ASSET PURCHASE AGREEMENT
DATED DECEMBER 8, 2000
BY AND AMONG
▇▇▇▇▇ FARGO FINANCIAL LEASING, INC.
CONSECO, INC.
CONSECO FINANCE CORP.
CONSECO FINANCE VENDOR SERVICES CORPORATION
GREEN TREE LEASE FINANCE II, INC.
GREEN TREE LEASE FINANCE 1998-1, LLC
AND
CONSECO FINANCE LEASE 2000-1, LLC
TABLE OF CONTENTS
Section 1. Definitions........................................................1
Section 2. Purchase and Sale of Assets; Other Closing Transactions............8
(a) Purchase and Sale of Assets............................................8
(b) Assumption of Liabilities..............................................8
(c) Purchase Price.........................................................8
(d) The Closing............................................................8
(e) Deliveries at the Closing..............................................9
(f) Pre-Closing Accounting Adjustments.....................................9
(g) Post-Closing Adjustment to Estimated Purchase Price................9
(h) Payment of Purchase Price Adjustments.................................10
(i) Reserve Holdback.......................................................10
Section 3. Representations and Warranties Concerning the Transaction..........10
(a) Representations and Warranties Regarding Seller and CFC................10
(b) Representations and Warranties of Buyer................................12
Section 4. Representations and Warranties Concerning the Business............13
(a) Title to Acquired Assets...............................................13
(b) [Reserved.]............................................................13
(c) Financial Information..................................................13
(d) Subsequent Events......................................................14
(e) Permits and Compliance...............................................14
(f) Contracts..............................................................14
(g) Real Property.........................................................15
(h) Lease Transactions and Lease Documents..........................15
(i) Transition Services Agreement........................................17
(j) Actions and Proceedings................................................17
(k) Certain Agreements.....................................................18
(l) Employee Benefit Plans.................................................18
(m) Compliance with Worker Safety and Environmental Laws................18
(n) Labor Matters..........................................................18
(o) Intellectual Property..................................................18
(p) Securitizations........................................................19
Section 5. Pre-Closing Covenants.............................................20
(a) Conduct of Business of the Company..................................20
(b) Access to Information..................................................23
(c) Reasonable Efforts.....................................................23
(d) Public Announcements...................................................24
(e) Notification of Certain Matters........................................24
Section 6. Post-Closing Covenants............................................24
(a) General................................................................24
(b) Litigation Assistance.................................................25
(c) Reserved...............................................................25
(d) Use of Name............................................................25
(e) Employee Benefits and Employment.......................................25
(f) Books and Records.....................................................28
(g) Noncompetition.........................................................28
(h) Non-Solicitation of Employees......................................29
(i) Notification of Employment Status......................................29
Section 7. Tax Matters........................................................29
(a) Definitions............................................................29
(b) Tax Representations....................................................30
(c) Liability for Taxes....................................................30
(d) Sales and Transfer Taxes..............................................31
(e) Payments of Amounts Due under this Section 7...........................31
(f) Tax Returns..........................................................31
(g) Assistance and Cooperation.........................................32
(h) Period of Indemnification.............................................32
Section 8. Conditions to Obligation to Close..................................33
(a) Conditions to Obligation of Buyer......................................33
(b) Conditions to Obligation of Seller.....................................34
Section 9. Indemnification....................................................35
(a) Survival of Representations and Warranties.......................35
(b) Indemnification Provisions for Benefit of Buyer........................35
(c) Indemnification Provisions for Benefit of Seller......................36
(d) Matters Involving Third Parties........................................36
(e) Exclusive Remedy.......................................................36
Section 10. Termination.......................................................37
(a) Termination of Agreement...............................................37
(b) Effect of Termination..................................................38
Section 11. Miscellaneous.....................................................38
(a) Entire Agreement.......................................................38
(b) No Third-Party Beneficiaries.........................................38
(c) Succession and Assignment............................................38
(d) Counterparts...........................................................38
(e) Headings...............................................................38
(f) Notices................................................................38
(g) Governing Law; Submission to Jurisdiction; Waiver of Jury Trial....39
(h) Amendments and Waivers...............................................40
(i) Severability...........................................................40
(j) Expenses...............................................................40
(k) Construction...........................................................40
(l) Incorporation of Disclosure Schedule..................................40
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT dated December 8, 2000 by and among ▇▇▇▇▇
Fargo Financial Leasing, Inc., an Iowa corporation (the "Buyer"), Conseco
Finance Corp., a Delaware corporation ("CFC") and Conseco Finance Vendor
Services Corporation, a Delaware corporation ("Vendor Services") and its wholly
owned subsidiaries Green Tree Lease Finance II, Inc., a Minnesota corporation,
Green Tree Lease Finance 1998-1, LLC, a Delaware limited liability company, and
Conseco Finance Lease 2000-1, LLC, a Delaware limited liability company (the
"Subsidiaries") (Vendor Services and the Subsidiaries are referred to
collectively as, the "Seller") and, solely as to the provisions and obligations
set forth in Sections 7 and Section 9 herein, Conseco, Inc., an Indiana
Corporation ("Conseco"). Buyer, Conseco, CFC and Seller are referred to together
herein as the "Parties."
WHEREAS, Seller is engaged in the business of providing customized
lease financing for commercial equipment, with a focus on the computer, office
products and telecommunications markets (the "Business"); and
WHEREAS, Seller desires to sell and assign to Buyer, and Buyer desires
to purchase and assume from Seller both directly and through certain Affiliates,
on the terms and subject to the conditions set forth in this Agreement,
substantially all of the assets and certain liabilities of Seller in connection
with the Business.
NOW, THEREFORE, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows:
Section 1. Definitions. The following terms used in this Agreement have
the meanings set forth below:
"Accounting Firm" has the meaning set forth in Section 2(g) below.
"Acquired Assets" means all assets (for clarity, specifically including
the contra asset account known as allowance for losses) of Seller set forth on
the Final Closing Statement of Assets and Liabilities and specifically including
miscellaneous assets of the Business which may not be recorded on the Final
Closing Statement of Assets and Liabilities including any rights to recovery by
Seller arising out of collection litigation related to the Business that is
pending as of or commenced after the Closing Date, except where such collection
litigation has resulted in a counterclaim and such Leases and Liabilities in
connection with such defensive litigation are Excluded Assets and Excluded
Liabilities (the "Acquired Litigation Rights") but specifically excluding the
Excluded Assets.
"Acquired Business" has the meaning set forth in Section 6(g)(i) below.
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"Adjustment Date" has the meaning set forth in Section 2(g) below.
"Adverse Consequences" means all actions, suits, proceedings, claims,
demands, judgments, damages, reasonable amounts paid in settlement, liabilities,
obligations, losses and expenses (including court costs and reasonable
attorneys' fees and expenses).
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Exchange Act.
"Assumed Liabilities" means (a) all liabilities reflected on the Final
Closing Statements of Assets and Liabilities, (b) all obligations of Seller
under the Leases, the Third Party Contracts, the real property leases and
subleases listed in Section 4(g) of the Disclosure Schedule, the Securitization
Agreements, and the Intellectual Property Rights listed in section 4(o) of the
Disclosure Schedule, and (c) Seller's Liabilities and obligations related to the
Acquired Litigation Rights (the "Assumed Litigation Obligations"), but
specifically excluding the Excluded Liabilities.
"Assumed Litigation Obligations" has the meaning set forth in the
definition of Assumed Liabilities above.
"BHC Act" means the Bank Holding Company Act.
"Buyer" has the meaning set forth in the preface above.
"Buyer Affiliates" has the meaning set forth in Section 2(a) below.
"Buyer's Employee Benefits" has the meaning set forth in Section
6(e)(ii)(A) below.
"Change in Control Agreement" has the meaning set forth in Section 4(k)
below.
"Closing" has the meaning set forth in Section 2(d) below.
"Closing Date" has the meaning set forth in Section 2(d) below.
"Code" means the Internal Revenue Code of 1986, as amended.
"Competitive Business" has the meaning set forth in Section 6(g)(i)
below.
"Confidentiality Agreement" has the meaning set forth in Section 5(b)
below.
"Conseco" has the meaning set forth in the preface above.
"Conseco Entity" means Conseco (or its successor by operation of law)
and any corporation, partnership, limited liability company or other entity (a)
with respect to which Conseco (or such successor), directly or indirectly, owns
a majority of the outstanding voting securities or (b) whose financial
statements are consolidated with Conseco's (or such
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successor's) financial statements in accordance with GAAP and as to which
Conseco is the parent entity.
"Disclosure Schedule" has the meaning set forth in Section 4 below.
"Employee Benefit Plan" means any (a) nonqualified deferred
compensation or retirement plan or arrangement, (b) qualified defined
contribution retirement plan which is an Employee Pension Benefit Plan, (c)
qualified defined benefit retirement plan which is an Employee Pension Benefit
Plan (including any Multiemployer Plan) or (d) Employee Welfare Benefit Plan.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA
Section 3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA
Section 3(1).
"Environmental Laws" means all applicable federal, state and local
laws, rules and regulations, orders, decrees, judgments, permits and licenses
relating to the protection or clean-up of the environment and activities or
conditions related thereto, including, without limitation, those relating to the
generation, handling, disposal, transportation or release of hazardous
materials.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Estimated Purchase Price" has the meaning set forth in Section 2(c)
below.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Excluded Assets" means:
(a) corporate charters, qualifications to conduct business as a
foreign corporation, arrangements with registered agents relating
to foreign qualifications, taxpayer and other identification
numbers, seals, minute books, stock transfer books, blank stock
certificates, and other documents relating to the organization,
maintenance, and existence of Seller;
(b) all stock (or any ownership interest in) the Subsidiaries;
(c) any of the rights of Seller under this Agreement (or under any
supplemental agreement between Seller and Buyer entered into on or
after the date of this Agreement);
(d) rights of Seller or any Affiliates under any governmental license,
permit or authorization;
(e) any rights to insurance (or proceeds of insurance) for claims
arising out of or related to Liabilities (other than Assumed
Liabilities);
(f) all Tax related assets, except personal property tax receivables
related to the Leases;
(g) all Leases and/or Lease Transactions involved in defensive
litigation, including counterclaims, as set forth on Appendix A to
the Disclosure Schedule, which Appendix shall be updated as of the
Closing Date; and
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(h) any refunds or credits relating to Taxes that are not an Assumed
Liability.
"Excluded Liabilities" means:
(a) any Liability of Seller for costs and expenses incurred in
connection with this Agreement and the transactions contemplated
hereby (including as provided in Section 7(h) below);
(b) any intercompany debt owed by Seller to an Affiliate thereof;
(c) any Liability or obligation of Seller under this Agreement (or
under any supplemental agreement by and between Buyer and Seller
entered into on or after the date of this Agreement);
(d) liabilities in connection with any Leases and/or Lease
Transactions involved in defensive litigation, including
counterclaims;
(e) all unaccrued and undisclosed liabilities;
(f) all liabilities retained by Seller under Section 6(e) hereof; and
(g) all Tax related liabilities for (1) any taxable year or period
that ends on or before the Closing Date and (2) with respect to
any taxable year ending after the Closing Date, the portion of
such taxable year or period on and including the Closing Date,
except for personal property tax liabilities related to the
Leases.
"Executive Officer" means an "officer" as such term is defined in Rule
16a-1 of the regulations promulgated under the Exchange Act.
"Final Closing Statement of Assets and Liabilities" means the
consolidated statement of assets and liabilities of the Seller as of the Closing
Date, which shall be prepared by Seller in the same manner as the Statements of
Assets and Liabilities, except as limited or restricted or modified by Sections
2(f) and 5(a) hereof.
"Finance Receivables" means the amount of the on-balance sheet
receivables and residuals, specifically not including allowance for losses or
SFAS 91 deferred expenses.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"Governmental Entity" has the meaning set forth in Section 3(a)(iii)
below.
"Gross Finance Receivables" means the total gross amount of Obligor
payments due now and in the future for all Leases managed in the Business.
"▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended.
"Inactive Employees" has the meaning set forth in Section 6(e)(i)
below.
"Income Tax" means any federal, state or local income tax, including
any interest, penalty or addition thereto, whether disputed or not.
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"Income Tax Return" means any return, declaration, report, claim for
refund or information return or statement relating to Income Taxes, including
any schedule or attachment thereto.
"Indemnified Party" has the meaning set forth in Section 9(d) below.
"Indemnifying Party" has the meaning set forth in Section 9(d) below.
"Intellectual Property Rights" means patents, trademarks, trade names,
service marks, trade secrets, copyrights and other proprietary intellectual
property rights.
"Interest Only Security(ies)" means the asset on the various Statements
of Assets and Liabilities representing the value of Seller's interest in the
off-balance sheet Securitization known as Green Tree Lease Finance 1998-1, LLC.
"IRS" means the Internal Revenue Service.
"Knowledge of Seller" means the actual knowledge, without independent
investigation, of the officers, directors, or financial or operational
managerial employees of Seller, CFC or Conseco.
"Lease" means, as applicable, (i) an equipment lease or master
equipment lease agreement, conditional sales agreement, loan and security
agreement, or promissory note and related schedules, supplements and addenda and
(ii) with respect to equipment or property owned by Seller, a promissory note
and related loan and security agreement, schedules, supplements and/or addenda,
each evidencing the payment obligation of an Obligor and entered into with
respect to a Lease Transaction.
"Lease Documents" means all agreements, arrangements, understandings
and documents entered into in connection with Lease Transactions including,
without limitation, vendor program agreements, master equipment lease
agreements, schedules, supplements and addenda thereto, delivery and acceptance
certificates, loan and security agreements, promissory notes, vendor recourse
agreements, assignment agreements, property waivers, Uniform Commercial Code
filings and guarantees.
"Lease Payoff Amount" has the meaning set forth in Section 4(h)(xv)
below.
"Lease Transaction" means a financing arrangement provided by Seller
with respect to any type of equipment or property and regardless of whether the
transaction takes the form of a lease agreement, a conditional sales agreement,
loan and security agreement or promissory note, under which Seller is the
lessor, seller, lender, secured party or assignee thereof.
"Liability" means any liability (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due.)
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"LIBOR" means the offered rate for deposits in United States Dollars
(rounded upwards, if necessary, to the nearest 1/16 of 1%) for an interest
period of one month which appears on the Reuters Screen LIBOR Page as of 11:00
a.m., London time, on each business day.
"Lien" means any mortgage, pledge, lien, encumbrance, charge, or other
security interest, other than (a) mechanics', materialmen's, warehousemen's,
artisans' and similar liens, (b) liens for Taxes not yet due and payable or for
Taxes that the taxpayer is contesting in good faith through an appropriate
proceeding, (c) purchase money liens and liens securing rental payments under
capital lease arrangements, (d) rights to use or ownership of assets provided
by the Lease Documents and liens permitted by the Lease Documents and (e) other
liens arising in the Ordinary Course of Business and not incurred in connection
with the borrowing of money.
"Material Adverse Effect" or "Material Adverse Change" means, with
respect to Seller, a material adverse effect on or change to (as the case may
be) the business or financial condition of Seller; provided, however, that (a)
any change or effect, to the extent it is attributable to changes in prevailing
interest rates or to any change in general economic conditions or (b) any change
in the ratings given to the debt securities of CFC or its Affiliates, excluding
Conseco, by any nationally recognized rating agency, shall not be considered
when determining if a Material Adverse Effect or Material Adverse Change has
occurred. Notwithstanding the foregoing, in no event shall there be an automatic
presumption that a downgrade in the ratings given to the debt securities of
Conseco has resulted in a Material Adverse Effect or Material Adverse Change.
"Multiemployer Plan" has the meaning set forth in ERISA Section 3(37).
"Most Recent Statement of Assets and Liabilities" has the meaning set
forth in Section 4(c) below.
"Obligor(s)" means, with respect to any Lease, the Person(s) obligated
to make payments with respect to such Lease, including any guarantor thereof.
"Ordinary Course of Business" means the ordinary course of business
consistent with past practice.
"Party" has the meaning set forth in the preface above.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization or a Governmental Entity.
"Preliminary Closing Statement of Assets and Liabilities" means the
consolidated statement of assets and liabilities of Seller as of the last date
of the month ending immediately before the Closing Date, which will be prepared
by Seller in the same manner as the Statements of Assets and Liabilities, except
as limited or restricted or modified by Sections 2(f) and 5(a) hereof.
6
"Pre-Closing Accounting Adjustments" means the pre-income tax sum of
the pre-closing accounting adjustments required pursuant to Section 2(f) hereof.
"Purchase Price" has the meaning set forth in Section 2(c) below.
"Reserve Holdback" has the meaning set forth in Section 2(i).
"Retention Bonus Agreement" has the meaning set forth in Section 4(k)
below.
"SEC" means the Securities and Exchange Commission.
"Securitization Agreements" has the meaning set forth in Section
4(p)(i) below.
"Securitization Transactions" has the meaning set forth in Section 4(p)
below.
"Securities Act" means the Securities Act of 1933, as amended.
"Seller" has the meaning set forth in the preface above.
"Seller Permits" has the meaning set forth in Section 4(e) below.
"Statements of Assets and Liabilities" has the meaning set forth in
Section 4(c) below.
"Subsidiaries" has the meaning set forth in the preface above.
"Tax" or "Taxes" has the meaning set forth in Section 7(a)(i) below.
"Tax Return" has the meaning set forth in Section 7(a)(ii) below.
"Third Party Claim" has the meaning set forth in Section 9(d)(i) below.
"Third Party Contracts" has the meaning set forth Section 4(f) below.
"Transferred Employees" has the meaning set forth in Section 6(e)(i)
below.
"Transition Services Agreement" means the Transition Services Agreement
by and between Buyer and CFC (or one of its Affiliates) in the form attached to
this Agreement as Exhibit A.
"Treasury Regulations" means the rules and regulations promulgated
under the Code.
"WARN Act" has the meaning set forth in Section 6(e)(v) below.
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"Worker Safety Laws" means all applicable federal, state or local laws,
rules and regulations, orders, decrees, judgments, permits and licenses relating
to public and worker health and safety.
Section 2. Purchase and Sale of Assets; Other Closing Transactions.
(a) Purchase and Sale of Assets. On and subject to the terms and
conditions of this Agreement, Buyer agrees to purchase and as applicable cause
certain of its Affiliates (the "Buyer Affiliates") to purchase from Seller, and
Seller agrees to sell, transfer, convey, and deliver to Buyer and the Buyer
Affiliates, all of the Acquired Assets at the Closing for an aggregate amount
equal to the Purchase Price.
(b) Assumption of Liabilities. On and subject to the terms and
conditions of this Agreement, Buyer agrees to assume and become responsible,
together with the Buyer Affiliates, for all of the Assumed Liabilities at the
Closing. Neither Buyer nor any Buyer Affiliate will assume or have any
responsibility with respect to any other Liability or obligation of Seller not
included in the definition of Assumed Liabilities.
(c) Purchase Price. The purchase price (the "Purchase Price") to be
paid by Buyer to Seller shall be equal to the book value of the Acquired Assets
on the Final Closing Statement of Assets and Liabilities, less the book value of
the Assumed Liabilities on the Final Closing Statement of Assets and
Liabilities, plus the Pre-Closing Accounting Adjustments, plus a premium of
$58,400,000; provided, however, that if the fair market value of the Interest
Only Securities residual value identified on Seller's Final Closing Statement of
Assets and Liabilities is in excess of $7,800,000, the foregoing premium will be
reduced by an amount equal to such excess. In addition, in the event the
covenant contained in Section 5(a)(xiii) is not performed, the foregoing premium
will be reduced in relation to the number of basis points in excess of the
percentage set forth in Section 5(a)(1)(xiii) as follows: (i) 25-49 basis points
= $2,000,000; (ii) 50-74 basis points = $4,000,000; (iii) 75-99 basis points =
$6,000,000; (iv) 100 or more basis points shall constitute a Material Adverse
Change.
The Purchase Price will be calculated by Seller on a preliminary basis
(the "Estimated Purchase Price") at Closing based on the Preliminary Closing
Statement of Assets and Liabilities which shall be provided to Buyer five (5)
days prior to the Closing. The Estimated Purchase Price is subject to
post-Closing adjustment as provided in Section 2(g) based upon the Final Closing
Statement of Assets and Liabilities. The Estimated Purchase Price, less a
$10,000,000 Reserve Holdback as set forth in Section 2(i) below, shall be paid
at Closing by Buyer's delivery of cash by wire transfer to a bank account in
accordance with the instructions of Seller.
(d) The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of CFC at 1100
Landmark Towers, ▇▇▇ ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, commencing at 9:00
a.m. local time on the last business day of the month in which all conditions to
the obligations of the Parties to consummate the transactions contemplated
hereby have been satisfied or waived (other than conditions with respect to
actions
8
the respective Parties will take at the Closing itself), or such other date and
time as the Parties may mutually determine (the "Closing Date").
(e) Deliveries at the Closing. At the Closing, (i) CFC and Seller will
deliver to Buyer the various certificates, instruments, and documents referred
to in Section 8(a) below; (ii) Buyer will deliver to CFC and Seller the various
certificates, instruments, and documents referred to in Section 8(b) below;
(iii) with respect to the other Acquired Assets, Seller will execute,
acknowledge (if appropriate), and deliver to Buyer (A) assignments (including
any applicable real property and Intellectual Property transfer documents) in
the forms attached hereto as Exhibit B and (B) such other instruments of sale,
transfer, conveyance, and assignment as Buyer and its counsel reasonably may
request, including but not limited to, UCC-3 Assignments; (iv) Buyer will
execute, acknowledge (if appropriate), and deliver to Seller (A) an assumption
in the form attached hereto as Exhibit C and (B) such other instruments of
assumption as Seller and its counsel reasonably may request; and (v) Buyer will
deliver to Seller the consideration specified in Section 2(c) above.
(f) Pre-Closing Accounting Adjustments. Seller shall make the following
pre-closing accounting adjustments; such adjustments are in addition to the
requirements of Section 5(a) hereof. The effect of these adjustments shall be
recorded in the Preliminary Closing Statement of Assets and Liabilities and in
the Final Closing Statement of Assets and Liabilities as of the respective dates
thereof.
(i) Seller shall increase the allowance for losses from 2.2% of
Finance Receivables as required by Section 5(a) to 5.0% of Finance
Receivables (the amount of this increase shall be a pre-closing
accounting adjustment).
(ii) Leases shall be charged-off in accordance with the Buyer's
charge-off rules (such charge-offs above Sellers normal
charge-offs shall be a pre-closing accounting adjustment).
(iii) Fixed assets and other assets shall be written-off pursuant
to Buyer's accounting policies (such write-downs shall be a
pre-closing accounting adjustment).
(iv) The Interest Only Securities shall be written-off (the
difference between the fair market value determined by Seller
pursuant to Section 5(a)(x) and zero shall be a pre-closing
accounting adjustment), however, the maximum amount of this
pre-closing accounting adjustment which can be included in the
definition of Pre-Closing Accounting Adjustment shall be
$7,800,000.
(g) Post-Closing Adjustment to Estimated Purchase Price. Not later than
60 days following the Closing, Seller shall cause to be prepared a Final Closing
Statement of Assets and Liabilities as modified and limited by Section 2(f) and
Section 5(a) hereof and prepared in accordance with GAAP consistently applied
and on a basis consistent with the preparation of the Preliminary Closing
Statement of Assets and Liabilities, and Seller shall calculate the Purchase
Price based upon the Final Closing Statement of Assets and Liabilities. Buyer
shall provide Seller with such assistance as may be requested by Seller in
connection with the preparation of
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the Final Closing Statement of Assets and Liabilities. Buyer, if it disputes the
calculation of the Purchase Price or the Final Closing Statement of Assets and
Liabilities, shall notify Seller in writing within thirty (30) days after
receipt of the Final Closing Statement of Assets and Liabilities and Purchase
Price computation, which notice shall specify in reasonable detail each
adjustment proposed by Buyer. If Buyer does not so notify Seller, then the
Purchase Price shall be as set forth on Seller's computation. If Buyer gives
notice of any proposed adjustments, during the 30-day period following the date
of such notice, Seller and Buyer shall attempt to resolve the appropriateness of
such proposed adjustments. If at the end of such 30-day period Seller and Buyer
shall have failed to reach a written agreement with respect to all such proposed
adjustments, the proposed adjustments remaining in dispute shall be referred to
arbitration to an accounting firm mutually acceptable to Buyer and Seller. If
Buyer and Seller are unable to agree on an accounting firm, a nationally
recognized accounting firm shall be chosen by lot by Buyer and Seller, however,
such firm shall not be KPMG, LLP nor PricewaterhouseCoopers, LLP (the
"Accounting Firm") to determine the appropriateness of the remaining proposed
adjustments. The adjustments so determined by written agreement of Seller and
Buyer or by arbitration, as the case may be, shall be reflected in the final
Purchase Price. The date that the Purchase Price is finally determined means the
"Adjustment Date." The costs of the Accounting Firm shall be borne by the party
whose position is not supported by the Accounting Firm's final determination or
equally by Buyer and Seller if the Accounting Firm's final determination of the
Purchase Price supports neither Buyer's nor Seller's position, and each of Buyer
and Seller will promptly provide such information to the Accounting Firm as such
firm shall request.
(h) Payment of Purchase Price Adjustments. If the final Purchase Price
exceeds the Estimated Purchase Price, Buyer shall pay such excess, together with
interest thereon from the Closing Date to the date such excess is paid at a
fluctuating rate per annum which at all times shall be equal to the LIBOR as in
effect from time to time, within seven days after the Adjustment Date, by wire
transfer of immediately available funds to such bank account in the United
States bank as Seller shall designate in the amount of such excess. If the
Estimated Purchase Price exceeds the final Purchase Price, Seller shall pay such
excess within seven days after the Adjustment Date, by wire transfer of
immediately available funds to such bank account in the United States bank as
Buyer shall designate in the amount of such excess, together with interest
thereon at the LIBOR from the Closing Date to the date such excess is paid.
(i) Reserve Holdback. Buyer shall holdback $10,000,000 from the
Purchase Price and such amount shall be placed in a reserve fund (the "Reserve
Holdback"). The Reserve Holdback shall be established, maintained and
administered pursuant to Addendum 1 attached hereto and made a part hereof.
Section 3. Representations and Warranties Concerning the Transaction.
(a) Representations and Warranties Regarding Seller and CFC. Seller
and CFC, jointly and severally, hereby represent and warrant to Buyer as
follows:
(i) Organization. CFC is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
Vendor Services is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and has the
requisite corporate power and authority to carry on its business as
10
now being conducted. Each Subsidiary is duly organized, validly
existing and in good standing under the laws of the jurisdiction in
which it is organized and has the requisite corporate (in the case of a
Subsidiary that is a corporation) or other power and authority to carry
on its business as now being conducted. Vendor Services and each of the
Subsidiaries are duly qualified to do business, and are in good
standing, in each jurisdiction where the character of their properties
owned or held under lease or the nature of their activities makes such
qualification necessary, except where the failure to be so qualified
would not, individually or in the aggregate, have a Material Adverse
Effect on Vendor Services and the Subsidiaries.
(ii) Authority. Seller and CFC have all requisite corporate or
other power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. The execution and
delivery of this Agreement by Seller and CFC and the consummation by
each of Seller and CFC of the transactions contemplated hereby have
been duly authorized by all necessary corporate or other action on the
part of Seller and CFC. This Agreement has been duly executed and
delivered by Seller and CFC, and (assuming the valid authorization,
execution and delivery of this Agreement by Buyer and the validity and
binding effect hereof on Buyer) constitutes the valid and legally
binding obligation of Seller and CFC, enforceable against each of
Seller and CFC in accordance with its terms.
(iii) Consents and Approvals; No Violation. Assuming that all
consents, approvals, authorizations and other actions described in this
Section 3(a)(iii) have been obtained and all filings and obligations
described in this Section 3(a)(iii) have been made, the execution and
delivery of this Agreement by each of Seller and CFC does not, and the
consummation of the transactions contemplated hereby and compliance
with the provisions hereof by Seller and CFC will not, result in any
violation of, or default (with or without notice or lapse of time, or
both) under, or give to others a right of termination, cancellation or
acceleration of any obligation or the loss of a material benefit under,
or result in the creation of any Lien upon any of the Acquired Assets
under, any provision of (i) the charter or bylaws of Vendor Services or
CFC, (ii) any provision of the comparable charter or organization
documents of any of the Subsidiaries, (iii) any loan or credit
agreement, note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise or license applicable to CFC
or Seller (other than the Lease Documents) or (iv) any judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to CFC
or Seller or any of their respective properties or assets, other than,
in the case of clauses (iii) or (iv), any such violations, defaults,
rights of termination, cancellation or acceleration, loss of material
benefit or rights or Liens, that, individually or in the aggregate,
would not have a Material Adverse Effect on Seller, materially impair
the ability of CFC or Seller to perform its obligations hereunder or
prevent the consummation of any of the transactions contemplated
hereby. No filing or registration with, or authorization, consent or
approval of, any federal or state court, commission, governmental body,
regulatory agency, authority or tribunal (a "Governmental Entity") is
required by or with respect to CFC or Seller in connection with the
execution and delivery of this Agreement by CFC and Seller or is
necessary for the consummation of the transactions contemplated by this
Agreement, except for (i) in
11
connection, or in compliance, with the provisions of the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act or the BHC Act, (ii) such filings as may be
required in connection with the Taxes described in Section 7, (iii)
such filings and consents as may be required under federal and state
finance, lending and banking laws and (iv) such other consents, orders,
authorizations, registrations, declarations and filings the failure of
which to be obtained or made would not, individually or in the
aggregate, have a Material Adverse Effect on Seller or prevent the
consummation of any of the transactions contemplated hereby.
(iv) Brokers. No broker, investment banker or other person (other
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., the fees and expenses of which will be paid
by CFC) is entitled to any broker's, finder's or other similar fee or
commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of CFC or
Seller.
(b) Representations and Warranties of Buyer. Buyer represents and
warrants to CFC and Seller as follows:
(i) Organization. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Iowa.
(ii) Authority. Buyer has all requisite corporate power and
authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement by Buyer and the consummation by Buyer of the transactions
contemplated hereby have been duly authorized by all necessary
corporate action on the part of Buyer. This Agreement has been duly
executed and delivered by Buyer, and (assuming the valid authorization,
execution and delivery of this Agreement by CFC and Seller and the
validity and binding effect hereof on CFC and Seller) constitutes the
valid and legally binding obligation of Buyer, enforceable against
Buyer in accordance with its terms.
(iii) Consents and Approvals; No Violation. Assuming that all
consents, approvals, authorizations and other actions described in this
Section 3(b)(iii) have been obtained and all filings and obligations
described in this Section 3(b)(iii) have been made, the execution and
delivery of this Agreement do not, and the consummation of the
transactions contemplated hereby and compliance with the provisions
hereof will not, result in any violation of, or default (with or
without notice or lapse of time, or both) under, or give to others a
right of termination, cancellation or acceleration of any obligation or
the loss of a material benefit under, or result in the creation of any
Lien upon any of the properties or assets of Seller under, any
provision of (i) the charter or bylaws of Buyer, (ii) any loan or
credit agreement, note, bond, mortgage, indenture, lease or other
agreement, instrument, permit, concession, franchise or license
applicable to Buyer or (iii) any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Buyer or its properties or
assets, other than, in the case of clauses (ii) or (iii), any such
violations, defaults, rights or Liens that, individually or in the
aggregate, would not materially impair the ability of Buyer to perform
its obligations hereunder or prevent the consummation of any of the
transactions contemplated hereby. No filing or
12
registration with, or authorization, consent or approval of, any
Governmental Entity is required by or with respect to Buyer in
connection with the execution and delivery of this Agreement by Buyer
or is necessary for the consummation of the transactions contemplated
by this Agreement, except for (i) in connection, or in compliance, with
the provisions of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act or the BHC Act, (ii) such
filings as may be required in connection with the Taxes described in
Section 7, (iii) such filings and consents as may be required under
federal and state commercial finance, lending and banking laws and (iv)
such other consents, orders, authorizations, registrations,
declarations and filings the failure of which to be obtained or made
would not, individually or in the aggregate, materially impair the
ability of Buyer to perform its obligations hereunder or prevent the
consummation of any of the transactions contemplated hereby.
(iv) Brokers. No broker, investment banker or other person is
entitled to any broker's, finder's or other similar fee or commission
in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of Buyer.
(v) Financing. Buyer has available, and on the Closing Date, will
have available, sufficient funds, available lines of credit and other
sources of immediately available funds to enable it to pay the Purchase
Price and otherwise consummate the transactions contemplated by this
Agreement on the terms and conditions set forth herein. Buyer's
obligations hereunder are not subject to any conditions regarding
Buyer's ability to obtain financing for the consummation of the
transactions contemplated herein.
Section 4. Representations and Warranties Concerning the Business. CFC
and Seller represent and warrant to Buyer that the statements contained in this
Section 4 are true and correct, except as set forth in the disclosure schedule
delivered by CFC and Seller to Buyer on the date hereof and initialed by the
Parties (the "Disclosure Schedule").
(a) Title to Acquired Assets. Seller has good and marketable title to
the properties and assets of Seller and a valid leasehold interest in the leased
properties and leased equipment used by the Seller in connection with the
Business, shown on the Most Recent Statement of Assets and Liabilities or
acquired after the date thereof, free and clear of all Liens, except for
properties and assets disposed of or repaid in the Ordinary Course of Business
since the date of the Most Recent Statement of Assets and Liabilities.
(b) [Reserved.]
(c) Financial Information. Included in Section 4(c) of the Disclosure
Schedule is a statement of assets and liabilities for Seller as of October 31,
2000 (the "Most Recent Statement of Assets and Liabilities") and as of June 30,
2000, August 31, 2000 and September 30, 2000 (together with the Most Recent
Statement of Assets and Liabilities, prepared in accordance with GAAP
consistently applied, the "Statements of Assets and Liabilities") derived from
CFC's unaudited consolidating balance sheets as of such date. The Statements of
Assets and Liabilities have been prepared on a basis consistent with exhibit
2.1.1 of the due diligence information
13
provided to Buyer, provided however, that the Statements of Assets and
Liabilities break the grouping "finance receivables" into its appropriate
categories. All Acquired Assets which are either material or which would be
required to be recorded on the books and records of Seller in accordance with
GAAP and Seller's past accounting practices, are set forth in the Most Recent
Statement of Assets and Liabilities. All Assumed Liabilities which are material
and which would be required to be recorded on the books and records of Seller in
accordance with GAAP and Seller's past accounting practices, are set forth in
the Most Recent Statement of Assets and Liabilities. The Statements of Assets
and Liabilities are prepared in accordance with GAAP and are complete and
accurate in all material respects and are consistent with the internal books and
records of Seller.
(d) Subsequent Events. Since the date of the Most Recent Statement of
Assets and Liabilities, there has not been any Material Adverse Change in the
Business.
(e) Permits and Compliance. Seller is in possession of all licenses,
grants, authorizations, permits, easements, variances, exceptions, consents,
certificates, approvals and orders of any Governmental Entity necessary for
Seller to lease and operate its properties or to carry on the Business as it is
now being conducted (the "Seller Permits"). No suspension or cancellation of any
of the Seller Permits is pending or, to the Knowledge of Seller, threatened.
Seller is not in violation of (A) its charter, bylaws or other organizational
documents, (B) any applicable law, ordinance, administrative or governmental
rule or regulation or (C) any order, decree or judgment of any Governmental
Entity having jurisdiction over Seller. No event of default or event that, but
for the giving of notice or the lapse of time or both, would constitute an event
of default exists under any indenture, mortgage, loan agreement, note or other
agreement or instrument for borrowed money, any guarantee of any agreement or
instrument for borrowed money or any lease (other than the Lease Documents),
contractual license or other agreement or instrument to which Seller is a party
or by which Seller is bound or to which any of the properties, assets or
operations of Seller is subject.
(f) Contracts. Section 4(f) of the Disclosure Schedule lists all
written contracts and other written agreements, other than Lease Documents, to
which Seller is a party (the "Third Party Contracts"). Seller has delivered to
Buyer correct and complete copies of the Third Party Contracts listed in Section
4(f) of the Disclosure Schedule (as amended to date). With respect to each Third
Party Contract as of the date hereof: (A) the agreement is valid and enforceable
in accordance with its terms in all material respects, subject to limitations as
to enforceability which might result from bankruptcy, insolvency, moratorium,
and other similar laws affecting creditor's rights generally and subject to the
effect of public policy and general principles of equity, including concepts of
materiality, reasonableness, good faith and fair dealing, and other similar
doctrines affecting the enforceability of agreements generally; (B) the
agreement will continue to be valid and enforceable to the same extent as
described in clause (A), and in full force and effect following the consummation
of the transactions contemplated hereby (including the assignments and
assumptions referred to in Section 2 above); and (C) no party is in breach or
default, and no event has occurred which with notice or lapse of time would
constitute a breach or default, or permit termination, modification, or
acceleration, under the agreement.
14
(g) Real Property. Seller owns no real property related to the
operations of the Business. Section 4(g) of the Disclosure Schedule lists and
describes briefly all real property leased or subleased to Seller, relating to
the Business. Seller has delivered to Buyer correct and complete copies of the
leases and subleases listed in Section 4(g) of the Disclosure Schedule (as
amended to date). Such leases and subleases are in full force and effect and
Seller holds a valid and existing leasehold interest under each such lease and
sublease. Seller is not in default, and no circumstances exist which, if
unremedied, would, either with or without notice or the passage of time or both,
result in a default, under any of such leases or subleases; nor, to the
Knowledge of CFC and Seller, is any other party to any of the leases or
subleases in default thereunder.
(h) Lease Transactions and Lease Documents.
(i) Each Lease constitutes a valid, binding, non-cancelable and
enforceable payment obligation of the Obligor in accordance with its
terms, except as may be limited by applicable bankruptcy, insolvency or
other similar laws affecting the enforceability of creditors' rights
generally and the availability of equitable remedies.
(ii) Each Lease was originated by Seller in the Ordinary Course of
Business or, in the case of any Lease purchased by Seller, was acquired
by Seller for proper consideration and on arm's length terms and was
validly assigned to Seller by the originator of such Lease without
recourse.
(iii) Each Lease contains customary and enforceable provisions
adequate to enable realization against the Obligor and/or the related
equipment.
(iv) Each Lease complies with all requirements of applicable
federal, state and local laws and regulations.
(v) Subject only to the Securitizations, Seller has good title to
each Lease and Seller's interest in the related equipment (subject to
the terms of such Lease) and is the sole owner thereof, free of all
Liens.
(vi) Subject only to the Securitizations, no Person (other than
Seller) has a participation in or other right to receive scheduled
payments under any Lease, and Seller has not taken any action to convey
any right to any Person that would result in such Person having a right
to scheduled payments received with respect to any Lease.
(vii) Each Lease was originated or acquired by Seller without any
fraud or misrepresentation.
(viii) Each Obligor had a location in the United States at the
inception of the Lease; and the asset location for each Lease and
address for each Lease in its records is accurate.
(ix) Seller warrants that Buyer shall suffer no Adverse
Consequences due to the failure by Seller or any other Person to make a
filing and or take other actions
15
required to be made, taken or performed in any jurisdiction to give
Seller an ownership or perfected security interest in the tangible
equipment underlying a Lease, except with respect to equipment having
an initial purchase price of $25,000 or less.
(x) There exists a lease file pertaining to each Lease, and such
lease file contains the Lease Documents or a facsimile copy thereof.
(xi) Each Lease prohibits the sale, assignment or transfer of the
Obligor's interest therein, the assumption of the Lease by another
person in a manner that would release the Obligor thereof from the
Obligor's obligation, or any sale, assignment or transfer of the
related equipment, without the prior consent of the lessor, other than
Leases which may (a) permit assignment to a subsidiary, corporate
parent or other affiliate, (b) permit the assignment to a third party,
provided the Obligor remains liable under the Lease or (c) permit
assignment to a third party with a credit standing (determined by
Seller in accordance with its underwriting policy and practice at the
time for an equivalent contract type, term and amount) equal to or
better than the original Obligor.
(xii) The Obligor under each Lease is required to make payments
thereunder (a) in United States dollars and (b) in fixed amounts and on
fixed and predetermined dates.
(xiii) Each Lease requires the Obligor to assume responsibility
for payment of all expenses in connection with the maintenance and
repair of the related equipment, the payment of all premiums for
insurance of such equipment and the payment of all taxes (including
sales and property taxes) relating to such equipment.
(xiv) Each Lease requires the Obligor thereunder to make all
scheduled payments thereon under all circumstances and regardless of
the condition or suitability of the related equipment and
notwithstanding any defense, set-off or counterclaim that the Obligor
may have against the manufacturer, lessor or lender (as the case may
be) and all payments were made on the dates indicated on the data tape
information provided during due diligence and will have been made on
the dates indicated on the data tape provided on the Closing Date.
(xv) The terms of each Lease constituting a lease agreement
provide that, if the leased equipment is damaged or destroyed, the
Obligor is required either (a) to repair such equipment, (b) to make a
termination payment to the lessor in an amount not less than the sum of
all unpaid scheduled payments through the end of the term of the Lease
or the principal amount then outstanding plus accrued interest thereon,
as appropriate (except some may be discounted at a rate set forth in
the Lease Documents) (the "Lease Payoff Amount") or (c) in some cases,
to replace such damaged or destroyed equipment with other equipment of
comparable use and value.
16
(xvi) Seller and CFC warrant that Buyer shall suffer no Adverse
Consequence as a result of cancellation of a Lease with a federal or
municipal entity caused by non-funding or non-appropriation.
(xvii) No provisions of any Lease have been waived, altered or
modified, in any material respect, except as indicated in the lease
file and reflected by the cash flow data provided to Buyer during due
diligence.
(xviii) Each Obligor has accepted the related equipment and has
had reasonable opportunity to inspect and test such equipment.
(xix) Each Lease constitutes and will continue to constitute a
valid reservation of title by Seller to the related equipment.
(xx) No consent of any Obligor is required to assign and transfer
any Lease to Buyer and each Lease is a complete and exclusive statement
of the entire agreement between Seller and Obligor.
(xxi) All security deposits held by Seller in connection with
Obligors residing in New York, are maintained in an account in
compliance with all laws.
(xxii) All Leases and all Lease information provided by Seller to
Buyer, including, but not limited to, balances, payments, credits,
other charges, insurance premiums and interest, are Year 2000
Compliant. As used herein "Year 2000 Compliant" shall mean that any
product, process, service, system or piece of equipment used to record,
store, process, calculate, sort, compare, transfer and/or present any
dates/time data, in connection with the Leases and Lease information,
accurately processes from, into or between the years 1999 and 2000 and
leap year calculations (Year 2000 is a leap year).
(i) Transition Services Agreement. Vendor Services currently provides
all services to CFC, via Vendor Services' LeaseWorks computer hardware and
software system, that Buyer is being asked to provide under the Transition
Services Agreement.
(j) Actions and Proceedings. There are no outstanding orders,
judgments, injunctions, awards or decrees of any Governmental Entity against or
involving Seller, or against or involving any of the present or former
directors, officers, employees, consultants, agents or stockholders of Seller,
as such, or any of its or their properties, assets or business. There are no
actions, suits or claims or legal, administrative or arbitrative proceedings or
investigations pending or, to the Knowledge of CFC and Seller, threatened
against or involving Seller or any of its or their present or former directors,
officers, employees, consultants, agents or stockholders, as such, or any of its
or their properties, assets or business that, individually or in the aggregate,
would have a Material Adverse Effect on Seller or materially impair the ability
of Seller to perform its obligations hereunder. There are no actions, suits,
labor disputes or other litigation, legal or administrative proceedings or
governmental investigations pending or, to the Knowledge of CFC and Seller,
threatened against or affecting Seller or any of its or their present or former
17
officers, directors, employees, consultants, agents or stockholders, as such, or
any of its or their properties, assets or business relating to the transactions
contemplated by this Agreement.
(k) Certain Agreements. Seller is not a party to any oral or written
agreement or plan, including any employment agreement or severance agreement,
any of the benefits of which will be increased, or the vesting of the benefits
of which will be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement or the value of any of the benefits of which will
be calculated on the basis of any of the transactions contemplated by this
Agreement (collectively, "Change in Control Agreements"). Section 4(k) of the
Disclosure Schedule sets forth (i) for each officer, director or employee who is
a party to, or will receive benefits under, any Change in Control Agreement, the
total amount that each such person may receive, or is eligible to receive,
assuming that the transactions contemplated by this Agreement are consummated on
the date hereof and (ii) the total amount of indebtedness owed to Seller from
each officer or director of Seller. CFC has entered into agreements with certain
employees of Seller under CFC's retention bonus program pursuant to which CFC
will be obligated to make payments to such employees if, after the Closing, they
complete a specified period of employment with Buyer (collectively, "Retention
Bonus Agreements"). CFC will continue to be obligated under such Retention Bonus
Agreements after the Closing Date. Section 4(k) of the Disclosure Schedule also
sets forth each officer, director or employee of Seller who is a party to a
Retention Bonus Agreement and the total amount that each such person is eligible
to receive thereunder.
(l) Employee Benefit Plans. All Employee Benefit Plans covering
employees of Seller are sponsored by CFC or an Affiliate of CFC (other than
Seller).
(m) Compliance with Worker Safety and Environmental Laws. The
properties, assets and operations of Seller are in compliance with all
applicable Worker Safety Laws and Environmental Laws. With respect to such
properties, assets and operations, there are no events, conditions,
circumstances, activities, practices, incidents, actions or plans of Seller that
interfere with or prevent compliance or continued compliance with applicable
Worker Safety Laws and Environmental Laws.
(n) Labor Matters. Seller is not a party to any collective bargaining
agreement or labor contract. There is no labor strike, dispute, slowdown or
stoppage pending or, to the Knowledge of CFC and Seller, threatened against or
affecting Seller which may interfere with the respective business activities of
Seller
(o) Intellectual Property. Section 4(o) of the Disclosure Schedule
describes all Intellectual Property rights owned by, licensed to or otherwise
controlled by Seller in connection with the Business. Seller owns and possesses
all right, title and interest, or holds a valid license, in and to the rights
set forth in Section 4(o) of the Disclosure Schedule. Seller has not infringed
any Intellectual Property Rights of any third party.
18
(p) Securitizations.
(i) Section 4(p)(i) of the Disclosure Schedule sets forth a true
and correct list of securitization transactions for which Seller (or
one or more Subsidiaries included within "Seller" as that term is
defined herein) (the "Securitization Transactions") is currently acting
as one or more of "servicer" or "master servicer," together with a true
and correct list of all sale and servicing agreements, indentures of
trust, insurance contracts, undertakings with rating agencies,
sub-servicing agreements, and any other contract of any type or
description relating to such Securitization Transactions (all of the
foregoing referred to herein as the "Securitization Agreements") and
Seller has furnished to the Buyer true, correct and complete copies of
all Securitization Agreements, and there are no agreements, written or
oral, that modify or amend any of such Securitization Agreements,
except as disclosed in Section 4(p)(i) of the Disclosure Schedule and
except for notifications for change of address.
(ii) Each of the Securitization Agreements is a valid and binding
agreement of the Seller and is enforceable by Seller against the other
parties thereto in accordance with its terms, except as such
enforcement may be limited by applicable bankruptcy, reorganization,
insolvency, moratorium or other laws affecting creditors' rights
generally from time to time in effect and subject to general equity
principles.
(iii) The Seller has the right under the Securitization Agreements,
subject only to the consents, notices, and other requirements
contemplated therein, to transfer and assign all of its rights
thereunder to the Buyer, including without limitation, the right to
re-purchase any assets pursuant to the Securitization Agreement.
Subject to the giving of notice to, and Seller's receipt of any
consents from third parties, as well as the agreement of Buyer and the
Buyer Affiliates to be bound and obligated and Buyer and the Buyer
Affiliates meeting any requirements with respect to successor entities
set forth therein, as may be required by the Securitization Agreements,
the execution, delivery and performance of this Agreement, and the
transfer and assignment by Seller of its rights under each
Securitization Agreement pursuant hereto will not constitute a breach
of any Securitization Agreement and will vest Buyer with good and
marketable title to the rights of Seller thereunder, free and clear of
any liens or claims.
(iv) The Seller has complied in all respects with the terms of the
Securitization Agreements, and all reports delivered by Seller in its
capacity as "servicer" pursuant to the terms of any Securitization
Agreement are true, correct and complete in all material respects. No
event of default, or event that would result in an event of default,
has occurred that would give rise to a right of another party thereto
to terminate any Securitization Agreement or Seller's rights as
"servicer" or "master servicer" thereunder, and Seller has not received
any notice of such termination.
(v) Each Lease sold and currently held in connection with a
Securitization Transaction complied at the time of sale in all respects
with the representations set forth in the Securitization Agreements,
and to the extent that Seller was obligated to repurchase or substitute
Leases in connection with a Securitization Transaction, all such
repurchases
19
or substitutions have complied with the terms of the Securtization
Agreements pursuant to which they were made, and Seller, as of the date
hereof, and as of the Closing Date, has no outstanding obligation to
repurchase any such Lease.
(vi) On the Closing Date, all representations and warranties, other
than those relating to Buyer or the Buyer Affiliates or solely under
the control of Buyer and the Buyer Affiliates, required to be made
pursuant to Section 6.2 and Section 7.2 of the respective Contribution
and Servicing Agreements set forth in section 4(p)(i) of the Disclosure
Schedule, shall be true and correct.
Section 5. Pre-Closing Covenants. The Parties agree as follows with
respect to the period between the execution of this Agreement and the Closing:
(a) Conduct of Business of the Company.
(1) Except as permitted by clauses (i) through (xiv) of Section
5(a)(2), during the period from the date of this Agreement through the
Closing Date, Seller shall:
(i) in all material respects carry on the Business in the Ordinary
Course of Business, including but not limited to, maintaining
Seller's credit approvals consistent with past practices, and, to
the extent consistent therewith, use reasonable efforts to preserve
intact its current business organizations;
(ii) keep available the services of its current officers and
employees and preserve its relationships with customers, suppliers,
brokers, vendors, dealers and others having business dealings with
Seller to the end that its goodwill and the Business shall be
unimpaired as of the Closing Date;
(iii) continue to account for Seller's SFAS 91 deferred expenses
under the accounting method in place on August 31, 2000, provided
however, that the deferred asset shall be no more that 3.75% of the
Finance Receivables on the Closing Date;
(iv) continue to book residuals consistent with past practice;
(v) maintain an allowance for losses of no less than 2.20% of the
Finance Receivables, prior to the effect of Section 2(f)(ii), on
the Closing Date;
(vi) charge-off all Leases more than three hundred sixty (360) days
contractually delinquent;
(vii) record accrued interest payable on all outstanding debt;
(viii) write-off unreconciled balance sheet items over ninety (90)
days old;
20
(ix) not enter into any additional off-balance sheet
securitizations. In addition, Seller shall not enter into any
term-debt on-balance-sheet securitizations or new commercial paper
conduit funding;
(x) account for the Interest Only Securities consistent with past
practices, except that Interest Only Securities shall be marked to
fair market value on the Preliminary Statement of Assets and
Liabilities and the Final Statement of Assets and Liabilities;
(xi) exercise and complete the clean-up call related to the
Securitization Transaction known as Green Tree Lease Finance
1997-1, LLC and account for all of the effects of such clean-up
call;
(xii) record a prorata portion of the expected revenue or profit
sharing under the Gateway vendor agreement;
(xiii) maintain a delinquency percentage for the Gross Finance
Receivables which are 60 or more days contractually delinquent, of
no greater than 3.50% of the Gross Finance Receivables and such
percentage shall be calculated consistently with information
provided Buyer by Seller during Buyer's due diligence;
(xiv) within ten (10) days after each month-end between the date of
this Agreement and the Closing Date provide Buyer with a data tape,
in the same format as provided to Buyer for due diligence purposes,
containing information on Leases;
(xv) ten (10) days prior to the Closing Date provide Buyer with a
data tape, in the same format as provided to Buyer for due
diligence purposes, containing information on Leases entered into
between the date hereof and fifteen (15) days prior to the Closing
Date which are outside the parameters of Section 5(a)(2)(xiv);
(xvi) provide Buyer with reasonable information/documentation that
Gateway and Tamco intend to continue their vendor relationship with
Buyer after the Closing Date; and
(xvii) reduce the credit authority of Seller's General Manager
(▇▇▇▇▇ ▇▇▇▇▇▇▇▇) to $100,000, complete Buyer's credit review on
each application over $100,000 (such forms to be provided to Seller
by Buyer) and have such reviews approved by Seller's Senior VP and
General Manager prior to forwarding to Buyer for consent pursuant
to Section 5(a)(2)(xiv).
(2) Without limiting the generality of the foregoing, and except as
otherwise contemplated by this Agreement, Seller shall not without the prior
written consent of Buyer (which consent shall not be unreasonably withheld or
delayed):
21
(i) [Reserved.]
(ii) amend its charter or bylaws;
(iii) acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial portion of the assets of or equity
in, or by any other manner, any business or any Person or division
thereof or otherwise acquire or agree to acquire any assets, other than
transactions that are in the Ordinary Course of Business;
(iv) sell, lease or otherwise dispose of, or agree to sell, lease
or otherwise dispose of, any of its assets, including the Leases, other
than transactions that are in the Ordinary Course of Business;
(v) incur any indebtedness for borrowed money, guarantee any such
indebtedness or make any loans, advances or capital contributions to,
or other investments in, any other person, other than in the Ordinary
Course of Business;
(vi) enter into or adopt any, or amend any existing, severance
plan or Change in Control Agreement or enter into or amend any Employee
Benefit Plan or employment or consulting agreement, except as required
by applicable law. Notwithstanding the foregoing, CFC may amend any
Employee Benefit Plan covering employees of Seller, provided that any
such amendment applies generally to employees of CFC and its Affiliates
and not exclusively to employees of Seller;
(vii) increase the compensation payable or to become payable to
its directors, officers or employees (except for increases in the
Ordinary Course of Business in salaries or wages of employees of
Seller) or grant any severance or termination pay to, or enter into or
amend any employment or severance agreement with, any director or
officer of Seller, or establish, adopt, enter into, or, except as may
be required to comply with applicable law, amend in any material
respect or take action to enhance in any material respect or accelerate
any rights or benefits under, any labor, collective bargaining, bonus,
profit sharing, thrift, compensation, pension, retirement, deferred
compensation, employment, termination, severance or other plan,
agreement, trust, fund, policy or arrangement for the benefit of any
director, officer or employee. Notwithstanding the foregoing, Seller
may accelerate to a date prior to the Closing the payment to employees
of customary bonuses for services rendered in the year 2000;
(viii) knowingly violate or knowingly fail to perform any
obligation or duty imposed upon Seller by any applicable law, rule,
regulation, guideline or ordinance of any Governmental Entity;
(ix) make any change to accounting policies or procedures, except
as required by another provision of this Agreement;
(x) prepare or file any Tax Return inconsistent with past practice
or, on any such Tax Return, take any position, make any election, or
adopt any method that is
22
inconsistent with positions taken, elections made or methods used in
preparing or filing similar Tax Returns in prior periods;
(xi) enter into or amend any agreement or contract or make or
agree to make any new capital expenditure or expenditures which,
individually, is in excess of $10,000 or, in the aggregate, are in
excess of $50,000 per month;
(xii) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the
Ordinary Course of Business or in accordance with their terms, of
liabilities reflected or reserved against in, or contemplated by, the
Final Closing Statement of Assets and Liabilities or incurred in the
Ordinary Course of Business;
(xiii) authorize, recommend, propose or announce an intention to
do any of the foregoing, or enter into any contract, agreement,
commitment or arrangement to do any of the foregoing; or
(xiv) enter into any Lease and/or Lease Transactions which is in
an amount greater than $100,000.
(b) Access to Information. Seller shall afford to the accountants,
counsel, financial advisors and other representatives of Buyer reasonable access
to, and permit them to make such inspections as they may reasonably require of,
during normal business hours during the period from the date of this Agreement
through the Closing Date, all properties, books, contracts, commitments and
records (including, without limitation, the work papers of independent
accountants, if available and subject to the consent of such independent
accountants) of Seller. During such period, Seller shall furnish promptly to
Buyer all information concerning the business, properties and personnel of
Seller as Buyer may reasonably request. All information obtained by Buyer
pursuant to this Section 5(b) shall be kept confidential in accordance with the
Confidentiality Agreement dated April 14, 2000 (the "Confidentiality Agreement")
between Conseco and ▇▇▇▇▇ Fargo & Company.
(c) Reasonable Efforts.
(i) Upon the terms and subject to the conditions set forth in this
Agreement, each of the Parties agrees to use reasonable efforts to
take, or cause to be taken, all actions, and to do, or cause to be
done, and to assist and cooperate with the other Party in doing, all
things necessary, proper or advisable to consummate and make effective,
in the most expeditious manner practicable, the transactions
contemplated by this Agreement, including, but not limited to: (A) the
obtaining of all necessary actions or non-actions, waivers, consents
and approvals from all Governmental Entities and the making of all
necessary registrations and filings (including filings with
Governmental Entities) and the taking of all reasonable steps as may be
necessary to obtain an approval or waiver from, or to avoid an action
or proceeding by, any Governmental Entity (including those in
connection with the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act or the BHC Act), (B) the
obtaining of all necessary consents, approvals or waivers from third
parties, (C) the defending of any
23
lawsuits or other legal proceedings, whether judicial or
administrative, challenging this Agreement or the consummation of the
transactions contemplated hereby, including seeking to have any stay or
temporary restraining order entered by any court or other Governmental
Entity vacated or reversed and (D) the execution and delivery of any
additional instruments necessary to consummate the transactions
contemplated by this Agreement. None of the Parties shall consent to
any voluntary delay of the consummation of the transactions
contemplated hereby at the behest of any Governmental Entity without
the consent of the other Parties, which consent shall not be
unreasonably withheld.
(ii) Each of the Parties shall use all reasonable efforts to not
take any action, or enter into any transaction, which would cause any
of the representations or warranties of such Party contained in this
Agreement to be untrue or result in a breach of any covenant made by it
in this Agreement.
(iii) Seller agrees to reasonably cooperate with Buyer to convert
the Business at Closing to Buyer's general ledger system.
(d) Public Announcements. None of the Parties will issue any press
release with respect to the transactions contemplated by this Agreement or
otherwise issue any written public statements with respect to such transactions
without prior consultation with the other party, except as may be required by
applicable law or by obligations pursuant to any listing agreement with any
national securities exchange. Notwithstanding the foregoing, each Party shall
have the right to issue a press release regarding the transactions contemplated
hereby upon the signing of this Agreement and upon the Closing; provided,
however, that each Party will notify the other Parties if it intends to issue
such a press release and provide the other Parties with the text of the press
release and reasonable opportunity to comment in advance of its release to the
public.
(e) Notification of Certain Matters. Buyer shall use its reasonable
efforts to give prompt notice to Seller and CFC, and Seller and CFC shall use
their reasonable efforts to give prompt notice to Buyer, of: (i) the occurrence
or non-occurrence of any event of which any of them is aware that would be
reasonably likely to cause (x) any representation or warranty contained in this
Agreement to be untrue or inaccurate in any material respect or (y) any
covenant, condition or agreement contained in this Agreement not to be complied
with or satisfied in all material respects, (ii) any failure of Buyer or of
Seller or CFC, as the case may be, to comply in a timely manner with or satisfy
any covenant, condition or agreement to be complied with or satisfied by it
hereunder or (iii) any change or event which would be reasonably likely to have
a Material Adverse Effect on Buyer or Seller, as the case may be; provided,
however, that the delivery of any notice pursuant to this Section 5(e) shall not
limit or otherwise affect the remedies available hereunder.
Section 6. Post-Closing Covenants. The Parties agree as follows with
respect to the period following the Closing:
(a) General. In case at any time after the Closing any further action
is necessary or desirable to carry out the purposes of this Agreement, each of
the Parties will take such further
24
action (including the execution and delivery of such further instruments and
documents) as the other Party reasonably may request, all at the sole cost and
expense of the requesting Party (unless the requesting Party is entitled to
indemnification therefor under Section 9 below).
(b) Litigation Assistance. In the event and for so long as any of the
Parties actively is contesting or defending against any action, suit,
proceeding, hearing, investigation, charge, complaint, claim or demand in
connection with (i) any transactions contemplated under this Agreement or (ii)
any fact, situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act or transaction on or prior
to the Closing Date involving the Business, the other Parties shall cooperate
with the contesting or defending Party and its counsel in the defense or
contest, make available its personnel, and provide such testimony and access to
their books and records as shall be necessary in connection with the defense or
contest, all at the sole cost and expense of the contesting or defending Party
(unless the contesting or defending Party is entitled to indemnification
therefor under Section 9 below). In addition, CFC agree to provide Buyer with
such assistance as Buyer may reasonably request in connection with the
assumption by Buyer of the Assumed Litigation Obligations. Buyer agrees to
reimburse CFC for all out-of-pocket expenses incurred by CFC in providing such
assistance.
(c) Reserved
(d) Use of Name. Seller hereby authorizes the Buyer, for a period of
one hundred eighty (180) days following the Closing Date, to use Seller's name
to identify Buyer as Seller's successor in interest to each Lease, Lease
Document and/or Lease Transaction.
(e) Employee Benefits and Employment.
(i) Hiring of Employees. Effective on the Closing Date, immediately
prior to the consummation of the Closing, each of the employees of
Seller employed in the Business, including any such employees who are
absent due to vacation, illness, or maternity/paternity leave
(employees on maternity/paternity leave shall be identified to Buyer
prior to the Closing Date), and specifically excluding any employee:
(A) who is set forth in Section 6(e)(i) of the Disclosure Schedule, or
(B) who is on short-term (other than employees on maternity leave) or
long-term disability ("Inactive Employees"), shall cease to be employed
by Seller, and Buyer shall offer employment with Buyer to each such
employee. With regard to all employees hired by Seller during the
period from the date this Agreement to the Closing Date, Buyer has the
option to update Section 6(e)(i) of the Disclosure Schedule on the
Closing Date. Each such employee who accepts, as of the Closing Date,
such offer of employment shall hereinafter be referred to as a
"Transferred Employee." All Transferred Employees shall be
employees-at-will of Buyer.
(ii) (A) In General. Buyer shall provide the Transferred Employees
with the employee benefits being provided to Buyer's own employees,
subject to the terms of those Employee Benefit Plans of Buyer (the
"Buyer's Employee Benefits"), and shall credit Transferred Employees'
service with Seller for purposes of eligibility and vesting under all
of Buyer's welfare benefit plans and qualified pension and profit
sharing plans
25
to the extent that such service credit would be relevant. No exclusions
for pre-existing conditions shall apply to any disability or medical
benefit plan for which Transferred Employees may be eligible with
respect to any condition for which the Transferred Employees were
covered under any disability or medical benefit plan maintained by
Seller or CFC.
(B) Notice. Except as otherwise expressly provided in this
Section 6(e), Seller, and effective as of the Closing Date, Buyer shall
give notice to all Transferred Employees that, except as otherwise
expressly provided herein, all benefits and/or accruals previously
provided under the Employee Benefit Plans of CFC will terminate on the
Closing Date and will be replaced by Buyer's Employee Benefits.
(iii) Certain Welfare Benefits and Pay Status. Notwithstanding
anything to the contrary in this Section 6(e), Seller shall retain all
Liabilities for employee benefits provided as of the Closing Date to
the Inactive Employees.
(iv) Paid Time Off. Transferred Employees shall receive credit for
service with Seller for purposes of computing paid time off benefits
(including vacation, sick leave and personal holidays) to which
similarly situated employees of Buyer are or may become entitled under
the terms of Buyer's paid time off policies. On or prior to the Closing
Date Seller shall pay all Transferred Employees paid time off accrued
prior to the Closing Date under Seller's paid time off policies.
(v) WARN Act Compliance. Following the Closing Date, Buyer shall
comply in all respects with the Worker's Adjustment and Retraining
Notification Act, as amended (the "WARN Act"), and shall not take any
action which would subject Seller to any disclosure or announcement
obligations under the WARN Act with respect to employees of Seller or
the Subsidiaries. As of the date hereof, Buyer does not contemplate any
"plant closing" or "employee mass layoff," as such terms are used in
the WARN Act, with respect to the Business or the Transferred Employees
on or before 91 days following Closing.
(vi) Indemnification. Buyer waives any and all claims against
Seller, CFC or CFC's Employee Benefits Plans (including, without
limitation, the trustees of such plans) it may have under ERISA, with
respect to employee benefits, or any benefit related claims it may
assert on behalf of Transferred Employees against Seller, CFC or CFC's
Employee Benefit Plans (including, without limitation, the trustees of
such plans), except with regard to amounts that Buyer has been required
to pay out of pocket pursuant to a court order.
(vii) Welfare Benefit Plans; Liabilities Retained by Sellers.
(A) Seller shall retain and be responsible for the welfare
benefits of all present and former employees, other than Transferred
Employees;
26
(B) Seller shall retain Liability for COBRA qualifying events
occurring before the Closing Date;
(C) Seller shall retain Liability for Seller's Retention Bonus
Program;
(D) Seller shall retain Liability for Seller, CFC and/or
Conseco issued stock options;
(E) Seller shall retain Liability for amounts payable under
Seller's incentive, commission, and bonus plans;
(F) Seller shall retain Liability for benefits due or amounts
payable under Seller's paid time off policies; and
(G) Seller or CFC shall retain Liability for medical,
disability or other benefit claims incurred by Transferred Employees
under Seller's or CFC's disability or medical or other similar plans
prior to the Closing Date.
(viii) Retirement Plan.
(A) CFC shall retain and be responsible for benefits under
CFC's 401(k) plan for the Transferred Employees through the Closing
Date. CFC shall cause its 401(k) plan to make available distributions
of the amount of account balances vested as of the Closing Date to
Transferred Employees pursuant to Section 401(k)(10)(A)(iii) of the
Code.
(ix) Cooperation.
(A) With respect to all benefits for which Seller or CFC is
responsible under this Section 6(e), Buyer shall cooperate with Seller
and CFC by promptly providing the information reasonably requested by
Seller or CFC to enable Seller or CFC to perform its obligations. Buyer
shall direct all claimants and claims for such benefits to Seller.
(B) With respect to all benefits for which Buyer is
responsible under this Section 6(e) or otherwise provides to
Transferred Employees, Seller shall cooperate with Buyer by promptly
providing the information reasonably requested by Buyer to enable Buyer
to perform its obligations. Seller shall direct all claimants and
claims for such benefits to Buyer. Seller shall provide Buyer with such
reasonable access prior to the Closing Date as may be necessary or
appropriate to enable Buyer to enroll Transferred Employees into
Buyer's Employee Benefits and otherwise fulfill its obligations under
this Section 6(e).
(C) After the Closing Date, Seller and Buyer each will
cooperate with the other in providing reasonable access to all
information required for the operation of, or the preparation and
submission of reports or notices required in connection with the
27
operation of the employee benefit programs maintained by Seller, CFC or
Buyer or their Affiliates which covers any of the Transferred
Employees, including, without limitation, the preparation and
submission of reports or notices to the PBGC, the Department of Labor,
the Internal Revenue Service, or any other agency of the U.S.
Government.
(f) Books and Records.
(i) Buyer agrees to retain the Leases and Lease Documents for a
period of five (5) years following the Closing Date.
(ii) For a period of two (2) years from the Closing Date, Buyer
shall allow Seller and its agents reasonable access, in connection with
the Leases or Seller's obligations under this Agreement, to all Leases
and Lease Documents which are transferred to Buyer in connection
herewith, during normal working hours at Buyer's principal places of
business or at any location where such documents are stored.
(iii) For a period of two (2) years from the Closing Date, Buyer
shall make available to Seller upon written request and at Seller's
expense, but consistent with Buyer's business requirements, (1) copies
of such Leases and Lease Documents as Seller may reasonably request,
(2) Buyer's personnel to assist Seller in locating and obtaining such
documents and (3) any of Buyer's personnel whose assistance or
participation is required by Seller, in anticipation of, or preparation
for, existing or future litigation or other matters in which Seller is
involved.
(g) Noncompetition.
(i) For a period of four (4) years from and after the Closing Date,
neither CFC nor any other Conseco Entity will:
(A) engage, anywhere in the United States of America, in any
Competitive Business (as hereinafter defined) or
(B) acquire, own or hold any interest in any Competitive Business
in the United States.
"Competitive Business" means any business of providing commercial
equipment financing in the computer, office products and
telecommunications markets through transactions, arrangements or
activities substantially similar to Lease Transactions.
"Competitive Business" does not include (A) leases between CFC and
its subsidiaries (or between any subsidiaries of CFC) and (B)
financing for individual, family or household purposes.
Notwithstanding the foregoing: (A) no Person owning less than 5% of
the outstanding stock of any publicly traded corporation shall be
deemed to violate this Section 6(g) solely by reason of such
ownership interest and (B) this Section 6(g) shall not be construed
to preclude CFC or any other Conseco Entity from directly or
indirectly acquiring a corporation or other entity or group of
28
corporations or other entities (the "Acquired Business") that is
engaged in a Competitive Business so long as (x) the Competitive
Business has assets with a net book value on a managed basis of
less than $50,000,000 or (y) if the Competitive Business has assets
with a net book value on a managed basis of $50,000,000, so long as
CFC or such other Conseco Entity divests itself, within six (6)
months, of substantially all of the Acquired Business that is
engaged in such Competitive Business.
(ii) If the final judgment of a court of competent jurisdiction
declares that any term or provision of Section 6(g)(i) is invalid or
unenforceable, the Parties agree that the court making the
determination of invalidity or unenforceability shall have the power to
reduce the scope, duration, or area of the term or provision, to delete
specific words or phrases, or to replace any invalid or unenforceable
term or provision with a term or provision that is valid and
enforceable and that comes closest to expressing the intention of the
invalid or unenforceable term or provision, and this Agreement shall be
enforceable as so modified after the expiration of the time within
which the judgment may be appealed.
(h) Non-Solicitation of Employees. For a period of four (4) years
following the Closing Date, without the prior approval of Buyer, neither CFC nor
any other Conseco Entity shall solicit any Transferred Employee or induce or
attempt to induce any Transferred Employee out of the employ of Buyer.
(i) Notification of Employee Status. Buyer agrees to notify CFC, upon
the written request of CFC, of the employment status of each of Seller's current
employees who is a party to a Retention Bonus Agreement.
Section 7. Tax Matters.
(a) Definitions. Except as otherwise provided herein or as otherwise
clearly required by the context, the following terms shall have the respective
meanings indicated when used in this Agreement:
(i) "Tax" or "Taxes" means any federal, state, local or foreign
income, gross receipts, franchise, estimated, alternative
minimum, add-on minimum, sales, use, transfer, registration,
value added, excise, natural resources, severance, stamp,
occupation, premium, windfall profit, environmental (including
Code Section 59A), customs, duties, real property, personal
property, capital stock, intangibles, social security,
employment, unemployment, disability, payroll, license,
employee, or other tax, withholding tax or levy, of any kind
whatsoever (including any deferred tax), including any
interest, penalties or additions to tax in respect of the
foregoing.
(ii) "Tax Return" means any return, declaration, report, claim for
refund, information return, or other document (including any
related or supporting estimates, elections, schedules,
statements, or information) filed or
29
required to be filed in connection with the determination,
assessment, or collection of any Tax or the administration of
any laws, regulations, or administration requirements relating
to any Tax.
(b) Tax Representations. Seller, CFC and Conseco represent and warrant
to Buyer as follows:
(i) Any and all Taxes relating to the Acquired Assets and the
Assumed Liabilities which are due and payable on or prior to
the Closing Date have been paid in full, or will be so paid on
or prior to the Closing Date except to the extent the
non-payment of which would not result in a lien on any
Acquired Asset or would not result in Buyer becoming liable or
responsible therefor. All Tax Returns (including extensions or
amendments thereto) required to be filed with any relevant
taxing authority on or prior to the Closing Date with respect
to any and all Taxes relating to the Acquired Assets or
Assumed Liabilities, have been timely filed or will be timely
filed on or prior to the Closing Date except to the extent the
non-filing of which would not result in a lien on any Acquired
Asset or would not result in Buyer becoming subject to any
liability therefor.
(ii) With respect to any Securitization Transaction, no action has
been taken nor has any action failed to be taken which would
adversely affect the characterization or tax treatment for
federal, state, or local income or franchise tax purposes of
the issuer or any securities issued in a Securitization
Transaction or would create any entity level of taxation with
respect to the trusts. All required federal, state and local
tax and information returns relating to any Securitization
Transaction have been properly filed for all periods ending on
or before the Closing Date.
(c) Liability for Taxes.
(i) Liability of Seller, CFC and Conseco. With respect to the
Acquired Assets and the Assumed Liabilities transferred at the
Closing, Seller, CFC and/or Conseco shall be liable for and
indemnify Buyer for all real property, personal property and
similar ad valorem Taxes imposed on such Acquired Assets for
(1) any taxable year or period that ends on or before the
Closing Date and (2) with respect to any taxable year or
period beginning before and ending after the Closing Date, the
portion of such taxable year or period ending on and including
the Closing Date.
(ii) Liability of Buyer. With respect to the Acquired Assets and
the Assumed Liabilities transferred at the Closing, Buyer
shall be liable for and indemnify Seller, CFC and Conseco for
all real property, personal property and similar ad valorem
Taxes imposed on such Acquired Assets or income therefrom,
such Assumed Liabilities or payments in respect
30
thereof for (1) any taxable year or period that begins after
the Closing Date and (2) with respect to any taxable year or
period beginning before and ending after the Closing Date, the
portion of such taxable year beginning after the Closing Date.
(iii) Proration of Taxes. Except as otherwise agreed to by the
parties, for purposes of Subparagraphs (i) and (ii) above,
whenever it is necessary to determine the liability for Taxes
for a portion of a taxable year or period that begins before
and ends after the Closing Date, the determination of the
Taxes for the portion of the year or period ending on, and the
portion of the year or period beginning after, the Closing
Date shall be determined by assuming that the taxable year or
period ended at the close of business on the Closing Date.
With respect to any real property or personal property Taxes
for a period that begins before and ends after the Closing
Date, such Taxes shall be apportioned based on the number of
days in the taxable period on or prior to the Closing Date.
(d) Sales and Transfer Taxes. All excise, sales, use, transfer and
similar taxes that are payable or that arise as a result of the consummation of
the purchase and sale contemplated by this Agreement shall be borne by CFC
whether such Taxes are imposed upon Seller or Buyer.
(e) Payments of Amounts Due under this Section 7. All payments
subsequent to the Closing Date under this Section 7 shall be made as soon as
determinable or when payment is due to the applicable taxing authority,
whichever is later, and shall be made and bear interest from the date
determinable or when payment is due to the applicable taxing authority,
whichever is later, to the date of payment at the average of the Federal Funds
Rate or Rates in effect from time to time during such period.
(f) Tax Returns. Except as otherwise provided in this Section 7 and as
otherwise agreed to by the parties, with respect to the Purchased Assets and
Assumed Liabilities, (a) Seller, CFC and/or Conseco shall file or cause to be
filed when due all Tax Returns that are required to be filed with respect to
such Acquired Assets or income therefrom, such Assumed Liabilities or payments
in respect thereof for taxable years or periods ending on or before the Closing
Date and shall pay any Taxes due in respect of such Tax Returns and (b) Buyer
shall file or cause to be filed when due all Tax Returns with respect to such
Acquired Assets or income therefrom or such Assumed Liabilities or payments in
respect thereof for taxable years or periods ending after the Closing Date and
shall remit any Taxes due in respect of such Tax Returns. If Seller, CFC or
Conseco, on the one hand, or Buyer, on the other hand, shall be liable hereunder
for any portion of the Tax shown due on any Tax Return prepared by the other
party, the party preparing the Tax Return shall deliver a copy to the party so
liable not less than ten (10) days prior to the date on which such Tax Return is
due to be filed (taking into account any applicable extensions). Seller, CFC,
Conseco or Buyer as the case may be shall pay in immediately available funds the
Taxes for which it is liable pursuant to Section 7(c )(i) or 7(c )(ii) but which
are payable with Tax Returns to be filed by the other party pursuant to the
previous sentence on the due date for the payment of such Taxes.
31
(g) Assistance and Cooperation. Seller, CFC and Conseco, on the one
hand, and Buyer, on the other hand, shall after the Closing Date:
(i) Assist (and cause their respective Affiliates to assist) the
other party in preparing any Tax Returns which such other
party is responsible for preparing and filing in accordance
with this Section 7 including any returns or forms required
pursuant to Section 7(e); provided, however, that either party
may withhold, or excise portions of, confidential records,
documents or information if it is necessary to do so to
reasonably protect the confidentiality thereof;
(ii) Cooperate fully in preparing for any audits of, or disputes
with taxing authorities regarding, any Tax Returns with
respect to the Acquired Assets or income therefrom or the
Assumed Liabilities or payments in respect thereof;
(iii) Make available to the other and to any taxing authority as is
reasonably requested all relevant information, records, and
documents relating to Taxes with respect to the Acquired
Assets or income therefrom or the Assumed Liabilities or
payments in respect thereof;
(iv) Provide timely notice to the other in writing of any pending
or proposed tax audits or assessments with respect to the
Acquired Assets or the income therefrom, or the Assumed
Liabilities or payments in respect thereof for taxable periods
for which the other may have a liability under this Section 7;
(v) Furnish the other with copies of all relevant correspondence
received from any taxing authority in connection with any tax
audit or information request with respect to any taxable
period referred to in Subsection (iv) above; and
(vi) The party requesting assistance or cooperation shall bear the
other party's reasonable out-of-pocket expenses in complying
with such request to the extent that those expenses are
attributable to fees and other costs of unaffiliated
third-party service providers.
(h) Period of Indemnification. Without limiting the provisions of
Section 7(g), the notification and contest provisions of Section 9 shall apply
to claims for indemnification under Section 7; provided, however, that notice of
claim for indemnification pursuant to Section 9 shall be given as promptly as
9practicable, but no later than sixty (60) days after the notice of a claim or
demand for Taxes for which indemnity may be sought from the indemnifying party
pursuant to this Section 7 is received from the relevant Tax authority. The
representations in Section 7(b) shall survive the Closing until ninety (90) days
after the expiration of the relevant limitations period for the assertion of
claims by the relevant Tax authority.
32
Section 8. Conditions to Obligation to Close.
(a) Conditions to Obligation of Buyer. The obligation of Buyer to
consummate the transactions contemplated hereby at the Closing is subject to
satisfaction of the following conditions:
(i) the representations and warranties of Seller and CFC set forth
in Section 3(a) and Section 4 above shall be true and correct in all
respects (except to the extent such representations and warranties
speak as of an earlier date) when made and as of the Closing Date;
provided, however, that for purposes of determining satisfaction of the
condition contained in this Section 8(a)(i), (A) no effect shall be
given to any exception in such representations relating to materiality,
Material Adverse Change or Material Adverse Effect and (B) such
representations and warranties shall be deemed to be true and correct
in all respects unless the failure of such representations and
warranties to be so true and correct, individually or in the aggregate,
results in a Material Adverse Effect on Seller;
(ii) Seller and CFC shall have performed and complied with all of
their covenants hereunder in all material respects through the Closing;
(iii) there shall not be any injunction, judgment, order, decree,
ruling or charge in effect preventing consummation of any of the
transactions contemplated by this Agreement;
(iv) Seller and CFC shall have delivered to Buyer a certificate to
the effect that each of the conditions specified above in Section
8(a)(i) and (ii) is satisfied in all respects;
(v) all applicable waiting periods (and any extensions thereof)
under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act or the BHC Act shall have expired or
otherwise been terminated and the Parties shall have received all other
authorizations, consents and approvals of Governmental Entities
referred to in Section 3(a)(iii) and Section 3(b)(iii) above, except
that any filings which are not either (i) specifically required by this
Agreement or (ii) mandatory filings with a Governmental Entity, shall
be deemed to be excluded from this Section 8(a)(v);
(vi) CFC (or one of its Affiliates) shall have executed the
Transition Services Agreement;
(vii) Seller shall have received all consents to assignment in
connection with the real property leases and subleases set forth in
Section 4(g) to the Disclosure Schedule, except that Seller shall
retain the Liability for the real property lease in Bloomington,
Minnesota and Buyer and Seller shall enter into a sublease whereby
Seller shall sublease to Buyer fifty percent (50%) of the leased space
pursuant to the same terms as those in the original lease between
Seller and the landlord, except that the rent due under the
33
sublease shall be a prorata portion of the rent due under the original
lease based upon the subleased space.
(viii) all certificates, instruments, and other documents required
to effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to Buyer;
(ix) Seller shall have received all consents; all approvals shall
have been given; all notices shall have been sent; and all conditions
shall have been met which are required under the Securitization
Agreements set forth in Section 4(p)(i) of the Disclosure Schedule, as
may be required by the terms of the Securitization Agreements to permit
the Seller to assign all of its right, title, and interest in such
agreements to the Buyer or the applicable Buyer's Affiliate, including
without limitation all required consents from any and all note holders,
trustees, rating agencies, and insurers (hereinafter called the
"Securitization Consents");
(x) Seller shall have exercised its "clean-up" call option on the
off-balance sheet securitization Green Tree Lease Finance 1997-1, LLC,
as permitted under section 5.1of the Contribution and Servicing
Agreement dated as of December 1, 1997, by and among Green Tree Lease
Finance 1997-1, LLC, Green Tree Lease Finance II, Inc., Green Tree
Vendor Services Corporation and First Trust National Association.
Seller shall have fully and appropriately accounted for the costs of
the exercise of such "clean-up" call;
(xi) Seller shall have discontinued its support center operations
in Kansas City and North Sioux City; and
(xii) Seller shall provide Buyer with the results of a Uniform
Commercial Code search on Seller with the Minnesota Secretary of State
and the county of Hennepin, Minnesota which reflects no material liens
on the Acquired Assets.
Buyer may waive any condition specified in this Section 8(a) if it executes a
writing so stating at or prior to the Closing.
(b) Conditions to Obligation of Seller. The obligation of Seller and
CFC to consummate the transactions contemplated hereby at the Closing is subject
to satisfaction of the following conditions:
(i) the representations and warranties of Buyer set forth in
Section 3(b) above shall be true and correct in all material respects
when made and as of the Closing Date;
(ii) Buyer shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(iii) there shall not be any injunction, judgment, order, decree,
ruling, or charge in effect preventing consummation of any of the
transactions contemplated by this Agreement;
34
(iv) Buyer shall have delivered to Seller and CFC a certificate to
the effect that each of the conditions specified above in Section
8(b)(i) and (ii) is satisfied in all respects;
(v) all applicable waiting periods (and any extensions thereof)
under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act or the BHC Act shall have expired or
otherwise been terminated and the Parties shall have received all other
authorizations, consents and approvals of Governmental Entities
referred to in Section 3(a)(ii) and Section 3(b)(ii) above, except that
any filings which are not either (i) specifically required by this
Agreement or (ii) mandatory filings with a Governmental Entity, shall
be deemed to be excluded from this Section 8(b)(v); and
(vi) Buyer shall have executed the Transition Services Agreement;
and
(vii) [Reserved.]
(viii) all certificates, instruments, and other documents required
to effect the transactions contemplated hereby will be satisfactory in
form and substance to Seller and CFC.
Seller and CFC may waive any condition specified in this Section 8(b) if they
execute a writing so stating at or prior to the Closing.
Section 9. Indemnification.
(a) Survival of Representations and Warranties. All of the
representations and warranties of Seller, CFC and/or Conseco contained in
Section 3(a), Section 4 and Section 7(b) above and Buyer contained in Section
3(b) above shall survive the Closing hereunder and continue in full force and
effect for a period of three (3) years thereafter, except that the
representations and warranties of Seller, CFC and/or Conseco which relate
expressly or by necessary implication to Taxes will survive the Closing until
ninety (90) days after the expiration of the relevant limitations periods for
the assertion of claims by the relevant Tax authority.
(b) Indemnification Provisions for Benefit of Buyer. In the event (i)
either Seller, CFC or Conseco breaches any of its representations and warranties
contained in Section 3(a), Section 4 and Section 7(b) above or Seller or CFC
breaches any of the covenants contained in this Agreement to be performed by
Seller or CFC prior to the Closing Date, and provided that Buyer makes a written
claim for indemnification against Seller, CFC and/or Conseco pursuant to this
Section 9(b), setting forth in reasonable detail the factual and contractual
bases on which such party is entitled to indemnification under this Agreement,
within the applicable survival period specified in Section 9(a) above (such
written claims to be submitted on no more than a quarterly basis following the
Closing Date and any failure to submit a claim in any one quarter shall not be
deemed as a waiver of the right to submit such claim in a subsequent quarter) or
(ii) any Third Party Claim or threatened Third Party Claim is made against Buyer
that relates to the actions or inactions of Seller with respect to the Business
prior to the Closing, then Seller, CFC
35
and Conseco jointly and severally agree to indemnify Buyer from and against any
Adverse Consequences Buyer shall suffer through and after the date of the claim
for indemnification caused by such breach.
Subject to the further limitations on Conseco's obligations set forth
in the next sentence of this Section 9(b), the aggregate amount required to be
paid by Seller, CFC and Conseco pursuant to this Section 9(b) (other than
amounts payable with respect to claims made under Section 7) shall not exceed
$110,000,000, and there shall be no limitation on amounts payable with respect
to claims made under Section 7. Conseco shall have no indemnification
obligations hereunder following the second anniversary of the Closing Date and
its aggregate indemnification obligations hereunder shall be limited to
$250,000,000.
(c) Indemnification Provisions for Benefit of Seller. In the event (i)
Buyer breaches any of its representations and warranties contained in Section
3(b) above or any of the covenants contained in this Agreement to be performed
by Buyer prior to the Closing Date, and provided that Seller, CFC or Conseco
makes a written claim for indemnification against Buyer pursuant to this Section
9(c) within the applicable survival period specified in Section 9(a) above, or
(ii) any Third Party Claim or threatened Third Party Claim is made against
Seller, CFC or Conseco that relates to the actions or inactions of Buyer or any
of the Subsidiaries with respect to the Business after the Closing, then Buyer
agrees to indemnify Seller, CFC and Conseco from and against any Adverse
Consequences either Seller, CFC or Conseco shall suffer through and after the
date of the claim for indemnification caused by such breach.
(d) Matters Involving Third Parties.
(i) If any third party shall notify a Party (the "Indemnified
Party") with respect to any matter (a "Third Party Claim") which may
give rise to a claim for indemnification against another Party (the
"Indemnifying Party") under this Section 9, then the Indemnified Party
shall promptly (and in any event within five business days after
receiving notice of the Third Party Claim) notify the Indemnifying
Party thereof in writing.
(ii) The Indemnifying Party will have the right at any time to
assume and thereafter conduct the defense of the Third Party Claim with
counsel of its choice reasonably satisfactory to the Indemnified Party;
provided, however, that the Indemnifying Party will not consent to the
entry of any judgment or enter into any settlement with respect to the
Third Party Claim without the prior written consent of the Indemnified
Party (not to be withheld or delayed unreasonably) unless the judgment
or proposed settlement involves only the payment of money damages and
does not impose an injunction or other equitable relief upon the
Indemnified Party.
(iii) Unless and until an Indemnifying Party assumes the defense of
the Third Party Claim as provided in Section 9(d)(ii) above, however,
the Indemnified Party may defend against the Third Party Claim in any
manner it reasonably may deem appropriate.
(e) Exclusive Remedy. The Parties acknowledge and agree that the
foregoing indemnification provisions in Section 7 and Section 9 herein shall be
the exclusive remedy of
36
each of the Parties with respect to (i) the breach of any representation or
warranty made by Seller, CFC, Conseco or Buyer in this Agreement; or (ii) any
breach of any covenant set forth in this Agreement to be performed prior to the
Closing Date. Notwithstanding the foregoing, nothing herein shall prevent any of
the Parties from bringing an action based upon allegations of fraud or other
intentional or willful breach of an obligation of or with respect to the other
Parties in connection with this Agreement and/or the failure of either Party to
pay amounts due hereunder. In addition, this section shall in no way limit (x)
the right of either Buyer, on the one hand, or Seller, CFC or Conseco, on the
other hand, to off-set against amounts it owes under this Agreement any amounts
owed to it by the other Party under this Agreement and (y) the right of Buyer to
charge to the Reserve Holdback, pursuant to the terms of Addendum 1 hereto,
amounts owed to Buyer pursuant to the terms of that certain Credit Card
Portfolio Purchase and Sale Agreement dated June 23, 2000 by and between Green
Tree Retail Services Bank, Inc., Conseco Bank, Inc., Conseco Finance Corp., and
Dial Bank, now known as ▇▇▇▇▇ Fargo Financial Bank.
Section 10. Termination.
(a) Termination of Agreement. The Parties may terminate this Agreement
as provided below:
(i) Buyer and Seller may terminate this Agreement by mutual written
consent at any time prior to the Closing;
(ii) Buyer may terminate this Agreement by giving written notice to
Seller at any time prior to the Closing in the event (A) Seller has
within the then previous 40 business days given Buyer any notice
pursuant to Section 5(e)(i) above and the breach referred to in such
notice has continued without cure for a period of 30 days after such
notice and (B) the development that is the subject of the notice has
had a Material Adverse Effect on Seller;
(iii) Buyer may terminate this Agreement by giving written notice
to Seller at any time prior to the Closing (A) in the event (x) Seller
or CFC has breached any representation, warranty or covenant contained
in this Agreement in any respect, which breach results in a Material
Adverse Effect on Seller or reflects the occurrence of a Material
Adverse Change with respect to Seller, (y) Buyer has notified Seller of
the breach and (z) the breach has continued without cure for a period
of 30 days after the notice of breach or (B) if the Closing shall not
have occurred on or before March 31, 2001, by reason of the failure of
any condition precedent under Section 8(a) hereof (unless the failure
results primarily from Buyer itself breaching any representation,
warranty or covenant contained in this Agreement); and
(iv) Seller may terminate this Agreement by giving written notice
to Buyer at any time prior to the Closing (A) in the event Buyer has
breached any representation, warranty, or covenant contained in this
Agreement in any material respect, Seller has notified Buyer of the
breach, and the breach has continued without cure for a period of 30
days after the notice of breach or (B) if the Closing shall not have
occurred on or before
37
March 31, 2001, by reason of the failure of any condition precedent
under Section 8(b) hereof (unless the failure results primarily from
Seller or CFC themselves breaching any representation, warranty or
covenant contained in this Agreement).
(b) Effect of Termination. If any Party terminates this Agreement
pursuant to Section 10(a) above, all rights and obligations of the Parties
hereunder (but not under the Confidentiality Agreement) shall terminate without
any liability of any Party to any other Party (except for any liability of any
Party then in breach).
Section 11. Miscellaneous.
(a) Entire Agreement. This Agreement and the Confidentiality Agreement
constitute the entire agreement among the Parties and supersede any prior
understandings, agreements, or representations by or among the Parties, written
or oral, to the extent they relate in any way to the subject matter of this
Agreement or the Confidentiality Agreement.
(b) No Third-Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
(c) Succession and Assignment. This Agreement shall be binding upon
and inure to the benefit of the Parties and their respective successors and
permitted assigns. No Party may assign either this Agreement or any of its
rights, interests or obligations hereunder without the prior written approval of
the other Parties.
(d) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(e) Headings. The section headings contained in this Agreement are
included for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(f) Notices. All notices and other communications under this Agreement
must be in writing and will be deemed to have been duly given if delivered,
telecopied or mailed, by certified mail, return receipt requested, first-class
postage prepaid, to the parties at the following addresses:
If to Buyer ▇▇▇▇▇ Fargo Financial Leasing, Inc.
to: ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
38
If to Seller Conseco Finance Corp.
or CFC, to: 1100 Landmark Towers
▇▇▇ ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Senior Vice President, General Counsel
and Secretary
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to Conseco, Inc.
Conseco, to: ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Executive Vice President, General
Counsel and Secretary
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
All notices and other communications required or permitted under this Agreement
that are addressed as provided in this Section will, if delivered personally, be
deemed given upon delivery, will, if delivered by telecopy, be deemed delivered
when confirmed and will, if delivered by mail in the manner described above, be
deemed given on the third business day after the day it is deposited in a
regular depository of the United States mail. Any of the Parties from time to
time may change its address for the purpose of notices to that Party by giving a
similar notice specifying a new address, but no such notice will be deemed to
have been given until it is actually received by the Party sought to be charged
with the contents thereof.
(g) Governing Law; Submission to Jurisdiction.
(i) This Agreement shall be governed by and construed in accordance
with the domestic laws of the State of Delaware without giving effect
to any choice or conflict of law provision or rule (whether of the
State of Delaware or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of
Delaware.
(ii) EACH PARTY HERETO HEREBY ACKNOWLEDGES AND AGREES THAT ANY
CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO
A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED IN THIS AGREEMENT. EACH
39
PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE THE FOREGOING WAIVER, (ii) EACH SUCH PARTY UNDERSTANDS AND HAS
CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH SUCH PARTY MAKES
THIS WAIVER VOLUNTARILY, AND (iv) EACH SUCH PARTY HAS BEEN INDUCED TO
ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION 11(g).
(h) Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
Parties. No waiver by any of the Parties of any default, misrepresentation, or
breach of warranty or covenant hereunder, whether intentional or not, shall be
deemed to extend to any prior or subsequent default, misrepresentation, or
breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.
(i) Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(j) Expenses. Each Party will bear its own costs and expenses
(including legal fees and expenses) incurred in connection with this Agreement
and the transactions contemplated hereby. Without limiting the generality of the
foregoing, Buyer shall pay all filing fees in connection with filings under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act or the BHC Act.
(k) Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state or local
statute or law shall be deemed also to refer to all rules and regulations
promulgated thereunder, unless the context requires otherwise. The word
"including" shall mean including without limitation.
(1) Incorporation of Disclosure Schedule. The Disclosure Schedule is
incorporated herein by reference and made a part hereof.
40
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on
the date first above written.
▇▇▇▇▇ FARGO FINANCIAL LEASING, INC.
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------------------
Its Vice President
----------------------------------------
CONSECO, INC.
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------------------
Its Senior Vice President and Acting
Chief Financial Officer
----------------------------------------
CONSECO FINANCE CORP.
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------------------------
Its Senior Vice President and Controller
----------------------------------------
CONSECO FINANCE VENDOR SERVICES
CORPORATION
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------------------------
Its Senior Vice President and
Chief Accounting Officer
----------------------------------------
GREEN TREE LEASE FINANCE II, INC.
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------------
Its Senior Vice President and Treasurer
----------------------------------------
GREEN TREE LEASE FINANCE 1998-1, LLC
CONSECO FINANCE LEASE 2000-1, LLC
By Green Tree Lease Finance II, Inc.
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------------
Its Senior Vice President and Treasurer
----------------------------------------
ADDENDUM 1 TO ASSET PURCHASE AGREEMENT
Reserve Holdback
Buyer shall hold back from the Purchase Price, a sum equal to $10,000,000,
which shall be placed in a reserve fund during the period set forth in Section
9(a) of the Agreement.
Buyer may charge to the Reserve Holdback or Seller will pay Buyer on demand, at
Buyer's option, (i) the Finance Receivable for any Lease with a federal or
municipal entity under which any payment remains or becomes unpaid due to
cancellation, non-funding or non-appropriation; (ii) the Finance Receivable for
any Lease with an Affiliate of Seller under which any payment remains or becomes
unpaid; (iii) any obligation of Seller under Section 7 or Section 9 of the
Agreement under which any payment remains or becomes unpaid by Seller, CFC or
Conseco or (iv) any amounts due to Buyer from any Person pursuant to the terms
of that certain Credit Card Portfolio Purchase and Sale Agreement dated June 23,
2000 by and between Green Tree Retail Services Bank, Inc., Conseco Bank, Inc.,
Conseco Finance Corp., and Dial Bank (now known as ▇▇▇▇▇ Fargo Financial Bank)
which remains or becomes unpaid.
Within seven (7) days after the Adjustment Date, Buyer shall pay to Seller an
amount equal to $2,000,000 less any amounts due to Buyer pursuant to the
post-closing adjustment to the Purchase Price as set forth in Section 2(g) and
2(h) of the Agreement, including but not limited to any reduction in the
Purchase Price attributed to Seller's non-compliance with Section 5(a)(1)(xiii)
of the Agreement. Notwithstanding the foregoing, any amounts due to Buyer on the
Adjustment Date in excess of $2,000,000, shall be paid by Seller to Buyer in
cash and shall not be charged against the Reserve Holdback. If on the Adjustment
Date Buyer owes amounts to Seller, Buyer shall pay to Seller the above
referenced $2,000,000 plus any additional amounts owed by Buyer in cash.
On the first anniversary following the Closing Date, Buyer shall pay to Seller
any amounts in the Reserve Holdback in excess of $5,333,334. On the second
anniversary of the Closing Date, Buyer shall pay to Seller any amounts in the
Reserve Holdback in excess of $2,666,667.
Buyer shall hold the remaining credit balance in the Reserve Holdback, subject
to any charges by Buyer pursuant to (i) through (iv) above, until the expiration
of the survival period set forth in Section 9(a) of the Agreement at which time
the remaining credit balance in the Reserve Holdback shall be returned to
Seller.
Buyer shall pay into the Reserve Fund interest on the credit balance in the
Reserve Holdback at the federal funds rate and such interest shall be calculated
on the credit balance prior to payment of amounts due to Seller during such
quarter.
All capitalized terms used herein shall have the meaning set forth in the Asset
Purchase Agreement.
Dated: December 8, 2000
▇▇▇▇▇ FARGO FINANCIAL LEASING, INC.
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------------------
Its Vice President
----------------------------------------
CONSECO, INC.
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------------------
Its Senior Vice President and Acting
Chief Financial Officer
----------------------------------------
CONSECO FINANCE CORP.
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------------------------
Its Senior Vice President and Controller
----------------------------------------
CONSECO FINANCE VENDOR SERVICES
CORPORATION
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------------------------
Its Senior Vice President and
Chief Accounting Officer
----------------------------------------
GREEN TREE LEASE FINANCE II, INC.
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------------
Its Senior Vice President and Treasurer
----------------------------------------
GREEN TREE LEASE FINANCE 1998-1, LLC
CONSECO FINANCE LEASE 2000-1, LLC
By Green Tree Lease Finance II, Inc.
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------------
Its Senior Vice President and Treasurer
----------------------------------------