Exhibit 2.7
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is made as of March 14, 2003, by
and among Conseco Finance Corp., a Delaware corporation (the "Company"), the
Subsidiaries of the Company owning Purchased Assets, which are named on the
signature pages hereof or become parties hereto in accordance with this
Agreement (the "Selling Subsidiaries"), and General Electric Capital
Corporation, a Delaware corporation (the "Buyer"). The Company and the Selling
Subsidiaries are collectively referred to herein as the "Sellers" and,
individually, as a "Seller". The Sellers, the Parent and the Buyer are
collectively referred to herein as the "Parties" and, individually, as a
"Party".
WHEREAS, on the terms and subject to the conditions set forth
in this Agreement, the Buyer desires to purchase from the Sellers, and the
Sellers desire to sell to the Buyer, the Purchased Assets and, with respect to
the Company and the Filing Company Subsidiaries, in a sale authorized by the
Bankruptcy Court pursuant to, inter alia, sections 105, 363, 365 and 1146(c) of
the Bankruptcy Code;
WHEREAS, it is intended that the acquisition of the Purchased
Assets be accomplished through the sale, transfer and assignment of assets of
the Company and the Selling Subsidiaries owning, leasing or having the right to
use the Purchased Assets and/or, as provided herein, through the sale of capital
stock of one or more direct or indirect Subsidiaries of the Company;
WHEREAS, the Buyer also desires to assume, and the Sellers
desire to assign and transfer, the Assumed Liabilities; and
WHEREAS, the Company and the Filing Company Subsidiaries
either have filed or will file one or more Chapter 11 Cases.
NOW, THEREFORE, in consideration of the premises and mutual
promises herein made, and in consideration of the representations, warranties
and covenants herein contained, the Parties hereby agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions. For purposes of this Agreement, the following terms
shall have the meanings set forth below:
"Accounting Principles" means the accounting principles (including
accounting methods, practices and procedures) set forth in Part II of Section
1.1A of the Business Schedules. When the accounting principles (including
accounting methods,
practices and procedures) set forth in Part II of Section
1.1A of the Business Schedules do not specifically address a particular matter
necessary to prepare the Schedule of Assets Acquired and Liabilities Assumed,
then the accounting principles (including accounting methods, practices and
procedures) set forth in Part II of Section 1.1A of the Business Schedules shall
be supplemented in accordance with GAAP, but only to the extent necessary to
address such matter.
"Accrued and Unpaid Interest" means, with respect to any Loan, as
of any date, the interest, fees, premiums, consignment fees, costs, advances and
other charges that have accrued on such Loan (whether or not such fees, costs or
charges have been billed) but have not been paid by the Obligor on such Loan or
otherwise collected by offset, recourse to collateral or otherwise.
"Acquired Securitization Assets" means the PL Residual Assets.
"Active Merchant Agreements" means program agreements set forth in
Section 2.1(a)(A)(iii) of the Business Schedules.
"Acxiom Models" means (a) all of the models set forth in
Attachment E to Section 3.12(a) of the Business Schedules, that are designated
therein as Purchased Assets, other than the Credit Lifecycle and Clustering
Models, and all associated software programs, algorithms, scripts, interfaces,
data layouts, database schema, decision engines and strategies and all other
data and documentation related thereto and (b) any other models and associated
software programs, algorithms, scripts, interfaces, data layouts, database
schema, decision engines and strategies and all other data and documentation
related thereto, which are used exclusively in the Purchased Businesses as
operated by the CFC Parties prior to the Cut-Off Time, and were created (i)
pursuant to the Acxiom Contracts set forth in Attachment A to 2.1(a) of the
Business Schedules and Section 6.13 of the Business Schedules or (ii) developed
by a CFC Party or a Third Party and administered pursuant to the Acxiom
Contracts set forth in Attachment A to 2.1(a) of the Business Schedules and
Section 6.13 of the Business Schedules.
"Additional Xxxxxx Debt" means an additional warehouse financing
facility (or an amendment of an existing Xxxxxx Facility) to be provided by
Xxxxxx Brothers Holdings, Inc. or any of its Affiliates in an amount not to
exceed $250 million to finance the origination of loans by the Company and its
Subsidiaries.
"Administrative Claims Escrow Agent" means Deutsche Bank Trust
Company Americas.
"Administrative Claims Escrow Agreement" means an escrow agreement
between the Administrative Claims Escrow Agent, the Buyer and the Company in
form and substance reasonably satisfactory to the Buyer and the Company.
"Affiliate" of any particular Person means any other Person
controlling, controlled by or under common control with such particular Person,
where "control" means the possession, directly or indirectly, of the power to
direct the management and policies of a Person whether through the ownership of
voting securities or otherwise.
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"Affiliated Group" means any affiliated group of corporations
within the meaning of Section 1504(a) of the Tax Code as well as any other group
of corporations filing consolidated, combined or unitary Income Tax Return under
federal, state, local or foreign Law.
"Agreement" means this Asset Purchase Agreement and the schedules,
exhibits and annexes attached hereto, as such Asset Purchase Agreement,
schedules, exhibits or annexes may be amended, restated, supplemented or
otherwise modified from time to time.
"Allocation Statement" shall have the meaning set forth in Section
5.1(g) hereof.
"Allowed Operating Expenses" shall have the meaning set forth in
Section 5.5(a)(xix)(b).
"Assigned Contracts" means (a) the Discount Accounts Receivables
and (b) the Insurance Accounts Receivables.
"Assigned Receivables" means (a) all Receivables and Loans of the
PL Business, (b) the HI and CL Mill Creek Bank Loans and (c) those Receivables
and Loans constituting part of the Visa/Mastercard Portfolio, including, without
limitation, in each case any Receivable and Loan that has been charged-off, but
shall not mean, in any case, the Excluded Receivables.
"Assumed Agreements" means, collectively, the Assumed Leases, the
Assumed Contracts, the Assumed Receivables Contracts, the Private Label Credit
Card Master Trust Documents and the Assumed Retention Agreement.
"Assumed Contracts" means those Contracts identified in Section
2.1(a) of the Business Schedules but excluding (i) Assumed Leases, Assumed
Receivables Contracts and those Contracts that expire or are terminated in the
ordinary course of business, consistent with past practices of the Sellers prior
to the Cut-Off Time and (ii) all Employee Agreements (other than the Assumed
Retention Agreement).
"Assumed Leases" means the real property leases, subleases,
licenses or other Contracts set forth in Section 2.1(a)(B)(ii) of the Business
Schedules.
"Assumed Liabilities" shall have the meaning set forth in Section
2.2(a) hereof.
"Assumed Receivables Contracts" means Contracts evidencing or
executed and delivered in connection with the Assigned Receivables and the
Securitized Receivables.
"Assumed Retention Agreement" means that certain agreement dated
as of December 19, 2002, by and between the Company and Xxxx Xxxxxxx.
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"Auction" means the auction conducted by the Sellers pursuant to
the Bidding Procedures Order.
"Auditor" means Ernst & Young LLP.
"Backlog" means any commitment by any Seller to enter into a
financing transaction, which transaction (i) has not been entered into on or
prior to the Cut-Off Time and (ii) would, had it been entered into prior to the
Cut-Off Time, have constituted an Assumed Receivables Contract.
"Backup Agreements" shall mean the purchase agreement among
certain of the CFC Parties and EMC Mortgage Corporation (or any of its
Affiliates) and the purchase agreement among certain of the CFC Parties and
Charlesbank Capital Partners, LLC (or any of its Affiliates) to acquire certain
assets of the Sellers and entered into pursuant to the Auction.
"Bank Information" shall have the meaning set forth in Section
5.24 hereof.
"Bank Merger Act" means the federal Bank Merger Act, Section 18(a)
of the Federal Deposit Insurance Act, 12 U.S.C. 1828(c).
"Banks" means (a) Mill Creek Bank and (b) Green Tree Retail
Services Bank.
"Bankruptcy Acquiror" means any purchaser of the rights, title and
interest of any Seller in any of the Properties of the Company and its
Subsidiaries pursuant to a Final Order of the Bankruptcy Court approving such
sale, other than the Buyer.
"Bankruptcy Code" means title 11 of the United States Code.
"Bankruptcy Court" means (i) with respect to the Company and the
Filing Subsidiaries, the United States Bankruptcy Court for the Northern
District of Illinois or such other court having jurisdiction over the Chapter 11
Case originally administered in the United States Bankruptcy Court for the
Northern District of Illinois, and (ii) with respect to the Parent or any other
Affiliate of the Company, the United States Bankruptcy Court for the Northern
District of Illinois or such other court having jurisdiction over the cases
commenced under the chapter 11 of the Bankruptcy Code by the Parent or any other
Affiliate of the Company, as applicable.
"Bankruptcy Event" means, with respect to any Person, that such
Person:
(a) commences any case, proceeding or other action (i) under any
existing Laws of any jurisdiction, domestic or foreign, relating
to bankruptcy, insolvency, reorganization or relief of debtors,
seeking to have an order for relief entered with respect to it, or
seeking to adjudicate such Person as bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment, winding-up,
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liquidation, dissolution, composition or other relief with respect
to such Person or such Person's debts, or (ii) seeking appointment
of a receiver, trustee, custodian, conservator or other similar
official for it or for all or any substantial part of its assets,
or making a general assignment for the benefit of such Person's
creditors;
(b) has commenced against such Person any case, proceeding or other
action of a nature referred to in clause (a) above which (i)
results in the entry of an order for relief or any such
adjudication or appointment or (ii) remains undismissed,
undischarged or unbonded for a period of 60 days;
(c) has commenced against such Person any case, proceeding or other
action seeking issuance of a warrant of attachment, execution,
distraint or similar process against all or any substantial part
of such Person's assets which results in the entry of an order for
any such relief which shall not have been vacated, discharged, or
stayed or bonded pending appeal within 60 days from the entry
thereof;
(d) fails generally to pay such Person's debts as such debts become
due; or
(e) takes any corporate action in furtherance of, or indicating such
Person's consent to, approval of, or acquiescence in, any of the
acts set forth above.
"Base Amount" means, subject to Section 2.4(f) hereof, $221
million.
"Bid Adjustment Amount" means $66 million.
"Bidding Procedures Order" means (a) the order of the Bankruptcy
Court dated December 20, 2002 granting in part, CFC debtors' motion for order
pursuant to Sections 105(a), 363, 365, and 1146(c) of the Bankruptcy Code (I)
(A) establishing the bidding procedures in connection with the sale of
substantially all of the assets of the CFC debtors, including certain buyer
protections; (B) approving the form and manner of notices; (C) approving the
form of the asset purchase agreement, (D) setting a sale hearing, and (E)
granting related relief; (II) approving the sale of the CFC debtors assets free
and clear of all liens, claims and encumbrances to the successful bidder; and
(III) authorizing the assumption and assignment of certain executory contracts
and leases; and (b) the order of the Bankruptcy Court dated January 8, 2003: (I)
Approving Bidding Procedures in Connection with the Sale of Substantially All of
the Assets of the CFC Debtors, Including Certain Buyer Protections; (II)
Approving the Form and Manner of Notices and (III) Approving Procedures for
Approval of the Sale.
"Book Value" means, at any time, with respect to any Property, the
value set forth for such Property on the books and records of the applicable
Seller as of such time.
"Business Area Balance Sheets" means the November 30 Balance
Sheet, the December 31 Balance Sheet and the January 31 Balance Sheet.
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"Business Day" means any day that is not a Saturday, Sunday or
other day on which commercial banking institutions in the State of New York are
authorized or obligated by law or executive order to be closed.
"Business Employee" means, as of the Cut-Off Time, (A) the
Employees primarily engaged in the PL Business and (B) those employees primarily
engaged in the origination platform (but not servicing platforms) of the CL
Business and HI Business, in each case as identified in Section 5.12 of the
Business Schedules.
"Business Leased Premises" means the real property leased,
subleased or otherwise used or occupied by the CFC Parties that are required to
be listed in Section 3.8(b) of the Business Schedules.
"Business Schedules" means the Purchased Businesses Schedule.
"Buyer" shall have the meaning set forth in the Preamble.
"Buyer Indemnified Parties" shall have the meaning set forth in
Section 9.2(a) hereof.
"Buyer Information" shall have the meaning set forth in Section
5.3(b)) hereof.
"Buyer's Knowledge" means, with respect to the Buyer, the
knowledge of Xxxxxx Xxxxxxx, Xxxx Xxxxxxx and Xxxxxxx X. Xxxxxxxxx, in each case
in the exercise of their respective duties as employees of the Buyer.
"Cap" shall have the meaning set forth in Section 9.3(b) hereof.
"CFC Parties" means, collectively, the Company, the Company's
Subsidiaries and their respective Affiliates.
"CFC Party" means, individually, the Company, any of the Company's
Subsidiaries or any of their respective Affiliates, as applicable.
"CFN" means CFN Investment Holdings LLC.
"CFN Agreement" means the Amended and Restated Asset Purchase
Agreement dated as of March 14, 2003 among certain of the CFC Parties and CFN to
acquire assets of the Sellers.
"Change of Control Event" means, with respect to any Person, any
sale of all or substantially all of the assets of such Person (whether in one or
a series of transactions) or a merger or consolidation of such Person into
another Person or the transfer of the capital stock or other equity interest of
such Person.
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"Chapter 11 Case" means, collectively, the cases commenced and to
be commenced by the Company and the Filing Company Subsidiaries under chapter 11
of the Bankruptcy Code in the Bankruptcy Court.
"Charged-Off Accounts" means Receivables that have been
charged-off by the CFC Parties prior to the Cut-Off Time.
"CL Business" means the consumer installment loan business of the
CFC Parties, excluding securities taken back or retained by any CFC Party in
connection with a Securitization.
"CL Origination Platform" means the Property and employees that,
in the ordinary course of business and consistent with the past practices of the
CFC Parties, are utilized in the making or purchasing of, or necessary to make
or purchase, Loans and Receivables (including, without limitation, the
origination and activation of dealers, consumer application processing, credit
underwriting, document preparation and funding) that constitute the CL Business.
"Company" shall have the meaning set forth in the Preamble.
"Confidentiality Agreement" means that letter agreement, dated as
of November 5, 2002, between the Parent and the Buyer.
"Consumer Loan" means the retail installment contracts and direct
and indirect consumer loans, whether or not secured by a purchase money or other
security interest creating a first lien in favor of the lender or obligee on
personal property such as recreational vehicles, motorcycles, watercraft,
trailers and snowmobiles, and the related promissory notes or other evidences of
indebtedness, together with any and all rights, benefits, collateral, payments,
recoveries and proceeds arising therefrom but shall not mean any Receivable or
Loan constituting part of the PL Business.
"Contract" means any contract, license, sublicense, franchise,
permit, terms and conditions of a revolving account, the account relationship,
mortgage, deed to secure debt or deed of trust, purchase order, indenture, loan
agreement, note, lease, sublease, agreement, obligation, commitment,
understanding, instrument or other arrangement or any commitment to enter into
any of the foregoing (in each case, whether written or oral including the terms
of an offer of credit which may be accepted by a purchaser or a credit card user
and the relationship between such Person and the Sellers), including, without
limitation, any schedules, exhibits, annexes, attachments, amendments or other
modifications thereto.
"CRA" means any Property that is held, made or extended by any
Person for Community Reinvestment Act purposes.
"Credit Lifecycle and Clustering Models" means (a) all of the
models set forth in Attachment E to Section 3.12(a) of the Business Schedules,
that are designated therein as Purchased Assets, other than the Acxiom Models,
and all associated software programs, algorithms, scripts, interfaces, data
layouts, database schema, decision engines
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and strategies and all other data and documentation related thereto and (b) any
other models and all associated software programs, algorithms, scripts,
interfaces, data layouts, database schema, decision engines and strategies and
all other data and documentation related thereto, which are used exclusively in
the Purchased Businesses as operated by the CFC Parties prior to the Cut-Off
Time and were created or developed by a CFC Party or a Third Party.
"Cut-Off Time" means 12:01 a.m. Eastern time on the Effective
Closing Date.
"December 31 Balance Sheet" means the Restricted and Unrestricted
Balance Sheets as of December 31, 2002 set forth on Annex B hereto.
"Deferred Promotional Discount Amount" means an amount, calculated
as of the Cut-Off Time, equal to that portion of any merchant discounts or
similar amounts collected by or owed to any CFC Party relating to purchases
initially subject to a promotional discount with respect to any Receivables of
the PL Business but not yet, as of the Cut-Off Time, accreted by the CFC Parties
into income. The Deferred Promotional Discount Amount shall be computed in a
manner consistent with CFC's past practices as described in Conseco's accounting
policy labeled "Promotional Discount Deferral and Amortization for Revolving
Products" set forth in Section 10 of the Accounting Principles.
"DIP Loan" means any debtor-in-possession extension of credit for
the benefit of the Company and the Filing Company Subsidiaries approved by the
Bankruptcy Court in connection with the Chapter 11 Cases.
"Disposition Agreement" means any agreement, contract or other
arrangement (other than this Agreement) pursuant to which any interest in any
Purchased Asset or any payment due with respect to any Purchased Asset has been
sold, used as collateral, transferred to or otherwise disposed of to any Person
or Persons by any Seller.
"Disposition Proceeds" means the amount of the cash proceeds of
any sale, transfer or assignment of Home Equity Loans, Reaffirmed Accounts, CRAs
and Charged-off Accounts owned by Mill Creek Bank Inc., as certified by the
Company in accordance with Section 5.40 hereof and provided that such amounts
are reflected on the Final Schedule of Assets Acquired and Liabilities Assumed
as cash or cash equivalents.
"Direct Claim" means any claim by an Indemnified Party on account
of a Loss which does not result from a Third Party Claim.
"Direct Initial Payment" means an amount equal to 92.5% of the
Initial Payment.
"Discount Accounts Receivable" means any receivable associated
with any Active Merchant Agreement and that represents promotional discounts
billed, but not collected by the CFC Parties, prior to the Cut-Off Time.
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"Domain Name Transfer Agreement" means the assignment agreement to
be executed by the Parties on or prior to the Funding Date, effective as of the
Cut-Off Time, in customary form and substance as reasonably agreed by the
Parties, that effects the assignment from the Sellers to the Buyer of all
Internet domain names included in the Purchased Assets.
"Drop Dead Date" means September 30, 2003 or such later date as
may be extended by the Buyer for an additional period of up to 90 days if the
failure of the Funding Date to occur prior to September 30, 2003 is a result of
the conditions set forth in Sections 6.4 and 6.13 not having been satisfied.
"Effective Closing Date" means the first day of the month in which
the conditions set forth ARTICLES 6 and 7 are satisfied or waived in accordance
with the terms thereof.
"Employee Agreements" means employment, retention, severance,
long-term incentive, change in control and any other similar agreements between
the Sellers or any Affiliate of the Sellers and any Employee.
"Employee Benefit Plans" shall have the meaning set forth in
Section 3.16(a) hereof.
"Employment Costs" means, with respect to the Business Employees
and the Shared Services Employees to whom Buyer offers employment in accordance
with Section 5.12(a)(ii) hereof: (1) base salary or wages, including any
overtime pay, deferred amounts and other payroll amounts, if applicable; (2)
bonus or incentive compensation, if any; (3) benefits and premiums payable to or
for the benefit of such employees and their eligible dependents (if applicable),
including, without limitation: (a) the actual costs of benefits, including,
without limitation, the actual cost of welfare benefits incurred during the
period from the Cut-Off Time through the Funding Date; (b) the employer portion
of applicable payroll taxes; (c) premiums paid by the Sellers and/or CFC Parties
with respect to health, dental, life, disability and other welfare benefit
coverages or expenses under the welfare plans, including paid time off, sick
pay, vacation and severance benefits; and (d) contributions to any qualified
retirement plan or supplemental retirement plan made on behalf of such
employees; (4) statutory benefits and unemployment contributions; and (5) actual
workers compensation benefits (if uninsured) paid to such employees and workers
compensation premiums.
"Employees" shall have the meaning set forth in Section 3.14
hereof.
"Environmental Law" means any Law relating to (a) the release or
threatened release of Hazardous Substances, (b) pollution or the protection of
human health, safety or the environment, including ambient air (including air
inside buildings), surface water, ground water, land surface or subsurface
strata and natural resources or (c) the manufacture, handling, transport, use,
treatment, storage or disposal of Hazardous Substances.
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"Equipment" means any personal property set forth in Section
2.1(a)(B)(iii) of the Business Schedules, as such section may be updated from
time to time in accordance with this Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) which is or has ever been under common control, or which is or has
ever been treated as a single employer, with Sellers under Section 414(b), (c),
(m) or (o) of the Tax Code.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Act Rules" means the rules and regulations promulgated
under the Exchange Act.
"Excluded Assets" means any and all assets of any Seller other
than those included in the definition of the Purchased Assets and shall include,
without limitation, the Specified Excluded Assets.
"Excluded Businesses" means any business or operation of the CFC
Parties or portions thereof that is not part of the Purchased Businesses.
"Excluded Contracts" means any Contract that is not an Assumed
Agreement, including, without limitation, (a) any Contract with respect to any
Reaffirmed Account (whether or not designated as such on the Final Data Tape),
(b) any Assumed Receivable Contract that in any manner does not comply with
applicable Law, which non-compliance impairs enforceability or validity of such
Assumed Receivable Contract, (c) the Contracts set forth in Section 2.1(c) of
the Purchased Businesses Schedule, (d) all Employment Agreements (other than the
Assumed Retention Agreement) and (e) the Contracts set forth in Section 2.1(a)
of the Business Schedule designated as Excluded Contracts.
"Excluded Liabilities" has the meaning set forth in Section 2.2(b)
hereof.
"Excluded Receivables" means any Loan or Receivable (a) that is a
Reaffirmed Account (whether or not designated as such on the Final Data Tape),
(b) the terms or conditions of which violate or contravene any applicable Law
and such violation or contravention impairs enforceability or validity of such
Loan or Receivable and (c) that has not been made or purchased in the ordinary
course of business consistent with the past practices of the CFC Parties.
"Facilities" means the Leased Premises.
"FDIC" shall have the meaning set forth in Section 3.3 hereof.
"FFIEC" means the Federal Financial Institutions Examination
Council.
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"Files" means, whether in paper or electronic form, books;
records; customer and vendor lists; correspondence; files; advertising,
marketing and sales materials; personnel files of employees; financial records
and statements; correspondence, reports and examinations of Governmental
Authorities other than those with respect to Mill Creek Bank and legal
proceedings materials.
"Filing Company Subsidiaries" means the Selling Subsidiaries and
such other Subsidiaries of the Company and of any Selling Subsidiary as the
Buyer may elect by notice to the Company; provided, however, that neither Mill
Creek Bank Inc. nor Green Tree Retail Services Bank shall be deemed Filing
Company Subsidiaries.
"Final Data Tape" means the Month's End Data Tape prepared as of
the Effective Closing Date which is to be delivered by the Sellers to the Buyer,
pursuant to Section 5.38 hereof, setting forth the Portfolio Information as of
the Cut-Off Time for all Loans and Assigned Receivables included in the
Purchased Assets and all Securitized Receivables in existence as of such time.
"Final Order" means an order or judgment of the Bankruptcy Court
(i) that is not the subject of a pending appeal, petition for certiorari, motion
for reconsideration or other proceeding for review, rehearing or reargument,
(ii) that has not been reversed, stayed, modified or amended, and (iii)
respecting which the time to appeal, to petition for certiorari, to move for
reconsideration or to seek review, rehearing or reargument shall have expired,
as a result of which such order shall have become final in accordance with Rule
8002 of the Federal Rules of Bankruptcy Procedure and other applicable Laws.
"Final Schedule of Assets Acquired and Liabilities Assumed" means
the Schedule of Assets Acquired and Liabilities Assumed delivered by the Buyer
to the Company pursuant to Section 5.39(e) hereof.
"Finance Laws" shall have the meaning set forth in Section 3.3
hereof.
"Financial Statements" shall have the meaning set forth in Section
3.19 hereof.
"FIRPTA" shall have the meaning set forth in Section 3.22(c)
hereof.
"Funding" shall have the meaning set forth in Section 2.3(a)
hereof.
"Funding Date" means the 10th day (or if such date is not a
Business Day, the next Business Day after such date) of the month following the
Effective Closing Date.
"GAAP" means United States generally accepted accounting
principles consistently applied.
"Governmental Authority" means any federal, state, provincial,
local, department, county, municipal, governmental regulatory or administrative
authority, agency, bureau, department or commission or any court, tribunal or
judicial or arbitral
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body or other governmental authority or instrumentality, in each case, whether
domestic or foreign.
"Green Tree Retail Services Bank" means Green Tree Retail Services
Bank, Inc., a South Dakota chartered limited purpose credit card bank, and its
wholly-owned Subsidiaries.
"Guarantees" means any and all obligations relating to guarantees,
letters of credit, support agreements, bonds and other credit assurances or
supports of a comparable nature, of any CFC Party.
"Hazardous Substances" means any substance, whether solid, liquid,
gaseous or any combination of the foregoing which is listed, defined or
regulated pursuant to any Environmental Law.
"HE Business" means the home equity loan business of the CFC
Parties, excluding securities taken back or retained by any CFC Party in a
Securitization.
"HELOC Loans" means all revolving, variable rate mortgage loans
secured by first or junior liens on single-family residential real property
(including, without limitation, condominiums and planned unit developments), and
the related promissory notes or other evidences of indebtedness, together with
any and all rights, benefits, collateral, payments, recoveries and proceeds
arising therefrom or in connection therewith.
"HI Business" means the home improvement loan business of the CFC
Parties, excluding (a) securities taken back or retained by any of the CFC
Parties in a Securitization and (b) Loans pledged to the Xxxxxx Warehouse
Facility.
"HI and CL Mill Creek Bank Loans" means those Loans and
Receivables that are either Home Improvement Loans or Consumer Loans of the HI
Business and the CL Business (and, in each case, the corresponding Receivables)
and that were owned by Mill Creek Bank as of December 31, 2002 or, subject to
Section 5.5 hereof, made (but not purchased) by Mill Creek Bank during the
period from December 31, 2002 though the Cut-Off Time and for the avoidance of
doubt excluding any Home Equity Loans.
"HI and CL Servicing Assets" means all Intellectual Property,
fixtures equipment and all computer hardware required for the Servicing of the
Home Improvement Loans and Consumer Loans originated by the HI Origination
Platform and the CL Origination Platform and the HI and CL Mill Creek Bank
Loans, including, without limitation, (a) the Intellectual Property, (b) the
fixtures, equipment and computer hardware, and (c) the Contracts, in each case
as set forth in Section 5.31(a) of the Business Schedules and designated as "HI
and CL Servicing Assets."
"HI Origination Platform" means the Property and employees that,
in the ordinary course of business and consistent with the past practices of the
CFC Parties, are utilized in the making or purchasing of, or necessary to make
or purchase, Loans and Receivables (including, without limitation, the
origination and activation of dealers,
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consumer application processing, credit underwriting, document preparation and
funding) that constitute the HI Business.
"Home Equity Loans" means all fixed or variable rate Loans secured
by first or junior liens on residential real Property (including, without
limitation, condominiums and planned unit developments), including, without
limitation, any such high loan-to-value mortgage loans, and the related
promissory notes or other evidences of indebtedness, together with any and all
rights, benefits, collateral, payments, recoveries and proceeds arising
therefrom or in connection therewith.
"Home Improvement Loans" means all first or junior liens or
unsecured home improvement Loans, and the related promissory notes or other
evidences of indebtedness, whether insured or uninsured, and the related
promissory notes or other evidences of indebtedness, together with any and all
rights, benefits, collateral, payments, recoveries and proceeds arising
therefrom or in connection therewith.
"Honda Purchase Agreement" means that certain Purchase and Sale
Agreement, dated as of May 28, 2001, among Transamerica Bank, N.A., Transamerica
Retail Financial Services and Conseco Bank, Inc.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended, and the regulations related thereto.
"Inactive Employees" shall have the meaning set forth in Section
5.12(a) hereof.
"Income Tax" means all domestic or foreign federal, state, local
Taxes based upon, measured by, or calculated with respect to (i) gross or net
income or gross or net receipts or profits (including, but not limited to, any
capital gains, minimum taxes and any Taxes on items of tax preference, but not
including sales, use, goods and services, real or personal property transfer or
other similar Taxes); (ii) multiple bases (including, but not limited to,
corporate franchise, doing business or occupation Taxes) if one or more of the
bases upon which such Tax may be based upon, measured, or calculated with
respect to, is described in clause (i); or (iii) withholding taxes, measured by,
or calculated with respect to, any payments or distributions (other than wages).
"Income Tax Return" means any return, declaration, report, claim
for refund, information return, amended return or statement relating to Income
Taxes, including any schedule or attachment thereto.
"Incremental Liabilities" shall have the meaning set forth in
Section 2.1(b) hereof.
"Indemnified Parties" shall have the meaning set forth in Section
9.2(b) hereof.
"Indemnifying Party" means a Person from whom indemnification is
sought.
13
"Indemnity Deductible" shall have the meaning set forth in Section
9.3(b) hereof.
"Insurance Accounts Receivable" means (a) any forced placed
insurance premium due from an Obligor in respect of an Assumed Receivable
Contract and (b) any charge card insurance premium due from an Obligor in
respect of an Assumed Receivables Contract relating to the PL Business.
"Insurance Policies" means those policies of insurance which the
CFC Parties maintain with respect to their assets and operations, including,
without limitation, liability, property, workers' compensation, directors and
officers liability.
"Intellectual Property" means all of the rights arising from or in
respect of the following in any U.S. or foreign jurisdiction: (a) patents,
patent applications and patent disclosures including re-issues, continuations,
divisions, continuations-in-part, renewals and extensions; (b) trademarks,
service marks, trade dress rights, trade names, corporate names, logos and
slogans (whether registered or unregistered, and all translations, adaptations,
derivations and combinations of the foregoing), and Internet domain names,
together with all goodwill associated with each of the foregoing; (c) copyrights
and copyrightable works; (d) trade secrets, confidential information, know-how,
processes, technology and inventions; (e) computer software and systems
(including, without limitation, in source code, executable code or other form,
data, databases and documentation); (f) all other intellectual property and
proprietary rights and rights of a similar nature; and (g) registrations,
applications and licenses related to any of the foregoing.
"Intellectual Property Assignment Agreements" means the Trademark
Assignment Agreement and Domain Name Transfer Agreement.
"January 31 Balance Sheet" means the Restricted and Unrestricted
Balance Sheets as of January 31, 2003 set forth on Annex C attached hereto.
"Knowledge" means, with respect to the Sellers, the knowledge of
Xxxxx X. Xxxxxxxx, Xxxxx X. Xxxxxxx, Xxxxxx X. Xxxxxxx, Xxxxx X. Xxxxx, Xxxxxxx
X. Xxxxxxx, Xxx Xxxx, Xxxx Xxxxxx, Xxxxx X. Xxxxxx, Xxx Xxxx, Xxx Xxxxxxx,
Xxxxxx Xxxxxxx, Xxxxxxx Xxxxxxxx and Xxxx Xxxxxxx, in each case in the exercise
of their respective duties as an employee of the applicable CFC Party.
"Laws" means any and all statutes, rules, regulations, codes,
injunctions, judgments, writs, orders, decrees, rulings, constitutions,
ordinances, common laws, standards, limitations, compliance schedules, written
directions, requests or treaties, whether legislatively, judicially,
administratively or otherwise promulgated, of any Governmental Authority.
"Leased Premises" means the real property, premises and facilities
leased or otherwise used or occupied by any CFC Party as the tenant, licensee or
occupant thereof pursuant to the Assumed Leases.
14
"Xxxxxx Facilities" means, collectively, the Xxxxxx Residuals
Facility and the Xxxxxx Warehouse Facility.
"Xxxxxx Residuals Facility" means (a) the Master Repurchase
Agreement and Annex to Master Repurchase Agreement Supplemental Terms and
Conditions, each dated as of September 29, 1999, between Green Tree Residual
Finance Corp. I and Xxxxxx Brothers, Inc., and as amended by the amendments
thereto dated as of September 22, 2000, January 30, 2002, April 30, 2002 and
December 20, 2002 and (b) the Asset Assignment Agreement, dated as of February
13, 1998, between Green Tree Residual Finance Corp. I and Xxxxxx XXX Inc., as
assignee of Xxxxxx Commercial Paper Inc., and as amended by the amendments
thereto dated as of June 23, 1998, February 23, 2000, May 10, 2000, August 1,
2000, September 22, 2000, September 28, 2001, January 30, 2002, April 30, 2002,
October 9, 2002 and December 20, 2002, and as each of the same may be further
amended in accordance with the terms thereof and of this Agreement.
"Xxxxxx Warehouse Facility" means the Second Amended and Restated
Master Repurchase Agreement, dated as of January 30, 2002, between Xxxxxx
Commercial Paper, Inc. and Green Tree Finance Corp.-Five, as amended by the
amendments thereto dated as of April 30, 2002, August 12, 2002, October 9, 2002
and December 20, 2002, and as the same may be further amended in accordance with
the terms thereof and of this Agreement.
"Liability" means any liability or obligation, whether known or
unknown, whether asserted or unasserted, whether absolute or contingent, whether
accrued or unaccrued, whether matured or unmatured, whether liquidated or
unliquidated, whether incurred or consequential and whether due or to become
due, including any liability for Taxes or any other liability arising out of
applicable Law.
"Lien" means any mortgage, deed to secure debt or deed of trust,
pledge, security interest, encumbrance, claim, Tax, equitable interest, negative
pledge, lien or charge of any kind (including, without limitation, any
conditional sale or other title retention agreement or lease in the nature
thereof) or any agreement to file any of the foregoing, any sale of receivables
with recourse against the Sellers or any of their Affiliates, any filing or
agreement to file a financing statement as debtor under the Uniform Commercial
Code or any similar statute and all claims (including, but not limited to, all
"claims" within the meaning of section 101(5) of the Bankruptcy Code).
"Loans" means all loans, or other extensions of credit, either
purchased by a CFC Party from Third Parties or pursuant to which the CFC Parties
have lent money, advanced funds or extended credit or are obligated to do so in
each case, which are owned by the CFC Parties or subject to repurchase by or
similar Contract of a CFC Party, including, but not limited to, (a) loans which
have been partially or fully charged off, (b) interests in loan participations
and assignments, (c) legally binding commitments and obligations to extend
credit (including any unfunded or partially funded revolving loans, lines of
credit or similar arrangements) and (d) retail installment contracts or
revolving credit arrangements, in each case that are not Securitized Loans as of
the Cut-Off Time.
15
"Loss" means any loss, Liability, judgment, equitable relief
granted, settlements, awards (including back-pay awards), demand, claim, action,
cause of action, cost, damage, deficiency, Tax, penalty, fine or expense,
whether or not arising out of third party claims (including, without limitation,
interest, penalties, reasonable attorneys' fees and expenses, court costs and
all amounts paid in investigation, defense or settlement of any of the foregoing
and enforcement of any rights of indemnification against any Indemnitor or with
respect to any appeal). With respect to the Buyer or any of its Affiliates, Loss
shall also be deemed to include, without limitation, any and all Losses
resulting from the failure of the Buyer or any of its Affiliates to receive any
amounts payable with respect to any Assumed Receivables Contract resulting from
any breach of any representation, warranty or covenant made by the Sellers in
this Agreement.
"Material Adverse Effect" means (a) any change or effect that is
materially adverse to the business, financial conditions, property, operations,
net income or assets of the Purchased Businesses taken as a whole; or (b) any
material adverse effect that would prevent or materially impair the ability of
the Sellers to consummate the transactions contemplated by this Agreement or the
Transaction Documents, including, without limitation, the appointment of the
FDIC as receiver, trustee, custodian or conservator for Mill Creek Bank Inc. or
the initiation of any proceeding for the termination of insurance or the
initiation of any other enforcement action against Mill Creek Bank Inc.
undertaken by the FDIC; provided that none of the following shall be deemed to
constitute, and none of the following shall be taken into account in determining
whether there has been, a Material Adverse Effect: (i) any adverse change,
event, development or effect arising from or relating to (A) general business or
economic conditions, including such conditions related to the businesses of the
Sellers and their Subsidiaries, except for such changes, events, developments or
effects which disproportionately impact the Purchased Businesses, or (B)
national or international political or social conditions, including the
engagement by the United States in hostilities, whether or not pursuant to the
declaration of a national emergency or war, or the occurrence of any military or
terrorist attack upon the United States, except for such changes, events,
developments or effects which disproportionately impact the Purchased Businesses
and (ii) the filing of the Chapter 11 Case and the Parent's filing of its case
under chapter 11 of the Bankruptcy Code.
"Material Agreement" shall have the meaning set forth in Section
3.11 hereof.
"MH Business" means the manufactured housing business of the CFC
Parties.
"Mill Creek Bank" means Mill Creek Bank Inc., a Utah industrial
loan corporation, and its wholly-owned Subsidiaries.
"Month's End Data Tape" means, with respect to each month to occur
between the date hereof (including April) and the Funding Date, a CD-ROM to be
delivered by the Sellers to the Buyer, pursuant to Section 5.38 hereof, setting
forth the Portfolio Information as of 12:01 a.m. Eastern Time on the first day
of such month for all
16
Loans and Receivables that will be included in the Purchased Assets if such day
is the Effective Closing Date and all Securitized Receivables that are in
existence as of such time.
"Net Assets Value" means an amount equal to (i) the excess of the
aggregate amount of (A) the Specified Purchased Assets over (B) the Assumed
Liabilities, in each case, as reflected on the Final Schedule of Assets Acquired
and Liabilities Assumed minus (ii) the Deferred Promotional Discount Amount.
"Net NAV" means an amount equal to (a) the Net Asset Value minus
(b) the Disposition Proceeds.
"Non-Assumable Claim" means any claim, action or proceeding (i)
involving any Governmental Authority, (ii) seeking injunctive relief, (iii)
involving a class action, (iv) involving an allegation of criminal activities,
or (v) involving allegations of any violation of any domestic or foreign federal
or state Laws governing extension of credit (including, without limitation, any
Finance Laws), any domestic or foreign federal or state securities Laws or
regulations or any domestic or foreign federal or state antitrust Laws, and such
claim, action or proceeding involves or relates to, in any material respect, any
of the Purchased Assets or the operation or conduct of any of the Purchased
Businesses.
"November 30 Balance Sheet" means the Restricted and Unrestricted
Balance Sheets as of November 30, 2002 set forth on Annex A.
"Obligor" means, with respect to any Loan, the Person(s) obligated
to make payments with respect to such Loan, including, without limitation, the
applicable borrower, or any guarantor, co-signer, surety or other obligor
therefor, but shall not include the lender or obligee thereunder.
"Order" means any decree, order, injunction, rule, judgment or
consent of or by any Governmental Authority.
"Organizational Documents" means certificates of incorporation,
by-laws, certificates of formation, limited liability company operating
agreements, limited liability partnership agreements, partnership or limited
partnership agreements or other formation or governing documents of a particular
entity.
"Other Transferred Intellectual Property" means, other than the
Transferred Trademarks and the Transferred Intellectual Property Agreements, (a)
all other Intellectual Property that is used exclusively in the Purchased
Businesses as operated by the CFC Parties prior to the Cut-Off Time, and (b) all
of the other Intellectual Property set forth in Section 3.12 of the Business
Schedules and designated therein as Purchased Assets.
"Overvalue Amount" means the amount by which the Net NAV exceeds
the Base Amount.
17
"Owned Real Property" means each of (i) Units 1, 2, 33 through 44
and 47 through 62 of Condominium Number 199, Ramp Condominium; Xxxxx 0, 0, 000,
000, 000, 000, 401, 501, 601, 701, 801, 901, 1001, 1101, 1201, 1301, 1401, 1501,
1601, 1701 and 1801 of Condominium Number 200, Amhoist Tower Condominium; and
Units 19A through 19E and 20A through 20E of Condominium Number 201, Park
Towers, all located in St. Xxxx, MN and (ii) 0000 Xxxxxxx Xxxxx, Xxxxx Xxxx, XX.
"Parent" means Conseco, Inc., an Indiana corporation.
"Parties" shall have the meaning set forth in the Preamble.
"Participating Affiliates" shall have the meaning set forth in
Section 6.4(a)(ii)(E) hereof.
"Party" shall have the meaning set forth in the Preamble.
"Permitted Liens" shall mean: (a) statutory liens for current
Taxes or other governmental charges with respect to the assets of a CFC Party
not yet due and payable or which may thereafter be paid without penalty or the
amount or validity of which is being contested in good faith by appropriate
proceedings by the CFC Party and for which appropriate reserves have been
established on the CFC Party's books and records in accordance with GAAP, (b)
mechanic's, carrier's, worker's, repairer's and similar statutory liens arising
or incurred in the ordinary course of business of the Sellers with respect to a
Liability which is not yet due or delinquent; (c) zoning, entitlement, building
and other land use regulations imposed by any Governmental Authority having
jurisdiction over the Leased Premises which are not violated by the current use
and operation of the Leased Premises; and (d) covenants, conditions,
restrictions, easements and other similar matters of record affecting title to
any Purchased Assets which do not, individually or in the aggregate, materially
impair the present value, occupancy or continued use of any Purchased Assets for
the purposes for which each is currently used in the respective Purchased
Business.
"Person" means an individual, a partnership, a limited liability
company, a corporation, a cooperative, an association, a joint stock company, a
trust, a joint venture, an unincorporated organization or a Governmental
Authority.
"PL Business" means the private label credit card business of the
CFC Parties, including, without limitation, the private label credit card
business conducted by Mill Creek Bank, but excluding, in all cases, (x)
securities taken back or retained by any CFC Party in a Securitization (other
than the PL Residual Assets), (y) all Properties of Green Tree Retail Services
Bank and (z) any business related to Visa or Mastercard credit cards or
accounts.
"PL Excluded Servicing Liabilities" means all Liabilities under
the PL Servicing Contracts other (i) than the duty to act as a servicer or
successor thereunder and (ii) any Liabilities arising from conduct of the Buyer
or its designee as servicer or successor servicer after the Cut-Off Time.
18
"PL Residual Assets" means the residuals, retained interests
listed on the PL Residuals Schedule under the caption "Credit Cards", and any
other interest, including equity, retained or residual interests, the
Transferors' Interest (as defined in the Private Label Credit Card Master Trust
Documents), the Transferors' Amount (as defined in the Private Label Credit Card
Master Trust Documents) (whether certificated or uncertificated), issued or
created by or in connection with a Securitization relating to the PL Business or
similar transaction relating to the PL Business in each case, that the Company
or any other CFC Party holds or owns (whether or not pledged to another Person
or sold under a repurchase agreement), including, without limitation, all other
cash or other proceeds, and all other rights arising from certificated or
uncertificated securities, interests or rights purchased or retained by a CFC
Party in connection with a Securitization relating to the PL Business,
including, without limitation, rights to prepayment penalties or charges, late
fees, investment income, cash collateral accounts, spread accounts, reserve
accounts and similar accounts and other charges not required to be paid to the
servicer, and repurchase options or similar rights arising in connection with a
Securitization relating to the PL Business.
"PL Residuals Schedule" means Section 3.21 of the disclosure
schedules attached hereto containing information relating to the PL Residual
Assets.
"PL Servicing Business" means all PL Servicing Rights of a CFC
Party relating to the PL Business and all assets of the CFC Parties primarily
used in the conduct of such business, including, without limitation, all cash,
deposits, receivables and Prepaid Expenses relating thereto.
"PL Servicing Contracts" means the Contracts providing for loan
servicing in connection with all Securitizations relating to the PL Business
that are outstanding at the Cut-Off Time and all related documents.
"PL Servicing Fees" means all servicing and other fees,
compensation or moneys payable from time to time to the Servicer under the PL
Servicing Contracts.
"PL Servicing Rights" means the right to act as servicer or
successor servicer under each of the PL Servicing Contracts and all rights,
privileges and benefits of being servicer or successor servicer under each PL
Servicing Contract or that are incidental thereto including, without limitation,
any and all of the following: (a) any and all rights to service any Securitized
Loan relating to the PL Business; (b) all Servicing Fees; and (c) any late fees,
investment income or similar payments or penalties (including, without
limitation, prepayment penalties) with respect to each Securitized Loan relating
to the PL Business payable to the servicer under the PL Servicing Contracts.
"Portfolio Information" means, with respect to any Receivable,
(a) the following information, which information is required to
appear, or which appears on the Pre-Signing Data Tapes:
19
A. with respect to the accounts in the PL Business: (i)
"cdrelease2.txt", created November 10, 2002 (12 months of history
- excluded historical charge offs and historical information for
accounts not on the books as of most recent date); (ii)
"cdrelease3.txt", created November 15, 2002 (13 through 24 months
of history for accounts missing history in cdrelease2.txt, does
not include charge off history); (iii) "cdrelease4.txt", created
November 18, 2002 (24 months of account balance history and
deferred credit plan balance information as of most recent date);
(iv) "losses24.txt", created November 18, 2002 (24 months of
historical charge offs, includes history prior to the charge
offs); and (v) "old24all.txt" created November 21, 2002 (24 months
of history for accounts not on the books of the CFC Parties as of
most recent date);
B. with respect to the accounts and contracts in the HI
Business: (i) "HIDdatatape.txt", created November 27, 2002 (HID
Account History from December 2000 - October 2002 excludes Charge
offs), and (ii) "HIDLOSSdata.txt", created November 27, 2002 (HID
Charge off History from December 2000 - October 2002);
C. with respect to the accounts and contracts in the CL
Business: (i) "Nov00.txt", created November 27, 2002 (status at
end of month for November, 2000), (ii) "Dec00.txt", created
November 27, 2002 (status at end of month for December, 2000),
(iii) "Jan01.txt", created November 27, 2002 (status at end of
month for January, 2001), (iv) "Feb01.txt", created November 27,
2002 (status at end of month for February, 2001), (v) "Mar01.txt",
created November 27, 2002 (status at end of month for March,
2001), (vi) "Apr01.txt", created November 27, 2002 (status at end
of month for April, 2001), (vii) "May01.txt", created November 27,
2002 (status at end of month for May, 2001), (viii) "Jun01.txt",
created November 27, 2002 (status at end of month for June, 2001),
(ix) "Jul01.txt", created November 27, 2002 (status at end of
month for July, 2001), (x) "Aug01.txt", created November 27, 2002
(status at end of month for August, 2001), (xi) "Sept01.txt",
created November 27, 2002 (status at end of month for September,
2001), (xii) "Oct01.txt", created November 27, 2002 (status at end
of month for October, 2001), (xiii) "Nov01.txt", created November
27, 2002 (status at end of month for November, 2001), (xiv)
"Dec01.txt", created November 27, 2002 (status at end of month for
December, 2001), (xv) "Jan02.txt", created November 27, 2002
(status at end of month for January, 2002), (xvi) "Feb02.txt",
created November 27, 2002 (status at end of month for February,
2002), (xvii) "Mar02.txt", created November 27, 2002 (status at
end of month for March, 2002), (xviii) "Apr02.txt", created
November 27, 2002 (status at end of month for April, 2002), (xix)
"May02.txt", created November 27, 2002 (status at end of month for
May, 2002), (xx) "Jun02.txt", created November 27, 2002 (status at
end of month for June, 2002), (xxi) "Jul02.txt", created November
27, 2002 (status at end of month for July, 2002), (xxii)
"Aug02.txt", created November 27, 2002
20
(status at end of month for August, 2002) (xxiii) "Sept02.txt",
created November 27, 2002 (status at end of month for September,
2002), and (xxiv) "Oct02.txt", created November 27, 2002 (status
at end of month for October, 2002).
and (b) the following information that is required to appear or
will appear on each Month's End Data Tape:
A. with respect to Assigned Receivables from the PL Business
which are open-end revolving accounts (other than the Assigned
Receivables associated with the VISA/MasterCard Portfolio) and
Securitized Receivables: (i) the account number, (ii) the name(s)
of the Obligor(s) that appears on such account, (iii) xxx xxxxxx,
xxxx, xxxxx, zip code and apartment number, if applicable, and the
country if not the United States, (iv) the Social Security Number
of the Obligor(s), (v) the Retailer to which the account is
associated, (vi) the total balance of the account as of the date
the file is created and the date as of which the file is created,
(vii) the code of such account's level of delinquency (e.g.,
Current, 1-29 days, 30-59 days, 60-89 days, etc.) (viii) the code
indicating the account's status (e.g., Closed, Bankrupt, Legal,
Lost/Stolen, etc.) and if Bankrupt the type of bankruptcy, (ix)
the date the account was opened, (x) the date the account charged
off, (xi) the gross charge off amount, (xii) the type of charge
off (e.g., Bankrupt, Deceased, Fraud, Aging, etc.) and if Bankrupt
the type of bankruptcy, (xiii) the date the account was last
reaged, (xiv) the day of the month the account cycles, (xv) the
most recent credit limit, (xvi) the most recent refreshed credit
score, (xvii) the date the most recent refreshed credit score was
received, (xviii) the code indicating if the balance on the
account is tied to an item which has been repossessed, (xix) the
code indicating if the debt is a reaffirmation, (xx) the code
indicating to which Bank the account belongs (e.g., Mill Creek
Bank Inc.), (xxi) the portion of the balance that is finance
charges, (xxii) the portion of the balance that is fees, (xxiii)
whether such Receivable is a Securitized Receivable and (xxiv) any
other information necessary to determine the Principal Balance of
such Receivables;
B. with respect to Assigned Receivables that are open-end
revolving accounts associated with the Visa/MasterCard Portfolio:
(i) the account number, (ii) the name(s) of the Obligor(s) that
appears on such account, (iii) xxx xxxxxx, xxxx, xxxxx, zip code
and apartment number, if applicable, and the country if not the
United States, (iv) the Social Security Number of the Obligor(s),
(v) the Retailer, if any, to which the account is associated, (vi)
the total balance of the account as of the date the file is
created and the date as of which the file is created, (vii) the
code of such account's level of delinquency (e.g., Current, 1-29
days, 30-59 days, 60-89 days, etc.) (viii) the code indicating
such account's status (e.g., Closed, Bankrupt, Legal, Lost/Stolen,
etc.) and if Bankrupt the type of bankruptcy, (ix) the date the
account was opened, (x) the date the
21
account charged off, (xi) the gross charge off amount, (xii) the
type of charge off (e.g., Bankrupt, Deceased, Fraud, Aging, etc.)
and if Bankrupt the type of bankruptcy, (xiii) the date the
account was last reaged, (xiv) the day of the month the account
cycles, (xv) the most recent credit limit, (xvi) the most recent
refreshed credit bureau score, (xvii) the date the most recent
refreshed credit bureau score was received, (xviii) the code
indicating if the debt is a reaffirmation, (xix) the date the
credit card expires, (xx) whether the account is Visa or
MasterCard and (xxi) the code indicating to which Bank the account
belongs (e.g., Mill Creek Bank);
C. with respect to Assigned Receivables from the CL Business:
(i) the account or contract number, (ii) the name(s) of the
Obligor(s), (iii) xxx xxxxxx, xxxx, xxxxx, zip code and apartment
number, if applicable, and the country if not the United States,
(iv) the Social Security Number of the Obligor(s), (v) the
Collateral Type Identifier (specific product type within
category), (vi) the Collateral Category Identifier (e.g., RV,
Motorcycle, Marine Product, etc.), (vii) the initial amount
financed, (viii) the Annual Percentage Rate the customer is being
charged, (ix) the balance net of finance charges and fees and the
date as of which the file is created, (x) the code of the level of
delinquency (e.g., Current, 1-29 days, 30-59 days, 60-89 days,
etc.) (xi) the code indicating the status (e.g., Closed, Bankrupt,
Legal, Lost/Stolen, etc.) and if Bankrupt the type of bankruptcy,
(xii) the date the account or contract was applied for, (xiii) the
date the account or contract was funded, (xiv) if the account or
contract was charged off, the date the account or contract charged
off, (xv) the charge off amount net of finance charges and fees,
(xvi) the type of charge off (e.g., Bankrupt, Deceased, Fraud,
Aging, etc.) and if Bankrupt the type of bankruptcy, (xvii) the
FICO bureau score at time of application, (xviii) the code
indicating if the balance on the account or contract is tied to an
item which has been repossessed, (xix) the date of repossession,
if any, (xx) the code indicating if the debt is a reaffirmation,
(xxi) the code indicating to which Bank the account or contract
belongs (e.g., Mill Creek Bank Inc.), and the finance charges xxxx
not yet collected, and (xxiv) any other information necessary to
the determination of the Principal Balance of such Assigned
Receivables;
D. with respect to Assigned Receivables from the HI Business:
(i) the account or contract number, (ii) the name(s) of the
Obligor(s), (iii) xxx xxxxxx, xxxx, xxxxx, zip code and apartment
number, if applicable, and the country if not the United States,
(iv) the Social Security Number of the Obligor(s), (v) the
Collateral Type Identifier (specific product type within
category), (vi) the Collateral Category Identifier (e.g., Pool,
Siding, Room Addition, etc.), (vii) the initial amount financed,
(viii) the Annual Percentage Rate the customer is being charged,
(ix) the balance net of finance charges and fees and the date as
of which the file is created, (x) the code of the level of
delinquency (e.g., Current, 1-29 days, 30-59 days, 60-89 days,
etc.) (xi) the code indicating the status (e.g., Closed, Bankrupt,
22
Legal, Lost/Stolen, etc.) and if Bankrupt the type of bankruptcy,
(xii) the date the account or contract was applied for, (xiii) the
date the account or contract was funded, (xiv) if the account or
contract was charged off, the date the account or contract charged
off, (xv) the charge off amount net of interest and fees, (xvi)
the type of charge off (e.g., Bankrupt, Deceased, Fraud, Aging,
etc.) and if Bankrupt the type of bankruptcy, (xvii) the FICO
bureau score at time of application, (xviii) the code indicating
if the balance on the account or contract is tied to an item which
has been repossessed, (xix) the date of repossession, if any, (xx)
the code indicating if the debt is a reaffirmation, (xxi) the code
indicating to which Bank the account or contract belongs (e.g.,
Mill Creek Bank Inc.), (xxii) the finance charges but not yet
collected of each account or contract, (xxiii) whether the
obligation is open- or closed-end credit and (xxiv) any other
information necessary to the determination of the Principal
Balance of such Assigned Receivable.
"Post-Funding Tax Period" means (a) any taxable year or period
beginning after the Funding Date, and (b) for any Straddle Period, the portion
of such period beginning after the Funding Date.
"Post-Signing Balance Sheets" shall have the meaning set forth in
Section 5.29(a) hereof.
"Pre-Cut-Off Period" shall have the meaning set forth in Section
2.1(a) hereof.
"Pre-Funding Period" means the period commencing on the date
hereof and ending at and including the Funding Date.
"Pre-Funding Tax Period" means (a) any taxable year or period
ending on or before the Funding Date and (b) for any Straddle Period, the
portion of such period ending on and including the Funding Date.
"Prepaid Expenses" means operating costs or other expenses which
were paid by the Sellers or any Subsidiary of Sellers on or prior to the Cut-Off
Time in respect of the Purchased Business and the Purchased Assets but that are
attributable to periods or portions thereof beginning after the Cut-Off Time,
including any real or personal property, use or other Taxes (other than Income
Taxes).
"Pre-Signing Data Tape" means:
a. with respect to the PL Business, the following electronic files
delivered to Buyer prior to the date hereof: (i) "cdrelease2.txt", created
November 10, 2002, (ii) "cdrelease3.txt", created November 15, 2002, (iii)
"cdrelease4.txt", created November 18, 2002, (iv) "losses24.txt", created
November 18, 2002 and (v) "old24all.txt" created November 21, 2002;
23
b. with respect to the HI Business, the following electronic files
delivered to Buyer prior to the date hereof: (i) "HIDdatatape.txt", created
November 27, 2002, (ii) "HIDLOSSdata.txt", created November 27, 2002;
c. with respect to the CL Business, the following electronic files
delivered to Buyer prior to the date hereof: (i) "Nov00.txt", created November
27, 2002, (ii) "Dec00.txt", created November 27, 2002, (iii) "Jan01.txt",
created November 27, 2002, (iv) "Feb01.txt", created November 27, 2002, (v)
"Mar01.txt", created November 27, 2002, (vi) "Apr01.txt", created November 27,
2002, (vii) "May01.txt", created November 27, 2002, (viii) "Jun01.txt", created
November 27, 2002, (ix) "Jul01.txt", created November 27, 2002, (x) "Aug01.txt",
created November 27, 2002, (xi) "Sept01.txt", created November 27, 2002, (xii)
"Oct01.txt", created November 27, 2002, (xiii) "Nov01.txt", created November 27,
2002, (xiv) "Dec01.txt", created November 27, 2002, (xv) "Jan02.txt", created
November 27, 2002, (xvi) "Feb02.txt", created November 27, 2002, (xvii)
"Mar02.txt", created November 27, 2002, (xviii) "Apr02.txt", created November
27, 2002, (xix) "May02.txt", created November 27, 2002, (xx) "Jun02.txt",
created November 27, 2002, (xxi) "Jul02.txt", created November 27, 2002, (xxii)
"Aug02.txt", created November 27, 2002, (xxiii) "Sept02.txt", created November
27, 2002, (xiv) "Oct02.txt", created November 27, 2002.
"Principal Balance" means, as of any time, for any Assigned
Receivable, the amount of the outstanding unpaid indebtedness incurred by an
Obligor with respect to the applicable Assumed Receivables Contract as of such
time (including the amount of the liabilities of the Company or any of its
Subsidiaries incurred by it in the ordinary course of its business and
consistent with its past practices in respect of checks, drafts, wire transfers
or other similar payment instructions which checks, drafts, wire transfers or
other similar payment instructions have not, as of such time, been charged as a
final matter against its applicable account), any properly posted charges for
goods and services purchased by such Obligor from any Person (whether or not
billed to such Obligor) that have not been paid as of such time, finance charges
charged with respect to such Assigned Receivable (including the Accrued and
Unpaid Interest) that are unpaid as of such time, and any fees, interest,
penalties or other charges (whether or not billed to Obligor) that are accrued
and unpaid as of such time, as determined in accordance with GAAP; provided,
however, that (i) the Principal Balance shall be calculated without regard to
any allowance for bad debt except as required by Section 5 of the Accounting
Principles and (ii) with respect to Assigned Receivables from the PL Business
and Assigned Receivables of the VISA/Mastercard Portfolio, the amount of finance
charges accrued but not yet billed in respect thereof for the period from the
last billed date to the Effective Closing Date shall be computed in the manner
set forth in Section 9 of the Accounting Principles (determined as if the
Effective Closing Date was the end of a month, but prorated appropriately if the
Effective Closing Date is not the end of a month).
"Private Label Credit Card Master Trust Certificates" means the
Conseco Private Label Credit Card Master Note Trust 2001-A, Class C and Class D
notes.
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"Private Label Credit Card Master Trust Documents" means (a) the
Conseco Private Label Credit Card Master Note Trust Amended and Restated Trust
Agreement, dated as of May 1, 2001, between Mill Creek Bank Inc., as transferor,
Conseco Finance Credit Card Funding Corp., as transferor, and Wilmington Trust
Company, as owner trustee; (b) the Master Indenture, dated as of May 1, 2001, by
and among Conseco Private Label Credit Card Master Note Trust, trust, U.S. Bank,
indenture trustee and securities intermediary, and Mill Creek Bank Inc.,
servicer; (c) the Series 2001-A Indenture Supplement, dated as of May 1, 2001,
by and among Conseco Private Label Credit Card Master Note Trust, U.S. Bank,
indenture trustee and securities intermediary, and Mill Creek Bank Inc.,
servicer; (d) the Series 2001-B Indenture Supplement, dated as of May 1, 2001,
by and among Conseco Private Label Credit Card Master Note Trust, U.S. Bank,
indenture trustee and securities intermediary, and Mill Creek Bank Inc.,
servicer; (e) the Class A Note Purchase Agreement, dated as of May 31, 2001, by
and among Conseco Private Label Credit Card Master Note Trust, issuer, Mill
Creek Bank Inc., transferor and servicer, Conseco Finance Credit Card Funding
Corp., individually and as a transferor, Green Tree Retail Services Bank,
individually and as an account owner, the Class A Purchasers, the agents for the
Purchaser Groups, from time to time parties thereto, and Credit Suisse First
Boston, administrative agent for the Class A Purchasers, and as amended by the
amendments thereto dated as of May 30, 2002 and September 30, 2002 and (f)
Transfer and Servicing Agreement, dated as of May 1, 2001, among Mill Creek Bank
Inc., as a transferor and as servicer, Conseco Finance Credit Card Funding
Corp., as a transferor, and Conseco Private Label Credit Card Master Note Trust.
"Property" means all property and assets of whatever nature,
including, but not limited to, personal property, whether tangible or
intangible, and claims, rights and choses in action.
"Purchase Price" shall have the meaning set forth in Section
2.4(a) hereof.
"Purchased Assets" means:
(a) all assets, Properties, Contracts (other than the Excluded
Contracts) and rights that constitute a part of, or are used in or necessary
for, the operation of any of the PL Business, the HI Origination Platform or the
CL Origination Platform, of whatever kind and nature, real or personal, tangible
or intangible, owned, leased, licensed, used or held for use or license,
wherever located (excluding, in each case, (i) any Intellectual Property and
(ii) other intangible Properties, in each case that are provided pursuant to the
Servicing Agreements entered into pursuant to Section 5.27 hereof);
(b) the Assumed Agreements, including, without limitation, the
Assumed Receivables Contracts;
(c) the Assigned Receivables and the Assigned Contracts;
25
(d) those other assets, Properties, Contracts (other than the
Excluded Contracts) and rights set forth on Section 2.1(a) of the Business
Schedules;
(e) Backlog entered into in the ordinary course of business and
consistent with past practice of the CFC Parties;
(f) the Transferred Intellectual Property; and
(g) the Private Label Credit Card Master Trust Documents, the PL
Residual Assets, the PL Residual Certificates, the PL Servicing Rights and the
PL Servicing Contracts, in each case only if the CFC Parties have not repaid,
redeemed and discharged the obligations represented by the Trust and terminated
the Private Label Credit Card Master Trust Documents, and the owners of the
Receivables and other Property that is subject thereto have not transferred such
Receivables and other Property to Mill Creek Bank Inc. and/or Conseco Finance
Credit Card Funding Corp. prior to the Cut-Off Time; and
(h) subject to Section 5.31(a), the HI and CL Servicing Assets,
but shall not mean, in any case, any Specified Excluded Assets.
"Purchased Businesses" means the PL Business and the CL
Origination Platform and the HI Origination Platform.
"Purchased Businesses Schedule" means the schedule by that name
annexed to this Agreement.
"Reaffirmed Account" means any Loan or Receivable with respect to
which an Obligor has reaffirmed such Obligor's obligation with respect to such
indebtedness in connection with any proceeding under the Bankruptcy Code
(whether or not designated as such on the Final Data Tape).
"Receivables" means all financial obligations of any Obligor
arising under the Loans, including, but not limited to, any amounts owing for
the payment of goods and services, periodic finance charges (including unearned
and billed), Accrued and Unpaid Interest, late charges, charge-off amounts,
accounts without a balance, bank advances and any other fee, expense or charge
of any nature, kind and description whatsoever.
"Records" means books and records of the CFC Parties (wherever
located) relating to the Purchased Businesses, the Purchased Assets or the
Assumed Liabilities, including (a) customer and vendor lists, correspondence and
files, (b) advertising, marketing and sales materials, (c) personnel files of
the Transferred Employees, (d) all accounting books and records, financial
records and statements, subject to Section 2.3(b)(vii) and Section 5.25 hereof,
in each case specifically excluding any such other property that is listed as an
Excluded Asset.
"Registration Statements" means the registration statements in
respect of the Securitizations relating to the PL Business outstanding as of the
Cut-Off Time.
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"Regulators" shall have the meaning set forth in Section 5.24
hereof.
"REMIC" means a real estate mortgage investment conduit under
Section 860D(a) of the Tax Code or any other entity or arrangement that has
purported to be a real estate mortgage investment conduit that is a REMIC under
Section 860D(a) of the Tax Code irrespective of whether such entity or
arrangement qualifies as a REMIC under Section 860D(a) of the Tax Code.
"Residual Assets" means the interests, including equity, retained
or residual interests (whether certificated or uncertificated), issued or
created by or in connection with a Securitization (not related to the PL
Business) or similar transaction that the Company or any other CFC Party may
hold or own (whether or not pledged to another party or sold under a repurchase
agreement), and all other cash or other proceeds and all other rights arising
from certificated or uncertificated securities, interests or rights purchased or
retained by a CFC Party including, without limitation, rights to prepayment
penalties or charges, late fees, investment income, cash collateral accounts,
spread accounts, reserve accounts and similar accounts and other charges not
required to be paid to the servicer, and repurchase options or similar rights
arising in connection with a Securitization not relating to the PL Business.
Residual Assets shall exclude any PL Residual Assets.
"Restricted and Unrestricted Balance Sheets" means balance sheets
of the Company and its Subsidiaries setting forth the assets and liabilities of
Parties by entity and by whether the assets set forth therein are restricted or
unrestricted, as classified by the Company.
"Rule" or "Rules" means the Federal Rules of Bankruptcy Procedure.
"Sale Hearing" means the hearing of the Bankruptcy Court to
approve this Agreement and the transactions contemplated herein.
"Sale Order" means an order of the Bankruptcy Court substantially
in the form of Annex E hereto, together with such changes as shall be reasonably
satisfactory to the Company and the Buyer.
"Schedule of Assets Acquired and Liabilities Assumed" means with
respect to the first day of a month, a schedule of assets acquired and
liabilities assumed reflecting, without duplication, the assets and liabilities
that will be Specified Purchased Assets and the Assumed Liabilities, and the
respective amounts thereof as of 12:01 a.m. on such day, prepared as if (a) such
day is the Effective Closing Date and (b) in accordance with Section 5.39.
"Section 338 Election" shall have the meaning set forth in Section
5.1(i) hereof.
"Securities Act" means the Securities Act of 1933, as amended.
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"Securities Act Rules" means the rules and regulations promulgated
under the Securities Act.
"Securitization" means, generally, any transaction in which any
Person transferred loans, other debt instruments or interests therein to a
trust, either taking back or selling securities or other similar interests
evidencing the ownership of such trust.
"Securitization Documents" means each pooling and servicing
agreement, transfer agreement, sale and servicing agreement, indenture,
assignment agreement and each and every document to which a CFC Party is or was
a party in connection with any Securitization relating to the PL Business that
is outstanding as of Cut-Off Time.
"Securitized Loan" means any loan (or other debt instrument) (a)
pledged by an entity or arrangement as collateral for a debt instrument issued
by such entity, (b) treated as sold by or through an entity or arrangement in
the form of securities in a trust or a REMIC or (c) otherwise pledged,
transferred or sold in a Securitization related to the PL Business.
"Securitized Receivables" means all receivables and loans subject
to the Private Label Credit Card Master Trust Documents.
"Seller" shall have the meaning set forth in the Preamble.
"Seller Indemnified Parties" shall have the meaning set forth in
Section 9.2(b) hereof.
"Sellers" shall have the meaning set forth in the Recitals.
"Selling Subsidiaries" shall have the meaning set forth in the
Recitals.
"Servicing" means the performance of all customer and merchant
services and functions, including without limitation, management and servicing
of inbound calls, backline functions, managing correspondence, disputes, fraud
claims, accounting services, payment settlements, payment processing and
management of collections.
"Servicing Agreements" shall have the meaning set forth in Section
5.27 hereof.
"Settlement Interest" means the amount of accrued interest on the
Purchase Price (subject to Section 2.4(b)(ii) hereof) calculated at the
Settlement Rate, as in effect on the date prior to the Funding Date for the
period from the Effective Closing Date to, but not including, the Funding Date
(calculated on the basis of the actual number of days elapsed in a year of 365
or 366 days, as the case may be).
"Settlement Rate" means, on any date, the "Target" federal funds
rate reported in the "Money Rates" section of the eastern edition of The Wall
Street Journal published for such date. In the event The Wall Street Journal
ceases publication of the federal funds rate or fails on any particular date to
publish the federal funds rate, the
28
federal funds rate shall refer to the rate for the last transaction in overnight
federal funds arranged prior to such date by a financial institution mutually
agreed upon by the Buyer and the Company.
"Shared Service Employees" shall have the meaning set forth in
Section 5.12(a)(ii) hereof.
"Shortfall Amount" means the amount by which the Net NAV is less
than the Base Amount.
"Shares" shall have the meaning set forth in Section 2.1(b)
hereof.
"Specified Excluded Assets" means (i) the Excluded Contracts; (ii)
the Properties, Contracts and rights, if any, set forth in Section 2.1(c) of the
applicable Business Schedules; (iii) the outstanding capital stock of Green Tree
Retail Services Bank and Mill Creek Bank Inc.; (iv) any Properties of Green Tree
Retail Services Bank; (v) any deferred tax assets or other tax assets; (vi) any
motor vehicles owned or leased by any CFC Party; (vii) any Properties subject to
a Securitization (other than any Property transferred to the Trust); (viii) any
Securitized Loan and any Residual Assets (other than the PL Residual Assets);
(ix) any Consumer Loans or Home Improvement Loans (other than HI and CL Mill
Creek Bank Loans); (x) any HELOC Loans; (xi) any Home Equity Loans; (xii) any
Properties constituting part of the MH Business of the CFC Parties; (xiii) any
cash or cash equivalents of any Person other than Mill Creek Bank Inc. (other
than the PL Residual Assets); (xiv) any real Property owned by any CFC Parties,
including, without limitation, any Owned Real Property; (xv) any Contracts that
after giving effect to the transactions specifically contemplated hereby are
between or among the Company's Affiliates (other than the Trust); (xvi) any
receivable due to or due from any of the Company's Affiliates (other than the
Trust) to any other Affiliate(s) of the Company (other than the Trust); (xvii)
any CRA; (xviii) all other claims, rights and courses of action which do not
relate to the ownership, use or operation of the Purchased Assets following the
Funding Date, it being understood and agreed that without limiting the
generality of the foregoing, claims, rights and causes of actions against the
holders of liens, pledges or security interests in the capital stock of Mill
Creek Bank Inc. constitute Specified Excluded Assets; and (xvix) any right of
any CFC party under this Agreement and the CFN Agreement.
"Specified Purchased Assets" means the following Purchased Assets:
cash and cash equivalents of Mill Creek Bank, the Assigned Receivables, the PL
Residual Assets (but only if the CFC Parties have not repaid, redeemed and
discharged the obligations represented by the Trust and terminated the Private
Label Credit Card Master Trust Documents, and the owners of the Receivables and
other property that is subject thereto have not transferred such Receivables and
other Property to Mill Creek Bank Inc. prior to the Cut-Off Time), fixed
tangible assets, capitalized intellectual property, repossessed property and
Prepaid Expenses.
"State Banking Authority" shall have the meaning set forth in
Section 3.3 hereof.
29
"Statement" shall have the meaning set forth in Section 5.1(c)(ii)
hereof.
"Stock Sale" shall have the meaning set forth in Section 2.1(b)
hereof.
"Straddle Period" shall mean any taxable year or period beginning
on or before and ending after the Funding Date.
"Subject Subsidiary" shall have the meaning set forth in Section
2.1(b) hereof.
"Subject Subsidiary Owner" shall have the meaning set forth in
Section 2.1(b)(iii) hereof.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, limited liability company, association or other business entity of
which (a) if a corporation, a majority of the total voting power of shares of
stock entitled (without regard to the occurrence of any contingency) to vote in
the election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof, or (b) if a partnership,
limited liability company, association or other business entity, a majority of
the partnership or other similar ownership interest thereof is at the time owned
or controlled, directly or indirectly, by any Person or one or more Subsidiaries
of that Person or a combination thereof. For purposes hereof, a Person or
Persons shall be deemed to have a majority ownership interest in a partnership,
limited liability company, association or other business entity if such Person
or Persons shall be allocated a majority of partnership, limited liability
company, association or other business entity gains or losses or shall be or
control the managing director or general partner of such partnership, limited
liability company, association or other business entity.
"Tax" or "Taxes" means (a) any federal, state, local or foreign
income, gross receipts, capital gains, franchise, alternative or add-on minimum,
excess inclusion income, prohibited transaction, estimated, sales, use, goods
and services, transfer, registration, value added, excise, natural resources,
severance, stamp, occupation, premium, windfall profit, environmental, customs,
duties, real property, personal property, capital stock, social security,
unemployment, employment, disability, payroll, license, employee or other
withholding, contribution or other tax, of any kind whatsoever, including any
interest, penalties or additions to tax or additional amounts in respect of the
foregoing; (b) any Liability for Taxes as a transferee under a Contract
indemnity; (c) any Liability for Taxes under Treasury Regulation ss. 1.1502-6 or
similar Law applicable in the case of a group that files on a consolidated,
combined or unitary basis; and (d) any applicable Liability for Taxes due to
application of bulk sale laws.
"Tax Code" means the Internal Revenue Code of 1986 as amended from
time to time.
30
"Tax Proceeding" means any claim, examination, suit, action,
negotiation or proceeding, or other proposed change or adjustment by any Tax
authority involving Liability for Taxes.
"Tax Return" means any return, declaration, report, claim for
refund, information return, amended return or other documents (including any
related or supporting schedules, statements or information) filed or required to
be filed in connection with the determination, assessment or collection of Taxes
of any Person or the administration of any laws, regulations or administrative
requirements relating to any Taxes.
"Taxable Period" shall have the meaning set forth in Section
5.1(b)(iii) hereof.
"Third Party" means any Person other than (a) the Parent, the
Company and its Subsidiaries or any of their Affiliates and (b) the Buyer and
its Affiliates.
"Third Party Claim" means any claim or the commencement of any
claim, action or proceeding made or brought by a Third Party.
"Trademark Assignment Agreement" means the assignment agreement to
be executed by the Parties on or prior to the Funding Date, to be effective as
of the Cut-Off Time, in customary form and substance as reasonably agreed by the
Parties, that effects the assignment from the Sellers to the Buyer of the
Transferred Trademarks.
"Transaction Documents" means this Agreement and any other
agreement, certificate, consent, waiver, document or instrument to be executed
and/or delivered at Funding, including, but not limited to, those agreements,
certificates, consents, waivers, documents and other instruments required to be
delivered by or on behalf of a Person under ARTICLE 6 or ARTICLE 7 herein, as
applicable.
"Transferred Employees" shall have the meaning set forth in
Section 5.12(b) hereof.
"Transferred Intellectual Property" means the Transferred
Trademarks, Other Transferred Intellectual Property, and the Transferred
Intellectual Property Agreements, together with all income, royalties, damages,
and payments due or payable as of the Cut-Off Time or thereafter (including,
without limitation, damages and payments for past or future infringements or
misappropriations thereof), the right to xxx and recover for past infringements
or misappropriations thereof, any and all corresponding rights that, now or
hereafter, may be secured throughout the world.
"Transferred Intellectual Property Agreements" means all licenses
and other agreements that relate to any Intellectual Property, used or held for
use exclusively in the Purchased Businesses as operated by the CFC Parties prior
to the Cut-Off Time, including, without limitation, the agreements required to
be set forth in Attachment D to Section 3.12 of the Business Schedules,
Attachment A to Section 2.1(a) of the Business Schedules and Section 6.13 of the
Business Schedules.
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"Transferred Trademarks" means all trademarks, service marks,
trade dress rights, trade names, corporate names, logos and slogans (whether
registered or unregistered), and all registrations and applications related to
any of the foregoing, owned or held by a Seller or any Affiliate of a Seller
exclusively for use in the Purchased Businesses as operated by the CFC Parties
prior to the Cut-Off Time, including, without limitation, the marks required to
be set forth in Attachment B to Section 3.12 of the Business Schedules together
with the goodwill associated therewith.
"Treasury Regulation" means a regulation promulgated by the
Treasury Department under the Tax Code, including a temporary regulation and a
proposed regulation to the extent that, by reason of their actual or proposed
effective date, would or could, as of the date of any determination or opinion
as to the Tax consequences of any action or proposed action or transaction, be
applied to the Purchased Businesses and Purchased Assets.
"Trust" means the Conseco Private Label Credit Card Master Note
Trust.
"U.S. Bank" means U.S. Bank National Association, a national
banking association, and its successors.
"VISA/MasterCard Portfolio" means Receivables, Loans, account
relationship and all documentation relating thereto, including, without
limitation, Charged-Off Accounts and zero balance accounts, owned by Mill Creek
Bank Inc. in connection with credit cards bearing the trademark/name Visa or
Mastercard, either alone or in connection with other trademarks/names.
"WARN Act" means the Workers Adjustment and Retraining
Notification Act and any state and local "plant closing" or "mass layoff" law.
"Welfare Benefits" shall have the meaning set forth in Section
5.12(i) hereof.
ARTICLE 2
PURCHASE AND SALE OF ASSETS
2.1 Purchased Assets.
(a) Purchase and Sale of Assets. On the terms and subject to the
conditions contained in this Agreement, on the Funding Date, effective as of the
Cut-Off Time, the Company will sell, convey, transfer, assign and deliver to (or
cause to be sold, conveyed, transferred, assigned and delivered by the relevant
Selling Subsidiaries owning, leasing or having the right to use the Purchased
Assets) the Buyer, and the Buyer will purchase and take assignment and delivery
from the Sellers of good and marketable title to the Purchased Assets in
existence at the Cut-Off Time, free and clear of any Lien of any kind whatsoever
other than a Permitted Lien. The Purchased Assets will include any additions to
such assets, properties, Contracts and rights that constitute the Purchased
Assets as of the date hereof that have arisen in the ordinary
32
course of business and consistent with the past practices of the CFC Parties
between the date hereof and the Cut-Off Time (the "Pre-Cut-Off Period"), but
specifically excluding (x) the Specified Excluded Assets and (y) subject to
compliance with Section 5.5(b), any deletions, dispositions or expirations of
such assets, properties, Contracts and rights during the Pre-Cut-Off Period, in
all cases, in the ordinary course of business consistent with the past practice
of the CFC Parties.
(b) Stock Sale. At any time prior to the Effective Closing Date,
the Buyer may, with the consent of the Company (not to be unreasonably
withheld), elect to acquire the Purchased Assets, in part, through the purchase
of all of the outstanding capital stock (the "Shares") of one or more of the
Selling Subsidiaries (a "Subject Subsidiary") that own, lease or have the right
to use Purchased Assets ("Stock Sale"), it being agreed that, with respect to
any Subject Subsidiary, such consent of the Company may not be withheld if (i)
the sale of the Shares of such Subject Subsidiary would not result in the CFC
Parties incurring any net incremental Liabilities (which are not Assumed
Liabilities), as compared to a sale of the Purchased Assets owned by such
Subject Subsidiary, as determined in good faith by the Parties ("Incremental
Liabilities"), or (ii) the Buyer, at its option, elects to pay or hold the
Company harmless (under arrangements reasonably satisfactory to the Company)
from such Incremental Liabilities. In connection with any Stock Sale, the
Company shall cause any such Subject Subsidiary to become a Filing Company
Subsidiary and shall take all reasonable actions to obtain an order from the
Bankruptcy Court pursuant to Federal Rule of Bankruptcy Procedure 3003(c)
establishing a bar date for prepetition claims and shall diligently prosecute
objections to such claims, as appropriate, in order to ensure that the
Liabilities of such Subject Subsidiary consist only of those Liabilities that
would be Assumed Liabilities if the Buyer would have acquired the Purchased
Assets of such Subject Subsidiary free and clear of all Liens other than
Permitted Liens. In the event the Buyer elects to acquire a portion of the
Purchased Assets through a Stock Sale, then the Shares which are the subject of
the Stock Sale shall be deemed Purchased Assets hereunder. If the Buyer elects
one or more Stock Sales:
(i) prior to the Funding Date, effective as of the Cut-Off
Time, the Company shall unconditionally assume, or shall cause one
of its Affiliates (other than another Subject Subsidiary) to
unconditionally assume all Liabilities of the Subject Subsidiary
(other than the Assumed Liabilities) in a manner and in form and
substance reasonably satisfactory to the Buyer and the Company;
(ii) prior to the Funding Date, effective as of the Cut-Off
Time, the Company shall, or shall cause the Subject Subsidiary to,
transfer any Excluded Assets of the Subject Subsidiary to the
Company or one of its Affiliates (other than another Subject
Subsidiary) in a manner and in form and substance reasonably
satisfactory to the Buyer and the Company; and
(iii) the Company shall, or shall cause its Subsidiary which
directly owns the Shares (the "Subject Subsidiary Owner") to,
sell, assign, transfer, convey and deliver the Shares, free and
clear of all Liens, to the
33
Buyer, and the Buyer shall purchase and accept the Shares, at the
Funding, effective as of the Cut-Off Time, (in which case, the
Subject Subsidiary Owner shall be deemed a Selling Subsidiary
hereunder, and the Company shall cause such Subject Subsidiary
Owner to execute a counterpart signature page hereto).
Notwithstanding the foregoing, this Section 2.1(b) shall not apply
to Mill Creek Bank Inc. or Green Tree Retail Services Bank, and the Buyer hereby
waives any and all of its rights under this Section 2.1(b) except to the extent
this Section 2.1(b) may apply to any Seller's right, title to, or interest in
the Trust.
(c) Excluded Assets. No Seller shall sell, assign, transfer or
convey to the Buyer, nor shall the Buyer purchase, any Seller's right, title or
interest in and to any Excluded Asset.
2.2 Liabilities.
(a) Assumed Liabilities.
(i) Subject to the conditions set forth herein, the Buyer
will assume at the Funding, effective as of the Cut-Off Time, and
will pay, perform and discharge in accordance with their terms, as
and when due, only those liabilities specifically identified in
Section 2.2(a) of the Business Schedules (the "Assumed
Liabilities").
(ii) Notwithstanding anything to the contrary herein, the
Sellers shall pay, perform and discharge the Assumed Liabilities
from the Cut-Off Time through the Funding Date, in accordance with
the terms of such Assumed Liabilities.
(iii) On the Funding Date, the Buyer shall reimburse the
Sellers, without duplication, for (A) the amounts advanced under
any Loan that is a Purchased Asset during the period commencing as
of the Cut-Off Time and ending on the Funding Date, (B) the
amounts advanced by any Seller with respect to the Backlog, in
accordance with the terms of such Backlog during the period
commencing as of the Cut-Off Time and ending on the Funding Date,
(C) the amount of Employment Costs paid by the Sellers and other
CFC Parties and attributable to (x) Business Employees and (y)
Shared Service Employees to whom the Buyer offers employment in
accordance with Section 5.12(a)(ii) hereof for the period
commencing at the Cut-Off Time and ending on the Funding Date, and
(D) the amount of any payment made by the Sellers with respect of
the Assumed Liabilities in accordance with their terms during the
period commencing as of the Cut-Off Time and ending on the Funding
Date; provided, however, the Buyer's obligations hereunder shall
be offset to the extent that the Sellers have failed to comply
with Sections 2.5, 5.4 and 5.5 hereof that relate to cash or cash
equivalents, the sale, transfer or assignment of any Purchased
34
Asset or the incurrence or discharge of Liabilities; provided,
further, that in each case the amount of such reimbursements shall
be reduced by any amounts paid by Mill Creek Bank Inc. in
accordance with Section 5.5(a)(xix)(C).
(b) Excluded Liabilities. The Sellers shall retain and pay,
perform and discharge in accordance with their terms (as the same may be
modified in connection with the Chapter 11 Case or otherwise), as and when due,
all Liabilities of the CFC Parties or the Parent (arising before, on or after
the Cut-Off Time) that are not expressly Assumed Liabilities (the "Excluded
Liabilities"). The Excluded Liabilities include, but are not limited to, the
following Liabilities of the CFC Parties or the Parent (the "Specified Excluded
Liabilities")
(i) arising from, related to or in connection with any of the
Parent's or the Sellers' transaction expenses;
(ii) except for the Liabilities specifically set forth in
Section 2.2(a) of the applicable Business Schedules, for (A) any
indebtedness or any other Liability of the CFC Parties or the
Parent, including intercompany indebtedness between or among their
respective Affiliates or (B) any Liabilities arising from or in
connection with any Securitization or Residual Assets (other than
Liabilities with respect to PL Residual Assets arising after the
Cut-Off Time) or any Guarantees of the CFC Parties or the Parent,
including intercompany Guarantees between Affiliates and any
Guarantees given to any holders of interests in a Securitization;
(iii) for any Taxes, whether or not relating to the Purchased
Businesses, the Purchased Assets or the transactions contemplated
hereby, whether before, on or after the Funding Date, other than
Taxes of any Subject Subsidiary (or a Subsidiary of a Subject
Subsidiary after the Funding Date) for any Post-Funding Tax Period
solely to the extent the Buyer purchases the Shares of such
Subject Subsidiary in a Stock Sale, provided, that Taxes of a
Subject Subsidiary (or Subsidiary thereof) for a Post-Funding Tax
Period shall not include any Liability of Parent or any Affiliate
of the Company that a Subject Subsidiary or Subsidiary thereof is
required to pay by virtue of Treasury Regulation Section 1.1502-6
or comparable provision of state, local or foreign Law;
(iv) attributable to the Purchased Assets or the operation of
the Purchased Businesses for all periods up to and including the
Cut-Off Time, including, without limitation, any Liabilities for
any default or breach, or for any event, occurrence, condition or
act which, with the giving of notice, the passage of time or both,
would result in a default or breach, of any of the Assumed
Agreements, to the extent such default or breach or event,
occurrence, condition or act existed on or prior to the Cut-Off
Time;
35
(v) to indemnify any Person by reason of the fact that such
Person was a director or officer of any of the CFC Parties or was
serving at the request of the CFC Parties as a partner, trustee,
director, officer, employee or agent of another Person;
(vi) with respect to any principal, partner, employee,
officer, director, consultant, independent contractor, agent or
Affiliate of the CFC Parties or the Parent (other than Liabilities
assumed by the Buyer under Section 5.12 hereof and the Assumed
Retention Agreement) arising out of employment, compensation,
severance, change-of-control, stay-pay, sale bonus, retention
bonus or other special compensation or golden parachute
agreements, plans or arrangements, including any such Liability
incurred in connection with the execution and performance of this
Agreement or any other Transaction Documents and the consummation
of the transactions contemplated hereby and not expressly assumed
herein, including any Employee Agreement.
(vii) arising under, out of, with respect to or in connection
with any Employee Benefit Plan and any other employee benefit plan
(within the meaning of Section 3(3) of ERISA) maintained or
sponsored by any Seller or any ERISA Affiliate and not expressly
assumed by the Buyer herein;
(viii) arising out of or resulting from any noncompliance
with or violation of any Laws (including, without limitation, any
securities Laws or Environmental Laws);
(ix) arising out of any occurrences of bodily injury,
property damage or personal injury which take place on or prior to
the Cut-Off Time;
(x) arising out of, related to, in connection with or with
respect to any deferred purchase price payment obligations or
non-competition payment obligations associated with (A) any
acquisition prior to the Cut-Off Time of any business, Subsidiary,
security or assets of any Person or (B) any disposition of any
business, Subsidiary, security or assets of any Person;
(xi) to indemnify any Third Party in connection with the
disposition of any subsidiary, business, properties or assets or
operations of any Person;
(xii) arising from, in connection with or with respect to
such Person's direct or indirect ownership (beneficial or
otherwise) at any time of any capital stock of or other beneficial
interest in (or any right to acquire such stock of or interest in)
any of the CFC Parties;
36
(xiii) arising from, related to or in connection with any
cure or other amount payable with respect to the assignment of any
contractual obligation to the Buyer hereunder;
(xiv) arising from, related to, in connection with or with
respect to any Excluded Asset;
(xv) under this Agreement;
(xvi) for infringement or misappropriation of any
intellectual property rights of a third party arising from the
operation of the Purchased Businesses on or before the Cut-Off
Time;
(xvii) relating to any claim, dispute, litigation or
arbitration asserted or threatened or governmental proceeding or
investigation instituted or threatened, arising out of any act or
omission of the CFC Parties or the Parent or any of their
Affiliates on or prior to the Cut-Off Time, or arising out of the
conduct, on or prior to the Cut-Off Time, of the Purchased
Businesses or any other businesses of CFC Parties (including,
without limitation, any claim, dispute, litigation or arbitration
with respect to or in connection with unpaid wages or Fair Labor
Standards Act classification and any other litigation and
arbitration listed in Section 3.18 of the Business Schedules);
(xviii) arising out of (A) any noncompliance with or
violation of any Environmental Law on or before the Cut-Off Time,
(B) any existing environmental condition (whether or not relating
to any noncompliance) of the Purchased Assets, or (C) any release
of Hazardous Substances on or before the Cut-Off Time, in each
case, regardless of whether any of the foregoing was known to or
disclosed to the Parties or any of their Affiliates;
(xix) under any insurance coverage, self-insurance or
retention program provided to customers in connection with the
Purchased Businesses;
(xx) arising from, related to or in connection with Assumed
Leases arising or accruing on or prior to the Cut-Off Time and/or
due to a breach by the Sellers or any of their Subsidiaries under
any contractual obligation, except to the extent relating to any
Permitted Lien;
(xxi) to any equity holder or former equity holder of the CFC
Parties;
(xxii) relating to any repurchase, assumption or similar
Liability under any Contract pursuant to which loans were sold to
a Third Party or pursuant to any Securitization not relating to
the PL Business;
37
(xxiii) that are PL Excluded Servicing Liabilities;
(xxiv) under the Honda Purchase Agreement; or
(xxv) assumed by the Company or one of its Affiliates
pursuant to Section 2.l(b)(i).
The Buyer shall not assume or otherwise become liable for any
Excluded Liabilities (whether or not such Excluded Liability is specifically set
forth above). Nothing contained in this Agreement shall be construed to imply
that the Buyer will assume the PL Excluded Servicing Liabilities or any
Guarantees given to any holders of interests in a Securitization.
2.3 Funding Transactions.
(a) Closing. Subject to the satisfaction or waiver of the
conditions contained in this Agreement, the closing of the transactions
contemplated by this Agreement (the "Funding") shall take place at the offices
of Xxxxxxxx & Xxxxx, 000 Xxxx Xxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000, at 10:00
a.m., on the Funding Date, or at such other place or time and on such other date
as the Parties may agree to in writing. The Funding shall be deemed effective as
of the Cut-Off Time.
(b) Funding Transactions. Subject to the conditions set forth in
this Agreement, the Parties shall consummate the following transactions on the
Funding Date:
(i) The Sellers shall convey all of the Purchased Assets to
the Buyer in accordance with Section 2.1 and shall deliver to the
Buyer such appropriately executed instruments of sale, transfer,
conveyance and delivery, deeds, assignments, certificates duly
registered in the Buyer's name representing the PL Residual Assets
(to the extent such PL Residual Assets are certificated), vehicle
titles, transfer Tax declarations, and all other instruments of
conveyance which are necessary or desirable to effect transfer to
the Buyer of good and marketable title to the Purchased Assets and
which are in form and substance reasonably satisfactory to the
Buyer and the Sellers.
(ii) (A) On and prior to the Funding Date, the Sellers
shall, with respect to all Purchased Assets that
are owned of record by any Person other than the
Company or a Selling Subsidiary (including, without
limitation, the PL Residual Assets), exercise all
rights, and take all such other actions, as may be
necessary to effect the conveyance of the Purchased
Assets to the Buyer as of the Cut-Off Time. If any
Purchased Assets are owned of record or
beneficially by any CFC Party other than the
Company or a Selling Subsidiary, then the Company
shall cause such CFC
38
Party to become a party to this Agreement and
execute a counterpart signature page to this
Agreement as a Selling Subsidiary hereunder;
provided, however, that neither the Parent nor any
other Affiliate of the Company that is not a
Subsidiary of the Company shall be required to
become a party to this Agreement; provided,
further, that on or prior to the Funding the Parent
and such Affiliates that own (legally or
beneficially) any of the Purchased Assets shall
have entered into an agreement or agreements with
the Buyer in form and substance reasonably
satisfactory to the Parent or such Affiliates and
the Buyer with respect to the sale of the Purchased
Assets owned by the Parent and such Affiliates to
the Buyer and, with respect to the Parent and any
such Affiliate that is a debtor-in-possession, a
Final Order shall have been entered by the
Bankruptcy Court approving the terms and conditions
of such agreement or agreements on or prior to the
Funding Date. Such agreements shall incorporate by
reference the representations and warranties set
forth in this Agreement to the extent such
representations and warranties are applicable to
the parties to such agreements and the Properties
to be transferred and assigned to the Buyer
pursuant to such agreements and contain an
acknowledgement by the Parent and such other
Affiliates that the Parent and such Affiliates have
conducted the Purchased Businesses and operated the
Purchased Assets owned by them in accordance with
the covenants set forth in this Agreement. For the
avoidance of doubt such agreements shall be deemed
"Transaction Documents".
(B) Subject to Section 2.4(b)(ii), 2.4(e), 2.4(f)
and Section 5.8, the Buyer shall deliver to the
Company or its designee, by wire transfer of
immediately available funds to an account or
accounts designated not less than three Business
Days before the Funding Date by the Sellers the
amount equal to the Purchase Price.
(iii) The Buyer shall assume the Assumed Liabilities as set
forth in Section 2.2(a) hereof and shall deliver to the Sellers
such appropriately executed assumption agreements and all other
instruments which are necessary or desirable to effect the
assumption by the Buyer of the Assumed Liabilities.
39
(iv) Each Seller and the Buyer shall deliver all other
Transaction Documents required to be delivered by or on behalf of
such Person, as applicable, which Transaction Documents shall be
in form and substance reasonably satisfactory to the Buyer and the
Sellers.
(v) (A) The Company shall deliver, or cause to be
delivered, at the Funding, to the Buyer or to such
Person or Persons as the Buyer may designate
(including, without limitation, any custodian
appointed by the Buyer to hold such items) all
documentation and other items pertaining to the
Assigned Receivables and, to the extent in the
possession of the Sellers, Securitized Receivables,
including, without limitation, original notes (with
appropriate endorsements), applications, account
agreements, installment contracts, original
guarantees, original mortgages and originals of all
other security agreements and all assignments,
assumptions, modifications, consolidations and
extensions thereof, UCC financing statements or
such other evidence of perfection of a security
interest in the applicable collateral in the
relevant jurisdictions, powers of attorney,
original certificates of title, all evidence of
title insurance policies, hazard or flood insurance
policies, loan applications, closing statements,
credit reports, appraisals, surveys, disclosure
statements, sales contracts, tax and insurance
receipts, verification statements delivered by the
borrowers, and all other documentation related to
the loan files associated with the applicable
Assigned Receivables and Securitized Receivables,
in each case duly executed by all parties thereto
and notarized as applicable. If, after the Funding
Date, a CFC Party (or any other Person acting on
its behalf) comes into possession of any additional
documentation, books and records relating to the
Assigned Receivables and Securitized Receivables,
such additional documentation shall be deemed to
have been received and held in trust for the
benefit of the Buyer and promptly shall be
delivered to the Buyer or such other Person or
Persons as the Buyer may direct. Effective as of
the Cut-Off Time, the Company shall (i) have caused
to be terminated any existing custodial or other
similar arrangement under which any of the
documentation relating to the Assigned Receivables
is held and shall obtain
40
and deliver to the Buyer appropriate releases in
connection therewith and (ii) execute and deliver,
and shall cause other CFC Parties to execute and
deliver, to the Buyer (or its designees) on the
Funding Date powers of attorney in form and
substance reasonably satisfactory to the Buyer
giving the Buyer or such designees full power and
authority to execute any further agreements,
assignments, endorsements or other documentation as
may be deemed necessary by the Buyer to allow the
Buyer (and its designees) to exercise full rights
of ownership with respect to the Assigned
Receivables. The Company shall fully cooperate with
the Buyer from and after the Funding to take all
other actions necessary or appropriate to effect
the transfer of, and vest in the Buyer, all right,
title and interest in and to the Assigned
Receivables.
(B) The Company shall execute and deliver, and
shall cause other CFC Parties to execute and
deliver, on the Funding Date powers of attorney in
form and substance reasonably satisfactory to the
Buyer giving the Buyer or its designees full power
and authority to execute any further agreements,
assignments, endorsements or other documentation as
may be deemed necessary by the Buyer to allow the
Buyer (and its designees) to exercise full rights
of ownership with respect to the Purchased Assets
(other than the Assigned Receivables). The Company
shall fully cooperate with the Buyer from and after
the Funding to take all other actions necessary or
appropriate to effect the transfer of, and vest in
the Buyer or its designees, all right, title and
interest in and to the Purchased Assets (other than
the Assigned Receivables).
(C) The Sellers shall use commercially reasonable
efforts to deliver to the Buyer at the Funding
amendments to the Active Merchant Agreements duly
executed by all parties thereto to ensure that
after the Cut-Off Time no Bankruptcy Event or
Change of Control Event of any Seller or any of its
Affiliates may constitute an event of default under
such Active Merchant Agreements.
(vi) The Sellers shall deliver all the Records or copies
thereof in the Sellers' possession to the Buyer which Records
relate primarily to the
41
Purchased Businesses, the Purchased Assets or the Assumed
Liabilities (including, without limitation, true, correct and
complete copies of all closing documents relating to the Private
Label Credit Card Master Trust, including but not limited to the
Conseco Private Label Credit Card Master Note 2001-A transaction).
2.4 Purchase Price.
(a) Purchase Price. The aggregate price for the Purchased Assets
(the "Purchase Price") shall be equal to the sum of (i) the Net Assets Value and
(ii) the Bid Adjustment Amount.
(b) (i) If the Net NAV is less than the Base Amount, then in
addition to the amounts payable pursuant to Section 2.4(a) hereof, the Buyer
shall pay to the Company an amount equal to the sum of (a) 0% of the first $20
million of the Shortfall Amount, (b) 100% of the next $10 million of the
Shortfall Amount (if and to the extent of such Shortfall Amount), (c) 50% of
next $20 million of the Shortfall Amount (if and to the extent of such Shortfall
Amount), and (d) subject to Section 8.1(j) hereof, 100% of the remaining amount
of the Shortfall Amount (if and to the extent of such Shortfall Amount).
(ii) If the Net NAV is greater than the Base Amount, then the
amounts payable by the Buyer pursuant to Section 2.4(a) hereof
shall be reduced by the sum of (a) 0% of up to the first $5
million of the Overvalue Amount and (b) 50% of the remaining
Overvalue Amount.
(c) Settlement Interest. At the Funding, the Buyer shall pay to
the Company by wire transfer in immediately available funds the Settlement
Interest.
(d) All amounts payable pursuant to Sections 2.4(b)(i) and 2.4(c)
hereof shall be payable at Funding by wire transfer in immediately available
funds to an account or accounts designated in writing by the recipient thereof
to the other party three Business Days prior to the Funding Date.
(e) Notwithstanding anything in this Agreement to the contrary, in
the event that the Buyer and the Company have not been able to resolve any and
all disputes with respect to the draft Schedule of Assets Acquired and
Liabilities Assumed that was prepared as of the Cut-Off Time and neither the
Buyer, on the one hand, nor the Sellers, on the other hand, have exercised their
rights, if any, to terminate this Agreement pursuant to Section 8.1(j), then the
Buyer will make the payments or reduce the payments required to be made by it,
as the case may be, by subsection (b) on the basis of the amount of the Net NAV
not in dispute. Once all such disputes have been resolved (either by the Auditor
in accordance with Section 5.39 or by the mutual agreement of the Buyer and the
Company), then:
(i) the Buyer shall make the payments required to be made by
it by Section 2.3(b)(ii)(B) hereof after giving effect to any
payments previously made by it pursuant to such section, so that
the aggregate
42
amounts paid by the Buyer pursuant to such section equal those
amounts that would have been payable by the Buyer had the final
amount of the Net Assets Value been known on the Funding Date;
(ii) if there is a Shortfall Amount at such time that is less
than the Shortfall Amount used for the calculation of the amounts
due on the Funding Date (or an Overvalue Amount at such time), the
Buyer will make the payments required to be made by it by
subsection (b)(i) hereof (or in case of an Overvalue Amount, by
subsection (b)(ii)), after giving effect to any payments
previously made by it pursuant to such subsection so that the
aggregate amounts paid by the Buyer pursuant to such subsection
(b)(i) (or (b)(ii)) equals the amounts that would have been
payable by it had the final amount of the Shortfall Amount (or
Overvalue Amount, as the case may be) been known on the Funding
Date; and
(iii) if there is a final Overvalue Amount that is greater
than the Overvalue Amount used for the calculation of the amounts
due on the Funding Date, the Buyer shall pay to the Company an
amount (if any) that after giving effect to any payments made
pursuant to this Section 2.4 (including, without limitation
payment of the Purchase Price) previously made by the Buyer, the
Company shall have received the amounts that it would have
received had the final amount of the Overvalue Amount been known
on the Funding Date (i.e., 100% of up to the first $5 million of
the Overvalue Amount and 50% of the remaining Overvalue Amount).
(f) The parties hereto agree that the Base Amount shall be reduced
by the amount of Allowed Operating Expenses paid by Mill Creek Bank Inc. during
the Pre-Cut-Off Period.
2.5 Post-Effective Time Amounts Received and Paid; Assignment of New
Loans; Securitized Receivables.
(a) All amounts which are received by the Company or any of its
Affiliates in respect of the Purchased Assets which are properly allocable to
periods after the Cut-Off Time, shall be received by such Person as agent, in
trust for and on behalf of the Buyer, and at the Funding and following the
Funding, on a weekly basis, the Sellers shall transfer, or cause to be
transferred, by wire transfer of immediately available funds, and remit (or
cause to be remitted) to the Buyer all such amounts received by or paid to the
Company or any of its Affiliates as of such date and shall provide the Buyer
information as to the nature and source of such payments, including any invoice
related thereto. All amounts included in the Excluded Assets (or which are paid
in respect of the Excluded Assets) and received by the Buyer following the
Funding Date shall be received by the Buyer as agent, in trust for and on behalf
of the applicable Seller, and the Buyer shall pay or cause to be paid all such
amounts over to such Seller and shall provide such Seller information as to the
nature and source of such payments, including any invoice relating thereto.
43
(b) Subject to Section 2.8 hereof, at the Funding, the Sellers
shall transfer and assign to the Buyer good and marketable title to all
Properties acquired, originated or entered into by the Sellers in accordance
with this Agreement during the period from the Cut-Off Time through the Funding
Date that would have been Purchased Assets if acquired, originated or entered
into prior to the Cut-Off Time.
(c) At the Funding, the Sellers shall deliver to the Buyer by wire
transfer of immediately available funds the amount equal to all cash and cash
equivalents that constituted the Purchased Assets as of the Cut-Off Time.
(d) If the Trust is terminated after the Cut-Off Time, upon such
termination the Sellers shall deliver to the Buyer good and marketable title to
Receivables that were Securitized Receivables as of the Cut-Off Time (other than
the Excluded Receivables) free and clear of all Liens other than Permitted
Liens.
2.6 Sale of Assets. Upon the sale of the Purchased Assets, the Sellers
shall have no legal or equitable title or interest whatsoever in the Purchased
Assets or any collections thereunder, and the Sellers shall have no right to
redeem any Purchased Assets.
2.7 Assumption of Certain Leases and Contracts. The Sale Order shall
provide for the assumption by the Sellers and assignment to the Buyer, upon the
Funding but effective as of the Cut-Off Time, of the Assumed Agreements set
forth on a pleading submitted to the Bankruptcy Court on the following terms and
conditions:
(a) As of the Cut-Off Time, the Sellers (as applicable) shall
assign to the Buyer the Assumed Agreements. The Assumed Agreements shall be
identified by the date of the Assumed Agreements (if available), the other party
to the Contract and the address of such party, all included on an exhibit
attached to either the motion filed in connection with the Sale Order or a
motion for authority to assume and assign such Assumed Agreements. Such exhibit
shall set forth the amounts necessary to cure defaults under each of such
Assumed Agreements as determined by the Sellers based on the Sellers' Records.
(b) If there exists at the Cut-Off Time any default related to an
Assumed Agreement, the Sellers shall be responsible for any amounts needed to be
cured pursuant to Section 365(a) of the Bankruptcy Code as a condition to the
assumption and assignment of such Assumed Agreement. Upon the Funding but
effective as of the Cut-Off Time, the Sellers shall pay all cure amounts for the
Assumed Agreements.
(c) Except as set forth in Section 2.7(b) and subject to Section
2.2(a)(ii) hereof, the Buyer shall be responsible for all costs and expenses
(other than the costs and expenses that are the Excluded Liabilities), incurred
after the Cut-Off Time, that are determined by the Buyer to be necessary in
connection with providing adequate assurance of future performance with respect
to the Assumed Agreements.
44
2.8 Consents to Certain Assignments.
Without limiting the effect of ARTICLE 6, the Buyer and the
Sellers agree that there shall be excluded from the Purchased Assets any Assumed
Agreements that are not assignable or transferable pursuant to the Bankruptcy
Code or otherwise without the consent of any Person other than the Sellers or
any Affiliate of the Sellers, to the extent that such consent shall not have
been given prior to the Funding; provided, however, that the Sellers shall have
the continuing obligation (both before and after the Funding) to use all
commercially reasonable efforts (including, without limitation, prosecution of
appropriate motions pursuant to Section 365 of the Bankruptcy Code) to endeavor
to obtain all necessary consents to the assignment thereof and, upon obtaining
the requisite Third Party consents thereto, such Purchased Asset shall be
assigned to the Buyer at no cost free and clear of all Liens other than the
Permitted Liens; provided, further, that the Sellers shall not be required to
incur any unreasonable costs or make any material payment to any Third Party
(other than cure costs) to obtain any consent. With respect to any Assumed
Agreement which is not transferred at the Funding as contemplated by the
immediately preceding sentence, effective as of the Cut-Off Time, the Sellers
shall enter into arrangements reasonably requested by the Buyer designed to
provide the Buyer the full and exclusive benefits of such asset; provided,
however, that subject to Section 2.2(a)(ii) hereof, the Buyer assumes the duty
to perform the obligations relating to such Assumed Agreements accruing after
the Cut-Off Time. If and to the extent such arrangements cannot be made, the
Buyer shall have no obligation with respect to such Assumed Agreement. For the
avoidance of doubt, this Section 2.8 shall not be applicable to the PL Servicing
Rights.
2.9 Real Estate Taxes. Notwithstanding anything to the contrary herein,
the Sellers shall be responsible for payment of all real property Taxes for all
years prior to the year in which the Cut-Off Time occurs. The obligations of the
Parties under this Section 2.9 shall survive the Funding.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Except as set forth in the Business Schedules, which schedules will be
arranged in sections corresponding to the sections contained in this ARTICLE 3,
as a material inducement to the Buyer to enter into this Agreement, the Sellers
hereby represent and warrant to the Buyer the following:
3.1 Organization and Power.
(a) The Company is a Delaware corporation duly organized, validly
existing and in good standing under the Laws of Delaware. Mill Creek Bank Inc.
is an industrial loan corporation duly organized, validly existing and in good
standing under the Laws of Utah and the FDIC. Each of the Selling Subsidiaries
is listed in Section 3.1(a) of the Business Schedules and is duly organized,
validly existing and in good standing under the Laws of its state of
incorporation or organization (as
45
applicable). Each of the Sellers is qualified to do business and is in good
standing as a foreign corporation or entity (as applicable) in each jurisdiction
listed in Section 3.1(a) of the Business Schedules, which jurisdictions are the
only jurisdictions where the nature of the activities conducted by it or the
character of the property owned, leased or operated by it makes such
qualification necessary, except for any failure to be so qualified or in good
standing that has not had and could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect. The Sellers have
the requisite corporate or other entity power and authority to own and operate
the Purchased Assets and to carry on the Purchased Businesses as currently
conducted. The Company has delivered or otherwise made available to the Buyer
complete and correct copies of the Organizational Documents of the Sellers and
represents that such documents are in full force and effect and have not been
amended, restated supplemented or otherwise modified in any respect. None of the
Sellers is in default under or in violation of any provision of its
Organizational Documents.
(b) A complete and correct chart showing the Company and its
direct and indirect Subsidiaries is set forth in Section 3.1(b) of the
applicable Business Schedules.
3.2 Authorization of Transactions. Each Seller has all the requisite
corporate (or other similar organizational authority) power and authority to
execute and deliver, and to perform its obligations under this Agreement and the
other Transaction Documents to which such Seller is a party. The execution,
delivery and performance of this Agreement and the other Transaction Documents,
and the consummation of the transactions contemplated hereby and thereby to be
consummated by the Sellers, have been duly and validly authorized by all
necessary corporate or other entity action (as applicable) on the part of each
Seller. This Agreement has been, and each of the other Transaction Documents
after execution and delivery thereof at the Funding will have been, duly and
validly executed and delivered by each Seller, and, subject to any necessary
authorization from the Bankruptcy Court, this Agreement constitutes, and each of
the other Transaction Documents will constitute, such Seller's legal, valid and
binding obligation, enforceable against such Seller in accordance with its
terms.
3.3 Absence of Conflicts; Required Consents, Approvals and Filings. The
execution and delivery of this Agreement and the other Transaction Documents,
the compliance by the Sellers with the terms and provisions hereof and thereof
and the consummation of the transactions contemplated hereby and thereby by the
Sellers do not and will not (a) except as described in clause (d) below,
constitute a material breach or violation of or default under any Law,
governmental permit or license of the CFC Parties or to which any of the
foregoing is subject, in each case relating to the Purchased Businesses,
including but not limited to state usury laws, state laws requiring licenses to
engage in consumer lending, consumer finance, mortgage lending and the other
businesses of the Sellers, the U.S.A. Patriot Act, the Truth in Lending Act,
Laws prohibiting deceptive, misleading and unfair acts and practices, the
Xxxxx-Xxxxx-Xxxxxx Act, the Real Estate Settlement Procedures Act, the Home
Mortgage Disclosure Act, the Consumer Credit Protection Act, the Right to
Financial Privacy Act, the Equal Credit Opportunity Act, the Fair Credit
Reporting Act, the Homeowners Ownership and Equity
46
Protection Act, the Federal Trade Commission Act, the Fair Debt Collection
Practices Act and other Laws regulating lending (including any Laws of any
Governmental Authority) and all rules and regulations promulgated pursuant to
any of the foregoing (the "Finance Laws") which breach, violation or default
would prevent or materially delay the Sellers from being able to perform their
obligations under this Agreement and the other Transaction Documents to which
they are a party, (b) constitute a breach or violation of or default under the
Organizational Documents of the Sellers, (c) except as set forth in Section 3.3
of the Business Schedules, conflict with or result in a breach of any terms,
conditions or provisions of any agreement, Contract or commitment to which any
Seller is a party or to which any Seller or any of its Properties is subject
(including, without limitation, any Purchased Asset), which conflict or breach
would prevent or delay in any material respect the Sellers from being able to
perform their obligations under this Agreement and the other Transaction
Documents to which they are party, (d) require the affirmative consent, approval
of or filing with, any Governmental Authority, except for (i) the expiration or
earlier termination of the waiting period under the HSR Act, (ii) filings in
respect of, and approvals and authorizations of, any Governmental Authority
having jurisdiction over the consumer lending, banking, insurance or other
financial services businesses set forth in Section 3.3 of the Business
Schedules, (iii) filings by the Buyer listed in Section 4.4, (iv) the approval
required by a state banking regulatory authority under applicable state Law and
listed in Section 3.3 of the Business Schedules (the "State Banking Authority")
and (v) the approval of the Federal Deposit Insurance Corporation (the "FDIC")
or any other applicable bank regulatory authority under the Bank Merger Act and
the expiration of the required waiting period thereafter, or (e) with respect to
any Assumed Agreement, require the affirmative consent or approval of any Third
Party, except for consents and approvals set forth in Section 3.3 of the
Business Schedules and consents and approvals which failure to obtain,
individually or in the aggregate, would not adversely affect the conduct and
operation of any Purchased Business or any of the Purchased Assets in any
material respect.
3.4 Company Subsidiaries. All of the outstanding shares of capital
stock of, or other ownership interests in, each Selling Subsidiary, are owned by
the Company, directly or indirectly. All of the issued and outstanding shares
and interests (as applicable) of the Selling Subsidiaries and their Subsidiaries
have been duly authorized, are validly issued, fully paid and assessable, were
issued free of pre-emptive or similar rights and are held of record and
beneficially by the Persons indicated on Section 3.1(b) of the Business
Schedules. Other than this Agreement, the CFN Agreement and the Backup
Agreements, there are no outstanding or authorized options, warrants, purchase
rights, subscription rights, conversion rights, exchange rights or other
contracts or commitments that could require the Company, any of the Selling
Subsidiaries, or their respective Subsidiaries to issue, sell or otherwise cause
to become outstanding any of its capital stock or rights in respect thereof.
There are no outstanding or authorized stock appreciation, phantom stock, profit
participation or similar rights with respect to the Selling Subsidiaries and
their Subsidiaries.
3.5 Good Title. Other than the Assumed Leases and the Transferred
Intellectual Property, as to each Purchased Asset (including, without
limitation, the Private Label Credit Card Master Trust Certificates) a Seller
has good and valid title to,
47
and, subject to obtaining the consents and approvals and making the filings set
forth in Section 3.3 of the Business Schedules and Section 3.3 of this
Agreement, the power and authority to sell, transfer and assign to the Buyer the
Purchased Assets, free and clear of all Liens (other than Permitted Liens and
Liens which will be discharged by the Bankruptcy Court prior to the Cut-Off
Time).
3.6 Compliance with Laws; Permits.
(a) Each Seller has conducted and is conducting the Purchased
Businesses and has owned and operated the Purchased Assets in all material
respects in compliance with all applicable Laws, including, without limitation,
the Finance Laws. Except as set forth in Section 3.6(a) of the Business
Schedules, there are no material proceedings pending or, to the Knowledge of the
Sellers, threatened alleging any material violation of any such applicable Laws.
Except as set forth in Section 3.6(a) of the Business Schedules and except for
any violations previously rectified, no CFC Party has received since January 1,
2000, any written notice of violation of any Law from any Governmental Authority
relating to any of the Purchased Assets, the Purchased Business or the ownership
or operation thereof the consequence of which violation (including, without
limitation, any cure to be undertaken in connection therewith or penalty
incurred as a result thereof) would adversely affect the operation and conduct
of any of the Purchased Businesses or any of the Purchased Assets in any
material respect. Except as set forth in Section 3.6 of the Business Schedules,
no Seller is subject to any judgment, writ, decree, injunction or order of any
federal, state or local court (domestic or foreign) or Governmental Authority
relating to the acquisition, collection, administration or enforcement of any
Loan or Assigned Receivable or the foreclosure, acquisition or disposition of
any Purchased Assets subject thereto or, in each case, any transactions or
activities indicated thereto.
(b) The CFC Parties have in effect all material authorizations,
permits, licenses, certificates of authority, consents, orders and approvals of,
and have made all material filings, applications and registrations with,
Governmental Authorities that are necessary in order for the CFC Parties to own
and operate the Purchased Assets and to conduct the Purchased Businesses in all
material respects as presently conducted, and such authorizations, permits,
licenses, certificates of authority, consents, orders and approvals (each of
which is set forth on Section 3.6(b) of the Business Schedules opposite the name
of the CFC Party which is the holder thereof) are in full force and effect and
the CFC Parties are in compliance therewith in all material respects. Except as
set forth in Section 3.6(b) of the Business Schedules, there are no material
proceedings pending or, to the Knowledge of the Sellers, threatened seeking to
terminate or suspend or to adversely modify any such authorization, permit,
license, certificate of authority, consent, order or approval.
3.7 Assets Necessary and Sufficient to Conduct Businesses. Except as
set forth in Section 3.7 of the Business Schedules, subject to satisfaction of
the conditions in ARTICLES 6 and 7, the Purchased Assets, together with the
Buyer's rights under this Agreement and after taking into account the access to
assets and services that are required to be provided to the Buyer pursuant to
the Servicing Agreements with the applicable
48
CFC Parties, (a) constitute all of the assets, Properties, Contracts and rights
used in the Purchased Businesses and which are necessary and (b) are sufficient
to, carry on the Purchased Businesses from and after the Cut-Off Time without
interruption in the same manner as the Purchased Businesses have been conducted
by the Sellers prior to the Cut-Off Time and consistent with the Sellers' past
practices. No part of the Purchased Businesses is conducted by or through any
Person other than the Sellers.
3.8 Facilities; Real Property.
(a) [Intentionally Omitted].
(b) Leased Premises. Section 3.8(b) of the applicable Business
Schedules indicates with respect to each Assumed Lease (i) the current rent
(including any additional rent) under such Assumed Lease, (ii) the expiration
date of such Assumed Leases, (iii) the security deposits being held by any
Person (and the identity of such Person) pursuant thereto, (iv) any guarantees
provided or held pursuant to any Assumed Lease. Subject to the entry of the Sale
Order, the Sellers hold good, valid and marketable leasehold title to the
Assumed Leases, free and clear of all Liens, other than Permitted Liens. All of
the Assumed Leases are in full force and effect and have not been modified,
altered or amended in any material respect, except as set forth in Section
3.8(b) of the Business Schedules. Except in connection with matters that will be
cured pursuant to the Sale Order, neither the Sellers nor any of their
Affiliates have received written notice of any material default or event that
with notice or lapse of time, or both, would constitute a default, under any
Assumed Lease by the Sellers, or any of their Affiliates a party thereto and, to
the Sellers' Knowledge, there has not occurred any default or event that with
notice or lapse of time, or both, would constitute a default thereunder by any
other party thereto. True, complete and accurate copies of the Assumed Leases
(including amendments or modifications thereto and any non-disturbance
agreements in connection therewith) have been delivered to the Buyer. Except as
set forth in Section 3.8(b) of the Business Schedules, neither the Sellers, nor
any of their Affiliates have assigned their interest under any Assumed Lease, or
subleased all or any part of the space demised thereby, to any Third Party.
3.9 Personal Property. Attachments A, B and C to Section 3.9(a) of the
Business Schedules contains a complete and accurate list of all furniture,
fixtures and equipment which the Sellers can identify based on their Records and
limited review, as of December 31, 2002, located on the Business Leased Premises
that are used or is necessary to be used in connection with the applicable
Purchased Businesses.
3.10 Receivables.
(a) Each of the Pre-Signing Data Tapes sets forth all Receivables
in existence as of the date the applicable Pre-Signing Data Tape was created
that have been made or purchased in the ordinary course of business and
consistent with past practices of the Sellers.
49
(b) Each Assigned Receivable and Securitized Receivable was made
or purchased by a Seller or its Affiliates (or by a predecessor of such Seller
or such Affiliate): (i) in the ordinary course of business at the time such
Assigned Receivable or Securitized Receivable was made or purchased, (ii) in all
material respects in accordance with then existing applicable Laws; and (iii) in
all material respects in accordance with such Seller's or such Affiliate's
applicable underwriting and documentation guidelines then in effect at the time
of origination or purchase.
(c) Each Assigned Receivable and Securitized Receivable (i) has
been originated or purchased and serviced and administered in all material
respects in accordance with the CFC Parties' standard Loan origination,
servicing and operating procedures as in effect from time to time and (ii) has
otherwise complied with standards of evaluating, originating, underwriting and
funding new business which are in all material respects consistent with the past
practices of the CFC Parties; (iii) have been serviced and administered in
accordance with all applicable Laws; and (iv) have been serviced and
administered in accordance with the respective Loan documents governing such
Assigned Receivable or Securitized Receivable.
(d) Each Assigned Receivable and Securitized Receivable is
evidenced by an Assumed Receivables Contract and constitutes a legal, valid and
binding obligation of the respective Obligor(s), enforceable by the applicable
Seller against such Obligor(s) in accordance with its written terms, subject to
bankruptcy, insolvency, moratorium, reorganization or similar laws in effect
which affect the enforcement of creditors' rights generally, or rules of law
governing equitable relief and other equitable remedies, or public policy. Each
Assumed Receivables Contract is, or as of the Cut-Off Time will be, in full
force and effect, free and clear of all Liens other than Permitted Liens.
(e) Each secured Assigned Receivable and Securitized Receivable is
secured by a valid, enforceable and perfected Lien on the secured property
described in the applicable security agreement, mortgage, deed to secure debt or
deed of trust, pledge, collateral assignment or other security agreement. No
such Assigned Receivable or Securitization Receivable which is so secured has
been waived or modified in any manner which would interfere in any material
respect with the security interest.
(f) There is no material breach or default existing under any
Assumed Receivables Contract and the Sellers have not waived any material breach
or default thereunder. The Sellers have performed their obligations in all
material respects under all Assumed Receivables Contracts.
3.11 Material Agreements.
(a) Section 3.11 of the Business Schedules contains a complete and
accurate list of the Material Agreements with respect to the Purchased
Businesses, except for Loan files. For purposes hereof, "Material Agreement"
shall mean (a) any Contract which requires payments by, on behalf of, or to the
CFC Parties of $500,000
50
or more in the aggregate and (b) any Assumed Agreement, in each case including
all amendments and modifications thereto; provided, however, that Contracts
(other than the agreements listed on Attachment A to Section 2.1(a) of the
Business Schedules) that are terminable on 60 days' notice or less without
penalty shall not be deemed Material Agreements for the purposes of Section 3.11
of the Business Schedules. All Material Agreements are valid, in full force and
effect and have not been modified or amended in any material respect. Except as
set forth in Section 3.11 of the Business Schedules, to the Sellers' Knowledge,
there are no material disputes, oral agreements or forbearance programs in
effect as to any of the Material Agreements. None of the Sellers or any of their
Affiliates that is a party to any Material Agreement has received written notice
from any Third Party of any material default or breach by the Sellers or their
Affiliates of any of the Material Agreements to which it is a party or given any
written notice to any Third Party indicating that it or such other party, as the
case may be, is presently in breach or violation of any Material Agreement. None
of the Sellers is in material breach of or in material default under any
Material Agreement except for any breach arising out of the filing of Chapter 11
Cases by any Seller. To the Knowledge of the Sellers, there has not occurred any
material default or material breach thereunder by any other party thereto. Each
such Material Agreement constitutes the legal, valid and binding obligations of
the Sellers or any of their Affiliates that is a party thereto and, to the
Knowledge of the Sellers, the respective Third Party thereto, and is enforceable
against such Third Party in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, moratorium,
reorganization or similar Laws in effect which affect the enforcement of
creditors' rights generally, or rules of law governing specific performance,
equitable relief and other equitable remedies, or public policy. All Material
Agreements, except for the Loan files, Assumed Receivables Contracts and dealer
agreements relating to the PL Business, the HI Origination Business and the CL
Origination Business, have been made available to the Buyer.
(b) [Intentionally Omitted].
(c) Section 2.1(a)(A)(iii) of the Business Schedules sets forth
all program agreements with merchants to which the Sellers are party and that
are in effect.
3.12 Intellectual Property.
(a) Attachments A through F to Section 3.12 of the Business
Schedules set forth a complete and correct list of all (i) patents, and patent
applications, registrations and applications pertaining to the Transferred
Trademarks and registered Other Transferred Intellectual Property; and the
patent, registration, or application number, the issuance, registration or
filing date, the jurisdiction and record owner as to each; (ii) material
unregistered Transferred Trademarks; (iii) material software, applications and
tools; (iv) Transferred Intellectual Property Agreements; (v) Acxiom Models and
Credit Lifecyle and Clustering Models; and (vi) Internet domain names, all of
which items (i) - (vi) above are included in the Transferred Intellectual
Property. All registered Transferred Trademarks and patented or registered Other
Transferred
51
Intellectual Property are unexpired, and all renewal fees and other maintenance
fees that have fallen due on or prior to the effective date of this Agreement
have been paid. Except as set forth in Section 3.12(a) of the Business
Schedules, no registered Transferred Trademarks or patented or registered Other
Transferred Intellectual Property (i) is the subject of any proceedings before
any governmental, registration or other authority in any jurisdiction, including
any office action or other form of preliminary or final refusal of patent or
registration, and (ii) the Sellers have not previously assigned, transferred,
conveyed or otherwise encumbered ownership thereof and none of the Sellers has
granted to any Third Party a license to use such registered Transferred
Trademarks or Other Transferred Intellectual Property in any manner. The
consummation of the transactions contemplated hereby will not alter or impair
any Transferred Intellectual Property in any material respect except to the
extent any Transferred Intellectual Property Agreements require a Third Party's
consent prior to transfer.
(b) Except as set forth in Section 3.12(b) of the Business
Schedules, the Sellers (i) own all right, title and interest in and to, or (ii)
have a valid and enforceable right to use (A) all of the Transferred
Intellectual Property, which right includes a valid and enforceable right to use
the subject matter of the Transferred Intellectual Property Agreements, and (B)
all of the Intellectual Property which is the subject of the rights and licenses
granted by the Sellers or their Affiliates to the Buyer pursuant to Section 5.31
hereof and pursuant to the Servicing Agreements. Subject to Section 2.8 hereof
and except as set forth in Section 3.7 of the Business Schedules, all of the
Transferred Intellectual Property and the other Intellectual Property rights in
item (ii) above in this Section 3.12(b), will be available to the Buyer
following the Cut-Off Time in the same manner and to the same extent as they
presently are available to the Sellers. The Sellers are in compliance with all
material contractual obligations relating to the protection of the Transferred
Intellectual Property Agreements. To the Knowledge of the Sellers, there are no
conflicts with, or infringements of, the Transferred Trademarks and Other
Transferred Intellectual Property by any Third Party. To the Knowledge of the
Sellers, the Transferred Trademarks and Other Transferred Intellectual Property
and the making, using, copying, selling or distributing thereof, either alone or
in combinations, do not conflict with or infringe any Intellectual Property
rights of any Third Party. There is no claim, suit, action or proceeding pending
or, to the Knowledge of the Sellers, threatened against any Seller: (i) alleging
any such conflict with or infringement of any Third Party's Intellectual
Property; or (ii) challenging such Seller's ownership or use of, or the validity
or enforceability of, the Transferred Trademarks and Other Transferred
Intellectual Property. Except as set forth in Section 3.12(b) of the Business
Schedules, no written claims of infringement or misappropriation of Intellectual
Property have been received from Third Parties with respect to the applicable
Purchased Businesses.
(c) Except as set forth in Section 3.12(c) of the Business
Schedules, none of the Sellers is under any obligation to pay royalties or other
payments in connection with any agreement or, subject to Section 2.8 hereof, is
restricted from assigning its rights respecting any Transferred Intellectual
Property, nor will any Seller otherwise be, as a result of the execution and
delivery of this Agreement or the
52
performance of a Seller's obligations under this Agreement, in breach of any
agreement relating to the Transferred Intellectual Property.
(d) To the Knowledge of the Sellers, except as set forth in
Section 3.12(d) of the applicable Business Schedules, no present or former
employee, officer or director of any of the Sellers, or agent or outside
contractor of any of the Sellers, holds any right, title or interest, directly
or indirectly, in whole or in part, in or to any Transferred Intellectual
Property.
(e) (i) To the Knowledge of the Sellers, none of the Sellers'
trade secrets have been used, disclosed or appropriated to the detriment of any
of the Sellers for the benefit of any Person other than the Sellers; and (ii) to
the Knowledge of the Sellers, no employee, independent contractor or agent of
any of the Sellers has misappropriated any trade secrets or other confidential
information of any other Person in the course of the performance of his or her
duties as an employee, independent contractor or agent of such Seller.
(f) With respect to the material computer software comprising
Transferred Intellectual Property developed by or on behalf of the Sellers, to
the Knowledge of the Sellers, (i) Sellers maintain readable master reproducible
copies, and source code listings for the most current releases or versions
thereof; (ii) in each case, the machine-readable copy conforms to the
corresponding source code listing; and (iii) it operates without material
operating defects.
3.13 Brokerage. Other than Credit Suisse First Boston, the fees and
disbursements of which will be a prepetition claim against the CFC Parties, and
Lazard Freres & Co. LLC, the fees and disbursements of which are to be paid by
the Parent, no Person has any claim for brokerage commissions, finders' fees or
similar compensation in connection with the transactions contemplated by this
Agreement based on any arrangement or agreement made by or on behalf of the
Sellers or any of their respective Affiliates.
3.14 Employees. Section 3.14 of the applicable Business Schedules sets
forth the names, employee identification numbers, positions (including
department name, corporate area and business title), years of service, place of
employment and the amount of paid time off of all employees of the Sellers and
any of their Affiliates for each applicable Purchased Business who are as of the
date hereof working primarily in the applicable Purchased Business (the
"Employees"). A separate corresponding list which includes each Employee's
current compensation and severance entitlement was provided to the Buyer. None
of the Sellers or any of their ERISA Affiliates is, or has within the last six
years been, a party to a collective bargaining agreement covering any of the
Employees and, to the Knowledge of the Sellers, no union organizing activities
have occurred with respect to any Employees.
3.15 Affiliate Transactions. Section 3.15 of the Business Schedules
describes all intercompany or affiliated transactions or Contracts under which
credits or services are provided to or on behalf of the applicable Purchased
Business by the Sellers
53
(including any "subsidiary" of Mill Creek Bank Inc., as that term is defined in
section 23A of the Federal Reserve Act) and to or on behalf of the Sellers
(including any such "subsidiary") by the applicable Purchased Business and all
intercompany transactions or Contracts among the Sellers with respect to the
applicable Purchased Business (including, in each case, a description of the
costs and expenses charged to the applicable Purchased Business in connection
therewith). Mill Creek Bank Inc. (and any such "subsidiary") is not, and has not
been since January 1, 2000, in violation of section 23A or section 23B of the
Federal Reserve Act, whether or not any such violation is known by any
Governmental Authority.
3.16 ERISA; Employee Benefit.
(a) The Sellers have furnished or made available to the Buyer
complete and correct copies of all employee benefit plans, as defined in Section
3(3) of ERISA, and all other retirement, deferred compensation, incentive
compensation, insurance, bonus, medical, stock option, severance, retention,
vision, dental, vacation policy and other material employee benefit plans in
which the Employees participate (the "Employee Benefit Plans"), the current
summary plan description for each Employee Benefit Plan subject to ERISA and any
similar description of any other Employee Benefit Plan. None of the Employee
Benefit Plans are multiemployer plans (as defined in Section 3(37) of ERISA).
Each Employee Benefit Plan which is a defined contribution pension plan intended
to be qualified under Section 401(a) of the Tax Code is so qualified. None of
the Employee Benefit Plans are established under, or subject to, the Laws of any
country other than the United States.
3.17 Depository Institutions.
(a) Mill Creek Bank Inc. is "well-capitalized" (as that term is
defined at 12 C.F.R. 225.2(r)(2)(i) and 325.103(b)(1)) and "well managed" (as
that term is defined at 12 C.F.R.225.8 1(c)) and its examination rating under
the Community Reinvestment Act of 1977 is satisfactory or outstanding. Mill
Creek Bank Inc. is not in a "troubled condition" (as that term is defined at 12
CFR 303.101(c)).
(b) Except as set forth in Section 3.17 of the Business Schedules,
Mill Creek Bank Inc. is not, and has not been since January 1, 2000, subject to
any supervisory or remedial agreement of any kind, including but not limited to
any memorandum of understanding, agreement, cease-and-desist order, consent
order or enforcement order with or from any Governmental Authority.
(c) Mill Creek Bank Inc. is in compliance in all material respects
with all applicable Laws. There are no material investigations or proceedings
pending or, to the Knowledge of the Sellers, threatened, alleging or
contemplating any material violation of any applicable Law.
3.18 Litigation. Except as set forth in Section 3.18 of the Business
Schedules, there are no civil, criminal or administrative actions, suits,
claims, hearings, arbitrations, investigations or proceedings pending (including
but not limited to any counterclaims) or,
54
to the Knowledge of any Seller, threatened, against any Seller relating to or
affecting any of the Purchased Assets, the Purchased Businesses or any of the
Assumed Liabilities that, if determined adversely to the interest of any Seller
would be reasonably likely to give rise to a Liability or cost to any Seller in
excess of $50,000 in any one instance or material injunctive relief or otherwise
adversely affect the operations or the conduct of any of the Purchased
Businesses or any of the Purchased Assets in any material respect. No Seller has
been the subject of any proceeding nor to any Seller's Knowledge have there been
any investigations by or before any Governmental Authority, in either case
relating to any of the Purchased Assets or Assumed Liabilities or the business
practices of the Purchased Businesses since January 1, 2000.
3.19 Financial Statements. Section 3.19(i) of the Business Schedules
sets forth true and complete copies of the unaudited Restricted and Unrestricted
Balance Sheet of the Company and its Subsidiaries as of September 30, 2002 and
as of December 31, 2002 and the related unaudited statements of income for the
fiscal years ended September 30, 2002 and December 31, 2002 (collectively, the
"Financial Statements"). The Financial Statements have been prepared from the
Records of the Company and its Subsidiaries and fairly present, in all material
respects, the financial position of the Company and its Subsidiaries as of the
dates thereof and the results of all operations of the businesses of the Company
and its Subsidiaries for the periods therein described, in each case in
accordance with GAAP, consistently applied and consistent with the accounting
principles set forth in Part I of Section 1.1A of the Business Schedules, except
as otherwise provided in the Financial Statements; provided, however, that the
Financial Statements reflect intercompany allocations of overhead and other
non-specific expenses between the businesses of the Company and its Subsidiaries
which the Sellers believe are reasonable and which have been disclosed to the
Buyer in reasonable detail. Except as set forth in Section 3.19(ii) of the
Business Schedules, each of the November 30 Balance Sheet, December 31 Balance
Sheet and January 31 Balance Sheet sets forth the unaudited Restricted and
Unrestricted Balance Sheet of the Company and its Subsidiaries as of November
30, 2002, December 31, 2002 and January 31, 2003, respectively, and was prepared
from the Records of the Company and fairly presents, in all material respects,
the financial position of the Company as of the date thereof in each case in
accordance with GAAP consistently applied and consistent with the accounting
principles set forth in Part I of Section 1.1A of the Business Schedules. The
Records from which the Financial Statements and the November 30 Balance Sheet,
December 31 Balance Sheet and January 31 Balance Sheet were prepared were
complete and accurate in all material respects at the time of such preparation.
3.20 Indebtedness; Guarantees; Absence of Undisclosed Liabilities.
(a) Except as set forth in the Financial Statements, no CFC Party
has any outstanding indebtedness. Except as set forth in Section 3.20(a) of the
Business Schedules, no CFC Party is a party to any Loan agreement whereby such
CFC Party has borrowed money, structured in the form of a loan or purchase and
sale, has any outstanding Guarantees in favor of any other Person or is
otherwise liable for any indebtedness of any other Person. Except as set forth
in Section 3.20(a) of the Business Schedules, no CFC Party has any Liabilities,
individually or in the aggregate,
55
of the type required to be reflected on a balance sheet or in the notes thereto
prepared in accordance with GAAP which were not fully reflected or reserved
against in the Financial Statements (other than current Liabilities incurred in
the ordinary course of business) consistent with past practices of the Sellers,
except for those that would not reasonably be expected to have a Material
Adverse Effect.
(b) In the event that a Stock Sale is consummated, as of the
Cut-Off Time, no Subject Subsidiary or any of its Subsidiaries will have any
Liabilities other than the Assumed Liabilities.
3.21 PL Residual Assets. The PL Residuals Schedule identifies, among
other things, all of the assets relating to the Private Label Credit Card Master
Note Trust that are owned by the Company or any other CFC Party and the
information contained therein is accurate in all material respects as of the
date hereof. The Sellers own all assets identified on the PL Residuals Schedule.
3.22 Tax Matters.
(a) Each of the CFC Parties has filed all Tax Returns that it was
required to file, and each has paid all Taxes, whether or not required to be
paid in connection with the filing of a Tax Return. Such Tax Returns are true,
correct and complete. The reserves for Taxes in the Financial Statements are
adequate. Except as set forth in Section 3.22(a) of the applicable Business
Schedules, none of the CFC Parties has waived any statute of limitations in
respect of any Tax Returns or Taxes or agreed to any extension of time with
respect to a Tax assessment or deficiency.
(b) Section 3.22(b) of the Business Schedules sets forth (i) all
Income Tax Returns filed with respect to the CFC Parties and the Purchased
Businesses for all open Tax years, (ii) those Tax Returns that have been
audited, (iii) those Tax Returns that currently are the subject of audit, and
(iv) any dispute or claim concerning Tax Liability relating to the Purchased
Businesses or the CFC Parties. The Company has made available to the Buyer
correct and complete copies of all federal and state Tax Returns, examination
reports, and statements of deficiencies assessed against or agreed to by the CFC
Parties with respect to the Purchased Businesses for all open Tax years.
(c) Except as set forth in Section 3.22(c) of the Business
Schedules, (i) for all open Tax years all Taxes required to be withheld,
collected or deposited by each CFC Party have been timely withheld, collected
and deposited and, to the extent required by law, all such Taxes have been paid
when due to the appropriate taxing authority and each CFC Party is in compliance
with respect to all withholding and information and reporting requirements in
the Tax Code; (ii) there are no closing agreements pursuant to Section 7121 of
the Tax Code (or corresponding provision of state, local or foreign law) or
rulings or requests for rulings relating to any CFC Party; (iii) none of the
Purchased Assets is (A) property required to be treated as owned by another
person pursuant to Section 168(f)(8) of the Internal Revenue Code of 1954 (as
amended and in effect prior to the 1986 act), (B) "tax-exempt use property"
within the
56
meaning of Code Section 168(h)(1), (C) "tax-exempt bond financed property"
within the meaning of Code Section 168(g), (D) subject to Code Section
168(g)(1)(A), or (E) "limited use property" as defined in Revenue Procedure
76-30; (iv) none of the CFC Parties has filed a consent under Section 341 (f) of
the Tax Code concerning collapsible corporations; (v) no transaction
contemplated by this Agreement is subject to withholding under Section 1445 of
the Tax Code (relating to "FIRPTA"); (vi) none of the CFC Parties will be
required to include any adjustment under Section 481(c) of the Tax Code (or any
corresponding provision of state, local or foreign law) in taxable income as a
result of a change in accounting method for a Tax period beginning on or before
the Funding Date; (vii) no claim has ever been made by a Taxing authority in a
jurisdiction where any CFC Party has never paid Taxes or filed Tax Returns
asserting that such CFC Party is or may be subject to Taxes assessed by such
jurisdiction; (viii) no power of attorney has been granted with respect to any
matter relating to Taxes of any CFC Party that is currently in effect; (ix) none
of the CFC Parties has made, changed or revoked, or permitted to be made,
changed or revoked, any election or method of accounting with respect to Taxes
affecting or relating to any CFC Party; (x) no Purchased Asset is an interest in
a partnership or other entity treated as a partnership for U.S. federal income
tax purposes; (xi) none of the Purchased Assets is a debt instrument the
interest on which is, or purports to be excludable, in whole or in part, from
gross income for federal income Tax purposes; (xii) none of the Purchased Assets
constitutes an interest in a "taxable mortgage pool" within the meaning of
Section 7701(i) of the Tax Code; and (xiii) none of the Purchased Assets is a
debt obligation that (A) was issued with "original issue discount" as defined in
Section 1273(a) of the Tax Code, (B) is a "registration-required obligation" as
defined in Section 163(f)(2) of the Tax Code, (C) is an "applicable high yield
discount obligation" as defined in Section 163(i)(1) of the Tax Code, or (D) is
a "disqualified debt instrument" as defined in Section 163(l)(2) of the Tax
Code.
(d) Except as set forth in Section 3.22(d) of the Business
Schedules, none of the CFC Parties is a party to any contract, plan or
arrangement that, individually or collectively, could give rise to the payment
of any amount that would not be deductible by the Buyer or any of its
Subsidiaries by reason of Sections 280G or 162(m) of the Tax Code.
(e) [Intentionally Omitted.]
(f) [Intentionally Omitted.]
(g) [Intentionally Omitted.]
(h) [Intentionally Omitted.]
(i) To the extent any Securitizations relating to the PL Business
are outstanding at the Cut-Off Time, the transactions contemplated by this
Agreement will not adversely affect the tax characterizations of any of the
Securitizations
57
relating to the PL Business as originally represented in connection with such
Securitizations relating to the PL Business, whether or not such representations
were the subject of confirming legal opinions.
(j) To the extent any Securitizations relating to the PL Business
are outstanding at the Cut-Off Time, no elections have been made to treat any
Securitizations relating to the PL Business, or parts thereof, as "financial
asset securitization investment trusts" within the meaning of Section 860L(a) of
the Tax Code.
(k) Except as provided in Section 3.22(k) of the Business
Schedules, a CFC Party has collected all but an immaterial number of resale
certificates or other applicable documents as required for the application of
any exemption with respect to any sales or use Tax applicable to the transfer of
a repurchased or repossessed asset by a CFC Party, including all but an
immaterial number of resale certificates for sales of repossessed manufactured
housing.
(l) With respect to the Securitizations relating to the PL
Business:
(i) the Trust is either a grantor trust, a partnership or a
disregarded entity, and not an association taxable as a
corporation, a publicly traded partnership or a taxable mortgage
pool, for federal income tax purposes;
(ii) no employer identification number has ever been issued
to the Trust by the Internal Revenue Service; and
(iii) to the extent that the Trust has issued instruments
designed as notes, bonds, debentures or other evidences of
indebtedness, such instruments will be characterized as
indebtedness for federal income tax purposes.
3.23 Insurance. Set forth in Section 3.23 of the Business Schedules is
a list of all Insurance Policies for such Purchased Business, including summary
coverage terms and expiration dates. All premiums due and payable with respect
to the Insurance Policies have been timely paid. No notice of cancellation of,
or indication of an intention not to renew, any material Insurance Policy has
been received by the Sellers. To the Knowledge of the Sellers, (i) all such
Insurance Policies are in full force and effect and (ii) the Sellers are not in
default under any provisions of the Insurance Policies.
3.24 Environment; Health and Safety. The CFC Parties are in compliance
in all material respects with all Environmental Laws applicable to the Purchased
Businesses and the Purchased Assets and have not received written notice from
any Governmental Authority or other Person alleging non-compliance or that they
are otherwise liable for the clean-up or other environmental response costs
pursuant to any Environmental Law. The Sellers have provided the Buyer with
copies of all material environmental, health and safety reports relating to the
Purchased Business and Purchased Assets.
58
3.25 Accounting Controls. Each CFC Party has devised and maintained
systems of internal accounting controls which it believes are sufficient to
provide reasonable assurances that (a) all material transactions are executed in
accordance with its management's general or specific authorization; (b) all
material transactions are recorded as necessary to permit the preparation of
financial statements in conformity with GAAP or any other criteria applicable to
such statements; (c) access to its material property and assets is permitted
only in accordance with management's general or specific authorization; and (d)
the recorded accountability for items is compared with the actual levels thereof
at reasonable intervals and appropriate action is taken with respect to any
variances.
3.26 Summary of Securitizations Relating to PL Business. The
information set forth in Section 3.26 of the applicable Business Schedules which
identifies, among other things, all Securitizations relating to the PL Business,
is true, complete and correct as of the date hereof.
3.27 Representations as to Certain Purchased Assets. Exhibit A hereto
sets forth certain additional representations and warranties with respect to the
Loans and the PL Residual Assets, which Exhibit A is incorporated herein by
reference.
3.28 Securities Offerings. The offering memoranda, offering circulars,
prospectuses and any other offering documents or registration statements for the
offering of securities, and any amendments or supplements thereto, distributed,
delivered or filed in connection with the Securitizations of the CFC Parties
relating to the PL Business, as of their dates, did not contain any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
3.29 No Powers of Attorney. Except as set forth in Section 3.29 of the
applicable Business Schedules, no CFC Party has any powers of attorney or
comparable delegations of authority outstanding with respect to the Purchased
Assets.
3.30 Securities Laws Matters; No Registration. No trust, arrangement,
issuer or other entity will be required to register as an investment company
under the Investment Company Act of 1940, as amended, and no issue of securities
or securities transaction will be required to be registered under the Securities
Act as a result of the sale of Purchased Assets pursuant to this Agreement. The
statutory or regulatory foundations for exemptions from registration under the
Investment Company Act of 1940, as amended, on which the Securitizations
relating to the PL Business rely include only Rule 3a-7, Section 3(c)(5)(C) and
Section 3(c)(5)(A) of the Investment Company Act of 1940, as amended.
3.31 Securitizations Relating to PL Business.
(a) The representations and warranties of the CFC Parties
contained in the Securitization Documents shall be true and correct as of the
date hereof and the Cut-Off Time.
59
(b) Each of the CFC Parties has complied with each of their
covenants and agreements set forth in the Securitization Documents. No event of
default, servicer termination event, early amortization event (other than those
specified in the PL Residuals Schedule), servicer default or similar event
(whether now cured or uncured) and no event (whether now cured or uncured) that
with the giving of notice or the passage of time or both would constitute any
such event, has occurred, and no CFC Party is aware of any allegation that any
such event has occurred. The ratings assigned to any class of securities issued
in any Securitization relating to the PL Business upon issuance thereof have not
been reduced, qualified or withdrawn, and no series thereof is on "watchlist" or
similar rating agency status or under review by any rating agency for possible
downgrade.
(c) No Securitization Document is required to be qualified under
the Trust Indenture Act of 1939.
(d) The Registration Statements, as of their respective effective
dates, were declared effective under the Securities Act and no stop order
suspending the effectiveness of such Registration Statements has been issued.
The Registration Statements, as of their respective effective dates, conformed
in all material respects to the requirements of the Securities Act and the
Securities Act Rules. On the dates of their use, each prospectus and preliminary
prospectus conformed in all material respects to the requirements of the
Securities Act and the Securities Act Rules. Neither the Registration
Statements, as of their respective effective dates, nor the prospectuses or
preliminary prospectuses, on the dates of their use, or any amendments or
supplements to the foregoing, contained or incorporated by reference any untrue
statement of any material fact or omitted to state any material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading. A CFC Party has timely
filed each servicer (or similar) report required by the Securitization Documents
on a form 8-K and has timely filed each form 10-K with respect to each Trust,
and each such filing complied with the applicable requirements of the Exchange
Act and the Exchange Act Rules and the information set forth in each such filing
was true and correct in all material respects. To the Sellers' Knowledge, the
appropriate officer of the Seller could provide the certification with respect
thereto required by Section 302 of the Xxxxxxxx-Xxxxx Act of 2002 and Rules
13a-14 or 15d-14, as applicable, under the Exchange Act Rules if the same were
required to be provided on the date hereof.
(e) There are no pending or, to the Knowledge of the Sellers,
threatened proceedings, lawsuits, or administrative actions or investigations
alleging violations of the Securities Act, the Exchange Act, the Securities Act
Rules or the Exchange Act Rules relating to any of the Registrations,
preliminary prospectuses or prospectuses.
(f) No provision of any Securitization Document has been amended,
modified, waived or supplemented since the original date thereof.
60
(g) The Sellers have not, as part of the conduct and operation of
the PL Business, entered into or otherwise engaged in any outstanding
securitization other than the Conseco Private Label Credit Card Master Note
Trust 2001-A transaction. The Conseco Private Label Credit Card Master Note
Trust 2001-B transaction has been terminated and no liabilities (fixed or
contingent) remain outstanding thereunder.
3.32 Conduct of Business.
(a) Since December 17, 2002, each Seller has used all reasonable
efforts to preserve substantially intact the business organization of the
Sellers and to preserve the present relationships of the Sellers with each
Person having any business relationships with any Seller that is advantageous to
the Purchased Businesses, or the discontinuance of which could have a Material
Adverse Effect. Except as set forth on Section 3.32(a) of the Business
Schedules, since December 17, 2002, each Seller has conducted business with its
Affiliates only in the ordinary course and consistent with the practices of such
Seller and has not dealt with or entered into any Contracts, commitments or
arrangements with its Affiliates on terms and conditions less favorable to it
than would be available in a comparable transaction with a Person not an
Affiliate of such Seller.
(b) Except as set forth on Section 3.32(b) of the Business
Schedules, (i) each Seller has conducted the Purchased Businesses only in the
ordinary course consistent with the past practices of such Seller and has not
deviated from or changed in any respect its credit policy or collateral
eligibility standards; and (ii) to the extent that any Seller has approved
credit applications with respect to (A) any financing constituting any Backlog,
which, as of the Cut-Off Time, have not become an Assumed Receivables Contract
or (B) any Assumed Receivables Contract entered into after December 17, 2002,
but prior to the Cut-Off Time, such Seller has complied with standards of
evaluating, originating, underwriting and funding new businesses which are in
all respects consistent with the past practices of the CFC Parties.
(c) Since January 1, 2000, Mill Creek Bank has complied with all
of the applicable policies of the FFIEC including the charge-off policies.
3.33 Absence of Certain Changes.
(a) Except as set forth on Section 3.33(a) of the Business
Schedules, since December 17, 2002, no Seller has deviated from or changed in
any material respect their forms of notes, retail installment, revolving
accounts, account holder agreements, guarantees, financing statements and other
documents or instruments necessary for, or used in connection with, the conduct
of the Purchased Businesses except for deviations or changes made in the
ordinary course of business and consistent with the past practices of the
applicable Seller.
(b) Except as set forth on Section 3.33(b) of the Business
Schedules, since December 17, 2002, no Seller has (i) made or agreed to make any
increase in the compensation payable or to become payable to any Employee,
except for regularly
61
scheduled increases in compensation payable or increases otherwise occurring in
the ordinary course of business consistent with the past practices of such
Seller, or (ii) entered into, adopted, made any material amendments to or
terminated any collective bargaining agreement, any Employee Benefit Plan or any
other employee benefit agreement, trust, plan, fund or other arrangement for the
benefit or welfare of any director, officer or employee. Except as set forth on
Section 3.33(b) of the Business Schedules, (i) since December 17, 2002, Mill
Creek Bank has not failed promptly to pay and discharge current Liabilities of
Mill Creek Bank Inc. or any of its Subsidiaries, except in the case of such
Liabilities which are disputed in good faith and for which adequate reserves are
maintained by Mill Creek Bank (as applicable) in accordance with GAAP and (ii)
since December 17, 2002, no other Seller has failed promptly to pay and
discharge any Liabilities of such Seller arising after December 17, 2002, except
in the case of such Liabilities which are disputed in good faith and for which
adequate reserves are maintained by such Seller in accordance with GAAP.
3.34 Maintenance of Books. Each Seller has maintained its books,
accounts and records with respect to the Purchased Assets in the usual, regular
and ordinary manner, in accordance with its past practices.
For purposes of this Agreement, Mill Creek Bank Inc. is not making
and shall not make any representation or warranty with respect to any Purchased
Asset or a Purchased Business to the extent not owned by Mill Creek Bank Inc.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE BUYER
As a material inducement to the Sellers to enter into this
Agreement, the Buyer hereby represents and warrants to the Sellers the
following:
4.1 Organization and Corporate Power. The Buyer is a corporation duly
organized, validly existing and in good standing under the Laws of the State of
Delaware, with the requisite corporate power and authority to enter into this
Agreement and the other Transaction Documents to which the Buyer is a party and
perform its obligations hereunder and thereunder.
4.2 Authorization of Transaction. The Buyer has all the requisite power
and authority to execute and deliver, and to perform its obligations under this
Agreement and the other Transaction Documents to which it is a party. The
execution, delivery and performance of this Agreement and the other Transaction
Documents to which the Buyer is a party have been duly and validly authorized by
all requisite action on the part of the Buyer, and no other corporate
proceedings on its part are necessary to authorize the execution, delivery or
performance of this Agreement. This Agreement constitutes, and each of the other
Transaction Documents to which the Buyer is a party will, when executed,
constitute, a valid and binding obligation of the Buyer, enforceable against the
Buyer in accordance with their respective terms, except as such enforceability
may be limited by applicable receivership, conservatorship and supervisory
powers of bank
62
regulatory agencies generally as well as by bankruptcy, insolvency, moratorium,
reorganization or similar laws in effect which affect the enforcement of
creditors' rights generally, or rules of law governing specific performance,
equitable relief and other equitable remedies.
4.3 No Violation. The execution and delivery of this Agreement and the
other Transaction Documents and the consummation of the transactions
contemplated hereby and thereby by the Buyer do not and will not (a) constitute
a material breach or violation of or default under any applicable Law, or
license, franchise or permit, in each case to which the Buyer is subject and
which breach, violation or default would prevent or materially delay the Sellers
from being able to perform their obligations under this Agreement and the other
Transaction Documents to which they are party, or (b) constitute a breach or
violation of or default under the Organizational Documents of the Buyer.
4.4 Governmental Authorities and Consents. Except as required by (a)
the Finance Laws, (b) the Bank Merger Act and federal and state banking Laws,
the Buyer is not required to submit any notice, report or other filing with any
Governmental Authority, and no consent, approval or authorization of any
Governmental Authority or any other person is required to be obtained by the
Buyer, in connection with the execution or delivery by it of this Agreement and
the other Transaction Documents to which the Buyer is a party or the
consummation of the transactions contemplated hereby or thereby, except for the
filing and expiration or termination of the waiting period under the HSR Act.
4.5 Litigation. As of the date hereof, there are no claims, actions,
suits, investigations, proceedings or orders pending or, to the Buyer's
Knowledge, threatened against or affecting the Buyer at law or in equity, or
before or by any Governmental Authority, which would reasonably be expected to
materially and adversely affect the Buyer's performance under this Agreement and
the other Transaction Documents to which the Buyer is a party or the
consummation of the transactions contemplated hereby or thereby.
4.6 Brokerage. Except for Xxxxxx Xxxxxxx Xxxx Xxxxxx, no Person has any
claim for brokerage commissions, finders' fees or similar compensation in
connection with the transactions contemplated by this Agreement based on any
arrangement or agreement made by or on behalf of the Buyer.
4.7 Availability of Funds. On the Funding Date, the Buyer will have
sufficient funds to enable it to consummate the transactions contemplated by
this Agreement.
4.8 Stock Purchase. The Shares of any Subject Subsidiary purchased by
the Buyer pursuant to this Agreement, if any, are being purchased for investment
only and not with a view to any public distribution thereof, and the Buyer will
not offer to sell or otherwise dispose of such Shares so purchased by it in
violation of any of the registration
63
requirements of the Securities Act of 1933, as amended, or any applicable state
securities Laws.
4.9 Approvals. To Buyer's Knowledge, there is no fact or circumstance
which is reasonably likely to result in Buyer's failing to obtain any consent,
approval or authorization of the type referred to in Section 4.4 of this
Agreement.
4.10 Knowledge. As of the date hereof, the Buyer has no actual
knowledge of any change, circumstance, breach or event which constitutes or has
resulted in a Material Adverse Effect.
ARTICLE 5
ADDITIONAL AGREEMENTS
5.1 Tax Matters.
(a) Transfer Taxes. All transfer, documentary, sales, use, stamp,
registration and other such Taxes and fees (including any penalties and interest
thereon) incurred in connection with this Agreement shall be paid by the Sellers
when due, and the Sellers shall, at their own expense, file all necessary Tax
Returns and other documentation with respect to all such transfer, documentary,
sales, use, stamp, registration and other Taxes and fees, and if required by
applicable law, the Buyer shall join in the execution of any such Tax Returns
and other documentation; provided, however, that except as provided in the
following sentence, the Sellers and the Buyer hereby waive any requirements
under any bulk sale rule arising from any transaction under this Agreement that
relates to the application of any sales or use Taxes. At the request of the
Buyer not more than 20 days after the execution and delivery of this Agreement,
the Sellers will comply with the bulk sales procedures applicable in respect of
sales and use tax in the jurisdiction specified by the Buyer.
(b) Tax Sharing and Indemnification.
(i) The Sellers shall indemnify and hold harmless the Buyer
and its Affiliates, each Subject Subsidiary, each Subsidiary of
any Subject Subsidiary, the Trust and their respective directors,
officers, employees, representatives, agents, successors and
assigns with respect to any and all Losses that may be imposed on
the Buyer, any Subject Subsidiary, any Subsidiary of any Subject
Subsidiary, or in respect of the Purchased Assets resulting from
(A) any Taxes of any CFC Party for any Pre-Funding Tax Period, (B)
any Taxes of any Affiliated Group that includes Parent or any
other CFC Party, including any Liability for Tax under Treasury
Regulation Section 1.1502-6 or any comparable state, local or
foreign Tax provision, except for any Taxes of any Subject
Subsidiary (or a Subsidiary of a Subject Subsidiary after the
Funding Date) for any Post-Funding Tax Period relating to an
Affiliated Group of which the Subject Subsidiary (or such
Subsidiary of a Subject Subsidiary) is a member after
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the Funding Date, (C) any breach of any representation or warranty
of the Sellers contained in Section 3.22 hereof or any schedule
delivered pursuant thereto, (D) any Taxes arising from a Section
338 Election with respect to any CFC Party, or (E) any Taxes
arising out of the application of any bulk sale rule under
federal, state, local or foreign law to any transaction
contemplated by this Agreement including Taxes resulting from the
failure to comply with any such bulk sale rule applicable in
respect of any sales and use taxes.
(ii) For any federal, state, local or foreign Tax purposes,
Taxes, if any, attributable to a Straddle Period of any Subject
Subsidiary or any Subsidiary of a Subject Subsidiary shall be
allocated to (A) the Sellers for the Pre-Funding Tax Period, and
(B) the Buyer for the Post-Funding Tax Period. For purposes of the
preceding sentence, Taxes for the Pre-Funding Tax Period and for
the Post-Funding Tax Period of each Straddle Period shall be
determined on the basis of an interim closing of the books as of
the close of business on the Funding Date as if such Straddle
Period consisted of one Taxable period ending at the close of
business on the Funding Date followed by a Taxable period
beginning on the day following the Funding Date. For purposes of
this subparagraph (ii), exemptions, allowances or deductions that
are calculated on an annual basis, such as the deduction for
depreciation, shall be apportioned on a daily basis. Real,
personal and intangible property Taxes of any Selling Subsidiary,
any Subject Subsidiary or any Subsidiary of a Subject Subsidiary
shall be equal to the amount of such property Taxes for the entire
Straddle Period multiplied by a fraction, the numerator of which
is the number of days during the Straddle Period that are in the
Pre-Funding Tax Period and the denominator of which is the total
number of days in the Straddle Period. For purposes of this
Section 5.1 and the representation contained in Section 3.22
hereof, any Tax that is based in whole or in part on income earned
during a particular Taxable period shall be deemed to be a Tax
attributable to and imposed in respect of such Taxable period;
provided, that for purposes of this sentence, the term "Taxable
period" shall include any portion of a Taxable period that ends on
and includes the Funding Date.
(iii) Except as otherwise provided in Section 5.1, if a
payment is required under Section 5.1, the Sellers shall discharge
their obligation by paying the amount due not later than 10 days
after notice to the Sellers stating that an amount is owed under
Section 5.1 to the Buyer, the amount thereof, and that an
indemnity payment is requested.
(iv) For the avoidance of doubt, any amount payable by the
Sellers pursuant to Section 5.1(b) hereof shall be reduced by any
estimated tax paid prior to the Funding with respect to the Tax
for which the Buyer would otherwise have been liable under Section
5.1(b)(i).
65
(c) Tax Returns.
(i) The Sellers shall prepare or cause to be prepared, and
file or cause to be filed, all Tax Returns of each CFC Party,
including consolidated, combined or unitary Tax Returns which
include any CFC Party, for all Taxable periods of each CFC Party
that end on or prior to the Funding Date. All such Tax Returns
shall be prepared on a basis that is consistent with the manner in
which the Sellers prepared or filed such Tax Returns for prior
periods. No later than 30 days prior to the due date of such Tax
Returns, the Sellers shall provide the Buyer with copies of (A) in
the case of consolidated, combined or unitary Tax Returns that
include a Subject Subsidiary and any Subsidiary of such Subject
Subsidiary, pro forma materials for each Subject Subsidiary to be
included in such consolidated, combined or unitary Tax Returns,
(B) all other Tax Returns prepared by Sellers pursuant to Section
5.1(c), and (C) such work papers and other documents as may be
reasonably necessary to determine the accuracy and completeness of
such materials or Tax Returns. If the Buyer notifies the Sellers
in writing within 10 days after receiving such materials or a Tax
Return of any comments of the Buyer, the Sellers shall incorporate
any such reasonable comments provided by the Buyer. If Sellers
dispute the reasonableness of any such comment by the Buyer, such
dispute shall be resolved by a "Big Four" accounting firm as
selected by the Buyer in its discretion (other than an accounting
firm regularly and materially used by the Buyer or its Affiliates)
and such Tax Returns (or any amendment to such return) shall be
filed in a manner consistent with resolution of such dispute. The
Sellers shall, upon the Buyer's request, make reasonably available
to the Buyer at a mutually convenient time and location any
personnel involved in the preparation of any materials or Tax
Return subject to this Section 5.1(c)(i)(A) and (B) for the
purpose of answering any questions the Buyer may have regarding
any such materials or Tax Return or the manner in which the same
was prepared. The Buyer shall be responsible for filing all Tax
Returns required to be filed by or on behalf of each Subject
Subsidiary and each Subsidiary of any Subject Subsidiary for
Taxable periods ending after the Funding Date.
(ii) With respect to any Tax Return required to be filed by
the Buyer pursuant to subparagraph (i) above for a Straddle Period
of any Subject Subsidiary or any Subsidiary of a Subject
Subsidiary, the Buyer shall provide the Company with true copies
of each of such completed Tax Returns, such work papers and other
documents as may be reasonably necessary to determine the accuracy
and completeness of such Tax Returns, and a statement setting
forth the amount of Tax shown on such Tax Return that is allocable
to the Sellers pursuant to subparagraph (ii) of paragraph (b)
above (the "Statement") at least 30 days prior to the due date for
the filing of such Tax Return. If the Company notifies the Buyer
in writing within 10 days after receiving the Statement that the
Company questions the information contained therein, then a "Big
Four" accounting
66
firm as selected by the Buyer in its discretion (other than an
accounting firm regularly and materially used by the Buyer or its
Affiliates) shall be instructed to review the Statement and
determine its accuracy and reasonableness within 15 days. If such
accounting firm determines that the Statement is accurate, or if
the Company does not provide any such notification, then not later
than five days before the due date for payment of Taxes with
respect to such Tax Return, the Sellers shall pay to the Buyer an
amount equal to the Taxes shown on the Statement as being
allocable to the Sellers pursuant to subparagraph (ii) of
paragraph (a) above. If the accounting firm appointed to review a
Statement pursuant to the foregoing procedure in this Section
5.l(c)(ii) determines that the Statement is inaccurate, the Buyer
will amend the Statement and any related Tax Returns in a manner
consistent with removing any such inaccuracy, and the Sellers
shall pay the amount due to the Buyer within five days of the
receipt of the amended Statement.
(iii) After the Funding Date, the Buyer and the Sellers shall
provide each other with reasonable cooperation in connection with
the preparation of Tax Returns of the CFC Parties and shall make
available to the other and to any Taxing authority, as reasonably
requested, all information, records or documents relating to Tax
liabilities or potential Tax liabilities of the Selling
Subsidiaries and their Subsidiaries for all periods prior to or
including the Funding Date and shall preserve all such
information, records and documents until the expiration of any
statute of limitations or extensions thereof.
(d) Tax Contests. The Buyer shall promptly notify the Company in
writing upon receipt by the Buyer, any Subject Subsidiary or any Subsidiary
thereof of written notice of any Tax Proceeding in respect of the Trust, any
Subject Subsidiary or any Affiliate of any Subject Subsidiary which, if
determined adversely to the taxpayer, may be grounds for indemnification under
this Section 5.1. Notwithstanding the foregoing, the failure of the Buyer to
give notice under the preceding sentence shall not affect the Buyer's right to
indemnification or relieve the Sellers of any other obligations hereunder unless
such failure shall preclude the defense of such claim and the Sellers have been
materially prejudiced by the Buyer's failure to give such notice, in which case
the Sellers shall be relieved from its obligations under Section 5.1 only to the
extent of such material prejudice. After notice to the Buyer, the Sellers will
have the right to elect to assume the defense of any such Tax Proceeding at the
Sellers' own expense. The Buyer and its representatives shall have the right to
observe any such Tax Proceeding with counsel of its choice and at its own
expense and to receive in advance copies of all submissions to be made to any
Tax authority or to any court. The Sellers, in exercising their control of any
such Tax Proceeding, shall consider in good faith all comments and suggestions
of the Buyer in respect of such Tax Proceeding, including but not limited to
comments on submissions and overall strategy. In the event that issues relating
to potential adjustment for which the Sellers may be held liable are required to
be dealt with in the same Tax Proceeding as separate issues relating to a
potential adjustment for which the Buyer, a Subject Subsidiary, a
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Subsidiary of a Subject Subsidiary or an Affiliate thereof may be liable, the
Buyer shall have the right, at its own expense, to control the Tax Proceeding
with respect to the latter issues. Under waiver of its right to indemnity
hereunder, the Buyer may take sole control of any Tax Proceeding, at its sole
cost and expense, and in such case the Sellers shall have no right to observe or
participate in such Tax Proceeding. The Sellers shall not enter into any
compromise or agreement to settle any claim in a Tax Proceeding involving
Liability for Taxes of a Subject Subsidiary, a Subsidiary of a Subject
Subsidiary, or for which the Sellers may otherwise be required to indemnify the
Buyer under this Agreement without the consent of the Buyer, such consent not to
be unreasonably withheld. Any refund received by the Buyer or any Affiliate
thereof of Taxes with respect to which the Sellers have made payment pursuant to
its obligation under Section 5.1(b) shall be for the account of the Sellers.
(e) Tax Sharing Agreements. Any and all Tax sharing, Tax indemnity
or Tax allocation agreements between any Seller, a Subject Subsidiary and/or any
Affiliate thereof that were in effect at any time on or prior to the Funding
shall terminate not later than the Funding. No further amounts shall be payable
by any the Buyer, any Subject Subsidiary, any Subsidiary of a Subject Subsidiary
or any Affiliate thereof under such agreements following the Funding and the
Buyer, any Subject Subsidiary, any Subsidiary of a Subject Subsidiary, or any
Affiliate thereof shall have no further obligations thereunder following the
Funding. Notwithstanding the foregoing, with respect to the filing of
consolidated income Tax Returns to the extent permitted by law each Subject
Subsidiary shall elect to relinquish any carryback period which would include
any Pre-Funding Tax Period with respect to carrybacks of net operating losses,
net capital losses, unused tax credits and other deductible or creditable tax
attributes.
(f) Claims Adjusted for Tax Benefits. The amount of any indemnity
payment owed by the Sellers to the Buyer under this Section 5.1 shall be
adjusted if such indemnity payment is made in connection with (i) the purchase
of the Purchased Businesses or (ii) the purchase of any Subject Subsidiary or
any Subsidiary of any Subject Subsidiary if a Section 338 Election is made with
respect to such purchase. The amount of any such indemnity payment shall be
reduced to take account of any net Tax benefit realized by the Buyer arising
from the item resulting in such indemnity payment, and increased by any net Tax
cost realized by the Buyer as a result of the receipt of such indemnity payment
being treated as income or as a reduction in purchase price. For purposes of
this Section 5.1(f), (x) any net Tax benefit shall be calculated by discounting
(based on semi-annual compounding) the Tax benefit from the date it is expected
to be realized to the date the indemnity payment is made using a discount rate
equal to the overpayment rate contained in Section 662 1(a)(1) of the Tax Code
and (y) any net Tax cost shall be calculated by increasing the indemnity payment
by an interest factor (based on semi-annual compounding) equal to the
overpayment rate contained in Section 6621(a)(1) of the Tax Code from the
Funding Date to the date the indemnity payment is made.
(g) Allocation. Within 90 days after the Funding, the Company
shall provide to the Company copies of a schedule allocating the Purchase Price
(and
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any other items required to be treated as additional Purchase Price) among
the Purchased Assets (the "Allocation Statement"). Within 60 days after the
receipt of such Allocation Statement, the Buyer shall propose to the Buyer any
changes to such Allocation Statement or shall indicate its concurrence
therewith, which concurrence shall not be unreasonably withheld. The failure by
the Buyer to propose any change or to indicate its concurrence within such 60
days shall be deemed to be an indication of its concurrence with such Allocation
Statement. The Buyer and the Company shall file, and shall cause their
Affiliates to file, all Tax Returns and statements (including Form 8594), forms
and schedules in connection therewith in a manner consistent with such
allocation of the Purchase Price and shall take no position contrary thereto
unless required to do so by applicable Tax laws. Any disputes with respect to
the items on the Allocation Statement that the Buyer and the Company, acting in
good faith, are unable to resolve shall be resolved by a "Big Four" accounting
firm mutually acceptable by the Buyer and the Company. Each of the parties to
this Agreement shall be bound by such resolution. Without limiting the
generality of the foregoing, the Buyer's allocation of the adjusted grossed-up
basis (within the meaning of Treasury Regulation Section 1.338-5) and the
Sellers' allocation of the aggregate deemed sales price (within the meaning of
Treasury Regulation Section 1.338-4) shall be consistent with such allocation.
(h) Cooperation on Tax Matters.
(i) The Buyer and the Sellers shall cooperate fully, as and
to the extent reasonably requested by any Party, in connection
with the filing of Tax Returns for the Purchased Businesses, and
any Tax Proceeding in respect of the Purchased Businesses. Such
cooperation shall include the retention and (upon any Party's
request) the provision of records and information which are
reasonably relevant to any such Tax Proceeding and making
employees available on a mutually convenient basis to provide
additional information and explanation of any material provided
hereunder. The Buyer and the Sellers agree (A) to retain all books
and records with respect to Tax matters and pertinent to the
Purchased Businesses until the expiration of the statute of
limitations (and, to the extent notified by the other Party, any
extensions thereof) for the respective taxable periods, and to
abide by all record retention agreements entered into with any
taxing authority, and (B) to give the other Party reasonable
written notice prior to transferring, destroying or discarding any
such books and records and, if the other Party so requests, such
Party shall allow the other Party to take possession of such books
and records.
(ii) To facilitate the Buyer's decision on whether to acquire
assets through an election to purchase the Shares of a Subject
Subsidiary under Section 2.1(b), and whether to effect a Section
338 Election in respect to one or more Subject Subsidiaries, the
Sellers shall deliver to the Buyer as promptly as practicable
following the execution and delivery of this Agreement any and all
information reasonably requested by the Buyer in connection with
determining the expected Tax consequences of the
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transactions contemplated by this Agreement (such information to
include, without limitation, information regarding the Tax
attributes of the Sellers including information regarding the
adjusted tax basis of each asset owned by any Selling Subsidiary).
Such information shall be provided at the Sellers' expense and
shall be the most current information reasonably available;
provided, however, that all such information shall be current as
of a date no earlier than September 30, 2002.
(i) Tax Election. In any case in which the Buyer elects a Stock
Sale, the Sellers will, at the Buyer's request no later than six months after
the Funding Date join in treating the transaction as a purchase of assets for
Tax purposes through an election under Tax Code Section 338(h)(10) and any
analogous provision of state, local or foreign Law (a "Section 338 Election").
The Buyer shall provide to the Sellers (i) a draft Internal Revenue Service Form
8023 to Sellers no later than eight months after the Funding Date prepared in a
manner consistent with Section 5.1 (g) and (ii) any other forms necessary to
effect the Section 338 Election under state, local or foreign Law no later than
30 days prior to the due date thereof. Any dispute with respect to such forms
shall be resolved in the manner set forth in Section 5.l(c)(i) and such forms
shall be executed on behalf of the Sellers and delivered to the Buyer at least
15 days prior to the last day for filing such forms when due and in the manner
required under applicable Law. The Buyer may make such requests separately with
respect to a Section 338 Election with respect to any Subject Subsidiary and any
Subsidiary of any Subject Subsidiary. If the Buyer requests that one or more
Section 338 Elections be made with respect to any Subject Subsidiary and/or any
Subsidiary of any Subject Subsidiary, then Section 5.1(g) shall apply to
determine the allocation of the Purchase Price and other relevant items among
the assets of the Subject Subsidiaries and, if applicable, one or more of its
Subsidiaries. The Sellers shall deliver to the Buyer as promptly as practicable,
and in any event no later than May 1, 2003, any and all information in
connection with determining whether to make any Section 338 Election (such
information to include, without limitation, the adjusted tax basis of each asset
owned by any Selling Subsidiary and the Sellers' (and any Affiliate of the
Sellers') tax basis in the stock of each Selling Subsidiary). Any and all
information provided pursuant to this Section 5.1(i) shall be provided at the
Sellers' expense and shall be the most current information reasonably available;
provided, however, that (x) all such information provided shall be current as of
no earlier than September 30, 2002, (y) the Sellers shall deliver to the Buyer
as promptly as practicable, and in any event within 20 days of receipt of the
Buyer's request therefor, updates of the information provided pursuant to (x) of
this proviso that is current as of no earlier than December 31, 2002.
5.2 Access to Information and Facilities. With respect to Mill Creek
Bank Inc., to the extent permitted by Law, and with respect to all other
Sellers, the Sellers agree that, during the Pre-Funding Period, the Buyer and
its representatives shall, upon reasonable notice to the Sellers and so long as
such access does not unreasonably interfere with the business operations of any
CFC Party, have full access to all premises of the CFC Parties, officers and
management employees, as necessary to prepare for the integration and its
monitor compliance by the CFC Parties with their obligations under this
Agreement including, without limitation, the finance, accounting, marketing,
70
sales, underwriting, risk and operational covenants (and the Sellers shall use
their commercially reasonable efforts to cause the CFC Parties' independent
accountants to be available to the Buyer on the same basis), and shall be
entitled to make such reasonable investigation of the properties, businesses and
operations of the CFC Parties and such examination of the Records and financial
condition of the CFC Parties as it reasonably requests. Without any limitation
of the foregoing, during the Pre-Funding Period, (a) the Sellers shall allow the
Buyer reasonable access to the Business Employees in connection with payroll and
benefit enrollment with the Buyer and (b) the Buyer shall have full access to
any Property that is subject to an Assumed Lease for the purposes of conducting
a Phase I environmental review.
5.3 Confidentiality.
(a) The Buyer acknowledges that all Evaluation Materials (as such
term is defined in the Confidentiality Agreement) provided to the Buyer and any
of its Affiliates, employees, agents and representatives by the Sellers and
their respective Affiliates, employees, agents and representatives in connection
with the transactions contemplated by this Agreement and other Transaction
Documents to which Buyer is a party are subject to the terms of the
Confidentiality Agreement, the terms of which are hereby incorporated herein by
reference; provided, however, that notwithstanding such agreement, the Buyer may
disclose Evaluation Materials to (i) any nationally recognized securities or
statistical rating agency if and to the extent that the Buyer determines that
doing so is desirable or, (ii) any other Person if required by Law or legal or
administrative process. Upon Funding and effective as of the Cut-Off Time, the
Confidentiality Agreement shall terminate; provided, however, the Buyer shall
not disclose to a Third Party any Evaluation Materials (other than the
Evaluation Materials related to the Purchased Assets or Purchased Businesses)
except in connection with a potential acquisition or other transaction involving
all or a portion of the Property of the CFC Parties.
(b) The Company agrees that, the Company shall, and shall use all
reasonable efforts to cause its Affiliates and its and their directors,
officers, employees and advisors to, keep the Buyer Information (as defined
below) confidential, except that any such Buyer Information required by Law or
legal or administrative process to be disclosed may be disclosed without
violating the provisions of this Section 5.3(b). For purposes of this Agreement,
the term "Buyer Information" shall mean all information concerning the Buyer and
its Affiliates (including information relating to the Purchased Businesses or
any client, customer or supplier of the Purchased Businesses).
(c) Notwithstanding anything to the contrary set forth herein or
in any other agreement to which the parties hereto are parties or by which they
are bound, the obligations of confidentiality contained herein and therein, as
they relate to the transactions contemplated in this Agreement, shall not apply
to the tax structure or tax treatment of such transactions, and each party
hereto (and any employee, representative, or agent of any party hereto) may
disclose to any and all persons, without limitation of any kind, the tax
structure and tax treatment of such transactions.
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The preceding sentence is intended to cause such transactions not to be treated
as having been offered under conditions of confidentiality for purposes of
Section 1.6011-4(b)(3) (or any successor provision) of the Treasury Regulations
promulgated under Section 6011 of the Code, and shall be construed in a manner
consistent with such purpose. In addition, each party hereto acknowledges that
it has no proprietary or exclusive rights to the tax structure of such
transactions or any tax matter or tax idea related to such transactions.
5.4 Conduct of the Businesses Prior to Funding.
(a) Subject to the obligations of a debtor-in-possession and any
limitations on operations imposed by the Bankruptcy Court, except as otherwise
expressly contemplated by this Agreement or with the prior written consent of
the Buyer, during the Pre-Funding Period, the CFC Parties shall (i) conduct the
Purchased Businesses in the ordinary course of business consistent with the past
practices of the CFC Parties and shall perform all of their obligations with
respect to the Private Label Credit Card Master Trust Documents in accordance
with their terms; (ii) use commercially reasonable efforts to preserve intact
the Purchased Businesses and the value of the Purchased Assets, to keep
available the services of its current employees and agents and to maintain its
relations and good will with its customers, regulators and any others with whom
or with which it has business relations; (iii) not take any action in violation
of this Agreement; and (iv) file all Tax Returns when due (taking into account
all extensions) and pay all Taxes when due; and (v) conduct the Purchased
Business and operate the Purchased Assets in compliance in all material respects
with all applicable Laws (including, without limitation, Finance Laws). In the
event any of the Active Merchant Agreements are scheduled to expire or terminate
prior to the Funding Date, the Company shall, and shall cause the applicable
Seller to seek to renew and extend any such agreement on terms and conditions
approved by the Buyer. On or prior to the Funding Date, effective as of the
Cut-Off Time, the CFC Parties shall make all adjustments or modifications as may
be necessary to cause their books and records to conform to the valuation and
reserve methodologies set forth on Annex H hereto (which adjustments and
methodologies shall not be used in the calculation of the Net Assets Value).
Without limiting the foregoing, any Purchased Asset that is not a Specified
Purchased Asset shall be reflected on the books and records of the applicable
Seller with a zero value.
(b) Except as otherwise expressly contemplated by this Agreement
or with the prior written consent of the Buyer, during the period from the
Cut-Off Time through the Funding Date, the CFC Parties shall continue to provide
the (i) Business Employees and (ii) Shared Service Employees to whom Buyer
offers employment in accordance with Section 5.12(a)(ii) hereof, with the same
level of base pay or wages and bonus or incentive compensation and the same
employee benefit plans, programs and arrangements (including statutory benefits)
in effect as of the date hereof.
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5.5 Restrictions on Certain Actions.
(a) Without limiting the generality of Section 5.4, and except as
otherwise set forth in Section 5.5 of the Business Schedules (solely with
respect to the period prior to the Cut-Off Time) or in Section 5.5(b) hereof or
as otherwise expressly provided in this Agreement, on or prior to the Funding
Date, the Company shall not, and shall not permit the Company or any of its
Subsidiaries or any Affiliates of the Company to the extent such Affiliates own
Purchased Assets, without the prior written consent of the Buyer, to:
(i) mortgage, pledge, assign, grant any participation or
security interest in or otherwise further encumber any of the
Purchased Assets;
(ii) (1) sell, transfer or liquidate any Property that would,
but for such sale, be a Purchased Asset; provided, however, that
the foregoing shall not prohibit (i) the sale of worn-out,
unserviceable or obsolete equipment and fixtures, (ii) transfers
resulting from any casualty or condemnation of Properties, in each
case at a consideration no less than the Book Value of such
Property as of January 31, 2003, and (iii) the sale of any
Charged-off Accounts and repossessed collateral in the ordinary
course of business and consistent with the past practices of the
CFC Parties;
(2) change the composition of the Assigned Receivables
pool with respect to credit quality except in the ordinary
course of business and consistent with the past practices of
the CFC Parties;
(iii) amend its Organizational Documents, other than to
convert any CFC Party (other than the Trust) into a limited
liability company;
(iv) (A) issue, sell or deliver (whether through the issuance
or granting of options, warrants, commitments, subscriptions,
rights to purchase, or otherwise) any shares of its capital stock
of any class or any other securities or equity equivalents; or (B)
amend in any material respect any of the terms of any such
securities outstanding as of the date hereof;
(v) (A) split, combine or reclassify any shares of its
capital stock or any other securities or equity equivalents; (B)
declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in
respect of its capital stock or any other securities or equity
equivalents; (C) repurchase, redeem or otherwise acquire any of
its securities; (D) adopt a plan of complete or partial
liquidation or resolutions providing for or authorizing a
liquidation, dissolution, merger, consolidation, restructuring,
recapitalization, or other reorganization of any CFC Party; or (E)
repay intercompany indebtedness owed to Affiliates, except in
payment of services rendered;
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(vi) with respect to Mill Creek Bank Inc., (A) create, incur,
guarantee or assume any indebtedness for borrowed money or
otherwise become liable or responsible for the obligations of any
other Person other than certificates of deposit issued by Mill
Creek Bank Inc. to the extent such certificates of deposit is
issued by Mill Creek Bank Inc. as reviewed weekly with the Buyer
or (B) other than in the ordinary course of business, make any
loans, advances or capital contributions to, or investments in,
any other Person (other than to wholly owned Subsidiaries or to
another CFC Party);
(vii) except as may be required by applicable Laws, (A) make
or agree to make any increase in the compensation payable or to
become payable to any Employee, except for regularly scheduled
increases in compensation payable or increases otherwise occurring
in the ordinary course of business consistent with past practices
or (B) enter into, adopt, make any material amendments to or
terminate any collective bargaining agreement, any Employee
Benefit Plan or any other employee benefit agreement, trust, plan,
fund or other arrangement for the benefit or welfare of any
director, officer or employee.
(viii) acquire (by merger, consolidation or acquisition of
stock or assets or otherwise) any Person, or other business
organization or division thereof which would be included in the
Purchased Businesses;
(ix) make any capital expenditure or expenditures in the
Purchased Businesses in excess of the aggregate amount set forth
in the capital expenditures budget agreed upon by the Company and
the Buyer;
(x) enter into, assume, amend, modify, cancel, waive or
change in any respect any Assumed Agreement, including, without
limitation, directly or indirectly extend or otherwise restructure
the payment schedule, payment terms or any other terms or
conditions of any Assumed Receivables Contract, or make any
advance, extension, novation, modification or other accommodation
to any Obligor, except for extensions, restructuring, advances,
novations, modifications or other accommodations made or entered
into in the ordinary course of business as consistent with past
practices of the Sellers;
(xi) enter into any Contract with an Affiliate other than
Contracts entered into in the ordinary course of business
consistent with past practices, involving no more than $100,000
per Contract or series of related Contracts and that do not affect
or impact the Purchased Assets or the Assumed Liabilities or
interfere with or impede the consummation of the transactions
contemplated hereby; or
(xii) with respect to the Purchased Businesses, (1) change in
any material respect any of the accounting principles or practices
used by it for
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Tax or accounting purposes, except for any change required by
reason of a concurrent change in GAAP or (2) write-down the value
of any assets, revalue any asset or write-off as uncollectible any
receivables except in the ordinary course of business consistent
with the past practices of the CFC Parties other than in
accordance with the Accounting Principles;
(xiii) make any changes in dealer concessions, servicing,
billing or collection operations or policies (including, without
limitation, any modifications with respect to the existing
collector incentive program) of the Purchased Businesses or change
the existing service level and operating hours except in the
ordinary course of business consistent with the past practices of
the CFC Parties;
(xiv) with respect to the Purchased Businesses, deviate in
any material respect from existing policies and procedures with
respect to (i) classification of assets; (ii) accrual of interest;
(iii) dealer and consumer underwriting, pricing, originating
selling and servicing; and (iv) obtaining or extending financing
and credit;
(xv) breach or otherwise fail to perform any of their
material duties under the Private Label Credit Card Master Trust
Documents;
(xvi) permit any Assigned Receivable to become subject to a
Securitization;
(xvii) reject any Contract or transfer, sell or otherwise
dispose of any Property that is necessary to operate the Purchased
Businesses in ordinary course and consistent with the past
practices of the CFC Parties;
(xviii) modify any terms or conditions of any deposit held or
accepted by Mill Creek Bank Inc. except as reviewed weekly with
the Buyer;
(xix) use any cash owned by Mill Creek Bank, Inc. or proceeds
from any sale, transfer or other disposition of any Purchased
Assets to pay any of the Excluded Liabilities except for the
following:
(A) payments of Taxes due as required to be made
pursuant to Section 5.4(a)(iv) hereof,
(B) subject to Sections 2.4(f) and 5.38 hereof, payments
prior to the Cut-Off Time of operating expenses incurred by
Mill Creek Bank Inc. in the ordinary course of its business
and consistent with its past practices ("Allowed Operating
Expenses"); and
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(C) subject to Sections 2.2(a)(iii) and 5.38 hereof,
payments of Allowed Operating Expenses after the Cut-Off Time
through the Funding Date; or
(xx) enter into an agreement, contract or commitment to
undertake any of the foregoing (other than this Agreement or the
other Transaction Documents).
(b) Without limiting the generality of Section 5.4, and except as
otherwise set forth in Section 5.5(a) of the Business Schedules or as otherwise
expressly provided in this Agreement, from the Cut-Off Time and through the
Funding Date, the Company shall not, and shall not permit any CFC Party, without
the prior written consent of the Buyer, to:
(i) sell, transfer or liquidate any Property that is a
Purchased Asset;
(ii) enter into, assume, amend, modify, cancel, waive or
change in any respect any Assumed Agreement or make any advance,
extension, novation, modification or other accommodation to any
Obligor (other than with respect to any Assigned Receivable, any
Assumed Receivables Contract or any dealer agreement in the
ordinary course of business consistent with the past practices of
the CFC Parties);
(iii) with respect to the Purchased Businesses, (1) change in
any respect any of the accounting principles or practices used by
it for Tax or accounting purposes, except for any change required
by reason of a concurrent change in GAAP or (2) write-down the
value of any assets, revalue any asset or write-off as
uncollectible any receivables except in accordance with the
Accounting Principles;
(iv) make any changes in dealer concessions, servicing,
billing or collection operations or policies (including, without
limitation, any modifications with respect to the existing
collector incentive program) of the Purchased Businesses or change
the existing service level and operating hours;
(v) with respect to the Purchased Business, deviate in any
respect from existing policies and procedures with respect to (A)
classification of assets; (B) accrual of interest; (C) dealer and
consumer underwriting, pricing, originating, selling and
servicing; and (D) obtaining or extending financing and credit;
(vi) reject any Contract or transfer, sell or otherwise
dispose of any Property that is a Purchased Asset;
(vii) incur, assume or acquire any other obligation or
liability (contingent or otherwise) with respect to the Purchased
Assets except
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normal trade or business obligations incurred in the ordinary and
usual course of businesses consistent with the past practices of
the Sellers;
(viii) cancel or compromise any debt or claim that is a
Purchased Asset, or waive or release any right that is a Purchased
Asset (in each case, other than with respect to any Assigned
Receivable, in the ordinary course of business and consistent with
the past practices of the CFC Parties);
(ix) initiate or settle any pending legal proceeding with
respect to the Purchased Assets (other than any collection
proceedings conducted in the ordinary course of business and
consistent with the past practices of the CFC Parties); or
(x) enter into an agreement, contract or commitment to
undertake any of the foregoing (other than this Agreement or the
other Transaction Documents).
5.6 Press Releases and Announcements. No press releases or public
disclosures related to this Agreement and the transactions contemplated herein,
or other announcements to the employees, customers or suppliers of any Party
shall be issued without the mutual prior written approval of the Parties, except
for any public disclosure which is required by applicable Law or regulation.
Prior to making any public disclosure required by applicable Law or regulation,
the disclosing Party shall give the other Party a copy of the proposed
disclosure and reasonable opportunity to comment on the same to the extent
practicable.
5.7 Approvals of Third Parties; Satisfaction of Conditions to Closing.
(a) Subject to the terms of this Agreement, the Parties shall use
their reasonable best efforts to cause the Funding to occur, and will cooperate
with one another, to secure all necessary consents, approvals, authorizations
and exemptions from Governmental Authorities and other third parties, including
all consents required by Sections 6.4 and 7.4, as promptly as possible. The
Sellers, with the Buyer's cooperation, shall use their reasonable best efforts
to obtain the satisfaction of the conditions specified in ARTICLE 6. The Buyer,
with the Sellers' cooperation, shall use its reasonable best efforts to obtain
the satisfaction of the conditions specified in ARTICLE 7. The Sellers shall
permit the Buyer to participate in negotiations with any merchant who is party
to any Active Merchant Agreement with respect to any consent to transfer of such
Active Merchant Agreement to the Buyer, any waivers and/or amendments to such
Active Merchant Agreements referred to in Section 6.4(d) hereof. The Buyer shall
have no duty to waive any rights or to assume any Liabilities other than the
Assumed Liabilities to be assumed pursuant to the terms of this Agreement in
order to obtain such consents, waivers or amendments.
(b) The Parties shall cooperate in preparing, submitting, filing,
updating and publishing (as applicable), as expeditiously as possible, all
applications, notifications and other filings as may be required by or may be
advisable under
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applicable Laws with respect to the transactions contemplated by this Agreement,
including, without limitation, those of the FDIC, the State Banking Authority
and any other applicable state or federal regulatory agency and those under the
HSR Act, if required. The Parties shall bear the costs and expenses of their
respective filings; provided, however that each of the Buyer and the Company
shall pay one-half the filing fees in connection with the filing under the HSR
Act. The Parties shall use their respective reasonable best efforts to make such
filings as promptly as practicable (and in any event within 30 days) following
the date hereof. The Parties will use their commercially reasonable best efforts
to obtain such approvals and accomplish such actions as expeditiously as
possible.
(c) The Parties shall respond to any requests for additional
information made by either of such agencies, as expeditiously as possible, and
to cause the waiting periods under applicable laws and regulations, including
the HSR Act and the Bank Merger Act, to terminate or expire at the earliest
possible date and to resist in good faith, at the respective cost and expense of
each, any assertion that the transactions contemplated hereby constitute a
violation of the antitrust or competition Laws, all to the end of expediting
consummation of the transactions contemplated hereby; provided, however, that in
no event shall the Buyer or any Seller be required to initiate or defend any
proceeding before any Governmental Authority with respect to such assertions.
Each of the Buyer, on the one hand, and the Sellers, on the other, shall consult
with the other prior to making any substantive presentation by telephone or in
person, in connection with the filings under the HSR (if any) and the Bank
Merger Act, required to be obtained by any party in connection with this
Agreement, to the staff of the applicable Governmental Authorities.
Notwithstanding any provision of clauses (b) and (c) of this Section 5.7,
neither Party shall be required to agree to commercially unreasonable and
materially burdensome conditions, other than any requirement that it be
well-capitalized, and in no event shall the Buyer or any of its Affiliates have
any obligation to dispose of, hold separate or otherwise restrict its respective
enjoyment of any of its Properties (including, without limitation, after the
Cut-Off Time, the Purchased Assets).
(d) Each Party represents, warrants and agrees that any
information furnished by it for inclusion in any regulatory application will be
true and complete as of the date so furnished.
5.8 Bankruptcy Actions.
(a) (i) The Filing Company Subsidiaries, that as of the date of
this Agreement have not commenced the Chapter 11 Case, shall commence the
Chapter 11 Case on a date (the "Petition Date") either prior to or, as soon as
reasonably practicable after the execution of this Agreement (but not later than
March 21, 2003), and serve notice of the execution of this Agreement on
interested parties as required by the Bankruptcy Code and Rules. Notwithstanding
the foregoing, the Buyer and the Company shall cooperate in determining any
adverse impact of the filing of Mill Creek Servicing Corporation ("MCSC") and
Conseco Finance Credit Card Corp. ("CFCCC") on the consummation of the
transactions contemplated hereby. Notwithstanding the
78
terms of Section 2.3(b)(ii)(B), in the event that MCSC or CFCCC does not become
a Filing Company Subsidiary on or prior to March 21, 2003, then that portion of
the Purchase Price allocable to the Purchased Assets and Assumed Liabilities of
the non-Filing Company Subsidiary (calculated on the basis of the Final Schedule
of Assets Acquired and Liabilities Assumed) shall be paid directly to such
non-Filing Company Subsidiary. The Sellers (other than the Banks) shall obtain
entry of the Sale Order by March 14, 2003. The Sellers who have commenced a
Chapter 11 Case shall file, in accordance with this Agreement and applicable
Law, all pleadings with the Bankruptcy Court as are necessary or appropriate to
secure entry of the Sale Order, shall serve all parties entitled to notice of
such pleadings under applicable provisions of the Bankruptcy Code and Bankruptcy
Rules, including, but not limited to, all parties to the Assumed Agreements
(other than to Assumed Agreements relating solely to Subsidiaries that are not
required to commence a Chapter 11 Case under this Agreement, and as to which
neither the Company nor any Filing Company Subsidiaries that have commenced a
Chapter 11 Case are parties) and all Governmental Authorities having or
asserting jurisdiction over the Sellers, or the Purchased Assets and shall
diligently pursue the obtaining of such orders.
(ii) The Sellers and their counsel shall consult with the
Buyer and its counsel in advance of the Sale Hearing regarding the
evidence to be presented in support of the Sale Order. The Sellers
agree that the direct evidence to be presented to the Bankruptcy
Court by the Sellers in support of the Sale Order, whether by
written proffer, affidavit, or otherwise, shall be in form and
substance reasonably satisfactory to the Buyer.
(b) The Buyer covenants and agrees that it shall cooperate with
the Sellers in connection with furnishing information or documents to the
Sellers to satisfy the requirements of adequate assurance of future performance
under section 365(f)(2)(B) of the Bankruptcy Code.
(c) In the event an appeal is taken, or a stay pending appeal is
requested from any of the Orders of the Bankruptcy Court in connection with the
sale of the Purchased Assets, the Sellers shall immediately notify the Buyer of
such appeal or stay request and, upon the Buyer's request, shall provide to the
Buyer within three Business Days after the Sellers' receipt thereof a copy of
the related notice of appeal or order of stay. The Sellers shall also provide
the Buyer with written notice of any motion or application filed in connection
with any appeal from any of such Orders.
(d) The Parties hereby agree that, notwithstanding any provision
to the contrary contained in this Agreement neither Mill Creek Bank Inc., any of
its Subsidiaries, nor Green Tree Retail Services Bank Inc., or any of its
Subsidiaries is required to commence a case under chapter 11 of the Bankruptcy
Code.
(e) (i) If requested by Buyer, the Seller shall seek a Final Order
from the Bankruptcy Court on or before the Funding Date permitting the Buyer to
use, in accordance with the terms and conditions of the existing lease, the
space and other facilities currently occupied by the CFC Parties in connection
with the PL Business at
79
000 Xxxxxxxxx Xxxxxx, Xx. Xxxx, Xxxxxxxxx, for such period after the Funding and
extending, pursuant to section 365(d)(4) of the Bankruptcy Code, the time within
which the CFC Debtors may assume or reject such lease through and including
December 31, 2003, which date may be further extended upon motion. If the Buyer
is permitted to use the aforementioned space and facilities, the Buyer shall pay
to the Seller all rent and other occupancy costs arising under such lease and
shall comply in all material respects with the terms, conditions and provisions
of such leases during the period of such occupancy, in each case for such period
after the Funding. The CFC Debtors shall not seek to reject the leases covering
such premises until in each case for such period after the Funding and ending on
the earliest to occur of (i) receipt by Seller of written notice from Buyer of
Buyer's decision to vacate such premises, (ii) a default by Buyer in its
obligations under this Section 5.8(e), or (iii) December 31, 2003.
(ii) If the amendment contemplated under Section
6.15(a)(ii)(B) hereof is obtained within the time period
contemplated thereunder, such lease for 0000 X. Xxxxxxxxx Xx.,
Xxxx. X/0, Xxxxx, XX (as so amended) shall be deemed to be an
Assumed Lease as of the Funding Date. If such an amendment is not
so obtained, the terms, conditions and agreements in Section
5.8(e)(i) above shall, at the election of Buyer, also apply in all
respects to such Tempe, AZ lease.
5.9 [Intentionally Omitted].
5.10 [Intentionally Omitted].
5.11 Exclusivity; No Solicitation of Transactions.
(a) The Sellers represent that, other than the transactions
contemplated by this Agreement, they are not parties to or bound by any
agreement with respect to a possible merger, sale, restructuring, refinancing or
other disposition of all or any material part of the Purchased Businesses or the
Purchased Assets.
(b) From the date of the issuance of the Sale Order and until the
Funding Date, neither the Sellers nor any of their Affiliates shall discuss,
negotiate or consummate any transaction involving the sale, exchange,
liquidation, reorganization, or other disposition of all or any part of the
Purchased Assets or any of the Purchased Businesses.
5.12 Employees.
(a) (i) Effective as of the Funding Date, the Buyer shall offer
employment to all Business Employees employed by the Sellers or their Affiliates
as of the Funding Date. The Buyer shall have no obligation to offer employment
to any Business Employees other than those identified in Section 5.12(a) of the
applicable Business Schedules.
(ii) Promptly following the execution of this Agreement, the
Sellers shall provide the Buyer with such assistance as the Buyer
may
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request with respect to identifying those employees whose services
are shared among both the Purchased Businesses and other
businesses of the Company (the "Shared Service Employees"). At the
same time, the Sellers shall also identify for the Buyer which
Shared Service Employees are primarily engaged in performing
services for, or are allocated to, the Purchased Businesses. The
Buyer shall have until April 30, 2003 to determine and notify the
Sellers which Shared Service Employees shall be offered
employment. The Buyer, in its sole discretion, shall have the
right to offer employment, effective as of the Funding Date, to
any Shared Service Employee (A) primarily engaged in performing
services for any Purchased Business (unless the Buyer agrees that
the Bankruptcy Acquiror may offer employment to any such
employee), (B) primarily engaged in performing services for the HE
or MH Businesses, subject to the prior consent of the Bankruptcy
Acquiror (unless the Bankruptcy Acquiror does not offer employment
to such employee) and (C) listed under the "Unallocated" heading
in Section 5.12(a) of the Business Schedules and who is designated
for the Buyer on such schedule. Notwithstanding the above, the
Shared Services Employees listed under the heading "Unallocated
Risk Management Employees" on Section 5.12(a) of the Business
Schedules (the "URM Employees") shall be offered employment by
such joint venture as the Buyer and CFN shall establish (the "JV
Arrangements") in accordance with such terms as mutually agreed
upon by the parties to the JV Arrangements, including an
allocation of costs within the joint venture based on the
proportion of the work done for each respective joint venture
party, and Buyer shall not offer employment to any URM Employee,
except that if the Funding Date occurs prior to the closing of the
transactions contemplated by the CFN Agreement, Buyer may offer
employment to URM Employees. If Buyer has offered employment to
URM Employees (pursuant to the above sentence), any such employees
who accept Buyer's offer shall remain employees of Buyer until the
closing of the transactions contemplated by the CFN Agreement, and
thereafter shall be employed pursuant to the JV Arrangements,
except that if the CFN Agreement is terminated, such URM Employees
shall continue as employees of Buyer. During such time as any URM
Employees are employed by Buyer prior to either the closing of the
transactions contemplated by the CFN Agreement or, in the event of
the termination of the CFN Agreement, until such time as the
Sellers either liquidate or sell the Excluded Businesses (but in
no event later than six months following the Funding Date), such
employees shall continue to provide support services to the
Excluded Businesses, and Sellers (or CFN if appropriate) shall
reimburse Buyer for the proportionate cost of employing such URM
Employees, based on the percentage of such employees' time
dedicated to the Excluded Businesses, as mutually determined by
Buyers and Sellers in good faith. Except with respect to URM
Employees who are employed pursuant to the JV Arrangements as
described herein, the Buyer shall have no Liability whatsoever for
any
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Shared Service Employees who are not offered employment by the
Buyer or who do not accept the Buyer's offer of employment.
(iii) The Buyer shall (A) assume liability and responsibility
for the Assumed Retention Agreement and (B) assume the severance
and sick pay, vacation and paid time off liability for any
Business Employee who is not offered employment in accordance with
Section 5.12 as such severance, sick pay, vacation and paid time
off is set forth on the list provided under Section 3.14 hereof.
(iv) Notwithstanding anything to the contrary in Section
5.12(a), the Buyer shall not offer employment to any employee
listed on the "IT Employees" portion of Section 5.12(a) of the
Business Schedules that is listed under the "CFN" column (the
"Bankruptcy Acquiror IT Employees"), and the Buyer shall offer
employment to all employees listed on the "IT Employees" portion
of Section 5.12(a) of the Business Schedules where such employees
are listed under the "GE PL/HI/CI" column (the "Buyer IT
Employees"). The Buyer will assume severance and paid time off,
sick leave, and vacation pay obligations (as set forth on the list
provided under Section 3.14) with respect to Buyer IT Employees
and will assume no Liabilities for severance, paid time off, sick
leave and vacation pay with respect to the Bankruptcy Acquiror IT
Employees.
(b) Business Employees, Shared Service Employees and employees of
the HE Business who accept offers of employment in accordance with Section
5.12(a) hereof and become employees of the Buyer are referred to herein as the
"Transferred Employees" as of the date such employee commences employment with
Buyer. Each such offer of employment shall be in accordance with Buyer's normal
terms and conditions (including "OFAC" list checks but not drug screening and
background checks) and at the same base salary or wage level and bonus
opportunity applicable to each such Transferred Employee immediately prior to
the Funding Date and the Buyer shall not reduce such base salary, wage level or
bonus opportunity during the 12-month period following the Funding Date. The
Buyer also agrees to provide the Transferred Employees and their covered
dependents with welfare and retirement benefits that are no less favorable, in
the aggregate, than those welfare and retirement benefits provided by Sellers to
such Transferred Employees immediately prior to the Funding Date. Except as
provided by Section 5.12(a)(ii), the Buyer shall assume no liability with
respect to, any employees other than the Business Employees and Transferred
Employees.
(c) Within 45 days of the Funding Date, the Buyer shall pay the
Business Employees and Transferred Employees the commissions relating to
pre-Funding originations of Loans that constitute Purchased Assets for the month
in which the Funding occurs, as calculated under the commission program in
effect immediately prior to the Funding (regardless of whether such program is
in effect at any time
82
following the Funding), and as reflected on the Final Schedule of Assets
Acquired and Liabilities Assumed.
(d) Prior to the Funding Date, or as soon as reasonably
practicable thereafter, Sellers shall contribute, or cause to be contributed, to
the ConsecoSave Plan an amount equal to the salary deferral relating to such
deferrals from January 1, 2003 through the Funding Date for each Transferred
Employee who participates in the ConsecoSave Plan. Each Transferred Employee
shall be fully vested in his or her accounts in such plan. As soon as reasonably
practicable following the Funding, the Buyer or one of its Affiliates shall
designate or establish a tax-qualified defined contribution retirement plan and,
to the extent allowable by Law, the Buyer shall take any and all necessary
action to cause the trustee of such plan, if requested to do so by a Transferred
Employee, to accept a direct "rollover" in cash of all or a portion of such
employee's distribution in accordance with the terms and conditions of such plan
from the ConsecoSave Plan. In the case of a Transferred Employee with an
outstanding loan under the ConsecoSave Plan, the Buyer and the Sellers shall
take any and all necessary action, to the extent allowable by Law, to permit the
Transferred Employee to rollover such outstanding loan balance to the plan or
plans designated or established by the Buyer, provided, however, that the
Transferred Employee may transfer such loan only if such Transferred Employee
elects to rollover his or her entire account balance under the ConsecoSave Plan
to the Buyer's plan.
(e) The Buyer shall pay to each Transferred Employee whose
employment is terminated by the Buyer or one of its Affiliates within 12 months
of the Funding Date, at the election of the Transferred Employee either (i)
severance equivalent to that set forth in Section 5.12(a) of the applicable
Business Schedules or (ii) severance benefits in accordance with the Buyer's
applicable severance policy.
(f) Liabilities for severance, paid time off, sick leave and
vacation pay for Business Employees and Transferred Employees as set forth under
the heading "PTO" in Section 5.12(a) of the applicable Business Schedules (or as
set forth on the list provided under Section 3.14 hereof) shall be Assumed
Liabilities hereunder as reflected on the Final Schedule of Assets Acquired and
Liabilities Assumed.
(g) The CFC Parties agree to timely perform and discharge all
requirements under the WARN Act to the extent applicable and under applicable
state and local laws and regulations for the notification of its Employees
arising from the sale of the Purchased Assets to the Buyer up to and including
the Funding Date for those employees who will become Transferred Employees
effective as of the Funding Date. After the Funding Date, the Buyer shall be
responsible for performing and discharging all requirements under the WARN Act
and under applicable state and local laws and regulations for the notification
of its employees with respect to the Purchased Assets and the Businesses. The
Parties shall provide one another with all assistance reasonably requested by
each Party to ensure that the Parties can comply with their respective
notification requirements of the WARN Act, including assistance with the
provision of such notices to Employees prior to the Funding Date. The Buyer
agrees to indemnify the Sellers and their Affiliates and their respective
directors, employees,
83
consultants and agents for, and to hold them harmless from and against, any and
all Losses arising or resulting, or alleged to arise or result, from liabilities
arising under the WARN Act with respect to any Transferred Employees or any
Business Employees not offered employment by the Buyers, provided that the
Sellers have complied with the covenants set forth in Section 5.12(a).
(h) To the extent permitted under the Buyer's welfare benefit
plans, the Buyer shall (i) waive pre-existing condition requirements (except
with respect to any pre-existing condition for which coverage was denied under
any welfare benefit plan of the CFC Parties), evidence of insurability
provisions, waiting period requirements or any similar provisions under any
welfare benefit plans maintained by the Buyer for Transferred Employees after
the Funding Date, and (ii) apply toward any deductible requirements and
out-of-pocket maximum limits under its Employee welfare benefit plans any
amounts paid (or accrued) by each Transferred Employee under the CFC Parties'
welfare benefit plans during the applicable plan year in which the Funding Date
occurs. The Buyer shall recognize for purposes of eligibility and vesting (but
not benefit accruals under any defined benefit pension plan) under its policies
and employee benefit plans, the service of any Transferred Employee with the CFC
Parties or any of their Affiliates prior to the Funding Date.
(i) Except for the reimbursement by the Buyer of Employment Costs
pursuant to Section 2.2(a)(iii)(C), claims of Transferred Employees and their
eligible beneficiaries and dependents for medical, dental, prescription drug,
life insurance, and/or other welfare benefits ("Welfare Benefits") that are
incurred before the Funding Date shall be the sole responsibility of the Sellers
and the Sellers' welfare benefit plans. Claims of Transferred Employees and
their eligible beneficiaries and dependents for Welfare Benefits that are
incurred on or after the Funding Date shall be the sole responsibility of the
Buyer and the Buyer's welfare benefit plans. For purposes of the preceding
provisions of this paragraph, a medical/dental claim shall be considered
incurred on the date when the medical/dental services are rendered or
medical/dental supplies are provided, and not when the condition arose or when
the course of treatment began. Claims of individuals receiving long-term
disability benefits under a disability plan of the Sellers or any CFC Party
("Seller LTD Plan") as of the Funding Date shall be the sole responsibility of
the Sellers and the Seller LTD Plan. Claims for long-term disability benefits
based on an illness or injury arising prior to the Funding Date by any
Transferred Employees (and their eligible beneficiaries and dependents) who were
covered under the Seller LTD Plan, but not receiving benefits as of the Funding
Date, shall be provided by the Seller LTD Plan in accordance with the terms of
such plan as of the Funding Date.
(j) The CFC Parties shall be responsible for satisfying
obligations under Section 601 et seq. of ERISA and Section 4980B of the Tax
Code, to provide continuation coverage to or with respect to any of the CFC
Parties' employees and their covered dependents in accordance with law with
respect to any "qualifying event" occurring on or prior to the Funding Date
(including any termination of employment of an Employee which occurs in
connection with the transaction contemplated herein). The Buyer shall be
responsible for satisfying obligations under Section 601 et seq. of
84
ERISA and Section 4980B of the Tax Code, to provide continuation coverage to or
with respect to any of the Transferred Employees and their covered dependents in
accordance with law with respect to any "qualifying event" which occurs after
the Funding Date.
5.13 Transition. The Sellers shall not in any manner take any action
which is designed, intended or might reasonably be anticipated to have the
effect of discouraging customers, suppliers, vendors, service providers,
employees, lessors, licensors and other business relations from maintaining the
same business relationships with the Purchased Businesses after the date of this
Agreement; and during the Pre-Funding Period, the Sellers shall make such
commercially reasonable efforts to encourage customers, suppliers, vendors,
service providers, employees, lessors, licensors and other business relations to
maintain the same business relationships with the Purchased Businesses after the
date of this Agreement; provided, that actions required to be taken by the
Sellers and their Subsidiaries pursuant to the Chapter 11 Cases shall not be
deemed to be a breach by the Sellers of the foregoing. During the Pre-Funding
Period, the Sellers shall also use all commercially reasonable efforts to obtain
for the Buyer and the Buyer shall use all commercially reasonable efforts to
cooperate with the Sellers in obtaining all of the rights under the agreements
designated as "Share/Split Contracts" in Attachment A to Section 2.1(a) of the
Business Schedules, which is necessary to operate the Purchased Businesses, to
the extent such rights were provided to the Sellers or their Affiliates prior to
the Funding Date; it being understood that such contracts designated as
"Share/Split Contracts" shall in any event be Excluded Assets. During the
Pre-Funding Period, subject to the consent of the Company, which consent shall
not be unreasonably withheld, the Buyer may contact Third Parties that are
parties to any Assumed Agreements. On and after the date hereof, the Sellers
shall cooperate with the Buyer to identify and provide all reasonable
information and access with respect to the transition services referred to in
Section 6.6 hereof.
5.14 Seller's Trademarks. After the Funding, the Buyer may use and
distribute solely in connection with the Purchased Businesses or the Purchased
Assets, shipping materials, stationery, invoices, sales, promotional or other
forms and literature comprising part of the Purchased Assets and which bear the
name "Conseco" or "Conseco Finance" or the Conseco design (except as are
transferred to the Buyer at Funding) only if the Buyer uses all commercially
reasonable efforts to attach a sticker, name plate or other notice previously
approved by the Seller which discloses the acquisition of such Purchased
Asset(s) by the Buyer. Such right shall terminate 180 days following the Funding
Date. Once such right has terminated, the Buyer shall destroy or cause to be
destroyed all of such items and the Buyer further agrees that it shall use all
commercially reasonable efforts to cease to use or display names or materials
bearing the name "Conseco", "Conseco Finance" or the Conseco design trademarks
or any derivative thereof as promptly as practicable. Notwithstanding the
foregoing, in no event shall this Section 5.14 apply to any existing Contract on
which such names or designs appear as of the Cut-Off Time and the Buyer shall be
under no obligation to remove such names or designs from any Contract or any
other Records or Files received from the Sellers.
85
5.15 Notices to Obligors. No later than 15 days prior to the Funding
Date, the Company shall prepare, and transmit to each Obligor (of an Assigned
Receivable or Securitized Receivable) under each Assumed Receivables Contract a
notice in a form satisfying the requirements, as applicable, of Regulation X of
the Department of Housing and Urban Development under the Real Estate Settlement
Procedures Act, as well as all other applicable legal requirements, and
reasonably acceptable to the Buyer, to the effect that the Assumed Receivables
Contract and, as applicable, the servicing of the Assumed Receivables Contract,
will be transferred to the Buyer or another Person and directing that payments
be made after the Funding Date to the Buyer or its designee at any address of
the Buyer specified by the Buyer, with the Buyer's or its designee's name as
payee on any checks or other instruments used to make such payments. The Company
and the Buyer shall consult and cooperate with each other in the preparation of
such notices and they each shall bear one-half of the expenses incurred for the
preparation and transmission of such notices. With respect to all such Assumed
Receivables Contracts on which payment notices or coupon books have been issued,
the Buyer shall have the opportunity to prepare new payment notices or coupon
books reflecting the name and address of the Buyer as the Person to whom and the
place at which payments are to be made and to have such new payment notices or
coupon books included with the notices prepared and transmitted by the Company.
5.16 Non-Solicitation and Non-Competition.
(a) The Sellers acknowledge that the agreements and covenants
contained in this Section 5.16 are essential to protect the value of the
Purchased Assets being acquired by the Buyer.
(b) During the period commencing on the date of this Agreement and
ending on the fifth anniversary of the Funding Date, neither the Sellers nor any
of their Subsidiaries shall for themselves or on behalf of or in conjunction
with any Person, directly or indirectly, solicit, endeavor to entice away from
the Buyer, or otherwise directly or indirectly interfere with the relationship
of the Buyer with any Person who within the prior 12 months had been an employee
of the Buyer; provided, however, that the foregoing provision will not prevent
the Sellers from hiring any such Person (i) who responds to a public
advertisement placed by the Sellers or any of their Subsidiaries, or (ii) who
has been terminated by Buyer or any of its Affiliates.
(c) During the period commencing on the date of this Agreement and
ending on the fifth anniversary of the Funding Date, neither the Sellers nor any
of their Subsidiaries shall participate or engage, directly or indirectly,
whether as an agent, consultant, stockholder, member, partner, joint venturer,
investor or otherwise, in the same or similar type of business as the Purchased
Businesses or in any activity which is the same as or similar to the Purchased
Businesses, in all cases anywhere in the world.
(d) The Parties agree that a monetary remedy for a breach of the
agreements set forth in this Section 5.16 will be inadequate and impracticable
and further agree that such a breach would cause irreparable harm, and that the
non-
86
breaching party shall be entitled to temporary and permanent injunctive relief
without the necessity of proving actual damages. In the event of such a breach,
the breaching party agrees that the non-breaching party shall be entitled to
such injunctive relief, including temporary restraining orders, preliminary
injunctions and permanent injunctions as a court of competent jurisdiction shall
determine.
(e) If any of the provisions of this Section 5.16 is invalid in
part, it shall be curtailed, as to time, location or scope, to the minimum
extent required for its validity under the Laws of the United States and shall
be binding and enforceable with respect to the Sellers, as applicable, as so
curtailed; it being the intention of the Parties that the provisions of this
Section 5.16 be enforced to the fullest extent permissible under the laws and
policies of each jurisdiction in which enforcement may be sought, and that the
unenforceability (or the modification to conform to such laws and policies) of
any provision of this Section 5.16 shall not render unenforceable or impair the
remainder of the provision of this Section 5.16.
5.17 Further Actions. The Sellers agree not to take any action in the
Chapter 11 Case, including, but not limited to, any action in connection with
proposing or confirming any plan of reorganization, that would limit, impair or
alter the Buyer's rights under this Agreement.
5.18 Further Assurances. Upon the request of the Buyer or its
successors and assigns at any time after the Funding Date, the Sellers will
forthwith execute and deliver to the Buyer or its designee such further
instruments of assignment, transfer, conveyance, endorsement, direction or
authorization and other documents as the requesting party or parties or its or
their counsel may reasonably request in order to perfect title of the Buyer and
its successors and assigns to the Purchased Assets (including the Shares
purchased in a Stock Sale) consistent with the terms and conditions of this
Agreement, or otherwise to effectuate the purposes of this Agreement and the
other Transaction Documents.
5.19 Mail Forwarding. For a period of one year after the Funding Date,
the Sellers shall maintain adequate staff or engage an outside service at their
own expense to accept and forward to the Buyer all mail and other communications
received by the CFC Parties relating to the Purchased Assets.
5.20 [Intentionally Omitted].
5.21 [Intentionally Omitted].
5.22 [Intentionally Omitted].
5.23 Preparation of License Applications. As promptly as possible after
the date hereof, the Sellers shall prepare drafts, which drafts shall be as
complete as possible, of all notifications or other filings or applications that
are advisable or are required to be filed by the Buyer pursuant to the Finance
Laws in order to consummate the transactions contemplated hereby, for the
Buyer's review, augmentation and filing. The Sellers shall provide all
reasonable assistance and cooperation with respect to the Buyer's efforts to
obtain such licenses.
87
5.24 Provision of Bank Information. The Sellers shall use all best
efforts to arrange for a meeting between representatives of the FDIC and state
banking authorities (collectively, the "Regulators") and representatives of the
Buyer and its financing sources (if any), at which the Regulators shall be asked
to discuss with them the results of examinations of Mill Creek Bank and other
regulatory issues or concerns. The Company shall seek to schedule the meeting as
soon as reasonably practicable after the date of this Agreement, but in no event
more than 10 Business Days after the date of this Agreement. In addition, as
soon as reasonably practicable after the date of this Agreement, but in no event
more than 5 Business Days after the date of this Agreement, the Sellers shall
provide to the Buyer to the extent permitted by Law the following information
with respect to Mill Creek Bank: (i) copies of all examination reports issued by
the FDIC or state banking authorities since January 1, 2000; (ii) copies of all
supervisory or remedial agreements of any kind, including, but not limited to,
memoranda of understanding, agreements, cease-and-desist orders, consent orders
and enforcements orders outstanding at any time since January 1, 2000; (iii)
copies of all supervisory correspondence, including, but not limited to,
correspondence related to (i) and (ii) above; and (iv) copies of all internal
analyses, including, but not limited to, memoranda, notes, correspondence and
messages, and data, including, but not limited to, financial reports and reports
concerning intercompany balances, regarding compliance with sections 23A and 23B
of the Federal Reserve Act with respect to intercompany agreements with Mill
Creek Bank (together with the discussions between the Buyer and the Regulators
described above, the "Bank Information").
5.25 Access to Records After the Funding.
(a) For a period of eight years after the Funding Date, the
Sellers and their representatives shall have reasonable access to all of the
Files transferred to the Buyer hereunder to the extent that such access may
reasonably be required by the Sellers. 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 by them pursuant to Section 5.23(a). If the Buyer shall desire to
dispose of any such Files prior to the expiration of such eight-year period, the
Buyer shall, prior to such disposition, give the Sellers a reasonable
opportunity, at their expense, to segregate and remove such Files as the Sellers
may select.
(b) For a period of eight years after the Funding Date, the Buyer
and its representatives shall have reasonable access to all of the Files
relating to the Purchased Businesses which the Sellers or any of their
respective Affiliates may retain after the Funding Date. Such access shall be
afforded by the Sellers and their respective 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 5.25(b). If the Sellers or any of their respective Affiliates shall
desire to dispose of any such Files prior to the expiration of such eight-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
Files as the Buyer may select. In the event any Records are acquired by any
Bankruptcy Acquiror, the
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Sellers shall cause such Bankruptcy Acquiror to provide the Buyer and its
representatives access to Records on terms and conditions substantially similar
to the terms and conditions set forth in this Section 5.25(b).
(c) In the event that the Buyer acquires any Records that relate
to any Property acquired by any Bankruptcy Acquiror or retained by the Company,
the Buyer shall provide such Bankruptcy Acquiror or the Company, as applicable,
and their respective representatives access to such Records on terms and
conditions substantially similar to the terms and conditions in Section 5.25(c)
hereof; provided, however, the Bankruptcy Acquiror shall be solely responsible
for any costs and expenses incurred by it and the Buyer pursuant to this Section
5.25(c) with respect to the access to such Records by the Bankruptcy Acquiror
and the Company shall be solely responsible for any costs and expenses incurred
by it and the Buyer pursuant to this Section 5.25(c) with respect to access by
the Company to such Records.
5.26 Liens. The Sellers shall provide to the Buyer, within five
Business Days of the date hereof, written notice of a description of all Liens
(except Permitted Liens) on the Purchased Assets, and a copy of all UCC searches
conducted with respect thereof. On or prior to the Funding, the Sellers shall
deliver to the Buyer evidence of the satisfaction, discharge or other
termination of all such Liens (except Permitted Liens) on the Purchased Assets.
5.27 Separation Matters. The Sellers shall cooperate with the Buyers
with respect to all separation or transition issues which may arise in
connection with the separation of various businesses of the CFC Parties as a
result of the sale of the assets of the CFC Parties pursuant to the Auction.
Without limiting the foregoing, the Sellers and the Buyer shall negotiate in
good faith with each other and with any applicable Bankruptcy Acquiror
(including, without limitation, CFN) to enter into (a) in case of the Sellers,
an agreement in form and substance mutually acceptable to the Company and the
Buyer whereby the Company would provide servicing to the Buyer for a period
beginning from and after the Funding Date until the earlier of (i) the date
which is four (4) months from the Funding Date or (ii) the closing date pursuant
to the terms of the CFN Agreement; and (b) in case of a Bankruptcy Acquiror, an
agreement incorporating the terms set forth on Annex D attached hereto and such
other terms as may be agreed by the parties thereto whereby the Sellers or such
Bankruptcy Acquiror shall agree to provide to the Buyer such services as the
Buyer reasonably determines are necessary to operate the Purchased Businesses,
to the extent such services were provided by the Sellers or its Affiliates prior
to the Funding Date (the "Servicing Agreements"). The Servicing Agreements shall
include, without limitation, certain transitional services provided pursuant to
the agreements designated in Attachment A to Section 2.1(a) of the Business
Schedules as required to be included under the Servicing Agreements. The Buyer
agrees to grant CFN, from and after the closing date under the CFN Agreement, a
perpetual, worldwide, royalty-free, sublicenseable, and transferable license to
use the trademarks "FUNANCING," "MAKING EXCITEMENT AFFORDABLE," and
"AQUAVANTAGE" in connection with the Purchased Businesses as defined in the CFN
Agreement (the "CFN Purchased Assets"), which shall include a right for CFN to
use any materials that incorporate these trademarks and that were created by the
Sellers prior to
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the Cut-Off Time for use with the CFN Purchased Assets, in each case to the
extent the Seller has transferred and assigned good and marketable title to such
Property to the Buyer.
5.28 [Intentionally Omitted].
5.29 Financial Information. The Sellers shall prepare and deliver to
the Buyer, within 10 Business Days after every calendar month-end between the
date hereof and the Funding Date (the "Post-Signing Balance Sheets") a
Restricted and Unrestricted Balance Sheet of the Company which shall fairly
present, in all material respects, the financial position of the Company and its
Subsidiaries as of the dates thereof in accordance with GAAP, consistently
applied and consistent with the accounting principles set forth in Part I of
Section 1.1A of the Business Schedules (subject, in the case of interim balance
sheets, to normal year-end audit adjustments which will not be material in
amount or effect and in the case of unaudited balance sheets, the omission of
notes), together with delinquency reports in the same form and containing the
same type of information and content as those created by the CFC Parties in
their ordinary course of business. The Sellers shall also prepare and deliver to
the Buyer as soon as reasonably practicable after every calendar month-end
between the date hereof and the Funding Date, true, complete and correct ledger
information of the Company which shall be in the form previously delivered to
the Buyer.
5.30 [Intentionally Omitted].
5.31 Intellectual Property Licenses; Shared Services; Shared Systems.
(a) In the event that the Buyer does not enter into an agreement
with a Third Party on or prior to the Effective Closing Date pursuant to which
such Third Party agrees to provide all Servicing required to service and manage
the Home Improvement Loans and Consumer Loans originated by the HI Origination
Platform and the CL Origination Platform and the HI and CL Mill Creek Bank
Loans, and the Closing Date as defined in the CFN Agreement has not yet
occurred, then the Sellers or their Affiliates shall provide such Servicing to
Buyer for a period beginning from and after the Funding Date until the earlier
of (i) the date which is four (4) months from the Funding Date or (ii) the
closing date pursuant to the terms of the CFN Agreement.
(b) On or prior to the Funding Date and effective as of the
Cut-Off Time, the Sellers or their Affiliates hereby grants to the Buyer a
non-exclusive perpetual, irrevocable, worldwide royalty-free, sublicensable
right and license to use the Intellectual Property set forth in Section 5.31(b)
of the Business Schedules and any other software developed by any Seller or for
any Seller and necessary for any Seller to run the Purchased Businesses, and
such license shall include the right to create and use enhancements,
modifications and other derivative works of computer software included within
such Intellectual Property. In the event that any of the Intellectual Property
set forth in Section 5.31(b) of the Business Schedules is acquired by any
Bankruptcy Acquiror, the Sellers shall cause such Bankruptcy Acquiror to (i)
assume
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the obligations of the Sellers under the license described in this Section
5.31(b) or (ii) provide the Buyer all of the rights equivalent to those provided
to the Buyer pursuant to the terms of the license described in this Section
5.31(b), on terms and conditions substantially equivalent to those set forth
herein.
(c) In the event that the Sellers or their Affiliates retain
certain Intellectual Property after the Funding Date, which is necessary for the
Buyer to conduct the Purchased Businesses, substantially in the manner in which
they were conducted pre-Funding the Sellers shall grant to the Buyer a
non-exclusive, perpetual, irrevocable, worldwide, royalty-free, sublicensable
right and license to use such Intellectual Property, and such license shall
include the right to create and use enhancements, modifications and other
derivative works thereof.
(d) In the event that the Buyer acquires certain Intellectual
Property pursuant to the terms of this Agreement which is necessary for the
Sellers to conduct their business after the Funding Date, substantially in the
manner in which it was conducted on or prior to the Funding Date (other than the
business which they are prohibited from conducting pursuant to Section 5.16 (the
"Restricted Business")), the Parties shall negotiate in good faith the terms of
a license agreement pursuant to which the Buyer shall grant to the Sellers the
right and license to use such Intellectual Property for the conduct of the
Seller's business after the Funding Date; provided, however, that such license
shall not include the Intellectual Property set forth in Section 5.31(d) of the
Business Schedules.
5.32 Pending or Threatened Litigation. Between the date of this
Agreement and the Funding Date, the Sellers and the Buyer shall inform each
other, promptly upon obtaining knowledge thereof, of any pending or threatened
litigation or any investigation by any Governmental Authority which reasonably
could be anticipated to (i) render inaccurate in any material respect any
representation or warranty made by any Seller or the Buyer (as the case may be);
or (ii) prohibit or restrain or materially and adversely affect the consummation
of the transactions contemplated hereby or the performance by any Seller or the
Buyer of their respective obligations hereunder.
5.33 Insurance; Risk of Loss.
(a) Without the prior written consent of the Buyer, no Seller
shall effect any termination of any occurrence liability policies (belonging to
such Seller) with respect to the Purchased Assets owned by such Seller so as to
prevent the Buyer from recovering under such policies for Losses from events
occurring prior to the Cut-Off Time to the extent that coverage for such Losses
was otherwise provided by any such policy. For a period commencing on the
Effective Closing Date and ending on the earlier of (i) the date a plan of
liquidation with respect to the applicable Seller becomes effective and (ii) the
date that is the second anniversary of the Funding Date, the Sellers shall also
take all commercially reasonable steps necessary to assure the continuation
and/or extension of all claims-made insurance policies in order to permit the
Buyer to recover under such policies to the extent provided therein.
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(b) Notwithstanding Section 5.33(a) hereof, to the extent that (i)
any insurance policies owned or controlled by any Seller (collectively, the
"Sellers' Insurance Policies") cover any loss, liability, claim, damage or
expense resulting from, arising out of, based on or relating to, any Seller (the
"Sellers Liabilities") and resulting from, arising out of, based on or relating
to occurrences prior to the Cut-Off Time and (ii) the Sellers' Insurance
Policies permit claims to be made thereunder with respect to the Sellers
Liabilities resulting from, arising out of, based on or relating to occurrences
prior to the Cut-Off Time (the "Seller Claims"), the Sellers shall take
commercially reasonable steps to cooperate and shall cause these respective
Affiliates to cooperate with the Buyer, in submitting any and all Seller Claims
(or pursuing any Seller Claim previously made) on behalf of the Buyer under any
Sellers' Insurance Policies.
5.34 Supplements to Schedules; Post-Signing Information. Not earlier
than ten (10) nor later than five (5) Business Days prior to the Effective
Closing Date and Funding Date, the Sellers and the Buyer will (a) supplement or
amend the Business Schedules relating to their respective representations and
warranties in this Agreement (other than the representations and warranties that
are made as of a date other than the date hereof, the Cut-Off Time or the
Funding Date) with respect to any matter, condition or occurrence hereafter
arising which, if existing or occurring at the date of this Agreement, would
have been required to have been set forth or described in such Business
Schedules. No supplement or amendment by either party shall be deemed to cure
(or affect the rights of any party with respect to) any breach of any
representation or warranty made in this Agreement or have any effect for the
purpose of determining satisfaction of the conditions set forth in ARTICLES 6
and 7.
5.35 Payment of Brokers' or Finders' Fees. The Sellers shall pay any
and all brokers' or finders' fees, and any other commissions or similar fees,
payable to any Person acting on behalf of the Sellers or any of their Affiliates
or under the authority of any of them, in connection with any of the
transactions contemplated herein, and the Buyer shall pay any and all brokers'
or finders' fees, and any other commissions or similar fees, payable to any
Person acting on behalf of the Buyer or any of its Affiliates or under the
authority of any of them, in connection with any of the transactions
contemplated herein, in each case regardless of whether any claim for payment is
asserted before or after the Funding, or before or after any termination of this
Agreement.
5.36 Powers of Attorney. Upon request by the Buyer, the Sellers shall
revoke any or all powers of attorney applicable to the Purchased Assets.
5.37 Non-Competition Waivers. Each Seller hereby waives, effective as
of the Cut-Off Time, any provision of any document to which such Seller is a
party restricting the ability of any Transferred Employee of such Seller, who
accepts an offer of employment from the Buyer or any of its Affiliates and
commences such employment, to accept, commence and continue such employment.
5.38 Post-Effective Closing Date Deliverables. Immediately after the
first day of each month to occur prior to the Funding Date (including, without
limitation, April
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2003) but in no event later than the 3rd day of each such month, (i) the Sellers
shall deliver to the Buyer a Month's End Data Tape, and the Portfolio
Information set forth thereon shall be true, correct and complete as of the date
of such Month's End Data Tape, (ii) the Sellers shall deliver to the Buyer a
CD-ROM containing a true, correct and complete list of Excluded Receivables, and
each such list shall set forth the basis on which the Sellers determined that
each such Receivable thereon is an Excluded Receivable and (iii) a certificate
of an authorized officer of Mill Creek Bank Inc. certifying the amount of
Allowed Operating Expenses paid by Mill Creek Bank during the preceeding month
except (A) with respect to the certificate to be delivered on April 1, 2003,
during the period commencing on the date hereof and ending on Xxxxx 0, 0000, (X)
with respect to the last period prior to the Cut-Off Time, the period commencing
on the second day of the month in which the Cut-Off Time occurs and ending as of
the Cut-Off Time, (c) with respect to the first period after the Cut-Off Time,
the period commencing on the Effective Closing Date and ending on the first day
of the month after the Effective Closing Date and (D) with respect to the last
period prior to the Funding Date, the period commencing on the second day of the
month in which the Funding Date occurs and ending on the Funding Date.
5.39 Final Schedule of Assets Acquired and Liabilities Assumed.
(a) Promptly and in no event later than 28 days after the Buyer's
receipt of each Month's End Data Tape, the Buyer shall prepare and deliver to
the Company a draft Schedule of Assets Acquired and Liabilities Assumed using
the information reflected on such Month's End Data Tape and on the basis that
such Month's End Data Tape is the Final Data Tape. Each such draft Schedule of
Assets Acquired and Liabilities Assumed shall be prepared in accordance with the
Accounting Principles and shall be based upon the information contained in the
applicable Month's End Data Tape and such other documentation or information as
is necessary or appropriate, including the results of any audit that the Buyer,
at its sole option and expense, may cause to be conducted with respect to the
assets reflected on such Month's End Data Tape and the liabilities of the
Sellers that would be Assumed Liabilities if the date of the Month's End Data
Tape is the Effective Closing Date, and the results of a physical inventory that
the Buyer, at its sole option and expense, may conduct or cause to be conducted
with respect to the fixed tangible assets and repossessed property that would be
included in the Specified Purchased Assets as of the Cut-Off Time. The Buyer
shall provide prior notice to the Company of any such physical inventory and
shall provide representatives of the Sellers the opportunity to observe any such
inventory. The Sellers shall provide to the Buyer any documentation and
information in any Seller's possession or control, that are necessary and
appropriate to conduct any such audit and inspection and that are reasonably
requested by the Buyer.
(i) The Sellers shall provide the Buyer's auditors with full
access to all information necessary to perform an audit of each
Month's End Data Tape including, without limitation, with respect
to the Final Data Tape and the Effective Closing Date, and an
audit of the Purchased Assets and Assumed Liabilities. Without
limiting the foregoing,
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the Sellers shall timely deliver to the Buyer all such other
documentation as may be reasonably be requested by the Buyer in
connection with the determination of the Purchase Price, Net NAV
or the Disposition Proceeds. The Buyer shall have a right to audit
any certificates required to be delivered pursuant to Section 5.38
hereof.
(ii) The Seller shall cooperate and comply with all
reasonable requests of the Buyer and its representatives to assist
such Persons in accomplishing the preparation of each Schedule of
Assets Acquired and Liabilities Assumed, any audit of the Schedule
of Assets Acquired and Liabilities Assumed and the preparation of
the Final Schedule of Assets Acquired and Liabilities Assumed.
Without limiting the foregoing, from and after the date hereof,
(A) each of the Buyer, the Sellers, and their respective
representatives shall have full access to all relevant accounting,
financial and other records reasonably requested by such Persons
in connection with the preparation, confirmation or review of each
Schedule of Assets Acquired and Liabilities Assumed and (B) each
party shall make available to the other party and its accountants
such personnel as they may reasonably request in connection with
the preparation or confirmation of each Schedule of Assets
Acquired and Liabilities Assumed and audit thereof including,
without limitation, in the case of clause (A) and (B) above, the
preparation, confirmation and review of the Schedule of Assets
Acquired and Liabilities Assumed prepared as of the Effective
Closing Date (and any audit thereof) and the determination of the
Purchase Price, Net NAV and the Disposition Proceeds.
(iii) The Sellers shall promptly inform the Buyer if any
information set on Annex I does not comply with Part II of the
Accounting Principles.
(b) The Company may review each such draft Schedule of Assets
Acquired and Liabilities Assumed. The Buyer shall provide any additional
information requested by the Company and used by the Buyer in its preparation of
any draft Schedule of Assets Acquired and Liabilities Assumed promptly after the
Company's request therefor. The draft Schedule of Assets Acquired and
Liabilities Assumed prepared as of the Cut-Off Time shall become the Final
Schedule of Assets Acquired and Liabilities Assumed unless, within 10 days after
the receipt of such draft schedule, the Company notifies the Buyer in writing of
any disagreement the Sellers may have with the draft Schedule of Assets Acquired
and Liabilities Assumed, which notice shall identify each item in the draft
Schedule of Assets Acquired and Liabilities Assumed to which the Sellers object
and describe in reasonable detail the reasons for each such objection based on
information available to the Sellers. The Buyer and the Company shall confer in
good faith to attempt to resolve any such disagreements on the draft Schedule of
Assets Acquired and Liabilities Assumed. In the event the Buyer and the Company
are unable to reach agreement on such draft Schedule of Assets Acquired and
Liabilities Assumed, the Purchase Price, Net NAV or the Disposition Proceeds
prior to the date that is two Business Days prior to the Funding Date, then so
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long as neither the Buyer nor the Sellers shall have exercised their rights to
terminate this Agreement pursuant to Section 8.1(j), the Company and the Buyer
shall jointly hire the Auditor to resolve any disagreements with respect to the
draft Schedule of Assets Acquired and Liabilities Assumed, and shall jointly pay
the costs of such resolution.
(c) The Auditor hired in accordance with this Section 5.39(b)
shall resolve any such disagreements on the basis of the terms of this Agreement
(including, without limitation, the Accounting Principles) and whether changes
or adjustments (if any) are required in order for such Schedule to have been
prepared in accordance with this Agreement (including, without limitation, the
Accounting Principles). The Buyer and the Sellers shall use their commercially
reasonable best efforts to cause the Auditor to issue a report (the "Report of
the Auditor") to each of the Buyer and the Company within 10 days following
appointment of the Auditor.
(d) The Report of the Auditor shall include the following: (i) the
Auditor's determination of the proper resolution of each disputed item (based on
the terms of this Agreement, including, without limitation, the Accounting
Principles) and a description in reasonable detail of the basis for such
determination and (ii) a calculation of the Purchase Price, Net NAV and
Disposition Proceeds, in each case, after giving effect to all disputes resolved
by it or previously mutually resolved by agreement of the Buyer and the Company.
(e) Upon the earlier to occur of (i) the Company failing to object on a timely
basis to the draft Schedule of Assets Acquired and Liabilities Assumed that was
prepared as of the Cut-Off Time and delivered by the Buyer to the Company
pursuant to Section 5.39(a), (ii) the Company and the Buyer agreeing on the
final version of the Schedule of Assets Acquired and Liabilities Assumed or
(iii) five (5) Business Days after delivery of the Report of the Auditor, the
Buyer shall deliver to the Company, as applicable, the version described in
clause (i) hereof, the agreed version, or the version prepared by the Auditor,
of the Schedule of Assets Acquired and Liabilities Assumed (which shall be
deemed to be the "Final Schedule of Assets Acquired and Liabilities Assumed").
5.40 Home Equity Loan, Reaffirmed Accounts, CRAs and Charged-Off
Accounts Sales.
(a) Prior to the Cut-Off Time, Mill Creek Bank Inc. shall use its
commercially reasonable efforts to sell, transfer and assign all of its rights,
title and interest in any and all Home Equity Loans owned by it for cash or cash
equivalents. All proceeds of such sales, transfers and assignments shall be
retained by Mill Creek Bank through the Cut-Off Time.
(b) Prior to the Cut-Off Time, Mill Creek Bank Inc. shall use its
commercially reasonable efforts to sell, transfer and assign all of its rights,
title and interest in any and all Reaffirmed Accounts and any CRA owned by Mill
Creek Bank
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Inc. for cash or cash equivalents. All proceeds of such sales, transfers and
assignments shall be retained by Mill Creek Bank Inc. through the Cut-Off Time.
(c) Promptly after any sale, transfer or assignment by Mill Creek
Bank Inc. of any Home Equity Loan, Reaffirmed Account, CRA or Charged-Off
Account (to the extent permitted by Section 5.5(a)(ii)(1)(iii) hereof), Mill
Creek Bank Inc. shall deliver to the Buyer a certificate certifying the amount
of the cash proceeds received by Mill Creek Bank Inc. with respect to such sale,
transfer or assignment.
(d) For the avoidance of doubt, cash proceeds of any of the sales
described in subsections (a), (b) and (c) that are owned by Mill Creek Bank Inc.
as of the Cut-Off Time shall be deemed Purchased Assets.
5.41 Other Notices. During the Pre-Funding Period, the Sellers shall
promptly notify the Buyer of (i) any termination of any agreement with any
merchant that but for such termination would be included in the Purchased Assets
and of any agreement set forth on Attachment A to Section 2.1(a) of the Business
Schedules and (ii) any departure of (A) an exempt employee or (B) an information
technology employee (who otherwise received or would have received an offer of
employment pursuant to Section 5.12 herein) and (iii) an employee turnover rate
in any month which exceeds 4% for the PL Business, 2% for the CL Business and 4%
for the HI Business and (iv) at the end of every calendar month, notify the
Buyer of the dealer agreements (if any) that have been terminated during the
preceding month.
5.42 Limited Power of Attorney. Without limiting the provisions of
Section 2.3(b)(v), on or prior to the Funding Date, the Sellers shall deliver to
the Buyer a duly executed and notarized limited power of attorney, in form and
substance reasonably satisfactory to the Buyer and the Company, authorizing the
Buyer to execute on behalf of the Sellers any Assumed Agreement.
5.43 Wind-Down of PL Securitization. No later than 2 Business Days
prior to the Cut-Off Time, the Company shall, or shall cause Mill Creek Bank
Inc. and/or Conseco Finance Credit Card Funding Corp. to, use their commercially
reasonable efforts to repay, redeem and discharge the obligations represented by
the certificates issued by the Trust, to terminate the Private Label Credit Card
Master Trust Documents and to cause the owner of the Receivables and other
Property that is subject thereto to transfer such Receivables and Property to
Mill Creek Bank Inc. and/or Conseco Finance Credit Card Funding Corp. on terms
and conditions reasonably acceptable to the Buyer.
ARTICLE 6
CONDITIONS PRECEDENT TO THE BUYER'S OBLIGATIONS
The obligation of the Buyer to consummate the transactions
contemplated by this Agreement is subject to the fulfillment, or waiver by the
Buyer in accordance with this ARTICLE 6, of the following conditions as of the
Funding:
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6.1 Representations and Warranties; Covenants; Certificates.
(a) The representations and warranties of the Sellers contained in
this Agreement, and in any agreement, instrument or document executed and
delivered by them in connection with the Closing (including the other
Transaction Documents to which the Sellers are parties), shall be true and
correct on and as of the Effective Closing Date as if made on and as of such
date, except as affected by transactions permitted by this Agreement and except
to the extent that any such representation or warranty is made as of a specified
date, in which case such representation or warranty shall have been true and
correct as of such specified date, except in each case to the extent that the
failures in the aggregate of such representations and warranties (disregarding
any qualifications as to materiality or Material Adverse Effect contained in
such representations and warranties) to be true and correct would not reasonably
be expected to have, and have not had, a Material Adverse Effect.
(b) Each Seller shall have performed and complied in all material
respects with all agreements, obligations, covenants and conditions required by
this Agreement to be performed or complied with by such Seller on or prior to
the Effective Closing Date and the Funding Date, including, without limitation,
the covenants set forth in Sections 5.4 and 5.5 hereof.
(c) The Buyer shall have received a certificate, dated as of the
Funding Date, signed by authorized officers of the Sellers, in their respective
representative capacities and not individually, to the effect that such
conditions set forth in Sections 6.1(a) and (b), 6.3 and 6.9 hereof have been
satisfied in all respects.
6.2 Bankruptcy Condition. The Bankruptcy Court shall have entered the
Sale Order, which shall be a Final Order that has not been reversed, modified,
rescinded or stayed as of the Cut-Off Time and as of the Funding Date.
6.3 Litigation.
(a) There shall be in effect no pending or threatened injunction,
writ, decree or preliminary restraining order or other order of, or any other
action or proceeding before, any Governmental Authority of competent
jurisdiction that could reasonably be expected to (i) prevent or prohibit the
sale of the Purchased Assets to the Buyer or the performance of the material
obligations of the parties hereto (or result in substantial damages from the
Buyer or any of its Affiliates as a result thereof), (ii) cause the transactions
to be rescinded following the consummation thereof, (iii) materially modify the
terms of the transactions contemplated hereby or result in the imposition of
material liability on the Buyer or its Affiliates or (iv) have a material
adverse effect on the Buyer's operation of the Purchased Businesses after the
Cut-Off Time.
(b) No Governmental Authority shall have notified any Party that
the consummation of the transactions contemplated hereby would constitute a
violation of the Laws of the United States or any State thereof or the Laws of
the jurisdiction to
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which such Governmental Authority is subject and that it intends to commence
proceedings to restrain the consummation of such transactions, to force
divestiture if the same are consummated or to materially modify the terms or
results of such transactions unless such Governmental Authority shall have
withdrawn such notice, or has otherwise indicated in writing that it will not
take any action, prior to what would otherwise have been the Effective Closing
Date and the Funding Date.
6.4 Approvals.
(a) All authorizations, permits, licenses, certificates of
authority, consents and waivers, Orders, filings, notices and approvals (other
than bulk sale approvals) from Governmental Authorities necessary to permit the
CFC Parties to perform the transactions contemplated hereby and required for the
Buyer to own the Purchased Assets and to operate the Purchased Businesses
post-Funding shall have been duly obtained, made or given, shall be in form and
substance reasonably satisfactory to the Buyer, shall not be subject to the
satisfaction of any material condition that has not been satisfied or waived and
shall be in full force and effect.
(b) All terminations or expirations of waiting periods imposed by
any Governmental Authority necessary for the transactions contemplated under
this Agreement, if any, shall have occurred. This includes, but is not limited
to, the termination or expiration of all applicable waiting periods relating to
the HSR Act, the Bank Merger Act and the satisfactory conclusion of any
proceedings that may have been filed or instituted thereunder.
(c) (i) All material consents and waivers from non-governmental
third parties with respect to the Assumed Agreements (other than any Active
Merchant Agreements) necessary to permit the Sellers to perform the transactions
contemplated hereby and required for the Buyer to own the Purchased Assets and
to operate the Purchased Businesses shall have been duly obtained, made or
given, shall be in form and substance reasonably satisfactory to the Buyer,
shall not be subject to the satisfaction of any material condition that has not
been satisfied or waived and shall be in full force and effect. The Sellers
shall have provided copies of such consents, waivers and amendments to the
Buyer.
(ii) For the avoidance of doubt, the following consents and
waivers shall be deemed material:
(A) waivers duly executed by Acxiom Corporation of
exclusivity provisions contained in any of the Acxiom
Contracts; and
(B) an acknowledgment by Acxiom Corporation that the CFC
Parties own all of the right, title and interest in and
to all of the Acxiom Models.
(d) The Sellers shall have delivered to the Buyer the following
consents, waivers, amendments and novations:
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(i) written consent to assignment and transfer to the Buyer
or its designee of the Active Merchant Agreements that are
associated with at least 75% of the aggregate amount of Assigned
Receivables generated by all Active Merchant Agreements, such
amount to be calculated as of December 31, 2002; provided,
however, for the purposes of such calculation (x) the Revolving
Credit Program Agreement among the Company, Mill Creek Bank Inc.
and Select Comfort Corporation dated May 17, 1999 (as amended)
and/or the agreement with Xxxxxx Lumber may, at the Sellers'
option, be excluded from both the denominator and the numerator of
such calculation and (y) the Revolving Credit Program Agreement
between the Company and Conseco Bank, Inc. as assignees and
American Honda Motor Co. shall be included in the calculation as
if consent to transfer of such agreement is required and as if
such consent has been obtained.
(ii) amendments to the Active Merchant Agreements with Lennox
and MTD duly executed by all parties thereto to ensure that after
the Cut-Off Time no Bankruptcy Event or Change of Control Event of
any Seller or any of its Affiliates may constitute an event of
default under such Active Merchant Agreements;
(iii) one of the following: (x) waivers, in a form and
substance satisfactory to the Buyer in its reasonable discretion,
duly executed and delivered by each Subsidiary of the Sellers and
the Parent (the "Participating Affiliates") that is party to or on
behalf of which any Seller has entered into any Contract that is a
Purchased Asset, waiving any right, title or interest that such
Participating Affiliate, may have in such Contracts and
authorizing the Buyer or its designees to enter from time to time
into any amendment or modification, to such Contract after the
Cut-Off Time; (y) a novation, in form and substance satisfactory
to the Buyer in its reasonable discretion of such Contracts duly
executed by all parties to each such Contract (including the
Participating Affiliates) and naming the Buyer as an assignee of
all CFC Parties and their Affiliates to such Contract (including,
without limitation, such Participating Affiliates); or (z) a
written consent in form and substance satisfactory to the Buyer in
its reasonable discretion to the transfer and assignment of all
rights, title and interest of all Sellers and the Participating
Affiliates in and to such Contracts and the obligations thereunder
which are Assumed Liabilities, together with an instrument of
sale, transfer and assignment from the Sellers and each of the
Participating Affiliates to effect transfer to the Buyer of good,
valid and marketable title to such Contracts.
6.5 Instruments of Conveyance and Transfer; Title. The Sellers shall
have delivered to the Buyer such bills of sale, deeds, endorsements, assignments
and other good and sufficient instruments of conveyance and transfer, including
the Intellectual Property Assignment Agreements, in form and substance,
reasonably satisfactory to the Buyer and its counsel, as are necessary to vest
in the Buyer good and marketable title to
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the Purchased Assets, free and clear of all Liens, other than Permitted Liens,
opinions of counsel and other documents and instruments referred to in Section
2.3(b). With respect to each PL Residual Asset, the Buyer or its designee shall
have been made the registered owner of such PL Residual Asset pursuant to the
terms of the related governing documents. In the case of a Stock Sale, the
Company shall deliver to the Buyer or its designees (a) stock certificates
representing the Shares, duly endorsed in blank for transfer or accompanied by
appropriate stock powers duly executed in blank, with all taxes, direct or
indirect, attributable to the transfer of the Shares paid or provided for; (b)
the minutes and stock records of the Subject Subsidiary; and (c) signature cards
from all banks or financial institutions with which the Subject Subsidiary has
an account designating signatures approved by the Buyer to become effective
immediately following the Funding.
6.6 Servicing Agreements. On or prior to the Funding Date, the Buyer
and the Sellers and/or the Bankruptcy Acquiror (that purchases the Properties
that are necessary for providing the services described in Annex D attached
hereto), as the case may be, shall have entered into and delivered the Servicing
Agreements (as such term is defined in Section 5.27 hereof), as the case may be.
6.7 Resignation of Officers and Directors of Subject Subsidiaries. In
the case of a Stock Sale, the directors and officers of the Subject Subsidiary
identified by the Buyer shall have delivered letters of resignation from their
respective positions at the Subject Subsidiary in form and substance
satisfactory to the Buyer.
6.8 [Intentionally Omitted].
6.9 No Material Adverse Effect. From December 31, 2002 until the
Cut-Off Time, there shall not have been any change, circumstance or event which
constitutes or has resulted in, or that could reasonably be expected to result
in, a Material Adverse Effect.
6.10 [Intentionally Omitted].
6.11 Securitization Rights. The Buyer shall be and shall be recognized
by the relevant trustee as (i) the servicer or successor servicer with respect
to all PL Servicing Rights under each PL Servicing Contract, (ii) the transferee
of the transferor's interest in the Transferor Certificate (as defined in the
Private Label Credit Card Master Trust Documents) and Transferor Amount (as
defined in the Private Label Credit Card Master Trust Documents) and (iii) the
transferee of the PL Residual Assets, and the Sellers shall furnish to the
appropriate party all opinions, consents, approvals, rating agency confirmations
and certificates and other items required in connection with such successions or
transfers, including without limitation evidence that the Rating Agency
Condition (as defined in the Private Label Credit Card Master Trust Documents)
has been satisfied with respect to each such succession or transfer (but only if
the CFC parties have not repaid, redeemed and discharged the obligations
represented by the Trust and terminated the Private Label Credit Card Master
Trust Documents, and the owners of the Receivables and other property that is
subject thereto have not transferred such
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Receivables and other Property to Mill Creek Bank Inc. prior to the Cut-Off
Time). The Sellers shall furnish to the Buyer a complete set of closing
documents relating to the closing of the Conseco Private Label Credit Card
Master Note Trust 2001-A and the Conseco Private Label Credit Card Master Note
Trust 2001-B transactions.
6.12 Tax Opinion.
(a) The Sellers shall furnish to the Buyer an opinion of counsel
to the effect that the Trust will be classified as a grantor trust, a
partnership or a disregarded entity, and not an association taxable as a
corporation, a publicly traded partnership or a taxable mortgage pool, for
federal income tax purposes, and, to the extent that it has issued instruments
designated as notes, bonds, debentures or other evidences of indebtedness, such
instruments will be characterized as indebtedness for federal income tax
purposes.
(b) The requirement of this Section 6.12 may be satisfied by the
delivery of a letter from the law firm that rendered the opinion as to the U.S.
federal income tax treatment of the Trust, which letter states that the Buyer is
entitled to rely on such opinion to the same extent as the party to whom the
opinion was originally issued. A copy of the relevant opinion shall be attached
to the letter that states that the Buyer is entitled so to rely.
6.13 Data Service Contracts. Notwithstanding the provisions set forth
in Section 5.13 hereof, the Sellers and the Parent shall have obtained for the
Buyer all of the rights equivalent or substantially similar to those provided to
the Sellers pursuant to, the Acxiom Contracts set forth in Section 6.13 of the
Business Schedules and Attachment A to Section 2.1(a) of the Business Schedules
and the database license with Oracle set forth in Attachment A to Section 2.1(a)
of the Business Schedules and all such rights shall be deemed to be part of the
Purchased Assets.
6.14 Acceptance of Employment Offers. With respect to each of the
Purchased Businesses, the Buyer shall have received acceptances of offers of
employment from a sufficient number of employees of the Purchased Business so as
to be able to operate such Purchased Business in a manner consistent with its
operating history, as reasonably determined by the Buyer in the exercise of its
good faith discretion.
6.15 Agreements.
(a) (i) The Bankruptcy Court (with respect to the bankruptcy
proceeding of the Parent) shall have entered an Order which shall be a Final
Order approving the letter agreement in form and substance satisfactory to the
Buyer, the Parent and the Company pursuant to which the Parent shall guarantee
the Seller's obligations with respect to certain tax matters. The Buyer shall
have received all other documents and instruments to be delivered to the Buyer
pursuant to Section 2.3(b).
(ii) The Buyer shall have entered into (A) an agreement or
agreements with the applicable Sellers and any Bankruptcy Acquiror
of the applicable Seller's fee simple interest in the properties
located at 1400
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Turbine Dr. Rapid City, S.D. 57703 on the terms and conditions set
forth on Annex F hereto in accordance with the terms and
conditions set forth on Annex F hereto and (B) an agreement or
agreements with the landlord of the applicable Seller's leasehold
interest in the property located at 0000 X. Xxxxxxxxx, Xxxxx,
Xxxxxxx 00000 shortening the term of the lease by two years.
6.16 Green Tree Retail Services Bank and Conseco Finance Servicing
Corp. Transfers. CFC shall have caused (i) Green Tree Retail Services Bank to
have transferred and assigned to the Company or any of its Subsidiaries that are
Sellers of the Active Merchant Agreements owned by Green Tree Retail Services
Bank and all Assigned Receivables related thereto and (ii) Conseco Finance
Servicing Corp. to have transferred and assigned to the Company or Mill Creek
Bank Inc. all Purchased Assets owned by Conseco Finance Servicing Corp.
6.17 Replacement Servicer. The Seller or its Affiliate shall have been
terminated as "Servicer" under each of the Private Label Credit Card Master
Trust Documents and the Buyer or a Person designated by it shall have been duly
appointed as successor servicer and all consents, approvals and rating agency
confirmations required therefor in the Private Label Credit Card Master Trust
Documents shall have been received in all cases, effective as of the Cut-Off
Time.
Any condition specified in this ARTICLE 6 may be waived by the
Buyer; provided, however, that no such waiver shall be effective unless it is
set forth in a writing executed by the Buyer or unless the Buyer agrees in
writing to consummate the transactions contemplated by this Agreement without
fulfillment of such condition.
ARTICLE 7
CONDITIONS PRECEDENT TO THE SELLERS' OBLIGATIONS
The obligation of the Sellers to consummate the transactions
contemplated by this Agreement is subject to the fulfillment, or waiver by the
Sellers in accordance with this ARTICLE 7, of the following conditions as of the
Funding:
7.1 Representations and Warranties; Covenants; Certificates.
(a) The representations and warranties of the Buyer contained in
this Agreement, and in any agreement, instrument or document executed and
delivered by it in connection with the Closing (including the other Transaction
Documents to which the Buyer is a party), shall be true and correct on and as of
the Closing Date as if made on and as of such date, except as affected by
transactions permitted by this Agreement and except to the extent that any such
representation or warranty is made as of a specified date, in which case such
representation or warranty shall have been true and correct as of such specified
date, except in each case to the extent that the failures in the aggregate of
such representations and warranties (disregarding any qualifications as to
materiality contained therein) to be true and correct would not reasonably be
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expected to have, and have not had, a material adverse effect on the Buyer or
its ability to perform its obligations hereunder or to consummate the
transactions contemplated herein.
(b) The Buyer shall have performed and complied in all material
respects with all agreements, obligations, covenants and conditions required by
this Agreement to be performed or complied with by it on or prior to the
Effective Closing Date and the Funding Date.
(c) The Sellers shall have received a certificate, dated as of the
Funding Date, signed by authorized officers of the Buyer, in their respective
representative capacities and not individually, to the effect that such
conditions set forth in Sections 7.1(a) and (b) and Section 7.3 hereof have been
satisfied in all respects.
7.2 Bankruptcy Condition. The Bankruptcy Court shall have entered the
Sale Order, that shall be a Final Order which has not been reversed, modified,
rescinded or stayed as of the Cut-Off Time and as of the Funding Date.
7.3 Litigation.
(a) There shall be in effect no pending or threatened injunction,
writ, decree or preliminary restraining order or other order of, or any other
action or proceeding before, any Governmental Authority of competent
jurisdiction that could reasonably be expected to (i) prevent or prohibit the
performance of the material obligations of the parties hereto or to materially
modify the terms or results of the transactions contemplated hereby or (ii)
cause the transactions to be rescinded following the consummation thereof.
(b) No Governmental Authority shall have notified either party to
this Agreement that the consummation of the transactions contemplated hereby
would constitute a violation of the Laws of the United States or the Laws of any
state thereof or the Laws of the jurisdiction to which such Governmental
Authority is subject and that it intends to commence proceedings to restrain the
consummation of such transactions, to force divestiture if the same are
consummated or to materially modify the terms or results of such transactions
unless such Governmental Authority shall have withdrawn such notice, or has
otherwise indicated in writing that it will not take any action, prior to what
would otherwise have been the Effective Closing Date and the Funding Date.
7.4 Approvals.
(a) All authorizations, permits, licenses, certificates of
authority, consents, notices, filings, orders and approvals (other than bulk
sale approvals) from Governmental Authorities necessary to permit the CFC
Parties to perform the transactions contemplated hereby shall have been duly
obtained, made or given, shall be in form and substance reasonably satisfactory
to the Sellers, shall not be subject to
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the satisfaction of any material condition that has not been satisfied or waived
and shall be in full force and effect.
(b) All terminations or expirations of waiting periods imposed by
any Governmental Authority necessary for the transactions contemplated under
this Agreement, if any, shall have occurred. This includes, but is not limited
to, the termination or expiration of waiting periods under the HSR Act.
7.5 [Intentionally Omitted].
7.6 Other Documents. The Sellers shall have received all other
documents and instruments to be delivered to the Sellers pursuant to Section
2.3(b).
Any condition specified in this ARTICLE 7 may be waived by the
Sellers; provided, however, that no such waiver shall be effective against the
Sellers unless it is set forth in a writing executed by the Sellers or unless
the Sellers agree in writing to consummate the transactions contemplated by this
Agreement without the fulfillment of such condition.
ARTICLE 8
TERMINATION
8.1 Termination Prior to Closing. This Agreement may be terminated
prior to the Closing as follows:
(a) by mutual written agreement of the Buyer and the Company;
(b) by the Buyer or the Company, if there shall be in effect a
Final Order restraining, enjoining or otherwise prohibiting the consummation of
the transactions contemplated by this Agreement;
(c) by the Buyer (provided, however, that the Buyer is not then in
material breach of any representation, warranty, covenant or other agreement
contained herein), if there shall have been a breach of any of the
representations or warranties of the Sellers that would have a Material Adverse
Effect or a material breach of any of the covenants set forth in this Agreement
on the part of the Sellers, which breach is not cured within 15 Business Days
following written notice to the Company;
(d) by the Company (provided, however, that none of the Sellers is
then in material breach of any representation, warranty, covenant or other
agreement contained herein), if there shall have been a breach of any of the
representations or warranties that would have a material adverse effect on the
Buyer's ability to perform its obligations hereunder or to consummate the
transactions contemplated herein or a material breach of any of the covenants
set forth in this Agreement on the part of the Buyer, which breach is not cured
within 15 Business Days following written notice to the Buyer;
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(e) [Intentionally Omitted];
(f) [Intentionally Omitted];
(g) by the Buyer or the Company, if the Funding Date has not
occurred by the Drop Dead Date; provided, however, that such failure of the
Funding Date to occur is not caused by a breach of this Agreement by the
terminating party;
(h) [Intentionally Omitted];
(i) [Intentionally Omitted];
(j) (i) by the Buyer, in the event either that the Shortfall
Amount is $50 million or more; or
(ii) by the Company, in the event the Shortfall Amount is $50
million or more, unless the Buyer elects to consummate the
transactions contemplated in this Agreement and other Transaction
Documents and pay the amount set forth in Section 2.4(b)(i)
hereof.
8.2 [Intentionally Omitted].
8.3 No Consequential Damages. If this Agreement is terminated pursuant
to Section 8.1(d), the sole and exclusive remedy of the CFC Parties and their
Affiliates shall be strictly limited to retention of the Purchased Assets and
the prompt payment by the Buyer to the Company of any Losses on an after Tax
basis actually incurred or suffered by the Sellers as a result of such breach.
If this Agreement is terminated pursuant to Section 8.1(c), the sole and
exclusive remedy of the Buyer and its Affiliates shall be strictly limited to
the prompt payment by the Company of any Losses on an after tax basis actually
incurred or suffered by the Buyer as a result of such breach. In no event shall
(a) the Buyer or its Affiliates have any Liability (including, without
limitation, pursuant to Section 9.2(b) hereof) to the CFC Parties or their
respective Affiliates or any other Person or (b) the Sellers or their respective
Affiliates have any Liability (including, without limitation, pursuant to
Section 9.2(a) hereof) to the Buyer or any other Person, in either case, for any
special, consequential or punitive damages, and any such claim, right or cause
of action for any damages that are special, consequential or punitive is hereby
fully waived, released and forever discharged.
8.4 Effect of Termination. If the transactions contemplated hereby are
consummated, then this Agreement shall become null and void and of no further
force and effect and there shall be no Liability on the part of any Party to any
other Party or its shareholders, directors or officers, except as contemplated
by ARTICLE 8 and ARTICLE 9 hereof and except for Liabilities for breach by
either party hereto of this Agreement prior to the termination hereof.
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ARTICLE 9
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
9.1 Survival of Representations.
(a) The respective representations and warranties of the Parties
contained herein and in any Transaction Document or in any other agreement,
certificate, instrument or other document delivered pursuant hereto or thereto
shall survive the Funding until a date 12 months from the Funding Date; and
provided, however, that representations and warranties contained in Section 3.22
hereof shall survive the Funding until 60 days after the lapse of the applicable
statute of limitations. No claim may be asserted nor may any action be commenced
against the Sellers pursuant to Section 9.2(a)(ii) or against the Buyer pursuant
to Section 9.2(b)(i) unless written notice of such claim or action is received
by the Sellers, in the case of Section 9.2(a)(ii), and Buyer, in the case of
Section 9.2(b)(i) on or prior to the date on which the representation or
warranty is based ceases to survive as set forth in the prior sentence (it being
agreed and understood that if a claim for a breach of a representation or
warranty is timely made, the representation or warranty shall, solely for
purposes of such claim, survive until the date on which such claim is finally
liquidated or otherwise resolved).
(b) Except as otherwise provided herein, the respective covenants
of the Parties contained in this Agreement, the other Transaction Documents or
in any other agreement, certificate, instrument or other document delivered
pursuant hereto or thereto shall survive the Closing indefinitely.
Notwithstanding anything to the contrary set forth herein, the representations
and warranties pertaining to any claim filed prior to the expiration of the
relevant survival period specified in Section 9.1(a) hereof, shall, solely for
purposes of such claim survive until the resolution of such claim.
9.2 Indemnification.
(a) From and after the Funding Date and subject to Sections 9.3
and 9.6 hereof), the Sellers on a joint and several basis shall indemnify,
defend and hold the Buyer, its Affiliates and their respective directors,
officers, employees, representatives, agents, successors and assigns
(collectively, the "Buyer Indemnified Parties") harmless, from and against all
Losses on an after-Tax basis that may be incurred or suffered by any Buyer
Indemnified Party resulting or arising from, related to or incurred or suffered
in connection with:
(i) any failure of the CFC Parties to pay, perform and
discharge any Excluded Liabilities;
(ii) any breach of any representation or warranty of the CFC
Parties contained herein or in any other Transaction Document or
in any other agreement, certificate, instrument or other document
delivered
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pursuant hereto or thereto including any exhibit or schedule
hereto and thereto;
(iii) any breach of any covenant, obligation or agreement of
the CFC Parties contained herein or in any other Transaction
Document or in any other agreement, certificate, instrument or
other document delivered pursuant hereto or thereto;
(iv) any failure to comply with any "bulk sales" or similar
laws promulgated by any Governmental Authority; and
(v) any failure of the CFC Parties to pay, perform or
discharge any of the Assumed Liabilities to the extent that such
Assumed Liabilities were due and payable or were required to be
performed by the owner of the Purchased Assets from the Cut-Off
Time through the Funding Date.
Notwithstanding the foregoing, Mill Creek Bank shall have no
obligations under this Section 9.2(a).
(b) From and after the Funding Date, subject to Sections 9.3 and
9.6, the Buyer shall indemnify, defend and hold the Sellers, their Affiliates
and their respective directors, officers, employees, representatives, agents,
successors and assigns (collectively, the "Seller Indemnified Parties", and
together with the Buyer Indemnified Parties, the "Indemnified Parties") harmless
from and against all Losses, that may be incurred or suffered by any Seller
Indemnified Party resulting or arising from, related to or incurred or suffered
in connection with:
(i) any breach of any representation or warranty of the Buyer
contained herein or in any other Transaction Document or in any
other agreement, certificate, instrument or other document
delivered pursuant hereto or thereto (including any exhibit or
schedule hereto and thereto);
(ii) any breach of any covenant, obligation or agreement of
the Buyer contained herein or in any other Transaction Document or
in any other agreement, certificate, instrument or other document
delivered pursuant hereto or thereto; or
(iii) any failure of the Buyer to assume, pay, perform and
discharge any Assumed Liability (other than the Assumed
Liabilities paid, performed or discharged by the CFC Parties
pursuant to Section 2.2(a)(ii) hereof) as set forth in Section
2.2(a) hereof.
9.3 Qualifications on Indemnification. Notwithstanding anything to the
contrary contained in this Agreement,
(a) Each Buyer Indemnified Party entitled to indemnification for
any Losses suffered or incurred by such Person resulting from, arising out of,
based on or relating to (A) a breach of any representation set forth in Section
3.22 or (B) a
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failure to perform any covenant, agreement or undertaking of any Seller shall be
entitled to such indemnification for the full amount of such Losses regardless
of the amount of Losses.
(b) Each Buyer Indemnified Party entitled to indemnification for
any Losses suffered or incurred by such Person resulting from, arising out of,
based on or relating to any breach described in Sections 9.2(a)(ii) and
9.2(a)(iii) shall be entitled to such indemnification for the full amount of
such Losses regardless of the amount of the Losses; provided, however, that the
Sellers shall not be required to indemnify the Buyer Indemnified Parties for any
Losses pursuant to Section 9.2(a)(ii) hereof (other than with respect to
representations under Section 3.22 hereof) until the aggregate amount of such
Losses exceeds $3.5 million (the "Indemnity Deductible"), and then only for the
excess of such Losses over such Indemnity Deductible; provided, further, that
the Sellers shall not be required to indemnify the Buyer Indemnified Parties for
any Losses pursuant to Section 9.2(a)(ii) (other than with respect to the
representations under Section 3.22) for any Losses in the aggregate in excess of
$35 million (the "Cap").
(c) Each Seller Indemnified Party entitled to indemnification for
any Losses suffered or incurred by such Person resulting from, arising out of,
based on or relating to any breach described on Sections 9.2(b)(ii) and
9.2(b)(iii) shall be entitled to such indemnification for the full amount of
such Losses regardless of the amount of the Losses; provided, however, that the
Buyer shall not be required to indemnify the Seller Indemnified Parties for any
Losses (i) pursuant to Section 9.2(b)(i) until the aggregate amount of such
Losses exceeds the Indemnity Deductible, and then only for the excess of such
Losses over such Indemnity Deductible; and provided, further, that the Buyer
shall not be required to indemnify the Seller Indemnified Parties for any Losses
pursuant to Section 9.2(b)(i) for any Losses in the aggregate in excess of the
Cap.
(d) For the purposes of determining whether the Indemnity
Deductible has been attained and whether any Indemnified Party is entitled to
indemnification for Losses pursuant to Section 9.2(a)(ii) or Section 9.2(b)(i),
all qualifications as to "material," "materiality," "Material Adverse Effect,"
or similar exception or qualifier contained therein shall be disregarded.
9.4 Notice and Defense of Claims.
(a) Notice of Claims. If an Indemnified Party desires to assert a
Direct Claim or receives notice of the assertion of any claim or of the
commencement of any Third Party Claim with respect to which indemnification is
to be sought from an Indemnifying Party, the Indemnified Party will give such
Indemnifying Party reasonable prompt notice thereof, but the failure to give
timely notice will not affect the rights or obligations of the Indemnifying
Party except to the extent that, as a result of such failure, the Indemnifying
Party has been materially prejudiced by the Indemnified Party's failure to give
such notice, in which case the Indemnifying Party shall be relieved from its
obligations hereunder only to the extent of such material
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prejudice. Such notice shall describe the nature of the Third Party Claim in
reasonable detail and will indicate the estimated amount, if practicable, of the
Loss that has been or may be sustained by the Indemnified Party. Any Notice of a
Direct Claim will state the nature of such claim in reasonable detail and
indicate the estimated amount, if practicable.
(b) Third Party Claim Defense. Subject to Section 9.4(d), the
Indemnifying Party will have the right to participate in or, by giving notice to
the Indemnified Party, to elect to assume the defense of, any Third Party Claim
at such Indemnifying Party's own expense and by such Indemnifying Party's own
counsel. If an Indemnifying Party assumes the defense, it must pursue such
defense, settlement or negotiation diligently and in good faith. The Indemnified
Party shall have the right, but not the obligation, to participate at its own
expense in the defense thereof by counsel of the Indemnified Party's choice and
shall in any event use its commercially reasonable efforts to cooperate with and
assist the Indemnifying Party; provided, however, that any Indemnified Party
shall be entitled to participate in the defense of any such Third Party Claim
with counsel of its own choice at the expense of the Indemnifying Party if, in
the good faith judgment of the Indemnified Party's counsel, representation by
the Indemnifying Party's counsel presents a material conflict of interest or if
the Indemnified Party has conflicting defenses. Subject to the proviso in the
immediately preceding sentence, if within 10 calendar days after an Indemnified
Party provides notice to the Indemnifying Party of any Third Party Claim, the
Indemnified Party receives notice from the Indemnifying Party that such
Indemnifying Party has elected to assume the defense of such Third Party Claim,
the Indemnifying Party will not be liable for any legal expenses subsequently
incurred by the Indemnified Party in connection with the defense thereof.
Without the prior written consent of the Indemnified Party, the Indemnifying
Party will not enter into any settlement or compromise of any Third Party Claim
unless the sole relief provided is monetary damages that are paid in full by the
Indemnifying Party.
(c) Direct Claim. The Indemnifying Party will have a period of 45
calendar days from the receipt of notice of a Direct Claim within which to
respond to such Direct Claim. If the Indemnifying Party does not respond within
such 45-day period, the Indemnifying Party will be deemed to have accepted such
Direct Claim. If the Indemnifying Party rejects such Direct Claim, the
Indemnified Party will be free to seek enforcement of its rights to
indemnification under this Agreement.
(d) Non-Assumable Claims. The Buyer shall have the sole right,
with counsel of its choice, to defend and/or settle any claim that is a
Non-Assumable Claim and Sellers will not be entitled to assume defense thereof;
provided, however, that the Buyer shall consult with the Sellers before settling
any Non-Assumable Claim. With respect to any Non-Assumable Claim, upon the
receipt by the Buyer of an offer of compromise relating to such Non-Assumable
Claim that includes an unconditional release of the Buyer and requires only the
payment of money, the Buyer shall promptly inform the Sellers of such offer
together with a description of the material terms and conditions of such offer.
The Sellers shall have the right to terminate their liability for Losses in
respect of any Non-Assumable Claim that is the subject of such an
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unconditional offer of compromise upon their irrevocable offer to the Buyer, as
applicable, to pay the amount contained in such offer to compromise; upon
receipt, in the form of immediately available funds by the Buyer, of the amount
contained in such offer to compromise and payment of all other Losses suffered
or incurred by any of them in respect of such Non-Assumable Claim, the Sellers
shall have no further liability to the Buyer in respect of such Non-Assumable
Claim.
9.5 Tax Treatment. The Parties agree that any indemnification payments
made pursuant to this Agreement shall be treated for Tax purposes as an
adjustment to the Purchase Price, unless otherwise required by applicable Law.
All indemnification payments under this Agreement shall include an amount
sufficient to hold the recipient harmless on a net after-Tax basis from all
Taxes imposed with respect to the receipt or on account of the payment.
9.6 Remedy. Notwithstanding any other provisions of this Agreement
other than Sections 2.5 and 9.7 hereof and for equitable remedies (including,
without limitation, specific performance), absent fraud, from and after the
Funding Date, the sole remedy of a party in connection with a breach of any
representation, warranty or covenant contained herein or in any other
Transaction Document or in any other agreement, certificate, instrument or other
document delivered pursuant hereto or thereto shall be set forth in this ARTICLE
9.
9.7 Administrative Expense; Administrative Priority.
(a) The following shall constitute allowed administrative expenses
of the CFC Debtors under section 364(c)(1) of the Bankruptcy Code with priority
over any and all administrative expenses of the kind specified in section 503(b)
or 507(b) of the Bankruptcy Code: the first $3.5 million of the Sellers'
obligations under Section 5.1(b)(i) and this ARTICLE 9 ("Administrative Tax and
Indemnity Claims"); the balance of Seller's obligations in excess of the first
$3.5 million referenced above shall be allowed as an unsecured prepetition
claim. Notwithstanding anything to the contrary herein, the Parties acknowledge
and agree that the obligations of the CFC Parties pursuant to Section 2.5 hereof
shall be separately enforceable at law or in equity and shall not constitute a
claim under ARTICLE 9 hereof.
(b) The Buyer shall not be required to file any request for
allowance of administrative claims or proofs of claim with the Bankruptcy Court
or otherwise. Any notices or claims provided by the Buyer hereunder pursuant to
this ARTICLE 9 shall satisfy and perfect any such request for administrative
claims or proof of claim filing requirements otherwise applicable to holders of
claims in the Chapter 11 case. In the event that the Buyer gives notice of a
claim or makes a claim pursuant to ARTICLE 9 hereof that is liquidated as to
amount and the CFC Debtors dispute such claim, the CFC Debtors shall deposit
with the Administrative Claims Escrow Agent, on account of, pending allowance
of, such claim cash in an amount equal to all Administrative Tax and Indemnity
Claims, not to exceed $3.5 million, the disposition of which shall be governed
by the terms and conditions set forth in the Administrative Claims Escrow
Agreement. In addition, the CFC Debtors shall deposit with the
110
Administrative Claims Escrow Agent on account of, and pending allowance of, all
general unsecured claims for Administrative and Tax and Indemnity Claims in
excess of $3.5 million, any property distributable on account of general
unsecured claims pursuant to a confirmed chapter 11 plan of the CFC Debtors.
Notwithstanding the foregoing, any reserve established pursuant to this Section
9.7(b) may be increased upon motion or other request by the Buyer filed with the
Bankruptcy Court up to the Cap. The CFC Debtors shall not seek to disallow,
expunge or estimate any claims of Bayer under section 502 of the Bankruptcy Code
or otherwise, on the grounds that such claims are contingent or unliquidated.
(c) On or prior to the Funding, the Buyer, the Sellers and the
Administrative Claims Escrow Agent shall enter into the Administrative Claims
Escrow Agreement. Such Administrative Claims Escrow Agreement shall terminate
with respect to any claims made pursuant to Section 9.2(a) on the date an order
of the Bankruptcy Court allowing or disallowing such indemnity claim is entered;
provided, however, that promptly after the entry of such order, the Buyer and
the Company shall instruct the Administrative Claim Escrow Agent to release the
amount allowed or disallowed by such order and the Buyer shall have received
such amounts.
ARTICLE 10
MISCELLANEOUS
10.1 Expenses. Except as otherwise specifically provided in this
Agreement, the Sellers and the Buyer will each pay all costs and expenses
incurred by each of them, or on their behalf respectively,. in connection with
this Agreement and the transactions contemplated hereby, including fees and
expenses of their own financial consultants, accountants and counsel.
10.2 Amendment and Waiver. This Agreement may be amended and any
provision of this Agreement may be waived; provided, however, that any such
amendment or waiver shall be binding upon a Party hereto only if such amendment
or waiver is set forth in a writing executed by such Party. No course of dealing
between or among any persons having any interest in this Agreement shall be
deemed effective to modify, amend or discharge any part of this Agreement or any
rights or obligations of any party hereto under or by reason of this Agreement.
10.3 Notices. All notices, demands and other communications given or
delivered under this Agreement shall be in writing and shall be deemed to have
been given when personally delivered, mailed by first class mail, return receipt
requested, or delivered by express courier service or telecopied (with hard copy
to follow). Notices, demands and communications to the Sellers and the Buyer
shall, unless another address is specified in writing, be sent to the address or
telecopy number indicated below:
111
Notices to the Sellers: Conseco Finance Corp.
---------------------- 0000 Xxxxxxxx Xxxxxx
Xxxxx Xxxx, Xxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Telecopy No.: (000) 000-0000
with a copy (which shall not constitute
notice) to:
Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxxx X.X. Xxxxxxxxxx, P.C.
Telecopy: (000) 000-0000
Notices to the Buyer: General Electric Capital Corporation
-------------------- General Electric Consumer Finance
0000 Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: Xxx Xxxxxxx
Telecopy: (000) 000-0000
with copies (which shall not constitute
notice) to:
General Electric Capital Corporation
General Electric Consumer Finance
0000 Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: General Counsel
General Electric Consumer Finance
Americas
Telecopy: (000) 000-0000
with copies (which shall not constitute
notice) to:
Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx XxXxxxxx
Telecopy: (000) 000-0000
10.4 Binding Agreement; Assignment. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and
112
their respective successors and permitted assigns; provided that neither this
Agreement nor any of the rights, interests or obligations hereunder may be
assigned by the Sellers without the prior written consent of the Buyer or by the
Buyer without the prior written consent of the Sellers. Notwithstanding the
foregoing, without the prior written consent of the Sellers, each of the Buyer
and its permitted assigns may at any time, in its sole discretion, assign, in
whole or in part, (a) its rights and obligations pursuant to this Agreement and
the other Transaction Documents to one or more of its Affiliates, (b) after the
Funding, its rights under this Agreement and, except as otherwise specifically
set forth therein, the other Transaction Documents, in whole or in part, to any
Person. However, the Buyer and its permitted assigns shall not be released or
novated from any obligations assigned by the Buyer or its permitted assigns
pursuant to this Section 10.4.
10.5 Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable Law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable Law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provisions or the remaining provisions of this Agreement.
10.6 Construction. The language used in this Agreement shall be deemed
to be the language chosen by the Parties to express their mutual intent, and no
rule of strict construction shall be applied against any Person. 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
otherwise requires. The word "including" shall mean "including without
limitation".
10.7 Captions. The captions used in this Agreement are for convenience
of reference only and do not constitute a part of this Agreement and shall not
be deemed to limit, characterize or in any way affect any provision of this
Agreement, and all provisions of this Agreement shall be enforced and construed
as if no caption had been used in this Agreement.
10.8 Entire Agreement. The annexes, exhibits and schedules identified
in this Agreement are incorporated herein by reference. This Agreement and the
other Transaction Documents (including the Confidentiality Agreement) contain
the entire agreement between the Parties and supersede any prior understandings,
agreements or representations by or between the Parties, written or oral, which
may have related to the subject matter hereof in any way.
10.9 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original but all of which taken
together shall constitute one and the same instrument.
10.10 Governing Law. All questions concerning the construction,
validity and interpretation of this Agreement shall be governed by and construed
in accordance with the domestic Laws of the State of New York, without giving
effect to any choice of law or conflict of law provision (whether of the State
of New York or any other jurisdiction)
113
that would cause the application of the Laws of any jurisdiction other than the
State of New York.
10.11 Parties in Interest. Nothing in this Agreement, express or
implied, is intended to confer on any Person other than the Parties and their
respective successors and assigns any rights or remedies under or by virtue of
this Agreement.
10.12 Consent to Jurisdiction. THE PARTIES AGREE THAT JURISDICTION AND
VENUE IN ANY ACTION BROUGHT BY ANY PARTY PURSUANT TO THIS AGREEMENT SHALL
PROPERLY (BUT NOT EXCLUSIVELY) LIE IN ANY FEDERAL OR STATE COURT LOCATED IN NEW
YORK, NEW YORK; PROVIDED, HOWEVER, THAT THE PARTIES AGREE THAT JURISDICTION AND
VENUE IN ANY ACTION BROUGHT BY ANY PARTY PURSUANT TO THIS AGREEMENT OVER ANY
DISPUTE RELATING TO THE AUCTION OR THE PURCHASED ASSETS SHALL EXCLUSIVELY LIE
WITH THE BANKRUPTCY COURT SO LONG AS THE BANKRUPTCY COURT SHALL BE WILLING TO
HEAR SUCH DISPUTE. BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PARTY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF SUCH COURTS FOR ITSELF AND IN RESPECT
OF ITS PROPERTY WITH RESPECT TO SUCH ACTION. THE PARTIES IRREVOCABLY AGREE THAT
VENUE WOULD BE PROPER IN SUCH COURT, AND HEREBY WAIVE ANY OBJECTION THAT SUCH
COURT IS AN IMPROPER OR INCONVENIENT FORUM FOR THE RESOLUTION OF SUCH ACTION.
THE PARTIES FURTHER AGREE THAT THE MAILING BY CERTIFIED OR REGISTERED MAIL AT
SUCH LOCATIONS AS INDICATED IN SECTION 10.3, HEREOF RETURN RECEIPT REQUESTED, OF
ANY PROCESS REQUIRED BY ANY SUCH COURT SHALL CONSTITUTE VALID AND LAWFUL SERVICE
OF PROCESS AGAINST THEM, WITHOUT NECESSITY FOR SERVICE BY ANY OTHER MEANS
PROVIDED BY STATUTE OR RULE OF COURT.
10.13 Delivery by Facsimile. This Agreement and any other Transaction
Document, and any amendments hereto or thereto, to the extent signed and
delivered by means of a facsimile machine, shall be treated in all manner and
respects as an original Contract and shall be considered to have the same
binding legal effects as if it were the original signed version thereof
delivered in person. At the request of any Party hereto or to any such Contract,
each other Party hereto or thereto shall re-execute original forms thereof and
deliver them to all other Parties. No Party hereto or to any such Contract shall
raise the use of a facsimile machine to deliver a signature or the fact that any
signature or Contract was transmitted or communicated through the use of a
facsimile machine as a defense to the formation of a Contract and each such
Party forever waives any such defense.
10.14 Disclosure Schedules. All schedules attached hereto or referred
to herein are hereby incorporated in and made a part of this Agreement as if set
forth in full herein. The description or listing of a matter, event or thing
within the schedules (whether in response for a description or listing of
material items or otherwise) shall not be deemed an admission or acknowledgment
that such matter, event or thing is "material" for any
114
purpose. In addition, matters reflected in the schedules are not necessarily
limited to matters required by this Agreement to be reflected in such schedules.
Such additional matters are set forth for informational purposes only and do not
necessarily include other matters of a similar nature.
[Signature pages follow]
115
IN WITNESS WHEREOF, the undersigned have executed this Asset
Purchase Agreement as of the date first written above.
CONSECO FINANCE CORP.
By: /s/ Xxxxx Xxxxxxxx
-------------------------------------
Name: Xxxxx Xxxxxxxx
Its:
CONSECO FINANCE CANADA HOLDING COMPANY
By: /s/ Xxxxx Xxxxxxxx
-------------------------------------
Name: Xxxxx Xxxxxxxx
Its:
CONSECO FINANCE CANADA COMPANY
By: /s/ Xxxxx Xxxxxxxx
-------------------------------------
Name: Xxxxx Xxxxxxxx
Its:
RICE PARK PROPERTIES CORPORATION
By: /s/ Xxxxx Xxxxxxxx
-------------------------------------
Name: Xxxxx Xxxxxxxx
Its:
GREEN TREE RETAIL SERVICES BANK, INC.
By: /s/ Xxxxxx X. Xxxx, Xx.
-------------------------------------
Name: Xxxxxx X. Xxxx, Xx.
Its: President
MILL CREEK BANK INC.
By: /s/ Xxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxx
Its: President
MILL CREEK SERVICING CORPORATION
By: /s/ Xxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxx
Its: SVP & CFO
CONSECO FINANCE CREDIT CARD
FUNDING CORP.
By: /s/ Xxxxx Xxxxxxxx
-------------------------------------
Name: Xxxxx Xxxxxxxx
Its:
GENERAL ELECTRICAL CAPITAL CORPORATION
By: /s/ Xxxxxx Xxxxxxx
-------------------------------------
Name: Xxxxxx Xxxxxxx
Its: Authorized Representative
PURCHASED BUSINESSES SCHEDULE
INDEX OF EXHIBITS
Exhibit A - Additional Representations and Warranties with
Respect to the Loans
Exhibit B - [Intentionally Omitted].
Exhibit C - [Intentionally Omitted].
Exhibit D - Form of Lost Document Affidavit
Annex A - November 30 Balance Sheet
Annex B - December 31 Balance Sheet
Annex C - January 31 Balance Sheet
Annex D - Servicing Agreements Terms
Annex E - Form of Sale Order
Annex F - Lease Terms
Annex G - [Intentionally Omitted]
Annex H - Adjustments to Book and Records
Annex I - Pro Forma Schedule as of January 31, 2003
113
EXHIBIT A
1. Loans. The Sellers make the following representations with respect (a) to
the Loans that are Purchased Assets and (b) the Securitized Loans relating
to the PL Business (collectively, the "Covered Loans"):
(a) Binding Obligation. The Covered Loans are the legal, valid and
binding obligations of the Obligor thereunder and are enforceable by the
applicable Sellers in accordance with their written terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar Laws affecting the enforcement of creditors' rights
generally.
(b) No Defenses. The Covered Loans are, or as of the Cut-Off Time
and as of the Funding Date will be, in full force and effect free and clear of
all Liens (other than Permitted Liens) and are not subject to any right of
rescission, setoff, counterclaim or defense, including the defense of usury by
any Person, and the operation of any of the terms of such Loans or the exercise
of any right thereunder by any Person will not render such Loans unenforceable,
in whole or in part, or subject to any right of rescission, setoff, counterclaim
or defense, including the defense of usury.
(c) Insurance. In the case of all applicable Covered Loans,
including, but not limited to Home Improvement Loans, relating to real property,
other than unsecured Loans, as of the date a CFC Party originated or purchased
(as applicable) such Covered Loan, all improvements on the related real property
were covered by a hazard insurance policy.
(d) Origination. Each Covered Loan constitutes and arose out of a
bona fide business transaction entered into by the Sellers in the ordinary
course of business consistent with past practices of the Sellers, and if not
originated by the Sellers, then purchased by or assigned to a Seller from a home
improvement contractor, dealer or a similarly situated Person in the ordinary
course of business of the Sellers consistent with past practices of the
applicable Sellers. The origination practices with respect to each Covered Loan
(i) have been and are in all material respects legal and proper in the
origination business and consumer finance business and (ii) are in accordance
with the Sellers' underwriting guidelines in all material respects (except that,
with respect to each Covered Loan that was originated by a Person other than a
Seller, the Sellers make such origination practices representation and warranty
only to their Knowledge).
(e) Lawful Assignment. The Covered Loans were not originated in
and are not subject to the Laws of any jurisdiction whose Laws would make the
transfer or ownership thereof unlawful or unenforceable. The assignment and any
and all documents executed and delivered by the Sellers pursuant to this
Agreement each constitutes the legal, valid and binding obligation of the
Sellers enforceable in accordance with their terms. On the Funding Date,
effective as of the Cut-Off Time, the Sellers will have executed a valid blanket
assignment of the Covered Loans transferred to the Buyer, and will have
transferred all their right, title and interest in such Covered Loans,
including all rights the Sellers may have against the originating Person with
respect to Covered Loans originated by Persons other than a Seller.
(f) Compliance with Laws. All requirements of any Law, including
without limitation, the Finance Laws, and FHA regulations, if applicable, have
been complied with in all material respects and such compliance is not affected
by the holding or ownership of the Covered Loans.
(g) Loans In Force. The Covered Loans have not been satisfied,
subordinated or rescinded, in whole or in part, and, in the case of such Loans
or Securitized Loans secured by collateral, such collateral has not been
released, in whole or in part (except as released in the ordinary course of
business consistent with past practices), from the Lien created thereby.
(h) Liens. With respect to Loans that are Home Improvement Loans,
such Covered Loans have been duly executed and delivered by the Obligors and the
related mortgage are valid and subsisting first, second or third Liens on the
property described therein or the Home Improvement Loans are unsecured
borrowings of the Obligor. On the Funding Date, effective as of the Cut-Off
Time, the Sellers will assign any related mortgage to the Buyer, and the Buyer
will have valid and subsisting Liens on the property therein described. The
Sellers have full right to sell and assign such Loans to the Buyer.
(i) Originals. The Sellers have in their possession (either
directly or through a custodian) and, as of the Funding Date, will have
delivered to the Buyer, all originals of the mortgage notes, promissory notes,
Contracts, applications and certificates, security agreements, certificates of
title, UCC financing statement that constitute or evidence the Covered Loans,
and to the extent applicable, together with an allonge affixed to each such note
and certificate showing a complete chain of endorsements to Buyer. As to any
missing promissory note, contract or certificate, the Sellers shall deliver or
cause to be delivered, a copy of the lost document and a lost document affidavit
with respect thereto, the form of which is attached hereto at Exhibit D. In the
case of Loans secured by real property, including but not limited to Home
Improvement Loans, the Sellers will deliver, or cause to be delivered, to the
Buyer on the Funding Date, effective as of the Cut-Off Time, the original
mortgage or deed of trust, with evidence of recording thereon, or if the
original mortgage has not yet been returned from the recording office, a true
copy of the mortgage which has been delivered for recording in the appropriate
recording office of the jurisdiction in which the real property has been
delivered, and executed assignments of mortgage showing a complete chain of
assignment of mortgage to the Buyer.
(j) Notation of Security Interest. With respect to the Covered
Loans where the underlying collateral, such as consumer products, is located in
a state in which notation of a security interest on the title document is
required or permitted to perfect such security interest, the title document
shows (or, if a new or replacement title document with respect to such
collateral is being applied for, then such title document will be issued within
180 days and will show) a Seller as the holder of a first priority
115
security interest in such collateral. If the collateral is located in a state in
which the filing of a financing statement under the UCC is required to perfect a
security interest in goods of the type of such collateral, such filings or
recording have been duly made and show a Seller as a secured party.
(k) Purchase Money Security Interest. The retail installment
contracts create a "purchase money security interest" (as defined in the UCC) in
favor of the Sellers in the consumer product covered thereby as security for
payment of the outstanding balance of such retail installment contract and all
other obligations of the Obligor under such retail installment contract; such
security interest has been assigned by the Sellers to the Buyer and at the time
of such assignment the Buyer will have a valid purchase money security interest
in such consumer product.
(l) [Intentionally Omitted].
(m) Home Ownership and Equity Protection Act. With respect to any
Loan subject to the Home Ownership and Equity Protection Act of 1994, each such
Loan has been originated and serviced in compliance with the provisions thereof.
(n) Licensing Requirements. All CFC Parties that have had any
interest in any Covered Loan, whether as mortgagee, assignee, pledgee or
otherwise, are (or, during the period in which they held and disposed of such
interest, were) (1) in compliance with any and all applicable licensing
requirements of the Laws of the state where the related mortgaged property is
located, except where the failure to comply with such licensing requirements
will not adversely affect the Buyer's interest in the Covered Loans, all parties
were (2) (a) organized under the Laws of such jurisdiction, or (b) qualified to
do business in such jurisdiction, or (c) federal savings and loan associations,
savings banks, industrial loan corporations or national banks having principal
offices in such jurisdiction, or (d) not doing business in such jurisdiction,
and (2) all parties had capacity to execute the Loans and Securitized Loans.
2. PL Residual Assets. The Sellers make the following representations with
respect to the PL Residual Assets:
(a) All of the PL Residual Assets that are certificated securities
have been validly issued, and are fully paid and non-assessable, and have been
offered, issued and sold in compliance with all applicable laws. There are no
outstanding rights, options, warrants or agreements for the purchase from, or
sale or issuance, in connection with such PL Residual Assets. There are no
agreements on the part of the Sellers to issue, sell or distribute the PL
Residual Assets and the Sellers have no obligation (contingent or otherwise) to
purchase, redeem or otherwise acquire any securities or interest therein or to
pay any dividend or make any distribution in respect of the PL Residual Assets.
(b) Except as indicated in the PL Residuals Schedule, no servicing
termination or over collateralization triggers or early amortization events have
occurred on any Securitization relating to the PL Business.
116
(c) The servicing practices used by each of the CFC Parties in
Securitizations relating to the PL Business are in compliance in all material
respects with the requirements of the related agreements and federal, state and
local laws, rules and regulations.
117
EXHIBIT D
FORM OF LOST DOCUMENT AFFIDAVIT
The undersigned being duly sworn, according to law, deposes and
states that he is an officer of [________________] (the "Holder"), that he makes
this Affidavit on its behalf, being authorized to do so, and that the facts
stated herein are true and correct to the best of his knowledge, information and
belief.
1. On or about [________________], [the Company, ("Company")]
issued [document].
2. The Holder is the sole legal and beneficial holder of the
[document].
3. The Holder has reason to believe that the [document] has been
lost, stolen or destroyed because the Holder has caused a diligent search to be
made for the [document], and the [document] is nowhere to be found.
4. If the [document] is found or comes into the Holder's
possession or control or into the possession or control of the Holder's
representatives or assigns, the [document] shall be delivered to the Company to
be cancelled.
5. The Holder relinquishes any claim of any nature whatsoever
which it had in connection with the [document].
6. The undersigned states that the above statements are true and
to the best of the undersigned's knowledge, information and belief.
[COMPANY]
By:___________________________
Name:
Title:
Sworn to and Subscribed before
me this ____ day of _________ __, 2003
---------------------------
Notary Public
================================================================================
ASSET PURCHASE AGREEMENT
by and among
CONSECO FINANCE CORP.,
THE SELLING ENTITIES NAMED HEREIN
and
GENERAL ELECTRIC CAPITAL CORPORATION
Dated as of
March 14, 2003
================================================================================
TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS.......................................................................1
1.1 Definitions...........................................................................1
ARTICLE 2 PURCHASE AND SALE OF ASSETS......................................................32
2.1 Purchased Assets.....................................................................32
2.2 Liabilities..........................................................................34
2.3 Funding Transactions.................................................................38
2.4 Purchase Price.......................................................................42
2.5 Post-Effective Time Amounts Received and Paid; Assignment of New Loans;
Securitized Receivables..............................................................43
2.6 Sale of Assets.......................................................................44
2.7 Assumption of Certain Leases and Contracts...........................................44
2.8 Consents to Certain Assignments......................................................45
2.9 Real Estate Taxes....................................................................45
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE SELLERS....................................45
3.1 Organization and Power...............................................................45
3.2 Authorization of Transactions........................................................46
3.3 Absence of Conflicts; Required Consents, Approvals and Filings.......................46
3.4 Company Subsidiaries.................................................................47
3.5 Good Title...........................................................................47
3.6 Compliance with Laws; Permits........................................................48
3.7 Assets Necessary and Sufficient to Conduct Businesses................................48
3.8 Facilities; Real Property............................................................49
3.9 Personal Property....................................................................49
3.10 Receivables..........................................................................49
3.11 Material Agreements..................................................................50
3.12 Intellectual Property................................................................51
3.13 Brokerage............................................................................53
3.14 Employees............................................................................53
3.15 Affiliate Transactions...............................................................53
3.16 ERISA; Employee Benefits.............................................................54
3.17 Depository Institutions..............................................................54
TABLE OF CONTENTS
(continued)
Page
3.18 Litigation...........................................................................54
3.19 Financial Statements.................................................................55
3.20 Indebtedness; Guarantees; Absence of Undisclosed Liabilities.........................55
3.21 PL Residual Assets...................................................................56
3.22 Tax Matters..........................................................................56
3.23 Insurance............................................................................58
3.24 Environment; Health and Safety.......................................................58
3.25 Accounting Controls..................................................................59
3.26 Summary of Securitizations Relating to PL Business...................................59
3.27 Representations as to Certain Purchased Assets.......................................59
3.28 Securities Offerings.................................................................59
3.29 No Powers of Attorney................................................................59
3.30 Securities Laws Matters; No Registration.............................................59
3.31 Securitizations Relating to PL Business..............................................59
3.32 Conduct of Business..................................................................61
3.33 Absence of Certain Changes...........................................................61
3.34 Maintenance of Books.................................................................62
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE BUYER......................................62
4.1 Organization and Corporate Power.....................................................62
4.2 Authorization of Transaction.........................................................62
4.3 No Violation.........................................................................63
4.4 Governmental Authorities and Consents................................................63
4.5 Litigation...........................................................................63
4.6 Brokerage............................................................................63
4.7 Availability of Funds................................................................63
4.8 Stock Purchase.......................................................................63
4.9 Approvals............................................................................64
4.10 Knowledge............................................................................64
ii
TABLE OF CONTENTS
(continued)
Page
ARTICLE 5 ADDITIONAL AGREEMENTS............................................................64
5.1 Tax Matters..........................................................................64
5.2 Access to Information and Facilities.................................................70
5.3 Confidentiality......................................................................71
5.4 Conduct of the Businesses Prior to Funding...........................................72
5.5 Restrictions on Certain Actions......................................................73
5.6 Press Releases and Announcements.....................................................77
5.7 Approvals of Third Parties; Satisfaction of Conditions to Closing....................77
5.8 Bankruptcy Actions...................................................................78
5.9 [Intentionally Omitted]..............................................................80
5.10 [Intentionally Omitted]..............................................................80
5.11 Exclusivity; No Solicitation of Transactions.........................................80
5.12 Employees............................................................................80
5.13 Transition...........................................................................85
5.14 Seller's Trademarks..................................................................85
5.15 Notices to Obligors..................................................................86
5.16 Non-Solicitation and Non-Competition.................................................86
5.17 Further Actions......................................................................87
5.18 Further Assurances...................................................................87
5.19 Mail Forwarding......................................................................87
5.20 [Intentionally Omitted]..............................................................87
5.21 [Intentionally Omitted]..............................................................87
5.22 [Intentionally Omitted]..............................................................87
5.23 Preparation of License Applications..................................................87
5.24 Provision of Bank Information........................................................88
5.25 Access to Records After the Funding..................................................88
5.26 Liens................................................................................89
5.27 Separation Matters...................................................................89
5.28 [Intentionally Omitted]..............................................................90
iii
TABLE OF CONTENTS
(continued)
Page
5.29 Financial Information................................................................90
5.30 [Intentionally Omitted]..............................................................90
5.31 Intellectual Property Licenses; Shared Services; Shared Systems......................90
5.32 Pending or Threatened Litigation.....................................................91
5.33 Insurance; Risk of Loss..............................................................91
5.34 Supplements to Schedules; Post-Signing Information...................................92
5.35 Payment of Brokers' or Finders' Fees.................................................92
5.36 Powers of Attorney...................................................................92
5.37 Non-Competition Waivers..............................................................92
5.38 Post-Effective Closing Date Deliverables.............................................92
5.39 Final Schedule of Assets Acquired and Liabilities Assumed............................93
5.40 Home Equity Loan, Reaffirmed Accounts, CRAs and Charged-Off Accounts Sales...........95
5.41 Other Notices........................................................................96
5.42 Limited Power of Attorney............................................................96
5.43 Wind-Down of PL Securitization.......................................................96
ARTICLE 6 CONDITIONS PRECEDENT TO THE BUYER'S OBLIGATIONS..................................96
6.1 Representations and Warranties; Covenants; Certificates..............................97
6.2 Bankruptcy Condition.................................................................97
6.3 Litigation...........................................................................97
6.4 Approvals............................................................................98
6.5 Instruments of Conveyance and Transfer; Title........................................99
6.6 Servicing Agreements................................................................100
6.7 Resignation of Officers and Directors of Subject Subsidiaries.......................100
6.8 [Intentionally Omitted].............................................................100
6.9 No Material Adverse Effect..........................................................100
6.10 [Intentionally Omitted].............................................................100
6.11 Securitization Rights...............................................................100
6.12 Tax Opinion.........................................................................101
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6.13 Data Service Contracts..............................................................101
6.14 Acceptance of Employment Offers.....................................................101
6.15 Agreements..........................................................................101
6.16 Green Tree Retail Services Bank and Conseco Finance Servicing Corp. Transfers.......102
6.17 Replacement Servicer................................................................102
ARTICLE 7 CONDITIONS PRECEDENT TO THE SELLERS' OBLIGATIONS................................102
7.1 Representations and Warranties; Covenants; Certificates.............................102
7.2 Bankruptcy Condition................................................................103
7.3 Litigation..........................................................................103
7.4 Approvals...........................................................................103
7.5 [Intentionally Omitted].............................................................104
7.6 Other Documents.....................................................................104
ARTICLE 8 TERMINATION.....................................................................104
8.1 Termination Prior to Closing........................................................104
8.2 [Intentionally Omitted].............................................................105
8.3 No Consequential Damages............................................................105
8.4 Effect of Termination...............................................................105
ARTICLE 9 SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION....................................106
9.1 Survival of Representations.........................................................106
9.2 Indemnification.....................................................................106
9.3 Qualifications on Indemnification...................................................107
9.4 Notice and Defense of Claims........................................................108
9.5 Tax Treatment.......................................................................110
9.6 Remedy..............................................................................110
9.7 Administrative Expense; Administrative Priority.....................................110
ARTICLE 10 MISCELLANEOUS...................................................................111
10.1 Expenses............................................................................111
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10.2 Amendment and Waiver................................................................111
10.3 Notices.............................................................................111
10.4 Binding Agreement; Assignment.......................................................112
10.5 Severability........................................................................113
10.6 Construction........................................................................113
10.7 Captions............................................................................113
10.8 Entire Agreement....................................................................113
10.9 Counterparts........................................................................113
10.10 Governing Law.......................................................................113
10.11 Parties in Interest.................................................................114
10.12 Consent to Jurisdiction.............................................................114
10.13 Delivery by Facsimile...............................................................114
10.14 Disclosure Schedules................................................................114
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