Exhibit 10.1

EXECUTION COPY

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PURCHASE AND SALE AGREEMENT

By and Between

KOHL’S DEPARTMENT STORES, INC.

And

CHASE BANK USA, NATIONAL ASSOCIATION

Dated as of March 5, 2006

 

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TABLE OF CONTENTS

 

         Page ARTICLE I DEFINITIONS    1   SECTION 1.1 Definitions of Certain
Terms    1   SECTION 1.2 Interpretation    9 ARTICLE II PURCHASE, SALE AND
ASSUMPTION    10   SECTION 2.1 Purchase and Sale of Assets    10   SECTION 2.2
Assumption of Liabilities    11   SECTION 2.3 Excluded Liabilities    11  
SECTION 2.4 Purchase Price; Purchase Price Adjustment    11   SECTION 2.5
Allocation of Purchase Price    12   SECTION 2.6 Third-Party Consents.    12  
SECTION 2.7 Intention of the Parties    13 ARTICLE III CLOSING; ASSIGNMENT    13
  SECTION 3.1 The Closing    13 ARTICLE IV REPRESENTATIONS OF THE PARTIES    14
  SECTION 4.1 Representations of the Seller    14   SECTION 4.2 Representations
of the Purchaser    17   SECTION 4.3 No Other Representations or Warranties   
19 ARTICLE V COVENANTS    19   SECTION 5.1 Conduct of Business    19   SECTION
5.2 Certain Changes    20   SECTION 5.3 Access and Confidentiality.    21  
SECTION 5.4 Reasonable Efforts; Other Filings    21   SECTION 5.5 Additional
Instruments    22   SECTION 5.6 Non-Solicitation    23   SECTION 5.7 Notice to
Cardholders    23   SECTION 5.8 Post-Closing Access    23   SECTION 5.9
Cooperation in Actions    23   SECTION 5.10 Preservation of Books and Records   
24   SECTION 5.11 Bulk Sales Law    24

 

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ARTICLE VI TAX AND EMPLOYEE MATTERS

   24   SECTION 6.1 Taxes    24   SECTION 6.2 Employees    25 ARTICLE VII
CONDITIONS    26   SECTION 7.1 Conditions to Each Party’s Obligations to Effect
the Purchase and Assumption    26   SECTION 7.2 Conditions to Obligations of the
Purchaser    26   SECTION 7.3 Conditions to Obligations of the Seller    27
ARTICLE VIII TERMINATION    27   SECTION 8.1 Termination    27   SECTION 8.2
Effect of Termination    28 ARTICLE IX SURVIVAL; INDEMNIFICATION    28   SECTION
9.1 Survival    28   SECTION 9.2 Indemnification by the Seller    29   SECTION
9.3 Indemnification by the Purchaser    30   SECTION 9.4 Notice, Settlements and
Other Matters    30 ARTICLE X MISCELLANEOUS    32   SECTION 10.1 Notices    32  
SECTION 10.2 Expenses    33   SECTION 10.3 Successors and Assigns    33  
SECTION 10.4 Entire Agreement; Amendment; Waiver    33   SECTION 10.5
Counterparts    34   SECTION 10.6 Governing Law    34   SECTION 10.7 Waiver of
Jury Trial and Venue    34   SECTION 10.8 Severability    34   SECTION 10.9
Public Announcement    34   SECTION 10.10 Third-Party Beneficiaries    34  
SECTION 10.11 Credit Bureau Reporting    34   SECTION 10.12 Further Assurances
   34

 

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SCHEDULES AND EXHIBITS

 

Schedule 1.1   Parties with Knowledge Schedule 1.2   Master File Layout
Schedule 2.4   Form of Estimated Closing Statement and Final Closing Statement
Schedule 4.1(c)   Third Party Consents Required for Closing Schedule 4.1(f)  
Write-Off Policy Schedule 4.1(i)   Assigned Contracts Schedule 4.1(l)   Forms of
Cardholder Agreements Schedule 5.2(d)   Sales, Leases, and Disposals
Schedule 9.2   Indemnification Matters Exhibit A   Form of Program Agreement
Exhibit B   Form of Instrument of Assignment and Assumption

 

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PURCHASE AND SALE AGREEMENT

THIS PURCHASE AND SALE AGREEMENT is dated as of March 5, 2006 (the “Agreement”)
and is by and between KOHL’S DEPARTMENT STORES, INC., a Delaware corporation
(the “Seller”), and CHASE BANK USA, NATIONAL ASSOCIATION, a national bank (the
“Purchaser”).

RECITALS

WHEREAS, the Seller is, among other things, (i) engaged in the business of
selling merchandise through retail stores and by other means, and (ii) directly
and indirectly engaged in the Business (as hereinafter defined);

WHEREAS, pursuant to this Agreement, the Seller desires to sell to the
Purchaser, and the Purchaser desires to purchase from the Seller, certain assets
used in the Business pursuant to the terms contained and in the manner described
herein and in the Ancillary Agreements (as hereinafter defined);

WHEREAS, on the date hereof, the Seller and the Purchaser are entering into a
Program Agreement (the “Program Agreement”) in the form attached hereto as
Exhibit A, that is to become effective as of the Closing under this Agreement,
and that provides for, among other things, the issuance of proprietary credit
cards of the Seller, the issuance of existing and new credit-related products to
be developed with the Purchaser, the processing and servicing of the related
accounts, and the conduct of related marketing activities, all as more fully set
forth therein; and

WHEREAS, concurrently with the Closing under this Agreement, the Seller and the
Purchaser desire to enter into other agreements in connection with the
transactions contemplated hereby, all as more fully set forth herein.

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

ARTICLE I

DEFINITIONS

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

“Account” means, as of the Cut-Off Time, any account identified by name and
account number under which a purchase or credit transaction may be or has been
made by a Cardholder by means of a Credit Card, which is recorded as an Account
on the Master File and for which an Account Agreement is in effect as of the
Closing Date, including any world-wide accounts.

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“Accountant” has the meaning given thereto in Section 2.4(c).

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

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

“Acquired Assets” means all right, title and interest of the Seller and its
Affiliates in and to the following credit assets and properties, except to the
extent they constitute Excluded Assets:

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

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

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

(4) the Assigned Contracts;

(5) the Books and Records, subject to Section 5.10, and subject to the Seller’s
right to retain a copy of the Books and Records for use in connection with
servicing the Accounts;

(6) the Credit Cards; and

(7) rights, claims, credits, causes of action and rights of set-off against
third parties relating principally to any Acquired Assets or Assumed
Liabilities.

“Action” means any claim, action, complaint, investigation, petition, suit or
other proceeding, whether civil, criminal or administrative, in law or in
equity, or before any arbitrator or Governmental Authority.

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

“Agreement” has the meaning given thereto in the Preamble.

 

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“Allocation Statement” has the meaning given thereto in Section 2.5(a).

“Ancillary Agreements” means the Program Agreement and the Instrument of
Assignment and Assumption.

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

“Assigned Contracts” means the Contracts listed on Schedule 4.1(i), and
specifically excludes any contracts relating to servicing of the Accounts and
any intercompany Contracts between the Seller and any of its Affiliates.

“Assumed Liabilities” mean the following Liabilities of the Seller and its
Affiliates, except to the extent they constitute Excluded Liabilities:

(1) all obligations to Cardholders from and after the Closing Date in respect of
Accounts to perform under Account Agreements, including payment of credit
balances as of the Cut-Off Time;

(2) all fees, normal operating assessments and other charges relating to the
Accounts that are incurred or accrue on or after the Closing Date;

(3) all obligations of the Seller arising under the Assigned Contracts from and
after the Closing Date;

(4) all Liabilities for Taxes relating to the Acquired Assets to the extent set
forth in Sections 6.1(d) and 6.1(e).

“Books and Records” means books, records, original documents, files and papers
maintained by or for the Seller, whether in hard copy or electronic format, in
each case to the extent within the Seller’s control and/or possession and
primarily used with respect to the Acquired Assets, other than any relating
principally to the Excluded Assets and other than Tax returns or Tax workpapers.

“Business” means the proprietary Credit Card business of the Seller relating to
the Accounts, including the extension of credit to Cardholders, the servicing of
the Accounts, billings, collections, processing of Account transactions and the
administration of the Accounts and Gross Receivables.

“Business Day” means any day other than a Saturday, a Sunday or a day on which
banks located in Wisconsin or New York generally are required or authorized by
law or executive order to close.

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

 

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“Cardholder List” means a list of the names, addresses, telephone numbers,
taxpayer identification numbers, social security numbers and e-mail addresses of
all Cardholders as of the Cut-Off Time if and to the extent such information is
within the possession or control of the Seller or its Affiliates.

“Closing” has the meaning set forth in Section 3.1(a).

“Closing Date” has the meaning set forth in Section 3.1(a).

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

“Confidentiality Agreement” means that certain Confidentiality Agreement dated
October 17, 2005, by and between the Seller and the Purchaser.

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

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

“Credit Card” means a proprietary card that may be used by the related
Cardholder to purchase goods and/or services from the Seller or other Persons
authorized by the Seller through open-end revolving credit, commonly known as
credit, store or Kohl’s charge card, commonly referred to as “Kohl’s Charge.”

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

“Deductible Amount” has the meaning given thereto on Schedule 9.2.

“De Minimis Claim Amount” has the meaning given thereto on Schedule 9.2.

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

“Eligible Receivables” means all Gross Receivables other than receivables under
Written-Off Accounts.

 

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“Estimated Closing Statement” means a statement prepared by the Seller
substantially in the form of Schedule 2.4, showing in reasonable detail the
calculation of the Estimated Purchase Price, based on data available as of the
close of business on the fifth Business Day preceding the Closing Date.

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

“Exchange Act” has the meaning given thereto in Section 4.1(e).

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

(1) cash and cash equivalents on hand and cash and cash equivalents in bank
accounts maintained by the Seller or any of its Affiliates;

(2) insurance policies maintained by or for the benefit of the Seller and all
claims accrued thereunder, and all amounts for insurance billed with respect to
Accounts prior to the Closing;

(3) Intellectual Property Rights other than rights to the Cardholder List or the
Master File and other than any Intellectual Property Rights explicitly licensed
or otherwise granted to the Purchaser under any Ancillary Agreement;

(4) assets of the Seller or any of its Affiliates sold or otherwise disposed of,
or otherwise becoming no longer a part of the Acquired Assets, without violation
of this Agreement during the period prior to the Closing Date;

(5) assets relating to the Seller’s employee benefit agreements, plans or other
arrangements;

(6) rights, claims, credits, causes of action, or rights of set-off against
third parties not relating principally to the Acquired Assets or which relate
principally to an Excluded Liability;

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

(8) interests in real property;

(9) Personal Property of the Seller;

(10) all right, title and interest of the Seller in and to any and all other
assets and properties, of any kind whatsoever, that are not primarily used in
connection with the Acquired Assets as of the Closing Date;

 

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(11) all customer data relating to customers of the Seller and its Affiliates
(whether or not duplicated in the Cardholder List, the Master File and the Books
and Records (all of which constitute Acquired Assets));

(12) prepaid Taxes, Tax payments due from any of the Seller’s Affiliates, and
entitlements to refunds, credits, offsets or other benefits for overpayment of
Taxes relating to any period (or portion thereof) prior to the Closing Date;

(13) Loan loss reserves;

(14) Intercompany Contracts between the Seller and any of its Affiliates;

(15) The Scoring Models;

(16) Any gift card, debit card, or other stored-value card, and any program
related thereto;

(17) All Written-Off Accounts; and

(18) All rights, privileges, and benefits of acting as servicer of the Accounts
or any account created in the future, including all servicing fees and other
compensation payable to the servicer with respect to all periods from and after
the Closing.

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

(1) Except as provided in Sections 6.1(d) and (e), (A) all Liabilities for Taxes
with respect to the Business or the Acquired Assets for any period (or portion
thereof) prior to the Closing Date and (B) all Liabilities for Taxes with
respect to the Business or the Acquired Assets that accrue on the Closing Date
in connection with the sale of the Acquired Assets;

(2) Liabilities that result from an act, or failure to act, by the Seller or any
of its Affiliates prior to the Closing Date that relate to any claims by any
current, former or putative employee thereof, whether or not such claims are
brought prior to, on or after the Closing Date, and Liabilities relating to
employee benefits (including any accrued vacation benefits) or compensation
arrangements existing prior to the Closing Date;

(3) Any Liability principally related to an Excluded Asset; and

(4) Any Liability of the Seller (or any of its Affiliates) relating to or
arising from the operation of the Business at or prior to the Cut-Off Time or
from any facts, circumstances or events existing or occurring at or prior to the
Cut-Off Time.

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

 

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“Final Closing Statement” means a statement prepared by the Seller,
substantially in the form of Schedule 2.4, showing in reasonable detail the
Seller’s calculation of the Purchase Price, based on the Accounts and the
Acquired Assets as of the Cut-Off Time.

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

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

“Gross Receivables” means all amounts owing (after deduction of credit balances
scheduled as of the Cut-Off Time and unapplied cash) to the Seller from
Cardholders with respect to Accounts (including outstanding loans, cash advances
and other extensions of credit; billed or posted but unbilled finance charges
and late charges; Accrued Interest; and any other fees, charges and interest
assessed on the Accounts) as of the Cut-Off Time (or, solely with respect to the
Estimated Closing Statement, as of the close of business on the fifth Business
Day preceding the Closing Date).

“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

“Indemnified Party” has the meaning given thereto in Section 9.4(a).

“Indemnifying Party” has the meaning given thereto in Section 9.4(a).

“Indemnity Cap Amount” has the meaning given thereto on Schedule 9.2.

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

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

“Knowledge” means, with respect to the Seller, the actual knowledge of the
officers of the Seller who are listed on Schedule 1.1, and, with respect to the
Purchaser, the actual knowledge of the officers of the Purchaser who are listed
on Schedule 1.1.

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

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

 

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“Losses” has the meaning given thereto in Section 9.2.

“Master File” means the master file maintained by the Seller and the Service
Provider with respect to the Accounts, including the information listed on
Schedule 1.2.

“Material Adverse Effect” means:

(a) With respect to the Acquired Assets, a material adverse change in, or a
material adverse effect upon, the Acquired Assets taken as a whole, excluding
any effect or change attributable to or resulting from (i) events, conditions or
occurrences in economic, business or financial conditions generally effecting
the credit card services, consumer credit business, or banking industry, to the
extent such that such events, conditions or occurrences do not
disproportionately effect the Acquired Assets, (ii) financial market conditions,
including interest rates or changes therein, (iii) changes in Requirements of
Law, GAAP or regulatory accounting principles after the date hereof, (iv) any
action, omission, change, effect, circumstance or condition contemplated by this
Agreement, or attributable to the signing and announcement of this Agreement or
the transactions contemplated by this Agreement and the Ancillary Agreements, or
(v) any actions or omissions required by the terms of this Agreement or the
Ancillary Agreements; and

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

“Permissible Liens” means (a) with respect to those Acquired Assets that are
Personal Property, restrictions or imperfections of title that do not materially
detract from the value or impair the use of any Acquired Asset and (b) Liens for
taxes, assessments and other governmental charges or levies not yet due or which
are being contested in good faith by appropriate action.

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

“Personal Property” means the tangible assets of the Seller.

“Program Agreement” has the meaning given thereto in the Recitals.

“Purchase and Assumption” has the meaning given thereto in Section 3.1(a).

“Purchaser” has the meaning given thereto in the Preamble.

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

“Purchaser Indemnified Parties” has the meaning given thereto in Section 9.2.

 

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“Requirement of Law” means all federal, state and local laws, statutes,
regulations, written regulatory guidance, orders or directives, opinions and
interpretations of any Governmental Authority as may be amended and in effect
from time to time, including: (i) the Truth in Lending Act and Regulation Z;
(ii) the Equal Credit Opportunity Act and Regulation B; (iii) the Fair Debt
Collection Practices Act; (iv) the Fair Credit Reporting Act; (v) the
Gramm-Leach-Bliley Act and its implementing regulations; and (vi) the Federal
Trade Commission Act.

“Schedule” shall mean any Disclosure Schedule hereto.

“SEC” has the meaning given thereto in Section 4.1(e).

“SEC Documents” has the meaning given thereto in Section 4.1(e).

“Securities Act” shall have the meaning given thereto in Section 4.1(e).

“Seller “ has the meaning given thereto in the Preamble.

“Seller Indemnified Parties” has the meaning given thereto in Section 9.3.

“Scoring Models” means the customer underwriting scorecard and the customer
behavioral scorecard developed on behalf of the Seller relating to the Accounts.

“Service Provider” means any data processing service provider used by the Seller
in connection with the Accounts.

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

“Taxes” means (A) any income, alternative or add-on minimum tax, gross receipts,
sales, use, transfer, gains, ad valorem, franchise, profits, license,
withholding, payroll, employment, excise, severance, stamp, occupation, premium,
property, environmental or windfall profit tax, custom, duty or other tax,
governmental fee or other like assessment or charge, together with any interest
or any penalty, addition to tax or additional amount imposed by any Governmental
Authority responsible for the imposition of any such tax (domestic or foreign),
and (B) any Liability of the Seller for the payment of any amounts of the type
described in clause (A) above as a result of being a member of an affiliated,
consolidated, combined or unitary group for any period.

“Written-Off Accounts” means all Accounts that (i) have been charged-off or
written-off as of the Cut-Off Time, or (ii) are eligible for charge off or
write-off as of the Cut-Off Time in accordance with the write-off policy
attached hereto as Schedule 4.1(f).

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

(i) the Preamble or the Recitals, Sections, Exhibits, or Schedules refer to the
Preamble or a Recital or Section of, or Exhibit or Schedule to, this Agreement;

 

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

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

(iv) any Governmental Authority includes any successor to the Governmental
Authority;

(v) this Agreement refers to this Agreement, the Schedules, the Disclosure
Schedule and the Exhibits hereto; and

(vi) any Schedule refer to a Disclosure Schedule.

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

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

(d) Any time period specified herein, including the period during or after which
a payment is due, shall be deemed to exclude the day on which the period
commences and include the day on which the period ends.

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

ARTICLE II

PURCHASE, SALE AND ASSUMPTION

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

 

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SECTION 2.2 Assumption of Liabilities. On the terms and subject to the
conditions set forth in this Agreement, from and after the Closing Date, the
Purchaser agrees to assume, pay, defend, discharge and perform as and when due
the Assumed Liabilities.

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

SECTION 2.4 Purchase Price; Purchase Price Adjustment. (a) On the second
Business Day before the Closing, the Seller will deliver to the Purchaser the
Estimated Closing Statement reflecting the Seller’s calculation of the Estimated
Purchase Price to be paid by the Purchaser at the Closing.

(b) Within 60 Business Days after the Closing, the Seller will deliver to the
Purchaser (i) the Final Closing Statement (A) prepared in accordance with the
Seller’s normal operating procedures in effect as of the Cut-Off Time, and
(B) based on the information in the Master File and the other Acquired Assets as
of the Cut-Off Time and (ii) copies of the Master File as of the Cut-Off Time
and all material working papers relating to the Final Closing Statement.

(c) The Purchaser shall, within 30 Business Days after receipt of the Final
Closing Statement, advise the Seller in writing and in reasonable detail of any
inaccuracies it believes are reflected in the Final Closing Statement. In the
event no such objection to the Final Closing Statement is delivered to the
Seller within such time period, the Final Closing Statement, as delivered to the
Purchaser, shall be final and binding upon the parties. In the event the
Purchaser delivers such an objection, the Seller and the Purchaser shall attempt
in good faith to resolve any differences. In the event all differences are not
resolved within 30 Business Days following delivery to the Seller of any
objections, then the issues remaining unresolved shall be determined by an
independent nationally-recognized public accounting firm mutually acceptable to
the Seller and the Purchaser (the “Accountant”). The Accountant shall resolve
all disputed items in accordance with the provisions of this Agreement. In
making its determination, the Accountant may only consider those items and
amounts as to which the Purchaser and the Seller have disagreed within the time
periods and the permitted grounds specified. The Accountant’s determination will
be conclusive and binding on the Purchaser and the Seller absent manifest error.
The fees of the Accountant will be shared by the Purchaser and the Seller in
proportion to the relative differences between their respective calculations of
the Purchase Price and the amount determined by the Accountant.

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

 

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

SECTION 2.5 Allocation of Purchase Price. (a) The Seller shall prepare an
allocation of the Purchase Price (as determined for federal income tax purposes)
among the Acquired Assets (the “Allocation Statement”) and, within 90 days after
the Closing Date, shall deliver to the Purchaser a copy of the Allocation
Statement, together with any appropriate supporting documentation. The Purchaser
and the Seller shall endeavor in good faith to agree on the Allocation
Statement. If the Purchaser and the Seller have not agreed on the Allocation
Statement within 30 days after delivery of the Allocation Statement by the
Seller to the Purchaser, each of the Purchaser and the Seller may use its own
allocation. The Seller will consult with the Purchaser regarding the preparation
of the Allocation Statement and will respond to any reasonable request or
inquiry of the Purchaser in connection therewith. The Allocation Statement shall
be prepared in accordance with Section 1060 of the Code and the rules and
regulations promulgated thereunder.

(b) The Purchaser and the Seller shall report the allocation of the total
consideration among the Acquired Assets in a manner consistent with the
Allocation Statement and shall act in accordance with the Allocation Statement
in the preparation and filing of all Tax Returns (including filing Form 8594
with their respective Federal income tax returns for the taxable year that
includes the Closing Date and any other forms or statements required by the
Code, Treasury regulations, the Internal Revenue Service or any applicable state
or local taxing authority) and in the course of any Tax audit, Tax review or Tax
litigation relating thereto; provided, however, that neither the Seller nor the
Purchaser will be obligated to litigate any challenge to such allocation of the
Purchase Price by a Governmental Authority.

(c) The Purchaser and the Seller will promptly inform each other of any
challenge by any Governmental Authority to any allocation made pursuant to this
Section 2.5 and shall consult with and keep each other informed with respect to
the status of, and any discussion, proposal or submission with respect to, such
challenge.

SECTION 2.6 Third-Party Consents.

(a) To the extent that any consent needed to assign to the Purchaser any
Assigned Contract has not been obtained on or prior to the Closing Date, this
Agreement and any document delivered pursuant hereto will not constitute an
assignment or attempted assignment thereof if such assignment or attempted
assignment would constitute a material breach of such Assigned Contract or would
give rise to a valid right of termination thereof. If any such third-party
consent will not be obtained on or prior to the Closing Date, then the
applicable Contract shall be withheld from sale pursuant to this Agreement and
the parties shall enter into an agreement reasonably acceptable to the Purchaser
and the Seller to provide for the transfer thereto of all the economic rights
and benefits related to such Contract.

(b) The Seller and the Purchaser will use commercially reasonable efforts (which
for purposes of this Section 2.6 shall not require any payment of money by the
Seller or

 

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the Purchaser, except as agreed between them in writing) to seek any required
consents to the assignment of the Assigned Contracts that have not been obtained
as of the Closing Date, and promptly upon receipt of such consents will effect
such assignments.

SECTION 2.7 Intention of the Parties. The Seller and the Purchaser intend that
the transfer of the Acquired Assets by the Seller to the Purchaser pursuant to
this Agreement be a sale of the ownership interest in such assets to the
Purchaser and that, following such sale, the Acquired Assets shall not be part
of the Seller’s estate in the event of the filing of a bankruptcy petition by or
against the Seller under any bankruptcy law. The Seller and the Purchaser intend
to treat such transfer as a sale for accounting and tax purposes. In the event
that, notwithstanding the intent of the Seller and the Purchaser, the transfer
contemplated hereby is held not to be a sale, this Agreement shall constitute a
security agreement under applicable law, and the Seller hereby grants to the
Purchaser a first priority continuing security interest in and to all of the
Seller’s right, title and interest now owned or hereafter arising in, to and
under the Acquired Assets.

ARTICLE III

CLOSING; ASSIGNMENT

SECTION 3.1 The Closing. (a) The closing (the “Closing”) of the purchase and
sale of the Acquired Assets and assumption of the Assumed Liabilities hereunder
(collectively, the “Purchase and Assumption”) will take place at the offices of
Sidley Austin LLP, 1787 7th Avenue, New York, New York, on the second Business
Day after the last of the conditions set forth in Sections 7.1, 7.2 and 7.3
(other than conditions relating solely to the delivery of documents to be dated
the Closing Date) has been satisfied or waived in accordance with the terms of
this Agreement or at such other place or on such other date as the parties
hereto jointly designate in writing (the “Closing Date”).

(b) At the Closing, the Seller and the Purchaser will deliver or cause to be
delivered to each other the Instrument of Assignment and Assumption in
substantially the form set forth in Exhibit B and, if necessary, such other
instruments as are necessary or appropriate to reflect any alternative
arrangements described in Section 2.6, appropriately executed by the Seller and
the Purchaser.

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

(d) All of the actions described in subsections (b) and (c) of this Section 3.1
shall be deemed to occur simultaneously.

 

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ARTICLE IV

REPRESENTATIONS OF THE PARTIES

SECTION 4.1 Representations of the Seller. The Seller represents to the
Purchaser as follows:

(a) Corporate Existence. The Seller (i) is a corporation duly organized, validly
existing and in good standing under the laws of the State of its incorporation,
and (ii) is duly licensed or qualified to do business as a corporation and is in
good standing as a foreign corporation in all jurisdictions in which the nature
of the activities conducted or proposed to be conducted by it or the character
of the assets owned or leased by it makes such licensing or qualification
necessary to perform its obligations required hereunder except to the extent
that its non-compliance would not reasonably be expected to have a Material
Adverse Effect on the Acquired Assets or the Seller.

(b) Capacity; Authorization; Validity. The Seller has all necessary corporate
power and authority to (i) own the Acquired Assets and to carry on the Business
as currently conducted, (ii) execute and enter into this Agreement and each of
the Ancillary Agreements, and (iii) perform the obligations required of the
Seller hereunder and under each of the Ancillary Agreements. The execution and
delivery by the Seller of this Agreement and each of the Ancillary Agreements,
and the consummation by the Seller of the transactions specified herein have
been duly and validly authorized and approved by all necessary corporate action
of the Seller. This Agreement (i) has been duly executed and delivered by the
Seller, (ii) constitutes the valid and legally binding obligation of the Seller,
and (iii) is enforceable against the Seller in accordance with its terms
(subject to applicable bankruptcy, insolvency, reorganization, receivership or
other laws effecting the rights of creditors generally and by general equity
principles including those respecting the availability of specific performance).

(c) Governmental and Third-Party Consents. Except as set forth on
Schedule 4.1(c), the Seller has all necessary licenses, permits, consents and
approvals from or by, and has made all necessary notices to, any Governmental
Authority having jurisdiction, or any other third party, in connection with the
execution, delivery or performance of this Agreement and the Ancillary
Agreements by the Seller or the consummation by the Seller of the transactions
contemplated by this Agreement and the Ancillary Agreements, except to the
extent that the failure to obtain such licenses, permits, consents or approvals
or to provide such notices would not reasonably be expected to have a Material
Adverse Effect on the Acquired Assets or the Seller.

(d) Conflicts; Defaults; Etc. The execution, delivery and performance of this
Agreement and the Ancillary Agreements by the Seller, its compliance with the
terms hereof and thereof, and its consummation of the transactions specified
herein and therein do not, and (subject to obtaining the governmental and
third-party consents referred to in Section 4.1(c)) the consummation of the
transactions contemplated by this Agreement and the Ancillary Agreements will
not, (i) conflict with, violate, result in the breach of, constitute an event
which would, or with the lapse of time or action by a third party or both would,
result in a default under, or accelerate the performance required by, the terms
of any Contract to which the Seller is a party or by which it is bound, or by
which the Seller’s assets are bound; (ii) conflict with or

 

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violate the Constituent Documents of the Seller; (iii) violate any Requirements
of Law or conflict with, or require any consent or approval under any Applicable
Order, permit or license, to which the Seller is a party or by which it is bound
or effected; (iv) require the consent or approval of any other party to any
Contract to which the Seller is a party or by which it is bound; or (v) require
any filing with, notice to, consent or approval of, or any other action to be
taken with respect to, any Governmental Authority, except any filings required
under the HSR Act; except in each case described in clause (i), (iii), (iv) or
(v) of this Section 4.1(d), for any conflict, violation, breach, default,
termination, or cancellation that would not reasonably be expected to have a
Material Adverse Effect on the Acquired Assets or the Seller.

(e) SEC Reports. The Seller has filed with the Securities and Exchange
Commission (the “SEC”) all forms, reports and other documents (including all
prospectuses and registration statements) required to be filed by it with
respect to all periods commencing on or after January 1, 2002 (the “SEC
Documents”). As of their respective filing dates (or effective dates, in the
case of prospectuses and registration statements), the SEC Documents complied in
all material respects with the requirements of the Securities Act of 1933 (the
“Securities Act”) or the Securities Exchange Act of 1934 (the “Exchange Act”),
as applicable, and the rules and regulations of the SEC promulgated thereunder.

(f) Absence of Certain Changes.

(i) Between November 1, 2005 and the date hereof, the Business has been
conducted in the ordinary course and there has not been any change in the
financial condition or results of operations of the Business that has had or
would reasonably be expected to have a Material Adverse Effect on the Acquired
Assets or the Seller.

(ii) Set forth on Schedule 4.1(f) hereto is a true and complete copy of the
write-off policy of the Seller as in effect on November 1, 2005. Since that
date, (A) the Accounts and Gross Receivables have been underwritten,
established, administered, serviced, collected, terminated and charged-off in
the ordinary course consistent with the Seller’s past practice, and (B) the
Seller has not materially amended, modified or supplemented or otherwise made
any material changes to the policies and procedures as in effect on such date.

(g) Title to Properties; Encumbrances. The Seller has good title to or a valid
leasehold interest in, or is licensed or otherwise entitled to use, all of the
Acquired Assets (other than the Accounts to which Section 4.1(1) applies), free
and clear of all Liens other than Permissible Liens.

(h) Litigation. No Action is pending or, to Seller’s Knowledge, threatened
against the Seller or its Affiliates with respect to the Business or the
Acquired Assets, at law, in equity or otherwise, before any Governmental
Authority or before any arbitrator or panel of arbitrators, to which the Seller
is a party, which, if adversely determined, would reasonably be expected to have
a Material Adverse Effect on the Acquired Assets or the Seller. There is no
outstanding judgment, order, decree, or award that would reasonably be expected
to have such a Material Adverse Effect. To the Seller’s Knowledge, there has
been no adverse finding of any audit, investigation, or inspection of any
Governmental Authority concerning or Business within the past two years that
would reasonably be expected to have such a Material Adverse Effect.

 

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(i) Contracts. Except to the extent that any of the following would not
reasonably be expected to have a Material Adverse Effect on the Acquired Assets
or the Seller, each Assigned Contract is a valid, legally binding agreement of
the Seller, enforceable against Seller in accordance with its terms, and neither
the Seller nor, to the Seller’s Knowledge, any other party thereto is in default
under the terms of any such Contract. Schedule 4.1(i) sets forth a complete list
of the Assigned Contracts.

(j) Books and Records. All of the Seller’s Books and Records are in all material
respects complete and correct and are maintained in accordance with all
Requirements of Law.

(k) Compliance with Laws. Except to the extent that the following would not
reasonably be expected to have a Material Adverse Effect on the Acquired Assets
or the Seller:

(i) the Seller is in compliance with all Requirements of Law relating to the
Business and the Acquired Assets; and

(ii) the Seller is not subject to any capital plan or supervisory agreement,
order or memorandum between any of them and any Governmental Authority.

(l) Account Agreements; Accounts; Gross Receivables. Except to the extent that
any of the following would not reasonably be expected to have a Material Adverse
Effect on the Acquired Assets or the Seller:

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

(ii) Each Account Agreement (other than any Account Agreement with respect to
any Written-Off Account) is a valid and legally binding obligation of each
obligor thereunder, including any co-signer, guarantor or surety, in the full
amount thereof set forth in the Master File or the Books and Records, and is
enforceable against such obligors in accordance with its terms, subject to
(A) claims and defenses on disputed card transactions asserted by a Cardholder
as indicated on the Master File or the Books and Records, (B) applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and
other laws relating to or effecting creditors’ rights generally and the effect
of general equitable principles, and (C) the Soldiers’ and Sailors’ Civil Relief
Act of 1940, as amended. Representative forms of Cardholder Agreements are set
forth in Schedule 4.1(1), and those forms contain all material terms of the
Cardholder Agreements as in effect as of the date of this Agreement; provided,
however, that

 

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no representation or warranty is hereby given as to the capacity, authority or
any other factor relating to the identity or status of the obligor that may
effect the enforceability of the Account Agreements to which it is party.

(iii) Each Gross Receivable is not subject to offset, refund, recoupment,
reversal, adjustment or any claim or defense by any Person (other than claims or
defenses on disputed card transactions and refunds of credit balances, as
indicated on the Master File).

(iv) Other than the Written-Off Accounts, each Account complies in all material
respects with the applicable Account Agreement.

(v) All Account applications have been taken and evaluated and applicants
notified in a manner that complied with all applicable Requirements of Law.

(vi) All Accounts have been solicited, originated, maintained and serviced in
all material respects in compliance with all applicable Requirements of Law.

(vii) All disclosures made in connection with the Accounts complied in all
material respects with all applicable Requirements of Law.

(m) No Brokers or Finders. The Assumed Liabilities do not include, and the
Seller is solely responsible for and shall pay, any Liability incurred by it for
any financial advisory fees, brokerage fees, commissions or finder’s fees
directly or indirectly in connection with this Agreement or the transactions
contemplated hereby or by the Ancillary Agreements.

(n) Accuracy of Information. The information contained in the Master File, the
Books and Records, and the Cardholder List delivered to the Purchaser prior to
the date hereof was, and the information contained in the Master File, the
Cardholder List and the Books and Records delivered to the Purchaser on the
Closing Date will be, complete and accurate in all material respects as of the
date of delivery and the Cut-Off Time, respectively.

SECTION 4.2 Representations of the Purchaser. The Purchaser represents to the
Seller as follows:

(a) Corporate Existence. The Purchaser (i) is a national bank organized, validly
existing, and in good standing under the laws of the United States; and (ii) is
duly licensed or qualified to do business as a banking corporation and is in
good standing as a foreign corporation in all jurisdictions in which the nature
of the activities conducted or proposed to be conducted by it or the character
of the assets owned or leased by it makes such licensing or qualification
necessary to perform its obligations hereunder, except to the extent that its
non-compliance would not reasonably be expected to have a Material Adverse
Effect on the Purchaser or on the Acquired Assets following the Closing Date.

(b) Capacity; Authorization; Validity. The Purchaser has all necessary power and
authority to (i) execute and enter into this Agreement and each of the Ancillary
Agreements,

 

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and (ii) perform the obligations required of the Purchaser hereunder and under
each of the Ancillary Agreements. The execution and delivery by the Purchaser of
this Agreement and each of the Ancillary Agreements, and the consummation by the
Purchaser of the transactions specified herein, have been duly and validly
authorized and approved by all necessary corporate action of the Purchaser. This
Agreement (i) has been duly executed and delivered by the Purchaser,
(ii) constitutes the valid and legally binding obligation of the Purchaser, and
(iii) is enforceable against the Purchaser in accordance with its terms (subject
to applicable bankruptcy, insolvency, reorganization, receivership or other laws
effecting the rights of creditors generally and financial institutions in
particular and by general equity principles including those respecting the
availability of specific performance).

(c) Governmental and Third-Party Consents. The Purchaser has all necessary
licenses, permits, consents, and approvals from or by, and has made all
necessary notices to, any Governmental Authority having jurisdiction or any
third party, in connection with the execution, delivery or performance of this
Agreement and the Ancillary Agreements by the Purchaser and the consummation by
the Purchaser of the transactions contemplated by this Agreement and the
Ancillary Agreements, except to the extent that the failure to obtain such
licenses, permits, consents, or approvals or to provide such notices would not
reasonably be expected to have a Material Adverse Effect on the Purchaser or on
the Acquired Assets following the Closing Date.

(d) Conflicts; Defaults; Etc. The execution, delivery and performance of this
Agreement and the Ancillary Agreements by the Purchaser, its compliance with the
terms hereof and thereof, and its consummation of the transactions specified
herein and therein do not and the consummation of the transactions contemplated
by this Agreement and the Ancillary Agreements will not (i) conflict with,
violate, result in the breach of, constitute an event which would, or with the
lapse of time or action by a third party or both would, result in a default
under, or accelerate the performance required by, the terms of any Contract to
which the Purchaser is a party or by which it is bound; (ii) conflict with or
violate the Constituent Documents of the Purchaser; (iii) violate any
Requirement of Law or conflict with, or require any consent or approval under
any Applicable Order, permit or license, to which the Purchaser is a party or by
which it is bound or effected; (iv) require the consent or approval of any other
party to any Contract to which the Purchaser is a party or by which it is bound;
or (v) require any filing with, notice to, consent or approval of, or any other
action to be taken with respect to, any Governmental Authority, except any
filings required under the HSR Act; and except in each case described in clause
(i), (iii), (iv) or (v) of this Section 4.2(d), for any conflict, violation,
breach, default, termination, or cancellation that would not reasonably be
expected to have a Material Adverse Effect on the Purchaser or on the Acquired
Assets following the Closing Date.

(e) Absence of Certain Changes. Since November 1, 2005, there has not been any
change in the financial condition or results of operations of the Purchaser that
has had or would reasonably be expected to have a Material Adverse Effect on the
Purchaser or on the Acquired Assets following the Closing Date.

(f) Compliance with Laws. Except to the extent that the following would not
reasonably be expected to have a Material Adverse Effect on the Purchaser or on
the Acquired Assets following the Closing Date:

(i) the Purchaser is in compliance with all Requirements of Law relating to its
credit card business; and

 

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(ii) the Purchaser is not subject to any capital plan or supervisory agreement,
order or memorandum between it and any Governmental Authority.

(g) Financing. The Purchaser has sufficient cash, available lines of credit or
other sources of immediately available funds to enable it to pay the Estimated
Purchase Price as required by Section 3.1(c) and to timely pay any other amounts
to be paid by it under this Agreement. The Purchaser is not subject to any
capital plan or supervisory agreement, order or memorandum between it and any
Governmental Authority with jurisdiction over it that could reasonably be
expected to effect its ability to consummate the purchase of the Acquired Assets
from the Seller and fulfill its obligations under this Agreement and the
Ancillary Agreements.

(h) Litigation. No Action is pending or, to the Purchaser’s Knowledge,
threatened against the Purchaser or its Affiliates with respect to any of their
respective assets, at law, in equity or otherwise, before any Governmental
Authority or before any arbitrator or panel of arbitrators, to which the
Purchaser is a party, which, if adversely determined, would reasonably be
expected to have a Material Adverse Effect on the Purchaser or on the Acquired
Assets following the Closing Date. There is no outstanding judgment, order,
decree, or award that would reasonably be expected to have such a Material
Adverse Effect. To the Purchaser’s Knowledge, there has been no adverse finding
of any audit, investigation, or inspection of any Governmental Authority
concerning the Purchaser’s credit card business within the past two years that
would reasonably be expected to have such a Material Adverse Effect.

(i) No Brokers or Finders. Any Liability incurred by the Purchaser or its
Affiliates for any financial advisory fees, brokerage fees, commissions or
finder’s fees directly or indirectly in connection with this Agreement or the
transactions contemplated hereby or by the Ancillary Agreements will be borne by
the Purchaser.

SECTION 4.3 No Other Representations or Warranties. Except as expressly set
forth in this Article IV and Article VI or in any of the Ancillary Agreements,
neither the Seller nor the Purchaser has made or make any other express or
implied representations, or any express or implied warranty, either written or
oral, with respect to the Acquired Assets, the Assumed Liabilities or the
Seller, the Business or the Purchaser, respectively.

ARTICLE V

COVENANTS

SECTION 5.1 Conduct of Business. (a) Except as otherwise contemplated hereby or
by the Ancillary Agreements, and except for transactions in the ordinary course
of business, until the Closing Date, the Seller will use its commercially
reasonable efforts to preserve intact the business organizations and
relationships with third parties relating to the Business, to keep available the
services of required employees of the Business and to preserve beneficial
relationships with customers in connection with the Business, following
substantially the same material practices and standards, including collection
practices and accounting practices for charge-offs and reserves, as in effect on
November 1, 2005.

 

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(b) Except as otherwise contemplated hereby or by the Ancillary Agreements, and
except for transactions in the ordinary course of business, until the Closing
Date, the Purchaser will use its commercially reasonable efforts to preserve
intact the business organizations and relationships with third parties relating
to its credit card business, to keep available the services of required
employees of its credit card business and to preserve beneficial relationships
with customers in connection with its credit card business, following
substantially the same material practices and standards, including collection
practices and accounting practices for charge-offs and reserves, as in effect on
the date hereof.

SECTION 5.2 Certain Changes. Without limiting Section 5.1, and except as
otherwise contemplated hereby or by the Ancillary Agreements or required by
applicable Requirements of Law, from the date hereof until the Closing Date,
without the prior written consent of the Purchaser (which consent shall not be
unreasonably withheld or delayed), the Seller will not:

(a) Enter into, terminate, or amend any Contract except in the ordinary course
of business consistent with past practice and only to the extent such entry or
amendment would not reasonably be expected to have a Material Adverse Effect on
the Acquired Assets;

(b) Acquire, except in the course of collection, a material amount of assets
from any other Person or all or substantially all of the business or assets of
any Person if such business or assets would constitute Acquired Assets;

(c) Change in any material respect its credit and underwriting, posting,
collection, charge-off or operating policies and procedures (or the manner of
application thereof) with respect to the Business as in effect on November 1,
2005;

(d) Sell, lease or otherwise dispose of any of the Acquired Assets except (i) in
the ordinary course of business consistent with past practice and in
transactions that individually or in the aggregate with all such other
dispositions would not reasonably be expected to have a Material Adverse Effect
on the Seller or the Acquired Assets or (ii) pursuant to the terms of Contracts
or commitments existing as of the date hereof, or (iii) as disclosed by Seller
on Schedule 5.2(d);

(e) Change any of the Cardholder Agreements; or

(f) Engage in any transaction or incur any obligation or liability with respect
to the Acquired Assets, except in the ordinary course consistent with past
practice;

(g) Impair or encumber the Purchaser’s rights in the Acquired Assets or the
ability of the Purchaser to collect the Acquired Assets, other than Permitted
Liens and Liens that will be removed on or before the Closing Date; or

(h) Agree with any Person or otherwise commit to do any of the foregoing.

 

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SECTION 5.3 Access and Confidentiality.

(a) Until the Closing Date, upon reasonable prior notice and subject to
applicable Requirements of Law relating to the exchange of information, the
Seller will permit the Purchaser and its authorized representatives to have
reasonable access, during regular business hours for purposes consistent with
this Agreement (including reasonable access to the servicing reports, systems
and procedures of the Seller), to the personnel (including the Employees),
properties and financial Books and Records, to the extent that such access does
not interfere with the business of the Seller; provided, however, that the
Purchaser and such representatives comply with the confidentiality obligations
contained herein and in the Confidentiality Agreement; and provided, further
that the foregoing shall not (i) require the Seller to permit any inspection, or
to disclose any information, that in its reasonable judgment would result in the
disclosure of any trade secrets of third parties or trade secrets of the Seller
or its Affiliates unrelated to the Business or violate any obligations of the
Seller to any third party with respect to confidentiality if the Seller shall
have used commercially reasonable efforts to obtain the consent of such third
party to such inspection or disclosure, or (ii) require any disclosure by the
Seller that could, as a result of such disclosure, have the effect of causing
the waiver of any attorney-client privilege.

(b) If this Agreement is terminated, the Purchaser, at its own expense, will
promptly deliver (without retaining any copies) to the Seller or (at the
Seller’s option) confirm in writing to the Seller that it has completely
destroyed, all information furnished to the Purchaser or its representatives by
the Seller or any of its agents, employees or representatives in connection with
this Agreement, whether so obtained before or after the execution hereof, and
all analyses, compilations, forecasts, studies or other documents prepared by
the Purchaser or its representatives that contain or reflect any such
information. The Purchaser will cause any information so obtained to be kept
confidential and will not use, or permit the use of, such information in its
business or in any other manner or for any other purpose except as contemplated
by this Agreement.

(c) In addition to the confidentiality arrangements contained herein, all
information provided or obtained in connection with the transactions
contemplated by this Agreement and by the Ancillary Agreements (including
pursuant to Section 5.3(a)) will be held by each party in accordance with the
Confidentiality Agreement. In the event of a conflict or inconsistency between
the terms of this Agreement and the Confidentiality Agreement, the terms of this
Agreement will govern; and in the event of a conflict or inconsistency between
the terms of this Agreement and the Program Agreement, the terms of the Program
Agreement will govern.

(d) Each party and its Affiliates shall be entitled to specific performance of
the foregoing provisions of this Section 5.3 and the provisions of the
Confidentiality Agreement, in addition to any other remedies that they may have
at law or in equity.

SECTION 5.4 Reasonable Efforts; Other Filings. (a) Subject to the terms and
conditions of this Agreement, the Purchaser and the Seller will use commercially
reasonable efforts to take, or cause to be taken, all actions and will do, or
cause to be done, all things necessary, proper or advisable under applicable
Requirements of Law, so as to permit consummation of the Purchase and Assumption
as promptly as reasonably practicable and otherwise to enable consummation of
the transactions contemplated by this Agreement and the Ancillary Agreements,
and will cooperate fully to that end.

 

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(b) Without limiting Section 5.4(a), the Seller and the Purchaser will use
commercially reasonable efforts to prepare all documentation, to effect all
filings and to obtain all permits, consents, approvals and authorizations of all
Governmental Authorities necessary to consummate the transactions contemplated
by this Agreement and the Ancillary Agreements, including taking any action
necessary to defend vigorously, lift, mitigate or rescind the effect of any
litigation or administrative proceeding involving any Governmental Authority
adversely effecting the transactions contemplated by this Agreement or this
Agreement, including promptly appealing any adverse court or administrative
decision. The Seller and the Purchaser shall consult with the other with respect
to the obtaining of such permits, consents, approvals and authorizations and to
keep the other apprised of the status thereof. Subject to appropriate
confidentiality protections, the Seller and the Purchaser shall each furnish to
the other such necessary information and reasonable assistance as such parties
may request in connection with the foregoing and shall each provide counsel for
the other party with copies of all filings made by such party, and all
correspondence between such party (and its advisors) with any Governmental
Authority and any other information supplied by such party and such party’s
Affiliates to a Governmental Authority in connection with this Agreement and the
transactions contemplated hereby. Each party shall, subject to applicable
Requirements of Law, permit counsel for the other party to review in advance any
such proposed written communication to any Governmental Authority.

(c) Without limiting the foregoing, the Seller and the Purchaser will use
commercially reasonable efforts to obtain all consents and approvals required
pursuant to Article VII in time to permit the Closing Date to occur on or before
April 15, 2006 or, if the Closing Date has not occurred, as promptly thereafter
after April 15, 2006 as reasonably practicable. Each of the Seller and the
Purchaser further agrees, without any request or demand by the other, to
complete all filings required pursuant to Article VII no later than 10 Business
Days from the execution and delivery of this Agreement and to prosecute actively
all such filings and pursue the receipt of any related consent or approval.

(d) The Purchaser will promptly notify the Seller in writing, and the Seller
will promptly notify the Purchaser in writing, upon (i) becoming aware of any
order or decree or any complaint praying for an order or decree restraining or
enjoining the execution of this Agreement or the Ancillary Agreements or the
consummation of the transactions contemplated hereunder and thereunder, or
(ii) receiving any notice from any Governmental Authority of its intention to
(A) institute an Action to restrain or enjoin the execution of this Agreement or
the Ancillary Agreements or the consummation of the transactions contemplated
hereunder and thereunder, or (B) nullify or render ineffective this Agreement or
the Ancillary Agreements if such transactions are consummated.

(e) The filing fees under the HSR Act shall be borne by the Purchaser.

SECTION 5.5 Additional Instruments. At the reasonable request of the Seller or
the Purchaser at or after the Closing, the Person receiving such request will
promptly execute and deliver, or cause to be executed and delivered, to the
requesting party such assignments, bills of

 

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sale, assumption agreements, consents and other similar instruments in addition
to those specifically required by this Agreement, in form and substance
satisfactory to the requesting party, as may be reasonably necessary to carry
out or implement any provision of this Agreement or any Ancillary Agreement.

SECTION 5.6 Non-Solicitation. The Purchaser shall not recruit, solicit for
employment, or hire any employees of the Seller or its Affiliates during the
period between the date of this Agreement and the Closing Date, and thereafter
in accordance with the Program Agreement. The Seller and its Affiliates shall be
entitled to specific performance of such provisions in addition to any other
remedies that they may have at law or in equity.

SECTION 5.7 Notice to Cardholders. From and after the date of this Agreement and
until the Closing, the Purchaser and its Affiliates shall not communicate with
the Cardholders (whether by mail, by telephone or otherwise) without the prior
written consent of the Seller.

SECTION 5.8 Post-Closing Access. Upon reasonable prior notice, subject to
applicable Requirements of Law relating to the exchange of information, and to
the extent such access does not interfere with the business of the Purchaser,
the Purchaser will permit the Seller, its Affiliates and their representatives
reasonable access (including the right to copy), without charge, during normal
business hours, to the Acquired Assets, the Books and Records conveyed
hereunder, and any third party who maintains or controls any of the foregoing
for the Purchaser or its Subsidiaries, all as may be reasonably requested by the
Seller or any Affiliate in order to enable the Seller to (i) perform any
covenants required to be performed under this Agreement and the Ancillary
Agreements after the Closing Date by them; (ii) permit the preparation of any
Tax Return or other document required to be filed with any Governmental
Authority; (iii) respond to any Action by any Governmental Authority or any
other Person, including any Cardholder with respect to matters that may
constitute Excluded Liabilities; and (iv) permit the processing of or response
to any claim made under this Agreement or the Ancillary Agreements, and the
Purchaser shall reasonably cooperate with the Seller and any such Affiliates, if
requested, in connection with the foregoing; provided, however that the
foregoing shall not (a) require the Purchaser to permit any inspection, or to
disclose any information, that in its reasonable judgment would result in the
disclosure of any trade secrets of third parties or trade secrets of the
Purchaser or its Affiliates unrelated to the Acquired Assets or violate any
obligations of the Purchaser to any third party with respect to confidentiality
if the Purchaser shall have used commercially reasonable efforts to obtain the
consent of such third party to such inspection or disclosure, or (b) require any
disclosure by the Purchaser that could, as a result of such disclosure, have the
effect of causing the waiver of any attorney-client privilege.

SECTION 5.9 Cooperation in Actions. (a) The Purchaser agrees to take
commercially reasonable actions necessary to make employees who are then
employed by the Purchaser and knowledgeable with respect to any matter in
question available to the Seller and its representatives after the Closing Date
with respect to any Action to which the Seller is or becomes a party or is
otherwise involved with regard to the Business, commenced after the Closing
Date. The Purchaser agrees to use commercially reasonable efforts to provide
that any such employees who terminate their employment with the Purchaser or any
of its Affiliates and enter into termination agreements or similar agreements,
arrangements or understandings, will be obligated to continue to assist the
Seller in the investigation, evaluation or defense of any such

 

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matters, whether as consultants, expert witnesses, or otherwise. The Seller will
reimburse the Purchaser for reasonable out-of-pocket expenses incurred by the
Purchaser in connection with requests by the Seller pursuant to this Section 5.9
(excluding salary and fringe benefits paid to such employees and related direct
or indirect overhead).

(b) The Seller and the Purchaser shall cooperate, to the extent reasonably
requested by the other, in the handling and disposition of any Actions, whether
or not listed on the Disclosure Schedules and whether or not pending or
threatened prior to the Closing, that arise out of or are related to any event
or occurrence with respect to the Business prior to the Closing; provided,
however, that the party ultimately responsible for discharging such Action shall
have the authority to take such actions as it deems necessary or advisable, in
its sole discretion, to discharge such Action, subject, however, to the
provisions of this Agreement.

(c) The Seller shall be entitled to keep copies of all filings relating to
Actions, correspondence, Books and Records, the Cardholder List, the Master
File, and other documentation of any kind that the Seller reasonably determines
are necessary or desirable in connection with its handling and disposition of
Actions.

SECTION 5.10 Preservation of Books and Records. The Purchaser shall preserve and
keep the Cardholder List, the Master File, all Books and Records of the Acquired
Assets and all information transferred by the Seller to the Purchaser relating
to the accounting, business, financial and Tax affairs of the Acquired Assets in
existence on the Closing Date or that come into existence after the Closing Date
but relate to the Acquired Assets prior to the Closing Date for a period of
seven years thereafter, or for any longer period (i) as may be required by any
federal, state, local or foreign governmental body or agency, (ii) as may be
reasonably necessary with respect to the prosecution or defense of any audit or
other Action that is then pending or threatened, or (iii) that is equivalent to
the period established by any applicable statute of limitations (or any
extension or waiver thereof) with respect to matters pertaining to Taxes. For a
period of four years following the seven year period specified above, if the
Purchaser wishes to destroy such records, the Purchaser shall first provide the
Seller the opportunity to take possession of the same. The Purchaser shall
further afford the Seller reasonable access during normal business hours and
upon reasonable notice to the Books and Records in order for the Seller to
perform its duties and obligations as servicer of the Accounts.

SECTION 5.11 Bulk Sales Law. The Purchaser hereby acknowledges that the Seller
does not intend to comply, in connection with the transactions contemplated
hereby, with the provisions of any applicable bulk sale or similar Requirement
of Law.

ARTICLE VI

TAX AND EMPLOYEE MATTERS

SECTION 6.1 Taxes. (a) The Seller hereby represents and warrants to the
Purchaser that the Seller has timely filed all Tax Returns relating to the
Business or the Acquired Assets that it was required to file on or before the
date hereof (taking into account all applicable extensions), and has timely paid
all Taxes shown thereon as due and owing. There are no Liens with respect to
Taxes upon any of the Acquired Assets other than with respect to Taxes not yet
due and payable or that are being contested in good faith by appropriate action.

 

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(b) At the requesting party’s expense, the parties hereto shall furnish or cause
to be furnished to each other, promptly upon reasonable request, any information
and assistance relating to the Acquired Assets or the Business as the requesting
party deems reasonably necessary in connection with the filing of any Tax
Returns, the preparation for any audit by any taxing authority, the response to
any inquiry by a taxing authority, the mailing or filing of any notice and the
prosecution or defense of any claim, suit or proceeding relating to any Tax
Returns or any other filing required to be made with any Taxing authority or any
other matter related to Taxes. The Seller and the Purchaser will cooperate with
each other in the conduct of any audit or other proceeding related to Taxes
involving the Acquired Assets or the Business prior to the Closing Date.

(c) Notwithstanding anything in this Agreement to the contrary, all Tax Returns
filed by the Seller for periods ending on or before the Closing Date shall
remain the property of the Seller.

(d) Notwithstanding anything in this Agreement to the contrary, all excise,
sales, use, transfer, documentary, stamp or similar Taxes that are payable or
that arise as a result of the consummation of the transactions contemplated by
this Agreement and the Ancillary Agreements and any recording or filing fees
with respect thereto will be borne equally by the Seller and by the Purchaser,
and such Taxes shall not be considered Excluded Liabilities.

(e) For all purposes of this Agreement, all property and ad valorem Tax
liabilities with respect to the Acquired Assets for taxable periods that begin
on or before the Closing Date and end after the Closing Date shall be allocated
to the Seller, on the one hand, and to the Purchaser, on the other hand, on a
per diem basis. For Tax Returns with respect to such property and ad valorem
Taxes that are due on or prior to the Closing Date, the Seller will file or
cause to be filed such Tax Returns. For Tax Returns with respect to such
property and ad valorem Taxes that are due after the Closing Date, the Purchaser
will file or cause to be filed such Tax Returns. The non-filing party shall
promptly remit to the party filing such property or ad valorem Tax Returns the
portion of such Taxes allocated to such non-filing party.

(f) The Purchaser shall, if the Seller so requests and at the Seller’s expense
(for reasonable out-of-pocket costs and expenses), cooperate with the Seller to
file for and obtain any Tax refund that relates to any period prior to the
Closing Date.

SECTION 6.2 Employees. All employees of the Seller and any of its Affiliates
involved with the Business shall remain with the Seller and the Purchaser shall
have no obligations with respect thereto.

 

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ARTICLE VII

CONDITIONS

SECTION 7.1 Conditions to Each Party’s Obligations to Effect the Purchase and
Assumption. The respective obligations of the Seller and the Purchaser to effect
the Purchase and Assumption are subject to the fulfillment or written waiver, at
or prior to the Closing Date, of the following conditions:

(a) Governmental and Regulatory Approvals. (i) The HSR waiting period shall have
expired or have been earlier terminated, and (ii) all other authorizations of,
filings and registrations with, and notifications to, all Governmental
Authorities required to effect the transactions contemplated by this Agreement
shall have been obtained or made and shall be in full force and effect and all
waiting periods required by applicable Requirements of Law in connection
therewith shall have expired or been terminated except to the extent that the
failure to obtain any such other approvals or authorizations would not
reasonably be expected to have a Material Adverse Effect on the Acquired Assets,
the Purchaser or the Seller.

(b) Third Party Consents. The consents and approvals of third Persons set forth
in Schedule 4.1(c) shall have been obtained and shall be in full force and
effect.

(c) No Injunction or Prohibition. No Governmental Authority of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
statute, rule, regulation, by-law, judgment, decree, injunction or other order
(whether temporary, preliminary or permanent) that is in effect and prohibits or
makes illegal consummation of the transactions contemplated by this Agreement or
any of the Ancillary Agreements.

(d) Program Agreement. The Program Agreement shall have been duly executed and
delivered by the other party thereto.

(e) Instrument of Assignment and Assumption. The Instrument of Assignment and
Assumption shall have been duly executed and delivered by the other party
thereto.

(f) Financing Statements. The Purchaser shall have prepared and delivered and
the Seller shall have executed UCC-1 financing statements to be filed by the
Purchaser in the Offices of the Secretaries of State of those states necessary
to perfect the sale of the Gross Receivables purchased pursuant to the terms and
conditions hereof.

SECTION 7.2 Conditions to Obligations of the Purchaser. The obligations of the
Purchaser to effect the Purchase and Assumption are subject to the fulfillment
or written waiver, at or prior to the Closing Date, of the following additional
conditions:

(a) Performance of Obligations. The Seller shall have performed in all material
respects all of its covenants and agreements set forth in this Agreement, to the
extent required at or prior to the Closing Date.

(b) Representations. The representations of the Seller set forth in this
Agreement shall be true and correct as of (i) the date of this Agreement, and
(ii) the Closing

 

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Date, except that representations that by their terms speak as of the date of
this Agreement or some other date shall be true and correct only as of such date
(in each case, without giving any effect to any qualifications or limitations as
to materiality or Material Adverse Effect contained therein), except to the
extent that any failure to be so true and correct has not had, or would not
reasonably be expected to have, a Material Adverse Effect on the Seller or the
Acquired Assets.

(c) Certificate. The Purchaser shall have received a certificate signed on the
Seller’s behalf by an executive officer of the Seller, dated the Closing Date,
to the effect that the conditions set forth in Sections 7.2(a) and 7.2(b) have
been satisfied.

SECTION 7.3 Conditions to Obligations of the Seller. The obligations of the
Seller to effect the Purchase and Assumption are subject to the fulfillment or
waiver in writing, at or prior to the Closing Date, of the following additional
conditions:

(a) Performance of Obligations. The Purchaser shall have performed in all
material respects all of its covenants and agreements set forth in this
Agreement, to the extent required at or prior to the Closing Date.

(b) Representations. The representations of the Purchaser set forth in this
Agreement shall be true and correct as of (i) the date of this Agreement, and
(ii) the Closing Date, except that any representations that by their terms speak
as of the date of this Agreement or some other date shall be true and correct
only as of such date (in each case, without giving any effect to any
qualifications or limitations as to materiality or Material Adverse Effect
contained therein), except to the extent that any failure to be so true and
correct has not had, or would not reasonably be expected to have, a Material
Adverse Effect on the Purchaser or the Acquired Assets.

(c) Certificate. The Seller shall have received a certificate signed on the
Purchaser’s behalf by an executive officer of the Purchaser, dated the Closing
Date, to the effect that the conditions set forth in Sections 7.3(a) and 7.3(b)
have been satisfied.

ARTICLE VIII

TERMINATION

SECTION 8.1 Termination. This Agreement may be terminated and the transactions
contemplated by this Agreement and the Ancillary Agreements may be abandoned at
any time before the Closing Date only:

(a) By the written consent of each of the parties hereto;

(b) By the Seller or the Purchaser if (i) any approval of a Governmental
Authority, the lack of which would result in the failure to satisfy the
condition set forth in Section 7.1(a), has been denied by the Governmental
Authority, and (ii) in each case such party has no opportunity to cure the fault
giving rise to such denial, including through reapplication or appeal;

 

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(c) By the Seller or the Purchaser if (i) any permanent injunction or Action by
any Governmental Authority of competent jurisdiction prohibiting consummation of
the transactions contemplated by this Agreement or the Ancillary Agreements
becomes final and nonappealable, (ii) any law or regulation makes consummation
of the transactions contemplated by this Agreement or the Ancillary Agreements
illegal or otherwise prohibited, or (iii) consummation of the transactions
contemplated by this Agreement or the Ancillary Agreements would violate any
nonappealable final order, decree or judgment of any Governmental Authority
having competent jurisdiction;

(d) By the Seller or the Purchaser if the transactions contemplated by this
Agreement and the Ancillary Agreements are not consummated by June 1, 2006;
provided, however, that neither the Seller nor the Purchaser may terminate this
Agreement pursuant to this Section 8.1(d) if its (or one of its Affiliate’s)
breach of any representation, warranty or covenant contained herein has been the
cause of or resulted in the failure to consummate such transactions by such
date; provided, however, that if the failure to consummate the transactions
contemplated hereby by such date is caused by a delay in satisfying the
conditions referenced in Section 7.1(a), no party shall have the right to
terminate this Agreement pursuant to this Section 8.1(d) until the date that is
three months after such date; or

(e) By the Seller or the Purchaser in the event of a breach or default in the
performance by the other party of any representation, warranty, covenant or
agreement hereunder, which breach or default (i) would, individually or in the
aggregate with all other uncured breaches and defaults of such other party,
constitute grounds for the conditions set forth in Section 7.2(a) or (b) or
Section 7.3(a) or (b), as the case may be, not to be satisfied at the Closing
Date, and (ii) has not been, or cannot be, cured within 30 days after written
notice, describing such breach or default in reasonable detail, is given by the
terminating party to the breaching or defaulting party.

SECTION 8.2 Effect of Termination. If this Agreement is terminated in accordance
with the terms of this Agreement, no party hereto (or any of its Affiliates,
directors, officers, representatives or agents) will have any Liability or
further obligation to any other party to this Agreement, except for
(i) obligations that survive termination as expressly provided for in
Section 9.1, Section 5.3 and Article X, and (ii) liabilities or obligations
arising out of or related to any knowing, willful or intentional breach of this
Agreement prior to such termination.

ARTICLE IX

SURVIVAL; INDEMNIFICATION

SECTION 9.1 Survival. (a) The representations or warranties of the parties in
this Agreement will survive the Closing until the date that is 12 months after
the Closing; provided, however, that the representations and warranties set
forth in the following provisions will survive until the expiration of the
applicable statute of limitations (including any extensions thereof):
Section 4.1(g), Section 4.1(l)(i), and Section 6.1(a).

(b) No agreement or covenant in this Agreement will survive the Closing Date,
other than the covenants in any agreement or covenant that by their terms
survive for a

 

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period after the Closing; provided, however, that the agreements and covenants
set forth in the following provisions will survive until the expiration of the
applicable statute of limitations (including any extensions thereof):
Sections 6.1(b)-(f), Section 8.2, and this Article IX. In addition, the last
sentence of Section 2.5(a) will survive until the expiration of the applicable
statute of limitations (including any extensions thereof).

(c) No claim for indemnification pursuant to this Article IX for breach of any
representation, warranty or covenant may be brought after the date on which such
representation, warranty or covenant no longer survives; provided, however, that
if any reasonably specific indemnification claim is validly made prior to the
termination of the applicable survival period, the indemnifying party’s
obligation hereunder with respect to such indemnification claim shall survive
until such claim has been finally resolved.

(d) If a Purchaser employee listed on Schedule 1.1 determines prior to Closing
that the Seller is in breach of any of the Seller’s representations or
warranties contained herein, or of any of the Seller’s covenants contained
herein that are to be performed by the Seller at or prior to Closing, and that
such breach would have a Material Adverse Effect on the Acquired Assets, the
Purchaser shall notify the Seller of the same as promptly as reasonably
practicable. However, no such notice shall constitute a waiver of any claim by
the Purchaser, and if the Seller has Knowledge of such breach, Purchaser shall
be relieved of its notice obligation under this Section.

SECTION 9.2 Indemnification by the Seller. The Seller agrees to indemnify the
Purchaser and each of its Affiliates and their respective officers, directors
and employers (collectively, the “Purchaser Indemnified Parties”) against, and
agrees to hold each of them harmless from, any and all damage, loss, liability,
expense, judgment, settlement, claim, cost or penalty (including reasonable
expenses of investigation and reasonable attorneys’ fees and expenses in
connection with any Action and enforcement of any rights of indemnification
against any Indemnifying Party or with respect to any appeal) (collectively,
“Losses”) incurred or suffered by the Purchaser Indemnified Parties arising out
of or resulting from, without duplication, (i) any breach of a representation or
warranty of the Seller contained in this Agreement or in any certificate
delivered by the Seller pursuant to this Agreement, (ii) any breach of an
agreement or covenant made by the Seller in this Agreement, (iii) any failure of
the Seller or any of its Affiliates to comply with any applicable “bulk sales”
or similar Requirement of Law in connection with the consummation of the
transactions contemplated hereby, or (iv) any Excluded Liability.
Notwithstanding the foregoing, the Purchaser Indemnified Parties will not be
entitled to indemnity pursuant to clause (i) of this Section 9.2: (x) in respect
of any individual Action or individual claim, fact or occurrence or any series
of related Actions, claims, facts or occurrences (including any class action),
until Losses in respect of such individual or related Actions, claims, facts or
occurrences are greater than the De Minimis Claim Amount; or (y) for any Losses,
until the aggregate amount of all such Losses incurred or suffered by the
Purchaser Indemnified Parties exceeds the Deductible Amount, in which case the
Purchaser Indemnified Parties be entitled to indemnification for the full amount
of such Losses in excess of such threshold; provided, however, that in no event
will the Purchaser Indemnified Parties be entitled to indemnity for Losses
pursuant to clause (i) of this Section 9.2 to the extent that the amount of
Losses, in the aggregate, incurred or suffered by the Purchaser Indemnified
Parties exceeds the Indemnity Cap Amount, except with respect to Losses arising
from the breach of Section 4.1(g), Section 4.1(l)(i), or Section 6.1.

 

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SECTION 9.3 Indemnification by the Purchaser. The Purchaser agrees to indemnify
the Seller and each of its Affiliates and their respective officers, directors
and employers (collectively, the “Seller Indemnified Parties”) against, and
agree to hold each of them harmless from, any and all Losses incurred or
suffered by the Seller Indemnified Parties arising out of or resulting from
without duplication, (i) any breach of a representation or warranty of the
Purchaser contained in this Agreement or in any certificate delivered by the
Purchaser pursuant to this Agreement, (ii) any breach of an agreement or
covenant made by the Purchaser in this Agreement, (iii) any Assumed Liability,
or (iv) the operation of the Acquired Assets from and after the Closing.
Notwithstanding the foregoing, the Seller Indemnified Parties will not be
entitled to indemnity pursuant to clause (i) of this Section 9.3: (x) in respect
of any individual Action or individual claim, fact or occurrence or any series
of related Actions, claims, facts or occurrences (including any class action),
until Losses in respect of such individual or related Actions, claims, facts or
occurrences are greater than the De Minimis Claim Amount; or (y) for any Losses,
until the aggregate amount of all such Losses incurred or suffered by the Seller
Indemnified Parties exceeds the Deductible Amount, in which case the Seller
Indemnified Parties shall be entitled to indemnification for the full amount of
Losses in excess of such threshold; provided, however, that in no event will the
Seller Indemnified Parties be entitled to indemnity for Losses pursuant to
clause (i) of this Section 9.3 to the extent that the amount of such Losses, in
the aggregate, incurred or suffered by the Seller Indemnified Parties exceeds
the Indemnity Cap Amount, except with respect to Losses arising from the breach
of Section 6.1.

SECTION 9.4 Notice, Settlements and Other Matters. (a) A party seeking
indemnification pursuant to Section 9.2 or Section 9.3 (the “Indemnified Party”)
must give prompt written notice to the party from whom such indemnification is
sought (the “Indemnifying Party”) of the assertion or commencement of any
Action, in respect of which indemnity may be sought hereunder specifying in
reasonable detail the individual items of such Losses including the amount, the
date each such item was paid, or properly accrued or arose, and the specific
details of the breach of representation, warranty or covenant or other claim or
matter to which such item is related. Notwithstanding the foregoing, the failure
of the Indemnified Party to furnish the written notice referred to in the
preceding sentence in a prompt manner shall not effect its right to
indemnification to the extent the Indemnifying Party’s right to defend the
matter is not materially prejudiced by such failure to give prompt notice. In
the event that any third party Action is made against the Indemnified Party and
the Indemnified Party notifies the Indemnifying Party of the commencement
thereof, the Indemnifying Party may elect at any time to negotiate a settlement
or a compromise of such Action or to defend such Action, in each case at its
sole cost and expense (subject to the limitations set forth in Section 9.2, if
the Seller is the Indemnifying Party, or Section 9.3, if the Purchaser is the
Indemnifying Party) and with its own counsel. If, within 30 days of receipt from
an Indemnified Party of the notice referred to above the Indemnifying Party
(i) advises the Indemnified Party in writing that it will not elect to defend,
settle or otherwise compromise or pay such Action, or (ii) fails to make such an
election in writing within such time-frame, the Indemnified Party may (subject
to the Indemnifying Party’s continuing right of election in the preceding
sentence), at its option, defend, settle, compromise or pay such Action;
provided, however, that any such settlement or compromise shall be permitted
hereunder only with the written consent of the Indemnifying Party. Unless

 

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and until the Indemnifying Party makes an election in accordance with this
Section to defend, settle, compromise or pay such Action, all of the Indemnified
Party’s reasonable costs arising out of the defense, settlement, compromise or
payment thereof will be Losses subject to indemnification by the Indemnifying
Party (subject to the provisions and limitations of Section 9.2 and Section 9.3,
as applicable). Each Indemnified Party shall make available to the Indemnifying
Party all information reasonably available to such Indemnified Party relating to
such Action. If the Indemnifying Party elects to defend any such Action, the
Indemnified Party may participate in such defense with counsel of its choice at
the Indemnified Party’s sole cost and expense. If the Indemnifying Party elects
to assume the defense of (or otherwise elects to negotiate, settle or
compromise) any Action as described above, the Indemnified Party will reimburse
the Indemnifying Party for all costs and expenses incurred by the Indemnifying
Party in connection with such defense to the extent such costs and expenses do
not total an amount indemnifiable pursuant to Section 9.2 or Section 9.3, as
applicable.

(b) The Indemnified Party will have the right to reject any settlement approved
by the Indemnifying Party if the Indemnified Party is not fully and
unconditionally released from any Liability resulting from that Action. The
Indemnified Party will not have the right to settle any third party Action
without the written consent of the Indemnifying Party if the Indemnifying Party
is contesting such Action in good faith and has assumed the defense of such
Action from the Indemnified Party or if the period for determining whether or
not to assume the defense of such Action from the Indemnified Party has not
expired.

(c) In calculating the amount of any Losses of an Indemnified Party under this
Article IX, there will be subtracted from such amount the amount of any
(i) insurance proceeds (net of Taxes actually incurred), and other than proceeds
received through self-insurance or insurance provided by Affiliates of such
Indemnified Party) actually received by the Indemnified Party with respect to
such Losses, and (ii) third-party payments actually received by the Indemnified
Party with respect to such Losses. In the event that the Indemnifying Party
reimburses the Indemnified Party for any Losses prior to the occurrence of any
events contemplated by clauses (i) or (ii) of this Section 9.4(c), the
Indemnified Party will remit to the Indemnifying Party any such amounts that the
Indemnified Party subsequently receives or realizes with respect to such Losses.
Upon the payment in full of any claim hereunder, the Indemnifying Party will be
subrogated to the rights of the Indemnified Party against any Person with
respect to the subject matter of such claim and any amount paid by the
Indemnifying Party under this Article IX. The Indemnified Party shall cooperate
with the Indemnifying Party in the assertion by the Indemnifying Party of any
such claim against such other Persons.

(d) Without limitation of their respective rights and obligations as set forth
elsewhere in this Article IX, and subject to the procedures for indemnification
claims set forth in this Article IX, the Indemnified Party will act in good
faith, will use commercially reasonable efforts to mitigate any Losses, will use
similar discretion in the use of personnel and the incurring of expenses as the
Indemnifying Party would use if they were engaged and acting entirely at their
own cost and for their own account, and will consult regularly with the
Indemnifying Party regarding the conduct of any Actions or the taking of any
action for which indemnification may be sought. In the event that an Indemnified
Party shall fail to make such commercially reasonable efforts to mitigate any
such Losses, then notwithstanding anything else to the contrary contained
herein, neither the Seller nor the Purchaser, as the case may be, shall be
required to indemnify any Indemnified Party for that portion of any Losses that
could reasonably be expected to have been avoided if the Indemnified Party had
made such efforts.

 

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(e) The Seller and the Purchaser agree to treat and report all indemnity
payments as additional adjustments to the amount of the total consideration paid
for the Acquired Assets for all Tax purposes unless required by applicable
Requirements of Law.

(f) For purposes of this Article IX, all representations and warranties
continued in this Agreement shall be read to exclude any materiality or
“Material Adverse Effect” qualifiers appearing therein.

(g) Notwithstanding anything to the contrary contained herein, the
indemnification provided for herein shall not cover, and in no event shall any
party hereto be liable for, any indirect damages, including consequential,
incidental, exemplary or special damages, or punitive damages.

(h) After the Closing Date, other than as provided in Section 2.4 and except
with respect to claims based on fraud and/or claims seeking equitable remedies,
this Article IX will constitute the Seller’s and the Purchaser’s exclusive
remedy for any of the matters addressed herein or other claim arising out of or
relating to this Agreement.

ARTICLE X

MISCELLANEOUS

SECTION 10.1 Notices. All notices and other communications by the Purchaser or
the Seller hereunder will be in writing to the other party and will be deemed to
have been duly given when delivered in person, when received via facsimile or
overnight courier, or when posted by United States registered or certified mail,
with postage prepaid, addressed as follows:

if to the Purchaser to:

Chase Bank USA, N.A.

3 Christina Center

201 North Walnut Street

Wilmington, DE 19801

Attention: Chief Executive Officer

Facsimile: (212) 230-8881

with a copy to:

Chase Bank USA, N.A.

3 Christina Center

201 North Walnut Street

Wilmington, DE 19801

Attention: General Counsel Chase Card Services

Facsimile: (212) 230-8881

 

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if to the Seller to:

Kohl’s Department Stores, Inc.

N56 W17000 Ridgewood Drive

Menomonee Falls, WI 53051

Attention: Chief Operating Officer

Facsimile: (262) 703-6796

with a copy to:

Kohl’s Department Stores, Inc.

N56 W17000 Ridgewood Drive

Menomonee Falls, WI 53051

Attention: General Counsel

Facsimile: (262) 703-7274

Notices and other communications may also be sent to such other address or
addresses as the Purchaser or the Seller may from time to time designate by
notice as provided herein, except that notices of change of address will be
effective only upon receipt.

SECTION 10.2 Expenses. (a) Except as otherwise provided herein, all legal and
any other third-party costs and expenses incurred in connection herewith and the
transactions contemplated by this Agreement and the Ancillary Agreements will be
paid by the party incurring such expenses, except that all fees or other amounts
payable to any Governmental Authority in connection with any consent or approval
required by Article VII shall be paid by the Purchaser.

(b) Collection efforts and related expenses on all Accounts made or incurred by
the Seller prior to the Closing Date will be the responsibility of the Seller,
and all monies collected thereon prior to the Closing Date (and all monies
collected on Written-Off Accounts prior to the Closing Date) shall be retained
by the Seller.

SECTION 10.3 Successors and Assigns. This Agreement will be binding upon and
will inure to the benefit of the parties and their respective successors and
permitted assigns. This Agreement and the rights and obligations hereunder may
not be assigned by any party to any Person without the prior written consent of
the other party hereto, and any purported assignment without such consent shall
be void.

SECTION 10.4 Entire Agreement; Amendment; Waiver. This Agreement and the
Ancillary Agreements, including the Exhibits and Schedules hereto and thereto,
embody the entire agreement of the parties hereto with respect to the subject
matter hereof and supersede all prior agreements with respect thereto, other
than the Confidentiality Agreement. No representation, warranty, inducement,
promise, understanding or condition not set forth in this Agreement (or the
other documents referred to in the preceding sentence) has been made or relied
on by any party in entering into this Agreement. This Agreement may be amended,
and any provision hereof waived, but only in a writing signed by the parties
hereto.

 

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SECTION 10.5 Counterparts. This Agreement may be executed in two or more
counterparts any of which may be delivered by facsimile transmission and all of
which will together constitute one and the same instrument.

SECTION 10.6 Governing Law. This Agreement and all rights and obligations
hereunder, including matters of construction, validity and performance, shall be
governed by and construed in accordance with the laws of the State of New York,
without regard to internal principles of conflict of laws, and applicable
federal law.

SECTION 10.7 Waiver of Jury Trial and Venue. The parties hereto waive all right
to trial by jury in any action or proceeding to enforce or defend any rights
under this Agreement. Any lawsuit brought by either party against the other
shall be brought in the United States District Court for the Eastern District of
Wisconsin in Milwaukee, Wisconsin.

SECTION 10.8 Severability. In case any one or more of the provisions contained
herein is found by a court of competent jurisdiction to be invalid, illegal or
unenforceable in any respect under any law, the validity, legality and
enforceability of the remaining provisions contained herein will not in any way
be effected or impaired thereby.

SECTION 10.9 Public Announcement. Except for any notice that is required by law
or regulation, each of the Purchaser and the Seller agrees that it will not
issue a press release or make any other public statement with respect to the
transactions contemplated by this Agreement or the Ancillary Agreements without
the prior written consent of the other party, which consent will not be
unreasonably withheld or delayed. Each of the Purchaser and the Seller, agrees
to notify and consult with the other at least one Business Day in advance of
filing any notice required by law or regulation.

SECTION 10.10 Third-Party Beneficiaries. Nothing in this Agreement, expressed or
implied, will confer on any Person, other than the parties hereto and their
respective successors and permitted assign, any rights, remedies, obligations or
liabilities; provided that the provisions of Article IX will inure to the
benefit of the Indemnified Parties.

SECTION 10.11 Credit Bureau Reporting. Upon the Closing, with the cooperation of
the Purchaser, the Seller will notify the three major credit reporting bureaus
that the designation on all Accounts purchased hereunder shall reflect that such
Accounts have been transferred.

SECTION 10.12 Further Assurances. Each of the parties hereto shall, whenever and
as often as reasonably requested to do so by the other party hereto, execute,
acknowledge and deliver any and all such other and further acts, assignments,
endorsements, transfers and any instruments of further assurance, approvals and
consents as are necessary or proper in order to complete, ensure and perfect
(i) the Purchase and Assumption contemplated hereby, and (ii) the consummation
of the other transactions contemplated hereby.

[Signature Page Follows]

 

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IN WITNESS WHEREOF, this Agreement has been executed on behalf of each of the
parties hereto as of the day and year first above written.

 

KOHL’S DEPARTMENT STORES, INC. By:  

/s/ Arlene Meier

Name:  

Arlene Meier

Title:  

Chief Operating Officer

CHASE BANK USA, NATIONAL

ASSOCIATION

By:  

/s/ David Hoyt

Name:  

David Hoyt

Title:  

Senior Vice President

 

Signature Page to Purchase and Sale Agreement