1
EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
DATED AUGUST 27, 1999
BY AND AMONG
TEXTRON FINANCIAL CORPORATION,
GREEN TREE FINANCIAL SERVICING CORPORATION,
GREEN TREE FINANCIAL LOAN COMPANY
AND
PIPER FINANCIAL SERVICES, INC.
2
TABLE OF CONTENTS
Page
----
1. Definitions..............................................................................................1
2. Basic Transaction.......................................................................................12
(a) Purchase and Sale of Assets....................................................................12
(b) Assumption of Liabilities......................................................................12
(c) Purchase Price.................................................................................12
(d) The Closing....................................................................................13
(e) Deliveries at the Closing......................................................................13
(f) Determination of Estimated Purchase Price......................................................13
(g) Post-Closing Adjustment to Estimated Purchase Price............................................14
(h) Payment of Purchase Price Adjustments..........................................................14
(i) Allocation of Purchase Price...................................................................15
(j) Purchase and Sale of Single Division...........................................................15
3. Representations and Warranties of the Sellers...........................................................15
(a) Organization of the Sellers....................................................................15
(b) Authorization of Transaction...................................................................16
(c) Noncontravention...............................................................................16
(d) Investment Banker's Fees.......................................................................16
(e) Title to Acquired Assets; Fixed Assets; Dealer Agreements......................................16
(f) Financial Information..........................................................................17
(g) Subsequent Events..............................................................................17
(h) Legal Compliance...............................................................................19
(i) Real Property..................................................................................19
(j) Contracts......................................................................................19
(k) Financing Documents............................................................................21
(l) Powers of Attorney.............................................................................22
(m) Litigation.....................................................................................22
(n) Employee Benefits..............................................................................23
(o) Guaranties.....................................................................................23
(p) Intellectual Property..........................................................................23
(q) Employees......................................................................................23
(r) Certain Transactions...........................................................................23
(s) Acquired Assets................................................................................24
(t) Securitization.................................................................................24
(u) Taxes..........................................................................................24
(v) Environmental Matters..........................................................................24
-i-
3
4. Representations and Warranties of the Buyer.............................................................24
(a) Organization of the Buyer......................................................................24
(b) Authorization of Transaction...................................................................24
(c) Noncontravention...............................................................................24
(d) Investment Banker's Fees.......................................................................25
5. Pre-Closing Covenants...................................................................................25
(a) General........................................................................................25
(b) Notices and Consents...........................................................................25
(c) Operation of Business..........................................................................26
(d) Preservation of Business.......................................................................26
(e) Access to the Business.........................................................................26
(f) Notice of Developments.........................................................................26
(g) Updated Schedule...............................................................................26
(h) Master Repurchase Agreement....................................................................26
(i) AISL Insurance Policy..........................................................................27
6. Conditions to Obligation to Close.......................................................................27
(a) Conditions to Obligation of the Buyer..........................................................27
(b) Conditions to Obligation of the Sellers........................................................28
7. Post-Closing Covenants..................................................................................29
(a) Access to Records after Closing................................................................29
(b) Other Assets; Non-Assignable Rights............................................................30
(c) Use of Name....................................................................................30
(d) Mutual Assistance Regarding Taxes..............................................................31
(e) Covenants Not to Compete.......................................................................31
(f) Non-Solicitation of Employees..................................................................33
(g) Non-Interchange of Customers...................................................................33
(h) Employee Benefits and Employment...............................................................33
(i) Further Assurances of Sellers..................................................................37
(j) Further Assurances of Buyer....................................................................37
(k) Transfer Taxes.................................................................................37
(l) Litigation Assistance..........................................................................37
(m) Separate Subsidiary for Piper Aircraft Business................................................38
(n) Nonsolicitation of Servicing Portfolio.........................................................38
(o) Collection of Certain Receivables..............................................................38
(p) Review of Files................................................................................38
(q) Repurchase of Loans............................................................................38
(r) Hotlink to AF Division Website.................................................................39
8. Termination.............................................................................................39
(a) Termination of Agreement.......................................................................39
-ii-
4
(b) Effect of Termination..........................................................................39
9. Indemnification.........................................................................................39
(a) Indemnification by the Sellers.................................................................39
(b) Indemnification by the Buyer...................................................................41
(c) Notice of Claims; Insurance Benefit............................................................41
(d) Third Person Claims............................................................................42
(e) Limitations....................................................................................43
(f) Adjustment to Purchase Price...................................................................44
10. Miscellaneous...........................................................................................44
(a) Press Releases and Public Announcements........................................................44
(b) No Third-Party Beneficiaries...................................................................44
(c) Entire Agreement...............................................................................44
(d) No Additional Representations and Warranties...................................................44
(e) Seller Joint Responsibility; Succession and Assignment.........................................45
(f) Counterparts...................................................................................45
(g) Headings.......................................................................................45
(h) Notices........................................................................................45
(i) Governing Law..................................................................................46
(j) Amendments and Waivers.........................................................................46
(k) Severability...................................................................................46
(l) Expenses.......................................................................................47
(m) Construction...................................................................................47
(n) Incorporation of Exhibits and Schedules........................................................47
(o) Specific Performance...........................................................................47
(p) Submission to Jurisdiction.....................................................................47
(q) Agreement Provisions Not related to Retained Assets; Confidentiality...........................48
Exhibit A -- Sub-servicing Agreement
Disclosure Schedule
-iii-
5
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT entered into on August 27, 1999 by and among
Textron Financial Corporation, a Delaware corporation (the "Buyer"), Green Tree
Financial Servicing Corporation, a Delaware corporation ("Green Tree"), Green
Tree Financial Loan Company, a Minnesota industrial loan company and a wholly
owned subsidiary of Green Tree ("Green Tree FLC"), and Piper Financial Services,
Inc., a Minnesota corporation and a wholly owned subsidiary of Green Tree
("PFS") and, together with Green Tree and Green Tree FLC, the "Sellers." The
Buyer and the Sellers are referred to collectively herein as the "Parties."
WHEREAS, this Agreement contemplates a transaction in which the Buyer
will purchase all of the Acquired Assets (and assume all of the Assumed
Liabilities) of Green Tree's Aircraft Finance Division and its Franchise Finance
Division in return for cash.
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:
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.
"Accrued Interest" means the book value of the "Accrued interest
receivables" (determined in accordance with GAAP) of the AF Division or the FF
Division, as the case may be, as set forth in the Final Closing Statements of
Assets and Liabilities.
"Acquired Assets" means all right, title, and interest in and to all of
the assets of the Sellers relating primarily to the Business, including all of
their: (a) financial assets (the "Financial Assets") shown on the Final Closing
Statements of Assets and Liabilities, as represented by accounts, notes and
other receivables, promissory notes, security agreements, loan agreements,
installment contracts, loan participation agreements, mortgages, deeds of trust,
guarantees and collateral and other supporting documents or agreements relating
to the Financial Assets, if any, including all amendments, modifications,
supplements, waivers, restatements or other changes thereto (the "Financing
Documents"), (b) fixed assets ("Fixed Assets") of the Business, generally
described as tangible personal property (such as machinery, equipment, furniture
and computers), listed on Section 3(e) of the Disclosure Schedule or acquired by
either of the Divisions subsequent to the date hereof; (c) Intellectual Property
and goodwill associated with the Business; (d) rights under the Dealer
Agreements listed on Section 3(e) of the Disclosure Schedule; (e) prepaid
personal property and sales tax assets of the Business; (f) rights under the
contracts and agreements relating to the Business listed on Section 3(j) of the
Disclosure Schedule (or which would have been listed on Section 3(j) of the
Disclosure Schedule if Section 3(j) did not contain dollar amount minimums for
certain contracts and agreements), and Sellers' rights under such contracts and
agreements entered into by any of the Sellers
-1-
6
subsequent to the date hereof (subject to the provisions on non-transferability
of rights as provided in Section 7(b) below); (g) books, records, ledgers, files
(including, without limitation, credit and collateral files), documents,
correspondence, lists, studies, reports, and other printed or written materials
to the extent relating to any Aircraft Loan or Franchise Loan made or acquired
by the Business regardless of when such loans were originated or acquired by a
Division; (h) any rights to insurance (or proceeds of insurance) on any
collateral relating to Aircraft Loans or Franchise Loans (except for rights to
insurance (or proceeds of insurance) on any such collateral relating to the
conduct of the Business prior to the Closing, the Retained Assets or any
Liabilities of the Business other than Assumed Liabilities); (i) office and
other supplies of the Business used solely in the conduct of the Business and
all files, lists and the Financing Documents; (j) collateral or escrowed funds
of borrowers, including all cash collateral and cash or cash equivalents with
respect to maintenance and engine reserve and other similar accounts; and (k)
all rights with respect to asserted or unasserted litigation claims with respect
to the Business listed on Section 3(m) of the Disclosure Schedule; provided,
however, that the Acquired Assets shall not include (A) the Retained Assets, (B)
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 the Sellers as corporations; (C) cash and cash
equivalents (other than cash collateral and cash and cash equivalents with
respect to maintenance and engine reserve and other similar accounts); (D) any
of the rights of the Sellers under this Agreement (or under any supplemental
agreement between the Sellers and the Buyer entered into on or after the date of
this Agreement); (E) rights of the Sellers or any Affiliates under any
governmental license, permit or authorization; (F) any rights to insurance (or
proceeds of insurance) for claims arising out of or related to Liabilities
(other than Assumed Liabilities) or the conduct of the Business prior to the
Closing (other than the insurance (or proceeds of insurance) identified in
clause (h) of this definition that are part of the Acquired Assets); (G) any
refunds or credits relating to Taxes that are not an Assumed Liability; (H) any
assets referred to as "Miscellaneous charge receivables" and "Assessed late
charge receivables" as set forth in the Final Closing Statements of Assets and
Liabilities; and (I) the Repo Inventory of the AF Division and the FF Division
(but only in the event that Buyer disagrees with Sellers' determination of the
fair market value of such Repo Inventory and declines to acquire the Repo
Inventory as a result of such disagreement).
"Acquired Person" has the meaning set forth in Section 7(e)(i) below.
"Adjusted AF Division Total Managed Receivables" means (a) the AF
Division Total Managed Receivables, less (b) the AF Division Delinquency
Adjustment, if any.
"Adjusted FF Division Total Managed Receivables" means (a) the FF
Division Total Managed Receivables, less (b) the FF Division Delinquency
Adjustment, if any.
"Adjustment Date" has the meaning set forth in Section 2(g) below.
-2-
7
"AF Division" means Green Tree's Aircraft Finance Division (excluding
any business operations or assets thereof to the extent relating to the Retained
Assets).
"AF Division Business" means the business of the AF Division.
"AF Division Business Purchase Price" has the meaning set forth in
Section 2(c) below.
"AF Division Delinquency Adjustment" means an amount equal to the
excess, if any, of (a) the AF Division Total Managed Receivables more than 60
days past due as of the Closing Date ("Delinquent Aircraft Loans"), over (b)
.50% of the AF Division Total Managed Receivables as of the Closing Date.
"AF Division Owned Receivables" means the book value of the "AF
Division owned receivables" (determined on a gross basis in accordance with
GAAP) to be set forth in the Final Closing Statements of Assets and Liabilities.
"AF Division Securitized Receivables" means the book value of the "AF
Division securitized receivables" (determined on a gross basis in accordance
with GAAP) to be set forth in the Final Closing Statements of Assets and
Liabilities.
"AF Division Total Managed Receivables" means (a) the AF Division Owned
Receivables, plus (b) the AF Division Securitized Receivables.
"AF Division Website" means Green Tree's website located at
▇▇▇.▇▇▇▇▇▇▇▇▇▇.▇▇▇ relating to the AF Division Business.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"Agreement" means this Asset Purchase Agreement dated the date hereof
by and among the Buyer and the Sellers.
"Aircraft Loan" means a loan (or similar financing arrangement, such as
direct finance leases) marketed and made available for the purpose of financing
or refinancing the acquisition of an aircraft, engines or other aircraft
collateral, including without limitation, kits, balloons, helicopters and
avionics; provided, however, that a loan (or similar financing arrangement)
provided by a Person as part of an aircraft floor plan lending or home equity or
mortgage loan business (or any other business not directed specifically toward
financing the acquisition of aircraft by end-users) shall not be deemed an
Aircraft Loan even if the proceeds of the loan (or similar financing
arrangement) are used to finance or refinance the acquisition of an aircraft,
unless such loan (or similar financing arrangement) has been marketed as being
specifically available for use to finance or refinance the acquisition of
aircraft.
-3-
8
"Assumed Liabilities" means (a) all Liabilities or obligations of the
Sellers relating to the Business under the Financing Documents (including,
without limitation, obligations to satisfy any loan commitments made on or prior
to the Closing Date (whether or not such commitments are contained in Financing
Documents)) to be performed after the Closing; (b) all Book Liabilities in
existence as of the Closing to the extent constituting Escrow Balances, Unearned
Interest and Dealer Holdbacks listed in the Final Closing Statement of Assets
and Liabilities, (c) all Liabilities of the Business in connection with all
borrower security deposits or escrowed funds to the extent the Acquired Assets
include such security deposits or escrowed funds, (d) all Liabilities and
obligations of the Business under the Dealer Agreements to be performed after
the Closing, (e) Sellers' Liabilities to perform obligations after the Closing
under the contracts, lease agreements, and other agreements relating to the
Business, including any Liabilities listed in Section 3(j) of the Disclosure
Schedule and (f) any employment related liabilities expressly assumed by the
Buyer pursuant to Section 7(h) of this Agreement. The Assumed Liabilities shall
not include (i) any Liability of the Sellers for costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby, (ii)
any intercompany debt owed to the Sellers or an Affiliate of Sellers, (iii) any
Liability or obligation of the Sellers under this Agreement (or under any
supplemental agreement between the Sellers and the Buyer entered into on or
after the date of this Agreement), (iv) any liability, claim or obligation of a
Seller with respect to any Taxes arising on or prior to the Closing or Taxes
(including pursuant to Treasury Regulation 1.1502-6 (or any analogous provision
of state, local or foreign law), as a transferee or successor under any
provision of federal, state, local or foreign law or otherwise), or any
reporting requirement or estimated Tax payable with respect thereto, whether
arising out of or relating to events, state of facts or transactions occurring
or existing on, prior to, or after the Closing Date, including any Taxes
relating to the transactions contemplated hereby (except as otherwise provided
in Section 7(k) below); (v) any Liability resulting from, arising out of,
relating to, in the nature of, or caused by any breach of contract, breach of
warranty, tort, infringement, violation of law, or environmental matter (except
for matters listed on Section 3(v) of the Disclosure Schedule), in each case on
or prior to the Closing, (vi) any obligation of the Sellers to indemnify any
Person by reason of the fact that such person was a director, officer, employee
or agent of the Sellers or their Affiliates or was serving at the request of the
Sellers or their Affiliates as a partner, trustee, director, officer, employee
or agent of another entity (whether such indemnification is for judgments,
damages, penalties, fines, costs, amounts paid in settlement, losses, expenses,
or otherwise and whether such indemnification is pursuant to any statute,
charter document, bylaw, agreement, or otherwise) or (vii) any employment
related liabilities not expressly assumed by the Buyer pursuant to Section 7(h)
of this Agreement.
"Book Liabilities" means all obligations recorded on the books and
records of the Sellers relating primarily to the Business as listed on the Most
Recent Statement of Assets and Liabilities or incurred subsequent to the date
thereof in the Ordinary Course of Business.
"Business" means the businesses of the Divisions considered as a whole.
"Buyer" has the meaning set forth in the preface above.
-4-
9
"Buyer's Employee Benefits" has the meaning set forth in Section
7(h)(ii)(A) below.
"Captive Finance Business" means a business, to the extent but only to
the extent, such business is engaged in making Aircraft Loans with respect to
(x) new aircraft manufactured by such business or one or more Affiliates thereof
and (y) used aircraft manufactured by such business or one or more of its
Affiliates to facilitate the sale of new aircraft manufactured by such business
or one or more of its Affiliates.
"Claim Notice" has the meaning set forth in Section 9(c)(i) below.
"Closing" has the meaning set forth in Section 2(d) below.
"Closing Conditions" 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 Aircraft Finance Business" has the meaning set forth in
Section 7(e)(i) below.
"Competitive Franchise Finance Business" has the meaning set forth in
Section 7(e)(ii) below.
"Conseco" means Conseco, Inc., an Indiana corporation which, as of the
date hereof, owns all of the outstanding capital stock of GTFC.
"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 successor's) financial
statements in accordance with GAAP and as to which Conseco is the parent entity.
"Consumer Finance Laws" means any federal or state laws or regulations
(including truth in lending, usury and licensing laws and registration
requirements) regulating loans (or any other agreement of the type underlying a
Financing Document) made to consumers or the collection of such loans (or any
amounts collectible pursuant to a Financing Document).
"Consumer Finance Law Violation Damages" means (i) any Damages
suffered, assessed, incurred or fines or other amounts paid to governmental
entities or borrowers by the Buyer as a result of or arising from Aircraft Loans
or Franchise Loans transferred to the Buyer hereunder made by any of the Sellers
to such borrowers in violation of Consumer Finance Laws and (ii) any
-5-
10
losses or other Damages resulting from the Buyer's inability to collect the
principal and interest due with respect to such loans.
"Current Employees" has the meaning set forth in Section 7(h)(i) below.
"Damages" has the meaning set forth in Section 9(a)(i).
"Dealer Agreements" means any agreement in existence on the date hereof
(or entered into subsequent to the date hereof in the Ordinary Course of
Business) with a dealer or vendor of a particular kind of equipment pursuant to
which the parties thereto set forth the terms upon which the Business will
provide loan financing to customers of the dealer or vendor.
"Dealer Holdback" means the book value of the "Dealer holdback credit
balances" of the AF Division or the FF Division, as the case may be, to be set
forth in the Final Closing Statements of Assets and Liabilities.
"Descriptive Memorandum" means the Descriptive Memorandum dated April
1999 relating to the Business and GTFC's other commercial finance businesses.
"Disclosure Schedule" has the meaning set forth in Section 3 below.
"Division" means the AF Division or the FF Division, as the case may
be.
"Divisions" means the AF Division and the FF Division.
"Employee Benefit Plan" means any (a) nonqualified deferred
compensation or retirement plan or arrangement which is an Employee Pension
Benefit Plan, (b) qualified defined contribution retirement plan or arrangement
which is an Employee Pension Benefit Plan, (c) qualified defined benefit
retirement plan or arrangement which is an Employee Pension Benefit Plan
(including any Multiemployer Plan), or (d) Employee Welfare Benefit Plan or
material fringe benefit plan or program.
"Employee Pension Benefit Plan" has the meaning set forth in Section
3(2) of ERISA.
"Employee Welfare Benefit Plan" has the meaning set forth in Section
3(1) of ERISA.
"Employees" has the meaning set forth in Section 7(h)(i) below.
"Enforceability Exceptions" has the meaning set forth in Section 3(j)
below.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
-6-
11
"Escrow Balance" means the book value of the "Escrow credit balances"
of the AF Division or the FF Division, as the case may be, to be set forth in
the Final Closing Statements of Assets and Liabilities.
"Estimated Purchase Price" has the meaning set forth in Section 2(f)
below.
"FF Division" means Green Tree's Franchise Finance Division.
"FF Division Business" means the business of the FF Division.
"FF Division Business Purchase Price" has the meaning set forth in
Section 2(c) below.
"FF Division Delinquency Adjustment" means an amount equal to the
excess, if any, of (a) the FF Division Total Managed Receivables more than 60
days past due as of the Closing Date, over (b) .50% of the FF Division Total
Managed Receivables as of the Closing Date.
"FF Division Owned Receivables" means the book value of the "FF
Division owned receivables" (determined on a gross basis in accordance with
GAAP) to be set forth in the Final Closing Statements of Assets and Liabilities.
"FF Division Securitized Receivables" means the book value of the "FF
Division securitized receivables" (determined on a gross basis in accordance
with GAAP) to be set forth in the Final Closing Statements of Assets and
Liabilities.
"FF Division Total Managed Receivables" means (a) the FF Division Owned
Receivables, plus (b) the FF Division Securitized Receivables.
"Final Closing Statements of Assets and Liabilities" means the
statements of assets and liabilities of the AF Division and the FF Division as
of the Closing Date, which shall be prepared by Green Tree in accordance with
this Agreement in the same manner as the Statements of Assets and Liabilities.
"Financial Assets" means financing arrangements provided by Sellers in
connection with the Business with respect to any type of property and regardless
of whether the transaction takes the form of a loan, a conditional sales
agreement or a note and security agreement, under which the Sellers are the
lender, seller, secured party or an assignee thereof. The Financial Assets
includes loan participation agreements and Sellers' Security Interests in
collateral and cash collateral (if any).
"Financing Documents" has the meaning set forth in the definition of
Acquired Assets above.
"Fixed Assets" has the meaning set forth in the definition of Acquired
Assets above.
-7-
12
"Franchise Loan" means a loan (or similar financing arrangement)
marketed and made available for the purpose of providing overall financing or
refinancing for a franchised business operation (including financing for
furniture, fixtures and equipment, remodeling and real estate acquisition);
provided, however, that a loan (or similar financing arrangement) provided by a
Person to a franchise business operation shall not be deemed to be a Franchise
Loan if such loan (or similar financing arrangement) is made to finance only a
portion of the operation's business or assets (e.g., leased or acquired real
estate or equipment), or if such loan (or similar financing arrangement) is made
as part of a financing business not directed specifically toward financing a
franchise business operation.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"Green Tree" has the meaning set forth in the preface above.
"Green Tree FLC" has the meaning set forth in the preface above.
"GTFC" means Green Tree Financial Corporation, a Delaware corporation
that owns all of the outstanding capital stock of Green Tree and that is a
wholly owned subsidiary of Conseco, Inc.
"▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended.
"Inactive Employees" has the meaning set forth in Section 7(h)(i)
below.
"Indemnified Event" has the meaning set forth in Section 9(c)(ii)
below.
"Indemnified Party" has the meaning set forth in Section 9(c)(i) below.
"Indemnitor" has the meaning set forth in Section 9(c)(i) below.
"Intellectual Property" means, with respect to such property relating
primarily to the Business, (a) the service marks and the trade names set forth
on Section 3(p) of the Disclosure Schedule, together with all translations,
adaptations, derivations, and combinations thereof and including all goodwill
associated therewith, and all applications, registrations, and renewals in
connection therewith, (b) all copyrightable works, all copyrights, and all
applications, registrations, and renewals in connection therewith, (c) all trade
secrets and confidential business information (including ideas, know-how, loan
origination and servicing procedures customer, dealer and supplier lists,
pricing and cost information, and business and marketing plans and proposals),
(d) all proprietary computer software listed on Section 3(p) of Disclosure
Schedule and (e) the AF Division Website.
-8-
13
"Knowledge of Sellers" means: (a) with respect to the AF Division, the
actual knowledge of the General Manager, Director of Operations and Loan
Processing Manager of the AF Division, the President, Executive Vice President
and Senior Counsel of GTFC's Commercial Lending Division, the Chief Financial
Officer, Treasurer, Controller and General Counsel of GTFC and the Chief
Financial Officer, Chief Accounting Officer, Senior Vice President and
President--Finance Group and General Counsel of Conseco; and (b) with respect to
the FF Division, the actual knowledge of the General Manager and Director of
Operations of the FF Division, the President, Executive Vice President and
Senior Counsel of GTFC's Commercial Lending Division, the Chief Financial
Officer, Treasurer, Controller and General Counsel of GTFC and the Chief
Financial Officer, Chief Accounting Officer, Senior Vice President and
President--Finance Group and General Counsel of Conseco.
"Liability" means any liability or obligation of any kind whatsoever
(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).
"LIBO Rate" 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 LIBO 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) warehousemen's, artisans', mechanics',
materialmen's, and similar liens on the Fixed Assets or collateral or
repossessed inventory securing Aircraft Loans or Franchise Loans of the
Business, (b) liens for Taxes not yet due and payable or for Taxes that the
taxpayer is contesting in good faith through appropriate proceedings (which
proceedings are set forth on Section 3(m) of the Disclosure Schedule) and (c)
other liens arising in the Ordinary Course of Business and not incurred in
connection with the borrowing of money on Fixed Assets.
"Managed Financial Assets" means Financial Assets of the AF Division
which have been sold by Green Tree in loan securitization transactions and which
are serviced by Green Tree.
"Master Repurchase Agreement" means the Master Repurchase Agreement
dated as of December 30, 1998 between Prudential Securities Credit Corporation
and GTFC.
"Material Adverse Effect" or "Material Adverse Change" means, with
respect to the Business, a material adverse effect on or change to (as the case
may be) the business, financial condition or results of operations of the
Business; provided, however, (a) that adverse conditions relating to the economy
in general or the sector of the commercial finance industry in which the
Business operates shall not constitute a Material Adverse Effect or Material
Adverse Change and (b) any adverse change with respect to the AF Division
Business relating to the financing of aircraft manufactured by Piper Aircraft
(including, without limitation, any decline in revenues resulting therefrom)
shall not constitute a Material Adverse Change.
-9-
14
"Most Recent Statements of Assets and Liabilities" has the meaning set
forth in Section 3(f) below.
"Multiemployer Plan" has the meaning set forth in Section 3(37) of
ERISA.
"Non-Assignable Rights" has the meaning set forth in Section 7(b)
below.
"Non-Competition Region" has the meaning set forth in Section 7(e)(i)
below.
"Ordinary Course of Business" means the ordinary course of business of
the Business consistent with past practices.
"Party" (including with correlative meaning, the term "Parties") has
the meaning set forth in the preface above.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Person" means an individual, a partnership, a corporation, an
association, a limited liability company, a joint stock company, a trust, a
joint venture, an unincorporated organization, a governmental entity (or any
department, agency, or political subdivision thereof) or any other type of
entity.
"PFS" has the meaning set forth in the preface above.
"Piper Aircraft" means The New Piper Aircraft, Inc. and any of its
Affiliates.
"PP&E" means the book value of the "Property and equipment" of the AF
Division or the FF Division, as the case may be, to be set forth in the Final
Closing Statements of Assets and Liabilities.
"Preliminary Closing Statements of Assets and Liabilities" means the
statements of assets and liabilities of the AF Division and the FF Division as
of a date not more than 35 days prior to the Closing Date, which will be
prepared by Sellers in the same manner as the Statements of Assets and
Liabilities.
"Purchase Price" has the meaning set forth in Section 2(c) below.
"Repo Inventory" means the fair market value of the "Repo inventory" of
the AF Division (determined by reference to the "Blue Book" value less estimated
liquidation costs) or the FF Division, as the case may be, to be set forth in
the Final Closing Statements of Assets and Liabilities.
-10-
15
"Refundable Fees" means the amount of the "Refundable Fees on unfunded
loans" of the AF Division or the FF Division, as the case may be, to be set
forth in the Final Closing Statements of Assets and Liabilities.
"Retained Assets" means the Financial Assets of the AF Division listed
on Section 1 of the Disclosure Schedule and any other assets or Financing
Documents to the extent relating to such Financial Assets.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Security Interest" means purchase money liens and Liens secured by
collateral for Financial Assets.
"Sellers" has the meaning set forth in the preface above.
"Sellers' Pension Plan" has the meaning set forth in Section 7(h)(vi)
below.
"Statements of Assets and Liabilities" has the meaning set forth in
Section 3(f) below.
"Sub-servicing Agreement" means that agreement entered into between
GTFC and Buyer pursuant to which Buyer will act as sub-servicer for the Managed
Financial Assets relating to the Business.
"Tax" (including with correlative meaning, the terms "Taxes" and
"Taxable") means (i) any income, gross receipts, ad valorem, premium, excise,
value-added, sales, use, transfer, franchise, license, severance, stamp,
occupation, service, lease, withholding, employment, payroll, premium, property
or windfall profits tax, alternative or add-on-minimum tax, or other tax, fee or
assessment, together with any interest and any penalty, addition to tax or
additional amount imposed by any governmental authority responsible for the
imposition of any such tax or in connection with the filing of or failure to
file any reports, (ii) any Liability of the Business for the payment of any
amount of the type described in clause (i) as a result of the Business being a
member of an affiliated or combined group with, or a successor to, or transferee
of, any other corporation at any time on or prior to the Closing, and (iii) any
Liability of the Business pursuant to any tax sharing, tax allocation, tax
indemnification or tax reimbursement agreement in effect at any time on or prior
to the Closing.
"Tax Return" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Textron" means Textron Inc., a Delaware corporation.
-11-
16
"Textron Entity" means Textron and the Buyer (or their successors by
operation of law) and any corporation, partnership, limited liability company or
other entity (a) with respect to which Textron (or its successor by operation of
law), directly or indirectly, owns a majority of the outstanding voting
securities or (b) whose financial statements are consolidated with Textron's
financial statements in accordance with GAAP and as to which Textron is the
parent entity.
"Transfer Taxes" has the meaning set forth in Section 7(k) below.
"Transferred Employee" has the meaning set forth in Section 7(h)(i)
below.
"Transitional Services Agreement" means that agreement entered into
between Green Tree and Buyer pursuant to which Green Tree will provide
transitional services relating to the Business.
"Unearned Interest" means the book value of the "Unearned interest" of
the AF Division or the FF Division, as the case may be, as set forth in the
Final Closing Statements of Assets and Liabilities.
"WARN Act" has the meaning set forth in Section 7(h)(v) below.
"Year-End Statements of Assets and Liabilities" has the meaning set
forth in Section 3(f) below.
2. Basic Transaction.
(a) Purchase and Sale of Assets. On and subject to the terms and
conditions of this Agreement, the Buyer agrees to purchase from the Sellers, and
the Sellers agree to sell, assign, transfer, convey, and deliver to the Buyer,
all of the Acquired Assets at the Closing for the amount of the Purchase Price.
(b) Assumption of Liabilities. On and subject to the terms and
conditions of this Agreement, the Buyer agrees to assume and become responsible
for all of the Assumed Liabilities at the Closing. The Buyer will not assume or
have any responsibility with respect to any obligation or Liability of the
Sellers not included in the definition of Assumed Liabilities.
(c) Purchase Price.
(i) The purchase price (the "Purchase Price") to be paid by
Buyer for the Business shall be equal to the sum of: (A) the AF
Business Purchase Price and (B) the FF Business Purchase Price.
(ii) For purposes of this Agreement, the "AF Business Purchase
Price" means (A) the sum of (1) the AF Division Owned Receivables, (2)
(x) the Adjusted AF Division
-12-
17
Total Managed Receivables, multiplied by (y) .0345, (3) the Repo
Inventory of the AF Division (provided that the value of such Repo
Inventory shall be deemed to be zero, if such Repo Inventory is not an
Acquired Asset), (4) the Accrued Interest of the AF Division and (5)
the PP&E of the AF Division, less (B) the sum of (1) the Escrow Balance
of the AF Division, (2) Unearned Interest of the AF Division and (3)
the Dealer Holdback of the AF Division.
(iii) For purposes of this Agreement, the "FF Business
Purchase Price" means (A) the sum of (1) the FF Division Owned
Receivables, (2) (x) the Adjusted FF Division Total Managed
Receivables, multiplied by (y) .1010, (3) the Repo Inventory of the FF
Division (provided that the value of such Repo Inventory shall be
deemed to be zero, if such Repo Inventory is not an Acquired Asset),
(4) the Accrued Interest of the FF Division and (5) the PP&E of the FF
Division, less (B) the sum of (1) the Escrow Balance of the FF
Division, (2) the Unearned Interest of the FF Division and (3) the
Refundable Fees of the FF Division.
(d) The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Green Tree at ▇▇▇
▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, commencing at 9:00
a.m. local time on the second business day following the satisfaction or waiver
of all conditions to the obligations of the Parties to consummate the
transactions contemplated hereby (other than conditions with respect to actions
the respective Parties will take at the Closing itself) (the "Closing
Conditions"), or such other date as the Parties may mutually determine (the
"Closing Date").
(e) Deliveries at the Closing. At the Closing, (i) the Sellers will
deliver to the Buyer the various certificates, instruments, and documents
referred to in Section 6(a) below; (ii) the Buyer will deliver to the Sellers
the various certificates, instruments, and documents referred to in Section 6(b)
below; (iii) the Sellers will execute, acknowledge (if appropriate), and deliver
to the Buyer (A) assignments (including any applicable real property and
Intellectual Property transfer documents) in form and substance consistent with
the terms of this Agreement and reasonably satisfactory to the Buyer and Sellers
and (B) such other instruments of sale, transfer, conveyance, and assignment as
the Buyer and its counsel reasonably may request; (iv) the Buyer will execute,
acknowledge (if appropriate), and deliver to the Sellers (A) an assumption in
form and substance consistent with the terms of this Agreement and reasonably
satisfactory to the Sellers and Buyer and (B) such other instruments of
assumption as the Sellers and their counsel reasonably may request; and (v) the
Buyer will deliver to the Sellers the consideration specified in Section 2(f)
below.
(f) Determination of Estimated Purchase Price. The Purchase Price will
be determined by Green Tree on a preliminary basis (the "Estimated Purchase
Price") as of the date of the Preliminary Closing Statement of Assets and
Liabilities and delivered, together with the Preliminary Closing Statement of
Assets and Liabilities, to the Buyer, not less than five business days prior to
the Closing. Green Tree will make appropriate personnel available to consult
with
-13-
18
the Buyer in connection with the Buyer's review of the Estimated Purchase Price
prior to the Closing Date. If Buyer, based on such review, does not agree with
the amount of the Estimated Purchase Price, the Sellers and the Buyer agree that
the Chief Accounting Officer (or his designee) of Conseco and the Chief
Executive Officer (or his designee) of the Buyer will personally discuss and use
good faith efforts to resolve such disagreement. The Estimated Purchase Price
will be 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 shall be paid at Closing by Buyer's delivery of cash by wire
transfer, in accordance with the instructions of Green Tree.
(g) Post-Closing Adjustment to Estimated Purchase Price. Not later than
60 days following the Closing, Green Tree shall cause to be prepared a Final
Closing Statements of Assets and Liabilities, and Green Tree shall calculate the
Purchase Price based upon the Final Closing Statement of Assets and Liabilities.
Buyer shall provide Green Tree with such assistance as may be requested by Green
Tree in connection with the preparation of 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 Green Tree
in writing within 15 days after receipt of the Purchase Price computation, which
notice shall specify in reasonable detail each adjustment proposed by Buyer. If
Buyer does not so notify Green Tree, then the Purchase Price shall be as set
forth on Green Tree's computation. If Buyer gives notice of any proposed
adjustments, during the 15 day period following the date of such notice, Green
Tree and Buyer shall attempt to resolve the appropriateness of such proposed
adjustments. If at the end of such 15-day period, Green Tree 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 the accounting firm of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP (the "Accounting
Firm") to determine the appropriateness of the remaining proposed adjustments.
The adjustments so determined by written agreement of Green Tree and the 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 equally by
the Buyer and Green Tree, and each of Buyer and Green Tree 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 LIBO Rate as
in effect from time to time, within seven days after the Adjustment Date, by
wire transfer of immediately available funds to such account as Green Tree shall
designate in the amount of such excess. If the Estimated Purchase Price exceeds
the final Purchase Price, Green Tree shall pay such excess within seven days
after the Adjustment Date, by wire transfer of immediately available funds to
such account as Buyer shall designate in the amount of such excess, together
with interest thereon at the LIBO Rate from the Closing Date to the date such
excess is paid.
-14-
19
(i) Allocation of Purchase Price. The Purchase Price, the Assumed
Liabilities and other relevant items shall be allocated among the Acquired
Assets and other relevant items in accordance with Section 1060 of the Code and
the Treasury Regulations thereunder as may reasonably be determined by Buyer and
agreed upon by Green Tree within 180 days following the Closing, which agreement
shall not be unreasonably withheld. Sellers and Buyer each agree to report the
sale and purchase of the Acquired Assets for all federal, state, local and
foreign Tax purposes, including the filing of IRS Form 8594, in a manner
consistent with such allocation and agree to take no position inconsistent with
such allocation. Upon any payment of any indemnification obligations hereunder
resulting in an adjustment of the Purchase Price, such allocation shall be
appropriately adjusted.
(j) Purchase and Sale of Single Division. Notwithstanding anything to
the contrary contained in this Agreement, in the event of the satisfaction or
waiver of all Closing Conditions relating to the sale and purchase of either the
AF Division Business or the FF Division Business, at such time as the Closing
Conditions relating to the sale of the business of the other Division are not
satisfied, the Parties shall be obligated to consummate the transactions
contemplated by this Agreement with respect to the Division for which the
Closing Conditions have been satisfied or waived. For purposes of determining
whether the Closing Conditions have been satisfied with respect to the AF
Division or the FF Division, the representations, warranties and covenants
contained herein shall be deemed made with respect to the AF Division Business
or the FF Division Business, as the case may be, rather than with respect to the
Business as a whole. To the extent necessary, any other provisions of this
Agreement shall be interpreted in a manner that is appropriate in the context of
the sale of one of the Divisions rather than the Business as a whole. In the
event that a Closing is held with respect to the sale of the business of one of
the Divisions and not the other Division, a second Closing shall be held with
respect to such other Division Business if the Closing Conditions with respect
to such second Closing are satisfied or waived prior to the termination of this
Agreement.
3. Representations and Warranties of the Sellers. The Sellers represent
and warrant to the Buyer as follows (except as set forth in the disclosure
schedule accompanying this Agreement and initialed by the Parties (the
"Disclosure Schedule"), which Disclosure Schedule is arranged in paragraphs
corresponding to the lettered and numbered paragraphs contained in this
Agreement):
(a) Organization of the Sellers. Each of the Sellers is a corporation
duly organized, validly existing, and in good standing under the laws of the
state of its incorporation. Each of the Sellers is duly authorized to conduct
business and is in good standing under the laws of each jurisdiction where such
qualification is required and where the lack of such qualification would cause a
Material Adverse Effect. Each of the Sellers has full power and authority and
all licenses, permits, and authorizations necessary to carry on the portion of
the Business conducted by it and to own and use the properties owned and used by
the Business in compliance with applicable law, except for any licenses, permits
and authorizations which the failure to hold would not cause a Material Adverse
Effect.
-15-
20
(b) Authorization of Transaction. Each of the Sellers has full power
and authority (including full corporate power and authority) to execute and
deliver this Agreement and to perform its obligations hereunder. Without
limiting the generality of the foregoing, the board of directors of each of the
Sellers has duly authorized the execution, delivery, and performance of this
Agreement by such Seller. This Agreement constitutes the valid and legally
binding obligation of each of the Sellers, enforceable in accordance with its
terms and conditions.
(c) Noncontravention. Except as set forth in Section 3(c) of the
Disclosure Schedule, neither the execution and the delivery of this Agreement,
nor the consummation of the transactions contemplated hereby (including the
assignments and assumptions referred to in Section 2 above), will (i) violate
any constitution, statute, regulation, rule, injunction, judgment, order,
decree, ruling, charge, or other restriction of any government, governmental
agency, or court to which any of the Sellers is subject or any provision of the
charter or bylaws of either of the Sellers, (ii) conflict with, result in a
breach of, constitute a default under, result in the acceleration of, create in
any party the right to accelerate, terminate, modify, or cancel, or require any
notice under, any agreement, contract, lease, license, instrument, or other
arrangement to which any of the Sellers is a party or by which it is bound or to
which the Business is subject (or result in the imposition of any Liens upon any
of the Acquired Assets) or (iii) require the Sellers to give any notice to, make
any filing with, or obtain any authorization, consent, or approval of any
government or governmental agency in order for the Parties to consummate the
transactions contemplated by this Agreement (including the assignments and
assumptions referred to in Section 2 above); provided however, that any such
conflict or lack of consent pursuant to clause (ii) or (iii) above shall not be
deemed a violation of this Section 3(c) if it does not result in a Material
Adverse Effect or materially impair Sellers' performance of their obligations
hereunder.
(d) Investment Banker's Fees. Neither of the Sellers has any Liability
or obligation to pay any fees, commissions, expenses, indemnities, or other
amounts to any investment banker, broker, finder, or agent with respect to the
transactions contemplated by this Agreement, except to ▇.▇ ▇▇▇▇▇▇ Securities
Inc. and ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co. for which the Sellers are responsible and shall
indemnify Buyer therefor. None of the Sellers has any Liability or obligation to
pay any fees, commissions, expenses, indemnities or other amounts to any
investment banker, broker, finder, or agent with respect to the transactions
contemplated by this Agreement for which the Buyer could become liable or
obligated.
(e) Title to Acquired Assets; Fixed Assets; Dealer Agreements. The
Sellers have good and marketable title to, or a valid leasehold interest in, the
Acquired Assets, free and clear of all Liens, except for (i) Acquired Assets
disposed of or repaid in the Ordinary Course of Business since the date of the
Most Recent Statements of Assets and Liabilities and (ii) those exceptions set
forth in Section 3(e) of the Disclosure Schedule. As of the Closing Date, any
Liens on the Acquired Assets will secure only Assumed Liabilities. Section 3(e)
of the Disclosure Schedule also sets forth a list as of the date hereof of the
Fixed Assets and the Dealer Agreements.
-16-
21
(f) Financial Information. Included in Section 3(f) of the Disclosure
Schedule are statements of assets and liabilities for each Division as of
December 31, 1998 (the "Year-End Statements of Assets and Liabilities") and as
of May 31, 1999 (the "Most Recent Statements of Assets and Liabilities" and,
together with the Year-End Statements of Assets and Liabilities, the "Statements
of Assets and Liabilities") derived from Green Tree's unaudited consolidating
balance sheets as of such dates. All Acquired Assets, which are material and
which would be required to be recorded on the books and records of the Sellers
in accordance with Sellers' past accounting practices, are set forth in the Most
Recent Statement of Assets and Liabilities and will be set forth in the Final
Closing 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
the Sellers in accordance with Sellers' past accounting practices, are set forth
in the Most Recent Statement of Assets and Liabilities and will be set forth in
the Final Closing Statements of Assets and Liabilities. The information set
forth in the financial summary relating to the AF Division for the historical
periods ended December 31, 1997 and 1998 and March 31, 1999 contained on page 17
of the Descriptive Memorandum are accurate in all material respects and are
consistent with the internal books and records of Green Tree. The information
set forth in the financial summary relating to the FF Division for the
historical periods ended December 31, 1997 and 1998 and March 31, 1999 contained
on page 70 of the Descriptive Memorandum are accurate in all material respects
and are consistent with the internal books and records of Green Tree.
(g) Subsequent Events. Since the date of the Most Recent Statements of
Assets and Liabilities, there has not been any Material Adverse Change. Without
limiting the generality of the foregoing, except as set forth in Section 3(g) of
the Disclosure Schedule, during the period from the date of the Most Recent
Financial Statements through the date hereof:
(i) none of the Sellers has sold, leased, transferred, or
assigned any of its material assets, tangible or intangible, used in
connection with the Business, other than repossessed inventory and
other assets (which are not Financial Assets) in the Ordinary Course of
Business;
(ii) none of the Sellers has entered into any agreement,
contract, lease, or license (or series of related agreements,
contracts, leases, and licenses) relating to the Business outside the
Ordinary Course of Business and involving an amount more than $25,000;
(iii) no Person (including any of the Sellers) has
accelerated, terminated, modified, or cancelled any agreement,
contract, lease or license (or series of related agreements, contracts,
leases, and licenses) relating to the Business to which any of the
Sellers is a party or by which any of them is bound outside the
Ordinary Course of Business and involving an amount more than $25,000;
-17-
22
(iv) none of the Sellers has imposed any material Security
Interest upon any of the Acquired Assets or other assets, tangible or
intangible, used in connection with the Business outside the Ordinary
Course of Business;
(v) neither of the Divisions has made any capital expenditure
(or series of related capital expenditures) relating to the Business
involving more than $25,000;
(vi) except for Aircraft Loans and Franchise Loans, the
Divisions have not made any capital investment in, any loan to, or any
acquisition of the securities or assets of, any other Person (or series
of related capital investments, loans, and acquisitions) relating to
the Business, outside the Ordinary Course of Business and involving
more than $25,000;
(vii) none of the Sellers has delayed or postponed the payment
of accounts payable or other Liabilities relating to the Business
outside the Ordinary Course of Business;
(viii) none of the Sellers has cancelled, compromised, waived,
or released any right or claim (or series of related rights and claims)
relating to the Business outside the Ordinary Course of Business;
(ix) none of the Sellers has granted any license or sublicense
of any material rights under or with respect to any Intellectual
Property used in connection with the Business;
(x) none of the Sellers has experienced any material damage,
destruction, or loss whether or not covered by insurance, to property
used in connection with the Business;
(xi) none of the Sellers has made any loan to, or entered into
any transaction with, any of the directors, officers, and employees of
the Business outside the Ordinary Course of Business;
(xii) none of the Sellers has entered into any employment
contract or collective bargaining agreement, or modified the terms of
any existing such contract or agreement relating to the Business;
(xiii) none of the Sellers has granted any increase in the
base compensation of any of the officers and employees of the Divisions
outside the Ordinary Course of Business;
(xiv) none of the Sellers has adopted, amended, modified, or
terminated any bonus, profit-sharing, incentive, severance, or other
plan, contract, or commitment for the
-18-
23
benefit of any of the directors, officers, and employees of the
Divisions, or taken any such action with respect to any other Employee
Benefit Plan;
(xv) neither of the Divisions has made or pledged to make any
charitable or other capital contribution outside the Ordinary Course of
Business;
(xvi) no Division has paid any material amount to any third
party with respect to any Liability or obligation outside the Ordinary
Course of Business (including any costs and expenses the Sellers have
incurred or may incur in connection with this Agreement and the
transactions contemplated hereby) which would not constitute an Assumed
Liability if in existence at the Closing;
(xvii) none of the Sellers has committed to any of the
foregoing; and
(xviii) no litigation has been commenced which could be
reasonably likely to have a Material Adverse Effect.
(h) Legal Compliance. Each of the Sellers has complied with all
applicable laws (including rules, regulations, codes, plans, injunctions,
judgements, orders, decrees, rulings and charges thereunder) of federal, state,
local, and foreign governments (and all agencies thereof) relating to the
Business, except where such lack of compliance would not cause a Material
Adverse Effect. As of the date hereof, no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand, or notice has been filed or
commenced with respect to the Business against the Sellers alleging any failure
to so comply, and, to the Knowledge of Sellers, none are threatened.
(i) Real Property. Except as set forth in Section 3(i) of the
Disclosure Schedule, none of the Sellers owns or leases any real estate relating
primarily to the operations of the Business.
(j) Contracts. Section 3(j) of the Disclosure Schedule contains a list
of the following documents and written or oral agreements (other than Financing
Documents) in effect as of the date hereof to which the Business is a party
(correct and complete copies of which have been delivered to the Buyer):
(i) any agreement (or group of related agreements), the
performance of which involves consideration in excess of $25,000 in a
given year or $100,000 over the term of the agreement;
(ii) any agreement concerning a partnership or joint venture
to which the Division is a party;
-19-
24
(iii) any agreement (or group of related agreements) under
which it has created, incurred, assumed, or guaranteed any indebtedness
for borrowed money, or any capitalized lease obligation or under which
it has imposed a Security Interest on any of its assets, tangible or
intangible;
(iv) any agreement concerning noncompetition by the Business;
(v) any collective bargaining agreement;
(vi) any agreement to pay any portion of the interest, yield
or spread payable with respect to any of the Financial Assets to third
parties;
(vii) any commitment letter or similar document which has not
yet been funded or terminated in full;
(viii) any agreement concerning confidentiality (other than
agreements entered into with borrowers or potential borrowers with
respect to Aircraft Loans or Franchise Loans);
(ix) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance or other material plan
or arrangement for the benefit of the current or former directors,
officers and employees of either of the Divisions;
(x) any agreement for the employment of any individual on a
full-time, part-time, consulting or other basis or providing severance
benefits;
(xi) any agreement under which it has been advanced or loaned
any amount to any of the directors, officers and employees of the
Division outside of the Ordinary Course of Business; or
(xii) any other agreement (or group of related agreements) the
performance or non-performance of which could reasonably be expected to
be material to either of the Divisions.
With respect to each such agreement, to the Knowledge of Sellers, 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 (collectively,
"Enforceability Exceptions"); (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
-20-
25
(including the assignments and assumptions referred to in Section 2 above); (C)
no party is in breach or default, and no event has occurred which with notice or
lapse of time would constitute a breach of default, or permit termination,
modification, or acceleration, under the agreement; and (D) no party has
repudiated any provision of the agreement.
(k) Financing Documents.
(i) For each Aircraft Loan and Franchise Loan of the Business
referenced in Section 3(k) of the Disclosure Schedule (which loans are
organized under separate headings for the AF Division and the FF
Division), the following information as of August 20, 1999 is set forth
on such Section 3(k) of the Disclosure Schedule:
(A) the contract number assigned by the Business;
(B) the name of the party obligated to make debt
service payments;
(C) the billing address of such obligor as reflected
in the records of the Business;
(D) the initial cost of equipment serving as
collateral;
(E) the general type and description of equipment
serving as collateral;
(F) the gross contract receivable balance related to
such transaction;
(G) the amount of debt service payments to the
Business with respect thereto;
(H) the date the related loan agreement commenced and
terminates; and
(I) the interest rate and scheduled maturity thereof.
(ii) Except as set forth in Section 3(k) of the Disclosure
Schedule:
(A) each Financing Document was originated by a
Seller in the Ordinary Course of the Business, or (in the case
of any Financing Document purchased by or assigned to a
Seller) was acquired by or assigned to a Seller for valid
consideration in the Ordinary Course of Business and was
validly assigned to a Seller by the originator or assignor of
such Financing Document;
(B) except in the Ordinary Course of Business of the
Aircraft Division, (A) Sellers have not entered into any
agreements waiving, amending, canceling or
-21-
26
subordinating in any material respect the terms and conditions
of the Financing Documents and the security interests
reflected therein and (B) no obligors have been released from
any of their material obligations thereunder;
(C) as of August 20, 1999, each of the Financing
Documents identifies the proper parties thereto and is correct
as to amounts set forth therein, and, to the Knowledge of
Sellers, is genuine as to signatures, including but not
limited to makers and endorsers, and is enforceable in
accordance with its respective terms in all material respects,
subject to any Enforceability Exceptions;
(D) as of August 20, 1999, the Financing Documents
accurately reflect in all material respects the priority
status of security interests, UCC financing statements, FAA
recordation and pledge agreements with respect to the material
collateral for such Financing Documents, and such Financing
Documents are adequate for the enforcement of the material
terms (including, but not limited to, perfection and lien
priority in collateral) of each Financing Document, subject to
any Enforceability Exceptions;
(E) the first perfected security interest in favor of
a Seller in the personal and real property held as collateral
for each of the Financing Documents does not vary in any
material respect from the Lien position required under the
credit approval for each of the loans. For each of the
Financing Documents, a first priority perfected security
interest in favor of a Seller exists in all collateral
material to the respective loan; and
(F) each of the Sellers has complied in all material
respects with all applicable laws and regulations (including
consumer laws and regulations) relating to the Financing
Documents. The interest rate applicable and/or charged under
the Financing Documents is in material compliance with all
applicable laws and regulations.
(l) Powers of Attorney. Except as set forth in Section 3(l) of the
Disclosure Schedule, there are no outstanding powers of attorney executed on
behalf of any of the Sellers relating to the Business.
(m) Litigation. Section 3(m) of the Disclosure Schedule sets forth each
lawsuit pending as of the date hereof in which the Business (i) is subject to
any material outstanding injunction, judgment, order, decree or ruling or (ii)
is a party or, to the Knowledge of Sellers, is threatened to be made a party to
any action, suit, proceeding, hearing, or investigation of, in, or before any
court or quasi-judicial or administrative agency of any federal, state, local,
or foreign jurisdiction or before any arbitrator. Without limiting the
generality of the foregoing, as of the date hereof, except as set forth in
Section 3(m) of the Disclosure Schedule, no litigation, collection action or
foreclosure has been commenced by or against any of the Sellers in relation
-22-
27
to any of the Financing Agreements, nor has any such litigation, to the
Knowledge of Sellers, been threatened by any Person. As of the date hereof, none
of the Sellers is aware of any suit or proceeding filed or threatened against it
by any Person denied a loan by such Seller. None of the actions, suits,
proceedings, hearings, and investigations set forth in Section 3(m) of the
Disclosure Schedule could reasonably be expected to result in any Material
Adverse Effect.
(n) Employee Benefits. Section 3(n) of the Disclosure Schedule lists
each Employee Benefit Plan relating to the Business maintained by the Sellers or
to which the Sellers contribute with respect to the employees of the Business.
(o) Guaranties. Except as set forth in Section 3(o) of the Disclosure
Schedule, none of the Sellers, relating to the Business, is a guarantor for any
material Liability or obligation (including indebtedness) of any other Person.
(p) Intellectual Property.
(i) Section 3(p) of the Disclosure Schedule lists all material
service marks, trade names, copyrights and proprietary software owned
by the Sellers used as of the date hereof primarily in connection with
the Business.
(ii) To the Knowledge of Sellers, neither of the Divisions has
interfered with, infringed upon, misappropriated, or otherwise come
into conflict with any Intellectual Property rights of third parties,
and, as of the date hereof, none of the Sellers has ever received any
charge, complaint, claim, demand, or notice alleging any such
interference, infringement, misappropriation, or violation (including
any claims that any of the Divisions must license or refrain from using
any Intellectual Property rights of any third party). As of the date
hereof, to the Knowledge of Sellers, no third party has interfered
with, infringed upon, misappropriated, or otherwise come into conflict
with any Intellectual Property rights of either of the Divisions.
(q) Employees. Included in Section 3(q) of the Disclosure Schedule is a
true and complete list as of the date hereof of all employees of the Sellers who
are primarily involved in the Business. Section 3(q) of the Disclosure Schedule
lists as of the date hereof for each such employee his or her title or position
held, hire date, base salary or wage rate and any bonus or commission
arrangements.
(r) Certain Transactions. Except as set forth in Section 3(r) of the
Disclosure Schedule or in the Ordinary Course of Business (which shall be deemed
to include employment and compensation arrangements), there is no transaction,
contract or other arrangement and no transaction, contract or other arrangement
proposed, to which the Business was or is to be a party with any director or
officer of any of the Sellers, any of the Sellers' Affiliates or their
respective directors or officers, or any Person owning of record more than 10%
of the outstanding capital stock of any class of any of the Sellers.
-23-
28
(s) Acquired Assets. The Acquired Assets and the Retained Assets
together comprise all of the Financial Assets of the Divisions.
(t) Securitization. The Sellers' historical determinations to sell
Aircraft Loans in loan securitization transactions in general have been based
solely on the date of origination of each Aircraft Loan.
(u) Taxes. For all tax periods or portions thereof ending on or prior
to the Closing Date, (i) all Taxes required to be paid by Sellers with respect
to the Business have been or will be paid when required by law; (ii) the
Acquired Assets are not encumbered by any liens arising out of unpaid Taxes
which are due and payable; (iii) no claim has been made by a taxing authority in
a jurisdiction where Sellers do not file Tax Returns with respect to the
Business that it is or may be subject to taxation by that jurisdiction with
respect to the Business; (iv) Schedule 3(u) sets forth a list of all
jurisdictions in which income, franchise or sales Tax Returns were, or were
required to be, filed by Sellers with respect to the Business for the two most
recently completed taxable years; and (v) none of the Acquired Assets is
property that is required to be treated as being owned by any other Person
pursuant to the "safe harbor lease" provisions of section 168(f)(8) of the
Internal Revenue Code of 1954 and none of the Acquired Assets of Sellers are
"tax exempt use property" within the meaning of section 168(h) of the Code.
(v) Environmental Matters. To the Knowledge of the FF Division, the
Petroleum Dealers Environmental Due Diligence Report included in Section 3(v) of
the Disclosure Schedule is accurate in all material respects as of June 30, 1999
and will be supplemented and updated as of a date reasonably close to the
Closing Date.
4. Representations and Warranties of the Buyer. The Buyer represents
and warrants to the Sellers as follows:
(a) Organization of the Buyer. The Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation.
(b) Authorization of Transaction. The Buyer has full power and
authority (including full corporate power and authority) to execute and deliver
this Agreement and to perform its obligations hereunder. This Agreement
constitutes the valid and legally binding obligation of the Buyer, enforceable
in accordance with its terms and conditions.
(c) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby
(including the assignments and assumptions referred to in Section 2 above), will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which the Buyer is subject or any provision of
its charter or bylaws, (ii) conflict with, result in a breach of, constitute a
default under, result in or, create in any party the right to accelerate,
terminate, modify, or cancel, or require any notice under any
-24-
29
agreement, contract, lease, license, instrument, or other arrangement to which
the Buyer is a party or by which it is bound or to which any of its assets is
subject, or (iii) require the Buyer to give any notice to, make any filing with,
or obtain any authorization, consent, or approval of any government or
governmental agency in order for the Parties to consummate the transactions
contemplated by this Agreement (including the assignments and assumptions
referred to in Section 2 above), except as required under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Act; provided, however, that any such violation, conflict or lack of consent
pursuant to clauses (ii) and (iii) above shall not be deemed a violation of this
Section 4(c) if it does not materially impair Buyer's performance of its
obligations hereunder.
(d) Investment Banker's Fees. The Buyer has no Liability or obligation
to pay any fees, commissions, expenses, indemnities or other amounts to any
broker, investment banker, finder, or agent with respect to the transactions
contemplated by this Agreement, except to ▇▇▇▇▇▇▇▇▇ Lufkin & ▇▇▇▇▇▇▇▇ Securities
Corporation for which the Buyer is responsible and shall indemnify the Sellers
therefor. The Buyer has no Liability or obligation to pay any fees, commissions,
expenses, indemnitees or other amounts to any investment banker, broker, finder,
or agent with respect to the transactions contemplated by this Agreement for
which the Sellers could become liable or obligated.
5. Pre-Closing Covenants. The Parties agree as follows with respect to
the period between the execution of this Agreement and the Closing:
(a) General. Each of the Parties will use all reasonable efforts to
consummate and make effective the transactions contemplated by this Agreement
(including satisfaction, but not waiver, of the closing conditions set forth in
Section 6 below).
(b) Notices and Consents. The Sellers will give any notices to third
parties, and the Sellers will use their reasonable efforts to obtain any third
party consents, that the Buyer reasonably may request in connection with the
matters referred to in Section 3(c) above. Each of the Parties will give any
notices to, make any filings with, and use its reasonable efforts to obtain any
authorizations, consents, and approvals of governments and governmental agencies
in connection with the matters referred to in Section 3(c) and Section 4(c)
above. Without limiting the generality of the foregoing, each of the Parties
will file any notification and report forms and related material that it may be
required to file with the Federal Trade Commission and the Antitrust Division of
the United States Department of Justice under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act, will
use its reasonable efforts to obtain an early termination of the applicable
waiting period, and will make any further filings pursuant thereto that may be
necessary, proper, or advisable in connection therewith; provided, however, that
the foregoing shall not require the Buyer or any of its Affiliates to make any
divestitures or consent or agree to any divestiture in order to fulfill any
condition or obtain any consent, authorization or approval or to appeal an
injunction or order, or to post a bond in respect of such appeal.
-25-
30
(c) Operation of Business. Except as may reasonably be required to
comply with this Agreement, the Sellers will operate the Business in the
Ordinary Course of Business. Without limiting the generality of the foregoing,
the Sellers shall take no action or fail to take any action necessary to cause
the representations set forth in Section 3(g) to be untrue or incorrect as of
the Closing as if such representations were made as of and through the Closing
Date (rather than as of the date hereof).
(d) Preservation of Business. The Sellers will use all reasonable
efforts to keep the business and properties of the Business substantially
intact, including its present operations, physical facilities, and relationships
with lessors, licensors, dealers, vendors, suppliers, customers, and employees.
(e) Access to the Business. The Sellers will permit representatives of
the Buyer (including Buyer's independent accountants) to have access at all
reasonable times, and in a manner so as not to interfere with the normal
business operations of the Business to all premises, properties, personnel,
books, records (including Tax records), contracts, and documents of or
pertaining to the Business.
(f) Notice of Developments. Each Party will give prompt written notice
to the other Party of any material adverse development causing a breach of or
inaccuracy in any of its own representations and warranties in Section 3 and
Section 4 above.
(g) Updated Schedule. Without limiting the generality of Section 5(f)
above, on a date not less than five business days prior to the Closing Date nor
more than 15 days prior to the Closing Date, the Sellers shall deliver to the
Buyer updated versions of Sections 3(e), 3(g), 3(h), 3(j), 3(k)(i), (ii)(C) and
(ii)(D), 3(m), 3(p) and 3(q) of the Disclosure Schedule for the purpose of
making the representations and warranties contained in Sections 3(e), 3(g),
3(h), 3(j), 3(k)(i), (ii)(C) and (ii)(D), 3(m), 3(p) and 3(q) true and correct
in all material respects as of such date of delivery, which updated Disclosure
Schedule sections shall reflect any additional matters required to be disclosed
in such sections of the Disclosure Schedule that have occurred or arisen after
the date hereof. Any determination of whether there has been a breach of or
inaccuracy in any of the representations and warranties of the Sellers contained
in this Agreement (or any certificate delivered by Sellers pursuant hereto) as
of the Closing Date shall be made by reference to the Disclosure Schedule as
updated in accordance with this Section 5(g) and any newly disclosed Assumed
Liabilities set forth in the updated Disclosure Schedule pursuant to any
contract entered into or liability incurred or assumed in compliance with the
Agreement shall be assumed by the Buyer.
(h) Master Repurchase Agreement. Green Tree will be solely responsible
for the payment of any fees to Prudential Securities Credit Corporation relating
to the repurchase by Green Tree of any loans previously transferred to
Prudential Securities Credit Corporation pursuant to the Master Repurchase
Agreement or otherwise.
-26-
31
(i) AISL Insurance Policy. Green Tree will cause its insurance policy
from American International Specialty Lines Insurance Company (Policy Number
2679958) to be assigned to the Buyer.
6. Conditions to Obligation to Close.
(a) Conditions to Obligation of the Buyer. The obligation of the Buyer
to consummate the transactions to be performed by it in connection with the
Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in Section 3
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
6(a)(i), (A) no effect shall be given to any exception in such
representations relating to materiality, Material Adverse Change,
Material Adverse Effect or Knowledge of Sellers and (B) such
representations and warranties shall be deemed to be true and correct in
all respects unless the failure or failures of such representations and
warranties to be so true and correct, individually or in the aggregate,
results in a Material Adverse Effect;
(ii) the Sellers shall have performed and complied with all of
their covenants hereunder in all material respects through the Closing;
(iii) the Sellers shall have procured all of the third party
consents specified in Section 5(b) above except those consents, the
failure of which to obtain, would not have a Material Adverse Effect (it
being understood and agreed that the failure to procure any consent
under any agreement with Piper Aircraft shall not be deemed to have a
Material Adverse Effect);
(iv) no action, suit, or proceeding shall be pending (or
threatened by any governmental or administrative agency or authority)
before any court or quasi-judicial or administrative agency of any
federal, state, or foreign jurisdiction or before any arbitrator wherein
an unfavorable injunction, judgment, order, decree, ruling, or charge
would (A) prevent consummation of any of the transactions contemplated
by this Agreement, (B) cause any of the matters contemplated by this
Agreement to be rescinded following consummation, or (C) create a
Material Adverse Effect or materially and adversely affect the right of
the Buyer to own the Acquired Assets or to operate the Business (and no
such judgement, order, decree, ruling or change shall be in effect);
(v) since the date of this Agreement, there shall have been no
Material Adverse Change in, and no event, occurrence or development
that, taken together with other events, occurrences and developments
would have or would reasonably be expected to have a Material Adverse
Effect;
-27-
32
(vi) the Sellers shall have delivered to the Buyer a certificate
to the effect that each of the conditions specified above in Sections
6(a)(i) to (v) is satisfied in all respects;
(vii) all applicable waiting periods (and any extensions thereof)
under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act shall have expired or otherwise been
terminated without conditions or restrictions;
(viii) all certificates, instruments, and other documents
required to effect the transactions contemplated hereby will be
reasonably satisfactory in form and substance to the Buyer;
(ix) Green Tree shall have signed and delivered to Buyer the
Transitional Services Agreement in the form and substance reasonably
satisfactory to Buyer;
(x) the Buyer shall have signed and delivered to the Sellers the
Sub-servicing Agreement in the form and substance as set forth in
Exhibit A; and
(xi) the Master Repurchase Agreement shall have been terminated
without any cost, Liability or risk to Buyer (including any cost of
recording the transfer of title, if necessary).
The Buyer may waive any condition specified in this Section 6(a) if it executes
a writing so stating at or prior to the Closing.
(b) Conditions to Obligation of the Sellers. The obligations of the
Sellers to consummate the transactions to be performed by each of them in
connection with the Closing are subject to satisfaction of the following
conditions:
(i) the representations and warranties set forth in Section 4
above shall be true and correct in all respects (in the case of any
representation or warranty containing materiality or knowledge
qualifiers) or in all material respects (in the case of those
representations or warranties not containing materiality or knowledge
qualifiers), as applicable, when made and as of the Closing Date;
(ii) the Buyer shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(iii) no action, suit, or proceeding shall be pending (or
threatened by any governmental or administrative agency or authority)
before any court or quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction or before any arbitrator
wherein an unfavorable injunction, judgment, order, decree, ruling, or
charge would (A) prevent consummation of any of the transactions
contemplated by this Agreement or (B) cause any of the transactions
contemplated by this Agreement to be
-28-
33
rescinded following consummation (and no such injunction, judgment,
order, decree, ruling, or charge shall be in effect);
(iv) the Buyer shall have delivered to each of the Sellers a
certificate to the effect that each of the conditions specified above in
Sections 6(b)(i) to (iii) is satisfied in all respects;
(v) all applicable waiting periods (and any extensions thereof)
under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act shall have expired or otherwise been
terminated without conditions or restrictions;
(vi) all certificates, instruments, and other documents required
to effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to the Sellers;
(vii) the Buyer shall have signed and delivered to the Sellers
the Transitional Services Agreement in form and substance reasonably
acceptable to Sellers; and
(viii) the Buyer shall have signed and delivered to the Sellers
the Sub-servicing Agreement in form and substance as set forth in
Exhibit A.
The Sellers may waive any condition specified in this Section 6(b) if it
executes a writing so stating at or prior to the Closing.
7. Post-Closing Covenants.
(a) Access to Records after Closing.
(i) For a period of six years after the Closing Date, the Sellers
and their representatives shall have reasonable access to all of the
books and records of the Business to the extent that such access may
reasonably be required by the Sellers in connection with matters
relating to or affected by the operations of the Business prior to the
Closing Date. Such access shall be afforded by the Buyer upon receipt of
reasonable advance notice and during normal business hours. The Sellers
shall be solely responsible for any costs or expenses incurred pursuant
to this Section 7(a)(i). If the Buyer or the Business shall desire to
dispose of any of such books and records prior to the expiration of such
six-year period, the Buyer shall, prior to such disposition, give each
of the Sellers a reasonable opportunity, at the Sellers' expense, to
segregate and remove such books and records as the Sellers may select.
(ii) For a period of six years after the Closing Date, the Buyer
and its representatives shall have reasonable access to all of the books
and records relating to the Business which the Sellers may retain after
the Closing Date. Such access shall be
-29-
34
afforded by the Sellers and their affiliates upon receipt of reasonable
advance notice and during normal business hours. The Buyer shall be
solely responsible for any costs and expenses incurred by it pursuant to
this Section 7(a)(ii). If the Sellers shall desire to dispose of any of
such books and records prior to the expiration of such six-year period,
the Sellers shall, prior to such disposition, give the Buyer a
reasonable opportunity, at the Buyer's expense, to segregate and remove
such books and records as the Buyer may select.
(b) Other Assets; Non-Assignable Rights. Subject to the terms of Section
5(b) hereof, with respect to those contracts, claims and rights of the Sellers
relating primarily to the Business which are not by their terms assignable to
Buyer and with respect to which no consent to the assignment has been obtained
prior to the Closing Date ("Non-Assignable Rights"), the Sellers shall, during
the remaining term of each respective contract pertaining to Non-Assignable
Rights, (A) use all reasonable efforts after Closing to obtain the consent of
any third party to the assignment to Buyer of such Non-Assignable Rights (it
being understood that Sellers shall not be required to give value or otherwise
incur expense, other than staff time, in connection therewith not reimbursed by
Buyer); (B) to the extent lawful, hold in trust such Non-Assignable Rights for
the benefit of Buyer or enter into with Buyer lawful arrangements reasonably
acceptable to Buyer and the Sellers to make available to Buyer substantially all
of the benefits of such Non-Assignable Rights to Buyer (it being understood that
Buyer will reimburse the Sellers for any Liabilities, including, without
limitation, continuing obligations under any contract) attendant to such
Non-Assignable Rights the benefit of which is received by Buyer (but not
out-of-pocket costs related to Sellers' efforts to transfer or otherwise make
available such benefits to Buyer) and that Sellers will not agree to any
modification of the terms of such Non-Assignable Right without the consent of
Buyer (which consent will not be unreasonably withheld or delayed); and (C)
enforce, at the request and expense of Buyer, any rights of the Sellers arising
from such Non-Assignable Rights against the other party or parties to the
applicable contract (including, without limitation, the right to elect to
terminate any such contract at Buyer's request if permitted in accordance with
the terms thereof). Any such Non-Assignable Rights shall be assigned to Buyer,
without further action, immediately upon the happening of any event which would
permit the assignment by the Sellers to Buyer of such Non-Assignable Rights,
including, without limitation, the receipt by Buyer of a duly executed consent
to the assignment of such Non-Assignable Rights to Buyer.
(c) Use of Name. Buyer acknowledges and agrees that it is not acquiring
any right to the name "Green Tree" or any variants thereof and shall not use
such names in connection with its operation of the Business or otherwise.
Notwithstanding the foregoing, Buyer shall have the right for one year following
the Closing to refer to the Business as "the business formerly known as the
Green Tree Aircraft Finance Division" and "the business formerly known as Green
Tree Franchise Finance Division" in connection with the use of the new name of
the Business. In addition, Buyer may, for a reasonable period not exceeding the
60 days following the Closing, use in connection with its operation of the
Business remaining quantities of invoices, letterhead
-30-
35
and other supplies included in the Acquired Assets. Buyer agrees to make
appropriate changes to the AF Division Website in order to comply with this
Section 7(c).
(d) Mutual Assistance Regarding Taxes. Sellers and Buyer will provide
each other such assistance as may reasonably be required by either of them in
connection with the preparation of any return for Taxes, any audit or other
examination by any taxing authority or any judicial or administrative
proceedings related to Liability for taxes (including refunds) and will each
provide the other with any records or information relevant to such return, audit
or examination, proceedings or determination as are in its possession or subject
to its control. Such assistance shall include making employees available on a
mutually convenient basis to provide additional information and explanation of
any material provided pursuant hereto and shall include providing copies of any
relevant tax returns of Sellers. All information provided pursuant to this
Section 7(d) shall be held in confidence, and not be disclosed to others for any
reasons whatsoever, except to the extent that such disclosure is required in
order to effect the intent of this Section 7(d) or such disclosure is required
by the law. Neither Buyer nor Sellers shall destroy any records related to the
Business necessary for tax return preparation or support in audits or other tax
proceedings for any period up to and including the Closing without the prior
written consent of the other.
(e) Covenants Not to Compete.
(i) For a period of five years from and after the Closing Date,
none of the Sellers nor any other Conseco Entity will directly or
indirectly solicit customers for Aircraft Loans in ▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ (the "Noncompetition Region").
Notwithstanding the foregoing: (1) no Person owning less than 5% of the
outstanding stock of any publicly traded corporation shall be deemed to
violate such agreement solely by reason of such ownership interest; (2)
any activities of the Sellers or any other Conseco Entity as
contemplated by the Sub-Servicing Agreement shall not constitute a
violation of this Section 7(e)(i); (3) this Section 7(e)(i) shall not be
construed to preclude Sellers or any other Conseco Entity from
collecting or refinancing (provided the Sellers have first given the
Buyer the opportunity to provide such refinancing), or making extensions
with respect to, Aircraft Loans that are Retained Assets; (4) this
Section 7(e)(i) shall not be construed to prohibit the Sellers or any
other Conseco Entity from directly or indirectly acquiring a corporation
or other entity or group of corporations or other entities (an "Acquired
Person") that is engaged in a business competitive with the AF Business
(a "Competitive Aircraft Finance Business") (x) so long as the
Competitive Business is a Captive Finance Business or is a business with
Aircraft Loan originations of less than $150,000,000 per year (excluding
any Captive Finance Business Aircraft Loan originations) or (y) if the
Competitive Business is a business with Aircraft Loan originations in
excess of $150,000,000 per year (excluding any Captive Finance Business
Aircraft Loan originations), so long as such Seller or other Conseco
Entity divests itself, within a reasonable period of time not to exceed
one year from the date of such acquisition, of a sufficient portion of
the Acquired Business so that
-31-
36
the annual Aircraft Loan originations attributable to the retained
portion thereof do not exceed $150,000,000 per year (excluding any
Captive Finance Business Aircraft Loan originations); and (5) this
Section 7(e)(i) shall not be construed to prohibit any Conseco Entity
from collecting, servicing, refinancing (provided the Sellers have first
given the Buyer the opportunity to provide such refinancing) or engaging
in other activities with respect to Managed Financial Assets or any
Aircraft Loans reacquired by any of the Sellers pursuant to Section
7(q). In the event any of the Sellers divests itself of a portion of an
Acquired Business in order to comply with this Section 7(e)(i), such
Seller shall provide the Buyer with an opportunity to make an offer to
acquire such portion of the Acquired Business (it being understood and
agreed that such Seller shall have no obligation to accept such offer).
(ii) For a period of two years from and after the Closing Date,
neither Green Tree nor any other Conseco Entity will directly or
indirectly solicit customers for Franchise Loans in the Noncompetition
Region. Notwithstanding the foregoing: (1) no Person owning less than 5%
of the outstanding stock of any publicly traded corporation shall be
deemed to violate such agreement solely by reason of such ownership
interest; (2) this Section 7(e)(ii) shall not be construed to preclude
the Sellers or any other Conseco Entity from engaging in the vendor
leasing finance business; (3) this Section 7(e)(ii) shall not be
construed to prohibit the Sellers or any other Conseco Entity from
directly or indirectly acquiring an Acquired Person that is engaged in a
business competitive with the FF Business (the "Competitive Franchise
Finance Business"), (x) so long as during the 12-month period ending on
the last day of the month immediately preceding the month of such
acquisition, revenues earned from the Franchise Finance Competitive
Business by such Acquired Person constituted no more than 20% of the
aggregate revenues of such Acquired Person during such 12-month period
or (y) if the Franchise Finance Competitive Business is a business whose
revenues exceed 20% of the aggregate revenues of such Acquired Person
during such 12-month period, so long as such Seller or other Conseco
Entity divests itself, within a reasonable period of time not to exceed
one year from the date of such acquisition, of a sufficient portion of
the Acquired Business so that the revenues attributable to the retained
portion thereof do not exceed such 20% threshold; and (4) this Section
7(e)(ii) shall not be construed to prohibit any Conseco Entity from
refinancing (provided the Sellers have first given the Buyer the
opportunity to provide such refinancing), servicing or undertaking any
other activities with respect to any loans reacquired by any of the
Sellers pursuant to Section 7(q). In the event any of the Sellers
divests itself of a portion of an Acquired Business in order to comply
with this Section 7(e)(ii), such Seller shall provide the Buyer with an
opportunity to make an offer to acquire such portion of the Acquired
Business (it being understood and agreed that such Seller shall have no
obligation to accept such offer).
(iii) If the final judgment of a court of competent jurisdiction
declares that any term or provision of Section 7(e)(i) or (ii) is
invalid or unenforceable, the Parties agree that the court making the
determination of invalidity or unenforceability shall have the
-32-
37
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.
(f) Non-Solicitation of Employees.
(i) For a period of five years following the Closing Date,
without the prior approval of Buyer, none of the Sellers or any other
Conseco Entity shall solicit any Transferred Employee of the AF Division
(who has been employed by a Textron Entity during the immediately prior
six-month period) to accept employment with any of the Sellers or any
other Conseco Entity.
(ii) For a period of five years following the Closing Date,
without the prior approval of Buyer, neither Green Tree nor any other
Conseco Entity shall solicit any Transferred Employee of the FF Division
(who has been employed by a Textron Entity during the immediately prior
six-month period) to accept employment with any of the Sellers or any
other Conseco Entity.
(g) Non-Interchange of Customers.
(i) For a period of five years from the Closing Date, none of the
Sellers or any other Conseco Entity, either directly or indirectly,
alone or in conjunction with another party, shall intentionally induce
(or seek to induce), any Person who is a customer of the AF Business as
of the Closing Date to cease obtaining Aircraft Loans from the Buyer.
(ii) For a period of two years from the Closing Date, neither
Green Tree nor any other Conseco Entity, either directly or indirectly,
alone or in conjunction with another party, shall intentionally induce
(or seek to induce), any Person who is a customer of the FF Business as
of the Closing Date to cease obtaining Franchise Loans from the Buyer.
(h) Employee Benefits and Employment.
(i) Hiring of Employees. The current and former employees of the
Sellers relating to the Business shall be referred to herein as the
"Employees." On or before the Closing Date, Sellers shall prepare
Section 7(h)(i) of the Disclosure Schedule, which shall set forth those
Employees of the Sellers whose employment with the Sellers has not ended
as of the Closing Date (the "Current Employees"), and shall also
indicate that subset of the Current Employees who are not actively at
work on the Closing Date due to a physical or mental illness or
disability that entitled such employee to workers'
-33-
38
compensation or other wage replacement benefits under a plan, policy or
arrangement maintained by Sellers (such subset being referred to herein
as the "Inactive Employees"). Effective on the Closing Date immediately
prior to the Closing, each of the Current Employees shall cease to be
employed by the Sellers, and Buyer shall offer employment with the Buyer
to each Current Employee who is not an Inactive Employee. If an Inactive
Employee becomes able and willing to return to work to perform the same
services performed by such Inactive Employee prior to his or her illness
or disability within 60 days after the Closing Date, the Buyer shall
offer such Inactive Employee employment with the Buyer. Each such
employee who accepts, as of the Closing Date, such offer of employment
(and each Inactive Employee upon being offered and accepting such
employment) shall be referred to herein as a "Transferred Employee."
(ii) (A) General. Buyer shall provide the Transferred Employees
with the employee benefits being provided to Buyer's own employees,
subject to the terms of those plans (the "Buyer's Employee Benefits"),
and shall credit Transferred Employees' service with Sellers for
purposes of eligibility and vesting under all of Buyer's welfare benefit
plans and qualified pension and profit sharing plans 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 the
Sellers' disability or medical benefit plans.
(B) Notice. Except as otherwise expressly provided in this
Section 7(h)(ii)(B), Sellers shall give notice to all Transferred
Employees that, except as otherwise expressly provided herein, all
benefits and/or accruals previously provided under the Seller's employee
benefit plans will terminate on the Closing Date.
(iii) Vacation. Transferred Employees shall receive credit for
service with Sellers for purposes of computing vacation benefits to
which similarly situated employees of Buyer are or may become entitled
under the terms of Buyer's vacation policies. Buyer shall assume the
Liability for any accrued but unused vacation benefits of Transferred
Employees under Sellers' vacation policy as of the Closing Date but only
to the extent such Liability is treated as a Book Liability.
(iv) Severance and WARN Act Liability. Sellers shall pay and be
solely liable and shall indemnify and hold Buyer harmless for all
obligation, cost or expense for severance pay, termination indemnity
pay, salary continuation, special bonuses or like compensation (whether
such amounts arise from any event, occurrence or circumstance or
otherwise become due or payable before or after the Closing) under
Sellers' plans, policies or arrangements, including, without limitation
any claim or constructive termination due to the sale of the Acquired
Assets. Sellers shall pay and be solely liable and shall indemnify and
hold Buyer harmless for all obligation, cost or expense for liability
under the Workers Adjustment and Retraining Notification Act (the "WARN
-34-
39
Act"), arising from, relating to or claimed which results from or
relates to actions taken by Sellers on or before the Closing Date. Buyer
shall pay and be solely liable and shall indemnify and hold Sellers
harmless for all obligation, cost or expense for liability under the
WARN Act, arising from, relating to or claimed which results from or
relates to actions taken by Buyer after the Closing Date.
(v) Indemnification. Buyer waives any and all claims against
Sellers or Sellers' employee benefit 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 Sellers or Sellers'
employee benefit plans (including, without limitation, the trustees of
such plans). Buyer agrees to indemnify Sellers, Sellers' employee
benefits plan, trustees of Sellers' employee benefit plans and Sellers'
directors, officers and employees, from any claim, lawsuit, settlement
or judgment (including reasonable attorneys' fees) and other expenses in
connection therewith, relating to any claim concerning Liability for
employee benefits which Buyer has assumed pursuant to Section 7(h),
except to the extent such claim is caused by the intentional misconduct
or the gross negligence of Sellers or trustees of Sellers' employee
benefit plans, as determined by a court or regulatory agency having
jurisdiction of the matter. Notwithstanding the first sentence of this
Section 7(h)(v), Sellers agree to indemnify Buyer, Buyer's employee
benefit plans, trustees of Buyer's employee benefit plans and Buyer's
directors, officers and employees, from any claim, lawsuit, settlement
or judgment (including reasonable attorneys' fees) and other expenses in
connection therewith, relating to any claim concerning Liability for
employee benefits under Sellers' plans and as to which Buyer has not
assumed responsibility under this Agreement, except to the extent such
claim is caused by the intentional misconduct or the gross negligence of
Buyer or trustees of Buyer's employee benefit plans, as determined by a
court or regulatory agency having jurisdiction of the matter.
(vi) Retirement Plans.
(A) Sellers shall be responsible for delivering benefits
accrued by Transferred Employees under their defined benefit
pension plan ("Sellers' Pension Plan") through the Closing Date.
No assets or Liabilities shall be transferred from Sellers'
Pension Plan to any plan maintained by Buyer. Transferred
Employees shall participate in any defined benefit plan
maintained by Buyer on and after the Closing Date consistent with
the terms of such plan but with full recognition for service
credited under Sellers' Pension Plan for purposes of vesting,
eligibility to participate and eligibility for early retirement
(but not for purposes of benefit accrual). Transferred Employees
in Sellers' Pension Plan shall have no further eligibility
service under those plans toward early retirement subsidies
following the Closing Date.
-35-
40
(B) Sellers shall retain and be responsible for
retirement benefits under their 401(k) plans for former employees
(including Transferred Employees) and for retirees of Sellers as
of the Closing Date. Sellers shall cause its 401(k) plan to make
distributions of vested account balances to Transferred
Employees.
(C) If Buyer provides a qualified defined contribution
plan in which Transferred Employees are eligible to participate,
such plan shall provide (or shall be amended by Buyer to so
provide) for acceptance in cash of eligible rollover
distributions to Transferred Employees from Sellers' Pension
Plans and 401(k) plans. Prior to the Closing Date, Buyer shall
amend its 401(k) plan to the extent necessary to provide for
Transferred Employees to be eligible to participate as soon as
administratively feasible on or after the first date after the
Closing Date.
(vii) Cooperation.
(A) With respect to all benefits for which Sellers are
liable under this Section 7(h), Buyer shall cooperate with
Sellers by promptly providing the information reasonably
requested by Sellers to enable Sellers to perform its
obligations. Buyer shall direct all claimants and claims for such
benefits to Sellers. Sellers 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 plan and otherwise fulfill its
obligations under this Section 7(h).
(B) With respect to all benefits for which Buyer is
liable under this Section 7(h) or otherwise provides to
Transferred Employees, Sellers shall cooperate with Buyer by
promptly providing the information reasonably requested by Buyer
to enable Buyer to perform its obligations. Sellers shall direct
all claimants and claims for such benefits to Buyer.
(C) After the Closing Date, Sellers 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
operation of the employee benefit programs maintained by Sellers
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.
(D) The provisions of any employee benefit plan or
program of Sellers relating to the amendment or termination by
any employer sponsor or other party to such plan or program shall
not be abridged by this Agreement.
-36-
41
(viii) SERP. Buyer shall have no obligation for Liabilities of
Sellers under any non-qualified deferred compensation plans of the
Sellers.
(ix) No Assumption of Employment-Related Liabilities. Except as
specifically provided in Section 7(h)(iii), with respect to vacation pay
and Section 7(h)(vi)(C) with respect to rollovers, Buyer does not assume
any employment-related Liabilities (including, but not limited to,
liabilities for compensation, employee benefits or any
employment-related claims) of the Seller with respect to any former
employee of the Sellers or to the Employees (including the Transferred
Employees) related to any event occurring on or before the Closing Date,
and Seller agrees to retain all such Liabilities.
(i) Further Assurances of Sellers. From time to time after the Closing
Date and without further consideration from Buyer, Sellers shall execute and
deliver, or cause to be executed and delivered, to Buyer such further
instruments (including powers of attorney) of sale, conveyance, assignment,
transfer and delivery or take such other action as Buyer may reasonably request
in order to more effectively sell, convey, assign, transfer and deliver and
reduce to the possession of Buyer any and all of the Acquired Assets and
consummate the transactions contemplated by this Agreement.
(j) Further Assurances of Buyer. From time to time after the Closing
Date and without further consideration from Sellers, Buyer shall execute and
deliver, or cause to be executed and delivered, to Sellers such further
instruments of assumption, conveyance, assignment, transfer and delivery or take
such other action as Sellers may reasonably request in order to have Buyer more
effectively assume any and all of the Assumed Liabilities and consummate the
transactions contemplated by this Agreement.
(k) Transfer Taxes. Buyer and Green Tree shall each pay one-half of all
sales, use, transfer, real property transfer, documentary, recording, gains,
stock transfer and similar taxes (but not any income, franchise or similar tax),
and any deficiency, interest or penalty asserted with respect thereto
(collectively, "Transfer Taxes"), arising out of or in connection with the
transactions effected pursuant to this Agreement. Buyer shall, at its own
expense, prepare and file any Tax Returns and other filings relating thereto,
and pay all out-of-pocket expenses associated therewith. Sellers will cooperate
with Buyer in the preparation of such Tax Returns and filings and jointly
control with Buyer any contests or controversies with respect thereto.
(l) Litigation Assistance.
(i) The Buyer acknowledges that from time to time after the
Closing Date the Sellers may require, in connection with the defense of
any litigation, proceeding or other claim related to the Business as
conducted prior to the Closing, the assistance of the Buyer. The Buyer
agrees to provide such assistance as may be reasonably requested by any
of the Sellers. The Sellers agree to reimburse the Buyer for all
out-of-pocket expenses incurred by the Buyer in providing any such
assistance.
-37-
42
(ii) The Sellers acknowledge that from time to time after the
Closing Date the Buyer may require, in connection with the defense of
any litigation, proceeding or other claim related to the Business as
conducted prior to the Closing, the assistance of the Sellers. The
Sellers agree to provide such assistance as may be reasonably requested
by the Buyer. The Buyer agrees to reimburse the Sellers for all
out-of-pocket expenses incurred by the Sellers in providing any such
assistance.
(m) Separate Subsidiary for Piper Aircraft Business. Buyer agrees that
after the Closing the portion, if any, of the AF Business relating to loans made
to finance aircraft manufactured by Piper Aircraft shall be conducted through a
wholly owned subsidiary of the Buyer (to the extent that the AF Business is
currently conducted through PFS) that will have been formed solely for the
purpose of conducting such business and that will not conduct any other
business.
(n) Nonsolicitation of Servicing Portfolio. For a period of five years
from the Closing Date or the period during which the Sub-servicing Agreement
remains in effect (whichever period is longer), the Buyer shall not
intentionally induce (or seek to induce) any Person which is a borrower under
Financing Documents relating to any Managed Financial Assets to refinance or
otherwise replace an Aircraft Loan made by any of the Sellers. During such
period, the Buyer will not provide any information relating to the Managed
Financial Assets to any other Textron Entity or in any way facilitate or
encourage any such Textron Entity to induce (or seek to induce) any such Person
to refinance or otherwise replace such an Aircraft Loan.
(o) Collection of Certain Receivables. After the closing, the Buyer
agrees to use reasonable efforts in the ordinary course of its business (without
being obligated to commence any litigation) to collect and, to the extent
actually received, to promptly remit to Green Tree any "Miscellaneous charge
receivables" and "Assessed late charge receivables" as set forth on the Final
Closing Statements of Assets and Liabilities. In the event that the Buyer elects
not to commence litigation to collect any such receivables, Buyer shall (i)
promptly pay Seller an amount equal to all such receivables or (ii) assign to
the Sellers the Buyer's rights to collect the receivables (in which case the
Sellers may commence litigation on their own behalf to collect such
receivables).
(p) Review of Files. Buyer agrees to review the Financing Document files
within the 12 months after the Closing Date. Prior to the end of such period,
the Buyer will notify the Sellers of any indemnification claim to be made
against Sellers as a result of the representations and warranties contained in
Section 3(k)(ii)(E) being inaccurate.
(q) Repurchase of Loans. In the event the Buyer notifies the Sellers of
the breach of any representations or the inaccuracy of any warranties of Sellers
contained in Section 3(k)(ii)(E) within the time period specified in Section
7(p), the Parties agree that, in lieu of Sellers making any indemnification
payment to the Buyer with respect to such breach or inaccuracy, Sellers may
repurchase the loan that is the subject of the breach or inaccuracy from the
Buyer at an amount
-38-
43
equal to the principal amount of the loan as of, plus accrued interest through,
the date of such repurchase.
(r) Hotlink to AF Division Website. As of the Closing Date, Green Tree
shall provide a "hotlink" from the commercial and equipment financing page of
GTFC's website located at ▇▇▇.▇▇▇▇.▇▇▇ to the AF Division Website. Green Tree
agrees to keep such hotlink in effect during the period ending one year after
the Closing Date. Green Tree agrees to provide reasonable assistance to Buyer in
maintaining any existing hotlinks between the AF Division Website and third
party websites.
8. Termination.
(a) Termination of Agreement. This Agreement may be terminated as
follows:
(i) the Buyer and the Sellers may terminate this Agreement by
mutual written agreement at any time prior to the Closing;
(ii) the Buyer may terminate this Agreement by giving written
notice to the Sellers at any time prior to the Closing in the event the
Sellers have breached any material representation, warranty, or covenant
contained in this Agreement in any material respect, the Buyer has
notified each of the Sellers of the breach, and the breach has continued
without cure for a period of 30 days after the notice of breach;
(iii) the Sellers may terminate this Agreement by giving written
notice to the Buyer at any time prior to the Closing in the event the
Buyer has breached any material representation, warranty, or covenant
contained in this Agreement in any material respect, the Sellers have
notified the Buyer of the breach, and the breach has continued without
cure for a period of 30 days after the notice of breach; or
(iv) any party may give notice of termination of the Agreement if
the Closing does not occur on or before December 31, 1999.
(b) Effect of Termination. If any Party terminates this Agreement
pursuant to Section 8(a) above, all rights and obligations of the Parties
hereunder shall terminate without any Liability of any Party to any other Party
(except for any Liability of any Party then in breach).
9. Indemnification.
(a) Indemnification by the Sellers.
(i) The Sellers agree to indemnify and hold harmless the Buyer
and its Affiliates and each of their subsidiaries, shareholders,
directors, officers, managers, employees, agents, successors and assigns
from and against any and all monetary
-39-
44
damages, charges, losses, deficiencies, Liabilities, obligations, costs,
fees and expenses (including, without limitation, reasonable fees and
disbursements of counsel incident to the enforcement of rights
hereunder) (collectively "Damages") in connection with or arising from
any (A) breach of any warranty or the inaccuracy of any representation
of the Sellers contained in this Agreement or any certificate delivered
by the Sellers pursuant hereto (other than the representations and
warranties contained in Section 3(b), (c)(i), (d) or (e)) (it being
understood and agreed that any such breach or inaccuracy shall be
determined without regard to any materiality or knowledge qualification
contained in any representation or warranty) or (B) Consumer Finance Law
Violation Damages of the type specified in clause (ii) of the definition
thereof in Section 1 above; provided, however, that the Sellers shall be
required to indemnify and hold harmless the Buyer under this Section
9(a)(i) only to the extent that the aggregate amount of such
indemnification exceeds $1,000,000; and provided, further, however, that
the aggregate amount required to be paid by the Sellers pursuant to this
Section 9(a)(i) (other than amounts payable pursuant to Section
9(a)(i)(B)) above) shall not exceed $10,000,000.
(ii) The Sellers further agree to indemnify and hold harmless the
Buyer and its Affiliates and each of their subsidiaries, shareholders,
directors, officers, managers, employees, agents, successors and assigns
from and against any and all Damages in connection with or arising from
(A) any breach of any warranty or the inaccuracy of any representation
contained in Section 3(b), (c)(i), (d) or (e), (B) Liabilities of
Sellers and their Affiliates, other than the Assumed Liabilities, (C)
breach or non-fulfillment of any covenant, agreement or other obligation
of the Sellers or any of their Affiliates under this Agreement, (D)
Liabilities to the extent relating to Retained Assets and (E) Consumer
Finance Law Violation Damages of the type specified in clause (i) of the
definition thereof in Section 1.
(iii) All of the representations and warranties of the Sellers
contained in this Agreement shall survive the Closing and continue in
full force and effect until the date one year after the date of the
Closing, except for (A) those representations and warranties of the
Sellers contained in Section 3(b), (c) (i), (d) or (e), which shall
survive the Closing and continue in full force and effect forever
thereafter, (B) those representations and warranties of the Sellers
contained in Section 3(k)(ii) (other than in Section 3(k)(ii)(E)), which
shall survive the Closing and continue in full force and effect until
the date three years after the date of the Closing, and (C) those
representations and warranties of the Sellers contained in Section
3(k)(ii)(E) with respect to any Financing Documents shall survive the
Closing and continue in full force and effect until the later of (x) the
date one year after the date of the Closing, or (y) with respect to any
Financial Asset for which such claim has been made within such one-year
period and Sellers have elected not to repurchase such Financial Asset
pursuant to Section 7(q) forever thereafter. Notwithstanding the
preceding sentence, the indemnification by the Sellers shall continue as
to any Damages in connection with or arising from any breach of any
warranty or the inaccuracy of any representation of which the Buyer has
notified the Sellers in accordance
-40-
45
with the requirements of Section 9(c) on or prior to the date such
indemnification would otherwise terminate in accordance with this
Section 9(a), as to which the obligation of the Sellers shall continue
until the Liability of the Sellers shall have been determined pursuant
to this Section 9, and the Sellers shall have reimbursed the Buyer for
such Damages in accordance with this Section 9. The indemnification
obligations set forth in Sections 9(a)(i)(B) and 9(a)(ii) shall survive
the Closing and continue in full force and effect forever thereafter.
(b) Indemnification by the Buyer.
(i) The Buyer agrees to indemnify and hold harmless each of the
Sellers from and against any and all Damages incurred by the Sellers in
connection with or arising from (A) any breach of any warranty or the
inaccuracy of any representation of the Buyer contained or referred to
in this Agreement or in any certificate or other document delivered by
or on behalf of the Buyer pursuant hereto, (B) any Assumed Liabilities,
(C) any breach or non-fulfillment of any covenant, agreement or other
obligation of the Buyer or any of its Affiliates under this Agreement
and (D) the operations of the Business following the Closing.
(ii) All of the representations and warranties of the Buyer
contained in this Agreement shall survive the Closing and continue in
full force and effect forever. The indemnification provided for in
Section 9(b) shall survive the Closing and continue in full force and
effect forever thereafter (subject to applicable statutes of
limitations).
(c) Notice of Claims; Insurance Benefit.
(i) The party (the "Indemnified Party") seeking indemnification
hereunder shall give promptly to the party obligated to provide
indemnification to such Indemnified Party (the "Indemnitor") a notice (a
"Claim Notice") describing in reasonable detail the facts (to the extent
known) giving rise to the alleged basis of the claim for indemnification
hereunder and shall include in such Claim Notice (if then known) the
amount or the method of computation of the amount of such claim, and a
reference to the provision of this Agreement or any other agreement,
document or instrument executed hereunder or in connection herewith upon
which such claim is based.
(ii) In calculating any Damages there shall be deducted any
insurance actually recovered from an insurer or other third person in
respect thereof (and no right of subrogation shall accrue hereunder to
any insurer or other person); provided, however, that if an Indemnified
Party receives any insurance recovery after an indemnification payment
is made by the Indemnitor to the Indemnified Party, such Indemnified
Party shall pay over promptly the amount of such insurance recovery to
the Indemnitor. Each Indemnified Party will prosecute diligently and in
good faith any claim recovery against
-41-
46
any insurer or other third person with respect to such matters as to
which such Indemnified Party has sought or may seek indemnification
against an Indemnitor.
(iii) After the giving of any Claim Notice pursuant hereto, the
amount of indemnification to which an Indemnified Party shall be
entitled under this Section 9 shall be determined:
(A) by the written agreement between the Indemnified
Party and the Indemnitor;
(B) by a final judgment or decree of any court of
competent jurisdiction; or
(C) by any other means to which the Indemnified Party
and the Indemnitor shall agree. The judgment or decree of a
court shall be deemed final when the time for appeal, if any,
shall have expired and no appeal shall have been taken or when
all appeals taken shall have been finally determined. The
Indemnified Party shall have the burden of proof in establishing
the amount of Damages suffered by it.
(d) Third Person Claims.
(i) In order for a Party to be entitled to any indemnification
provided for under this Agreement in respect of, arising out of or
involving a claim or demand made by any third Person against the
Indemnified Party, such Indemnified Party must notify the Indemnitor in
writing, and in reasonable detail, of the third person claim within
fifteen (15) days after receipt by such Indemnified Party of written
notice of the third person claim. Thereafter, the Indemnified Party
shall deliver to the Indemnitor, within five (5) business days after the
Indemnified Party's receipt thereof, copies of all notices and documents
(including court papers) received by the Indemnitor relating to the
third person claim. Notwithstanding the foregoing, should a party be
physically served with a complaint with regard to a third person claim,
the Indemnified Party must notify the Indemnitor with a copy of the
complaint within five (5) business days after receipt thereof and shall
deliver to the Indemnitor within seven (7) business days after the
receipt of such complaint copies of notices and documents (including
court papers) received by the Indemnified Party relating to the third
person claim.
(ii) In the event any legal proceeding shall be threatened or
instituted or any claim or demand shall be asserted by any person in
respect of which payment may be sought by one party hereto from another
party under the provisions of this Section 9(d), the Indemnified Party
shall promptly cause written notice of the assertion of any such claim
of which it has actual knowledge which is covered by this indemnity to
be forwarded to the Indemnitor. In the event of the initiation of any
legal proceeding against
-42-
47
the Indemnified Party by a third person, the Indemnitor shall have the
sole and absolute right after the receipt of notice, at its option and
at its own expense, to be represented by counsel of its choice and to
control, defend against, negotiate, settle or otherwise deal with any
proceeding, claim, or demand which relates to any loss, Liability or
damage indemnified against hereunder; provided, however, that the
Indemnified Party may participate in any such proceeding with counsel of
its choice and at its expense. The parties hereto agree to cooperate
fully with each other in connection with the defense, negotiation or
settlement of any such legal proceeding, claim or demand. To the extent
the Indemnitor elects not to defend such proceeding, claim or demand,
and the Indemnified Party defends against or otherwise deals with any
such proceeding, claim or demand, the Indemnified Party may retain
counsel, at the expense of the Indemnitor, and control the defense of
such proceeding. Neither the Indemnitor nor the Indemnified Party may
settle any such proceeding which settlement obligates the other party to
pay money, to perform obligations or to admit Liability or fault without
the consent of the other party, such consent not to be unreasonably
withheld or delayed; provided, that an Indemnitor may settle any such
proceeding without the consent of the Indemnified Party so long as such
settlement releases the Indemnified Party from all Liability with
respect to such proceeding and does not provide for any injunctive or
other continuing obligation of the Indemnified Party or admit fault if
such admission would materially damage the reputation of the Business.
After any final judgment or award shall have been rendered by a court,
arbitration board or administrative agency of competent jurisdiction and
the time in which to appeal therefrom has expired, or a settlement shall
have been consummated, or the Indemnified Party and the Indemnitor shall
arrive at a mutually binding agreement with respect to each separate
matter alleged to be indemnified by the Indemnitor hereunder, the
Indemnified Party shall forward to the Indemnitor notice of any sums due
and owing by it with respect to such matter and the Indemnitor shall pay
all of the sums so owning to the Indemnified Party by wire transfer,
certified check or bank cashier's check within 30 days after the date of
such notice.
(e) Limitations.
(i) In any case where an Indemnified Party recovers from third
persons (including, without limitation, insurers) any amount in respect
of a matter with respect to which an Indemnitor has indemnified it
pursuant to this Section 9, such Indemnified Party shall promptly pay
over to the Indemnitor the amount so recovered (after deducting
therefrom the full amount of the expenses incurred by it in procuring
such recovery), but not in excess of the sum of (a) any amount
previously so paid by the Indemnitor to or on behalf of the Indemnified
Party in respect of such matter and (b) any amount expended by the
Indemnitor in pursuing or defending any claim arising out of such
matter.
(ii) Except for remedies that cannot be waived as a matter of law
and injunctive and provisional relief, if the Closing occurs, this
Section 9 shall be the exclusive remedy for (A) any breach of any
warranty or the inaccuracy of any
-43-
48
representation of a Party contained in this Agreement or any certificate
delivered pursuant hereto (absent intentional fraud, reckless conduct or
willful misstatements) or (B) any breach or nonfulfillment of any
covenant, agreement or other obligation of a Party under this Agreement.
(f) Adjustment to Purchase Price. The parties agree to treat all payment
made pursuant to this Article 9 as an adjustment to the Purchase Price for Tax
purposes.
10. Miscellaneous.
(a) Press Releases and Public Announcements. No Party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement without the prior written approval of the other Party (which
approval shall not be unreasonably withheld or delayed); provided, however, that
any Party may make any public disclosure it believes in good faith is required
by applicable law or any listing or trading agreement concerning its
publicly-traded securities (in which case the disclosing Party will use its
reasonable efforts to advise the other Party prior to making the disclosure).
(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) Entire Agreement. This Agreement (including the documents referred
to herein) constitutes the entire agreement between the Parties and supersedes
any prior understandings, agreements, or representations by or between the
Parties, written or oral, to the extent they related in any way to the subject
matter hereof, provided that this Agreement shall not supercede the
confidentiality provisions relating to information about the Business (but not
those provisions relating to disclosure of this Agreement or the transactions
contemplated hereby) or the provisions relating to non-solicitation of employees
set forth in the confidentiality agreement entered into by Green Tree Financial
Corporation and Buyer dated April 27, 1999 relating to the possible sale of the
Business.
(d) No Additional Representations and Warranties. EXCEPT FOR THE
REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS AGREEMENT, SELLERS ARE SELLING
THE ACQUIRED ASSETS "AS IS, WHERE IS" AND DISCLAIM ALL OTHER REPRESENTATIONS AND
WARRANTIES, WHETHER EXPRESS OR IMPLIED. WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING, SELLERS MAKE NO REPRESENTATIONS OR WARRANTIES AS TO MERCHANTABILITY
OR FITNESS OF THE FIXED ASSETS FOR ANY PARTICULAR PURPOSE AND NO IMPLIED
REPRESENTATIONS OR WARRANTIES WHATSOEVER.
-44-
49
(e) Seller Joint Responsibility; Succession and Assignment. The
representations, warranties and obligations of the Sellers under this Agreement
are joint and several. This Agreement shall be binding upon and inure to the
benefit of the Parties named herein 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 Party, except a Party (i) may assign its rights and interests
hereunder to one or more of its Affiliates, (ii) may, after the Closing, assign
its rights and interests hereunder to a Person which acquires all or
substantially all of the Business (or all or substantially all of the business
of either Division) and (iii) may designate one or more of its Affiliates or
Person (after the Closing) referred to in clause (ii) of this Section 10(e) to
perform its obligations hereunder (in any or all of which cases such Party
nonetheless shall remain responsible for the performance of all of its
obligations hereunder at or prior to the Closing).
(f) Counterparts. This Agreement may be executed in one or more
counterparts (including by facsimile signatures), each of which shall be deemed
an original but all of which together will constitute one and the same
instrument.
(g) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(h) 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 the Buyer, to: Textron Financial Corporation
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
-45-
50
If to Green Tree,
Green Tree FLC
or PFS, to: Green Tree Financial Corporation
1100 Landmark Towers
▇▇▇ ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: General Counsel
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: Conseco, Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇, Esq.
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 party 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.
(i) Governing Law. 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.
(j) 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
Buyer and each of the Sellers. The Sellers may consent to any such amendment at
any time prior to the Closing with the prior authorization of its board of
directors. No waiver by any Party 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.
(k) 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
-46-
51
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.
(l) Expenses. Except as otherwise provided in this Agreement, each of
the Buyer and the Sellers will bear its own costs and expenses (including legal
fees and expenses) incurred in connection with this Agreement and the
transactions contemplated hereby.
(m) 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, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation.
(n) Incorporation of Exhibits and Schedules. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.
(o) Specific Performance. Each of the Parties acknowledges and agrees
that the other Party would be damaged irreparably in the event any of the
provisions of Section 5 and Section 7 of this Agreement are not performed in
accordance with their specific terms or otherwise are breached. Accordingly,
each of the Parties agrees that the other Party shall be entitled to seek an
injunction or injunctions to prevent breaches of those provisions of this
Agreement and to enforce specifically those provisions of this Agreement and the
terms and provisions hereof in any action instituted in any court of the United
States or any state thereof having jurisdiction over the Parties and the matter,
in addition to any other remedy to which it may be entitled, at law or in
equity.
(p) Submission to Jurisdiction. Each of the Parties submits to the
jurisdiction of any state or federal court sitting in Wilmington, Delaware, in
any action or proceeding arising out of or relating to this Agreement and agrees
that all claims in respect of the action or proceeding may be heard and
determined in any such court. If such court exercises personal and subject
matter jurisdiction (which jurisdiction the Buyer and the Sellers agree not to
contest) within a 90-day period after the commencement of such action or
proceeding, each Party also agrees not to bring such action or proceeding in any
other court. If the court in which such action or proceeding was commenced does
not exercise personal and subject matter jurisdiction within such period, then
any of the Parties may bring any action or proceeding arising out of or relating
to this Agreement in any other court. Each of the Parties waives any defense of
inconvenient forum to the maintenance of any action or proceeding so brought and
waives any bond, surety, or other security that might be required of any other
Party with respect thereto. Any Party may make service on another Party by
sending or delivering a copy of the process to the Party to be served at the
address and in the manner provided for the giving of notices in Section 10(h)
above. Each Party agrees that a final non-appealable judgment in any action or
proceeding so brought shall be
-47-
52
conclusive and may be enforced by suit on the judgment or in any other manner
provided by law or in equity.
(q) Agreement Provisions Not related to Retained Assets;
Confidentiality. Notwithstanding any provision of this Agreement to the
contrary, the Parties agree that Sellers are not making any representations or
warranties to Buyer or entering into any covenants, agreements or obligations
with or to Buyer herein with respect to any business, operations or assets
relating primarily to the Retained Assets. Buyer agrees that Buyer and all other
Textron Entities will maintain the confidentiality of any information relating
to the Retained Assets received by the Buyer from the Sellers.
-48-
53
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on
the date first above written.
TEXTRON FINANCIAL CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Title: Senior Vice President,
Corporate Development
------------------------------------
GREEN TREE FINANCIAL SERVICING
CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Senior Vice President and Treasurer
GREEN TREE FINANCIAL LOAN
COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Senior Vice President and Treasurer
PIPER FINANCIAL SERVICES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Senior Vice President and Treasurer
-49-