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CONTRIBUTION AGREEMENT
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Agreement dated as of October 28, 1997 by and among Advanta Corp., a
Delaware corporation (the "Company") and Fleet Financial Group, Inc., a Rhode
Island corporation ("Fleet").
WHEREAS, the Boards of Directors of the parties hereto deem it advisable
that they and certain of their Affiliates contribute and transfer certain assets
and liabilities to a newly created limited liability company (the "LLC") on the
terms hereinafter stated.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements hereinafter contained, and
intending to be legally bound hereby, the parties hereto hereby agree as
follows:
ARTICLE I. THE CONTRIBUTION.
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SECTION 1.01 The Contribution.
(a) Upon the terms and subject to the conditions hereof, and in
consideration of the issuance of the membership interests to the Company and
Fleet (or Subsidiaries of either of them), pursuant to a Limited Liability
Company Agreement in substantially the form attached hereto as Exhibit A, at the
Closing hereunder the Company shall, and shall cause each of the Company
Contributors to, contribute and transfer to the LLC, and Fleet and the Company
shall cause the LLC to accept and assume, the assets and liabilities of the
Company and the Company Contributors set forth on Schedules 1 and 2 hereto,
respectively, and Fleet shall, and shall cause each of the Fleet Contributors
to, contribute and transfer to the LLC, and Fleet and the Company shall cause
the LLC to accept and assume, the assets and liabilities set forth on Schedules
3 and 4 hereto, respectively (all such contributions and transfers are
collectively referred to herein as the "Contribution").
(b) The assets and liabilities contributed and transferred by the Company
and the Company Contributors to the LLC (including, without limitation, the
Ordinary Course of Business Liabilities) are referred to herein collectively as
the "Company Contributed Assets" and the "Company Transferred Liabilities",
respectively. The assets and liabilities contributed and transferred by Fleet
and the Fleet Contributors to the LLC are referred to herein collectively as the
"Fleet Contributed Assets" and the "Fleet Transferred Liabilities",
respectively. The contracts listed on Schedule 1 hereto and those entered into
by the Company or any Company Contributor on or after the date hereof and prior
to the Closing Date in the ordinary course of business relating to the Business
are collectively referred to as the "Company Contributed Contracts" and the
contracts listed on Schedule 3 hereto and those entered into by Fleet or any
Fleet Contributor on or after the date hereof and prior to the Closing Date in
the ordinary course of business relating to the Fleet Business are collectively
referred to as the "Fleet Contributed Contracts."
(c) The parties hereto acknowledge that excluded from the assets listed on
Schedule 1 hereto are the assets listed on Schedule 4.13.
(d) Immediately prior to the Closing, Fleet shall cause the LLC to enter
into a Participation Agreement with Fleet Credit Card Bank (the "CCB
Participation Agreement") pursuant to which the LLC will receive all of the
economic benefit of, and retain all of the economic risk of, the assets set
forth on Schedules 1B and 3B hereto (the "CCB Assets") and the liabilities set
forth on Schedules 2B and 4B hereto (the "CCB Liabilities"). In connection
therewith, the LLC shall direct the Company and each of the Company Contributors
to transfer, at the Closing, the CCB Assets and the CCB Liabilities to Fleet
Credit Card Bank.
(e) Immediately prior to the Closing, Fleet shall cause the LLC to enter
into a Participation Agreement with Fleet National Bank (the "FNB Participation
Agreement") pursuant to which the LLC will receive all of the economic benefit
of, and retain all of the economic risk of, the assets set forth on Schedules 1C
and 3C hereto (the "FNB Assets") and the liabilities set forth on Schedules 2C
and 4C hereto (the "FNB Liabilities"). In connection therewith, the LLC shall
direct the Company and each of the Company Contributors to transfer, at the
Closing, the FNB Assets and the FNB Liabilities to Fleet National Bank.
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(f) The Company and Fleet acknowledge and agree that the LLC shall remain
fully liable for all of the liabilities (including the principal, interest, fees
and other charges related to each such liability) assumed by it under this
Agreement, and as between the LLC and Fleet Credit Card Bank with respect to the
CCB Liabilities and as between the LLC and Fleet National Bank with respect to
the FNB Liabilities, the LLC shall be the party which is the ultimate obligor
with respect to such liabilities and shall bear the economic risk of loss with
respect to such liabilities and shall hold Fleet Credit Card Bank and Fleet
National Bank harmless with respect to any Losses arising from any such
liabilities.
(g) Other than the Company Transferred Liabilities and the Fleet
Transferred Liabilities or as otherwise set forth in this Agreement, the parties
hereto agree that the LLC is not agreeing to, and shall not, assume any other
liability, obligation, undertaking, expense or agreement of any kind, absolute
or contingent, known or unknown, of the Company or any of the Company
Contributors or of Fleet or any of the Fleet Contributors (the "Non-Assumed
Liabilities"), and the execution, delivery and performance of this Agreement by
the parties hereto shall not render the LLC liable for any such liability,
obligation, undertaking, expense or agreement. Without limiting the generality
of the foregoing, the parties hereto agree that the LLC shall not assume or be
liable for, and shall not undertake to attempt to assume or discharge (except
with respect to the Company Transferred Liabilities and the Fleet Transferred
Liabilities): (i) any liability or obligation of the Company or any of the
Company Contributors or of Fleet or any of the Fleet Contributors arising out of
or relating to any contract or agreement not specifically assumed by the LLC
pursuant to Section 1.01(b) hereof; (ii) subject to Section 6.17, any liability
or obligation of the Company or any Company Contributor relating to SmartMove
Repricing of the Retained SmartMove Accounts; (iii) other than as provided in
Section 6.08 hereof, any liability or obligation of the Company or any of the
Company Contributors or of Fleet or any of the Fleet Contributors arising out of
or relating to any pension, retirement, employee health or welfare or profit
sharing plan or trust of the Company or any Company Contributor; (iv) any
liability or obligation of the Company or any of the Company Contributors or
Fleet or any of the Fleet Contributors arising out of or relating to any oral or
written employment agreement not included in the Company Contributed Contracts
or the Fleet Contributed Contracts or contemplated by this Agreement; (v) any
liability or obligation of the Company or any of the Company Contributors or
Fleet or any of the Fleet Contributors arising out of or relating to any
litigation, proceeding, or claim by any person relating to the business or
operation of, or otherwise relating to, the Company or any of the Company
Contributors or Fleet or any of the Fleet Contributors or the Company
Contributed Assets or the Fleet Contributed Assets before the Closing Date,
whether or not such litigation, proceeding or claim is pending, threatened or
asserted before, on or after the Closing Date; (vi) any liabilities or
obligations of the Company or any of the Company Contributors for any Taxes,
whether or not such Taxes become due before, on or after the Closing Date; and
(vii) any and all other liabilities, obligations, debts or commitments of any of
the Company or any of the Company Contributors or Fleet or any of the Fleet
Contributors whatsoever whether accrued now or hereafter, whether fixed or
contingent, whether known or unknown, or any claims asserted against the Company
Contributed Assets or the Fleet Contributed Assets or other items transferred to
the LLC by the Company Contributors or the Fleet Contributors relating to any
event (whether act or omission) prior to the Closing Date.
(h) Except as otherwise set forth in this Agreement, the Company hereby
acknowledges and agrees that, other than the CCB Liabilities, Fleet Credit Card
Bank shall not assume any other liability, obligation, undertaking, expense or
agreement of any other kind, whether absolute or contingent, known or unknown,
of the Company or any of the Company Contributors.
(i) Except as otherwise set forth in this Agreement, the Company hereby
acknowledges and agrees that, other than the FNB Liabilities, Fleet National
Bank shall not assume any other liability, obligation, undertaking, expense or
agreement of any other kind, whether absolute or contingent, known or unknown,
of the Company or any of the Company Contributors.
SECTION 1.02 Consummation of the Contribution. The Contribution and the
other transactions contemplated by this Agreement shall be consummated and
closing thereof (the "Closing") shall occur on (a) the last Business Day of the
calendar quarter in which the last of the conditions set forth in Sections
8.01(a), 8.01(b), 8.02(c) and 8.03(f) hereof shall have been satisfied or waived
in accordance with the terms of this Agreement; provided, however, that at
Fleet's sole election, exercised by written notice
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thereof to the Company at any time after the satisfaction or waiver of such
conditions, the Closing shall occur within ten(10) Business Days after delivery
of such notice; provided, further, however, that if Fleet so elects, after
determination of a good faith estimate of the Managed Receivables and the Agreed
Deficit as of the proposed Closing Date and the last Business Day of the
preceding calendar quarter, Fleet shall have the right to withdraw the notice
referred to in the immediately preceding proviso promptly after determination of
such estimate and the Closing shall occur on the last Business Day of the
calendar quarter in which Fleet's original election notice was given, or (b)
such other date to which the parties may agree in writing. In no event may Fleet
give notice of a proposed mid quarter Closing Date more than once. The date on
which the Closing shall occur is referred to herein as the "Closing Date." The
exact date and time of closing of the transactions contemplated by this
Agreement shall be specified by the Company by notice to Fleet given at least
three Business Days prior thereto and the Closing shall be held at the offices
of Wolf, Block, ▇▇▇▇▇▇ and ▇▇▇▇▇-▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ or such other place as the parties shall agree.
The parties acknowledge and agree that the foregoing provisions are
intended to provide that if Fleet elects to give notice that a closing of the
transactions contemplated by this Agreement shall occur at any time other than
at the end of a calendar quarter, and does not withdraw such notice in
accordance with the terms of this Agreement, then the calculation of the Managed
Receivables, the Agreed Deficit and the Gain Receivable shall be made as of the
Specified Date and shall be effective for all purposes of this Agreement,
including, without limitation, the Closing Balance Sheet.
SECTION 1.03 Deliveries at Closing. At the Closing,
(a) The Company or the Company Contributors, or any one or more of them, as
applicable, shall execute and deliver such conveyances, bills of sale, deeds,
assignments, assurances, certificates and other instruments as Fleet may
reasonably request in order to evidence the conveyance and transfer of the
Company Contributed Assets to the LLC, and, thereafter, the transfer of title
pursuant to the CCB Participation Agreement, the CCB Assets to Fleet Credit Card
Bank and pursuant to the FNB Participation Agreement, the FNB Assets to Fleet
National Bank.
(b) The Company and the Company Contributors or any one or more of them, as
applicable, shall cause to be delivered the items set forth in Sections 8.01 and
8.03 hereto.
(c) The Company and the Company Contributors or any one or more of them, as
applicable, shall have delivered executed copies of the Ancillary Agreements.
(d) Fleet shall cause to be executed and delivered such instruments of
assumption and such other instruments and documents as the Company may
reasonably request to evidence the assumption of (i) the Company Contributed
Liabilities by the LLC, (ii) the CCB Liabilities by Fleet Credit Card Bank and
(iii) the FNB Liabilities by Fleet National Bank.
(e) Fleet, the Fleet Contributors, the LLC, or any one or more of them, as
applicable, shall cause to be delivered the items set forth in Sections 8.01 and
8.02 hereto.
(f) Fleet, the Fleet Contributors, the LLC, or any one or more of them, as
applicable, shall have delivered executed copies of the Ancillary Agreements.
SECTION 1.04 Certain Consents. Notwithstanding anything to the contrary
contained in this Agreement, nothing in this Agreement shall be construed as an
attempt to assign any Company Contributed Contract or Fleet Contributed Contract
or any other agreement, franchise, or claim which is part of the Contribution
which is by its terms or at law nonassignable without the consent of the other
party or parties thereto, unless such consent shall have been given. In order,
however, to provide the LLC, Fleet Credit Card Bank and Fleet National Bank with
the full realization and value of every Company Contributed Contract or Fleet
Contributed Contract and any other agreement, franchise and claim which is part
of the Contribution and the other transactions contemplated by this Agreement,
except as provided in Sections 6.10 and 11.09 hereof and except with respect to
the Material Company Contributed Contracts, each party hereto agrees that on and
after the Closing, it will, at the request of the LLC, and under the reasonable
direction of LLC, in the
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name of the LLC or otherwise as the LLC shall reasonably specify, take all
reasonable action (i) to attempt to assure that the rights of such party under
such contracts, agreements, franchises and claims shall be preserved for the
benefit of the LLC (or its assignee) and (ii) to facilitate receipt of the
consideration payable to such party in and under every such contract, agreement,
franchise and claim, which consideration shall be held for the benefit of, and
shall be delivered to, the LLC (or its assignee).
SECTION 1.05 Transfer of Company's Interest in RBS Advanta. Fleet and the
Company acknowledge and agree that the Company Contributed Assets include the
share capital (the "RBS Advanta Shares") of RBS Advanta (f/k/a Roboscot (15)),
an unlimited company organized under the Companies ▇▇▇ ▇▇▇▇, registered in
Scotland (No 157256) ("RBS Advanta"), which is held by Advanta UK, an unlimited
company organized under the Companies ▇▇▇ ▇▇▇▇, registered in Scotland (No
158226) ("Advanta UK"). Pursuant to the Articles of Association of RBS Advanta,
the consent of the other member of RBS Advanta is required to transfer the RBS
Advanta Shares to the LLC and upon notice of the proposed transfer, such member
may exercise its right to purchase such RBS Advanta Shares. Fleet and the
Company hereby agree that the Company shall cause Advanta UK to give the
applicable notice to RBS Advanta promptly after the date of this Agreement. If
consent to the transfer of the RBS Advanta Shares is obtained prior to the
Closing Date, the RBS Advanta Shares shall be so transferred to the LLC or such
other person as the parties shall mutually agree at the Closing. If such consent
is obtained after the Closing Date, such RBS Advanta Shares will be transferred
promptly after receipt of the consent. In either event, the Closing Balance
Sheet shall reflect the value of such RBS Advanta Shares as a Company
Contributed Asset at the value for such RBS Advanta Shares on the Closing Date
calculated in accordance with Schedule 1.06(g). If the RBS Advanta Shares are
acquired by another person pursuant to the provisions of the Articles of
Association of RBS Advanta or if any other payment is made subsequent to the
Closing Date to Advanta UK in respect of the RBS Advanta Shares, the Company
will cause such amounts, net of applicable Taxes of the Company or its
Affiliates in respect thereof, if any, to be paid to the LLC promptly after
receipt thereof. If RBS Advanta gives notice to the Company or any of the
Company's Affiliates of a need for additional capital subsequent to the Closing
Date, the Company shall promptly deliver such notice to the LLC and shall, at
the sole cost and expense of the LLC, take such actions in response to the
request for capital as the LLC shall direct. If the RBS Advanta Shares are not
transferred at the Closing, the Company shall cause the designees of Advanta UK
on the Board of Directors of RBS Advanta to resign effective as of the Closing
Date and shall use its best efforts to cause to be elected to the Board of
Directors of RBS Advanta the designees of the LLC effective as of the Closing
Date or as promptly as practicable thereafter.
SECTION 1.06 Closing Balance Sheet Confirmation.
(a) No later than five Business Days' prior to the Closing Date, the
Company shall deliver to Fleet its good faith estimate of the Closing Balance
Sheet ("Estimated Closing Balance Sheet"), which Estimated Closing Balance Sheet
shall demonstrate that the book value of the Company Transferred Liabilities
over the Company Contributed Assets equals the Agreed Deficit. In addition, the
Company shall cause to be delivered therewith a certificate of the Company
signed on its behalf by the chief financial officer of the Company, confirming
that the Estimated Closing Balance Sheet was prepared in accordance with the
provisions of Section 1.06(g). The interest bearing liabilities which are
included in the Company Transferred Liabilities at Closing shall be subject to
the conditions set forth on Schedule 1.06(a). The Estimated Closing Balance
Sheet submitted by the Company to Fleet shall include a schedule of the interest
bearing liabilities to be contributed by the Company in substantially the form
of Exhibit A attached to Schedule 1.06(a), which shall detail the outstanding
balances by liability type, rate and maturity and demonstrate that the
characteristics of the interest bearing liabilities to be contributed by the
Company are substantially no less favorable than the characteristics of the
liabilities set forth in Schedule 1.06(a). Notwithstanding the foregoing, the
Managed Receivables, the Agreed Deficit and the Gain Receivable on Secured
Credit Cards referred to in Exhibit B to Schedule 1.06(g) shall be computed as
of the Specified Date.
(b) The term "Agreed Deficit" shall mean five hundred ten million dollars
($510,000,000) minus the Agreed Adjustment, if any (the parties acknowledge and
agree that the Agreed Adjustment may be an amount which is less than zero, in
which event the Agreed Deficit would equal the sum of five hundred ten million
dollars ($510,000,000) plus the absolute value of the Agreed Adjustment).
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(c) The "Agreed Adjustment" shall be that amount which is the sum of the
Volume Adjustment and the Yield Adjustment.
(d) The Volume Adjustment (which may be less than zero as noted in Section
1.06(b)) means that amount which is (i) ($12,100,000,000 minus the amount of
Managed Receivables as of the Specified Date) multiplied by (ii) 0.0438.
(e) The Yield Adjustment (which may be less than zero as noted in Section
1.06(b)) shall be equal to the product of (A)(i) the amount of the Managed
Receivables with Introductory Rate Balances as of the Specified Date minus (ii)
$2,192,520,000 multiplied by (B) 0.5 multiplied by (C) 0.0438. For example, if
on the Specified Date the percentage of Managed Receivables with introductory
rates equaled 15% and the amount of Managed Receivables was equal to
$12,100,000,000 then the Yield Adjustment would be equal to:
($12,100,000,000 x .15 = $2,192,520,000) x .5 x 0.0438 = $8,267,688 (Yield
Adjustment)
In such example, the Agreed Deficit would equal $518,267,688 (i.e.,
$510,000,000 plus the absolute value of the Yield Adjustment).
(f) As promptly as practicable, but in no event later than sixty (60) days
after the Closing Date, the Company shall prepare and deliver to the LLC and
Fleet the pro forma balance sheet of the Business as of the close of business on
the Closing Date, subject to the provisions of Section 1.02, but without giving
effect to the transactions occurring at the Closing (the "Closing Balance
Sheet"), together with the unqualified report of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP ("Company's
Auditor") on the Closing Balance Sheet, and a calculation in reasonable detail
of the Volume Adjustment, the Yield Adjustment, the Agreed Adjustment and the
Agreed Deficit together with a certificate of the Company signed on its behalf
by the Chief Financial Officer of the Company, confirming that such calculations
were made in accordance with the terms of this Agreement. The report of the
Company's Auditor shall be made to the Company, Fleet and the LLC and shall be
to the effect that (i) the Closing Balance Sheet (A) has been prepared therein
in conformity with the terms of this Agreement, including the provisions of
Section 1.06(g) hereof; (B) was prepared in conformity with GAAP (except as set
forth in Schedule 1.06(g)), applied on a consistent basis with the Company's
past practice; and (C) presents fairly the financial position of the Business as
of the close of business at the Closing Date, subject to the provisions of
Section 1.02, and (ii) the audit by the Company's Auditor was conducted in
accordance with generally accepted auditing standards. In addition, the
Company's Auditor shall confirm whether or not the interest bearing liabilities
contributed by the Company have characteristics substantially no less favorable
than the characteristics as set forth on Schedule 1.06(a). In the event that the
Company's Auditor does not so confirm the characteristics of the interest
bearing liabilities, the LLC and the Company shall determine in good faith such
amount as is necessary, consistent with the provisions of Schedule 1.06(a), to
reimburse the LLC for any such failure to so conform to such characteristics. In
the event the LLC and the Company can not resolve any dispute as to the amount
of such reimbursement, such dispute will be resolved in accordance with the
procedures set forth below. The Company shall pay the amount of any required
reimbursement, if any, to the LLC promptly after determination thereof.
(g) The Closing Balance Sheet shall be prepared in accordance with the
books and records of the Company and the Company Contributors and in conformity
with the provisions of, and pursuant to the procedures described on, Schedule
1.06(g) hereto.
(h) After the Closing Date, the LLC shall permit the Company and the
Company's Auditor reasonable access upon reasonable notice and during normal
business hours to the deeds, documents and contracts and books of account,
records, files, invoices and other data associated with, necessary to or used in
the Business as conducted on or before the Closing Date. The Company and the LLC
shall direct the appropriate personnel, regardless of whether employed by the
Company or the LLC, to provide the necessary financial information regarding the
Business as promptly as practicable after the Closing Date to the Company and
the Company's Auditor. Fleet shall, within forty-five (45) days after its
receipt of the Closing Balance Sheet, advise the Company in writing (an
"Objection Notice") in reasonable detail of the amounts and descriptions of
adjustments, if any, which Fleet believes are necessary to be made to the
Closing Balance Sheet or the Agreed Deficit in order to comply with the
provisions of this Agreement and Section 1.06(g) hereof. In the event that
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Fleet fails to deliver an Objection Notice within the time period specified
herein, the pro forma Closing Balance Sheet and the calculation of the Agreed
Deficit delivered by the Company pursuant to Section 1.06(f) hereof shall be
deemed to be the Closing Balance Sheet and Agreed Deficit for all purposes of
this Agreement.
(i) In the event that Fleet shall deliver an Objection Notice pursuant to
Section 1.06(h) hereof, Fleet and the Company shall attempt, in good faith, to
resolve their differences within the thirty day period following the receipt by
the Company of the Objection Notice. In the event the Company and Fleet are not
able to resolve their good faith differences within such thirty day period with
respect to any line item of the Closing Balance Sheet, but the differences with
respect to any such line item are less than two hundred fifty thousand dollars
($250,000), then such line item shall be deemed to be the average of the amounts
specified by the Company and Fleet, respectively, and the differences on such
line item shall be deemed to be resolved. In the event that the Company and
Fleet are able to resolve their differences within such thirty day period
(including any resolution pursuant to the immediately preceding sentence), the
Closing Balance Sheet and Agreed Deficit agreed to by Fleet and the Company
pursuant to this Section 1.06(i) shall be deemed to be the Closing Balance Sheet
and Agreed Deficit for all purposes of this Agreement. In the event that all of
the differences are not resolved within such thirty day period, but the effect
of such differences on the Agreed Deficit is less than three million dollars
($3,000,000), in the aggregate, then all remaining differences shall be resolved
in the same manner set forth above with respect to differences of less than
$250,000 and the Closing Balance Sheet and the calculation of the Agreed
Deficit, as so adjusted, shall be deemed to be the Closing Balance Sheet and the
Agreed Deficit for all purposes of this Agreement.
(j) In the event that the Company and Fleet are unable to resolve all
differences with respect to the Closing Balance Sheet or Agreed Deficit in the
manner set forth in Section 1.06(i) hereof within the thirty (30) days referred
to in Section 1.06(i) hereof, then the issues remaining unresolved shall be
determined by Coopers & ▇▇▇▇▇▇▇ L.L.P. (the "Independent Firm") as follows:
(1) Within fifteen (15) days following retention of the Independent
Firm, the Company and Fleet shall present or cause to be presented the
disputed issue or issues that must be resolved with respect to the Closing
Balance Sheet.
(2) The Company and Fleet shall use their commercially reasonable
efforts to cause the Independent Firm to render its decision as soon as is
reasonably practicable, including, without limitation, prompt compliance
with all reasonable requests by the Independent Firm for information,
papers, books, records and the like; provided that (i) the Company and
Fleet agree that the scope of the retention of the Independent Firm shall
be limited to resolving the disputed issues presented to it and matters
related thereto and (ii) in no event shall the resolution of any issue be
outside the parameters or amounts within which the issues were determined
by each of the Company and Fleet. All decisions of the Independent Firm
with respect to the Closing Balance Sheet and the Agreed Deficit shall be
final and binding upon Fleet, the Company and their respective Affiliates,
and the Closing Balance Sheet and the Agreed Deficit as determined in
accordance with the provisions of this Section 1.06(j) shall be deemed to
be the Closing Balance Sheet and the Agreed Deficit for all purposes of
this Agreement.
(k) With respect to the performance of their respective functions pursuant
to this Section 1.06, (i) the Company shall bear all of the fees, costs,
disbursements and other expenses of the Company's Auditor; (ii) Fleet shall bear
all of the fees, costs, disbursements and other expenses of its auditor; and
(iii) the Company, on the one hand, and Fleet, on the other hand, shall share
equally all fees, costs, disbursements and other expenses of the Independent
Firm.
(l) If the value of Company Transferred Liabilities over the Company
Contributed Assets as reflected on the Closing Balance Sheet (the "Net Deficit")
exceeds the Agreed Deficit, then the Company shall pay to the LLC in the manner
and with interest as provided in Section 1.06(n), the amount of such excess.
(m) If the Agreed Deficit exceeds the Net Deficit, then the LLC shall pay
to the Company in the manner and with interest as provided in Section 1.06(n),
the amount of such excess.
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(n) Any payment pursuant to Sections 1.06(l) or 1.06(m) hereof shall be
made at a mutually convenient time and place within ten (10) days after the
Closing Balance Sheet has been finally determined, by delivery to the Company or
the LLC, as the case may be, of a wire transfer of immediately available funds
from such party to a designated account of such other party. The amount of any
payment to be made pursuant to Sections 1.06(l) or 1.06(m) shall bear interest
from and including the Closing Date to but excluding the date of payment at a
rate per annum equal to LIBOR as of the Closing Date. Such interest shall be
payable at the same time as the payment to which it relates and shall be
calculated on the basis of a year of 360 days and the actual number of days
elapsed.
ARTICLE II. DEFINITIONS
SECTION 2.01 Definitions. As used in this Agreement the following terms
shall have the meanings set forth below:
(a) "Administration Agreement" shall mean that certain administration
agreement dated as of the Closing Date by and between the LLC or an Affiliate
thereof and the one or more of the Company Contributors and containing the
provisions set forth on Exhibit B hereto.
(b)"Advanta National Bank" shall mean Advanta National Bank, a bank
organized under the laws of the United States.
(c) "Advanta Service ▇▇▇▇ License Agreement" shall mean that certain
license agreement dated as of the Closing Date by and between the Company and
the LLC containing the provisions set forth in Exhibit C hereto.
(d) "Affiliate" shall mean, with respect to any specified Person, a Person
that directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, the Person specified. As used in
this definition, the term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through ownership of voting securities, as trustee
or executor, by contract or credit arrangement or otherwise.
(e) "Agreed Adjustment" shall have the meaning set forth in Section 1.06(c)
of this Agreement.
(f) "Agreed Deficit" shall have the meaning set forth in Section 1.06(b) of
this Agreement.
(g) "Ancillary Agreements" means each of the LLC Agreement, the
Administration Agreement, the CCB Participation Agreement, the FNB Participation
Agreement, the Lease Agreements, the SmartMove Service Agreement, the Advanta
Service ▇▇▇▇ License Agreement and the Interim Servicing Agreement.
(h) "Bank Acts" shall mean, collectively, the Bank Holding Company Act of
1956, the National Bank Act, the Federal Reserve Act, the Federal Deposit
Insurance Act and any other federal or state banking statutes which may govern
the transactions contemplated by this Agreement, as they may be amended from
time to time, and the rules and regulations promulgated thereunder.
(i) "Bank Authority" shall mean the Board of Governors of the Federal
Reserve System, the Office of the Comptroller of the Currency, the Federal
Deposit Insurance Corporation and the Office of Thrift Supervision, and any
state banking authority or non-U.S. governmental banking authority having
jurisdiction over the Company, Fleet or any Related Entities.
(j) "Board" shall have the meaning set forth in Section 3.01 of this
Agreement.
(k) "Business" shall mean the consumer credit card business of the Company
and the Company Contributors as of the Closing Date, including, without
limitation, the origination and servicing of consumer credit cards, the
determination of creditworthiness of consumer credit card account customers, the
extension of credit to consumer credit card account customers, and the
maintenance of consumer credit card accounts and collection of receivables with
respect thereto, anywhere in the world.
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(l) "Business Day" shall mean any day that is not a Saturday, a Sunday or a
day on which banks in the Commonwealth of Massachusetts and the Commonwealth of
Pennsylvania are generally closed for regular banking business.
(m) "CCB Assets" shall have the meaning set forth in Section 1.01(d) of
this Agreement.
(n) "CCB Liabilities" shall have the meaning set forth in Section 1.01(d)
of this Agreement.
(o) "CCB Participation Agreement" shall have the meaning set forth in
Section 1.01(d) of this Agreement.
(p) "Class A Preferred Shares" shall mean the shares of the Company's Class
A Preferred Stock, par value $1,000 per share.
(q) "Class A Shares" shall mean the shares of the Company's Class A Common
Stock, par value $.01 per share.
(r) "Closing" shall have the meaning set forth in Section 1.02 of the
Agreement.
(s) "Closing Balance Sheet" shall have the meaning set forth in Section
1.06(f) of this Agreement.
(t) "Company" shall have the meaning set forth in the preamble to this
Agreement.
(u) "Company's Auditor" shall have the meaning set forth in Section 1.06(f)
of this Agreement.
(v) "Company Contributed Assets" shall have the meaning set forth in
Section 1.01(b) of this Agreement.
(w) "Company Contributors" shall mean Advanta National Bank, an indirect
wholly owned subsidiary of the Company and any Affiliates thereof which
contribute Company Contributed Assets or transfer Company Transferred
Liabilities in accordance with the terms of this Agreement.
(x) "Company Credit Card Business Employees" shall mean each individual who
is employed on a full-time or part-time basis in connection with the Business on
the Closing Date, composed of those individuals and groups of individuals who
are listed on Schedule 2.01(x) hereto, together with all Potential Credit Card
Business Employees who are deemed to be Company Credit Card Business Employees
pursuant to Section 6.22 of this Agreement.
(y) "Company Intellectual Property" shall have the meaning set forth in
Section 4.10 of this Agreement.
(z) "Company Transferred Liabilities" shall have the meaning set forth in
Section 1.01 of this Agreement.
(aa) "Contribution" shall have the meaning set forth in Section 1.01 of
this Agreement.
(bb) "Credit Insurance Business" shall have the meaning set forth in
Section 7.01 of this Agreement.
(cc) "Estimated Closing Balance Sheet" shall have the meaning set forth in
Section 1.06(a) of this Agreement.
(dd) "Exchange Act" shall have the meaning set forth in Section 4.04 of
this Agreement.
(ee) "Fleet" shall have the meaning set forth in the preamble to this
Agreement.
(ff) "Fleet Business" shall mean the consumer credit card business of Fleet
and the Fleet Contributors, including, without limitation, the origination and
servicing of consumer credit cards as of the Closing Date, the determination of
creditworthiness of consumer credit card account customers, the extension of
credit to consumer credit card account customers and the maintenance of consumer
credit card accounts and collection of receivables with respect thereto,
anywhere in the world.
(gg) "Fleet Contributed Assets" shall have the meaning set forth in Section
1.01(b) of this Agreement.
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(hh) "Fleet Contributors" shall mean Fleet Credit Card Bank, Fleet National
Bank and any Affiliates thereof which contribute Fleet Contributed Assets or
transfer Fleet Transferred Liabilities in accordance with the terms of this
Agreement.
(ii) "Fleet Credit Card Bank" shall mean Fleet Bank, National Association
(DE), a credit card bank organized under the laws of the United States, and any
successor thereto.
(jj) "Fleet Material Adverse Effect" shall mean any effect that (1) is
material and adverse to the assets, liabilities, financial position, business or
results of operations of the Fleet Business, taken as a whole, or (2) would
materially impair the ability of Fleet and the Fleet Contributors, taken as a
whole, to perform their obligations under this Agreement or otherwise materially
impede the consummation of the transactions contemplated by this Agreement
(excluding any such impairment arising from any action taken by, or omission of
the Company, and any Company Contributor or any Affiliate thereof), excluding,
in (1) and (2) above, any effects relating to or arising from (A) the
transactions contemplated by this Agreement and any actions or omissions to act
required by this Agreement (including, without limitation, actions or inactions
of employees, customers or vendors) or (B) past, existing or prospective general
economic or regulatory conditions affecting the consumer revolving lending
business or the consumer credit card business in general. Notwithstanding the
foregoing, Fleet may, at its option, include in the Disclosure Schedules items
which would not have a Fleet Material Adverse Effect within the meaning of the
previous sentence or are not necessarily material, and such inclusion shall not
be deemed to be an acknowledgment by Fleet that such items would have a Fleet
Material Adverse Effect or further define the meaning of either such term for
purposes of this Agreement.
(kk) "Fleet National Bank" shall mean Fleet National Bank, a bank organized
under the laws of the United States.
(ll) "Fleet Transferred Liabilities" shall have the meaning set forth in
Section 1.01 of this Agreement.
(mm) "FNB Assets" shall have the meaning set forth in Section 1.01(e) of
this Agreement.
(nn) "FNB Liabilities" shall have the meaning set forth in Section 1.01(e)
of this Agreement.
(oo) "FNB Participation Agreement" shall have the meaning set forth in
Section 1.01(e) of this Agreement.
(pp) "GAAP" shall mean generally accepted accounting principles.
(qq) "HSR Act" shall have the meaning set forth in Section 4.06 of this
Agreement.
(rr) "Household Receivables" shall mean all consumer credit card
receivables owned, managed, or serviced by the Company or the Company
Contributors acquired by the Company or any of the Company Contributors pursuant
to that certain Credit Card Portfolio Purchase and Sale Agreement, dated as of
September 30, 1997, between Advanta National Bank and Household Bank (Nevada),
N.A. and that certain Line of Credit Portfolio Purchase and Sale Agreement,
dated as of September 30, 1997, between Household Bank, F.S.B. and Advanta
National Bank.
(ss) "Interim Servicing Agreement" shall mean that certain Interim
Servicing Agreement dated as of the Closing Date between the LLC and the
Company, substantially in the form attached hereto as Exhibit D.
(tt) "Introductory Rate Balances" shall mean consumer credit card
receivables accruing finance charges at a special introductory annual percentage
rate offered to new credit card customers only at the time of the opening of a
credit card account for a limited period, referred to as an "introductory rate;"
it is understood that the term Introductory Rate Balances does not include any
portion of a credit card holder's balances (i) resulting from a cash advance and
accruing interest at a cash advance rate; (ii) that no longer carry a special
introductory rate as a result of a delinquency; or (iii) resulting from any
other promotional campaign or relationship management activities.
(uu) "Knowledge" of the Company or Fleet, as applicable, shall be deemed to
include only the actual knowledge of the executive officers of the Company or
Fleet, respectively, provided, however, that for the
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purposes of the indemnification provisions of Article X hereof only (and for no
other provision of this Agreement) "Knowledge" of the Company or Fleet, as
applicable, shall mean the knowledge of all of the officers of the Company and
its Subsidiaries engaged in the Business or Fleet and its Subsidiaries engaged
in the Fleet Business, respectively.
(vv) "Lease Agreements" shall mean those certain lease agreements dated as
of the Closing Date between the LLC and certain of the Company Contributors
relating to shared facilities and containing the provisions set forth on Exhibit
E hereof.
(ww) "LIBOR" shall mean, as of any date, the London Interbank Offered Rate
for three-month deposits as shown at 11:00 a.m. London time on such date on the
display screen designated "Page 3570" by Dow ▇▇▇▇▇ Markets, or such other page
as may replace such page on that service or such other services as may be
nominated by the British Bankers' Association for the purpose of displaying
London Interbank offered rates for U.S. Dollar Deposits.
(xx) "Lien" shall have the meaning set forth in Section 4.08 hereof.
(yy) "LLC" shall mean a limited liability company formed by the parties
hereto or their Affiliates prior to the Closing Date and pursuant to the terms
of the LLC Agreement.
(zz) "LLC Agreement" shall mean the Limited Liability Company Agreement of
the LLC, substantially in the form of Exhibit A attached hereto.
(aaa) "Losses" shall mean any and all claims, losses, liabilities, costs,
penalties, fines, expenses (including reasonable expenses for attorneys,
accountants, consultants and experts), damages, obligations to third parties,
expenditures, proceedings, judgments, awards, settlements or demands (including,
without limitation, Taxes) that are imposed upon or otherwise incurred, suffered
or sustained by the relevant party.
(bbb) "Managed Receivables" shall mean all consumer credit card receivables
owned, managed or serviced by the Company or the Company Contributors under
Master Trust I or Master Trust II or under other agreements relating to the
securitization of such receivables by the Company or the Company Contributors,
or included as part of the Company Contributed Assets, except any receivables
relating to Retained SmartMove Accounts (other than Qualified SmartMove
Accounts), Household Receivables and Rewards Accelerator Receivables.
(ccc) "Master Trust I" and "Master Trust II" shall mean, respectively, that
certain Amended and Restated Master Pooling and Servicing Agreement, dated as of
April 1, 1992, between Colonial National Bank USA and Chemical Bank, and all
supplements and amendments thereto, and that certain Amended and Restated
Pooling and Servicing Agreement, dated as of December 1, 1993, as amended and
restated on May 23, 1994, between Colonial National Bank USA and Bankers Trust
Company and all supplements and amendments thereto.
(ddd) "Material Adverse Effect" shall mean any effect that (1) is material
and adverse to the assets, liabilities, financial position, business or results
of operations of the Business, taken as a whole, or (2) would materially impair
the ability of the Company and the Company Contributors, taken as a whole, to
perform their obligations under this Agreement or otherwise materially threaten
or materially impede the consummation of the transactions contemplated by this
Agreement (excluding any such impairment arising from any action taken by, or
omission of, Fleet, any Fleet Contributor or any Affiliate thereof) excluding,
in (1) and (2) above, any effects relating to (A) the announcement made by the
Company relating to a possible reorganization or sale of significant assets
involving the Company and its Affiliates, (B) the transactions contemplated by
this Agreement and any actions or omissions to act required by this Agreement
(including, without limitation, actions or inactions of employees, customers or
vendors) or (C) past, existing or prospective general economic or regulatory
conditions affecting the consumer revolving lending business or the consumer
credit card business in general. Notwithstanding the foregoing, the Company may,
at its option, include in the Disclosure Schedules items which would not have a
Material Adverse Effect within the meaning of the previous sentence or are not
necessarily material, and such inclusion shall not be deemed to be
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an acknowledgment by the Company that such items would have a Material Adverse
Effect or further define the meaning of either such term for purposes of this
Agreement.
(eee) "Material Company Contributed Contracts" shall mean those Company
Contributed Contracts listed on Schedule 1A(i) hereto.
(fff) "Non-Assumed Liabilities" shall have the meaning set forth in Section
1.01(g) of this Agreement.
(ggg) "Ordinary Course of Business Liabilities" shall mean liabilities
relating to consumer credit matters arising from the operations of the Business
in the ordinary course in a manner substantially similar to the operation of a
credit card business by one or more of the 20 largest credit card issuers in the
United States.
(hhh) "Outside Termination Date" shall have the meaning set forth in
Section 9.01(b) of this Agreement.
(iii) "person" shall mean any individual, corporation, partnership,
association, joint stock company, business, trust, other entity or group.
(jjj) "Proxy Statement" shall have the meaning set forth in Section 3.02 of
this Agreement.
(kkk) "Related Entities" shall mean any company, partnership, trust or
limited liability company of which the Company or Fleet, as the case may be,
directly or indirectly, owns 25% or more of the equity or can elect a majority
of the directors or partners or which the Company or Fleet is otherwise deemed
to control under any of the Bank Acts.
(lll) "Retained SmartMove Accounts" shall mean the credit card accounts and
all accounts receivable thereon for any credit card account holder who either
(i) received a notice of the SmartMove Repricing and, at the time of the receipt
of such notice, maintained a SmartMove Balance subject to the SmartMove
Repricing or (ii) maintained a SmartMove Balance which became subject to the
SmartMove Repricing.
(mmm) "Rewards Accelerator Accounts" shall mean the credit card accounts
and all accounts receivable thereon which are subject to the Rewards Accelerator
Program and as to which the Company does not have the right to solicit the
account holders for a replacement credit card which is not subject to the
program.
(nnn) "Rewards Accelerator Receivables" are receivables under the Rewards
Accelerator Accounts.
(ooo) "SEC" shall have the meaning set forth in Section 3.02 of this
Agreement.
(ppp) "Securities Act" shall have the meaning set forth in Section 4.04 of
this Agreement.
(qqq) "Shares" shall mean any Class A Share or Class A Preferred Share.
(rrr) "SmartMove Balances" shall mean all credit card accounts receivable
generated by the SmartMove Campaign.
(sss) "SmartMove Campaign" shall mean the marketing campaigns of any of the
Company Contributors, referred to as "SmartMove," offering existing credit card
account holders a lower annual percentage rate on credit card balances
transferred to such card holders' accounts with any Company Contributor from
such card holders' credit card accounts with any other credit card issuer.
(ttt) "SmartMove Repricing" shall mean all initiatives under which the
Company Contributors notified credit card account holders who maintained
SmartMove Balances that the annual percentage rate on such SmartMove Balances
would be increased.
(uuu) "SmartMove Service Agreement" shall mean that certain service
agreement dated as of the Closing Date between the LLC and Advanta National Bank
and containing the provisions set forth on Exhibit F hereto.
(vvv) "Special Meeting" shall have the meaning set forth in Section 3.01 of
this Agreement.
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(www) "Specified Date" shall mean the Closing Date; provided, however, that
if the Closing Date is a date other than the last Business Day of a calendar
quarter, Specified Date shall mean, at the sole discretion of the Company, the
last Business Day of the immediately preceding calendar quarter.
(xxx) "Subsidiary" shall mean, when used with reference to an entity, any
corporation or other entity, a majority of the outstanding voting securities of
which are owned directly or indirectly by such entity.
(yyy) "Tax Return" shall mean any return, report, information statement,
schedule or other document (including any related or supporting information and
including any Form 1099 or other document or report required to be provided by
any of the parties to third parties) with respect to Taxes, including any
document required to be retained or provided to any governmental authority
pursuant to 31 U.S.C. Sections 5311-5328 and regulations promulgated hereunder,
relating to the parties or any consolidated group of which any such entity was a
member at the applicable time, and any amended Tax Returns.
(zzz) "Taxes" shall mean all federal, provincial, territorial, state,
municipal, local, foreign or other taxes, imposts, rates, levies, assessments
and other charges (and all interest and penalties thereon), including, without
limitation, all income, excise, franchise, gains, capital, real property, goods
and services, transfer, value added, gross receipts, windfall profits,
severance, ad valorem, personal property, mortgage recording, employment,
payroll, social security, unemployment, disability, estimated or withholding
taxes, and all customs and import duties, and all interest, penalties and losses
thereon or associated therewith or associated with any Tax Return.
(aaaa) "Volume Adjustment" shall have the meaning set forth in Section
1.06(d) of this Agreement.
(bbbb) "Yield Adjustment" shall have the meaning set forth in Section
1.06(e) of this Agreement.
(cccc) "1996 Bonus Protection Payment" shall mean a payment to a
Transferred Employee pursuant to the terms of the Advanta Corp. Management
Incentive Plan with Stock Election II, Advanta Corp. Management Incentive Plan
with Stock Election III and Advanta Corp. Management Incentive Plan with Stock
Election IV, as applicable, for the year ended December 31, 1996.
(dddd) "1997 Bonus Payment" shall mean a payment or issuance or vesting of
stock to a Transferred Employee pursuant to the terms of the Advanta Corp.
Senior Management Incentive Plan with Stock Election II, Advanta Corp.
Management Incentive Plan with Stock Election III and Advanta Corp. Management
Incentive Plan with Stock Election IV, as applicable, for the year ended
December 31, 1997.
(eeee) "1997 Bonus Protection Payment" shall mean a payment from the
Company to a Transferred Employee pursuant to the terms of the Advanta Corp.
Management Incentive Plan with Stock Election II, Advanta Corp. Management
Incentive Plan with Stock Election III and Advanta Corp. Management Incentive
Plan with Stock Election IV, as applicable, for the year ended December 31,
1997.
ARTICLE III. STOCKHOLDERS' MEETING AND PROXY STATEMENT
SECTION 3.01 Stockholders' Meeting. The Company, acting through its Board
of Directors (the "Board"), will, in accordance with applicable law and the
Company's charter and bylaws, duly call, give notice of, convene and hold a
special meeting (including any adjournment or postponement thereof, the "Special
Meeting") of its stockholders as soon as practicable following the date of this
Agreement, but in any event no later than 20 Business Days after the mailing of
the Company's Proxy Statement for the purpose of considering and taking action
upon the approval of the Contribution and any other related matters required
under applicable law to be approved by such stockholders (it being agreed that
the parties hereto do not acknowledge that such approval is required under
applicable law). The Board shall recommend such approval by the stockholders and
shall take all reasonable, lawful action to solicit such approval by its
stockholders.
SECTION 3.02 Proxy Statement. The Company will (i) as promptly as
practicable following the date of this Agreement, prepare and file with the
Securities and Exchange Commission ("SEC"), and use its best efforts to have
cleared by the SEC and thereafter mail to its stockholders as promptly as
practicable, a proxy statement and a form of proxy, in connection with the vote
of the Company's stockholders with respect
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to this Agreement and the transactions contemplated hereby (such proxy
statement, together with any amendments thereof or supplements thereto, in each
case in the form or forms mailed to the Company's stockholders, is herein called
the "Proxy Statement"), (ii) use its best efforts to obtain the necessary
approvals by its stockholders of this Agreement and the transactions
contemplated hereby and (iii) otherwise comply with all legal requirements
applicable to the Special Meeting. The Company agrees to promptly provide Fleet
with all comments or correspondence received from the SEC with respect to the
Proxy Statement. The Company will include in the Proxy Statement the
recommendation of its Board that stockholders of the Company vote in favor of
the approval of this Agreement and the transactions contemplated hereby.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the Company's Disclosure Schedule delivered to Fleet
by the Company prior to the execution of this Agreement, the Company represents
and warrants to Fleet, on behalf of itself and each of the Company Contributors,
as follows:
SECTION 4.01 Organization. Each of the Company and the Company
Contributors is a corporation or limited liability company duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
formation or a banking organization duly chartered by its chartering authority.
Each of the Company and the Company Contributors is duly qualified to conduct
the Business in the states of the United States and any foreign jurisdictions
where its ownership or leasing of properties or assets used in the conduct of
the Business or the assets of the Business requires it to be so qualified and
where the failure to be so qualified would have a Material Adverse Effect.
SECTION 4.02 Corporate Power, Authority Relative to this Agreement. Each
of the Company and the Company Contributors has the corporate power and
corporate authority to carry on its business as it is now being conducted and to
own or lease all of the properties and assets used in the conduct of the
Business and to conduct the Business in the manner currently conducted by it.
The Company has full corporate power and authority to execute and deliver this
Agreement and, upon approval of this Agreement by the holders of Shares
representing a majority of the votes entitled to be cast by holders of the Class
A Shares and Class A Preferred Shares, voting together as a single class, as
required to satisfy the condition set forth in Section 8.01(a), to consummate
the transactions contemplated hereby and to perform its obligations hereunder,
including, without limitation, causing the Company Contributors (after approval
by their respective Boards of Directors) to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by the Board of Directors of the Company and no other corporate
proceedings on the part of the Company or any Company Contributor (other than
approval by the respective Boards of Directors of the Company Contributors other
than the Company) are necessary to authorize the execution, delivery or
performance of this Agreement or to consummate the transactions contemplated
hereby other than (subject to the last parenthetical clause in the penultimate
sentence of Section 3.01) the approval of this Agreement and the transactions
contemplated hereby by the holders of Shares representing a majority of the
votes entitled to be cast by holders of Class A Shares and Class A Preferred
Shares, voting together as a single class. This Agreement has been duly and
validly executed and delivered by the Company and, assuming this Agreement has
been duly authorized, executed and delivered by Fleet, this Agreement
constitutes a valid and binding agreement of the Company, enforceable against
the Company in accordance with its terms (but subject to obtaining the approvals
set forth in Section 4.06 hereof), except that (i) enforcement may be subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws, now or hereafter in effect, affecting creditors' rights generally and (ii)
the remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
SECTION 4.03 Absence of Certain Changes. Except as disclosed in the
Company Filings, since June 30, 1997, (a) the Company and each of the Company
Contributors have conducted the Business in the ordinary and usual course,
consistent with past practice and (b) no event has occurred or fact or
circumstance
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arisen that, individually or taken together with all other facts, circumstances
and events, has had, or is reasonably likely to have a Material Adverse Effect.
Since June 30, 1997, there has not been (a) any entry into any agreement,
commitment or transaction by the Company or any Company Contributor relating to
the Business, which is material to the Business taken as a whole (except
agreements, commitments or transactions in the ordinary course of business,
consistent with past practice and described on the Company's Disclosure
Schedule); or (b) any change by the Company or any of the Company Contributors
in accounting methods, principles or practices relating to the Business, except
as required by GAAP.
SECTION 4.04 Reports and Financial Statements.
(a) The Company and each of its Subsidiaries and Master Trust I and Master
Trust II and, to the Knowledge of the Company, the trustees of Master Trust I
and Master Trust II, have filed all forms, reports, definitive proxy statements,
information statements and other documents (including all prospectuses and all
registration statements) with the SEC required to be filed by it with respect to
all periods commencing on or after January 1, 1994 pursuant to the federal
securities laws and the rules and regulations promulgated thereunder, all of
which have complied in all material respects with all applicable requirements of
the Securities Act of 1933 (the "Securities Act") and the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and the rules and regulations
promulgated thereunder (the "Company Filings"). None of the Company Filings
(excluding the financial statements included therein), at the time filed or
mailed, contained, with respect to the Business, any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein in light of the
circumstances under which they were made, not misleading.
(b) The pro forma balance sheet of the Business as of September 30, 1997
(the "Pro Forma Balance Sheet") attached hereto as Schedule 4.04(b) has been
prepared in accordance with GAAP applied on a consistent basis with the
Company's past practice and the procedures set forth on Schedule 1.06(g) hereto,
and presents fairly in all material respects the assets and liabilities of the
Business at September 30, 1997. Notwithstanding the foregoing, it is
acknowledged and agreed that the information technology assets and fixed assets
set forth on the Pro Forma Balance Sheet are subject to change, as mutually
determined by the Company and Fleet, in each case based on a physical inventory
of information technology assets and fixed assets, having an agreed minimum book
value for any one item and an agreed minimum book value for any single line
item, to be performed prior to the Closing. Such changes will be reflected in
the Closing Balance Sheet. The Pro Forma Statement of Operations (as defined in
Section 6.21) for the year ended December 31, 1996 and the nine months ended
September 30, 1997 have been prepared in accordance with GAAP applied on a
consistent basis with the Company's past practice and presents fairly in all
material respects the results of operations of the Business for the periods
covered by the statement of operations.
(c) The Company and each of its Subsidiaries have filed all reports,
registrations, applications and statements, together with any amendments
required to be made with respect thereto, relating to the Business that they
were required to file since January 1, 1995 with any governmental authority, and
all other reports and statements required to be filed by them since January 1,
1995, including, without limitation, any report or statement required to be
filed pursuant to the laws, rules or regulations of the United States, any state
thereof or any governmental authority, and have paid all fees and assessments
due and payable in connection therewith, except in any case where the failure to
file the same would not have a Material Adverse Effect. Each of such reports,
registrations, applications and statements complied (and with respect to such
reports, registrations, applications and statements filed after the date hereof
and prior to the Closing Date, will comply) at the date thereof in all material
respects with the rules and regulations of the governmental authority relating
thereto and fairly present in all material respects the information required to
be presented therein. Except for normal examinations conducted by a governmental
authority in the ordinary course of the business of the Company and its
Subsidiaries, no governmental authority has initiated any proceeding or, to the
Knowledge of the Company, investigation, into the Business since January 1,
1995. There is no unresolved material violation, or exception by any
governmental authority with respect to any report or statement relating to any
examinations of the Company or any of its Subsidiaries relating to the Business.
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(d) Neither the Company nor any of its Subsidiaries is subject to any
cease- and-desist or other order issued by, or is a party to any consent
agreement or memorandum of understanding with, or is a party to any commitment
letter or similar undertaking to, or is subject to any order or directive by, or
is a recipient of any supervisory letter from or has adopted any board
resolutions at the request of any governmental authority, in any such case, that
restricts the conduct of the Business or that, in any manner, relates to the
Business or the Company Credit Card Business Employees (each, whether or not set
forth in the Company's Disclosure Schedule, a "Company Regulatory Agreement"),
nor has the Company or any of its Subsidiaries (A) been advised since January 1,
1995 by any governmental authority that it is considering issuing or requesting
any such Company Regulatory Agreement or (B) have Knowledge of any pending or
threatened regulatory investigation relating to the Business.
(e) Each of the balance sheets contained or incorporated by reference into
any of the Company Filings since January 1, 1997 (including the related notes
and schedules thereto) fairly presents or will fairly present in all material
respects, the financial position of the Company and of its Subsidiaries, or
Master Trust I or Master Trust II, as applicable, as of its date, and each of
the statements of income and changes in stockholders' equity and cash flows or
equivalent statements in the Company Filings since January 1, 1997 fairly
presents, or will fairly present, in all material respects, the results of
operations, changes in stockholders' equity and changes in cash flows, as the
case may be, of the Company and its Subsidiaries, for the periods to which they
relate, and in each case, in compliance in all material respects with the
applicable accounting requirements and with the published rules of the SEC with
respect thereto and in accordance with GAAP, except, in each case, as may be
noted therein, subject to normal year-end audit adjustments in the case of
unaudited statements.
SECTION 4.05 Proxy Statement. None of the information in the Proxy
Statement and any amendment or supplement thereto or any other documents to be
filed by the Company with the SEC or any other governmental entity in connection
with the transactions contemplated by this Agreement will at the time of the
mailing of the Proxy Statement and at the time of the Special Meeting, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein not misleading. If at any time prior to the Closing Date, any event with
respect to the Company, its officers and directors or any of the Company
Contributors should occur which is required to be described in an amendment of,
or a supplement to, the Proxy Statement, such event shall be so described, and
such amendment or supplement to the Proxy Statement shall be promptly filed with
the SEC and, as required by law, disseminated to the stockholders of the
Company. The Proxy Statement will (with respect to information relating to the
Company and the Company Contributors) at all times comply as to form in all
material respects with the requirements of the Exchange Act and the rules and
regulations promulgated thereunder. Each of the Company Contributors agrees
that, if it should become aware prior to the Closing Date of any information
furnished by it that would cause any of the statements in the Proxy Statement to
be false or misleading as of the time of the Special Meeting with respect to a
material fact, or to omit to state any material fact necessary to make the
statements therein not false or misleading as of the time of the Special
Meeting, to promptly inform Fleet thereof and to take the necessary steps to
correct the Proxy Statement.
SECTION 4.06 Consents and Approvals; No Violation. Neither the execution,
delivery and performance of this Agreement by the Company nor the consummation
of the transactions contemplated hereby by the Company or any Company
Contributor will (i) conflict with or result in any breach or violation of any
provision of the respective Restated Certificate of Incorporation or By-Laws (or
other similar governing documents) of the Company or any of the Company
Contributors, (ii) require the Company or any Company Contributor to obtain any
consent, approval, authorization or permit of, or filing with or notification
to, any governmental or regulatory authority or body, except (A) in connection
with the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), if applicable, (B) pursuant to the Exchange Act and the rules and
requirements of the National Association of Securities Dealers, Inc., (C)
approval of Bank Authorities, (D) approval of state insurance departments, if
applicable, and (E) filings in connection with the formation of the LLC and
maintaining the good standing and qualification of the LLC following the
Closing; (iii) result in a breach or violation of or a default under (or give
rise to any Lien, right of termination, unilateral modification or amendment,
cancellation or acceleration) under any of the terms, conditions or
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provisions of any material note, license, agreement, Company Contributed
Contract (other than any Material Company Contributed Contract or any Company
Contributed Contract relating to Information Technology) or other instrument or
obligation relating to the Business to which the Company or any of the Company
Contributors is a party or by which the Company, any of the Company Contributors
or any of their respective assets may be bound, except for such breaches,
violations or defaults (or Liens or rights of termination, unilateral
modifications or amendments, cancellations or accelerations) as to which
requisite waivers or consents have been obtained prior to the Closing or which
individually or in the aggregate would not have a Material Adverse Effect, (iv)
result in a material breach or a violation or a default under (or give rise to
any Lien, right of termination, unilateral modification or amendment,
cancellation or acceleration) under any Material Company Contributed Contract
except for the breaches, violations or defaults (or Liens or rights of
termination, unilateral modifications or amendments, cancellations or
accelerations) as to which requisite waivers or consents have been obtained
prior to the Closing; or (v) violate any order, writ, injunction, decree,
judgment, ordinance, statute, rule, law or regulation, permit or agreement
applicable to the Business, except for violations (other than of orders, writs,
injunctions or decrees issued against the Company or any of the Company
Contributors or naming the Company or any of the Company Contributors as a
party) which would not individually or in the aggregate have a Material Adverse
Effect.
SECTION 4.07 Litigation. There is no litigation, claim, action,
arbitration, investigation or other proceeding pending or, to the Knowledge of
the Company, threatened against the Company or any of the Company Contributors
and relating to the Business before any court or governmental or regulatory
authority or body acting in an adjudicative capacity, with respect to which
there is a reasonable likelihood of an adverse determination, which (i) would
have a Material Adverse Effect or (ii) challenges the validity or propriety of
the transactions contemplated by this Agreement. Neither the Company nor any of
the Company Contributors is subject to any outstanding order, writ, judgment,
stipulation, award, injunction or decree of any court issued against the Company
or any of the Company Contributors or naming the Company or any of the Company
Contributors as a party relating to the Business which has or is reasonably
likely to have a Material Adverse Effect.
SECTION 4.08 Title to Properties; Encumbrances. The Company and each of
the Company Contributors has good title to or a valid leasehold interest in, or
is licensed or otherwise entitled to use, all of the Company Contributed Assets
(other than the Business real property and the Business leased properties as to
which Section 4.14 is applicable and other than the Company Intellectual
Property as to which Section 4.10 is applicable), free and clear of all security
interests, mortgages, pledges, monetary liens, conditional sales agreements,
leases, monetary liens, endorsements or charges of any kind or character claims
of third parties of any nature whatsoever (each a "Lien"), except for Permitted
Liens.
SECTION 4.09 Licenses. The Company and each of the Company Contributors
has all permits, licenses, authorizations, orders and approvals of, and has made
all filings, applications and registrations with, all governmental authorities
that are required to permit them to own and lease their properties and to
conduct the Business as presently conducted; all such permits, licenses,
certificates of authority, orders and approvals are in full force and effect
and, to the Company Knowledge, no suspension or cancellation of any of them is
threatened which, in any such case, would have a Material Adverse Effect.
SECTION 4.10 Patents, Trademarks, Trade Names, and Information Technology.
A. Patents, Trademarks and Trade Names.
(a) For purposes of this Section 4.10, "Company Intellectual Property"
means any patent, patent application, copyright registration, trade secret or
similar proprietary information, trademark or service ▇▇▇▇, trademark or service
▇▇▇▇ registration or application or trade name.
(b) All rights of ownership of, or material licenses to use, the Company
Intellectual Property held by the Company and the Company Contributors relating
to the Business are listed on Schedule 4.10A. There are no material intellectual
property rights, other than those set forth on such schedule, reasonably
necessary to and regularly used in, the conduct of the Business as presently
conducted.
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(c) All rights to the Company Intellectual Property reasonably necessary to
and regularly used in the conduct of the Business as presently conducted:
(i) have been duly registered in, filed in, or issued by the United
States Patent and Trademark Office, or the corresponding offices of other
countries identified on said schedule, or applications to register such
Company Intellectual Property have been filed and are pending;
(ii) have been properly maintained and renewed in accordance with
applicable laws and regulations in the United States and such foreign
countries;
(iii) in the case of registered copyrights were developed and authored
as original works of authorship either by full-time employees of the
Company or any of the Company Contributors within the normal scope of their
duties as works for hire, or by third persons as works for hire under an
express written agreement so stating or under a written agreement expressly
transferring and assigning all rights to the Company, the Company
Contributors or any one or more of them;
(iv) in the case of patents or patent applications, have been duly
assigned to the Company, the Company Contributors or any one or more of
them, and such assignment(s) have been recorded in the appropriate
government offices;
(v) are owned by the Company, the Company Contributors, or any one or
more of them, free and clear of any Liens such that no other person has any
right or interest in or license to use or right to license others to use
any of the Company Intellectual Property to the exclusion of the Company;
(vi) are freely transferable (except as otherwise required by law);
and
(vii) are not subject to any outstanding order, decree, judgment or
stipulation,
except, in the case of each of the foregoing clauses (i) through (vii), to the
extent where the failure to comply to the statements made therein would not have
a Material Adverse Effect.
(d) To the Company's Knowledge, no proceedings to which the Company or any
Company Contributor is a party have been commenced which (i) challenge the
rights of the Company or any Company Contributor to use Company Intellectual
Property, or (ii) charge the Company or any Company Contributor with
infringement of any other person's rights in Company Intellectual Property; and
to the Knowledge of the Company, no such proceeding to which the Company is not
a party has been filed, nor are any such proceedings threatened to be filed, in
either case which, if adversely determined, is reasonably likely to have a
Material Adverse Effect.
(e) To the Company's Knowledge (i) none of the rights in the material
Company Intellectual Property is being infringed in any material manner by any
other person, and (ii) neither the Company nor any Company Contributor is
infringing in any material manner upon any material intellectual property rights
of any person.
(f) No director, officer or employee of the Company or any Company
Contributor owns, directly or indirectly, in whole or in part, any material
Company Intellectual Property right.
(g) In addition to the Company Intellectual Property described above, the
Company and the Company Contributors have the right to use, free and clear of
any claims or rights of others except claims or rights described in the
Company's Disclosure Schedule, all material trade secrets and Company owned
customer lists (collectively "Trade Secrets") required for and used in the
Business.
B. Information Technology. For purposes of this Section 4.10B. and
attached hereto as Schedule 4.10B(i) is a listing of all of the functions
reasonably necessary in any material respect to and regularly used in the
Business as presently conducted, including all of the material hardware,
software, networks and telecommunication (collectively the "Company Information
Technology"). The Company or one or more of the Company Contributors owns (free
and clear of all Liens, except Permitted Liens), or is licensed or otherwise
entitled to use the Company Information Technology which is included within the
Company Contributed Assets relating to the operation of the Business. There is
no material information technology,
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other than those set forth in the Schedule 4.10B(i), reasonably necessary and
regularly used in, the conduct of the Business as presently conducted. Schedule
4.10B(ii) identifies the material contracts included in the Company Information
Technology which the Company and Fleet have jointly and mutually identified
(collectively, the "Material Information Technology Contracts"). The Company or
one of the Company Contributors has or can obtain the right to assign the
Material Information Technology Contracts to the LLC, except as otherwise stated
in the Material Information Technology Contracts.
C. Information Technology Consents and Approvals; No Violation. Schedule
4.10C identifies those Information Technology Contracts requiring consents of
any third party in connection with the consummation of the transactions
contemplated by this Agreement. Neither the execution, delivery and performance
of this Agreement by the Company nor the consummation of the transactions
contemplated hereby by the Company or any Company Contributor will (i) require
the Company or any Company Contributor to obtain any other consent or approval
of or by any Company Information Technology contracting party; or (ii) result in
a material breach or violation of or a material default (or give rise to any
right of termination or claim for injunctive relief) under any of the terms,
conditions or provisions of any material contract relating to Company
Information Technology.
SECTION 4.11 Company Contributed Contracts.
(a) Each of the Company and the Company Contributors has complied in all
material respects with all of the respective provisions of the Material Company
Contributed Contracts and the Material Information Technology Contracts required
to be complied with by it and neither the Company nor any of the Company
Contributors, nor, to the Knowledge of the Company, any other party thereto is
in material default in any respect thereunder, and no event has occurred which
but for the passage of time or giving of notice or both would constitute such a
material default thereunder by the Company or any of the Company Contributors,
and there is no outstanding notice of default or termination under any Material
Company Contributed Contract or Material Information Technology Contract. The
Material Company Contributed Contracts and the Material Information Technology
Contracts are each valid, binding and enforceable in all material respects in
accordance with their respective terms, and the Contribution and the other
transactions contemplated by this Agreement will not affect the validity,
enforceability and continuity of any such Material Company Contributed Contract
or Material Information Technology Contract, if assignable and if properly
assigned.
(b) With respect to the Company Contributed Contracts which are not
Material Company Contributed Contracts or Material Information Technology
Contracts each of the Company and the Company Contributors has complied with all
respective provisions of the Company Contributed Contacts required to be
complied with by it and none of the Company or any Company Contributor is in
default in any respect thereunder, and no event has occurred, but for the
passage of time or giving of notice or both, would constitute such a default
thereunder by the Company or any of the Company Contributors, except where such
noncompliance or defaults would, individually or in the aggregate, not have a
Material Adverse Effect and there is no outstanding notice of default or
termination under any Company Contributed Contract which would have a Material
Adverse Effect.
SECTION 4.12 Environmental Matters.
(a) For purposes of this Agreement, the following terms shall have the
following meanings: (i) the term "Hazardous Material" shall mean any material,
waste or substance including, without limitation, petroleum or petroleum
products that, whether by their nature or use, are subject to control or
regulation under any Environmental Requirement; (ii) the term "Environmental
Requirement" shall collectively mean the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (42 U.S.C. Section 9601, et seq.), the
Hazardous Materials Transportation Act (49 U.S.C. Section 1801, et seq.), the
Resource Conservation and Recovery Act (42 U.S.C. Section 6901, et seq.), the
Toxic Substances Control Act (15 U.S.C. Section 2601, et seq.), the Clean Air
Act (42 U.S.C. Section 7401, et seq.) and the Federal Water Pollution Control
Act (33 U.S.C. Section 1251, et seq.), all as presently in effect, any
regulation pursuant thereto, or any other law addressing environmental, health
or safety issues of or by any governmental authority; and (iii) the term
"governmental authority" shall mean the Federal government, or any state or
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other political subdivision thereof, or any agency, court or body of the Federal
government, any state or other political subdivision thereof, exercising
executive, legislative judicial, regulatory or administrative functions.
(b) To the Company's Knowledge: (i) no Hazardous Material has been or is
currently located at, in, on, under or about any real estate used, owned,
operated or leased by the Company or any of the Company Contributors and
included in the Company Contributed Assets in a manner which (x) violates in any
material respect any Environmental Requirement or (y) which requires cleanup or
remedial action of any kind requiring the expenditure of more than $150,000 in
the aggregate under any Environmental Requirement; (ii) none of the Company or
any Company Contributor is required to obtain or maintain any federal, state and
local environmental permits, certifications, licenses or approvals with respect
to any of the Company Contributed Assets, the failure to obtain or hold which
would have a Material Adverse Effect; (iii) neither the Company nor any Company
Contributor has received notice of any material violation, lien, complaint,
suit, order or other obligation with respect to any past, present or future
event concerning the environmental condition of any real estate included in the
Company Contributed Assets; and (iv) there has been no investigation,
litigation, directive or administrative enforcement proceeding against the
Company or any Company Contributor, nor have any settlements been reached by the
Company or any Company Contributor with any governmental authority or public or
private party alleging the release, threatened release, disposal, storage or use
of any Hazardous Material at, in, on, under or adjacent to any real estate
included in the Company Contributed Assets, and with respect to which any of
such items (i) through (iv) would result in a Material Adverse Effect.
SECTION 4.13 Condition of the Company Contributed Assets. The Company
Contributed Assets (including, without limitation, all leasehold interests
included therein), constitute all of the assets reasonably necessary or required
to conduct the Business as presently conducted; provided, however, that this
representation shall not relate to any capital or capital adequacy requirements
of any Bank Authority. To the Company's Knowledge, all tangible assets with a
depreciated book value as of September 30, 1997 in excess of one million dollars
($1,000,000) included in the Company Contributed Assets are in good operating
condition and repair, normal wear and tear excepted.
SECTION 4.14 Real Property.
(a) Schedule 4.14(a) of the Company's Disclosure Schedule lists all real
property owned by the Company or any of the Company Contributors and included in
the Company Contributed Assets. With respect to each such parcel of owned real
property:
(i) the identified owner has good and valid title to the parcel of
real property, free and clear of any Lien except for installments of
special assessments not yet delinquent, liens for Taxes not yet due and
payable, easements, covenants, and other restrictions, and utility
easements, building restrictions, zoning restrictions, and other easements
and restrictions existing generally with respect to properties of a similar
character or which do not materially reduce the value or usefulness of such
property ("Permitted Liens");
(ii) there are no leases, subleases, licenses, concessions, or other
agreements granting to any party or parties the right of use or occupancy
of any portion of the parcel of real property; and
(iii) there are no outstanding options or rights of first refusal to
purchase the parcel of real property, or any portion thereof or interest
therein.
(b) Schedule 4.14(b) of the Company's Disclosure Schedule lists all real
property currently leased or subleased to the Company or any of the Company
Contributors and included in the Company Contributed Contracts. Each lease and
sublease listed in Schedule 4.14(b) of the Company's Disclosure Schedule hereto
is in all material respects legal, valid, binding, enforceable against Company
and the Company Contributors which are parties thereto, and to the Knowledge of
the Company, against the other parties thereto and is in full force and effect,
subject to bankruptcy, reorganization and similar laws and general equitable
principles.
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SECTION 4.15 Compliance with Laws. Except for the Environmental
Requirements (compliance with which is covered by Section 4.12, as applicable)
the Company and each of the Company Contributors:
(i) is in compliance with all applicable United States federal, state
and local and foreign statutes, laws, regulations, ordinances, rules,
judgments, orders or decrees applicable to the Business or to the Company
Credit Card Business Employees;
(ii) holds all permits, licenses, authorizations, orders and approvals
of, and has made all filings, applications and registrations with, all
governmental agencies that are required in order to permit them to own or
lease their properties and to conduct the Business as presently conducted;
and all such permits, licenses, certificates of authority, orders and
approvals are in full force and effect; and
(iii) has not since June 30, 1996 received any written notice from any
governmental agency (A) asserting that the Company or any of the Company
Contributors is not in material compliance with any statutes, regulations,
ordinances or rules in connection with the operation of the Business or (B)
threatening to revoke any material license, franchise, permit, membership
privilege or governmental authorization necessary for the operation of the
Business which, in either (A) or (B) above, is reasonably likely to have a
material adverse effect on the ability of the Company and the Company
Contributors to consummate the transactions contemplated by this Agreement
or the ability of the LLC to conduct the Business following the Closing
Date in substantially the same manner as it is presently conducted,
except in the case of any matter referred to in clauses (i), (ii) and (iii)
above where such non-compliance or failure to hold any such items or make such
filings, applications and registrations or failure to be in full force and
effect would not have a Material Adverse Effect.
SECTION 4.16 Benefit Plans.
(a) With respect to the Company Credit Card Business Employees identified
as of the date of this Agreement, no amount paid or payable by the Company or
any of the Company Contributors or the LLC in connection with the transactions
contemplated hereby (either solely as a result thereof or as a result of such
transactions in conjunction with any other event) will be an "excess parachute
payment" within the meaning of Section 280G of the Internal Revenue Code of
1986, as amended.
(b) Neither the LLC nor Fleet have any liability with respect to the
payment of any benefits or otherwise arising in connection with any "employee
benefit plan" or "plan" (as those terms are defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")) of the
Company or any Company Contributor, except those payments of benefits or other
liabilities that may arise in connection with those plans or other obligations
with respect to Transferred Employees or Company Credit Card Business Employees
that are expressly assumed or otherwise agreed to by the LLC or Fleet under the
terms of this Agreement.
SECTION 4.17 Unions. The Company represents that with respect to the
Company Credit Card Business Employees: There is no pending or, to the best of
the Company's Knowledge, threatened employee strike, work stoppage or labor
dispute which would have a Material Adverse Effect. To the Knowledge of the
Company no union representation question exists, no collective bargaining
agreement exists or is currently being negotiated by the Company or any Company
Contributor, no demand has been made for recognition by a labor organization, no
union organizing activities is taking place, and none of the Company Credit Card
Business Employees is represented by any labor union or organization. There is
no unfair labor practice claim against the Company or any Company Contributor
pending before the National Labor Relations Board, or any strike, dispute,
slow-down, or stoppage pending or to the Knowledge of the Company, threatened
against or involving the Company or any Company Contributor and none has
occurred.
SECTION 4.18 Retained SmartMove Accounts. As of September 30, 1997, the
total amount of SmartMove Balances outstanding equaled approximately
$667,000,000; the total amount of outstanding SmartMove Balances included in the
Retained SmartMove Accounts equaled approximately $54,000,000; and the weighted
average per annum interest rate of the SmartMove Balances included in the
Retained SmartMove Accounts equaled approximately 9.9%. The initiatives in May
1997, February 1997 and
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September 1996 are the only initiatives under which the Company Contributors
notified credit card account holders who maintained SmartMove balances that the
annual percentage rate on such SmartMove Balances would be increased, although
the Company Contributors have otherwise increased annual percentage rates on
SmartMove Balances as a result of delinquency or other breaches by card holders
of the credit card account agreement with the Company Contributors.
SECTION 4.19 Other Matters. There is (i) no litigation, claim, action,
arbitration, investigation or examination by any governmental authority, other
action or other proceeding, with respect to which there is a reasonable
likelihood of an adverse determination and (ii) no material default by the
Company or any Company Contributor under any material agreement, relating in any
case to the business (including, without limitation, the Business) of the
Company, which, in the case of either (i) or (ii), would materially delay or
materially impair the ability of the Company to consummate the transactions
contemplated by this Agreement.
SECTION 4.20 AS IS Condition. Except as otherwise set forth in this
Agreement, the Company Contributed Assets to be contributed and transferred
hereunder are to be contributed and transferred and are to be accepted by the
LLC in an "AS IS" condition, without any representation or warranty whatsoever.
EXCEPT AS OTHERWISE SET FORTH IN THIS AGREEMENT, THE COMPANY MAKES NO
REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, AS TO THE COMPANY
CONTRIBUTED ASSETS, INCLUDING, BUT NOT LIMITED TO, ANY REPRESENTATION OR
WARRANTY AS TO THE MERCHANTABILITY OR THE TRANSFERABILITY OF THE COMPANY
CONTRIBUTED ASSETS OR AS TO THE FITNESS OF THE COMPANY CONTRIBUTED ASSETS FOR
ANY PARTICULAR PURPOSE OR AS TO ANY INFRINGEMENT OR VIOLATION OF ANY
INTELLECTUAL PROPERTY RIGHTS BY ANY COMPANY CONTRIBUTED ASSET OR ANY USE
THEREOF.
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF FLEET
Except as set forth in the Disclosure Schedule delivered to the Company by
Fleet prior to the execution of this Agreement, Fleet represents and warrants to
the Company as follows:
SECTION 5.01 Organization. Each of Fleet and the Fleet Contributors is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation or a banking organization duly
chartered by its chartering authority.
SECTION 5.02 Corporate Power, Authority Relative to this Agreement. Each
of Fleet and the Fleet Contributors has the corporate power and authority to
carry on its business as it is now being conducted and to own or lease all of
its properties and assets and to conduct the Fleet Business in the manner
currently conducted by it. Fleet has full corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby and to perform its obligations hereunder, including without
limitation causing the Fleet Contributors (after approval by their respective
Boards of Directors). The execution and delivery of this Agreement and the
consummation of the transactions hereby have been duly and validly authorized by
the Board of Directors of Fleet and no other corporate proceedings on the part
of Fleet or any Fleet Contributor (other than approval by the respective Boards
of Directors of the Fleet Contributors other than Fleet) are necessary to
authorize the execution, delivery or performance of this Agreement or to
consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by Fleet and assuming that this Agreement has
been duly authorized, executed and delivered by the Company, this Agreement
constitutes a valid and binding agreement of Fleet, enforceable against it in
accordance with its terms (but subject to obtaining the approvals set forth in
Section 5.05 hereof), except that (i) enforcement may be subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws, now or
hereafter in effect, affecting creditors' rights generally and (ii) the remedy
of specific performance and injunctive and other forms of equitable relief may
be subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.
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SECTION 5.03 Absence of Certain Changes. Except as disclosed in the Fleet
Filings, since June 30, 1997 (a) Fleet and each of the Fleet Contributors have
conducted their respective businesses in the ordinary and usual course,
consistent with past practice and (b) no event has occurred or fact or
circumstance arisen that, individually or taken together with all other facts,
circumstances and events, has had, or is reasonably likely to have a Fleet
Material Adverse Effect.
SECTION 5.04 Reports. Fleet and each of its Subsidiaries have filed all
required forms, reports, definitive proxy statements, information statements,
and documents (including all prospectuses and all registration statements) with
the SEC required to be filed by it with respect to all periods commencing on or
after January 1, 1994 pursuant to the federal securities laws and the SEC rules
and regulations thereunder, all of which have complied in all material respects
with all applicable requirements of the Securities Act and the Exchange Act and
the rules and regulations promulgated thereunder (the "Fleet Filings"). None of
the Fleet Filings (excluding the financial statements included therein), at the
time filed or mailed, contained, with respect to the Fleet Business, any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements, in light of the
circumstances under which they were made, not misleading.
SECTION 5.05 Consents and Approvals; No Violation. Neither the execution
and delivery and performance of this Agreement by Fleet nor the consummation of
the transactions contemplated hereby by Fleet or any Fleet Contributor will (i)
conflict with or result in any breach or violation of any provision of the
respective Certificate of Incorporation or ByLaws (or other similar governing
documents) of Fleet or any of the Fleet Contributors, (ii) require Fleet or any
Fleet Contributor to obtain any consent, approval, authorization or permit of,
or filing with or notification to, any governmental or regulatory authority or
body, except (A) in connection with the HSR Act, if applicable, (B) pursuant to
the Exchange Act or the rules and requirements of the New York Stock Exchange,
Inc., (C) approval of state insurance departments, if applicable, or (D)
approval of Bank Authorities; (iii) result in a breach or violation of or
default (or give rise to any Lien, right of termination, unilateral modification
or amendment, cancellation or acceleration) under any of the terms, conditions
or provisions of any material note, license, Fleet Contributed Contract,
agreement or other instrument or obligation relating to the Fleet Business to
which Fleet or any of the Fleet Contributors is a party or by which Fleet, any
of the Fleet Contributors or any of their respective assets may be bound, except
for such breaches, violations or defaults (or Liens or rights of termination,
unilateral modifications or amendments, cancellations or accelerations) as to
which requisite waivers or consents have been obtained prior to the Closing or
which in the aggregate would not have a Fleet Material Adverse Effect; or (iv)
violate any order, writ, injunction, decree, judgment, ordinance, statute, rule,
law or regulation applicable to Fleet, any of the Fleet Contributors or any of
their respective properties or businesses, except for violations (other than of
orders, writs, injunctions or decrees issued against Fleet or any of the Fleet
Contributors or naming Fleet or any of the Fleet Contributors as a party) which
would not, individually or in the aggregate, have a Fleet Material Adverse
Effect.
SECTION 5.06 Litigation. There is no claim, action, arbitration,
investigation or proceeding pending or, to the Knowledge of Fleet, threatened
against Fleet or any of the Fleet Contributors and relating to the Fleet
Business, before any court or governmental or regulatory authority or body
acting in an adjudicative capacity, with respect to which there is a reasonable
likelihood of an adverse determination which (i) would have a Fleet Material
Adverse Effect, or (ii) challenges the validity or property or the transactions
contemplated in the Agreement. Neither Fleet nor any of the Fleet Contributors
is subject to any outstanding order, writ, judgment, stipulation, award,
injunction or decree of any court issued against Fleet or any of the Fleet
Contributors or naming Fleet or any of the Fleet Contributors as a party
relating to the Fleet Business which has or is reasonably likely to have a Fleet
Material Adverse Effect.
SECTION 5.07 Title to Properties; Encumbrances. Fleet and each of the
Fleet Contributors has good title to all of the Fleet Contributed Assets, free
and clear of all Liens, except for Permitted Liens.
SECTION 5.08 Licenses. Fleet and each of the Fleet Contributors has all
permits, licenses, authorizations, orders and approvals of, and has made all
filings, applications and registrations with, all governmental authorities that
are required to permit them to own and lease their properties and to conduct the
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Fleet Business as presently conducted; all such permits, licenses, certificates
of authority, orders and approvals are in full force and effect and, to Fleet's
Knowledge, no suspension or cancellation of any of them is threatened, which, in
any such case, would have a Fleet Material Adverse Effect
SECTION 5.09 Fleet Contributed Contracts. Fleet and each of the Fleet
Contributors has complied with all respective provisions of the Fleet
Contributed Contracts required to be complied with by it and neither Fleet nor
any of the Fleet Contributors nor to the Knowledge of Fleet any other party is
in default in any respect thereunder, and no event has occurred which but for
the passage of time or giving of notice of both would nor might constitute such
a default thereunder by Fleet or any of the Fleet Contributors except where such
noncompliance or defaults would, individually or in the aggregate, not have a
Fleet Material Adverse Effect, and there is no outstanding notice of default or
termination under any Fleet Contributed Contract. The Fleet Contributed
Contracts are valid, binding and enforceable in accordance with their respective
terms and the Contribution and the other transactions contemplated by this
Agreement will not affect the validity, enforceability and continuity of any
such Fleet Contributed Contract, if assignable and if properly assigned.
ARTICLE VI. COVENANTS
SECTION 6.01 Conduct of Business of the Company and Fleet.
(a) Except as contemplated by this Agreement, during the period from the
date of this Agreement until the Closing Date, the Company and the Company
Contributors will each conduct its operations relating to the Business according
to its ordinary and usual course of business, consistent with past practice.
(b) From the date hereof until the Closing Date, except as expressly
contemplated by this Agreement, without the prior written consent of Fleet, the
Company will not, and will cause each of the Company Contributors not to:
(i) Ordinary Course. Conduct the Business other than in the ordinary
and usual course or fail to use commercially reasonable efforts to preserve
the Business and the Company Contributed Assets and maintain their rights,
franchises and existing relations with customers, suppliers, employees,
including Company Credit Card Business Employees, and business associates,
or take any action reasonably likely to have a material adverse effect upon
the Company's or any of the Company Contributors' ability to perform any of
their respective obligations under this Agreement or to materially
adversely affect or delay the ability of any of the Company or the Company
Contributors to obtain any necessary approvals of any regulatory agency or
governmental body required for the transactions contemplated hereby.
(ii) Compensation; Employment Agreements; Etc. Enter into or amend or
renew any employment, consulting, severance or similar agreements or
arrangements (other than benefit plans) with any Company Credit Card
Business Employee, or grant any salary or wage increase or increase any
employee benefit (including incentive or bonus payments to any Company
Credit Card Business Employee) except (1) for normal individual increases
in compensation to employees in the ordinary course of business consistent
with past practice, base compensation increases not to exceed 6% per annum,
(2) for other changes that are required by applicable law, (3) to satisfy
contractual obligations existing as of the date hereof and disclosed on the
Company's Disclosure Schedule, (4) for employment arrangements for, or
grants of awards to, newly hired employees of the Business consistent with
past practice (which in no event shall include the execution of any
employment agreements with such employees); provided, however, that no such
agreement or arrangement shall cause the Company's representation in
Section 4.16(a) to fail to be true as of the Closing Date or (5) bonus
payments in the ordinary course of business consistent with past practice
and in accordance with bonus plans existing on the date of this Agreement.
For purposes of this paragraph 6.01(b)(ii), the limitations applicable to
Company Credit Card Business Employees who are Potential Company Credit
Card Business Employees (as identified as such as individuals or by
category or job description) shall cease to be applicable with respect to
any individuals designated by the Company 24 hours after notice of such
designation is provided by the Company to Fleet unless Fleet notifies the
Company of Fleet's determination to treat such individuals as
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Company Credit Card Business Employees with respect to whom Fleet is
required to offer employment on behalf of the LLC.
(iii) Benefit Plans. (A) Except as set forth on Schedule 6.01(b)(iii)
of the Company Disclosure Schedule, enter into, establish, adopt or amend
(except as may be required by applicable law) any pension, retirement,
stock option, stock purchase, savings, profit sharing, deferred
compensation, consulting, bonus, group insurance or other employee benefit,
incentive or welfare contract, plan or arrangement, or any trust agreement
(or similar arrangement) related thereto, in respect of the Company Credit
Card Business Employees, or (B) except as provided in Section 6.08(b)
hereof, take any action with respect to Company Credit Card Business
Employees to accelerate the vesting or exercisability of stock options,
restricted stock or other compensation or benefits under the Advanta Corp.
1992 Stock Option Plan (as amended and restated), or increase the
compensation or benefits, payable thereunder. For purposes of this
paragraph 6.01(b)(iii), the limitations applicable to Company Credit Card
Business Employees who are Potential Company Credit Card Business Employees
(as identified as such as individuals or by category or job description)
shall cease to be applicable with respect to any individuals designated by
the Company 24 hours after notice of such designation is provided by the
Company to Fleet unless Fleet notifies the Company of Fleet's determination
to treat such individuals as Company Credit Card Business Employees with
respect to whom Fleet is required to offer employment on behalf of the LLC.
(iv) Dispositions. Sell, transfer, mortgage, encumber or otherwise
dispose of or discontinue any of the Company Contributed Assets, except in
the ordinary course of business consistent with past practice and in a
transaction that individually or in the aggregate with all such other
disposition or discontinuances is not material to the Company Contributed
Assets taken as a whole, or in connection with securitizations of Managed
Receivables (provided that the benefits thereof are transferable to the LLC
at the Closing without further consents of any third parties) or Household
Receivables or in connection with the monthly sale of charged-off
receivables to an Affiliate of Commercial Financial Services, Inc. pursuant
to contractual obligations existing on the date of this Agreement or the
sale of receivables of bankrupt account holders consistent with past
practice.
(v) Acquisitions. Acquire all or any portion of, the assets, business,
or properties of any other entity which would be part of the Business and
included in the Company Contributed Assets, except in the ordinary course
of business consistent with past practice and in a transaction that
individually or in the aggregate with all such other acquisitions is not
material to the Business or the Company Contributed Assets.
(vi) Accounting Methods. Implement or adopt any material change in its
accounting principles, practices or methods as they apply to the Business
and are reflected in the Company Accounting Policy Manual identified in
Schedule 1.06(g), other than as may be required by GAAP or governmental
regulatory authorities as concurred in by the Company's Auditor, or change
any of its methods of reporting income and deductions for Federal income
tax purposes from those employed in the preparation of the Federal income
tax returns of the Company and the Company Contributors for the taxable
years ending December 31, 1997 and December 31, 1996 and, if applicable,
December 31, 1998, except as required by changes in law or regulation or
except to the extent such changes do not materially adversely effect the
federal income tax treatment of the Company Contributed Assets while owned
by the LLC.
(vii) Reconciliations. Fail to reconcile all general ledger accounts
consistent with past practice but in no event later than forty-five days
after the month end other than those accounts which are reconciled
quarterly (i.e., general ledger accounts 124007, 152619 and 157001).
(viii) Contracts. Except in the ordinary course of business consistent
with past practice, enter into or terminate any Material Company
Contributed Contract or amend or modify any Material Company Contributed
Contract or Material Information Technology Contract (other than renewals
of such contracts without material changes of terms), or amend any Company
Contributed Contract (other than a Material Company Contributed Contract or
a Material Information Technology Contract) in such a
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manner as to cause such Company Contributed Contract to become a "Material
Company Contributed Contract".
(ix) Indebtedness. As soon as practicable after appropriate SEC and
other regulatory approvals have been obtained, issue any notes in
connection with the Advanta National Bank note program unless such notes
may be transferred in accordance with the terms of this Agreement at the
Closing without any additional consent of the holder thereof.
(x) Credit Policies. Amend or revise in any material respect its
credit policies relating to the Business, including, without limitation;
underwriting, delinquency and charge-off policies.
(xi) Deferred Acquisition Costs. Amortize the DAC account other than
in a manner consistent with past practice or, except in the ordinary course
of business consistent with past practice, change in any material respect
its policies with respect to the transfer of prepaid advertising expenses
to the DAC account.
(xii) Solicitation Campaigns. Conduct solicitation campaigns other
than in the ordinary course of business consistent with past practice and
in substantial accordance with its current marketing plans (e.g., if the
current marketing plans call for four campaigns, then five campaigns would
not be a breach of this covenant but ten campaigns would be a breach) and
in a manner that such campaigns would not have a material adverse effect on
the LLC's ability to operate the Business after the Closing Date in
substantially the same manner as the Business is presently operated.
(xiii) Commitments. Agree or commit to do any of the foregoing.
(c) Except as contemplated by this Agreement, from the date of this
Agreement until the Closing, Fleet and the Fleet Contributors will each conduct
its operations relating primarily or solely to the Fleet Business according to
its ordinary and usual course of business, consistent with past practice.
SECTION 6.02 No Solicitation.
(a) From the date of this Agreement until the earlier of the Closing or the
termination of this Agreement, the Company and each of the other Company
Contributors and their respective executive officers shall not (and will use
their respective commercially reasonable efforts not to permit any of its other
officers, directors, agents or affiliates to) directly or indirectly (i)
solicit, encourage inquiries or proposals with respect to, engage in discussions
or negotiate with any person (whether such discussions or negotiations are
initiated by the Company or otherwise) or take any other action intended or
designed to facilitate the efforts of any person (other than Fleet) relating to
the possible acquisition of the Business (whether by way of contribution,
purchase of capital stock, purchase of assets or otherwise) (with any such
efforts by any such person, including a firm proposal to make such an
acquisition, to be referred to as an "Alternative Acquisition"), (ii) provide
information with respect to the Business to any person, other than Fleet,
relating to a possible Alternative Acquisition by any person, other than Fleet,
(iii) enter into an agreement with any person, other than Fleet, providing for a
possible Alternative Acquisition, or (iv) make or authorize any statement,
recommendation or solicitation in support of any possible Alternative
Acquisition by any person, other than by Fleet.
(b) The Company shall immediately cease any of its activities, discussions
or negotiations conducted prior to the date of this Agreement with any parties
other than Fleet with respect to any of the foregoing, and shall use its
commercially reasonable efforts to enforce any confidentiality or similar
agreement relating to an Alternative Acquisition. In the event the Company shall
receive a proposal for an Alternative Acquisition, it shall promptly inform
Fleet as to the Alternative Acquisition and the substance thereof (including the
identity of the person making such Alternative Acquisition), and advise Fleet of
any developments with respect to such Alternative Acquisition promptly after the
occurrence thereof.
(c) From the date of this Agreement until the earlier of the Closing or the
termination of this Agreement, Fleet and each of the other Fleet Contributors
and their respective executive officers shall not (and will use their respective
commercially reasonable efforts not to permit any of its other officers,
directors, agents or affiliates to) directly or indirectly (i) solicit,
encourage inquiries or proposals with respect to, engage in discussions or
negotiate with any person (whether such discussions or negotiations are
initiated by Fleet or
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otherwise) or take any other action intended or designed to facilitate the
efforts of any person (other than the Company) relating to the possible
acquisition of the Fleet Business (whether by way of contribution, purchase of
capital stock, purchase of assets or otherwise) (with any such efforts by any
such person, including a firm proposal to make such an acquisition, to be
referred to as an "Fleet Alternative Acquisition"), (ii) provide information
with respect to the Fleet Business to any person, other than the Company,
relating to a possible Fleet Alternative Acquisition by any person, (iii) enter
into an agreement with any person, other than the Company, providing for a
possible Fleet Alternative Acquisition, or (iv) make or authorize any statement,
recommendation or solicitation in support of any possible Fleet Alternative
Acquisition by any person, other than by the Company. Notwithstanding the
foregoing, Fleet may furnish information concerning the Fleet Business to a
person (other than the Company) and may negotiate and execute an agreement with
such person if counsel to Fleet advises the Board of Directors of Fleet, or a
committee thereof, that the failure to furnish such information or negotiate
with such person could subject the Fleet's directors to liability for breach of
their fiduciary duties. In the event Fleet shall receive a proposal for a Fleet
Alternative Acquisition, it shall promptly inform the Company as to any such
proposal. In addition, notwithstanding any other provisions of this paragraph
(c), the term Fleet Alternative Acquisition shall not include, and there shall
be no limitations whatsoever imposed upon Fleet, its officers, directors, agents
or affiliates with respect to, any proposal relating to the acquisition of Fleet
whether by merger, consolidation, purchase of assets or otherwise.
SECTION 6.03 Access to Information.
(a) Between the date of this Agreement and the Closing, upon reasonable
prior notice to the Company and subject to applicable laws relating to the
exchange of information, the Company will give Fleet and its authorized
representatives reasonable access during normal business hours to the offices
and other facilities and to the books and records of the Company and the Company
Contributors relating to the Business, and to the Company Credit Card Business
Employees and will permit Fleet to make such reasonable inspections during
normal business hours as it may reasonably request and will cause its officers
and those of the Company Contributors to furnish Fleet with such financial and
operating data and other information relating to the Business as Fleet may from
time to time reasonably request; provided, however, that all such access and
inspections shall be coordinated by Fleet with a designee of the Company (who
shall be identified to Fleet promptly following the date hereof) and shall be
conducted in such manner so as not to unduly interfere with the normal business
operations of the Company or any of the Company Contributors. Notwithstanding
the foregoing, neither the Company nor any of the Company Contributors shall be
required to provide access to or to disclose information where such access or
disclosure would jeopardize the attorney-client privilege of the institution in
possession or control of such information or contravene any law, rule,
regulation, order, judgment, decree or binding agreement entered into prior to
the date of this Agreement. The parties hereto will make appropriate substitute
disclosure arrangements to the extent practicable under circumstances in which
the restrictions of the immediately preceding sentence apply.
(b) All information received by Fleet and its representatives pursuant to
this Section 6.03 will be subject to the Letter Agreement dated May 12, 1997
between Fleet and the Company.
SECTION 6.04 Commercially Reasonable Efforts.
(a) Subject to the terms and conditions herein provided, each of the
parties hereto agrees to promptly effect all necessary filings under the Bank
Acts and, to the extent applicable, the HSR Act (which the parties shall file
with the United States Federal Trade Commission and the Antitrust Division of
the United States Department of Justice on or prior to November 20, 1997 if they
determine a filing is so required) and use its commercially reasonable efforts
to secure all government clearances (including by taking all reasonable steps to
avoid or set aside any preliminary or permanent injunction or other order of any
federal or state court of competent jurisdiction or other governmental
authority) to consummate and make effective the transactions contemplated by
this Agreement. Each of the parties shall have the right to review in advance,
and, to the extent practicable, each will consult with the other, in each case
subject to applicable laws relating to the exchange of information, with respect
to (i) all material written information submitted to the SEC or (ii)
descriptions of this Agreement and the transactions contemplated hereby
submitted to any rating agency or any other third party, in connection with the
transactions contemplated by this Agreement.
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(b) In exercising the foregoing right, each of the parties hereto agrees to
act reasonably and as promptly as practicable. Each of the parties hereto
further agrees to use its reasonable efforts to take, or cause to be taken, all
action, and to do, or cause to be done, all other things necessary, proper or
advisable under applicable laws and regulations to consummate and make effective
the transactions contemplated by this Agreement. In particular, subject to the
provisions of Section 11.09 of this Agreement, Fleet and the Company will use
their respective commercially reasonable efforts to obtain all other consents,
authorizations, orders and approvals required in connection with, and waivers of
any material violations, breaches and defaults that may be caused by, the
consummation of the Contribution or the other transactions contemplated by this
Agreement. For those of the Material Information Technology Contracts set forth
on the Company's Disclosure Schedule which require consent (or any other form of
conditional approval) from any third party prior to or after any assignment by
the Company, the Company and Fleet will each diligently and in good faith
exercise reasonable commercial efforts towards obtaining such consents or
satisfying any conditions imposed by any third party. Each party hereto further
agrees that it will consult with the other party hereto with respect to the
obtaining of all permits, consents, approvals, and authorizations of third
parties and governmental authorities necessary or advisable to consummate the
transactions contemplated by this Agreement, and each party will keep the other
party appraised of the status of material matters relating to the completion of
the transactions contemplated hereby.
SECTION 6.05 Public Announcements. Fleet and the Company will consult
with each other before issuing any press release or otherwise making any public
statements with respect to the Contribution, the transactions contemplated
hereby or this Agreement and shall not issue any such press release or make any
such public statement prior to such consultation, except as may be required by
law, regulation or the rules of any national securities exchange or The Nasdaq
Stock Market.
SECTION 6.06 Purchase of Shares. From the date hereof until the Closing
or the termination of this Agreement in accordance with its terms, and for a
period of twelve months thereafter, neither Fleet nor any Subsidiary or
Affiliate of Fleet shall acquire beneficial ownership (within the meaning of
Rule 13d-3 under the Exchange Act), except in a fiduciary capacity in cases
where the person for which it is acquiring beneficial ownership is not Fleet or
any such Subsidiary or Affiliate, of any shares of capital stock of the Company
without the prior written consent of the Company.
SECTION 6.07 Notification of Certain Matters.
(a) The Company shall give prompt notice to Fleet, and Fleet shall give
prompt notice to the Company, of (i) the occurrence or nonoccurrence of any
event the occurrence or non-occurrence of which would be likely to cause any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect at or prior to the Closing, (ii) any failure
of the Company or Fleet, as the case may be, to comply with or satisfy in any
material respect any covenant, condition or agreement to be complied with or
satisfied by it hereunder, (iii) any notice or other communication from any
third party alleging that the consent of such third party is required in
connection with the transactions contemplated by this Agreement, (iv) the
receipt of written notice from any governmental agency (A) asserting that the
Company or any of the Company Contributors is not in material compliance with
any statutes, regulations, ordinances or rules in connection with the operation
of the Business or (B) threatening to revoke any material license, franchise,
permit, membership privilege or governmental authorization necessary for the
operation of the Business or (v) any Material Adverse Effect or Fleet Material
Adverse Effect, as applicable.
(b) The Company and Fleet shall confer on a regular and frequent basis with
each other with respect to the Business, the Fleet Business and other matters
relevant to the Contribution, and the other transactions contemplated by this
Agreement, and Fleet and the Company shall promptly advise the other, orally and
in writing, of any change or event, including, without limitation, any
complaint, investigation or hearing by any governmental entity (or communication
indicating the same may be contemplated) or the institution or threat of
litigation, having, or which, insofar as can be reasonably foreseen, would have,
a Material Adverse Effect or a Fleet Material Adverse Effect.
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SECTION 6.08 Employment Matters.
(a) Employment Matters
(1) Between the date hereof and the Closing Date, Fleet shall offer,
on behalf of the LLC, employment effective as of the close of business on
the Closing Date to all Company Credit Card Business Employees. Company
Credit Card Business Employees who accept such offer of employment shall
hereinafter be referred to as the "Transferred Employees."
(2) If any Company Credit Card Business Employee who is, on the
Closing Date, absent on an authorized leave in accordance with Company
policies, seeks to return to active employment, within the period that such
Company Business Card Employee's reemployment rights are protected by law,
Fleet, on behalf of the LLC, shall offer immediate employment to such
Company Credit Card Business Employee; provided that Fleet's obligation to
offer employment on behalf of the LLC to any Company Credit Card Business
Employee whose authorized leave was based upon a medical condition of such
Company Credit Card Business Employee shall be subject to the Company
Credit Card Business Employee being medically capable to perform the
essential functions of the position occupied immediately before such leave.
For purposes of this Section 6.08(a)(2), an authorized leave shall mean
short-term disability, maternity, military, family and medical leaves and
such other leaves of absence where the opportunity to return to active
employment is subject to statutory requirements. Any Company Credit Card
Business Employee who accepts the LLC's offer of employment pursuant to
this Section 6.08(a)(2) shall thereafter be considered a Transferred
Employee for all purposes of this Agreement.
(3) Fleet shall not be required to offer employment on behalf of the
LLC to any Credit Card Business Employee who is (i) on short-term
disability on the date hereof and who thereafter becomes eligible for long
term disability benefits without returning to active employment, (ii) on
long term disability from Company or any of its Affiliates on the date of
this Agreement or (iii) eligible to receive long term disability benefits
on or before the Closing Date.
(4) Nothing in this Agreement shall be deemed to require or guaranty
the employment of any Company Credit Card Business Employee to be continued
by the LLC for any particular period of time after the Closing Date.
Employment of the Transferred Employees by the LLC shall be employment "at
will" and nothing herein shall be construed to be an employment agreement
for the benefit of any Company Credit Card Business Employee, or to
interfere with the right of Fleet or the LLC to terminate the employment of
any Company Credit Card Business Employee.
(5) The LLC will reimburse the Company and the Company Contributors in
connection with any severance costs incurred by any of them with respect to
Company Credit Card Business Employees who (i) are not offered employment
pursuant to this Section 6.08(a) on terms consistent with the Change of
Control Plans and (ii) do not accept employment with the LLC.
(b) Company Benefits. Between the date hereof and the Closing Date, the
Company shall take reasonable actions necessary to provide that:
(1) Effective on the Closing Date, the Advanta Corporation Employee
Savings Plan account balances of all Company Credit Card Business Employees
shall become fully vested.
(2) The Company, or its Affiliates, pay, or cause to be paid,
consistent with past practice, all claims by Transferred Employees and
their dependents for medical and dental benefits covered by any of the
Company's medical or dental plans which relate to services rendered on or
before the Closing Date to the extent such plans would honor such claims in
accordance with their terms.
(3) The Advanta Management Incentive Plans with Stock Election (II,
III and IV) ("AMIP") are amended as provided in Schedule 6.01(b)(iii).
(4) The Advanta Corp. 1992 Stock Option Plan (as amended and restated)
is amended, as necessary, to provide for the benefits described in Schedule
6.08(b)(4).
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(5) The Company makes its election to distribute funds held by it
pursuant to its Executive Deferral Plan to Company Credit Card Business
Employees by lump sum or over three years, as determined by the Company.
(6) The Change of Control Plans assumed by the LLC pursuant to Section
6.08(c)(2)(i) are amended as provided in Schedule 6.01(b)(iii).
(7) On the Closing Date, the Company shall pay 50% of the aggregate
benefits payable to those persons listed on Schedule 6.08(c) hereof
pursuant to the terms of those letter agreements dated as of April 28, 1997
between each such person and the Company (the "Company Letter Agreement
Payments").
(c) LLC Benefits. After the Closing Date, Fleet will ensure that:
(1) the LLC will maintain employee benefit plans, programs, policies
and arrangements for the Transferred Employees on terms and conditions
generally applicable to similarly situated employees of Fleet ("FFG
Benefits").
(2) notwithstanding Section 6.08(c)(1):
(i) with respect to the Transferred Employees, the LLC shall assume
the Advanta Employees Change of Control Severance Plan and the Advanta
Senior Management Change of Control Severance Plan (the "Change of
Control Plans") and will pay benefits to the Transferred Employees in
accordance with such Change of Control Plans;
(ii) the LLC shall pay 50% of the aggregate of all Company Letter
Agreement Payments; and
(iii) the LLC and the Company shall cooperate in order to cause, as
soon as practicable following the Closing Date, a trustee to trustee
transfer of the account balances of all Transferred Employees held under
the Advanta Corp. Employee Savings Plan to a defined contribution plan
meeting the requirements of Section 401(a) of the Internal Revenue Code
of 1986, as amended (the "Code"), maintained for the benefit of
employees of the LLC (the "LLC Plan"), such transfer to consist of the
cash or other investments held in such accounts; provided, however, that
no such transfer shall be made with respect to any Transferred Employee
who is not, as of the date of such transfer, an employee of the LLC. The
Company and the LLC shall cooperate in all matters related to such
transfer, including making appropriate amendments to the plans involved
and in timely filing with the Internal Revenue Service or other
governmental or regulatory agencies such returns or other documentation
as may be required. All liabilities associated with the accounts of
Transferred Employees that are actually transferred to the LLC Plan
shall be assumed by the LLC Plan;
(3) Transferred Employees (to the extent otherwise eligible) shall be
given credit for all service with the Company and its Affiliates (and
predecessors) to the same extent as such service was credited for such
purpose by the Company and its Affiliates, under all FFG Benefits for
purposes of eligibility and vesting but not for benefit accrual purposes;
provided, however, that for all purposes under the Fleet Financial Group,
Inc. Pension Plan, including, but not limited to, eligibility, vesting and
benefit accrual, each Transferred Employee shall be considered a new
employee of Fleet as of the close of business on the Closing Date;
(4) each Transferred Employee's current level of vacation or paid time
off entitlement will be grandfathered, so that vacation or paid time off
entitlement under the LLC's vacation policy will never be less than what
such Transferred Employee is entitled to on the date hereof; and
(5) the LLC shall waive any limitations for preexisting conditions
under its medical, dental and disability plans with respect to any
Transferred Employee provided such Transferred Employee was participating
in a comparable benefit plan of the Company or any of its Affiliate on the
Closing Date. In addition, the LLC shall waive any service-based
eligibility requirement for its employee benefit plans with respect to any
Transferred Employee who is otherwise eligible for such plan and was
participating in a comparable benefit plan of Company or any of its
Affiliates on the Closing Date.
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(d) Company Obligations. The Company shall pay (including, without
limitation, by issuance or vesting of stock) to the Transferred Employees or
reimburse the LLC (if the Company and Fleet agree to cause the LLC to pay) all
amounts due under AMIP with respect to the 1996 Bonus Protection Payment, the
1997 Bonus Protection Payment and the 1997 Bonus Payment no later than such time
as the Company otherwise makes payments under such plans.
(e) Employee Records. After Closing, the parties hereto will cooperate
with each other in the administration of all applicable employee compensation
and benefit plans including providing reasonable access to any and all records
necessary to administer all employee compensation and benefit plans.
(f) No Third Party Beneficiaries; No LLC Limitations. Nothing expressed or
implied in this Section 6.08 shall create any third party beneficiary or other
rights in any Company Credit Card Business Employee in respect of continued
employment with Company, the LLC or any of their respective Affiliates or with
respect to any benefits that may be provided, directly or indirectly, from the
Company or under any FFG Benefits. Additionally, notwithstanding anything
contained herein to the contrary, no provision of this Agreement shall
constitute a limitation on rights to amend, modify or terminate, after the
Closing Date, any specific plan or arrangement of Company, the LLC or any of
their respective Affiliates, except to the extent that comparability
requirements as to a type of plan, program, policy or arrangement may create
such a limitation or such limitation is imposed under the terms of any plan
expressly assumed by the LLC.
SECTION 6.09 Tax Reporting. The Company and the Company Contributors and
Fleet and the Fleet Contributors agree that they shall treat the Contribution as
an exchange for membership interests in the LLC that will qualify for
nonrecognition of gain or loss to each contributor and the LLC pursuant to the
provisions of Subchapter K of the Code and, accordingly, the parties hereto
further agree that each of them and the LLC will report the income tax
consequences of the Contribution in a manner fully consistent with viewing the
Contribution as resulting in the nonrecognition of gain or loss and further
agree that they will not take any income tax position inconsistent with viewing
the Contribution as resulting in the nonrecognition of gain or loss unless such
position would subject the reporting person to a penalty.
SECTION 6.10 Real Estate Matters. Title to owned real estate which is
part of the Company Contributed Assets and Fleet Contributed Assets will be
conveyed by special warranty deed, free and clear of all Liens, except Permitted
Liens to the extent valid and enforceable. Real estate taxes on the real estate
which is part of the Company Contributed Assets or Fleet Contributed Assets,
minimum water and sewer rents, rents under any leases in which the applicable
contributor is the landlord and other items customarily apportioned in the
jurisdiction in which the real estate is situate, shall be apportioned pro rata
between the contributor and the LLC on a per diem basis as of the close of
business on the Closing Date.
SECTION 6.11 Cooperation in Obtaining Approval and Consents.
(a) The LLC and Fleet agree, and Fleet shall cause Fleet's Affiliates to
agree, to cause Fleet National Bank, at the option of the Company, to assume or
to join as joint and several indemnitors, and irrevocable and unconditional
guarantor and surety of the obligations of the LLC and Fleet Credit Card Bank
(i) to the extent requested by the applicable trustees or rating agencies and
any other party whose consent, approval or action is required in connection with
transfer of the assets and liabilities of the Company and the Company
Contributors relating to Master Trust I and Master Trust II; and (ii) with
respect to any obligations of Advanta National Bank which are part of the
Company Transferred Liabilities, including, without limitation, those arising
under promissory notes and certificates of deposit.
(b) Upon the terms and subject to the conditions herein provided, each of
the parties hereto agrees to use all reasonable efforts to take, or cause to be
taken, all action, to do, or cause to be done, and to assist and cooperate with
the other party hereto in doing, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated by this Agreement,
including, but not limited to, the obtaining of all necessary consents,
approvals or waivers from holders of notes of Advanta National Bank. In
connection therewith, the Company will prepare and file with the applicable Bank
Authorities a solicitation statement with respect to the notes, if necessary.
Fleet will furnish the Company with such information, including, but not limited
to,
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financial information regarding Fleet and its Subsidiaries, as the Company may
reasonably request for incorporation into such solicitation materials, and shall
take all such other actions as the Company may reasonably request in connection
with any such action.
(c) The Company and Fleet agree to cooperate in good faith to determine
which contracts relating to Information Technology should be assigned to the
LLC, retained by the Company, split to the extent possible between the Company
and the LLC and/or shared by the Company and the LLC.
SECTION 6.12 Good Faith Negotiation. The parties shall use their best
efforts to negotiate the form of the agreements and documents referred to in
Section 1.03 which are to be executed concurrently with or prior to the Closing.
SECTION 6.13 Actions of Company Contributors, Fleet Contributors and
Others. The Company hereby agrees that it will use its best efforts to cause
the Company Contributors and Fleet hereby agrees that it will use its best
efforts to cause the Fleet Contributors, to take any and all such actions (as
sole shareholder or otherwise) as they are required to take pursuant to this
Agreement.
SECTION 6.14 Supplements to Schedules.
(a) Prior to the Closing Date, each of the Company and Fleet shall promptly
supplement or amend their applicable Disclosure Schedule with respect to any
matter hereafter arising which, if existing or occurring at the date of this
Agreement, would have been required to be set forth or described in the
schedules and shall supplement or delete from the lists of Company Contributed
Assets, Fleet Contributed Assets, Company Transferred Liabilities and Fleet
Transferred Liabilities any assets or liabilities which should be so added or
deleted in accordance with the terms of this Agreement. Solely for purposes of
determining the accuracy of representations and warranties of the Company and
Fleet contained in this Agreement for the purpose of determining the fulfillment
of the conditions set forth in Sections 8.02(b) and 8.03(b), the Disclosure
Schedules delivered by the Company and Fleet, as applicable, shall be deemed to
include only that information contained therein on the date of this Agreement
and shall be deemed to exclude any information contained in any subsequent
supplement or amendment thereto.
(b) For purposes of determining satisfaction of the closing condition set
forth in Section 8.03(f), Fleet shall have the exclusive right to review any
supplements to the list of Company Contributed Contracts and to determine, in
its reasonable discretion (applying substantially the same standards of
materiality used to establish the list of Material Company Contributed Contracts
as of the date of this Agreement), whether any additional Company Contributed
Contracts should be deemed Material Company Contributed Contracts; provided,
however, that in no event shall any such additional Company Contributed Contract
be deemed to be a Material Company Contributed Contract unless Fleet gives the
Company written notice thereof within five Business Days after a copy of such
contract is submitted to Fleet.
SECTION 6.15 Non-Competition and Non-Solicitation.
(a) During the period beginning on the Closing Date and ending on the fifth
anniversary thereof (the "Non-Competition Period"), except as required in
connection with the Retained SmartMove Accounts and the Rewards Accelerator
Accounts, neither the Company nor any of its Subsidiaries or any entity which is
an Affiliate of the Company (individually and collectively, the "Company
Parties") shall directly or indirectly engage in any consumer credit card
business or activity which is in competition with the Business or the Fleet
Business in the United States; provided, however, that ownership of less than 2%
of the outstanding capital stock of any publicly traded corporation which is in
direct competition with the Business or the Fleet Business in the United States
shall not violate the foregoing agreement not to compete.
(b) During the period beginning on the Closing Date and ending on the fifth
anniversary thereof, neither the Company nor any of its Subsidiaries shall,
directly or indirectly use any past or present customer list of the Business or
any list of prospective customers generated by use of the know-how, trade
secrets or other intellectual property of the Business (whether in hard copy or
data file or otherwise) to solicit, directly or indirectly, any customer of the
Business or the Fleet Business for any consumer debt product or in its business
credit card operations; provided, however that nothing in this Section 6.15
shall require the Company or any of
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its Affiliates to destroy any customer lists relating to the Business that it
may have in its possession (whether in hard copy, data file or otherwise) or to
sort or cull any customer list used by the other businesses of the Company or
its Affiliates and nothing in this Section 6.15(b) shall restrict the general
use of know-how by the Company in the conduct of its business.
(c) For the period beginning as of the close of business on the Closing
Date and ending on the third anniversary thereof, neither the Company nor any of
its Subsidiaries shall, directly or indirectly, solicit for employment, retain
as an independent contractor or consultant, induce to terminate employment with
Fleet, any of its Subsidiaries or the LLC or otherwise interfere with any
employee of Fleet, any of its Subsidiaries or the LLC, in all such cases,
engaged in the Business or the Fleet Business; provided, however, that persons
solicited by the Company and its Subsidiaries pursuant to the use of any general
advertisements or general solicitations not specifically directed to employees
of Fleet, any of its Subsidiaries or the LLC shall not violate the terms of this
covenant.
(d) For the period beginning as of the close of business on the Closing
Date and ending on the third anniversary thereof, neither Fleet nor any of its
Subsidiaries shall, directly or indirectly, solicit for employment, retain as an
independent contractor or consultant, induce to terminate employment with the
Company or any of its Subsidiaries or otherwise interfere with any employee of
the Company or any of its Subsidiaries; provided, however, that persons
solicited by Fleet and its Subsidiaries pursuant to the use of any general
advertisements or general solicitations not specifically directed to employees
of the Company or any of its Subsidiaries shall not violate the terms of this
covenant.
SECTION 6.16 Access. From and after the Closing Date, the LLC, Fleet and
the Fleet Contributors shall give the Company and the Company Contributors,
without charge, reasonable, prompt and timely access to the Company Contributed
Assets, books and records relating thereto, the Company Credit Card Business
Employees and First Data Resources, Inc., all as may be reasonably requested by
the Company, in order to enable the Company and the Company Contributors to (i)
administer and otherwise deal with the Retained SmartMove Accounts and the
Credit Insurance Business; (ii) participate in the preparation of the Closing
Balance Sheet and the resolution of any disputes relating thereto; (iii) permit
the performance of any covenants required to be performed under this Agreement
after the Closing Date by the Company or any Company Contributor; (iv) permit
the preparation of any Tax Return or other document required to be filed with
any governmental authority; (v) respond to any necessary proceeding or claim
made, or request for information, by any governmental authority or any third
party; and (vi) permit the processing or responding to any claim made under this
Agreement, and the LLC, Fleet and the Fleet Contributors shall reasonably
cooperate with the Company and the Company Contributors, if requested, in
connection with the foregoing. Notwithstanding the foregoing, neither the LLC,
Fleet nor any of the Fleet Contributors shall be required to provide access to
or to disclose information where such access or disclosure would jeopardize the
attorney-client privilege of the institution in possession or control of such
information or contravene any law, rule, regulation, order, judgment, decree or
binding agreement entered into prior to the date of this Agreement.
SECTION 6.17 SmartMove and Rewards Contribution.
(a) At any time, and from time to time, on or after the Closing Date, the
Company and the Company Contributors may tender to the LLC, and the LLC will
accept and assume, within 15 days after such tender, pursuant to documents
relating thereto in form reasonably satisfactory to the LLC and the other
parties thereto, Qualified SmartMove Accounts subject to certain liabilities.
For purposes of this Section 6.17, "Qualified SmartMove Accounts" are Retained
SmartMove Accounts as to which (i) a release of all claims in respect of
SmartMove Promotions has been obtained, (ii) a final judgment from which any
right to appeal has lapsed has been rendered in connection with litigation
relating to such Retained SmartMove Account or (iii) full restitution has been
made in respect of the repricing of such Retained SmartMove Accounts or some
other event (including, without limitation, the passage of time) shall have
occurred relating to such Retained SmartMove Accounts and, in either such case
in the reasonable judgment of the LLC, no further liability to the LLC exists in
respect of such Retained SmartMove Accounts or an indemnity therefor from the
Company in form and substance reasonably acceptable to the LLC is satisfactory
to satisfy any such remaining liability. The book value of the liabilities
assigned by the Company and the Company Contributors and assumed by the
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LLC with respect to such Qualified SmartMove Accounts shall equal the product of
the amount of credit card receivables relating to such Qualified SmartMove
Accounts multiplied by 1.0438. Such liabilities will be composed of interest
bearing liabilities with characteristics consistent with Section 1.06(a).
(b) At any time after the Closing Date, the Company and the Company
Contributors may tender to the LLC, and the LLC will accept and assume, within
fifteen (5) days of such tender, pursuant to documents relating thereto in form
reasonably satisfactory to the LLC and the other parties thereto, Qualified
Rewards Accelerator Accounts subject to certain liabilities. For purposes of
this Section 6.17, "Qualified Rewards Accelerator Accounts" are credit card
accounts which were Rewards Accelerator Accounts on the Closing Date but
subsequently ceased to be Rewards Accelerator Accounts. The book value of the
liabilities assigned by the Company and the Company Contributors and assumed by
the LLC with respect to such Qualified Rewards Accelerator Accounts shall equal
the product of the amount of credit card receivables relating to such Qualified
Rewards Accelerator Accounts multiplied by 1.0438. Such liabilities will be
composed of interest bearing liabilities with characteristics consistent with
Section 1.06(a).
SECTION 6.18 Cooperation in Litigation.
(a) Fleet agrees to take commercially reasonable actions necessary to make
Transferred Employees who are knowledgeable with respect to the matter in
question available to the Company after the Closing Date with respect to any
action, suit, proceeding or investigation ("Actions") to which the Company is a
party or is otherwise involved with regard to the Business, whether commenced
before or after the Closing Date, including, without limitation, Actions
relating to Retained SmartMove Accounts. Fleet agrees to use its reasonable
efforts to provide that any such employees who terminate their employment with
the LLC or any of its Affiliates and enter into termination agreements or
similar agreements, arrangements or understandings, will be obligated to
continue to assist the Company in the defense of any such matters, whether as
consultants, expert witnesses, or otherwise. Fleet further agrees to use its
commercially reasonable efforts to ensure that all decisions as to the legal
representation of any such Transferred Employees in connection with any such
Actions shall be made by the Company, exclusive of joint representation. The
Company agrees to reimburse the LLC for reasonable out-of-pocket expenses
incurred by the LLC in connection with requests by the Company pursuant to this
Section 6.18(a) (excluding salary and fringe benefits paid to such employees).
(b) Fleet and its Affiliates will not provide information relating to the
Business or its operations prior to the Closing Date to any person if Fleet has
Knowledge that such information is being requested in connection with any
litigation, arbitration or other proceeding in which the Company or any of the
Company's Affiliates is a party. If Fleet or any of its Affiliates becomes
legally compelled (by deposition, interrogatory, request for documents,
subpoena, civil investigative demand or otherwise) to disclose such material,
Fleet will provide the Company with prompt prior written notice of such
requirement so that the Company may seek a protective order or other appropriate
remedy to prevent the dissemination of such information. In the event that such
protective order or other remedy is not obtained, or that the Company waives
compliance with the terms hereof, Fleet agrees to furnish only such information
which it reasonably believes is legally required.
(c) The Company and Fleet shall cooperate, to the extent reasonably
requested by either of them, in the handling and disposition of any Actions,
whether or not listed on the Company Disclosure Schedule and whether or not
pending or threatened prior to the Closing, that arise out of or are related to
any event or occurrence with respect to the Business prior to the Closing;
provided, however, that the party ultimately responsible for discharging such
Action shall have the authority to take such actions as it deems necessary or
advisable, in its sole discretion, to discharge such Action subject, however, to
the provisions of this Agreement.
SECTION 6.19 Preservation of and Access to Books and Records. Fleet shall
cause the LLC to preserve and keep all books and records of the Business and all
information relating to the accounting, business, financial and Tax affairs of
the Business in existence on the Closing Date or which come into existence after
the Closing Date but relate to the Business prior to the Closing Date for a
period of seven (7) years thereafter, or for any longer period (i) as may be
required by any federal, state, local or foreign governmental body or agency,
(ii) as may be reasonably necessary with respect to the prosecution or defense
of any audit, suit, action, litigation or administrative arbitration or other
proceeding or investigation that is then pending or threatened, or (iii) that is
equivalent to the period established by any applicable statute of
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limitations (or any extension or waiver thereof) with respect to matters
pertaining to Taxes. For a period of four (4) years following the seven (7) year
period specified above, if the LLC wishes to destroy such records, the LLC shall
first provide the Company the opportunity to take possession of same.
SECTION 6.20 Guarantees. Fleet shall take such commercially reasonable
actions as necessary to cause Fleet National Bank to replace the Company under
the Guarantees listed in Schedule 6.20 and to ensure that the Company has no
remaining obligation under such guarantees after the Closing Date.
SECTION 6.21 Pro Forma Statements of Operation. The Company shall deliver
to Fleet prior to the date of mailing of the Proxy Statement to stockholders of
the Company, a pro-forma statement of operations of the Business for the year
ended December 31, 1996 and the nine months ended September 30, 1997 (the "Pro
Forma Statement of Operations"). The Pro Forma Statement of Operations will
reflect pretax earnings for the nine month period ended September 30, 1997 of no
less than $30 million.
SECTION 6.22 Employee Designations. It is acknowledged that Schedule
2.01(x) does not, in certain instances, give specific names of employees, but
rather the number of employees who will be part of the Company Credit Card
Business Employees to fill positions in particular departments (the "Potential
Company Credit Card Business Employees"). Fleet shall use its best efforts to
provide the Company with the names of specific employees to fill such positions
within fifteen days after the date of this Agreement, and in any event shall
give all of such names to the Company within 30 days after the date of this
Agreement (it being agreed that all such selections shall be subject to the
reasonable approval of the Company). If all of such names are not given to the
Company within 30 days after the date of this Agreement, then the Company shall
be permitted to designate those employees from such departments who will fill
the positions for which names of specific employees were not given by Fleet
within such 30 day period. Upon the identification and approval of Potential
Company Credit Card Business Employees, such employees shall be deemed to be
Company Credit Card Business Employees.
SECTION 6.23 VISA and MasterCard. The Company shall take such
commercially reasonable actions as reasonably requested by the LLC and as
necessary to obtain any required consent of VISA USA Inc. ("VISA") and
MasterCard International Inc. to the use of the bin numbers of Advanta National
Bank in respect of the Company Contributed Assets; provided, however, that the
Company shall not be required to take any actions which would reasonably be
expected to affect adversely the ability of the Company to obtain a refund of
its sixteen million dollar ($16,000,000) deposit with VISA or to materially and
adversely effect the Company's ability to hold the Retained SmartMove Accounts
and the Rewards Accelerator Accounts.
SECTION 6.24 Strategic Business Assets. From and after the Closing Date,
the parties agree that the strategic business assets identified on Annex A-8 to
Schedule 1 as shared assets (the "Shared Strategic Assets") may be used by each
of the LLC and the Company in their respective businesses; provided, however,
that, except in connection with a sale, transfer or other disposition of a
substantial portion of the assets of a business unit or the Company as a whole,
the Company shall not sell, transfer or otherwise dispose of such Shared
Strategic Assets in any manner which would permit any person not Affiliated with
the Company to the use of such assets in any manner which would compete with the
consumer credit card business of the LLC.
ARTICLE VII. INSURANCE
SECTION 7.01 Liabilities to be Retained. The parties hereto acknowledge
that the Non-Assumed Liabilities include any and all obligations of the Company
and the Company Contributors to pay claims which were (for any particular claim)
incurred on or prior to the Closing Date under the credit insurance policies and
debt cancellation contracts sold by or on behalf of the Company to certain of
its customers on or before the Closing Date (the "Credit Insurance Business").
Notwithstanding the fact that the accounts receivable from certain of these
customers and the credit cards issued to such customers (including all
contractual rights
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relating thereto) and the deferred acquisition costs associated with the
Business (including the Credit Insurance Business) are included as part of the
Contributed Assets, the parties hereto agree as follows:
(a) The LLC, or an Affiliate thereof, pursuant to the terms of the
Administration Agreement shall administer all claims made with respect to the
Credit Insurance Business.
(b) Within 5 Business Days' notice of receipt of notice thereof, together
with appropriate backup documentation, the Company shall pay, or cause one of
its Affiliates to pay, any and all proper Credit Insurance Business claims which
were (for any particular claim) incurred on or prior to the Closing Date,
whether or not the claim is made on or after the Closing, and shall promptly
reimburse Fleet and its Affiliate if any one of them shall pay any such claim on
behalf of the Company.
SECTION 7.02 Assets to be Retained. The parties hereto acknowledge that
the assets retained by the Company and the Company Contributors include all
reserves relating to the Credit Insurance Business and the Company Contributed
Assets include all deferred acquisition costs related to the Credit Insurance
Business.
SECTION 7.03 Insurance Proceeds. The parties agree that in the event
insurance proceeds in respect of policies with American Bankers Life, or other
insurance companies, are paid to such party or any of its Affiliates in respect
of liabilities of the other party or its Affiliates, such proceeds will be
promptly paid, without setoff, to the other party.
ARTICLE VIII. CONDITIONS TO CLOSING
SECTION 8.01 Conditions to Each Party's Obligation to Effect the
Contribution. The respective obligations of each party to effect the
Contribution and the other transactions contemplated by this Agreement are
subject to the satisfaction or waiver, where permissible, prior to or
concurrently with the Closing, of each of the following conditions:
(a) This Agreement shall have been adopted by the affirmative vote of a
majority of the votes entitled to be cast by the holders of the Class A Shares
and the Class A Preferred Shares, voting together as a single class;
(b) All regulatory approvals required to be obtained by such party to
consummate the transactions contemplated hereby, including, without limitation,
any required approvals of the Bank Authorities, shall have been obtained and
shall remain in full force and effect and all statutory waiting periods in
respect thereof shall have expired; and no such approvals shall contain any
conditions or restrictions which the Board of Directors of either Fleet or the
Company reasonably determines in good faith will have a Material Adverse Effect
or a Fleet Material Adverse Effect or a material limitation on the ability of
Fleet to operate the LLC or the Company to redeem shares of its capital stock
following consummation of the transactions contemplated by this Agreement;
(c) No statute, rule or regulation shall have been enacted or promulgated
by any governmental authority of competent jurisdiction which prohibits the
consummation of the Contribution and the other transactions contemplated by this
Agreement;
(d) There shall be no order, judgment, decree or injunction (whether
temporary, preliminary or permanent) of a United States Federal or state court
of competent jurisdiction in effect precluding or materially restricting or
making illegal consummation of the Contribution and the other transactions
contemplated by this Agreement;
(e) The Ancillary Agreements (other than the Lease Agreements) shall have
been executed, provided that this paragraph (e) shall not be a condition to the
obligations of any party to effect the Contribution and the other transactions
contemplated by this Agreement if such party has not negotiated in good faith
and used its best efforts to negotiate and execute such agreements.
SECTION 8.02 Conditions to the Company's Obligation to Effect the
Contribution. The obligations of the Company and the Company Contributors to
effect the Contribution and the other transactions
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contemplated by the Agreement are also subject to the satisfaction or waiver,
where permissible, prior to or concurrently with the Closing of each of the
following conditions:
(a) Fleet and the Fleet Contributors shall have performed in all material
respects their agreements and covenants contained in or contemplated by this
Agreement which are required to be performed by them at or prior to the Closing;
(b) The representations and warranties of Fleet set forth in this Agreement
(without regard to any Fleet Material Adverse Effect qualification in such
representation or warranty) shall be true and correct (i) on and as of the date
hereof and (ii) on and as of the Closing Date, with the same effect as though
such representations and warranties had been made on and as of the Closing Date,
except for representations and warranties that expressly speak only as of a
specific date or time which need only be true and correct as of such date and
time, and except for such failures to be true and correct as individually or in
the aggregate will not have a Fleet Material Adverse Effect;
(c) The Company and the Company Contributors shall have sufficient
liabilities as provided in Schedule 1.06(a) which may be transferred to the LLC
in accordance with the terms of this Agreement to permit the Closing Balance
Sheet to reflect the Agreed Deficit; provided, however, that in the event the
Company is unable to satisfy this condition and all other conditions to Closing
have been satisfied or waived, then the Closing shall be delayed until a date
which is within 20 Business Days after the Company is first able to satisfy this
condition, with the exact date and time of Closing to be specified by the
Company by notice to Fleet given at least three Business Days prior thereto;
(d) The Company shall have received a certificate signed on behalf of Fleet
by an executive officer of Fleet, dated as of the Closing Date, to the effect
that the conditions set forth in Sections 8.02(a) and 8.02(b) hereof have been
satisfied;
(e) The Company shall have received the opinion of ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇,
counsel to Fleet, relying on Pennsylvania counsel as necessary, in form and
substance reasonably satisfactory to the Company.
SECTION 8.03 Conditions to Fleet's Obligation to Effect the
Contribution. The obligations of Fleet and the Fleet Contributors to effect the
Contribution and the other transactions contemplated by this Agreement are
subject to the satisfaction or waiver, where permissible, prior to or
concurrently with the Closing of each of the following conditions:
(a) The Company and the Company Contributors shall have performed in all
material respects their agreements and covenants contained in or contemplated by
this Agreement which are required to be performed by them at or prior to the
Closing;
(b) The representations and warranties of the Company set forth in this
Agreement (without regard to any Material Adverse Effect qualification in such
representation or warranty) shall be true and correct (i) on and as of the date
hereof and (ii) on and as of the Closing Date, with the same effect as though
such representations and warranties had been made on and as of the Closing Date,
except for representations and warranties that expressly speak only as of a
specific date or time which need only be true and correct as of such date and
time, and except for such failures to be true and correct as will individually
or in the aggregate not have a Material Adverse Effect; provided, however, that
for purposes of this paragraph (b), any change in the financial condition or
results of operations of the Business shall be deemed not to result in a breach
of any of the representations and warranties of the Company set forth in this
Agreement;
(c) Fleet shall have received a certificate signed on the Company's behalf
by an executive officer of the Company, dated the Closing Date, to the effect
that the conditions set forth in Sections 8.03(a) and 8.03(b) hereof have been
satisfied;
(d) Fleet shall have received the opinion of Wolf, Block, ▇▇▇▇▇▇ and
▇▇▇▇▇-▇▇▇▇▇ LLP, counsel to the Company, in form and substance reasonably
satisfactory to Fleet, including an opinion regarding the valid transfer of
Master Trust I and Master Trust II;
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(e) Since the date of this Agreement, no bona fide claim which challenges
the consummation of the transactions contemplated by this Agreement shall have
been filed which is reasonably likely to materially and adversely affect the
ability of the LLC to operate the Business in substantially the same manner as
it is presently operated; and
(f) All consents and approvals of any persons required in connection with
the assignment of the Material Company Contributed Contracts shall have been
obtained (including, without limitation, the consent of the trustees to the
amendment of Master Trust I and Master Trust II).
ARTICLE IX. TERMINATION; AMENDMENTS; WAIVER
SECTION 9.01 Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned, notwithstanding approval
thereof by the stockholders of the Company, at any time prior to the Closing:
(a) by mutual written consent of Fleet and the Company;
(b) by either Fleet or the Company if the transactions contemplated by this
Agreement have not been consummated by March 31, 1998 (as such date may be
extended by mutual agreement or pursuant to the proviso to this sentence, the
"Outside Termination Date"); provided, however, that the right to terminate this
Agreement under this Section 9.01(b) shall not be available to any party whose
failure to fulfill any obligation under this Agreement has been the cause of, or
resulted in, the failure to consummate the transactions contemplated by this
Agreement by the Outside Termination Date; provided, further, however, that if
the failure to consummate the transactions contemplated by this Agreement by the
Outside Termination Date result from the failure to satisfy the condition set
forth in Section 8.02(c), then the Outside Termination Date shall be extended to
June 30, 1998;
(c) by either Fleet or the Company if any court of competent jurisdiction
or other governmental body within the United States shall have issued an order,
decree or ruling or taken any other action permanently restraining, enjoining or
otherwise prohibiting the Contribution and such order, decree, ruling or other
action shall have become final and nonappealable;
(d) by Fleet, if (i) Fleet shall discover that any representation or
warranty made by the Company in this Agreement (without regard to any Material
Adverse Effect qualification in such representation or warranty) is untrue at
the time such representation or warranty was made or (except for those
representations and warranties made as of a particular date which need only be
true and correct as of such date) shall not be true and correct as of the
Closing Date, except where the failure to be so true and correct individually or
in the aggregate would not have a Material Adverse Effect, provided that if any
such failure to be so true and correct is capable of being cured prior to the
Outside Termination Date, then Fleet may not terminate this Agreement under this
paragraph (d) until the Outside Termination Date, unless Fleet provides notice
to the Company, at or prior to the date originally scheduled for Closing by the
Company specifying in reasonable detail the untruthfulness in the
representations or warranties claimed by Fleet, and in no event may Fleet
terminate this Agreement under this paragraph (d) if such failure is corrected
prior to the Outside Termination Date, (ii) there shall have been a breach of
any covenant or agreement on the part of the Company or any Company Contributor
under this Agreement resulting in a Material Adverse Effect which shall not be
capable of being cured prior to the Outside Termination Date, (iii) the
stockholders of the Company fail at the Special Meeting to approve the
Contribution and the other transactions contemplated by this Agreement; or (iv)
the Company's Board (x) fails to recommend approval and adoption of this
Contribution and the other transactions contemplated by this Agreement by the
stockholders of the Company or withdraws or amends or modifies in a manner
adverse to Fleet its recommendation or approval in respect of this Agreement and
the Contribution, (y) makes any recommendation with respect to an Alternative
Acquisition other than a recommendation to reject such Alternative Acquisition
or (z) fails to convene the Special Meeting on or prior to the Outside
Termination Date (other than as a result of any restraining order or injunction
or court order or failure of the SEC to clear the Proxy Statement for mailing to
the Company's stockholders on or before that date which is 35 days prior to the
Outside Termination Date); or
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(e) by the Company, if (i) the Company shall discover that any
representation or warranty made by Fleet in this Agreement (without regard to
any Fleet Material Adverse Effect qualification in such representation or
warranty) is untrue at the time such representation or warranty was made or
(except for those representations and warranties made as of a particular date
which need only be true and correct as of such date) shall not be true and
correct as of the Closing Date, except where the failure to be so true and
correct would not have a Fleet Material Adverse Effect or materially adversely
affect (or materially delay) the consummation of the Contribution and the other
transactions contemplated by this Agreement, provided that if any such failure
to be so true and correct is capable of being cured prior to the Outside
Termination Date, then the Company may not terminate this Agreement under this
paragraph (e) until the Outside Termination Date, unless the Company provides
notice to Fleet, at or prior to the date originally scheduled for closing by the
Company specifying in reasonable detail the untruthfulness in the
representations and warranties claimed) by the Company, and in no event may the
Company terminate this Agreement under this paragraph (e) if such failure is
corrected prior to the Outside Termination Date or (ii) there shall have been a
material breach of any covenant or agreement in this Agreement on the part of
Fleet which shall not be capable of being cured prior to the Outside Termination
Date.
SECTION 9.02 Effect of Termination.
(a) In the event of the termination and abandonment of this Agreement
pursuant to Section 9.01 hereof, this Agreement shall forthwith become void,
without liability on the part of any party hereto except as provided in this
Section 9.02 and Sections 6.03(b) and 11.09; provided, however, that, other than
in the case of a termination pursuant to Section 9.01(d)(iii), termination will
not relieve a party in breach of this Agreement from liability for any willful
breach of this Agreement giving rise to such termination. Notwithstanding the
foregoing, neither Fleet, on the one hand, nor the Company, on the other hand,
shall have any rights against each other with respect to the recovery of
expenses, except as provided for in Section 9.02(b)(i) and except to the extent
that the non-breaching party may recover such expenses pursuant to the proviso
contained in the immediately preceding sentence.
(b)(i) If Fleet shall have terminated this Agreement pursuant to Sections
9.01(d)(iii) or 9.01(d)(iv)(z) and an Alternative Acquisition is approved by the
Board of Directors of the Company prior to the first anniversary of the
termination of this Agreement, then in such case the Company shall promptly, but
in no event later than two Business Days after approval by the Board of
Directors of an Alternative Acquisition, pay Fleet a termination fee equal to
$50 million, by wire transfer of immediately available funds to an account
previously designated by Fleet and shall have no obligation to pay any other
amounts or have any other liability on account of damages, expenses or
otherwise.
(ii) Notwithstanding any other provision hereof, no fee or any other
amount shall be paid pursuant to this Section 9.02(b) or otherwise to Fleet if
it or any Fleet Contributor shall be in material breach of its material
obligations hereunder.
SECTION 9.03 Amendment. Prior to the Closing Date, this Agreement may be
amended by action taken by or on behalf of the Boards of Directors of the
Company and Fleet at any time before or after adoption of this Agreement by the
stockholders of the Company, but no amendment shall be made if it would violate
applicable law or, after the approval of this Agreement and the transactions
contemplated hereby at the Special Meeting, which materially adversely affects
such stockholders, without further approval of the stockholders of the Company.
This Agreement may not be amended except by an instrument in writing signed on
behalf of all the parties.
SECTION 9.04 Extension; Waiver. At any time prior to the Closing, the
parties hereto, by action taken by or on behalf of the respective Boards of
Directors of the Company and Fleet, may (i) extend the time for the performance
of any of the obligations or other acts of any other applicable party hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein by any other applicable party or in any document, certificate or writing
delivered pursuant hereto by any other applicable party or (iii) waive
compliance with any of the agreements of any other applicable party or with any
conditions to its own obligations. Any agreement on the part of any other
applicable party to any such extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such party. Such extension
or waiver or
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failure to insist on strict compliance with an obligation, covenant, agreement
or condition shall not operate as a waiver of, or estoppel with respect to, any
subsequent or other failure.
ARTICLE X. INDEMNIFICATION
SECTION 10.01 Indemnification by the Company and Company Contributors.
(a) Following Closing, Company and the Company Contributors shall jointly
and severally indemnify and hold the LLC, Fleet and the Fleet Contributors
harmless from and against any Losses sustained by the LLC, Fleet or any of the
Fleet Contributors:
(i) arising from any breach of any representation or warranty on the
part of the Company or any Company Contributor (and for this purpose the
representations and warranties of the Company, except for those contained
in Section 4.07, shall not be deemed to include qualifications as to
materiality or Material Adverse Effect, and the Knowledge standard shall be
as set forth in the proviso to the definition thereof);
(ii) arising from any breach of any covenant on the part of the
Company or any Company Contributor;
(iii) arising from a challenge to the validity of the transfer of
Master Trust I or Master Trust II (other than arising out of actions or
failures to act of Fleet and its Affiliates);
(iv) related to any action taken by the Company or any of the Company
Contributors with respect to any of its employee benefit plans, including
any amendment thereto resulting from the transactions contemplated by this
Agreement; and
(v) related to any Non-Assumed Liability which is a liability of the
Company or any of the Company Contributors, including, but not limited to,
the Retained SmartMove Accounts and the Reward Accelerator Accounts.
(b) Any and all Losses referred to in this Section 10.01 shall be computed
on a net basis, after taking into account any amounts received or, in the
reasonable opinion of Fleet, receivable by Fleet or any Fleet Contributor under
any insurance policies.
SECTION 10.02 Indemnification by Fleet and Fleet Contributors.
(a) Following Closing, Fleet and the Fleet Contributors shall jointly and
severally indemnify and hold the LLC, the Company and the Company Contributors
harmless from and against any Losses sustained by the LLC, the Company or any
Company Contributor:
(i) arising from any breach of any representation or warranty on the
part of Fleet or any Fleet Contributor under this Agreement (and for this
purpose the representations and warranties of Fleet, except for those
contained in Section 5.06, shall not be deemed to include qualifications as
to materiality or Material Adverse Effect and the Knowledge standard shall
be as set forth in the proviso in the definition thereof;
(ii) arising from a breach of any covenant on the part of Fleet or any
Fleet Contributor;
(iii) arising from or resulting from any liability of Fleet or any of
the Fleet Contributors which are not included as part of the Fleet
Transferred Liabilities; and
(iv) arising from or resulting from any guaranty listed in Schedule
6.20 to the extent such Losses arise after the Closing Date.
(b) Any and all Losses referred to in this Section 10.02 shall be computed
on a net basis, after taking into account any amounts received or, in the
reasonable opinion of the Company, receivable by the Company or any Company
Contributor under any insurance policies.
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SECTION 10.03 Other Indemnification.
(a) Following Closing, Fleet shall, and shall cause the Fleet Contributors
and the LLC to, jointly and severally, indemnify and hold harmless the Company
and the Company Contributors from and against any and all Losses sustained by
the Company or any of the Company Contributors arising out of the Company
Transferred Liabilities, including, without limitation, Ordinary Course of
Business Liabilities, or the Fleet Transferred Liabilities.
(b) Any and all Losses referred to in this Section 10.03 shall be computed
on a net basis, after taking into account any amounts received or, in the
reasonable opinion of the Company, receivable by the Company or any Company
Contributor under any insurance policies.
SECTION 10.04 Requirement for Notice. In the event that any claim is
asserted or action, suit, or proceeding is commenced against a party hereto
("Indemnitee") which can reasonably be expected to result in any liability or
indemnity being imposed on another party hereto ("Indemnitor"), the Indemnitee
shall promptly give notice thereof to Indemnitor. Indemnitor then shall have the
opportunity to defend such claim, action, suit or proceeding with counsel
reasonably satisfactory to Indemnitee. Indemnitor shall have control of any
defense or settlement, and if Indemnitor accepts such defense and diligently
defends or pursues a settlement, then Indemnitor shall not be liable to the
Indemnitee for any of the Indemnitee's attorneys' fees or other costs and
expenses. If Indemnitor does not accept such defense (i) Indemnitor nevertheless
shall have the opportunity to participate in (but not to control) the defense
against such claim, action, suit or proceeding and to participate in any
negotiations with respect thereto and (ii) Indemnitee shall have control of any
defense. Notwithstanding the foregoing, no settlement of any claim as to which
indemnification is required or may be sought hereunder shall be made without the
consent of the Indemnitor, which consent shall not be unreasonably withheld.
SECTION 10.05 Limitation on Indemnification.
(a) Notwithstanding anything to the contrary contained herein, (i) neither
the Company nor the Company Contributors shall have any obligation with respect
to any indemnification payments pursuant to the provisions of Sections
10.01(a)(i) or 10.01(a)(iii) except to the extent that the aggregate
indemnification obligations of the Company and the Company Contributors exceed
$15,000,000 in the aggregate, and the Company and the Company Contributors shall
have no obligation with respect to such initial $15,000,000 amount, (ii) the
indemnification provided for herein shall not cover, and in no event shall any
party hereto be liable for, any consequential, incidental or special damages,
and (iii) in no event may any claim for indemnification be made in an amount
which is less than $50,000.
(b) Notwithstanding anything to the contrary contained herein, (i) neither
Fleet nor any of the Fleet Contributors shall have any obligation with respect
to any indemnification payments pursuant to the provisions of Section
10.02(a)(i) except to the extent that the aggregate indemnification payments of
Fleet and the Fleet Contributors exceed $15,000,000 in the aggregate and Fleet
and the Fleet Contributors shall have no obligation with respect to such initial
$15,000,000, (ii) the indemnification provided herein shall not cover, and in no
event shall any party hereto be liable for, any consequential, incidental or
special damages, and (iii) in no event may any claim for indemnification be made
in an amount less than $50,000.
ARTICLE XI. MISCELLANEOUS
SECTION 11.01 Survival of Representations and Warranties. All covenants,
agreements, representations and warranties contained in this Agreement,
including the schedules hereto shall survive the Closing and the consummation of
the transactions contemplated by this Agreement, provided that the
representations and warranties survive only for a period of one year after
Closing, except for the representations set forth in Sections 4.02, 4.12 and
5.02 hereof, which shall survive the Closing for the applicable statute of
limitations period. Notwithstanding the foregoing, the parties hereto (including
their permitted assigns) shall be entitled to indemnity under Article X (subject
to the limitations on indemnity set forth therein) for any and all claims made
to the party breaching such representation or warranty within the periods
indicated above, as the case may be, based upon the breach or violation of such
covenants, agreements, representations and warranties.
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The termination of any covenant, agreement, representation or warranty shall not
affect any person's right to prosecute to conclusion any claim made in writing
as aforesaid (which describes such claim with reasonable specificity) prior to
the termination of such covenant, agreement, representation or warranty.
SECTION 11.02 Brokerage Fees and Commissions. Except for ▇▇ ▇▇▇▇▇▇▇▇▇▇,
the Company hereby represents and warrants to Fleet with respect to the Company
and its Affiliates, and except for ▇▇▇▇▇▇ Bros., Inc. and ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co.,
Fleet hereby represents and warrants to the Company with respect to Fleet and
its Affiliates, that no person is entitled to receive from the Company or Fleet,
respectively, or any of their respective Subsidiaries or Affiliates, any
investment banking, brokerage or finder's fee or fees for financial consulting
or advisory services in connection with this Agreement or the transactions
contemplated hereby.
SECTION 11.03 Entire Agreement; Assignment. This Agreement (including the
Disclosure Schedules and the other documents and instruments referred to herein)
(a) constitutes the entire agreement among the parties with respect to the
subject matter hereof and supersedes all other prior agreements and
understandings, both written and oral (other than the agreement referred to in
Section 6.03(b) hereof and this Section 11.03), among the parties or any of them
with respect to the subject matter hereof, (b) shall be binding upon the parties
hereto and their successors and permitted assigns and (c) shall not be assigned
without the prior written consent of the other parties hereto; provided,
however, that the Company hereby covenants and agrees that in the event that the
Company sells all or substantially all of its assets within six years after the
Closing Date, it will assign its obligations hereunder to the purchasers of such
assets (and may, at its option, assign all or any portion of its rights
hereunder to such parties), and the consent of Fleet shall not be required for
an assignment pursuant to this proviso; provided, further, however, that in no
event shall the sale or other disposition of the Company's interests in Advanta
Information Systems, Inc. Advanta Partners LP and/or Advanta Business Services
Corp. be a sale of all or substantially all of the assets of the Company for
purposes of this Agreement.
SECTION 11.04 Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, each of which shall remain in full force
and effect.
SECTION 11.05 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered in person or by next business day courier to the
respective parties as follows:
If to Fleet or any Fleet Contributor:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Managing Director, Strategic Planning
and Corporate Development
Fleet Financial Group, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
with copies to:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Assistant General Counsel
Fleet Financial Group, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: V. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
If to the Company or any Company
Contributor:
Advanta Corp.
Welsh and ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice Chairman of the Board
with a copy to:
Advanta Corp.
Welsh and ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇▇▇, Esquire
Senior Vice President and
General Counsel
with a copy to:
Wolf, Block, ▇▇▇▇▇▇ and ▇▇▇▇▇-▇▇▇▇▇
LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇, Esq.
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof). Any such notice shall be effective upon receipt, if personally
delivered or sent by facsimile transmission, or one day after delivery to a
courier for next-day delivery. Nothing in this Section 11.05 shall be deemed to
constitute consent to the manner and address for service of process in
connection with any legal proceeding (including litigation arising out of or in
connection with this Agreement), which service shall be effected as required by
applicable law.
SECTION 11.06 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof.
SECTION 11.07 Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning of interpretation of this Agreement.
SECTION 11.08 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
SECTION 11.09 Expenses. Except as otherwise specifically provided herein,
all costs and expenses incurred in connection with the transactions contemplated
by this Agreement, shall be paid by the party incurring such expenses; provided,
however, that all costs and expenses (including transfer fees, consent fees and
penalty fees) incurred in connection with the assignments of the Material
Company Contributed Contracts (except one such agreement as to which the parties
have agreed that all costs and expenses shall be borne by the Company) and the
Material Information Technology Contracts, and all recording fees, transfer
fees, documentary stamps and sales taxes payable in connection with the
Contribution of the Company owned real property and personal property, shall be
paid 50% by the Company and 50% by Fleet, and the LLC shall bear all costs and
expenses (including transfer fees, consent fees and penalty fees) incurred
either before, or
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after the Closing, in connection with the Contribution of all other Company
Contributed Contracts and Fleet Contributed Contracts.
SECTION 11.10 Third Party Beneficiaries. Except for, from and after the
Closing hereunder, the rights of holders and obligees of interest bearing
liabilities included in the Company Transferred Liabilities to performance of
the obligations assumed by the LLC to pay such holders and obligees the amounts
owed to them, this Agreement is not intended to, and does not, create any rights
or benefits of any person other than the parties hereto.
SECTION 11.11 Construction; Interpretation. The parties hereby agree that
any rule of law or any legal decision that would require interpretation of any
claimed ambiguities in this Agreement against the party that drafted it has no
application and is expressly waived.
SECTION 11.12 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDINGS
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
SECTION 11.13 Effect of Investigation. Except to the extent provided in
this Agreement, no investigation by the parties hereto made before or after the
date of this Agreement or the provisions of any documents (other than the
Disclosure Schedules), whether available pursuant to this Agreement or
otherwise, shall affect the interpretation of the representations and warranties
of the parties which are contained herein.
SECTION 11.14 Joinder. The parties hereto shall cause the LLC to be
formed prior to the Closing Date and shall cause the LLC to enter into a joinder
to this Agreement pursuant to which the LLC agrees to be bound by all of the
terms and provisions of this Agreement applicable to the LLC.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed under seal on its behalf by its officers thereunto duly authorized, all
as of the day and year first above written.
FLEET FINANCIAL GROUP, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Managing Director, Strategic
Planning and Corporate Development
ATTEST:
/s/ H. ▇▇▇ ▇▇▇▇▇▇
--------------------------------------
Name: H. ▇▇▇ ▇▇▇▇▇▇
Title: Chief Administrative Officer
ADVANTA CORP.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Chairman
ATTEST:
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice Chairman
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