AGREEMENT
This Agreement (this "Agreement") is made and entered into this 11th
day of May, 2000 by and among Conseco Finance Corp. (the "Company"), Conseco,
Inc. ("Conseco"), CIHC, Incorporated ("CIHC"), and Xxxxxx Brothers Holdings Inc.
(collectively with its direct and indirect subsidiaries "Xxxxxx").
WHEREAS, the parties hereto have entered into a letter agreement dated
May 4, 2000 (the "Letter Agreement") pursuant to which, among other things, (i)
the Company has agreed to sell certain assets to Xxxxxx and (ii) the parties
thereto have agreed to various related matters to be embodied in a definitive
agreement; and
WHEREAS, the parties hereto desire to hereby embody their
understandings from the Letter Agreement in a definitive agreement that will
survive the termination of the Letter Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
1. Retention of Employees. The Company shall use commercially reasonable
efforts to retain those members of management listed on Exhibit A hereto in
their present positions with the Company.
2. Affiliate Transactions.
2.1 Repayment of Existing Intercompany Indebtedness. The Company shall
not directly or indirectly repay any indebtedness for borrowed money outstanding
on the date hereof owed to Conseco or any Affiliate (as defined below) thereof
except as provided on Exhibit B hereto. The term "Affiliate" means any Person
(as defined below) that directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with the
person specified, provided however, that for purposes of all sections of this
Agreement other than Sections 8 and 11.4, the term "Affiliate" (i) shall not
include any direct or indirect majority-owned subsidiaries of the Company but
(ii) shall include the Transferred Companies (as defined in Exhibit B). The term
"Person" means any natural person, corporation, limited liability company,
general partnership, limited partnership, proprietorship, trust, union,
association, court, tribunal, agency, government, department, commission,
self-regulatory organization, arbitrator, board, bureau, instrumentality, or
other entity, enterprise, authority, or business organization.
2.2 Dividend Restrictions. The Company shall not directly or
indirectly pay any dividends or make any distributions or transfer any assets
of the Company to Conseco or any of its Affiliates except as provided on Exhibit
B hereto.
2.3 Restrictions on Other Affiliate Transactions. The Company shall
not effect any transactions or enter into, amend, modify or waive any agreement,
arrangement or understanding
(including without limitation any guaranty, loan, note, or extension of credit
by or to the Company) with Conseco or any of its Affiliates, or make any
payments thereunder, except (i) as provided on Exhibit B hereto, (ii) that the
Company may borrow funds and/or obtain extensions of credit from Conseco and any
of its Affiliates at any time and from time to time during the term hereof but
none of such indebtedness shall be due, payable or paid except for short-term
loans made by Conseco or an Affiliate to the Company to provide the Company with
liquidity pending receipt of funding from other sources which is expected to be
received within seven business days of such loan provided such funding is
actually received, whether or not within such period and (iii) that the Company
may enter into agreements, arrangements or understandings with Conseco or any of
its Affiliates (other than those covered by clause (ii) above) upon terms no
less favorable to the Company than the Company could obtain from third parties
in arms length transactions. Nothing in this Agreement shall be deemed to
prohibit the Company from paying interest on any indebtedness incurred by the
Company after the date hereof in accordance with clause (ii) above, provided
that the interest rate paid shall not exceed the interest rate charged on the
Intercompany Note.
2.4 Tax Sharing Agreement. Conseco shall (and shall cause its
Affiliates to) pay to the Company when due any and all amounts owed to the
Company by Conseco (or any Affiliate of Conseco) under the Consolidated Federal
Income Tax Agreement in effect on the date hereof (the "Tax Sharing Agreement")
among Conseco, the Company, and the other Conseco Affiliates party thereto.
2.5 Intercompany Receivables. Conseco shall (and shall cause its
Affiliates to) pay interest on any amount owed by Conseco or any of its
Affiliates to the Company or any subsidiary thereof on the date hereof at a
rate per annum equal to 150 basis points in excess of the London interbank
offered rate for a three-month period, as published in The Wall Street Journal.
Such interest shall be paid monthly.
2.6 Maintenance of Separate and Independent Corporate Identities.
The Company, CIHC and Conseco shall maintain separate and independent corporate
identities and shall observe separate and independent corporate formalities
related thereto. Without limiting the generality of the foregoing, each of
Conseco and CIHC, on the one hand, and the Company, on the other, shall (i)
maintain separate and independent (A) business locations, (B) operating
accounts, (C) employees, (D) assets and liabilities, and (E) proceeds from the
sale of each entity's respective stock (it being recognized that an immaterial
sharing of employees and facilities may occur so long as there is an appropriate
allocation of costs relating thereto) and (ii) not commingle any funds or other
assets.
2.7 No Contributions to Capital. The Company shall not contribute
any funds or other assets to the Transferred Companies.
2.8 No Guaranty of Indebtedness. Without limiting the generality of
Section 2.3, the Company shall not assume or guaranty any indebtedness of
Conseco or any Affiliate thereof.
3. Maintenance of Financing Facilities. The Company shall use
commercially reasonable
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efforts to maintain the Company's current non-Xxxxxx warehouse financing
facilities provided that the Company may replace such warehouse financing
facilities with facilities having substantially similar terms.
4. Board Matters.
4.1 Independent Board Member. Concurrently herewith, Conseco shall
nominate an Independent Director (as defined in the certificate of incorporation
of the Company) to the Company's Board of Directors (the "Independent Board
Member"). The Independent Board Member shall be subject to Xxxxxx'x consent and
approval, which shall not be unreasonably delayed. Conseco and the Company agree
to take all action within their respective power (including, with out
limitation, the voting of capital stock of the Company owned by Conseco and any
of its Affiliates) required to cause the Board of Directors of the Company to
at all times include such nominee (and any replacement nominee) as a director
of the Company's Board of Directors.
4.2 Vacancies. If, prior to election to the Board of Directors
of the Company pursuant to Section 4.1 hereof, any Independent Board Member
shall be unable or unwilling to serve as a director of the Company, Conseco
shall promptly nominate a replacement in accordance with Section 4.1 hereof, who
shall then be the Independent Board Member for purposes of this Section 4. If,
following an election to the Board of Directors of the Company pursuant to this
Section 4, any Independent Board Member shall resign or be removed or be unable
to serve for any reason prior to the expiration of his term as a director of the
Company, Conseco shall notify the Board of Directors of the Company in writing
of a replacement Independent Board Member, and either (i) Conseco shall vote its
shares of capital stock of the Company, at any regular or special meeting called
for the purpose of filling positions on the Board of Directors of the Company or
by written consent executed in lieu of such a meeting of stockholders, and shall
take all such other actions necessary to ensure the election to the Board of
Directors of the Company of such replacement Independent Board Member to fill
the unexpired term of the Independent Board Member whom such new Independent
Board Member is replacing or (ii) the remaining members of the Board of
Directors (whether or not constituting a quorum) shall elect such replacement
Independent Board Member to fill the unexpired term of the Independent Board
Member who such new Independent Board Member is replacing.
4.3 Observer Designee. Xxxxxx shall be entitled to have one designee
(an "Observer Designee") attend all of the meetings of the Board of Directors
(and each committee thereof) of the Company, in each case other than those
portions (if any) of any meeting (a) dealing with (i) the Company's obligations
to Xxxxxx or Xxxxxx'x Affiliates, (ii) matters reasonably expected to be adverse
to Xxxxxx or (iii) matters the disclosure of which to Xxxxxx could reasonably be
expected to be adverse to the Company or (b) where necessary to protect the
attorney-client privilege of any matter material to the Company. The Observer
Designee shall not be entitled to vote on any matters presented to the Board of
Directors or to such committees. The Company shall give notice, including,
without limitation, any proposed agenda, to Xxxxxx of each such meeting at the
same time and in the same manner as the members of the Board of Directors (or
any committee thereof) receive notice of such meetings. Xxxxxx shall be
entitled to receive all written
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materials and other information given to the directors of the Company in
connection with such meetings at the same time such materials are given to such
directors. If the Company proposes to take action by written consent in lieu of
a meeting of its Board of Directors, the Company shall give a copy of such
consent to Xxxxxx at the same time as the members of the Board of Directors.
Such Observer Designee shall maintain the confidentiality of all confidential
information of the Company, provided that such Observer Designee may share such
information with Xxxxxx.
4.4 Costs and Expenses.
The Company shall pay all reasonable out-of-pocket expenses incurred by the
Independent Board Member and the Board Observer in connection with their
participation in meetings of the Board of Directors (and committees thereof) of
the Company. The Company shall also pay the Independent Board Member customary
and appropriate retainer and fees as may be mutually agreed upon by the Company
and such Independent Board Member. The Company and such Independent Board Member
shall negotiate such retainer and fees in good faith so as to ensure that such
amounts are customary and appropriate.
5. Restrictions on Transfer of Stock
5.1 Tag Along Right.
(a) No Stockholder (as defined below) shall Transfer (as defined
below) any Stock (as defined below), if, after giving effect to all prior
Transfers from and after the date hereof by such Stockholder such Transfers
constitute more than ten percent (10%) of the Common Stock (as defined below)
owned by all Stockholders on the date hereof, in a single transaction or related
series of transactions, to any Purchaser (as defined below) unless the terms and
conditions of such sale, transfer or other disposition (the "Tag Along Sale") to
such Purchaser shall contain an offer to each Potential Seller (as defined
below) to include in such Tag Along Sale such number of shares of Common Stock
as is determined in accordance with Section 5.1(b) below. At least 15 days prior
to effecting any Tag Along Sale, such selling Stockholder (the "Selling
Stockholder") shall promptly cause the terms and conditions of the Tag Along
Sale to be reduced to a reasonably detailed writing (which writing shall
identify the Purchaser and shall include the offer to Potential Sellers to
purchase or otherwise acquire their Common Stock according to the terms and
subject to the conditions of this Section 5), and shall deliver, or cause the
Purchaser to deliver, written notice (the "Notice") of the terms of such Tag
Along Sale to each Potential Seller. The Notice shall be accompanied by a true
and correct copy of the agreement, if any, embodying the terms and conditions of
the proposed Tag Along Sale or such written summary thereof if there is no
agreement. At any time after receipt of the Notice (but in no event later than
10 business days after receipt), each Potential Seller may accept the offer
included in the Notice for up to such number of its shares of Common Stock as
determined in accordance with the provisions of Section 5.1(b) below, by
furnishing irrevocable written notice of such acceptance to the Selling
Stockholder and to the Purchaser.
(b) In the event that any Potential Seller elects to accept the
offer included in the Notice described in Section 5.1(a) above, such Potential
Seller (the "Included Stockholder") shall have the right to sell, transfer or
otherwise dispose of such number of its shares of Common Stock pursuant to, and
upon consummation of, the Tag Along Sale which is equal to the product
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of (X) the total number of shares of Common Stock owned by the Included
Stockholder and (Y) a fraction, the numerator of which shall equal the total
number of shares of Common Stock to be sold to the Purchaser by the Selling
Stockholder, and the denominator of which shall equal the total number of shares
of Common Stock owned by the Selling Stockholder. If the Purchaser is not
willing to purchase such additional shares, the number of shares to be sold by
the Selling Stockholder and the Included Stockholders shall be proportionately
reduced.
(c) The purchase of Stock pursuant to this Section 5 shall be made
on the same terms (including, without limitation, the per share consideration
and method of payment, and the date of sale, transfer or other disposition), and
subject to the same conditions, if any, as are provided to the Selling
Stockholder and stated in the Notice.
(d) Upon the consummation of the disposition of Stock to the
Purchaser pursuant to the Tag Along Sale, the Selling Stockholder shall (i)
cause the Purchaser to remit directly to each Included Stockholder the sales
price of its Stock disposed of pursuant thereto, and (ii) furnish such other
evidence of the completion and time of completion of such disposition and the
terms thereof as may reasonably be requested by such Included Stockholder.
(e) If a Potential Seller has not delivered to the Selling
Stockholder and to the Purchaser written notice of its acceptance of the offer
contained in the Notice within 10 business days after the receipt of such
Notice, it shall be deemed to have waived any and all rights pursuant to this
Section 5 with respect to the disposition of its Stock described in the Notice,
and the Selling Stockholder shall have 45 days (calculated from the first day
next succeeding the expiration of the 1 business day acceptance period described
above), in which to dispose of the aggregate amount of Stock described in the
Notice to the Purchaser identified in the Notice, on terms not more favorable to
the Selling Stockholder than those which were set forth in the Notice. If a
Potential Seller has delivered irrevocable written notice of acceptance as
described in the preceding sentence and, if after 30 days following receipt of
the Notice, the Selling Stockholder and the Purchaser shall not have completed
the disposition of Stock to be sold in connection therewith in accordance with
the terms of the Tag Along Sale, all the restrictions on the disposition of
Stock contained in this Section 5 shall again be in force and effect.
5.2 Drag-Along Right.
(a) If a Stockholder proposes to Transfer to any Purchaser a
number of shares of Stock which represents at least a majority of the
outstanding shares of Common Stock on a fully-diluted basis (the "Transferred
Shares") then, at the election of such holder or holders (a "Drag Along
Seller"), each other Stockholder (each, a "Drag Along Stockholder") shall be
required to sell to such Purchaser (a "Drag Along Sale") a number of shares of
Stock determined by the Drag Along Seller up to the total number of shares of
Stock then held by such Drag Along Stockholder (the "Drag Along Shares"). If the
percentage of any Drag Along Stockholder's Stock required to be sold as Drag
Along Shares exceeds the percentage of the Drag Along Seller's Stock to be sold
to Purchaser in a Drag Along Sale, Drag Along Seller, shall, at its sole
expense, arrange for the delivery of a fairness opinion by an investment banking
firm of nationally recognized standing acceptable to such Drag Along Stockholder
(which acceptance
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shall not be unreasonably withheld or delayed). Such fairness opinion shall
confirm that the terms of the Drag Along Sale are fair to the Drag Along
Stockholders from a financial point of view.
(b) The Drag Along Seller shall deliver to each Drag Along
Stockholder written notice (the "Drag Along Notice") of any sale to be made
pursuant to Section 5.2(a) above, which notice shall set forth the consideration
to be paid by the Purchaser for each Transferred Share, the number of
Transferred Shares to be sold by the Drag Along Seller, the number of shares to
be sold by each Drag Along Stockholder, and the other terms and conditions, if
any, of such transaction. Pending consummation of the Drag Along Sale, the Drag
Along Seller shall promptly notify each Drag Along Stockholder of any changes in
the proposed timing for the Drag Along Sale and any other material developments
in connection therewith. The Drag Along Sale shall be on the same terms and
conditions as the sale of the Transferred Shares by the Drag Along Seller. The
Drag Along Stockholder shall only be required to give representations and
warranties as to its due organization, its due authorization and title to the
Drag Along Shares and shall only be required to indemnify for breach of its own
representations and warranties.
(c) If, within 15 days after the Drag Along Seller provides the
Drag Along Notice, no sale of the Transferred Shares owned by the Drag Along
Seller or the Drag Along Stockholder in accordance with the provisions of this
Section 5 shall have been completed, the Drag Along Sale shall be terminated for
purposes hereof.
(d) Simultaneously with the consummation of the sale of the
Transferred Shares pursuant to this Section 5, the Drag Along Seller shall cause
the Purchaser to remit directly to the Drag Along Stockholder the consideration
with respect to the Drag Along Shares and shall furnish such other evidence of
the completion and time of completion of such sale and terms and conditions, if
any, thereof as may reasonably be requested by the Drag Along Stockholder.
(e) The provisions of this Section 5, however, shall remain in
effect for any subsequent proposed sale.
5.3 Permitted Dispositions of Stock. Each Stockholder shall be
entitled to directly or indirectly Transfer all or any portion of its Stock to
any Affiliate of such Stockholder, and no such Transfer (other than a Transfer
to a Purchaser) shall give rise to any rights under Sections 5.1 or 5.2. No
Transfer may be made under this Section 5.3 unless the Person acquiring the
shares of Stock pursuant to such Transfer agrees in writing to be bound by the
provisions of this Section 5. No Transfer permitted by this Section 5.3 shall
relieve the Stockholder effecting such Transfer from its obligations hereunder.
5.4 Definitions. For the purposes of this Section 5, the following
terms have the respective meanings:
(a) "Common Stock" means the common stock, $.01 par value, of the
Company.
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(b) "Potential Seller(s)" means any Stockholder other than the
Selling Stockholder.
(c) "Purchaser" means any Person to which shares of Stock are
proposed to be Transferred, but shall not include:
(i) any Person 30% or more of the fully diluted capital stock or other
equity or ownership interests of which are directly or indirectly owned by the
Selling Stockholder(s) and/or any Affiliates thereof (in the case of a Tag Along
Sale) or the Drag Along Seller(s) and/or any Affiliates thereof (in the case of
a Drag Along Sale); or
(ii) any Person 30% or more of the voting power of which is directly or
indirectly owned by the Selling Stockholder(s) and/or any Affiliates thereof (in
the case of a Tag Along Sale) or the Drag Along Seller(s) and/or any Affiliates
thereof (in the case of a Drag Along Sale).
(d) "Stock" means (i) Common Stock, (ii) any capital stock into
which such common stock may be changed or converted, (iii) capital stock of the
Company of any other class (regardless of how denominated) issued to the holders
of shares of Common Stock upon any reclassification thereof which is also not
preferred as to dividends or assets on liquidation over any other class of stock
of the Company and which is not subject to redemption, (iv) shares of common
stock of any successor or acquiring corporation received by or distributed to
the holders of Common Stock of the Company and (v) any warrant, option or other
right exercisable for or convertible into capital stock of the Company
(including without limitation that certain Warrant, dated the date hereof,
issued by the Company to Xxxxxx), together with any shares of capital stock of
the Company issued upon the exercise or conversion thereof. For purposes of all
calculations under this Section 5, any warrants, options and other right
referred to in Section 5.4(c)(v) shall be assumed to have been fully vested,
exercised, and converted, as the case may be, immediately prior to any such
calculation, and shall be treated for purposes of such calculations as the
number of shares of Common Stock into which such warrants, options and other
rights are exercisable or convertible.
(e) "Stockholders" means each of the parties hereto and their
respective successors and assigns (other than the Company), whom on the date
hereof are holders of shares of Stock (including without limitation Xxxxxx).
(f) "Transfer(s)" means to directly or indirectly, transfer, sell,
assign, donate, contribute, or otherwise voluntarily or involuntarily dispose
of.
5.5 Non-Cash Consideration. Notwithstanding anything in this
Section 5 to the contrary, if (i) the consideration payable for shares of Stock
to be sold in a Tag Along Sale or a Drag Along Sale consists of property other
than cash ("Non-Cash Consideration") and (ii) the Purchaser acquiring such
shares so requests in writing, each Included Stockholder or Drag Along
Stockholder (collectively, "Holders") shall receive cash in lieu of Non-Cash
Consideration that would otherwise be received by such Holder as consideration
for the shares of Stock to be sold in
7
such Tag Along Sale or Drag Along Sale (as the case may be). The amount of such
cash shall equal the Appraised Value of the Non-Cash Consideration that would
otherwise be received by such Holder. The term "Appraised Value" means:
(A) in respect of any share of capital stock included in the Non-Cash
Consideration for which there is not a public market, the fair saleable value of
such share of capital stock (determined without giving effect to the discount
for (i) a minority interest or (ii) any lack of liquidity of such capital stock
or to the fact that the company issuing such capital stock may have no class of
equity registered under the Securities Exchange Act of 1934, as amended) as of
the last day of the most recent fiscal month end based on the value of the
Company, as determined by an investment banking firm of recognized national
standing acceptable to the Holder (which acceptance shall not be unreasonably
withheld or delayed) divided by the number of fully diluted shares of capital
stock of such issuer;
(B) in respect of any share of capital stock included in the Non-Cash
Consideration for which there is a public market, the average of the daily
market prices of such stock for 30 consecutive business days commencing 45 days
before such date. The daily market price for each such business day shall be (i)
the last sale price on such day on the principal stock exchange on which such
capital stock is then listed or admitted to trading, (ii) if no sale takes place
on such day on any such exchange, the average of the last reported closing bid
and asked prices on such day as officially quoted on any such exchange, (iii) if
such capital stock is not then listed or admitted to trading on any stock
exchange, the average of the last reported closing bid and asked prices on such
day in the over-the-counter market, as furnished by the National Association of
Securities Dealers Automatic Quotation System or the National Quotation Bureau,
Inc., (iv) if neither such corporation at the time is engage in the business of
reporting such prices, as furnished by any similar firm then engaged in such
business, or (v) if there is no such firm, as furnished by any member of the
NASD selected mutually by the Holder and the Company or, if they cannot agree
upon such selection, an investment banking firm of recognized national standing
as selected by two such members of the NASD, one of which shall be selected by
the Holder and one of which shall be selected by the Company; and
(C) in respect of any property included in the Non-Cash Consideration
other than those types described in paragraphs (A) and (B) above, the fair
market value of such property as determined by an entity qualified to make such
determinations acceptable to the Holder (which acceptance shall not be
unreasonably withheld or delayed).
6. Representations and Warranties.
6.1 Conseco and the Company. Conseco, CIHC and the Company hereby
represent and warrant to Xxxxxx as follows:
(a) Organization. Each of Conseco, CIHC and the Company is a
corporation duly organized, validly existing, and in good standing under the
Laws (as defined below) of its jurisdiction of incorporation, and has full
corporate power and authority to enter into this Agreement and to perform its
obligations under this Agreement. The term "Law" shall mean all
8
laws, statutes, ordinances, Orders, and regulations of the United States of
America or any state, commonwealth, city, county, or municipality thereof. The
term "Order" shall mean an order, writ, ruling, judgment, directive, injunction
or decree of any arbitrator, mediator or governmental or regulatory authority.
Each of Conseco and the Company are operated as separate and independent
corporations, and each maintains separate and independent (i) corporate books
and records including but not limited to all matters related thereto and (ii)
financial statements and balance sheets.
(b) Authority. The execution and delivery of this Agreement by
Conseco, CIHC and the Company and the performance by Conseco, CIHC and the
Company of their respective obligations under this Agreement have been duly and
validly authorized by all necessary corporate action on the part of Conseco,
CIHC and the Company. This Agreement (i) has been duly executed and delivered by
Conseco, CIHC and the Company, (ii) constitutes a legal, valid, and binding
obligation of Conseco, CIHC and the Company and (iii) is enforceable against
Conseco, CIHC and the Company in accordance with its terms, except to the extent
that (a) enforcement may be limited by or subject to any bankruptcy, insolvency,
reorganization, moratorium, or similar Laws now or hereafter in effect relating
to or limiting creditors' rights generally and (b) the remedy of specific
performance and injunctive and other forms of equitable relief are subject to
certain equitable defenses and to the discretion of the court or other similar
Person before which any proceeding therefor may be brought.
(c) Business Structure. Conseco and CIHC, on the one hand, and the
Company, on the other, being separate and independent corporations, (i) have
observed separate and independent corporate formalities related thereto and have
separate and independent (A) business locations, (B) operating accounts, (C)
employees, (D) assets and liabilities, and (E) proceeds from the sale of each
entity's respective stock (it being recognized that an immaterial sharing of
employees and facilities has occurred with an appropriate allocation of costs
related thereto) and (ii) do not commingle funds or other assets.
(d) No Conflicts or Violations. The execution and delivery of this
Agreement by Conseco, CIHC and the Company do not, and the performance by
Conseco, CIHC and the Company of their respective obligations under this
Agreement will not:
(i) violate any term or provision of any Law applicable to Conseco,
CIHC or the Company or any of their respective subsidiaries, other than such
violations that would not reasonably be expected to result in a Material Adverse
Effect (as defined below) on the Company, CIHC or Conseco;
(ii) conflict with or result in a violation or breach of any of the
provisions of the certificate of incorporation or bylaws of Conseco, CIHC or the
Company or any of their respective subsidiaries;
(iii) conflict with or result in a violation or breach of, or
constitute a default under, any contract or other agreement to which Conseco,
CIHC or the Company or any of their respective subsidiaries is a party other
than such conflicts, violations, breaches or
9
defaults that would not reasonably be expected to result in a Material Adverse
Effect on the Company, CIHC or Conseco; or
(iv) require Conseco, CIHC or the Company or any of their respective
subsidiaries to obtain any consent, approval, or action of, or make any filing
with or give any notice to, any Person (except disclosure of the transactions
contemplated in this Agreement in public filings as may be required by
applicable securities laws or stock exchange rules), other than those the
failure of which to obtain or make would not reasonably be expected to result in
a Material Adverse Effect o the Company, CIHC or Conseco.
The term "Material Adverse Effect" shall mean, as to any party
hereto, any material adverse effect on (i) the assets, properties, business,
licenses, income, condition (financial or otherwise) or results of the
respective operations of such party, (ii) the transactions contemplated by this
Agreement, (iii) the legality, validity or enforceability of this Agreement and
the agreements and instruments to be entered into in connection herewith, or the
realization of the rights and remedies thereunder, or (iv) the ability of such
party to perform its respective obligations under this Agreement.
(e) Capitalization of the Company. As of the date hereof, (i) the
authorized capital stock of the Company consists solely of 1,000 shares of
common stock, par value $.01 per share, of the Company ("Common Stock"), and
(ii) there are 103 shares of Common Stock issued and outstanding. All issued and
outstanding shares of capital stock of the Company are duly authorized, validly
issued, fully paid, and nonassessable and are owned beneficially and of record
by CIHC. Conseco directly owns all of the issued and outstanding common stock of
CIHC. There are no outstanding securities, rights (preemptive or other),
subscriptions, calls, warrants, options, or other agreements (except for the
warrant to be issued as of the date hereof by the Company to Xxxxxx (the
"Warrant")) that give any Person the right to purchase or otherwise receive or
be issued any shares of capital stock of the Company or CIHC or any security
convertible into or exchangeable for any shares of capital stock of the Company
or CIHC. Immediately after issuance of the Warrant, the shares of Common Stock
into which the Warrant will be exercisable will represent 5% of the fully
diluted common stock of the Company (assuming full vesting, conversion, and
exercise of all securities, options, warrants, and other rights).
(f) Charter Documents and Bylaws. The Company has heretofore made
available to Xxxxxx true and complete copies of the certificate of incorporation
and bylaws of the Company, in each case as in effect on the date hereof.
(g) Intercompany Indebtedness. Schedule 6.1(g) hereto sets forth
the amount and nature of all indebtedness for borrowed money owed by the Company
to Conseco or any Affiliate thereof as of the date hereof.
6.2 Xxxxxx. Xxxxxx hereby represents and warrants to the Company,
CIHC and Conseco as follows:
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(a) Organization. Xxxxxx is a corporation duly organized, validly
existing, and in good standing under the Laws of its jurisdiction of
incorporation, and has full corporate power and authority to enter into this
Agreement and to perform its obligations under this Agreement.
(b) Authority. The execution and delivery of this Agreement by
Xxxxxx and the performance by Xxxxxx of its obligations under this Agreement
have been duly and validly authorized by all necessary corporate action on the
part of Xxxxxx. This Agreement (i) has been duly executed and delivered by
Xxxxxx, (ii) constitutes a legal, valid, and binding obligation of Xxxxxx and
(iii) is enforceable against Xxxxxx in accordance with its terms, except to the
extent that (a) enforcement may b limited by or subject to any bankruptcy,
insolvency, reorganization, moratorium, or similar Laws now or hereafter in
effect relating to or limiting creditors' rights generally and (b) the remedy of
specific performance and injunctive and other forms of equitable relief are
subject to certain equitable defenses and to the discretion of the court or
other similar Person before which any proceeding therefor may be brought.
(c) No Conflicts or Violations. The execution and delivery of this
Agreement by Xxxxxx do not, and the performance by Xxxxxx of its obligations
under this Agreement will not:
(i) violate any term or provision of any Law applicable to Xxxxxx or
any of its subsidiaries other than such violations that would not reasonably be
expected to result in a Material Adverse Effect on Xxxxxx;
(ii) conflict with or result in a violation or breach of any of the
provisions of the certificate of incorporation or bylaws of Xxxxxx or any of its
subsidiaries;
(iii) conflict with or result in a violation or breach of, or
constitute a default under, any contract or other agreement to which Xxxxxx or
any of its subsidiaries is a party, other than such conflicts, violations,
breaches or defaults that would not reasonably be expected to result in a
Material Adverse Effect on Xxxxxx.
(iv) require Xxxxxx or any of its subsidiaries to obtain any consent,
approval, or action of, or make any filing with or give any notice to, any
Person, other than those the failure to obtain or make would not reasonably be
expected to result in a Material Adverse Effect on Xxxxxx.
7. Survival of Representations and Warranties.
7.1 Survival. Subject to Section 7.2 hereof, the representations
and warranties respectively made by the parties in this Agreement will expire on
the second anniversary hereof, except that the representations and warranties
set forth in Sections 6.1(e) and 6.1(g) hereof will remain in full force and
effect until the expiration of all applicable statutes of limitation (including
all periods of extension, whether automatic or permissive).
11
7.2 Pursuit of Claims. Any breach of any representation or warranty
as to which a bona fide claim for indemnification has not been asserted in
accordance with Section 8.3 hereof during the applicable survival period set
forth in Section 7.1 hereof may not be pursued and is hereby irrevocably waived,
except that if a claim for indemnification is made in accordance with Section
8.3 hereof before the expiration of the applicable survival period set forth in
Section 7.1 hereof, then (notwithstanding such survival period) the
representation or warranty applicable to such claim shall survive until, but
only for purposes of, the resolution of such claim.
8. Indemnification.
8.1 Indemnification by Conseco and the Company. Subject to the
provisions of Section 7 hereof, Conseco, CIHC and the Company shall jointly and
severally indemnify, defend, and hold harmless the Xxxxxx Indemnitees (as
defined below) for any and all Damages (as defined below) resulting from or
relating to (i) any breach by Conseco, CIHC or the Company of any covenant or
agreement made by Conseco, CIHC, the Company or any Affiliate thereof that
subsequently becomes a party to this Agreement, i this Agreement and (ii) any
breach by Conseco, CIHC, the Company or any Affiliate thereof that subsequently
becomes a party to this Agreement of any representation or warranty contained in
Section 6.1 of this Agreement. The term "Xxxxxx Indemnitee" shall mean Xxxxxx,
any Affiliate of Xxxxxx, and any officer, director, employee, agent, or other
representative of such entities. The term "Damages" shall mean any and all
monetary damages, liabilities, fines, fees, penalties, interest obligations,
deficiencies, losses, costs, expenses (including reasonable fees and expenses of
attorneys, accountants, actuaries, and other experts).
8.2 Indemnification by Xxxxxx. Subject to the provisions of
Section 7 hereof, Xxxxxx shall indemnify, defend, and hold harmless the Conseco
Indemnitees (as defined below) for any and all Damages resulting from or
relating to (i) any breach by Xxxxxx of any covenant or agreement made by Xxxxxx
in this Agreement and (ii) any breach by Xxxxxx of any representation or
warranty contained in Section 6.2 of this Agreement. The term "Conseco
Indemnitee" shall mean Conseco, any Affiliate of Conseco and any officer,
director, employee, agent, or other representative of such entities.
8.3 Indemnification Procedures.
(a) If an Indemnitee becomes aware of any matter that it believes
is indemnifiable pursuant to Section 8.1 or 8.2 hereof and such matter involves
(i) any claim made against the Indemnitee by any Person other than any Xxxxxx
Indemnitee or Conseco Indemnitee or (ii) the commencement of any action, suit,
investigation, arbitration, or similar proceeding against the Indemnitee by any
Person other than any Xxxxxx Indemnitee or Conseco Indemnitee, the Indemnitee
shall give the Indemnifying Party prompt written notice of such claim or the
commencement of such action, suit, investigation, arbitration, or similar
proceeding, which notice must (A) be given during the applicable survival
period, (B) provide (with reasonable specificity) the basis on which
indemnification is being asserted, (C) set forth the actual or good-faith
estimated amount of Damages for which indemnification is being asserted, if
known, and (D) be accompanied by copies of all relevant pleadings, demands, and
other papers served on the
12
Indemnitee. Failure to provide notice shall not relieve an Indemnifying Party of
any obligation to provide indemnity hereunder, except to the extent that the
Indemnifying Party is prejudiced by such failure in its efforts to defend such
claim
(b) The Indemnifying Party shall have a period of 30 days after
the delivery of each notice required by Section 8.3(a) hereof during which to
respond to such notice. If the Indemnifying Party elects to defend the claim
described in such notice or does not respond within such 30-day period, the
Indemnifying Party shall be obligated to compromise or defend (and shall control
the defense of) such claim, at its own expense and by counsel chosen by the
Indemnifying Party. The Indemnitee shall cooperate fully with the Indemnifying
Party and counsel for the Indemnifying Party in the defense against any such
claim, and the Indemnitee shall have the right to participate at its own expense
in the defense of any such claim. If the Indemnifying Party responds within such
30-day period and elects not to defend such claim, the Indemnitee shall be free
to compromise or defend (and control the defense of) such claim and to pursue
such remedies as may be available to the Indemnitee under applicable Law.
(c) Any compromise or settlement of any claim (whether defended by
the Indemnitee or by the Indemnifying Party) shall require the prior written
consent of the Indemnitee and the Indemnifying Party, which consent shall not be
unreasonably withheld or delayed. If, however, the Indemnitee refuses to consent
to a bona fide offer of compromise or settlement that the Indemnifying Party
desires to accept, the Indemnitee may continue to pursue such claim, free of any
participation by the Indemnifying Party, at the sole expense of the Indemnitee.
In such event, the obligation of the Indemnifying Party to the Indemnitee will
equal the lesser of (i) the amount of the offer of compromise of settlement that
the Indemnifying Party desired to accept, plus the reasonable out-of-pocket
expenses (except for expenses resulting from the Indemnitee's participation in
any defense controlled by the Indemnifying Party) incurred by the Indemnitee
before the date the Indemnifying Party notified the Indemnitee of the offer of
compromise or settlement, or (ii) the actual out-of-pocket amount that the
Indemnitee is obligated to pay as a result of the Indemnitee's continued pursuit
of such claim, plus the reasonable out-of-pocket expenses incurred by the
Indemnitee after the Indemnifying Party notified the Indemnitee of the offer of
compromise or settlement, minus the reasonable out-of-pocket expenses incurred
by the Indemnifying Party after such notice date.
(d) If an Indemnitee becomes aware of any matter that it believes
is indemnifiable pursuant to Section 8.1 or 8.2 hereof and such matter involves
a claim made by Xxxxxx, Conseco or the Company, the Indemnitee shall give the
Indemnifying Party prompt written notice of such claim, which notice must (i) be
given during the applicable survival period, (ii) provide (with reasonable
specificity) the bases for which indemnification is being asserted, and (iii)
set forth the actual or good-faith estimated amount of Damages for which
indemnification is being asserted. The Indemnifying Party will have a period of
30 days after the delivery of each notice required by this Section 8.3(d) during
which to respond to such notice. If the Indemnifying Party accepts (in writing)
full responsibility for the claim described in such notice, the Indemnifying
Party shall pay upon demand to the Indemnitee the actual or estimated amount of
Damages reflected in such notice. If the Indemnifying Party has disputed such
claim
13
or does not respond within such 30-day period, the Indemnifying Party and the
Indemnitee agree to proceed in good faith to negotiate a resolution of such
dispute. If all such disputes are not resolved through negotiations within 30
days after such negotiations begin or if such negotiations are not initiated
within 30 days after notice is given, either the Indemnifying Party or the
Indemnitee may initiate litigation to resolve such disputes.
(e) The term "Indemnitee" shall mean a Person claiming
indemnification under this Section 8. The term "Indemnifying Party" shall mean a
Person against whom claims of indemnification are being asserted under this
Section 8.
9. Termination.
9.1 Termination Events. This Agreement shall terminate and be of no
further force or effect automatically and without any action of the parties
hereto at such time as (i) all indebtedness under the Asset Assignment Agreement
dated as of February 13, 1998, as amended from time to time, between Green Tree
Residual Finance Corp. I and Xxxxxx XXX Inc. and the Master Repurchase Agreement
dated as of September 29, 1999, as amended from time to time, between Green Tree
Residual Finance Corp. I and Xxxxxx Brothers Inc. (collectively, the "Residual
Facilities") shall have been repaid in full in accordance with the terms of the
Residual Facilities and (ii) the Company or an Affiliate shall have repurchased
all of the Esoteric Assets (as defined in the Repurchase Agreement defined
below) sold under the Amended and Restated Master Repurchase Agreement dated as
of May 11, 2000, as amended from time to time, between Green Tree Finance Corp.
- Five ("Finance - Five") and Xxxxxx Commercial Paper Inc. ("LCPI (the
"Repurchase Agreement") and owned by LCPI on the repurchase date in accordance
with the terms of the Repurchase Agreement and Conseco and its Affiliates shall
have taken all action necessary including, without limitation, the repurchase of
other assets sold under the Repurchase Agreement in accordance with the terms
thereof so that immediately after giving effect to such repurchases and actions,
neither the Company nor Finance - Five would be in default under the Repurchase
Agreement and the aggregate amount of wet financing under Section 11(e) of the
Repurchase Agreement then outstanding would not exceed $150 million.
9.2 Effect of Termination. If this Agreement terminates pursuant to
Section 9.1 hereof, this Agreement shall become null and void except that, (a)
the provisions of Sections 5, 9, 10, and 11 and the last sentence of Section 4.3
hereof will continue to apply following any such termination, and (b) no party
hereto will be relieved of any Liability (as defined below) for Damages that
such party may have to the other parties by reason of such party's breach of
this Agreement (or any representation, warranty, covenant, or agreement included
herein). The term "Liability" shall mean all debts, obligations, and other
liabilities (including without limitation surplus relief transactions) of a
person (whether known or unknown and whether absolute, accrued, contingent,
fixed, or otherwise, or whether due or to become due).
10. Public Announcements. No party shall make any public announcement or
media comment regarding the existence or subject matter of this Agreement
without prior consultation with the other parties hereto, except as required by
law, applicable regulation or the rules of any securities exchange on which a
party's securities are publicly traded. Each party shall not, and
14
shall cause its direct and indirect subsidiaries to not, issue any press release
or make any other public announcement or filing regarding any matter associated
with this Agreement or the matters described herein unless the other parties
hereto have been afforded a reasonable opportunity to review such release or
announcement.
11. Miscellaneous
11.1 Notices. Any notice or other communication given pursuant to
this Agreement must be in writing and (a) delivered personally, (b) sent by
telefacsimile or other similar facsimile transmission, (c) delivered by
overnight express, or (d) sent by registered or certified mail, postage prepaid,
as follows:
(a) If to Conseco, CIHC or the Company:
Conseco, Inc.
00000 Xxxxx Xxxxxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx, Chairman of the Board
Facsimile: 000-000-0000
With a copy to:
Conseco, Inc.
00000 Xxxxx Xxxxxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxx X. Xxxx, Executive Vice President
and Secretary
Facsimile: 000-000-0000
(b) If to Xxxxxx:
Xxxxxx Brothers Holdings Inc.
0 Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx Xxxxxx, Managing Director - FAS
Facsimile: 000-000-0000
With a copy to:
Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxxxx
Facsimile: 000-000-0000
15
(c) All notices and other communications required or permitted under
this Agreement that are addressed as provided in this Section will (A) if
delivered personally or by overnight express, be deemed given upon delivery; (B)
if delivered by telefacsimile or similar facsimile transmission, be deemed given
when electronically confirmed; and (C) if sent by registered or certified mail,
be deemed given when received. Any party from time to time may change its
address for the purpose of notices to that party by giving a similar notice
specifying a new address, but no such notice will be deemed to have been given
until it is actually received by the party sought to be charged with the
contents thereof
11.2 Entire Agreement. Except for documents executed by Xxxxxx,
Conseco and/or the Company concurrently herewith and except for the Acquisition
Letter Agreement, this Agreement supersedes all prior discussions and agreements
between the parties with respect to the subject matter of this Agreement
(including, without limitation, the Letter Agreement), and this Agreement
contains the sole and entire agreement between the parties hereto with respect
to the subject matter hereof.
11.3 Expenses. Except as otherwise expressly provided in this
Agreement, each of the parties hereto shall pay its own costs and expenses in
connection with this Agreement and the transactions contemplated hereby.
11.4 Brokers.
(a) Indemnification by Conseco and the Company. Conseco and the
Company shall jointly and severally indemnify and hold harmless each Xxxxxx
Indemnitee in respect of any and all claims or demands for commission,
compensation, or other Damages by any broker, finder, or other agent (whether or
not a present or former employee or agent of either of Conseco or the Company)
claiming to have been engaged by Conseco, the Company or any of their respective
Affiliates in connection with the transactions contemplated by this Agreement,
and Conseco and the Company shall bear the cost of the reasonable out-of-pocket
expenses incurred by each Xxxxxx Indemnitee in investigating, defending against,
or appealing any such claim or demand.
(b) Indemnification by Xxxxxx. Xxxxxx shall indemnify and hold
harmless each Conseco Indemnitee in respect of any and all claims or demands for
commission, compensation, or other Damages by any broker, finder, or other agent
(whether or not a present or former employee or agent of Xxxxxx) claiming to
have been engaged by Xxxxxx or any Affiliate of Xxxxxx in connection with the
transactions contemplated by this Agreement, and Xxxxxx shall bear the cost of
the reasonable out-of-pocket expenses incurred by each Conseco Indemnitee in
investigating, defending against, or appealing any such claim or demand.
16
11.5 Waiver. Any term or condition of this Agreement may be waived
at any time by the party that is entitled to the benefit thereof. Such waiver
must be in writing and must be executed by an executive officer of such party. A
waiver on one occasion will not be deemed to be a waiver of the same or any
other breach or nonfulfillment on a future occasion. All remedies, either under
this Agreement, or by Law or otherwise afforded, will be cumulative and not
alternative.
11.6 Amendment. This Agreement may be modified or amended only by a
writing duly executed by or on behalf of all of the parties hereto.
11.7 Counterparts. This Agreement may be executed simultaneously in
any number of counterparts, each of which will be deemed an original, but all of
which will constitute one and the same instrument.
11.8 No Third Party Beneficiary. The terms and provisions of this
Agreement are intended solely for the benefit of Conseco, the Company, Xxxxxx,
and their respective successors and permitted assigns, and it is not the
intention of the parties to confer third-party beneficiary rights upon any other
Person.
11.9 Governing Law; Venue. This Agreement will be governed by and
construed and enforced in accordance with the laws of the State of New York
applicable to a Contract executed and performable in such state. EXCLUSIVE VENUE
FOR ANY ACTION RELATING TO THIS AGREEMENT SHALL BE MAINTAINED IN ANY FEDERAL OR
STATE COURT SITTING IN NEW YORK COUNTY, NEW YORK. EACH PARTY HEREBY CONSENTS TO
PERSONAL JURISDICTION AND SERVICE OF PROCESS IN THE STATE OF NEW YORK FOR
MATTERS BETWEEN THE PARTIES HERETO THAT ARISE OUT OF THIS AGREEMENT.
11.10 Binding Effect. This Agreement is binding upon and will inure to
the benefit of the parties and their respective successors and permitted
assigns.
11.11 No Assignment. Neither this Agreement nor any right or
obligation hereunder or part hereof may be assigned by any parties hereto
without the prior written consent of the other parties hereto (and any attempt
to do so will be void), except (a) as otherwise specifically provided herein and
(b) that Xxxxxx may assign all or any part of its rights or obligations
hereunder to one or more of its Affiliates without the consent of Conseco or the
Company provided however, that such assignment shall not relieve Xxxxxx of its
responsibilities hereunder.
11.12 Invalid Provisions. If any provision of this Agreement is held
to be illegal, invalid, or unenforceable under any present or future Law, and if
the rights or obligations under this Agreement of the parties hereto will not be
materially and adversely affected thereby, (a) such provision will be fully
severable; (b) this Agreement will be construed and enforced as if such illegal,
invalid, or unenforceable provision had never comprised a part hereof; and (c)
the remaining provisions of this Agreement will remain in full force and effect
and will not be
17
affected by the illegal, invalid, or unenforceable provision or by its severance
from this Agreement.
11.13 Headings. The headings of the Sections of this Agreement have
been inserted for convenience of reference only, are not intended to be
considered a part hereof, and shall not modify or restrict any term or provision
hereof.
11.14 Specific Performance. The parties recognize that if any of
the parties hereto refuses to perform under the provisions of this Agreement
(each, a "Breaching Party"), monetary damages alone will not be adequate to
compensate the other parties for their injury. Each party hereto that has not
refused to perform under the provisions of this Agreement (each, a
"Non-Breaching Party") shall therefore be entitled, in addition to any other
remedies that may be available, to obtain specific performance of the terms of
this Agreement. If any such action is brought by any party to enforce this
Agreement, any Breaching Parties shall waive the defense that there is an
adequate remedy at law. In the event of a default by any party which results in
the filing of a lawsuit for damages, specific performances, or other remedies,
any Non-Breaching Parties shall be entitled to reimbursement by any Breaching
Parties of reasonable legal fees and expenses incurred by such Non-Breaching
Party.
18
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered as of
the date first written above by the duly authorized representatives of the
parties hereto.
CONSECO, INC.
By: /s/ Xxxxxx X. Xxxxxx
------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
CONSECO FINANCE CORP.
By: /s/ Xxxxxx X. Xxxxxx
------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
XXXXXX BROTHERS HOLDINGS INC.
By: /s/
------------------------
Name:
Title:
CIHC, INCORPORATED
By: /s/ Xxxx X. Xxxxxxxx
------------------------
Name: Xxxx Xxxxxxxx
Title: President
19
Exhibit A
Members of Management
Xxxx Xxxxx
Xxxxx Xxxxxxxx
Xxxx Xxxxxxx
Xxx Xxxxxxx
Xxxxx Xxxxxxxxxx
Xxxx Xxxxxxx
Xxxxx Xxxxxx
Xxx Xxxx
Xxxxxxx Xxxxxx
Xxxx Xxxxxxxx
Xxxx Xxxxxxx
A-1
Exhibit B
Permitted Dividends,
Distributions and Transfers
The Company may pay interest and scheduled payments of principal under the
Amended and Restated Promissory Note, dated the date hereof, issued by the
Company to Conseco (the "Intercompany Note"), in accordance with the terms
thereof. Notwithstanding the foregoing, the Company shall in no event prepay
any amounts thereunder.
1. The Company may make customary and usual payments to Conseco for
products and services provided by Conseco to or for the benefit of the
Company consistent with past practices consistently applied, provided that
the Company shall have at least ten business days in which to cure any
failure to pay any such amount on the date such payment was requested.
2. The Company may make payments to Conseco under the Tax Sharing Agreement
in accordance with the terms of such agreement.
3. Subject to the receipt of any required regulatory approvals or exemptions,
the Company may dividend or distribute to its stockholder all of the stock of
the entities identified on Schedule I hereto (the "Transferred Companies").
4. The Company may repay up to $500 million of the principal owed by the
Company to Conseco under the Intercompany Note after consummation of the sale
of assets under the Seller's Warranties and Servicing Agreement dated May 11,
2000 by an among Xxxxxx Capital, a division of Xxxxxx, and the Company and
the Seller's Warranties and Servicing Agreement dated May 11, 2000 by and
between Xxxxxx Brothers Bank, FSB and the Company.
The Company may pay dividends to its stockholder(s) in accordance with
the formula set forth on Schedule II hereto.
B-1
Schedule I
TRANSFERRED COMPANIES
CFIHC, Inc. (a Delaware corporation)
Schedule II
PERMITTED DIVIDENDS
From and after January 1, 2001, the Company may declare and pay a
dividend to its stockholder(s) in any quarter (including, without limitation,
the first quarter of 2001 if the tests set forth in this Schedule II are met) in
which Free Cash Flow (as defined below) for the preceding 12 months exceeds $375
million. The amount of such dividend payable in any quarter shall in no event
exceed the amount by which Free Cash Flow for the preceding 12 months exceeds
$375 million. Notwithstanding anything in this Agreement to the contrary, no
such dividend may be declared or paid if, (i) at the date of such declaration or
payment, a breach, default or event of default shall have occurred and be
continuing (or any event has occurred which with the passage of time or the
giving of notice or both would constitute a breach, default or event of default)
under (A) any material agreement or contract to which the Company or any
subsidiary thereof is a party relating to financing or indebtedness or (B) any
class of preferred stock of the Company or any subsidiary thereof (collectively,
a "Material Contract") or (ii) such a breach, default or event of default could
be reasonably expected to result from the declaration or payment of any such
dividend.
The term "Free Cash Flow" means, with respect to any 12-month
period, (i) cash flow from operations of the Company for such period (as
reported under "Cash Flow from Operations" in the Company's statements of cash
flow filed with the Securities and Exchange Commission) less (ii) Capital
Expenditures (as defined below) during such period less (iii) dividends and
other distributions to stockholders paid by the Company during such period
(other than as permitted by Item 4 of Exhibit B to this Agreement).
The term "Capital Expenditures" means, with respect to any period,
the aggregate of amounts that would be reflected as additions to property, plant
or equipment on a consolidated balance sheet of the Company and its
majority-owned subsidiaries prepared in conformity with GAAP consistently
applied.
Schedule 6.1(g)
Indebtedness for Borrowed Money
Principal balance as of
May 11, 2000 $2,660,799,080
==============
Including:
Total cash advances of $5,819,200,000
Total cash payments of (3,362,266,995)
Money borrowed for intercompany
fees 61,279,246
Capitalized interest 142,586,829
Accrued interest at May 11, 2000
to be paid on June 1, 2000
along with accrued interest since
May 11, 2000 $21,092,383.45
==============
