Exhibit 2.1
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STOCK AND ASSET PURCHASE AGREEMENT
between
WASHINGTON MUTUAL, INC.,
GREAT WESTERN SERVICE CORPORATION TWO
and
CITIFINANCIAL CREDIT COMPANY
for the purchase and sale
of
the outstanding capital stock
WASHINGTON MUTUAL FINANCE CORPORATION
and certain assets of
WASHINGTON MUTUAL FINANCE GROUP, LLC
Dated as of November 24, 2003
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TABLE OF CONTENTS
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ARTICLE I DEFINITIONS.............................................................................................1
ARTICLE II PURCHASE AND DELIVERY OF STOCK AND ASSETS.............................................................10
2.1 Delivery of Stock and FG Transferred Assets..........................................................10
2.2 Closing; Payment of Purchase Price; Assumption of FG Assumed Liabilities.............................10
2.3 Purchase Price Allocation............................................................................10
2.4 Post-Closing Adjustments of Purchase Price...........................................................11
ARTICLE III CLOSING DATE.........................................................................................13
3.1 Closing Date; Insurance Subsidiary Purchase..........................................................13
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLER..............................................................14
4.1 Organization, Power etc..............................................................................14
4.2 Authority Relative to Agreement......................................................................15
4.3 Non-Contravention....................................................................................15
4.4 Consents, etc........................................................................................16
4.5 Title to Stock and FG Transferred Assets.............................................................16
4.6 Capital Stock of the Subject Companies...............................................................16
4.7 SEC Filings; Financial Statements....................................................................17
4.8 Litigation...........................................................................................18
4.9 Compliance with Laws; Permits and Licenses...........................................................19
4.10 Absence of Certain Changes; No Undisclosed Liabilities...............................................19
4.11 Personnel and Employee Benefits Matters..............................................................20
4.12 Taxes................................................................................................21
4.13 Properties...........................................................................................22
4.14 Certain Labor Matters................................................................................22
4.15 Material Agreements; Agreements with Affiliates......................................................22
4.16 Intellectual Property................................................................................23
4.17 Environmental Matters................................................................................24
4.18 Brokers..............................................................................................24
4.19 Non-Competition and Non-Solicitation Agreements......................................................24
4.20 Insurance............................................................................................25
4.21 Guarantees...........................................................................................25
4.22 Receivables..........................................................................................25
4.23 No Regulatory Impediment.............................................................................26
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PURCHASER............................................................26
5.1 Organization.........................................................................................26
5.2 Authority Relative to Agreement......................................................................26
5.3 Non-Contravention....................................................................................26
5.4 Consents, etc........................................................................................27
5.5 Brokers..............................................................................................27
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5.6 Available Funds......................................................................................27
5.7 Investment Intent....................................................................................27
5.8 No Regulatory Impediment.............................................................................27
ARTICLE VI COVENANTS.............................................................................................27
6.1 Conduct of Business..................................................................................27
6.2 Access; Confidentiality..............................................................................31
6.3 Reasonable Best Efforts; Taking of Necessary Action..................................................31
6.4 [RESERVED]...........................................................................................33
6.5 Insurance; Risk of Loss..............................................................................33
6.6 [RESERVED]...........................................................................................34
6.7 Reorganization.......................................................................................34
6.8 Seller Name and Xxxx.................................................................................35
6.9 Post-Closing Cooperation and Retention of Records....................................................36
6.10 Public Announcements.................................................................................37
6.11 Transition Services..................................................................................37
6.12 Non-Compete; Non Solicitation........................................................................37
6.13 No Shop..............................................................................................38
6.14 Further Assurances...................................................................................38
6.15 First Community Industrial Bank......................................................................39
ARTICLE VII EMPLOYEE MATTERS.....................................................................................39
7.1 General..............................................................................................39
7.2 Offers of Employment.................................................................................39
7.3 Termination and Severance............................................................................40
7.4 Welfare Plans........................................................................................40
7.5 Variable Pay Plans...................................................................................40
7.6 Accrued Vacation.....................................................................................40
7.7 Profit Sharing Contribution..........................................................................41
7.8 WARN.................................................................................................41
ARTICLE VIII CONDITIONS TO THE CLOSING...........................................................................41
8.1 Conditions to Obligations of Each Party..............................................................41
8.2 Additional Conditions to the Obligations of Purchaser................................................42
8.3 Additional Conditions to the Obligations of Seller and Seller Parent.................................42
ARTICLE IX TERMINATION, AMENDMENT AND WAIVER.....................................................................43
9.1 Termination..........................................................................................43
9.2 Effect of Termination................................................................................43
ARTICLE X TAX MATTERS............................................................................................44
10.1 Indemnification for Taxes............................................................................44
10.2 Apportionment of Taxes...............................................................................44
10.3 Tax Returns and Payment of Taxes.....................................................................45
10.4 Carrybacks...........................................................................................45
10.5 Cooperation; Audits..................................................................................45
10.6 Transfer Taxes.......................................................................................46
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10.7 Section 338(h)(10) Election..........................................................................47
10.8 Refunds..............................................................................................48
10.9 Confidentiality......................................................................................48
10.10 Miscellaneous........................................................................................48
ARTICLE XI INDEMNIFICATION.......................................................................................49
11.1 Indemnification by Seller and Seller Parent..........................................................49
11.2 Indemnification by Purchaser.........................................................................50
11.3 Indemnification Procedures...........................................................................51
11.4 General..............................................................................................53
ARTICLE XII GENERAL PROVISIONS...................................................................................54
12.1 Survival.............................................................................................54
12.2 Notices..............................................................................................54
12.3 Interpretation.......................................................................................56
12.4 Amendment and Modification; Waiver...................................................................56
12.5 Entire Agreement.....................................................................................56
12.6 Fees and Expenses....................................................................................56
12.7 Disclosure Schedules.................................................................................56
12.8 Third Party Beneficiaries............................................................................56
12.9 Specific Performance.................................................................................56
12.10 Assignment; Binding Effect...........................................................................57
12.11 Governing Law........................................................................................57
12.12 Jurisdiction.........................................................................................57
12.13 Waiver of Jury Trial.................................................................................57
12.14 Severability.........................................................................................57
12.15 Counterparts.........................................................................................57
Seller Disclosure Schedule
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STOCK AND ASSET PURCHASE AGREEMENT
STOCK AND ASSET PURCHASE AGREEMENT, dated as of November 24,
2003 (this "Agreement"), between WASHINGTON MUTUAL, INC., a Washington
corporation ("Seller Parent"), GREAT WESTERN SERVICE CORPORATION TWO, a
California corporation ("Seller"), and CITIFINANCIAL CREDIT COMPANY, a Delaware
corporation ("Purchaser").
WITNESSETH
WHEREAS, Seller owns 1,000 shares of the common stock, par
value $1.00 per share (the "Stock"), of Washington Mutual Finance Corporation, a
Delaware corporation (the "Company"), constituting all of the issued and
outstanding shares of capital stock of the Company;
WHEREAS, Seller is an indirect wholly owned Subsidiary of
Seller Parent;
WHEREAS, on the terms and subject to the conditions set forth
herein, Seller Parent and Seller desire to sell, and Purchaser desires to
purchase, the Stock;
WHEREAS, the Company owns all of the membership interests of
Washington Mutual Finance Group, LLC, a Delaware limited liability company
("FG"), and Washington Mutual Finance, Inc. of Mississippi, LLC, a Delaware
limited liability company ("Washington Mutual Mississippi" and, together with
FG, the "Excluded Subsidiaries"), and Seller Parent, Seller and Purchaser desire
that the membership interests of the Excluded Subsidiaries be transferred by the
Company to Seller Parent or its designee prior to the sale of the Stock; and
WHEREAS, on the terms and subject to the conditions set forth
herein, Seller Parent and Seller desire that FG sell certain of its assets and
transfer certain of its liabilities to Purchaser, and Purchaser desires to
purchase such assets and assume such liabilities.
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements hereinafter set forth, the parties hereto agree
as follows:
ARTICLE I
DEFINITIONS
The following terms when used in this Agreement shall have the
following meanings:
"Affected Employees" means the FG Employees and employees of
any of the Subject Companies immediately prior to the Closing Date
(other than employees of any of the Subject Companies who are on
long-term disability leave).
"affiliate" of a specified Person means a Person who, directly
or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with, such specified Person.
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"Agreement" has the meaning set forth in the introductory
paragraph hereof.
"Applicable Law" has the meaning set forth in Section 4.3.
"Appraiser" has the meaning set forth in Section 2.3(a).
"Xxxxx Database" has the meaning set forth in Section 6.7(e).
"Benefit Plans" has the meaning set forth in Section 4.11(a).
"Business Day" means any day which is not a Saturday, Sunday
or a day on which banks in Seattle, Washington, or New York, New York,
are authorized or obligated by law or executive order to be closed.
"C3 Lease" has the meaning set forth in Section 4.13(a).
"Charged-Off Receivables" has the meaning set forth in Section
6.7(e).
"CITI Names and Marks" has the meaning set forth in Section
6.8(a).
"Claim Notice" has the meaning set forth in Section 11.3(a).
"Closing" has the meaning set forth in Section 3.1(a).
"Closing Date" has the meaning set forth in Section 3.1(a).
"Closing Date Receivables" means the Receivables of the
Subject Companies and the FG Transferred Business, excluding the
Charged-Off Receivables, shown on the Statement of Closing Date
Receivables as "net consumer finance receivables", as finally
determined in accordance with Section 2.4(b).
"Code" means the Internal Revenue Code of 1986, as amended, or
any successor thereto.
"Company" has the meaning set forth in the preamble to this
Agreement.
"Company Asset-Backed Commercial Paper Program" means the
asset-backed commercial paper program of the Company governed by (i)
the Receivables Transfer Agreement dated as of July 31, 2002 by and
among Paradigm Funding LLC and each of the other commercial paper
conduits party thereto from time to time, Washington Mutual Acceptance,
LLC, the Company and the several financial institutions and agent banks
party thereto from time to time and (ii) the Purchase and Sale
Agreement dated as of July 31, 2002 by and among the various sellers
party thereto and Washington Mutual Acceptance, LLC, as amended,
modified or supplemented from time to time.
"Company Credit Agreement" means the Three-Year Credit
Agreement dated as of August 12, 2002 between Seller Parent and the
Company, as borrowers, the lenders party thereto and JPMorgan Chase
Bank, as administrative agent, as amended, modified or supplemented
from time to time.
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"Company Intellectual Property" means all Intellectual
Property owned or used by (i) the Subject Companies' respective
businesses (the "SC Intellectual Property") and (ii) the FG Transferred
Business (the "FG Intellectual Property").
"Company Reports" has the meaning set forth in Section 4.7(b).
"Company SAP Statements" has the meaning set forth in Section
4.7(d).
"Company Specified Debt" means the aggregate amount of the
principal of, accrued and unpaid interest on and any premium in respect
of, all indebtedness of the Subject Companies under (i) the Company
Credit Agreement, (ii) the Company Asset-Backed Commercial Paper
Program, (iii) any other outstanding commercial paper of the Company
issued pursuant to the programs described in Section 1(a) of the Seller
Disclosure Schedule, and (iv) borrowing arrangements with Seller Parent
and/or its affiliates (other than the Subject Companies) described in
Section 1(b) of the Seller Disclosure Schedule.
"Confidential Memorandum" means the Confidential Descriptive
Memorandum, dated October 2003, provided to Purchaser on behalf of
Seller Parent by Xxxxxx Brothers Inc.
"Confidentiality Agreement" means the Confidentiality
Agreement, dated September 22, 2003, between Seller Parent and
CitiFinancial Credit Corporation relating to, among other things, the
confidentiality of certain information provided by or on behalf of
Seller Parent to CitiFinancial Credit Corporation with respect to the
Company and its Subsidiaries.
"Contract" has the meaning set forth in Section 4.3.
"Conveyance Taxes" has the meaning set forth in Section
10.6(a).
"Damages" has the meaning set forth in Section 11.1(a).
"Deductible" has the meaning set forth in Section 11.1(b).
"Deferred Transfer" has the meaning set forth in Section
3.1(c).
"De Minimis Claim" has the meaning set forth in Section
11.1(b).
"Election(s)" has the meaning set forth in Section 10.7(a).
"Environment" means surface waters, groundwaters, soil,
subsurface strata, sediment, and indoor and outdoor air.
"Environmental Claim" means any written claim, notice,
complaint, proceeding or litigation by any third person alleging any
violation of, or any liability under, any Environmental Laws.
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"Environmental Laws" means all applicable federal, state and
local statutes, rules, regulations, ordinances, codes, common law and
orders relating to pollution or protection of natural resources or the
environment or exposure to Hazardous Materials.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC thereunder.
"Excluded Liability" means any liabilities arising out of or
in connection with (i) the Reorganization or (ii) the Company's sale of
First Community Industrial Bank and any assets or liabilities sold,
assigned or otherwise transferred as part of that transaction.
"Excluded Litigation" means any litigation, action, suit,
proceeding or claim (i) in which the Excluded Subsidiaries are named as
defendants, except to the extent arising out of or related to the FG
Transferred Assets, FG Transferred Business or FG Assumed Liabilities
or (ii) that relates to or arises out of the business or operations of
the Subject Companies or the Excluded Subsidiaries in or with respect
to the State of Mississippi.
"Excluded Names" has the meaning set forth in Section 6.8(a).
"Excluded Subsidiaries" has the meaning set forth in the
preamble to this Agreement.
"FG" has the meaning set forth in the preamble to this
Agreement.
"FG Assumed Liabilities" means any and all liabilities and
obligations of FG of any kind or nature, whether such liabilities or
obligations are known or unknown, disclosed or undisclosed, matured or
unmatured, accrued, absolute, contingent or otherwise, that relate to
the FG Transferred Business or the FG Transferred Assets, including,
without limitation, litigation described in Section 1(c) of the Seller
Disclosure Schedule. Notwithstanding anything to the contrary in this
Agreement, the term "FG Assumed Liabilities" shall not include (i) any
liabilities with regard to Taxes for the Pre-Closing Period or (ii) the
Pre-Closing FG Employee Related Liabilities.
"FG Employees" has the meaning set forth in Section 7.2.
"FG Transferred Asset Purchase Price" has the meaning set
forth in Section 2.3(a).
"FG Transferred Assets" means any and all assets, rights,
properties, claims, Permits and Contracts (in each case, to the extent
transferable) of FG which relate to the FG Transferred Business,
including branch offices and personnel located outside Mississippi and
loans to Persons resident in a state other than Mississippi.
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"FG Transferred Business" means, collectively, the consumer
finance, insurance, financial services and other businesses of FG,
other than any portion of such businesses conducted in or with respect
to the State of Mississippi.
"Form 8023" has the meaning set forth in Section 10.7(b).
"GAAP" means generally accepted accounting principles in the
United States.
"Governmental Approval" has the meaning set forth in Section
4.4(a).
"Governmental Authority" has the meaning set forth in Section
4.3.
"Hazardous Materials" means all materials defined as
"hazardous" or "toxic" or any other term of similar import under any
Environmental Law, including petroleum, friable asbestos,
polychlorinated biphenyls, mold and urea formaldehyde foam insulation.
"HSR Act" has the meaning set forth in Section 4.4(a).
"Included Subsidiary" means any Subsidiary of the Company
which is not an Excluded Subsidiary.
"Indemnified Entity" has the meaning set forth in Section
11.3(a).
"Indemnified Purchaser Entities" has the meaning set forth in
Section 11.1(a).
"Indemnified Seller Entities" has the meaning set forth in
Section 11.2(a).
"Indemnifying Party" has the meaning set forth in Section
11.3(a).
"Independent Accounting Firm" has the meaning set forth in
Section 2.4(b).
"Insurance Regulatory Approvals" means those Governmental
Approvals required for the consummation of the Insurance Subsidiary
Purchase.
"Insurance Subsidiaries" means Aristar Insurance Company and
City Holdings Reinsurance Life Company.
"Insurance Subsidiary Purchase" has the meaning set forth in
Section 3.1(b).
"Intellectual Property" shall mean U.S. and foreign
intellectual property, including patents, inventions, discoveries,
processes, algorithms, formulae, technology, know-how and related
improvements; copyrights and copyrightable works (including software,
code, applications, databases, website content, documentation and
related items); trademarks, service marks, trade names, corporate
names, domain names, logos, trade dress and other source indicators;
trade secrets and confidential or proprietary information; and any
applications or registrations relating to any of the foregoing.
"Interim Period" has the meaning set forth in Section 10.1.
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"IRS" means the Internal Revenue Service or any successor
agency or authority.
"IT Systems" means all computer systems, programs, networks,
software and hardware used to process, store, maintain and operate
data, information and functions used in connection with the Subject
Companies' respective businesses or the FG Transferred Business.
"Knowledge of Seller" means the actual knowledge of the
individuals named in Section 1(d) of the Seller Disclosure Schedule.
"Lien" means any mortgage, pledge, lien, charge, security
interest or other encumbrance or any covenant restriction, right of way
or other matter of record affecting title to real property.
"Loans" means all loans, lines of credit and sales finance
accounts of the Subject Companies or that constitute part of the FG
Transferred Assets.
"Material Adverse Effect" means any effect on any Subject
Company or FG (with respect to the FG Transferred Business only) that
is, either individually or in the aggregate, materially adverse to the
business, assets, liabilities, operations or financial condition of the
Subject Companies and the FG Transferred Business, taken as a whole,
other than any such effect attributable to or resulting from (i) this
Agreement or the transactions contemplated hereby or the announcement
thereof, (ii) any change in general economic conditions or interest
rates, except to the extent that those changes or conditions materially
and disproportionately affect the Subject Companies and the FG
Transferred Business, (iii) any change or condition affecting the
consumer finance, banking, insurance or financial services industries
generally, including any change in Applicable Law or GAAP or in the
official interpretations thereof, except to the extent that those
changes or conditions materially and disproportionately affect the
Subject Companies and the FG Transferred Business, or (iv) any act or
omission by Seller Parent or any of its Subsidiaries taken with the
prior written consent or at the written direction of Purchaser.
"Material Contract" means, other than contracts and
instruments under which there exists Company Specified Debt, (i) any
contract that individually calls for payments to or by any of the
Subject Companies in excess of $250,000 or (ii) any contract to which
any Subject Company is a party that is a "material contract" (as such
term is defined in Item 601(b)(10) of Regulation S-K of the SEC under
the Securities Act and the Exchange Act) with respect to the Company in
effect on the date of this Agreement.
"Offer" and "Offers" have the respective meanings set forth in
Section 7.2.
"Past Due Receivables" has the meaning set forth in Section
6.7(e).
"Permits" has the meaning set forth in Section 4.9.
"Permitted Liens" means (i) Liens for taxes, assessments or
other governmental charges not yet due or which are being contested in
good faith by appropriate
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proceedings, (ii) carriers', warehousemen's, mechanics',
materialmen's, repairman's or other similar Liens, (iii) easements,
rights of way, building, zoning and other similar encumbrances or
title defects, (iv) Liens on assets incurred to finance the
acquisition of such assets, (v) Liens on assets of any of the Subject
Companies or the assets of the FG Transferred Business incurred in the
ordinary course of business and (vi) Liens on properties which do not
materially impair business operations or the use of such properties in
the ordinary course of business.
"Person" means any individual, corporation, company,
partnership (limited or general), limited liability company, joint
venture, association, trust, unincorporated organization or other
business entity.
"Pre-Closing Environmental Liabilities" means all liabilities
relating to an Environmental Claim or Environmental Law and arising
from or related to any action, event, circumstance or condition related
to any Subject Company, any of their respective businesses or the FG
Transferred Business or the premises leased by a Subject Company or FG
(with respect to the FG Transferred Business only), in each case
occurring or existing on or before the Closing.
"Pre-Closing FG Employee Related Liabilities" means all
liabilities relating to (i) individuals who are, immediately prior to
the Closing Date, former employees of FG or (ii) employees of FG who do
not become FG Employees (including employees of FG, if any, who are on
long-term disability leave as of the Closing).
"Pre-Closing Period" has the meaning set forth in Section
10.1.
"Purchase Price" has the meaning set forth in Section 2.2.
"Purchase Price Allocation" has the meaning set forth in
Section 2.3(a).
"Purchaser" has the meaning set forth in the introductory
paragraph hereof.
"Receivables" means, as of any date, in the case of interest
bearing Loans, the aggregate outstanding principal balance of the
Loans, together with any earned but unpaid financing charges or
servicing advances or costs accrued thereon and, in the case of
precomputed Loans, the aggregate unpaid balance thereof less unearned
finance charges thereon.
"Receivables Downward Adjustment Amount" has the meaning set
forth in Section 2.4(c).
"Receivables Upward Adjustment Amount" has the meaning set
forth in Section 2.4(c).
"Reference Date Receivables" means the Receivables of the
Subject Companies and the FG Transferred Business, as shown on the
Statement of Reference Date Receivables as "net consumer finance
receivables".
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"Reorganization" has the meaning set forth in Section 6.7.
"Restructuring" has the meaning set forth in Section 10.7(d).
"Retained Seller Plans" has the meaning set forth in Section
4.11(f).
"SEC" means the Securities and Exchange Commission.
"Section 338 Allocation" has the meaning set forth in Section
10.7(c).
"Section 338 Schedule" has the meaning set forth in Section
10.7(a).
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the SEC thereunder.
"Seller" has the meaning set forth in the introductory
paragraph hereof.
"Seller Disclosure Schedule" means the disclosure schedule
delivered by Seller to Purchaser at the time of execution hereof.
"Seller Parent" has the meaning set forth in the introductory
paragraph hereof.
"Seller Parent's Group" means any corporation, or group of
corporations, which files a Tax Return together with Seller Parent on a
consolidated, combined or unitary basis.
"Seller's Insurance Policies" has the meaning set forth in
Section 6.5(b).
"September Tape" has the meaning set forth in Section 4.22(c).
"Statement of Closing Date Receivables" means the statement of
Closing Date Receivables as of the Closing Date after giving effect to
the transactions contemplated by Section 6.7, to be prepared and
delivered pursuant to Section 2.4, as finally determined in accordance
with Section 2.4(b).
"Statement of Reference Date Receivables" means the statement
of Reference Date Receivables of the Subject Companies and the FG
Transferred Business, a copy of which is set forth in Section 2.4(a) of
the Seller Disclosure Schedule.
"Stock" has the meaning set forth in the preamble to this
Agreement.
"Subject Companies" means, collectively, the Company and the
Included Subsidiaries.
"Subject Company Claims" has the meaning set forth in Section
6.5(b).
"Subject Company Liabilities" has the meaning set forth in
Section 6.5(b).
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"Subsidiary" means, with respect to any entity, a corporation
or other entity of which the outstanding shares of stock or other
equity interests having ordinary voting power to elect a majority of
the board of directors (or comparable body) of such corporation or
other entity are owned, directly or indirectly, through one or more
intermediaries, by such entity. Ownership through fiduciary, trust,
custodial or similar arrangements for the account of customers shall
not constitute ownership of stock or other equity interests for
purposes of this definition.
"Target Closing Receivables" means $4.025 billion less (i) an
amount equal to all Receivables outstanding as of the Closing Date
constituting Receivables of the Excluded Subsidiaries (other than
Receivables constituting part of the FG Transferred Business) and (ii)
an amount equal to the Charged-Off Receivables.
"Tax Returns" means all returns, declarations, reports,
estimates, information returns, statements and other documents required
to be filed in respect of Taxes, and "Tax Return" means any of the
foregoing Tax Returns.
"Tax Sharing Agreement" has the meaning set forth in Section
6.7(b).
"Taxes" means any and all (i) federal, state, county,
provincial, local, foreign and other taxes, charges, fees, levies or
other assessments, including without limitation all net income, gross
income, gross receipts, premium, estimated, sales, use, ad valorem,
property, transfer, franchise, profits, license, withholding, payroll,
employment, excise, severance, stamp, occupation, customs, duties and
guaranty fund assessments, and any interest, additions to tax or
penalties imposed under the Code or otherwise by any Governmental
Authority upon any of the Subject Companies and (ii) written
indemnifications with respect to taxes.
"1060 Allocation Statement" has the meaning set forth in
Section 10.7(c).
"Texas LP" has the meaning set forth in Section 10.7(d).
"Third Party" has the meaning set forth in Section 11.3(a).
"Third Party Consents" has the meaning set forth in Section
4.4(b).
"Transition Services Agreement" has the meaning set forth in
Section 6.11.
"Vacation Policy" has the meaning set forth in Section 7.6.
"Variable Pay Plan" has the meaning set forth in Section 7.5.
"Variable Plan Payments" has the meaning set forth in Section
7.5.
"WAMU Marks" has the meaning set forth in Section 6.8(a).
"WAMU Names" has the meaning set forth in Section 6.8(a).
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"WARN" has the meaning set forth in Section 4.11(g).
"Washington Mutual Mississippi" has the meaning set forth in
the preamble to this Agreement.
ARTICLE II
PURCHASE AND DELIVERY OF STOCK AND ASSETS
2.1 Delivery of Stock and FG Transferred Assets (a) On the
terms and subject to the conditions of this Agreement, Seller shall, at the
Closing on the Closing Date, transfer, assign and deliver to Purchaser or its
designee certificates evidencing the Stock, together with the certificates
evidencing the capital stock or membership interests of the Included
Subsidiaries and the stock books, ledgers and minute books of the Subject
Companies. Such certificates evidencing the Stock shall be duly endorsed in
blank, or be accompanied by stock transfer powers duly executed in blank, with
all necessary stock transfer tax stamps affixed thereto and cancelled.
(b) On the terms and subject to the conditions of this
Agreement, Seller Parent shall, at the Closing on the Closing Date, cause FG to
transfer, assign and deliver to Purchaser or its designee the FG Transferred
Assets, and shall deliver or cause to be delivered to Purchaser or its designee
such fully executed endorsements, consents, assignments and other instruments of
conveyance and assignment as shall be reasonably necessary and effective to vest
in Purchaser or its designee all right, title and interest of FG in and to the
FG Transferred Assets.
2.2 Closing; Payment of Purchase Price; Assumption of FG
Assumed Liabilities. On the terms and subject to the conditions of this
Agreement and against delivery of the certificates evidencing the Stock as
provided in Section 2.1(a) and the instruments of conveyance and assignment for
the FG Transferred Assets as provided in Section 2.1(b), Purchaser shall (a)
pay, at the Closing on the Closing Date, by wire transfer of immediately
available funds to the account of Seller and to such other accounts as, in each
case, Seller shall designate in writing to Purchaser not less than one Business
Day prior to the Closing Date, the sum of (i) $1.25 billion (the "Purchase
Price") and (ii) the Company Specified Debt (as calculated on the date
immediately preceding the Closing, but including interest scheduled to accrue
through (but not including) the Closing Date, and designated in writing by
Seller to Purchaser on such date), (b) on and as of the opening of business on
the Closing Date, expressly assume and agree to thereafter perform, pay and
discharge when due, the FG Assumed Liabilities and (c) deliver to FG such fully
executed acceptances, consents, instruments of assumption and other instruments
as shall be reasonably necessary and effective to vest in Purchaser sole
responsibility to perform, pay and discharge, when due, the FG Assumed
Liabilities.
2.3 Purchase Price Allocation. (a) The allocation of the total
consideration among the Stock and the FG Transferred Assets (the "Purchase Price
Allocation") shall be determined pursuant to an independent appraisal conducted
by Standard & Poor's (the "Appraiser") and completed within 60 days after the
Closing Date. The portion of the consideration allocated to the FG Transferred
Assets shall be referred to as the "FG Transferred Asset Purchase Price." The
costs of the Appraiser shall be borne equally by Seller and Purchaser.
11
(b) Purchaser, Seller Parent and Seller shall promptly inform
one another of any challenge by any Governmental Authority to any allocation
made pursuant to this Section 2.3 and agree to consult and keep one another
informed with respect to the status of, and any discussion, proposal or
submission with respect to such challenge. Notwithstanding the foregoing, in the
event the IRS challenges any position taken by any of the parties to this
Agreement, such party may settle or litigate such challenge without the consent
of, or liability to, the other parties.
2.4 Post-Closing Adjustments of Purchase Price. The Purchase
Price shall be subject to adjustment after the Closing as specified in this
Section 2.4.
(a) Statement of Closing Date Receivables. As promptly as
practicable, but in any event within 30 days following the Closing,
Purchaser shall deliver to Seller its Statement of Closing Date
Receivables (together with the Receivables "tape" used in preparing
such Statement of Closing Date Receivables), which shall be prepared on
the same basis as and utilizing the same principles, practices and
policies of the Subject Companies (and, with respect to the FG
Transferred Business, FG), as those used in preparing the Statement of
Reference Date Receivables; provided, however, that the provisions of
Section 6.7(e) shall govern the treatment of the Charged-Off
Receivables.
(b) Disputes. (i) Subject to clause (ii) of this Section
2.4(b), the Statement of Closing Date Receivables delivered by
Purchaser to Seller shall be final, binding and conclusive on the
parties hereto.
(ii) Seller may dispute any amounts on the Statement of
Closing Date Receivables, but only on the basis that they were not
arrived at in a manner consistent with the preparation of the Statement
of Reference Date Receivables or were arrived at based on mathematical
or clerical error; provided, however, that the Seller shall have
notified Purchaser in writing of each disputed item, specifying the
estimated amount thereof in dispute and setting forth, in reasonable
detail, the basis for such dispute, within 15 Business Days of
Purchaser's delivery of the Statement of Closing Date Receivables to
Seller. In the event of such a dispute, Seller and Purchaser shall
attempt to reconcile their differences, and any resolution by them as
to any disputed amounts shall be final, binding and conclusive on the
parties hereto. If Seller and Purchaser are unable to reach a
resolution with such effect within 10 Business Days after the receipt
by Purchaser of Seller's written notice of dispute, Seller and
Purchaser shall submit the items remaining in dispute for resolution to
PricewaterhouseCoopers LLP (or, if such firm shall decline or is unable
to act or is not, at the time of such submission, independent of Seller
and Purchaser, to another independent accounting firm of international
reputation mutually acceptable to Seller and Purchaser) (either
PricewaterhouseCoopers LLP or such other accounting firm being referred
to herein as the "Independent Accounting Firm"), which shall, within 15
Business Days after such submission, determine and report to Seller and
Purchaser upon such remaining disputed items, only on the basis of
whether or not they were arrived at in a manner consistent with the
preparation of the Statement of Reference Date Receivables or whether
or not they were arrived at based on mathematical or clerical error and
such report shall be final, binding and conclusive on Seller and
12
Purchaser. The fees and disbursements of the Independent Accounting
Firm shall be shared equally by Seller and Purchaser.
(c) Purchase Price Adjustments. The Statement of Closing Date
Receivables shall be deemed final for the purposes of this Section 2.4
upon the earliest of (i) the failure of Seller to notify Purchaser of a
dispute within 15 Business Days of Purchaser's delivery of the
Statement of Closing Date Receivables to Seller, (ii) the resolution of
all disputes, pursuant to Section 2.4(b), by Seller and Purchaser and
(iii) the resolution of all disputes, pursuant to Section 2.4(b), by
the Independent Accounting Firm. Within three Business Days of the
Statement of Closing Date Receivables being deemed final, Purchase
Price adjustments shall be made as follows:
(I) In the event that the Target Closing Receivables
is at least $25 million greater than the Closing Date
Receivables reflected on the Statement of Closing Date
Receivables, then the Purchase Price shall be adjusted
downward in an amount (the "Receivables Downward Adjustment
Amount") equal to the product of (x) 0.30 multiplied by (y)
the difference between the Target Closing Receivables minus
$25 million and the Closing Date Receivables; provided that no
adjustment to the Purchase Price shall be made pursuant to
this Section 2.4(c)(I) if the difference between the Target
Closing Receivables and the Closing Date Receivables is less
than $25 million. Seller shall pay the Receivables Downward
Adjustment Amount, if applicable, to Purchaser in cash by wire
transfer of immediately available federal funds to such bank
account(s) as shall be designated in writing by Purchaser to
Seller within one (1) Business Day of the Statement of Closing
Date Receivables being deemed final.
(II) In the event that the Closing Date Receivables
reflected on the Statement of Closing Date Receivables is at
least $25 million greater than the Target Closing Receivables,
then the Purchase Price shall be adjusted upward in an amount
(the "Receivables Upward Adjustment Amount") equal to the
product of (x) 0.30 multiplied by (y) the difference between
the Closing Date Receivables minus $25 million and the Target
Closing Receivables; provided that no adjustment to the
Purchase Price shall be made pursuant to this Section
2.4(c)(II) if the difference between the Closing Date
Receivables and the Target Closing Receivables is less than
$25 million. Purchaser shall pay the Receivables Upward
Adjustment Amount, if applicable, to Seller in cash by wire
transfer of immediately available federal funds to such bank
account(s) as shall be designated in writing by Seller to
Purchaser within one (1) Business Day of the Statement of
Closing Date Receivables being deemed final.
(d) Interest on Payments. Any payments required to be made by
Seller or Purchaser pursuant to Section 2.4 shall bear interest from
the Closing through the date of payment at the prime lending rate
prevailing during such period as published in The Wall Street Journal.
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ARTICLE III
CLOSING DATE
3.1 Closing Date; Insurance Subsidiary Purchase. (a) Unless
this Agreement shall have theretofore been terminated and the transactions
herein abandoned pursuant to Section 9.1, subject to the provisions of Article
VIII, the closing (the "Closing") of the purchase and sale of the Stock, the
transfer of the FG Transferred Assets and the assumption of the FG Assumed
Liabilities by Purchaser provided for in Article II shall take place at the
offices of Xxxxxxx Xxxxxxx & Xxxxxxxx LLP, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx, at 10:00 a.m., New York City time, on the first Business Day occurring
after December 31, 2003 that is after the day on which all conditions set forth
in Article VIII are first satisfied or waived, other than conditions which by
their terms are to be satisfied at the Closing (provided that Seller and
Purchaser may mutually agree in writing to delay the Closing until the last
Business Day of the month during which all conditions set forth in Article VIII,
other than conditions which by their terms are to be satisfied at the Closing,
are first satisfied or waived), or at such other place and time and on such
other date as the parties may agree. The date on which the Closing occurs is
herein called the "Closing Date".
(b) Notwithstanding Section 3.1(a), if all the conditions to
Closing set forth in Article VIII, other than conditions which by their terms
are to be satisfied at Closing and other than the receipt of Insurance
Regulatory Approvals shall have been satisfied or waived, then the parties shall
promptly take all actions necessary to (i) consummate the Closing and the other
transactions contemplated hereby (other than the sale and delivery of the stock
of the Insurance Subsidiaries (the "Insurance Subsidiary Purchase"), which shall
be transferred to Seller), provided that the amount payable in respect of the
Purchase Price at the Closing shall be reduced by an amount equal to the
aggregate book value of the Insurance Subsidiaries as of their most recent
quarter-end, but in any event not less than $100 million (which amount shall be
deferred and paid as provided in Section 3.1(d)), and (ii) delay the Insurance
Subsidiary Purchase until such time as the Insurance Regulatory Approvals shall
have been obtained (at which time the Insurance Subsidiary Purchase shall take
place in the manner described in Section 3.1(d)). From and after the Closing,
Seller, Seller Parent and Purchaser shall continue to use their reasonable best
efforts to obtain the Insurance Regulatory Approvals.
(c) Following the Closing and until such time as each
Insurance Subsidiary has been transferred to Purchaser pursuant to Section
3.1(d) (each, a "Deferred Transfer"), Seller and Seller Parent shall cause the
Insurance Subsidiaries not so transferred to be held for Purchaser's benefit and
shall cause the Insurance Subsidiaries to be managed and operated for
Purchaser's benefit and account, with all gains, income, losses, taxes or other
items generated thereby to be for Purchaser's account. Except as otherwise
provided in this Section 3.1(c), Seller, Seller Parent and their affiliates
shall have no liability to Purchaser arising out of the management or operation
of the Insurance Subsidiaries other than for gross negligence or willful
misconduct, for which gross negligence or willful misconduct Seller and Seller
Parent will indemnify Purchaser; provided, that Seller, Seller Parent and their
affiliates will have no liability for actions taken in accordance with the
request or direction of Purchaser or its affiliates. Except as set forth in the
immediately preceding sentence, Purchaser shall reimburse Seller, Seller Parent
and their affiliates and shall hold Seller, Seller Parent and their affiliates
harmless from and against all liabilities, incurred or asserted as a result of
the post-Closing direct or indirect ownership,
14
management or operation of the Insurance Subsidiaries, including, without
limitation, the amount of any additional taxes payable by Seller, Seller Parent
or its affiliates (whether currently or in the future), after application of the
terms of this Agreement, as a result thereof in excess of the amount of taxes
which would have been payable by Seller, Seller Parent or its affiliates, after
application of the terms of this Agreement, if the Insurance Subsidiaries had
been transferred to Purchaser on the Closing Date, and Seller and Seller Parent
shall reimburse Purchaser if the amount of such taxes so payable by Seller and
Seller Parent is less than had the transfer occurred on the Closing Date.
(d) The Deferred Transfer of any Insurance Subsidiary shall be
effected on the fifth Business Day following receipt of all Insurance Regulatory
Approvals necessary therefor or at such other time as the parties may agree, and
shall be effective upon the execution and delivery of all necessary agreements
required by Applicable Law to effect such transfer. At the closing of any
Deferred Transfer, Purchaser shall pay the portion of the Purchase Price
deferred in respect of such Insurance Subsidiary pursuant to Section 3.1(a),
together with interest thereon at the prime lending rate prevailing during such
period as published in The Wall Street Journal, calculated on a daily basis from
the Closing Date until the date of payment, and Seller or Seller Parent shall
cause the capital stock of the applicable Insurance Subsidiary, plus or as
offset by all gains, income, losses, taxes or other items generated thereby for
Purchaser's account (as described in the first sentence of Section 3.1(c)), to
be delivered to Purchaser.
(e) If the Deferred Transfer of any Insurance Subsidiary shall
not have occurred prior to the one-year anniversary of the Closing Date, (i) all
obligations of the parties to purchase or sell such Insurance Subsidiary or
account for gains, income, losses or taxes with respect thereto shall be
terminated (provided that such termination shall not affect any party's rights
in respect of any breach of this Agreement, including with respect to Section
6.3) and (ii) Seller shall retain such Insurance Subsidiary for its own account
and the provisions set forth in Section 3.1(c) shall thereafter cease to apply.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller and Seller Parent, jointly and severally, represent and
warrant to Purchaser that:
4.1 Organization, Power etc. (a) Each of Seller and Seller
Parent is a corporation duly incorporated, validly existing and in good standing
under the laws of its jurisdiction of incorporation.
(b) Each of the Subject Companies has been duly incorporated
or organized and is validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization. Where applicable, each of the
Subject Companies is duly qualified or licensed as a foreign corporation or
other entity to do business and is in good standing in each jurisdiction in
which the nature of its business or properties makes such qualification or
license necessary, all of which jurisdictions are set forth in Section 4.1 of
the Seller Disclosure Schedule next to the names of the applicable Subject
Companies, and each of the Subject Companies and FG (with
15
respect to the FG Transferred Business only) has full power and authority
necessary to own all of its properties and assets and to carry on its business
as it is now being conducted, except where failure to be so incorporated,
organized, existing, qualified, licensed or in good standing would not
reasonably be expected to have a Material Adverse Effect. True and complete
copies of the certificate of incorporation and bylaws of each Subject Company,
as in effect as of the date hereof, have heretofore been delivered or made
available to Purchaser. Seller and Seller Parent have made available to
Purchaser the minute books of each Subject Company from January 1, 2000 through
the date of this Agreement and such minute books contain true and complete
copies of the minutes of all meetings held by the boards of directors and
stockholders of each Subject Company during that period.
4.2 Authority Relative to Agreement. Each of Seller and Seller
Parent has the corporate power and authority to execute and deliver this
Agreement and the Transition Services Agreement, to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby. The execution and delivery by each of Seller and Seller Parent of
this Agreement and the Transition Services Agreement, the performance of its
obligations hereunder and thereunder and its consummation of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action. This Agreement has been, and upon its execution and delivery
the Transition Services Agreement shall have been, duly and validly executed and
delivered by each of Seller and Seller Parent and, assuming the due
authorization, execution and delivery by Purchaser, this Agreement constitutes,
and upon its execution and delivery the Transition Services Agreement shall
constitute, legal and binding obligations, enforceable against Seller Parent and
Seller in accordance with their respective terms, except as may be affected by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights generally and
general equitable principles.
4.3 Non-Contravention. The execution and delivery of this
Agreement and the Transition Services Agreement by each of Seller and Seller
Parent do not, and its consummation of the transactions contemplated hereby and
thereby and its performance of the obligations which it is obligated to perform
or cause to be performed hereunder and thereunder will not: (a) violate any
provision of its certificate of incorporation or by-laws or other organizational
documents or those of any Subject Company or FG; or (b) assuming that all
consents, authorizations, orders or approvals of, filings or registrations with,
and notices to, each United States federal and state court, governmental
commission, board or other regulatory authority or agency or arbitral body
("Governmental Authority") referred to in Section 4.4(a) and all Third Party
Consents referred to in Section 4.4(b) have been obtained or made, (i) violate
any law, regulation, rule, order, judgment or decree of any Governmental
Authority ("Applicable Law") to which Seller or Seller Parent, any Subject
Company or FG (with respect to the FG Transferred Business only) or any of their
respective properties (but with respect to FG, only the FG Transferred Assets)
is subject, (ii) violate, result in the termination or acceleration of, or
conflict with or constitute a default under, any mortgage, indenture, lease,
license, permit, agreement or instrument (each a "Contract") to which Seller,
Seller Parent, any Subject Company or FG (with respect to the FG Transferred
Business only) is a party or by which any of their respective properties (but,
with respect to FG, only the FG Transferred Assets) is bound or (iii) result in
the creation of any Lien on the Stock or any of the assets or properties of any
Subject Company or the FG Transferred Assets, except, in the case of clauses (i)
and (ii), for any such
16
violation, termination, acceleration, conflict or default as would not
reasonably be expected to have a Material Adverse Effect or prohibit or
materially impair the ability of Seller Parent or Seller to consummate the
transactions contemplated hereby and by the Transition Services Agreement or
perform their respective obligations hereunder or thereunder on a timely basis.
4.4 Consents, etc. (a) Except for the filing of applications
and notices with and receipt of approvals, licenses or consents from applicable
state regulatory authorities governing consumer finance, mortgage lending and
insurance in the various states in which the Subject Companies and FG (with
respect to the FG Transferred Business only) operate their respective
businesses, the filing of notice under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976 ("HSR Act"), and the expiration or early termination of
the applicable waiting period, and as described in Section 4.4(a) of the Seller
Disclosure Schedule, no consent, authorization, license, order or approval of,
filing or registration with, or notice to, any Governmental Authority
(collectively, "Governmental Approvals") and (b) except as described in Section
4.4(b) of the Seller Disclosure Schedule, no consent, authorization, approval or
waiver from any party (other than a Governmental Authority) to any Contract
(collectively, "Third Party Consents") to which Seller, Seller Parent, any
Subject Company or FG (with respect to the FG Transferred Business only) is a
party or by which any of their respective properties (but, with respect to FG,
only the FG Transferred Assets) are bound is required for the execution and
delivery of this Agreement or the Transition Services Agreement by Seller and
Seller Parent, the performance of their respective obligations hereunder and
thereunder and their consummation of the transactions contemplated hereby and
thereby, except in any such case for any such Governmental Approval or Third
Party Consent (A) which is required solely by reason of the specific regulatory
status of Purchaser or its affiliates or (B) the failure of which to be obtained
or made would not reasonably be expected to have a Material Adverse Effect or
prohibit or materially impair the ability of Seller Parent or Seller to
consummate the transactions contemplated hereby or perform their respective
obligations hereunder on a timely basis.
4.5 Title to Stock and FG Transferred Assets. Upon the
delivery and payment for the Stock as contemplated herein, Seller will transfer
to Purchaser or its designee valid title to the Stock and the stock of the
Insurance Subsidiaries, free and clear of any Liens (other than Liens created or
incurred by Purchaser or any of its affiliates). Upon the delivery and payment
for the FG Transferred Assets as contemplated herein and assumption of the FG
Assumed Liabilities, FG will transfer to Purchaser valid title to the FG
Transferred Assets, free and clear of any Liens (other than Liens created or
incurred by Purchaser or any of its affiliates and Permitted Liens).
4.6 Capital Stock of the Subject Companies. (a) The authorized
capital stock of the Company consists of 10,000 shares of common stock, par
value $1.00 per share, of which 1,000 shares are issued and outstanding and
owned, beneficially and of record, by Seller, free and clear of any Liens. All
outstanding shares of the Company's capital stock have been duly authorized and
validly issued and are fully paid, nonassessable and free of preemptive rights.
There are no outstanding obligations, warrants, options or other rights to
subscribe for or purchase from the Company, or other contracts or commitments
providing for the issuance of or granting any Person the right to acquire,
shares of any class of stock of the Company, or any securities or other
instruments convertible into or exchangeable or exercisable for shares of any
class of stock of the Company. There are no proxies, voting agreements or other
agreements
17
with respect to the voting or transfer of any shares of capital stock or
membership interests of any of the Subject Companies.
(b) Section 4.6(b) of the Seller Disclosure Schedule sets
forth, as to each Included Subsidiary, its jurisdiction of organization and the
percentage of its capital stock that is beneficially owned by the Company. The
outstanding shares of capital stock beneficially owned by the Company of each
Included Subsidiary are validly issued, fully paid and nonassessable. All of the
shares shown in Section 4.6(b) of the Seller Disclosure Schedule as being
beneficially owned by the Company are owned by the Company either directly or
indirectly through other Included Subsidiaries, free and clear of any Liens,
except as set forth in Section 4.6(b) of the Seller Disclosure Schedule. There
are no outstanding obligations, warrants, options or other rights to subscribe
for or purchase from any Included Subsidiary, or other contracts or commitments
providing for the issuance of or granting any Person the right to acquire,
shares of any class of stock of any Included Subsidiary, or any securities or
other instruments convertible into or exchangeable or exercisable for shares of
any class of stock of any Included Subsidiary.
4.7 SEC Filings; Financial Statements. (a) Each Subject
Company has timely filed all material reports, registrations and statements,
together with any amendments required to be made with respect thereto, that it
was required to file since January 1, 2001 with any Governmental Authority and
has paid all material fees and assessments due and payable in connection
therewith. Except for normal and routine examinations conducted by Governmental
Authorities in the regular course of the business of the Subject Companies and
FG (with respect to the FG Transferred Business only), and except as set forth
in Section 4.7(a) of the Seller Disclosure Schedule, no Governmental Authority
has initiated any proceeding or investigation or, to the Knowledge of Seller,
threatened or indicated an intention to initiate any investigation into the
business or operations of the Subject Companies or FG (with respect to the FG
Transferred Business only) since January 1, 2001.
(b) The Company has filed all material reports, schedules,
forms, statements and other documents required to be filed with the SEC since
January 1, 2001 (collectively, together with all items incorporated therein by
reference, the "Company Reports"). The Company Reports, at the time they were
filed (or if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing), (i) complied in all material
respects with the applicable requirements of the Securities Act or the Exchange
Act, as the case may be, and (ii) did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(c) Each of the consolidated statements of financial condition
and the related consolidated statements of operations and comprehensive income,
retained earnings and cash flows (including, in each case, any related notes
thereto) contained in the Company Reports was prepared in accordance with GAAP
applied on a consistent basis throughout the periods involved (except as may be
indicated in the notes thereto or in such documents or, in the case of unaudited
financial statements, as otherwise permitted by Form 10-Q of the SEC), and each
fairly presents in all material respects the consolidated financial position of
the Company and its Subsidiaries at the respective dates thereof and the
consolidated results of its operations and cash flows for the
18
periods indicated (subject, in the case of unaudited statements, to normal
year-end adjustments which have not had and would not reasonably be likely to
have a Material Adverse Effect).
(d) Each of the Insurance Subsidiaries has filed all annual or
quarterly statements, together with all exhibits and schedules thereto, required
to be filed with or submitted to the appropriate regulatory authorities of the
jurisdiction in which it is domiciled on forms prescribed or permitted by such
regulatory authority (collectively, the "Company SAP Statements") since January
1, 2001. The financial statements included in the Company SAP Statements and
prepared on a statutory basis, including the notes thereto, have been prepared
in all material respects in accordance with accounting practices prescribed or
permitted by the applicable regulatory authorities in effect as of the date of
the respective statements and such accounting practices have been applied in all
material respects on a consistent basis throughout the periods involved, except
as expressly set forth in the notes or schedules thereto, and such financial
statements present fairly in all material respects the respective statutory
financial positions and results of operations of each of the Insurance
Subsidiaries as of their respective dates and for the respective periods
presented therein.
(e) The Company has timely filed or supplied all
certifications and statements required by (i) Rule 13a-14 or Rule 15d-14 under
the Exchange Act or (ii) 18 U.S.C. Section 1350 (Section 906 of the
Xxxxxxxx-Xxxxx Act of 2002) with respect to any Company Report. The Company
maintains disclosure controls and procedures required by Rule 13a-15 or Rule
15d-15 under the Exchange Act; such controls and procedures are effective to
ensure that all material information concerning the Company and its Subsidiaries
is made known on a timely basis to the individuals responsible for the
preparation of the Company's SEC filings and other public disclosure documents.
(f) The Subject Companies and the FG Transferred Business
maintain a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management's general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
GAAP and to maintain asset accountability, (iii) access to assets is permitted
only in accordance with management's general or specific authorization, and (iv)
the recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(g) Since January 1, 2001, none of Seller Parent, Seller or
any Subject Company has received any complaint, allegation or claim regarding
the accounting or auditing practices, procedures, methodologies or methods of
any Subject Company or their respective internal accounting controls.
4.8 Litigation. Except (i) for any litigation that may arise
out of the transactions contemplated by this Agreement and any Excluded
Litigation or (ii) as set forth in Section 4.8 of the Seller Disclosure
Schedule, there is no action, suit or proceeding pending or, to the Knowledge of
Seller, threatened against Seller, any Subject Company or FG (with respect to
the FG Transferred Business only) before any Governmental Authority or
arbitrator that would reasonably be expected to have a Material Adverse Effect.
Except as set forth in Section 4.8 of the Seller Disclosure Schedule, there are
no outstanding judgments, decrees, injunctions or
19
orders of any Governmental Authority to which any of the Subject Companies or FG
(with respect to the FG Transferred Business only) is subject or any of their
respective properties (but, with respect to FG, only the FG Transferred Assets)
is bound that would reasonably be expected to have a Material Adverse Effect.
4.9 Compliance with Laws; Permits and Licenses. The operations
of each of the Subject Companies and FG (with respect to the FG Transferred
Business only) are being, and at all times since January 1, 2000 have been,
conducted in compliance, in all material respects, with all Applicable Laws to
which Seller, any Subject Company or FG (with respect to the FG Transferred
Business only) is subject, including all state usury, state "high cost" or
"predatory lending" laws, consumer lending and insurance laws, the Truth in
Lending Act, the Real Estate Settlement Procedures Act, the Consumer Credit
Reporting Act, the Equal Credit Opportunity Act, the Fair Credit Reporting Act,
the Homeowners Ownership and Equity Protection Act, the Fair Debt Collection
Practices Act and other applicable federal state and local laws regulating
lending, servicing loans or selling credit or other insurance, and neither the
Subject Companies nor FG (with respect to the FG Transferred Business only) is
in conflict with, is in default of, or has since January 1, 2000 been charged in
writing (or, to the Knowledge of Seller, otherwise been charged) by any
Governmental Authority with a material violation of any, Applicable Law. Each of
the Subject Companies and FG (with respect to the FG Transferred Business only)
holds all material permits, certificates, licenses, approvals and other
authorizations ("Permits") of each Governmental Authority which are necessary
for the operation of its business (but, with respect to FG, only the FG
Transferred Business) as presently conducted and all such material Permits are
in full force and effect. Except as set forth in Section 4.9 of the Seller
Disclosure Schedule, since January 1, 2000, none of the Subject Companies or FG
(with respect to the FG Transferred Business only) has received any written or,
to the Knowledge of Seller, oral notification from any Governmental Authority
asserting that such Person is not in compliance with any of the statutes,
regulations or ordinances that such Governmental Authority enforces or that such
Governmental Authority intends to revoke or suspend any such Permit.
4.10 Absence of Certain Changes; No Undisclosed Liabilities.
(a) Since December 31, 2002, except as contemplated by this Agreement or as set
forth in Section 4.10(a) of the Seller Disclosure Schedule or disclosed in the
Company Reports filed prior to the date of this Agreement, (i) the business of
the Subject Companies and FG (with respect to the FG Transferred Business only)
has been conducted only in the ordinary course of business consistent with past
practice, (ii) there has been no change, event or development affecting the
Subject Companies or FG (with respect to the FG Transferred Business only)
which, individually or in the aggregate, has resulted in or would reasonably be
expected to result in a Material Adverse Effect and (iii) none of the Subject
Companies or FG (with respect to the FG Transferred Business only) has taken any
action that, if taken during the period from the date of this Agreement to the
Closing Date, would constitute a breach of Section 6.1 hereof.
(b) Section 4.10(b) of the Seller Disclosure Schedule sets
forth all Company Specified Debt and all other outstanding long-term debt for
borrowed money of the Company outstanding as of September 30, 2003. Except for
liabilities incurred in connection with this Agreement and the transactions
contemplated hereby, and except for (i) liabilities disclosed, reserved for or
otherwise reflected in the unaudited consolidated statement of financial
condition
20
of the Company as of September 30, 2003 (including the notes thereto) contained
in the Company Reports and (ii) liabilities incurred by the Subject Companies
after September 30, 2003 in the ordinary course of business or as otherwise
disclosed in the Company Reports filed prior to the date of this Agreement, the
Subject Companies and FG (with respect to the FG Transferred Business only) do
not have any material liabilities (accrued, absolute, contingent or otherwise)
that are required to be disclosed on a consolidated balance sheet in accordance
with GAAP. Reserves are reflected on the most recent balance sheet contained in
the Company Reports against all liabilities of the Subject Companies and the FG
Transferred Business in amounts that have been established on a basis consistent
in all material respects with the past practices of the Subject Companies and FG
(with respect to the FG Transferred Business only).
(c) Except as set forth in Section 4.10(c) of the Seller
Disclosure Schedule or as contemplated by the Reorganization, since December 31,
2002 no Subject Company has declared, set aside, made or paid any dividend or
other distribution on or in respect of its capital stock, or repurchased,
redeemed or otherwise reacquired any of its capital stock, other than any
dividend or other distribution on any capital stock of any Subject Company paid
or made solely to another Subject Company and any repurchase, redemption or
reacquisition of any capital stock of any Subject Company held by another
Subject Company.
4.11 Personnel and Employee Benefits Matters. (a) Section
4.11(a) of the Seller Disclosure Schedule sets forth a list of each material (i)
"employee benefit plan" (within the meaning of Section 3(3) of ERISA), (ii)
severance, change in control and employment plan, program or agreement and (iii)
vacation, incentive, bonus, stock option, stock purchase, restricted stock or
other benefit or compensation plan, program, agreement or policy of or sponsored
by Seller Parent, Seller, any of the Subject Companies or FG, in which present
or former employees or directors of the Subject Companies or the FG Transferred
Business participate (collectively, "Benefit Plans").
(b) The Benefit Plans are in compliance in all material
respects with all applicable requirements of ERISA, the Code, and other
Applicable Laws and have been administered in all material respects in
accordance with their terms and such laws. Each Benefit Plan that is intended to
be qualified within the meaning of Section 401 of the Code has received a
favorable determination letter as to its qualification, and, to the Knowledge of
Seller, nothing has occurred that would reasonably be expected to adversely
affect such qualification.
(c) Except as set forth in Section 4.11(c) of the Seller
Disclosure Schedule or for ordinary and usual claims for benefits by
participants and beneficiaries, there are no pending or, to the Knowledge of
Seller, threatened claims and no pending or, to the Knowledge of Seller,
threatened litigation with respect to any Benefit Plan which would reasonably be
expected to result in material liability to the Subject Companies.
(d) Except as set forth in Section 4.11(d) of the Seller
Disclosure Schedule, nothing has occurred, and no condition exists, with respect
to any Benefit Plan which would reasonably be expected to have a Material
Adverse Effect. None of Seller Parent, Seller, any of the Subject Companies or
FG has incurred any material liability under, arising out of or by operation of
Title IV of ERISA (other than the payment of premiums to the Pension Benefit
Guaranty Corporation), and no fact or event exists which could reasonably be
expected to give
21
rise to any such material liability. No Benefit Plan is a multiemployer plan (as
defined in Section 3(37) of ERISA).
(e) Except as set forth in Section 4.11(e) of the Seller
Disclosure Schedule, neither the execution of this Agreement nor the
consummation of the transactions contemplated by this Agreement will (i) entitle
any employees of the Subject Companies or employees of the FG Transferred
Business to severance pay or any increase in severance pay upon any termination
of employment after the date hereof or (ii) accelerate the time of payment or
vesting or trigger any payment or funding of compensation or benefits under, or
increase the amount payable or trigger any other material obligation pursuant
to, any of the Benefit Plans. None of the Benefit Plans would result separately
or in the aggregate (including, without limitation, as a result of this
Agreement or the transactions contemplated hereby) in the payment of any "excess
parachute payment" within the meaning of Section 280G of the Code.
(f) Except as set forth in Section 4.11(f) of the Seller
Disclosure Schedule, the Benefit Plans are sponsored or maintained by the Seller
Parent or an affiliate (other than the Subject Companies or FG) (the "Retained
Seller Plans"), and the Seller Parent or such affiliate (or a trust or insured
arrangement maintained by the Seller Parent or such affiliate) is liable for the
payment of all compensation and benefits arising under such Retained Seller
Plans (including all claims for such compensation or benefits, whenever
occurring) to employees of the Subject Companies and the FG Transferred Business
(except to the extent that the Purchaser or any of its affiliates participate in
any of the Retained Seller Plans after the Closing Date).
(g) Each of the Subject Companies and FG (with respect to the
FG Transferred Business only) have timely given any and all notices and taken
any other actions required with respect to the Worker Adjustment and Retraining
Notification Act of 1988, as amended, or other similar laws of any state or
other jurisdiction (collectively, "WARN").
4.12 Taxes. (a) Except as set forth in Section 4.12 of the
Seller Disclosure Schedule, (i) all material Tax Returns required to be filed
with respect to the Subject Companies and the FG Transferred Assets have been
timely filed; (ii) all Taxes shown as due on such Tax Returns have been timely
paid and all such Tax Returns are true and complete in all material respects;
(iii) to the Knowledge of Seller, there are no pending or threatened actions or
proceedings for the assessment or collection of any material Taxes against the
Subject Companies or the FG Transferred Assets; (iv) none of the Subject
Companies or FG (with respect to the FG Transferred Assets only) is a party to
any Tax sharing agreement or arrangement, other than pursuant to the Tax Sharing
Agreement dated as of August 31, 1999 among Seller Parent, the Subject Companies
and others; (v) no material Tax Liens or assessments (other than Liens for Taxes
not yet due and payable or being contested in good faith by appropriate
proceedings) have been filed by any Tax authority against the Subject Companies
or any of their respective properties or assets and (vi) all indebtedness of the
Subject Companies that will remain outstanding after the Closing Date is
properly treated as "indebtedness" for federal and state income tax purposes.
(b) Seller Parent and the Seller Parent's Group have filed
consolidated federal income Tax Returns including each of the Subject Companies
for the taxable year immediately
22
preceding the current taxable year, other than City Holdings Reinsurance Life
Company in the event that the taxable year immediately preceding the current
taxable year is 2002.
(c) Section 4.12(c) of the Seller Disclosure Schedule lists
(i) any Included Subsidiaries that are treated by Seller Parent as entities
disregarded from their owners for federal income tax purposes, and (ii) any
Included Subsidiaries that are treated by Seller Parent as a partnership for
state tax purposes. Washington Mutual Finance of Texas LLC is the only Included
Subsidiary that paid any material amount of Texas state income or franchise tax
for the 2002 taxable year.
4.13 Properties. (a) Section 4.13(a) of the Seller Disclosure
Schedule sets forth a true and complete description of all real property (a)
leased by a Subject Company and (b) leased by FG (with respect to the FG
Transferred Business only). The Company or an Included Subsidiary has a valid
and enforceable leasehold interest in each of the leased premises in which the
Subject Companies currently conduct their business and FG or one of the other
Subject Companies has a valid and enforceable leasehold interest in each of the
leased premises in which FG currently conducts the FG Transferred Business, in
each case except as may be affected by bankruptcy, insolvency, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally or general equitable principles. As of the date hereof, there is no
material default (or event or circumstance which, with the giving of notice or
lapse of time, would constitute such a default) by the lessee or, to the
Knowledge of Seller, the lessor under any such lease and each such lease is in
effect in accordance with its terms, except to the extent that any failure to be
so in effect would not reasonably be expected to have a Material Adverse Effect.
The leasehold interest in the leased premises used by the Subject Companies in
Pensacola, Florida (the "C3 Lease") is held by a Subject Company free and clear
of all Liens other than Permitted Liens. None of the Subject Companies and FG
(with respect to the FG Transferred Business only) owns any real properties in
fee simple for use in the conduct of its business.
(b) The FG Transferred Assets constitute substantially all the
properties, assets and rights forming a part of, used, held or intended to be
used in, and all such properties, assets and rights as are necessary in the
conduct of, the FG Transferred Business.
4.14 Certain Labor Matters. None of the Subject Companies and
FG (with respect to the FG Transferred Business only) is a party to any
collective bargaining agreement or agreement with any labor union. From January
1, 2001 through the date of this Agreement, (i) there has not occurred or, to
the Knowledge of Seller, been threatened any strike, slow down, picketing, work
stoppage, concerted refusal to work, receipt of notice to seek union or other
similar labor activities with respect to the Affected Employees and (ii) no
labor grievance or arbitration or other proceeding against a Subject Company or
FG (with respect to the FG Transferred Business only) is pending or, to the
Knowledge of Seller, threatened before the National Labor Relations Board or
other comparable administrative body, in any case which would reasonably be
expected to have a Material Adverse Effect.
4.15 Material Agreements; Agreements with Affiliates. (a)
Section 4.15(a) of the Seller Disclosure Schedule lists all Material Contracts
to which a Subject Company or FG (with respect to the FG Transferred Business
only) is a party or to which any of the assets of the
23
Subject Company or any of the FG Transferred Assets are bound. Except as would
not reasonably be expected to have a Material Adverse Effect, each Material
Contract to which any of the Subject Companies or FG (with respect to the FG
Transferred Business only) is a party is a legal and binding obligation of the
applicable Subject Company or FG, as the case may be, and, to the Knowledge of
Seller, each of the other parties thereto, in each case enforceable in
accordance with its terms, except as may be affected by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally or general equitable
principles. No condition exists or event has occurred which (whether with or
without notice or lapse of time or both) would constitute a default by any of
the Subject Companies or FG or, to the Knowledge of Seller, any other party
thereto under, or result in a right in termination of, any Material Contract to
which any of the Subject Companies or FG (with respect to the FG Transferred
Business only) is a party, except as would not reasonably be expected to have a
Material Adverse Effect. As of the date of this Agreement, no Material Contract
is under negotiation or scheduled to terminate prior to March 31, 2004.
(b) Section 4.15(b) of the Seller Disclosure Schedule lists
all written Contracts in effect on the date hereof between a Subject Company or
FG (with respect to the FG Transferred Business only), on the one hand, and any
affiliate thereof (other than another Subject Company), other than any Contracts
which will be terminated at or prior to the Closing without additional cost or
liability to a Subject Company.
4.16 Intellectual Property. (a) Section 4.16(a) of the Seller
Disclosure Schedule sets forth a true and complete list of all patents and
patent applications, trademark and copyright registrations and applications, and
URLs and domain names included within the Company Intellectual Property.
(b) Except as set forth in Section 4.16(b) of the Seller
Disclosure Schedule, as contemplated by Section 6.8, or as would not reasonably
be expected to have a Material Adverse Effect: (i) the Subject Companies and the
FG Transferred Business have the right to use all the Company Intellectual
Property used in their respective businesses as currently conducted; (ii) the
Subject Companies own the entire and unencumbered right, title and interest in
(or have a license to use) all the SC Intellectual Property and FG owns the
entire and unencumbered right, title and interest in (or has a license to use)
all the FG Intellectual Property; (iii) such Intellectual Property owned by the
Subject Companies and FG (and, to the Knowledge of Seller, all other Company
Intellectual Property) is subsisting, valid and enforceable; (iv) to the
Knowledge of Seller, such Intellectual Property is not being infringed or
violated by any other Person; (v) to the Knowledge of Seller, the conduct of,
and the services performed and products offered by, the Subject Companies'
respective businesses and the FG Transferred Business and the use by the Subject
Companies and FG (with respect to the FG Transferred Business only) of such
Intellectual Property do not infringe (whether directly, contributorily or by
inducement) or violate the Intellectual Property of any other Person and no
claim is pending or threatened against the Subject Companies or FG (with respect
to the FG Transferred Business only) alleging any such infringement or
violation; and (vi) the Company Intellectual Property constitutes all of the
Intellectual Property material to the operation of the Subject Companies'
respective businesses and the FG Transferred Business as currently conducted.
Except as set forth in Section 4.16(b) of the Seller Disclosure Schedule, no
royalties or fees in excess of $100,000 are payable by any
24
of the Subject Companies to any Person or would constitute part of the FG
Assumed Liabilities by reason of the Subject Companies' or FG's ownership or use
of such Intellectual Property.
(c) The Subject Companies and the FG Transferred Business have
a valid right to access and use all IT Systems. The IT Systems constitute all of
the IT systems material to the operation of the Subject Companies' respective
businesses and the FG Transferred Business as currently conducted. The
consummation of the transactions contemplated in this Agreement will not impair
or interrupt the Subject Companies' or the FG Transferred Business's access and
use of, or their right to access and use, the IT Systems or, to the extent
applicable, their customers' access and use of or their right to access and use,
the IT Systems. The Subject Companies and FG have taken all reasonable steps in
accordance with industry standards to secure the material IT Systems from
unauthorized access or use by any Person, and to enable the continued and
uninterrupted operation of the material IT Systems. To the Knowledge of Seller,
the material IT Systems do not contain any material errors or problems of a
material nature that materially disrupt the ordinary operations of such IT
Systems in the conduct of the Subject Companies' respective businesses and the
FG Transferred Business as currently conducted.
4.17 Environmental Matters. Except as disclosed in Section
4.17 of the Seller Disclosure Schedule or as would not reasonably be expected to
have a Material Adverse Effect:
(a) the Subject Companies and FG (with respect to the FG
Transferred Business only) are in compliance with all Environmental Laws;
(b) none of the Subject Companies or FG (with respect to the
FG Transferred Business only) has received any Environmental Claim nor, to the
Knowledge of Seller, is there any threatened Environmental Claim; and
(c) Hazardous Materials have not been "released" (within the
meaning under 42 U.S.C. Section 9601(22)) by any of the Subject Companies and FG
(with respect to the FG Transferred Business only) in violation of any
Environmental Laws.
4.18 Brokers. No broker, investment banker, financial advisor
or other Person, other than Xxxxxx Brothers Inc., the fees and expenses of which
will be paid by Seller Parent, is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
Seller.
4.19 Non-Competition and Non-Solicitation Agreements. Except
as described in Section 4.19 of the Seller Disclosure Schedule, none of the
Subject Companies is subject to (i) any exclusive contractual arrangements with
vendors or (ii) except for the obligations referred to in Section 6.15, any
contractual prohibition or restriction on its ability to own, manage or operate
any business, or solicit any current, former or potential customers, borrowers,
lessees, or policy holders that will, in either case, be binding on Purchaser or
its affiliates (including the Subject Companies) after Closing. The consummation
of the transactions contemplated by this Agreement will not, pursuant to the
terms of any Contract to which any Subject Company is a party or which
constitutes an FG Assumed Liability, impose any restriction on the ability of
25
Purchaser or its affiliates (including any Subject Company) or the FG
Transferred Business to solicit customers.
4.20 Insurance. The insurance policies maintained by each
Subject Company and FG (with respect to the FG Transferred Business only) on its
assets, operations and personnel are of the kinds, covering such risks and in
such amounts and with such deductibles and exclusions as are consistent in all
material respects with the past business practices of each Subject Company and
FG (with respect to the FG Transferred Business only). Except as set forth in
Section 4.20 of the Seller Disclosure Schedule, as of the date of this
Agreement, no Subject Company has received any notice of cancellation or
termination with respect to any material insurance policy.
4.21 Guarantees. Except as set forth in Section 4.21 of the
Seller Disclosure Schedule, no Subject Company is directly or indirectly
obligated to guarantee any debt for borrowed money of any Person (other than
another Subject Company).
4.22 Receivables. (a) To the Knowledge of Seller, the forms of
documentation used by the Subject Companies and the FG Transferred Business to
originate Receivables were used in connection with the origination of all
Receivables.
(b) To the Knowledge of Seller and except as would not be
reasonably expected to have a Material Adverse Effect, each outstanding
Receivable of the Subject Companies and the FG Transferred Business (i) is
evidenced by notes, agreements or other evidences of indebtedness which are
true, genuine and what they purport to be, (ii) in the case of secured
Receivables, has been secured by valid and perfected Liens in favor of a Subject
Company as the secured party and (iii) is the legal, valid and binding
obligation of the obligor named therein, enforceable in accordance with its
terms, except as may be affected by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally and general equitable principles. All
Receivables originated by the Subject Companies and FG (with respect to the FG
Transferred Business only) since January 1, 2001, and all Receivables purchased
by the Subject Companies and FG (with respect to the FG Transferred Business
only) since January 1, 2001 were originated or purchased, and have been serviced
since that date, in all material respects, in accordance with the applicable
credit and collection policies of the Subject Companies' respective businesses
and the FG Transferred Business. To the Knowledge of Seller, all extensions and
deferments of scheduled payments have been granted and administered, in all
material respects, in accordance with the applicable credit and collection
policies of the Subject Companies and the FG Transferred Business.
(c) The Receivables "tape" set forth in Section 4.22(c) of the
Seller Disclosure Schedule (the "September Tape") reflects the Receivables of
the Subject Companies' respective businesses and the FG Transferred Business in
all material respects as of September 30, 2003. To the Knowledge of Seller, (i)
no default, breach, violation or event permitting acceleration under the terms
of any Receivable (other than as reflected on the September Tape) had occurred
as of the date thereof, (ii) no continuing condition (other than as reflected on
the September Tape) that with notice or the lapse of time would constitute a
default, breach, violation or event permitting acceleration under the terms of
such Receivable had arisen as of such date, and (iii) except to the extent
consistent with the credit and collection policies of the Subject Companies
26
and FG (with respect to the FG Transferred Business only), none of the Subject
Companies or FG, as the case may be, has waived any of the foregoing.
4.23 No Regulatory Impediment. Neither Seller Parent nor
Seller is aware of any fact relating to its business, operations, financial
condition or legal status that might reasonably be expected to impair in any
material respect its ability to obtain all consents, orders, authorizations, and
approvals from Governmental Authorities necessary for the consummation of the
transactions contemplated hereby within the time period contemplated by Section
9.1(d).
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller that:
5.1 Organization. Purchaser is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation.
5.2 Authority Relative to Agreement. Purchaser has the
corporate power and authority to execute and deliver this Agreement and the
Transition Services Agreement, to perform its obligations hereunder and
thereunder and to consummate the transactions contemplated hereby and thereby.
The execution and delivery by Purchaser of this Agreement and the Transition
Services Agreement, the performance of its obligations hereunder and thereunder
and the consummation by Purchaser of the transactions contemplated hereby and
thereby have been duly authorized by all necessary corporate action. This
Agreement has been, and upon its execution and delivery the Transition Services
Agreement shall have been, duly and validly executed and delivered by Purchaser
and, assuming the due authorization, execution and delivery by Seller and Seller
Parent, this Agreement constitutes, and upon its execution and delivery, the
Transition Services Agreement shall constitute a legal and binding obligation of
Purchaser, enforceable against Purchaser in accordance with their respective
terms, except as may be affected by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally or general equitable principles.
5.3 Non-Contravention. The execution and delivery of this
Agreement and the Transition Services Agreement by Purchaser do not, and the
consummation by Purchaser of the transactions contemplated hereby and thereby
and the performance by Purchaser of the obligations which it is obligated to
perform hereunder and thereunder will not: (a) violate any provision of the
certificate of incorporation or by-laws of Purchaser; or (b) assuming that all
consents, authorizations, orders or approvals of, filings or registrations with,
and notices to, each Governmental Authority referred to in Section 5.4(a) and
all Third Party Consents referred to in Section 5.4(b) have been obtained or
made, (i) violate any Applicable Law to which Purchaser is subject or (ii)
violate, result in the termination or the acceleration of, or conflict with or
constitute a default under, any Contract to which Purchaser is a party or by
which any of its property is bound, except, in the case of clauses (i) and (ii),
for any such violation, termination, acceleration, conflict or default as would
not prohibit or materially impair Purchaser's ability to
27
consummate the transactions contemplated hereby and by the Transition Services
Agreement or perform its obligations hereunder and thereunder on a timely basis.
5.4 Consents, etc. (a) Except for the filing of applications
and notices with and receipt of approvals, licenses or consents from applicable
state regulatory authorities governing consumer finance, mortgage lending and
insurance in the various states in which the Subject Companies and FG (with
respect to the FG Transferred Business only) operate their respective
businesses, the filing of notice under the HSR Act, and the expiration or early
termination of the applicable waiting period, no Governmental Approval and (b)
no Third Party Consents with respect to any Contract to which Purchaser is a
party or by which any of its property is bound is required for the execution and
delivery of this Agreement or the Transition Services Agreement by Purchaser,
the performance of its obligations hereunder and thereunder and the consummation
by Purchaser of the transactions contemplated hereby and thereby, except in any
such case for any such Governmental Approval or Third Party Consent, the failure
of which to be obtained or made would not prohibit or materially impair
Purchaser's ability to consummate of the transactions contemplated hereby and
thereby or perform its obligations hereunder and thereunder on a timely basis.
5.5 Brokers. No broker, investment banker, financial advisor
or other Person is entitled to any broker's, finder's, financial advisor's or
other similar fee or commission in connection with the transactions contemplated
by this Agreement based upon arrangements made by or on behalf of Purchaser.
5.6 Available Funds. Purchaser has available to it all funds
necessary to satisfy all of its obligations hereunder and in connection with the
transactions contemplated hereby, including the obligation to purchase the Stock
and the FG Transferred Assets and to assume the FG Assumed Liabilities pursuant
to this Agreement on the terms and conditions set forth herein, and its ability
to consummate such transactions is not dependent or conditional upon the receipt
of financing (whether debt or equity) from any Third Party (including any
affiliate).
5.7 Investment Intent. Purchaser is acquiring the Stock for
its own account, for investment purposes only and not with a view to, or for
resale in connection with, the distribution thereof. Purchaser understands that
the Stock may not be sold, transferred or otherwise disposed of without
registration under the Securities Act, except pursuant to an exemption from such
registration available under the Securities Act.
5.8 No Regulatory Impediment. Purchaser is not aware of any
fact relating to its business, operations, financial condition or legal status
that might reasonably be expected to impair in any material respect its ability
to obtain all consents, orders, authorizations, and approvals from Governmental
Authorities necessary for the consummation of the transactions contemplated
hereby within the time period contemplated by Section 9.1(d).
ARTICLE VI
COVENANTS
6.1 Conduct of Business. During the period from the date
hereof to the Closing Date, without the prior written consent of Purchaser
(which shall not be unreasonably withheld
28
or delayed) or except as permitted or contemplated by this Agreement (including,
without limitation, Section 6.7 hereof), Seller Parent and Seller agree that:
(a) the FG Transferred Business and the respective businesses
of the Subject Companies will be operated in all material respects in
the ordinary course consistent with past practice;
(b) no amendment shall be made in the certificate of
incorporation, by-laws or other organizational documents of any Subject
Company, other than to the extent contemplated by Section 6.8;
(c) no Subject Company shall issue or agree to issue any
shares of its capital stock or securities convertible into or
exchangeable or exercisable for such capital stock (other than
issuances of capital stock or rights with respect thereto to another
Subject Company);
(d) no change shall be made by any Subject Company or FG (with
respect to the FG Transferred Business only) in its accounting methods,
principles or practices, except as required by GAAP, Applicable Law or
official interpretations thereof;
(e) no Subject Company or FG (with respect to the FG
Transferred Business) shall write down or write up (or fail to write
down or write up in accordance with the same principles, practices and
policies of the Subject Companies and, with respect to the FG
Transferred Business, FG, as those used in preparing the financial
statements contained in the Company Reports and the Statement of
Reference Date Receivables) the value of any Receivables, or revalue
any of the assets of the Subject Companies or any of the FG Transferred
Assets other than in the ordinary course of business consistent with
past practice and in accordance with GAAP;
(f) none of Seller Parent or Seller, with respect to the
Subject Companies or the FG Transferred Business, or the Subject
Companies or FG (with respect to the FG Transferred Business only)
shall engage, either directly or indirectly, in any rate swap
transaction, basis swap, forward rate transaction, commodity swap,
commodity option, equity or equity index swap, equity or equity index
option, bond option, interest rate option, foreign exchange
transaction, cap transaction, floor transaction, collar transaction,
currency swap transaction, cross-currency rate swap transaction,
currency option or any other similar transaction (including any option
with respect to any of these transactions);
(g) none of the Subject Companies or FG (with respect to the
FG Transferred Business only) shall enter into, amend, terminate or
otherwise modify any Material Contract;
(h) none of the Subject Companies or FG (with respect to the
FG Transferred Business only) shall transfer or otherwise dispose of,
encumber or securitize any of its properties or assets (but, with
respect to FG, only the FG Transferred Assets), including any of the
Receivables, other than (A) transfers in the ordinary course of
business of any properties or assets which are not material to the
Subject Companies and FG (with
29
respect to the FG Transferred Business only), taken as a whole and (B)
transfers to a Subject Company;
(i) each of Seller Parent, Seller and the Company shall ensure
(A) that the maturity dates of any securities issued pursuant to the
Company Credit Agreement and the Company's commercial paper programs
are not later than two Business Days following the Closing Date to
minimize pre-payment fees that might be incurred with respect to such
securities and (B) that any borrowings made by any Subject Company or
FG (with respect to the FG Business only) within the two-day period
preceding the Closing Date are made pursuant to the intercompany
arrangements in place with Seller;
(j) none of the Subject Companies or FG (with respect to the
FG Transferred Business only) shall cancel any debts or waive or
compromise any claims or rights which are material to the Subject
Companies and FG (with respect to the FG Transferred Business only),
taken as a whole;
(k) none of the Subject Companies or FG (with respect to the
FG Transferred Business only) shall make or commit to make any capital
expenditures, other than in the ordinary course of business;
(l) none of the Subject Companies or FG (with respect to the
employees of FG in the FG Transferred Business only) shall (A) grant
any increase in the compensation of directors, officers or employees,
except for regularly scheduled increases in base salary or hourly
wages, as the case may be, in the ordinary course of business or as
required by any employment or other benefit plan, policy, arrangement
or agreement or any bonus plan or commitment in effect on the date of
this Agreement, or (B) establish, adopt, enter into or amend, or
increase the benefits under, any employee benefit plan, program or
arrangement;
(m) none of the Subject Companies or FG (with respect to the
FG Assumed Liabilities only) shall incur, assume or guarantee long-term
indebtedness for borrowed money;
(n) none of the Subject Companies or FG (with respect to the
FG Transferred Business only) shall merge or consolidate with or,
except as a result of foreclosure or repossession in the ordinary
course of business, acquire substantially all of the assets or equity
securities of, any other entity;
(o) none of the Subject Companies shall declare, set aside,
make or pay any dividend or other distribution (whether in cash,
securities or other property) on or in respect of its capital stock, or
repurchase, redeem or otherwise reacquire any of its capital stock,
other than any dividends or other distributions on any capital stock of
any Subject Company paid or made solely to another Subject Company, any
repurchase, redemption or reacquisition of any capital stock of any
Subject Company held by another Subject Company or as contemplated by
the Reorganization or Section 6.1(o) of the Seller Disclosure Schedule;
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(p) none of Seller Parent, Seller, the Subject Companies or FG
(with respect to the FG Transferred Business or the FG Transferred
Assets) shall take any action with respect to any non-income tax matter
that is inconsistent with past practice;
(q) none of Seller Parent, Seller, the Subject Companies or FG
shall change in any material respects the Subject Companies' and the FG
Transferred Business's policies with respect to the extension of
credit, the application of payments, servicing collection, risk
management or other similar policies, except as required by Applicable
Law;
(r) none of the Subject Companies or FG (with respect to the
FG Transferred Business only) will enter into any material insurance
transaction, other than in the ordinary course of business consistent
with past practice;
(s) none of the Subject Companies or FG (with respect to the
FG Transferred Business only) will file any application to relocate or
terminate the operations of any of their respective branches or
offices;
(t) none of the Subject Companies or FG (with respect to the
FG Transferred Business only) shall restructure or materially change
its investment securities portfolio or its gap position, through
purchases, sales or otherwise or the manner in which the portfolio is
classified or reported;
(u) each Subject Company and FG (with respect to the FG
Transferred Business only) shall continue to carry on its business in
the ordinary course and shall use its reasonable best efforts to (i)
preserve its respective business organization and goodwill intact, and
preserve and maintain its licenses, (ii) keep available the services of
its current officers and key employees and (iii) maintain satisfactory
relationships with licensors, licensees, suppliers, contractors,
distributors, customers and others having significant relations with
the Subject Companies;
(v) Seller and Seller Parent shall use commercially reasonable
efforts to maintain insurance covering the assets of the Subject
Companies and the FG Transferred Business at substantially the levels
in effect on the date of this Agreement;
(w) no Subject Company shall (i) extend, issue or offer
pre-approved credit, teaser rates or live checks, except in the
ordinary course of business consistent with past practice, or (ii)
introduce any material new line of products;
(x) no Subject Company shall make or agree to make any
material charitable contribution in the aggregate in excess of
$100,000;
(y) no Subject Company shall communicate in writing with any
borrower regarding the transactions contemplated by this Agreement
without the prior written consent of Purchaser (such consent not to be
unreasonably withheld or delayed) or pursuant to the communications
plan agreed upon by Purchaser and Seller Parent prior to the date of
this Agreement;
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(z) no Subject Company shall amend or cancel or agree to amend
or cancel any reinsurance agreement, treaty or arrangement;
(aa) no Subject Company shall make any material change in the
Subject Companies' policies relating to underwriting standards or
pricing of loans; and
(bb) none of the Subject Companies or FG shall agree, whether
in writing or otherwise, to take any of the actions prohibited pursuant
to subsections (a) through (aa) above.
6.2 Access; Confidentiality. Seller and Seller Parent agree to
permit Purchaser and its accountants, counsel and other authorized
representatives to have, during the period from the date of this Agreement to
the Closing Date, access to the premises, books and records, and authorized
representatives of each Subject Company and FG that relate to its business (but,
with respect to FG, only the FG Transferred Business) upon reasonable advance
notice during normal business hours, provided that such access does not
interfere with the normal operations of the Subject Companies and FG. Seller and
Seller Parent agree to cause the Subject Companies and FG to furnish Purchaser
with such financial and operational data and other information with respect to
their respective businesses and properties (but, with respect to FG, only the FG
Transferred Business) as Purchaser may from time to time reasonably request,
provided, however, that (i) the auditors and outside accountants of Seller,
Seller Parent, the Subject Companies and FG shall not be obligated to make work
papers available to Purchaser unless Purchaser has signed a customary agreement
relating to access to such work papers in form and substance reasonably
acceptable to such auditors or accountants, as applicable, and (ii) none of
Seller, Seller Parent, the Subject Companies or FG shall be obligated to make
any information available to Purchaser that would, in the reasonable judgment of
Seller or Seller Parent, violate or jeopardize any applicable attorney-client or
other privilege or any applicable contractual confidentiality obligation.
Without limitation of the foregoing, Seller shall deliver to Purchaser, or make
available for printing by Purchaser, within ten (10) days after the date of this
Agreement, true and complete copies of each lease (as amended to date) pursuant
to which FG or any Subject Company leases real property. Any information
regarding any of the Subject Companies and FG heretofore or hereafter obtained
from Seller, Seller Parent, the Subject Companies, FG, their affiliates or their
respective representatives by Purchaser or its representatives shall be subject
to the terms of the Confidentiality Agreement, and such information shall be
held by Purchaser and its representatives in accordance with the terms of the
Confidentiality Agreement.
6.3 Reasonable Best Efforts; Taking of Necessary Action. (a)
Each of Seller, Seller Parent and Purchaser shall use its reasonable best
efforts to take or cause to be taken all action and promptly to do or cause to
be done all things necessary, proper or advisable to consummate and make
effective the transactions contemplated by this Agreement.
(b) Each of Seller, Seller Parent and Purchaser shall (i) as
soon as practicable after the date hereof, but in no event later than ten (10)
calendar days from the date hereof, (A) file such applications, notices,
registrations and requests as may be required or advisable to be filed by it
with any Governmental Authority in order to consummate the transactions
contemplated hereby, (B) use its reasonable best efforts to obtain all consents,
authorizations,
32
orders and approvals of all such Governmental Authorities referred to in the
preceding clause (A), and (C) use its reasonable best efforts to satisfy all
conditions, undertakings and requirements as may be necessary or appropriate to
obtain all such consents, authorizations, orders and approvals or as may be set
forth therein, (ii) furnish the other parties hereto with copies of all
documents (except documents or portions thereof for which confidential treatment
has been requested or given) and correspondence (A) prepared by or on behalf of
such party for submission to any Governmental Authority and (B) received by or
on behalf of such party from any Governmental Authority, in each case in
connection with the transactions contemplated hereby, and (iii) use its
reasonable best efforts to consult with and keep the other parties hereto
informed as to the status of such matters. Notwithstanding anything to the
contrary contained herein, Purchaser shall not be required pursuant to this
Section 6.3 to take any action that would reasonably be expected to result in a
Material Adverse Effect with respect to the Subject Companies and the FG
Transferred Business taken as a whole. To the extent that any application,
notice, registration or request so filed by any party contains any significant
information relating to the other parties hereto or any of the Subject Companies
and FG, prior to submitting such application, notice, registration or request to
any Governmental Authority, such party will permit the other parties to review
such information and will consider in good faith the suggestions of such other
parties with respect thereto.
(c) Each of Seller, Seller Parent and Purchaser shall use its
reasonable best efforts to cooperate diligently with the other parties hereto in
the preparation and filing of any applications, notices, registrations and
responses to requests for additional information from Governmental Authorities
in connection with the transactions contemplated by this Agreement, including
providing such information as may be reasonably necessary for inclusion in such
applications, notices, registrations and responses.
(d) To the extent that any Third Party Consent is required
under any Contract to which one of the Subject Companies or FG is a party for
the consummation of the transactions contemplated by this Agreement, Seller and
Seller Parent will use their reasonable best efforts to obtain such Third Party
Consent as soon as practicable following the date hereof and in any event on or
prior to the Closing Date. Upon the request of Seller, Purchaser will provide
reasonable assistance to Seller and Seller Parent in obtaining such Third Party
Consents, including providing such financial and other information as shall be
reasonably requested by the other parties to such Contracts. Notwithstanding the
foregoing, neither Seller or Seller Parent nor any of the Subject Companies and
FG shall have any obligation to pay any money or other consideration to any
Person or to initiate any claim or proceeding against any Person in order obtain
any such Third Party Consent. Purchaser shall remain obligated to consummate the
transactions contemplated by this Agreement, subject to the other terms and
conditions of this Agreement (including Section 3.1(c)), whether or not all such
Third Party Consents are obtained on or prior to the Closing Date.
(e) This Agreement shall not constitute an agreement to assign
or transfer any interest in (i) the C3 Lease or (ii) any Permit, Contract or
other arrangement or any claim, right or benefit arising thereunder or resulting
therefrom that constitutes an FG Transferred Asset or an FG Assumed Liability,
if an assignment or transfer or an attempt to make such an assignment or
transfer without a Third Party Consent or Governmental Approval would constitute
a breach or violation thereof or affect adversely the rights of Purchaser,
Seller, Seller Parent, the Subject
33
Companies or FG with respect thereto; and any assignment or transfer of the C3
Lease or any interest that constitutes an FG Transferred Asset or FG Assumed
Liability under any such Permit, Contract or other arrangement that requires a
Third Party Consent or Governmental Approval shall be made subject to such Third
Party Consent or Governmental Approval being obtained. If any such Third Party
Consent or Governmental Approval is not obtained on or prior to the Closing Date
(and no adequate substitute therefor or replacement thereof has been obtained),
the parties shall continue to use reasonable best efforts to obtain any such
Third Party Consent or Governmental Approval (or in lieu thereof agree with the
counterparty to replace any such Permit, Contract or other arrangement on
mutually agreeable terms) after the Closing Date until such time as such Third
Party Consent or Governmental Approval (or substitute or replacement in lieu
thereof) has been obtained, and until such time as such Third Party Consent or
Governmental Approval (or substitute or replacement in lieu thereof) is
obtained, Seller, Seller Parent and Purchaser shall, and shall cause their
respective Subsidiaries to, enter into alternative arrangements, the expense of
which shall be borne by Seller, until such time as such Third Party Consent or
Governmental Approval (or substitute or replacement in lieu thereof) has been
obtained so that Purchaser and the Subject Companies shall receive the benefits
and assume the obligations thereunder in accordance with this Agreement. Nothing
in this Section 6.3(e) shall relieve the parties of their respective obligations
under any other provision of this Agreement.
(f) Notwithstanding anything to the contrary contained herein,
prior to the Closing, Purchaser shall not attempt to directly or indirectly
solicit any customers of the Subject Companies in such a way as to induce such
customers to repay a loan from a Subject Company. Notwithstanding the foregoing,
Purchaser and its affiliates shall be permitted to (i) engage in advertising,
solicitation and marketing campaign programs and efforts in its ordinary course
of business not primarily directed or targeted at Subject Company customers,
including from lists generated independently, and (ii) respond to unsolicited
inquiries of such customers.
6.4 [RESERVED]
6.5 Insurance; Risk of Loss. (a) Effective as of the Closing
Date: (i) Seller Parent will terminate or cause its affiliates (other than the
Subject Companies) to terminate all coverage relating to the Subject Companies
and their respective businesses, assets and current or former directors,
officers and employees under the general corporate policies of insurance,
cancelable surety bonds and hold harmless agreements of Seller Parent or its
affiliates (other than the Subject Companies) for the benefit of the Subject
Companies (provided that no such termination of occurrence liability policies
shall be effected so as to prevent any Subject Company from recovering under
such policies for losses from events occurring prior to the Closing Date); and
(ii) Purchaser shall become solely responsible for all insurance coverage and
related risk of loss based on events occurring and, except as otherwise provided
in Section 6.5(b), claims made on and after the Closing Date with respect to the
Subject Companies and their respective businesses, assets and current or former
directors, officers and employees and the FG Transferred Business.
(b) Notwithstanding Section 6.5(a), to the extent that (i) any
insurance policies issued for the benefit of Seller Parent and its affiliates
("Seller's Insurance Policies") cover any loss, liability, claim, damage or
expense relating to the FG Transferred Business or to any of the Subject
Companies or their respective businesses, assets and current or former
directors, officers
34
and employees ("Subject Company Liabilities") relating to or arising out of
occurrences prior to the Closing Date and (ii) Seller's Insurance Policies
continue after the Closing to permit claims to be made thereunder with respect
to Subject Company Liabilities relating to or arising out of occurrences prior
to the Closing Date ("Subject Company Claims"), Seller Parent shall, at
Purchaser's election, cooperate and cause its affiliates to cooperate with
Purchaser and the Company in submitting Subject Company Claims (or pursuing
Subject Company Claims previously made) on behalf of Purchaser or the Company
under Seller's Insurance Policies; provided that Seller Parent shall be under no
obligation to commence or maintain litigation to enforce any Subject Company
Claim and that Purchaser shall reimburse, indemnify and hold Seller Parent and
its affiliates harmless from all liabilities, costs and expenses (including all
present or future premiums and retroactive or prospective premium adjustments,
deductibles, self-insured retentions, legal and administrative costs, attorney's
fees, overhead and costs of compliance under Seller's Insurance Policies) of any
nature actually incurred by Seller or its affiliates as a result of Subject
Company Claims made under Seller's Insurance Policies. Upon the incurrence or
accrual of any such liability, cost or expense relating to Subject Company
Claims made, at Purchaser's election, under Seller's Insurance Policies and upon
receipt from Seller Parent of a statement of the amount of such liabilities,
costs and expenses in reasonable detail, from time to time, Purchaser shall make
payment promptly to Seller Parent or its affiliates of the amount indicated in
such statement.
(c) To the extent that, after the Closing Date, Purchaser or
Seller Parent requires any information regarding claim data, payroll or other
information in order to make filings with insurance carriers or self-insurance
regulators, Seller Parent shall promptly supply such information to Purchaser
and Purchaser shall promptly supply such information to Seller Parent.
6.6 [RESERVED].
6.7 Reorganization. At or prior to the Closing, Seller and
Seller Parent shall take, or shall cause the Company or its Subsidiaries to
take, each of the following actions (collectively, the "Reorganization"):
(a) The Company (or its applicable Subsidiaries) shall
dividend and transfer to Seller (or its designee) all of the
outstanding shares of capital stock of the Excluded Subsidiaries then
owned by the Company (or its applicable Subsidiaries).
(b) Seller and its affiliates (other than the Subject
Companies), on the one hand, and each of the Subject Companies, on the
other hand, shall cancel and terminate (for no consideration) all
indebtedness between them other than any amounts owed under the Tax
Sharing Agreement dated as of August 31, 1999 among Seller Parent, the
Subject Companies and others (the "Tax Sharing Agreement") for all
taxable years ending prior to the Closing Date and for the taxable year
including the Closing Date, calculated as if the year ended on the
Closing Date and as if the Tax Sharing Agreement applied to the year so
ended, excluding any gain or loss related to the transactions
contemplated by this Agreement. Such cancellation and termination shall
be deemed a capital contribution by Seller to the applicable Subject
Company in the amount of such canceled indebtedness.
35
(c) Seller shall provide or cause the Company to be provided
with sufficient funds for the Subject Companies to repay, and shall
cause the Subject Companies to repay, all Company Specified Debt
outstanding immediately prior to the Closing (other than intercompany
indebtedness canceled or terminated pursuant to Section 6.7(b)). The
funds received by the Subject Companies pursuant to the foregoing
sentence shall be deemed a capital contribution by Seller to the
applicable Subject Company in the amount of such funds.
(d) Seller shall cause the Company Credit Agreement to be
terminated or, at Seller's sole discretion, amended to provide that no
Subject Company shall have any rights or obligations with respect
thereto, effective as of the Closing.
(e) Prior to the Closing, Seller Parent and Seller shall cause
the Subject Companies and FG (with respect to the FG Transferred Assets
only) to run through the Lexis-Nexis Xxxxx Database (the "Xxxxx
Database") all of their respective Receivables related to a personal
loan (unless a Subject Company or FG has a security interest with
respect to such loan in the obligor's automobile) or a sales finance
loan, on which payments to be made by the obligor under such loans are
thirty days or more past due (collectively, the "Past Due
Receivables"). Prior to the Closing, Seller Parent and Seller shall
cause the Subject Companies and FG (with respect to the FG Transferred
Assets only) to charge-off each such Past Due Receivable if the obligor
under such Past Due Receivable is identified as bankrupt in the Xxxxx
Database (such charged-off Past Due Receivables being collectively
referred to herein as the "Charged-Off Receivables").
(f) Prior to the Closing, Seller shall cause the Company's
provision for loan losses to be maintained consistent with past
practice and in no event shall the Company's aggregate reserve for loan
losses, as of the Closing, be less than the corresponding amount on the
Company's balance sheet as of September 30, 2003 contained in the
Company Reports filed prior to the date hereof.
(g) Seller shall cause (i) all accrued but unused vacation
time to which any employee of the Subject Companies and any employee of
FG in the FG Transferred Business is entitled pursuant to the Vacation
Policy, (ii) the Variable Plan Payments, (iii) all other bonus,
incentive and performance compensation payments or awards under the
Benefit Plans with respect to employees of the Subject Companies and
employees of FG in the FG Transferred Business and (iv) all operational
liabilities of the Subject Companies and the FG Transferred Business to
be fully accrued on the Company's books and records as of the Closing.
6.8 Seller Name and Xxxx. (a) As promptly as practicable (and
in any event within 150 days) after the Closing Date, Purchaser shall, at its
own expense, cause the Subject Companies to (i) cease the use of the names
"Washington Mutual", "Washington Mutual Finance", "WAMU", "WAMU Finance" and any
confusingly similar derivative thereof (including, without limitation, the use
of any product name containing any such derivative) (the "WAMU Names"), (ii)
cease the use of any other name, designation or symbol which consists of or
includes any trade name, trademark, service xxxx, URL, domain name or other
source identifier that both (x) is owned or used by Seller Parent or any of its
affiliates (including the
36
Subject Companies) prior to the Closing Date and (y) contains, incorporates or
is associated with any WAMU Name (the "WAMU Marks") and (iii) eliminate the use
of any other designation indicating affiliation with Seller Parent or any of its
affiliates (including in the corporate name of each Subject Company); provided,
however, that the Company shall continue to own all rights to, and the Subject
Companies shall continue to have the right to use, the name "Aristar", "Aristar
Mortgage", "xxx.xxxxxxxxxxxxxxx.xxx" and "Blazer" (the "Excluded Names") from
and after the Closing Date. As promptly as practicable (and in any event within
150 days) after the Closing Date, Purchaser, at its own expense, shall cause the
Subject Companies to change all names on all signage and all stationery,
contracts, and other business forms and documents to names which do not use any,
and are not confusingly similar to any, WAMU Name or WAMU Xxxx (but expressly
excluding the Excluded Names). Notwithstanding anything else set forth in this
Section 6.8(a), nothing shall in any way restrict or limit the right of
Purchaser and the Subject Companies after the Closing Date to use any trade
name, trademark, service xxxx, URL, domain name or other source identifier
containing, incorporating or associated with the name "CITI" and any and all
variations and acronyms thereof (the "CITI Names and Marks"); provided, however,
that Purchaser shall not use any CITI Names and Marks in combination or
connection with any WAMU Name or WAMU Xxxx.
(b) Upon Seller Parent's request therefor, Purchaser will
provide Seller Parent with a certificate signed on behalf of Purchaser by an
appropriate officer thereof to the effect that the provisions of Section 6.8(a)
have been complied with in all material respects.
(c) Purchaser acknowledges that a breach of its obligations
under Section 6.8(a) would cause Seller Parent and its affiliates irreparable
injury and that damages would be inadequate, and that therefore Seller Parent
shall have the right to an injunction or other equitable relief in any court of
competent jurisdiction enjoining such breach. The existence and exercise of this
right shall not preclude any other rights and remedies Seller Parent may have at
law or in equity or otherwise.
6.9 Post-Closing Cooperation and Retention of Records. (a)
Purchaser, Seller and Seller Parent agree that following the Closing, each party
and/or their independent auditors shall have reasonable access during normal
business hours to the books and records of the Subject Companies and their
predecessors and the FG Transferred Business (and of the other parties as they
relate to the Subject Companies and their predecessors and the FG Transferred
Business) applicable to the period prior to the Closing and shall have the
reasonable assistance and cooperation of appropriate personnel consistent with
assistance and cooperation furnished during the period prior to the Closing. In
addition, Purchaser shall make available to Seller Parent and its affiliates the
employees of the Subject Companies and the Affected Employees whose assistance,
expertise, testimony, notes, recollections or presence (including participation
as a witness in a deposition, hearing or trial) is necessary or appropriate to
assist Seller Parent and its affiliates in the defense or prosecution of any
legal action or proceeding or similar matter relating to the business of the
Subject Companies and the FG Transferred Business, as the case may be.
(b) Following the Closing, Purchaser shall, and shall cause
the Subject Companies to, (i) subject to the last sentence of this Section
6.9(b), preserve and keep (x) the records of the Subject Companies held by the
Subject Companies immediately prior to the
37
Closing relating to the business of the Subject Companies and (y) the records of
the FG Transferred Business transferred to Purchaser or its designee (in each
case including personnel records) for so long as and to the extent required by
Applicable Law (but in no event less than three years after the Closing Date)
and (ii) to the extent permitted by Applicable Law, make such records and
personnel available to Seller Parent and its affiliates, subject to customary
confidentiality commitments reasonable under the circumstances, as may be
reasonably required by any such party, including in connection with any
insurance claims by, legal proceedings against or investigations by any
Governmental Authority of, Seller Parent or any of its affiliates or for similar
matters or to enable Seller Parent to comply with its obligations under
Applicable Law and this Agreement or otherwise reasonably necessary for the
conduct of Seller Parent's business and operations. In the event Purchaser or
any of its affiliates wishes to destroy any such records after that time in
accordance with its normal document retention policy, then Purchaser shall (or
shall cause such affiliate to) give 30 days' prior written notice to Seller
Parent and (to the extent permitted by Applicable Law) Seller Parent shall have
the right at its option and expense, upon prior written notice given within such
30-day period, to take possession of the records within sixty days after the
date such notice is given.
6.10 Public Announcements. Upon execution and delivery of this
Agreement, the parties shall jointly issue a press release in the form approved
by the parties prior to the date hereof. Except for such press release, prior to
the Closing Date, no news release or other public announcement pertaining to the
transactions contemplated by this Agreement shall be made by or on behalf of any
party hereto without the prior approval of the other parties, unless otherwise
required by Applicable Law, in which case the party making such public
announcement or disclosure shall give prior written notice to the other parties.
6.11 Transition Services. On or prior to the Closing, Seller
Parent, Seller and Purchaser shall execute a transition services agreement
containing terms agreed to by Seller Parent and Purchaser (the "Transition
Services Agreement"), effective as of the Closing, pursuant to which Seller
Parent and Seller shall, for a period not to exceed four months, provide the
Subject Companies those services currently provided by them to the Subject
Companies as Seller Parent, Seller and Purchaser may agree to in writing.
Purchaser shall cause the Subject Companies to pay Seller and Seller Parent for
all such services at rates and prices that are consistent with the intercompany
pricing policies of Seller Parent and its affiliates.
6.12 Non-Compete; Non Solicitation. (a) Seller and Seller
Parent agree, on behalf of themselves and their affiliates, that none of Seller,
Seller Parent or any affiliate of Seller or Seller Parent shall for a period of
three years following the Closing Date: (i) directly solicit or market to any of
the obligors under the receivables acquired by Purchaser, any mortgage loan,
home equity loan, auto loan, credit card, tax refund anticipation loan,
unsecured loan or line of credit; (ii) establish a "consumer finance branch
network" (as defined below), (iii) solicit the Affected Employees while they are
employed by Purchaser or any Subject Company for employment, other than through
advertising and other recruitment efforts directed to the public generally; (iv)
sell, assign or otherwise transfer any nonpublic information with respect to the
Subject Companies or FG Transferred Business (including personally identifiable
customer information) or Affected Employees to any other Person (other than to a
Governmental Authority pursuant to a requirement of Applicable Law); or (v) use
any list or record of customers or borrowers from the Subject Companies to
attempt to directly solicit any customers
38
of the Subject Companies in such a way as to induce such customers to repay a
loan from a Subject Company. Notwithstanding the foregoing, Seller, Seller
Parent and their affiliates shall be permitted to (x) engage in advertising,
solicitation and marketing campaign programs and efforts in its ordinary course
of business not primarily directed or targeted at Subject Company customers,
including solicitations of any individuals or groups (including Persons that are
Subject Company customers) based on lists generated independently, and (y)
respond to unsolicited inquiries of such customers. For purposes of this Section
6.12, the term "consumer finance branch network" means a company or group of
companies that (1) consists of at least 25 state licensed consumer lending
branches the exclusive business of each of which is to originate and service
subprime unsecured consumer loans, subprime home equity loans and consumer
retail installment contracts and (2) operates in at least 10 states; it being
understood that the branches comprising a "consumer finance branch network"
shall not include bank branches, bank loan production offices or separately
licensed providers of first mortgage loans.
(b) Notwithstanding the provisions of Section 6.12(a)(ii),
nothing contained herein shall be construed as precluding Seller Parent or its
affiliates from acquiring, merging or otherwise combining with, or being
acquired by, any Person, notwithstanding that such Person or its affiliates
(including Seller Parent and its affiliates after such acquisition, merger or
combination) operates, directly or indirectly, a consumer finance branch
network; provided, however, that Seller Parent and its affiliates shall not,
during the three-year period referred to in Section 6.12(a), acquire, merge or
combine with, or be acquired by, any Person that is "primarily engaged" in the
business of operating a consumer finance branch network. For purposes of this
Section 6.12(b), a Person shall be "primarily engaged" in operating a consumer
finance branch network if more than 50% of the consolidated gross revenues of
such Person for each of the last two fiscal years shall have been generated from
the operation of a consumer finance branch network.
6.13 No Shop. (a) Upon and after execution of this Agreement,
and until the earlier of the Closing or termination of this Agreement in
accordance with its terms, neither Seller nor Seller Parent will, directly or
indirectly, solicit, or cause any of its affiliates or representatives to
solicit, any offer to acquire the Subject Companies or the FG Transferred
Business (whether by merger, purchase of assets or other similar transaction),
other than the acquisition and assumption contemplated by this Agreement. Except
as contemplated by this Agreement, neither Seller nor Seller Parent will,
directly or indirectly, furnish any non-public information concerning the
Subject Companies or the FG Transferred Business to any Person in connection
with a proposal or inquiry by such Person to acquire the Subject Companies or
the FG Transferred Business, in whole or in significant part, unless and until
this Agreement has been terminated in accordance with its terms.
(b) If Seller, Seller Parent or any of their affiliates
receives any unsolicited inquiry or proposal concerning the availability of the
Subject Companies or the FG Transferred Business for purchase, Seller Parent
agrees to inform promptly Purchaser of the substance of such inquiry or proposal
including the identity of the Person making such inquiry or proposal.
6.14 Further Assurances. Each party shall cooperate with the
others, and execute and deliver, or use its best efforts to cause to be executed
and delivered, all such other instruments, including instruments of conveyance,
assignment and transfer, and take all such
39
other actions as such party may reasonably be requested to take by the other
parties hereto from time to time, consistent with the terms of this Agreement,
in order to effectuate the provisions and purposes of this Agreement and the
transactions contemplated hereby.
6.15 First Community Industrial Bank. On and after the Closing
Date, Purchaser shall cause the Company and its affiliates to comply with the
applicable non-monetary post-closing obligations contained in any of Sections
6.2(b), 6.5, 6.6, 6.7(d)(iii), 6.8(d), 6.8(e) and 6.12 of the Agreement and Plan
of Merger among First State Bancorporation (Buyer), First State Bank of Taos,
the Company and First Community Industrial Bank.
ARTICLE VII
EMPLOYEE MATTERS
7.1 General. (a) Except as otherwise provided in this Article
VII, for the twelve-month period following the Closing Date, Purchaser shall, or
shall cause its affiliates to, provide each Affected Employee with (i) salary or
wages, as applicable, at least equal to those provided to such Affected Employee
immediately prior to the Closing Date and (ii) employee benefits that are no
less favorable in the aggregate than the employee benefits provided by Purchaser
to its similarly situated employees. Notwithstanding any provision hereof, none
of Purchaser, the Company or any of their respective affiliates will have any
obligation to continue the employment of any Affected Employee for any period
following the Closing Date.
(b) Purchaser and its affiliates shall give Affected Employees
full credit for all purposes, except for purposes of benefit accrual, under such
employee benefit plans or arrangements maintained by Purchaser or any of its
affiliates (including, without limitation, any welfare plan, pension plan,
vacation program or severance program) in which any such Affected Employees
participate for such Affected Employees' service with Seller, Seller Parent, any
of the Subject Companies, FG, any of their respective affiliates and/or any
predecessor entities to the same extent recognized by Seller, Seller Parent, FG
and/or any of the Subject Companies immediately prior to the Closing Date,
except to the extent such credit would result in an unintended duplication of
benefits.
(c) Purchaser shall, or shall cause its affiliates to, (i)
waive all limitations as to preexisting conditions, exclusions and waiting
periods with respect to participation and coverage requirements applicable to
the Affected Employees under any welfare benefit plans in which such Affected
Employees may be eligible to participate on or after the Closing Date and (ii)
provide each Affected Employee with credit for any co-payments and deductibles
paid prior to the Closing Date (other than preexisting conditions which were
excluded by any welfare benefit plans of the Seller Parent's Group in which the
Affected Employee participated) in satisfying any applicable deductible or
out-of-pocket requirements under any welfare plans in which any such Affected
Employee is eligible to participate on or after the Closing Date.
7.2 Offers of Employment. Promptly after the execution and
delivery of this Agreement and the announcement of the transactions contemplated
hereby, Purchaser shall, in writing, offer "at-will" employment (each an "Offer"
and, collectively, the "Offers"), commencing on the Closing Date, to all
employees who were employed by or on behalf of FG in
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connection with the FG Transferred Business immediately prior to Closing (other
than those employees who are on long-term disability leave). Such employees of
the FG Transferred Business shall have 5 Business Days to notify Purchaser of
their acceptance or rejection of such Offer. Purchaser shall then notify Seller
and Seller Parent of those employees of the FG Transferred Business who have
accepted the Offers. Those Persons who accept Purchaser's Offer and commence
working with Purchaser on the Closing Date shall be referred to as "FG
Employees".
7.3 Termination and Severance. If the employment of an
Affected Employee terminates (a) on or prior to the first anniversary of the
Closing Date, such Affected Employee shall be entitled to severance benefits
from Purchaser or its affiliates at least equal to the severance benefits that
would have been paid under the Washington Mutual Special Severance Plan,
effective October 1, 2003 (as set forth in Section 7.3(a) of the Seller
Disclosure Schedule) to such Affected Employee under the applicable termination
circumstances had the Affected Employee continued to participate in such Plan
after the Closing Date and (b) after the first anniversary of the Closing Date,
such Affected Employee shall be entitled to severance benefits, if provided
under the applicable termination circumstances, in accordance with the severance
policies of Purchaser, as in effect from time to time thereafter. For purposes
of subsection (a) of this Section 7.3, it is understood that if Purchaser or any
of its affiliates proposes to change an Affected Employee's work location and
such change results in an increase in the one-way commute from such Affected
Employee's primary residence to his or her worksite by 25 miles or more, such
Affected Employee shall be entitled to terminate his or her employment and
receive the severance benefits described above if such employee declines to make
such change. Seller or Seller Parent shall reimburse Purchaser and its
affiliates for the amounts set forth in Section 7.3(b) of the Seller Disclosure
Schedule.
7.4 Welfare Plans. Seller Parent shall retain responsibility
for and continue to pay all medical, life insurance, disability and other
welfare plan expenses and benefits for each Affected Employee with respect to
claims incurred by such Affected Employees or their covered dependents prior to
or on the Closing Date. Expenses and benefits with respect to claims incurred by
Affected Employees or their covered dependents after the Closing Date shall,
except as otherwise provided in the Transition Services Agreement, be the
responsibility of Purchaser and its affiliates. For purposes of this paragraph,
a claim is deemed incurred when the services that are the subject of the claim
are performed; in the case of life insurance, when the death occurs; in the case
of long-term disability benefits, when the disability occurs; and in the case of
a hospital stay, when the employee or covered dependent first enters the
hospital.
7.5 Variable Pay Plans. On the Closing Date or as soon as
practicable thereafter, Purchaser or its affiliates shall pay to each Affected
Employee who was a participant in one or more of the variable pay plans listed
in Section 7.5 of the Seller Disclosure Schedule (each, a "Variable Pay Plan")
an amount determined in accordance with the existing formulas and related terms
and conditions specified in the applicable Variable Pay Plans (collectively,
"Variable Plan Payments").
7.6 Accrued Vacation. With respect to any accrued but unused
vacation time to which any Affected Employee is entitled pursuant to the
vacation policy applicable to such Affected Employee immediately prior to the
Closing Date (the "Vacation Policy") (as set forth in
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Section 7.6 of the Seller Disclosure Schedule), Purchaser and its affiliates
shall allow such Affected Employee to use such accrued but unused vacation;
provided, however, that if Purchaser and its affiliates deem it necessary to
disallow such Affected Employee from taking such accrued but unused vacation,
Purchaser and its affiliates shall be liable for and pay in cash to such
Affected Employee an amount equal to such accrued but unused vacation time in
accordance with terms of the Vacation Policy; provided, further, that Purchaser
shall be liable for and pay in cash an amount equal to such accrued but unused
vacation time to any Affected Employee whose employment terminates for any
reason subsequent to the Closing Date.
7.7 Profit Sharing Contribution. For the 2003 fiscal year,
Seller Parent shall make a profit sharing contribution to the Retirement Savings
and Investment Plan on behalf of Affected Employees; provided that (a) the
Closing Date occurs on or after December 31, 2003 and (b) such Affected
Employees are employed by the Seller Parent or one of its affiliates on December
31, 2003. Seller Parent shall be solely responsible for all liabilities relating
to or arising from the contribution described in the preceding sentence.
7.8 WARN. Each of the Subject Companies and FG shall timely
give any and all notices and take any other actions required under WARN with
respect to the Affected Employees for periods on or prior to the Closing Date.
The Purchaser shall give any and all notices and take any other actions required
under WARN with respect to the Affected Employees for periods following the
Closing Date.
ARTICLE VIII
CONDITIONS TO THE CLOSING
8.1 Conditions to Obligations of Each Party. The respective
obligations of Purchaser, Seller and Seller Parent to consummate the
transactions contemplated by this Agreement are subject to the satisfaction at
or prior to the Closing Date of the following conditions:
(a) No Injunction. At the Closing Date, there shall be no (i)
injunction, restraining order or decree of any nature of any
Governmental Authority of competent jurisdiction in effect that
restrains or prohibits the purchase of the Stock or the FG Transferred
Assets or the assumption of the FG Assumed Liabilities hereunder or the
consummation of the other transactions contemplated hereby (including,
without limitation, any transaction constituting part of the
Reorganization) or (ii) pending action, suit or proceeding brought by
any Governmental Authority which seeks to restrain or prohibit the
purchase of the Stock hereunder or the consummation of the other
transactions contemplated hereby (including, without limitation, any
transaction constituting part of the Reorganization).
(b) Regulatory Authorizations. (i) All consents,
authorizations, orders or approvals of each Governmental Authority
specified in Section 8.1 of the Seller Disclosure Schedule shall have
been obtained and any applicable waiting periods in respect thereof
shall have expired or been terminated; and (ii) all Third Party
Consents specified in Section 4.4(b) of the Seller Disclosure Schedule
shall have been obtained,
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except for such Third Party Consents the failure of which to have been
obtained would not have a Material Adverse Effect.
(c) Reorganization. The Reorganization shall have been
completed.
8.2 Additional Conditions to the Obligations of Purchaser. The
obligation of Purchaser to consummate the transactions contemplated by this
Agreement is subject to the satisfaction at or prior to the Closing Date of each
of the following additional conditions:
(a) Representations and Warranties. The representations and
warranties of Seller and Seller Parent contained in Article IV of this
Agreement (which, for purposes of this Section 8.2(a) only, shall be
interpreted without giving effect to any limitation or qualification as
to "materially" or "Material Adverse Effect") shall be true and correct
as of the Closing Date as though made at and as of the Closing Date,
except to the extent that any representation and warranty is made as of
a specified date other than the Closing Date, in which case such
representation and warranty shall be true and correct as of such
specified date, and except, in each case, for such failures to be true
and correct that individually or in the aggregate would not reasonably
be expected to have a Material Adverse Effect.
(b) Performance of Covenants. Seller and Seller Parent shall
have performed in all material respects all obligations and agreements,
and complied in all material respects with all covenants and
conditions, contained in this Agreement to be performed or complied
with by them prior to or at the Closing Date.
(c) Certificate. Purchaser shall have received a certificate
of Seller and Seller Parent, dated the Closing Date, executed on behalf
of Seller and Seller Parent, to the effect that the conditions
specified in paragraphs (a) and (b) above have been fulfilled.
8.3 Additional Conditions to the Obligations of Seller and
Seller Parent. The obligation of Seller and Seller Parent to consummate the
transactions contemplated by this Agreement is subject to the satisfaction at or
prior to the Closing Date of each of the following additional conditions:
(a) Representations and Warranties. The representations and
warranties of Purchaser contained in Article V of this Agreement shall
be true and correct as of the Closing Date as though made at and as of
the Closing Date, except to the extent that any representation and
warranty is made as of a specified date other than the Closing Date, in
which case such representation and warranty shall be true and correct
as of such specified date, and except, in each case, for such failures
to be true and correct that individually or in the aggregate would not
reasonably be expected to prohibit or otherwise materially impair
Purchaser's ability to consummate the transactions contemplated hereby
or perform its obligations hereunder on a timely basis.
(b) Performance of Covenants. Purchaser shall have performed
in all material respects all obligations and agreements, and complied
in all material respects with all covenants and conditions, contained
in this Agreement to be performed or complied with by it prior to or at
the Closing Date.
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(c) Certificate. Seller and Seller Parent shall have received
a certificate of Purchaser, dated the Closing Date, executed on behalf
of Purchaser, to the effect that the conditions specified in paragraphs
(a) and (b) above have been fulfilled.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
9.1 Termination. This Agreement may be terminated and the
transactions contemplated hereby abandoned at any time prior to the Closing
Date:
(a) By mutual written consent of Seller and Purchaser;
(b) By either Seller or Purchaser upon written notice given to
the other in the event of a breach by such other party of any
representation or warranty or any breach or default by such other party
in the performance by such other party of any covenant or agreement
contained in this Agreement, in each case, which breach or default (i)
would constitute grounds, either individually or in the aggregate, for
the non-breaching party to elect not to consummate the transactions
contemplated hereby pursuant to Section 8.2(a), 8.2(b), 8.3(a) or
8.3(b), as applicable, and (ii) has not been, or by its terms cannot
be, cured within 30 days after written notice of such breach or
default, describing such breach or default in reasonable detail, is
given by the terminating party to the breaching or defaulting party;
(c) By either Seller or Purchaser upon written notice to the
other in the event that any Governmental Authority (including any court
of competent jurisdiction) the consent of which is necessary for the
consummation of the transactions contemplated hereby shall have issued
an order, decree or ruling or taken any other official action enjoining
or otherwise prohibiting the transactions contemplated by this
Agreement or denying approval of any application or notice for approval
to consummate such transactions, and such order, decree, ruling or
other action shall have become final and non-appealable; or
(d) By either Seller or Purchaser upon written notice given to
the other in the event that the Closing shall not have taken place on
or before March 31, 2004, provided that (i) the failure of the Closing
to occur on or before such date is not the result of a breach of any
covenant or agreement hereunder by the party seeking such termination
and (ii) for the avoidance of doubt, the failure of the Insurance
Subsidiary Purchase to be completed on or prior to such date shall not
give rise to a right to terminate this Agreement pursuant to this
clause (d).
9.2 Effect of Termination. In the event of the termination of
this Agreement as provided above, this Agreement (other than this Section) shall
become void and of no further force and effect, and there shall be no duties,
liabilities or obligations of any kind or nature whatsoever on the part of any
party hereto to the other parties based either upon this Agreement or the
transactions contemplated hereby, except that the obligations of the parties
referred to in the last sentence of Section 6.2 and in Section 12.6 shall
continue to apply following any such termination of this Agreement.
Notwithstanding the foregoing, the termination of this
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Agreement pursuant to Section 9.1(b), (c) or (d) shall not relieve Purchaser,
Seller or Seller Parent from liability for any fraudulent breach of its
representations or warranties or willful default in performance of any agreement
or covenant occurring prior to termination.
ARTICLE X
TAX MATTERS
10.1 Indemnification for Taxes. (a) From and after the Closing
Date, Seller Parent and the Seller Parent's Group (or any successor thereto)
shall be responsible for and shall indemnify and hold harmless Purchaser and its
affiliates (including each of the Subject Companies) from any and all (i) Taxes
imposed on any member of the Seller Parent's Group for any taxable year
including, but not limited to, Taxes arising solely as a result of Treasury
Regulation Section 1.1502-6(a) or any similar provision of state, local or
foreign law for Taxes of the Seller Parent's Group or for which any Subject
Company may be liable because of membership in any other affiliated,
consolidated, combined or unitary group at any time prior to the Closing, (ii)
Taxes imposed on the Subject Companies or for which the Subject Companies may
otherwise be liable for any taxable year that ends on or before the Closing Date
and, with respect to any taxable year beginning before and ending after the
Closing Date, the portion of such taxable year ending on (and including) the
Closing Date (such portion being referred to hereinafter as the "Interim
Period") (the Interim Period and any taxable year that ends on or before the
Closing Date being referred to collectively hereinafter as the "Pre-Closing
Period"); (iii) Taxes imposed on or payable by any Subject Company as a result
of the Reorganization under Section 6.7 or the Election(s) under Section 10.7;
(iv) Taxes imposed on or payable by any Subject Company as a result of a breach
by Seller Parent, Seller or any of their affiliates of any covenant contained in
this Article X (including with respect to the obligations of Seller Parent and
Seller to make any Election(s)); (v) Taxes imposed on or payable by the Subject
Companies for any Pre-Closing Period as a result of a breach of a representation
or warranty contained in Section 4.12 (other than section 4.12(b)); and (vi)
Taxes imposed on or payable by the Subject Companies as a result of a breach of
the representation contained in Section 4.12(b).
(b) From and after the Closing Date and except as otherwise
provided in this Agreement, Purchaser and each of the Subject Companies shall be
responsible for, and shall indemnify and hold harmless Seller Parent and Seller
Parent's Group (or any successor thereto) from, (i) any and all Taxes imposed on
the Subject Companies, Purchaser or Purchaser's Affiliated Group (or any
successor thereto) for any taxable year that begins after the Closing Date and,
with respect to any taxable year beginning before and ending after the Closing
Date, the portion of such taxable year commencing on the day after the Closing
Date, and (ii) any transfer of assets by the Subject Companies, other than in
the ordinary course of business, after the Closing on the Closing Date.
10.2 Apportionment of Taxes. In order to apportion any Taxes
relating to any taxable year that includes the Interim Period, the parties
hereto shall, to the extent permitted by Applicable Law, treat for all purposes
the Closing Date as the last day of the taxable year of the Subject Companies,
and such Interim Period shall be treated as a short taxable year and a
Pre-Closing Period for purposes of this Agreement. In any case where Applicable
Law does not permit the Subject Companies to treat the Closing Date as the last
day of the taxable year of the
45
Subject Companies, then, in the case of a Tax that is based on gross or net
income, Taxes will be apportioned for an Interim Period as if such Interim
Period were a short taxable year. All other Taxes that are attributable to a
taxable year that includes an Interim Period shall be apportioned to the period
to which they legally relate, or, if not capable of being so apportioned, shall
be apportioned based upon a fraction, the numerator of which is the number of
days in the Interim Period, and the denominator of which is the number of days
in such taxable year.
10.3 Tax Returns and Payment of Taxes. (a) Seller Parent or
Seller Parent's Group shall, to the extent permitted by Applicable Law, include
the Subject Companies in the consolidated federal income Tax Returns and any
combined, unitary or consolidated state and local Tax Returns filed by Seller
Parent for any Pre-Closing Period. With respect to state and local Tax Returns
required to be filed by the Subject Companies after the Closing Date for Tax
periods beginning before and ending after the Closing Date, Seller Parent or
Seller Parent's Group, or Purchaser or the Subject Companies, as the case may
be, shall cause the Subject Companies to, when permitted by Applicable Law,
elect to file a short-period Tax Return for the portion of such period which
ends on the Closing Date. Seller Parent or Seller Parent's Group shall prepare,
or cause to be prepared all such short-period Tax Returns.
(b) Except to the extent that an election has been made to
prepare a short-year Tax Return described in Section 10.3(a), Seller shall, or
shall cause the Subject Companies, to prepare, submit to Purchaser (at least
ninety days prior to the extended due date) for its review and approval, and
thereafter file all state and local Tax Returns required to be filed by the
Subject Companies after the Closing Date for all Interim Periods. All such
returns shall be prepared on a basis consistent with the returns filed by or on
behalf of the Subject Companies for the preceding Tax period.
(c) Purchaser shall, or shall cause the Subject Companies to,
prepare and file all Tax Returns (other than those referred to in Section
10.3(a) or Section 10.3(b)) required to be filed by the Subject Companies after
the Closing Date for all Tax periods beginning after the Closing Date.
(d) Notwithstanding anything in any other agreement to the
contrary, all liabilities and obligations between Seller Parent or any members
of the Seller Parent's Group on the one hand, and the Subject Companies on the
other hand, under any Tax allocation, Tax sharing, Tax reimbursement and similar
agreements and arrangements in effect prior to the Closing Date shall cease and
terminate as of the Closing Date and will no longer be enforceable.
10.4 Carrybacks. Purchaser agrees that it shall not cause or
permit any of the Subject Companies to carry back to any taxable period ending
on or before the Closing Date any net operating loss, loss from operations or
other Tax attribute that is attributable to a taxable period or portion thereof
beginning after the Closing Date. The Seller Parent and Seller shall have no
obligation under this Agreement to return or remit any such refund or other Tax
benefit attributable to a breach by any Purchaser of the foregoing undertaking.
10.5 Cooperation; Audits. In connection with the preparation
of Tax Returns and audit examinations by any governmental taxing authority or
administrative or judicial proceedings resulting therefrom relating to the
Subject Companies, Seller Parent, Purchaser and
46
the Subject Companies will cooperate fully with one another, including but not
limited to the furnishing or making available of records, personnel (as
reasonably required), books of account, powers of attorney or other materials
necessary or helpful for the preparation of returns, the conduct of audit
examinations or the defense of claims by taxing authorities as to the imposition
of Taxes. Purchaser shall be entitled to copies of any Tax Returns (or portions
thereof) and related work papers to the extent that they relate to the Subject
Companies. After the Closing Date, Seller Parent shall control the conduct of
all stages of any audit or other administrative or judicial proceeding with
respect to Taxes for which it has an indemnification obligation under Section
10.1 (other than with respect to a taxable year that includes an Interim Period
as set forth below), and Purchaser shall control the conduct of all other audits
or other administrative or judicial proceedings with respect to the Tax
liability of the Subject Companies; provided, however, that if with respect to
any such audit or other proceeding which is controlled by Purchaser any Tax
adjustment is proposed which would be for the account of Seller Parent pursuant
to this Article X, Purchaser (x) shall give prompt notice to Seller Parent of
such proposed adjustment, (y) shall afford Seller Parent and its counsel a
reasonable opportunity to participate in such proceeding including, without
limitation, the right to participate in conferences with Tax authorities and to
submit pertinent material in support of Seller Parent's position and (z) shall
not, and shall not permit the Subject Companies to, accept such proposed
adjustment or enter into any settlement or agreement which would be for Seller
Parent's account under this Article X without Seller Parent's written consent.
In the case of any taxable year that includes an Interim Period, the controlling
party shall be whichever of Purchaser or Seller Parent would bear the greater
Tax liability with respect to such Tax proceeding if the Tax authority was
successful in such Tax proceeding; provided, however, that neither party shall
settle such Tax proceeding without the prior written consent of the other party,
which consent shall not be unreasonably withheld. Notwithstanding any other
provision of this Agreement to the contrary, neither Seller Parent nor any
affiliate thereof shall be entitled to participate in any Tax proceeding with
respect to any consolidated, combined, affiliated or unitary Tax Return which
includes Purchaser or any affiliate thereof (including any Subject Company), and
neither Seller Parent nor any affiliate thereof shall be entitled to any
information regarding or copy of any such Tax Return (or portion thereof),
except, in either case, to the extent that such Tax proceeding or Tax Return (or
portion thereof) relates to the applicable Subject Company or relates to a Tax
adjustment which is for the account of Seller.
10.6 Transfer Taxes. (a) Except as set forth in Section
10.6(b) below, all transfer, documentary, sales, use, stamp, registration,
valued added, real property transfer Taxes and other such Taxes, and all
conveyance fees, recording charges and other fees and charges, and any penalties
and interest associated with such Taxes, fees and charges (collectively,
"Conveyance Taxes"), incurred in connection with this Agreement or the
transactions contemplated hereby, shall be borne equally by Purchaser, on the
one hand, and Seller and Seller Parent, on the other hand, when due, and the
parties will file all necessary Tax Returns and other documentation with respect
to all such Taxes, fees and charges, and, if required by Applicable Law, the
parties will, and will cause their affiliates to, join in the execution of any
such Tax Returns and other documentation.
(b) Notwithstanding any other provision of this Agreement to
the contrary, all Conveyance Taxes incurred in connection with the
Reorganization shall be paid by Seller and
47
Seller Parent, and Seller and Seller Parent will, at their own expense, file all
necessary Tax Returns and other documentation with respect to all such Taxes.
10.7 Section 338(h)(10) Election. (a) Seller, Seller Parent
and Purchaser agree that they shall make, or cause to be made, a timely,
effective and irrevocable election under Section 338(h)(10) of the Code (and any
corresponding provisions of state or local Tax law) with respect to the purchase
and sale of the Stock and, within 45 days of the receipt of a written request
from Purchaser (which request is received by Seller Parent at least 60 days
prior to the due date for filing of such election), with respect to the purchase
and sale of any Included Subsidiary listed on a schedule (the "Section 338
Schedule") to be provided to Purchaser on or prior to the Closing (the
"Election(s)"), and the parties shall file the Elections in accordance with
Applicable Law. Seller and Seller Parent warrant that the Section 338 Schedule
will be true, accurate and complete in all material respects. Seller Parent and
Purchaser shall and shall cause their respective Subsidiaries to (i) treat the
Elections as valid, (ii) execute a Form 8023 for each Included Subsidiary with
respect to which an Election is made, (iii) file all Tax Returns in a manner
consistent with such Elections and (iv) take no position contrary thereto,
unless otherwise required by Applicable Law.
(b) In furtherance of Section 10.7(a), (i) prior to the
Closing Date, Seller Parent or an affiliate thereof and Purchaser shall agree,
based on information then available, on the form and content of IRS Form 8023
("Form 8023") with respect to the Company; and (ii) at or prior to the Closing,
Seller Parent or an affiliate thereof and Purchaser shall execute Form 8023
containing information then available. Purchaser shall file such Form 8023, or
cause such form to be filed, with the IRS.
(c) Purchaser shall, within 120 days after the Closing Date,
prepare and deliver to Seller and Seller Parent for its review and consent a
statement setting forth the allocation of, (i) the FG Transferred Asset Purchase
Price among the FG Transferred Assets (the "1060 Allocation"), and (ii) the
deemed sales price among the assets of the Company and any Included Subsidiary
with respect to which an Election is made pursuant to Section 10.7(a) (the
"Section 338 Allocation"). These allocations shall be prepared in accordance
with Sections 338 and 1060 of the Code and the regulations promulgated
thereunder. Seller Parent, Seller and Purchaser shall negotiate in good faith to
resolve any disputed items. If the parties are unable to agree on the 1060
Allocation or the Section 338 Allocation, as the case may be, within 60 days
after Purchaser delivers the proposed allocations to Seller Parent and Seller,
each of Purchaser and Seller shall use its own allocation for purposes of this
Section 10.7. The 1060 Allocation, if any, shall be used in preparing IRS Form
8594 and any similar forms required under state or local Tax Law, which forms
shall be completed, executed and delivered by the parties as soon as practicable
after the finalization of the 1060 Allocation but in no event later than 60 days
before the due date for filing of such forms; and the Section 338 Allocation, if
any, shall be used in preparing IRS Forms 8883 (and any similar forms required
under state or local Tax Law) with respect to the sale and purchase of the Stock
and any Included Subsidiary for which an Election is made pursuant to Section
10.7(a), which forms shall be completed, executed and delivered by the parties
as soon as practicable after the finalization of the Section 338 Allocation, if
any, but in no event later than 60 days before the due date for filing such
forms. The 1060 Allocation, if any, and the Section 338 Allocation, if any,
shall be used by Seller, Seller Parent and Purchaser to file all Tax Returns
(including amended Tax Returns and claims for refund), and, except as
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otherwise required by Applicable Law, the parties shall take no position
contrary thereto or inconsistent therewith. Purchaser, Seller Parent and Seller
shall promptly inform one another of any challenge by any Governmental Authority
to any allocation made pursuant to this Section 10.7 and agree to consult and
keep one another informed with respect to the status of, and any discussion,
proposal or submission with respect to such challenge. Notwithstanding the
foregoing, in the event the IRS (or any other Tax authority) challenges any
position taken by any of the parties to this Agreement, such party may settle or
litigate such challenge without the consent of, or liability to, the other
parties.
(d) In the case of Washington Mutual Finance, LP (TX) ("Texas
LP"), Seller and Seller Parent shall, at the expense of Seller and Seller
Parent, take all steps reasonably necessary, at Purchaser's direction (and to
the extent that such steps in and of themselves will not delay the Closing), to
restructure the acquisition by Purchaser of Texas LP (or its assets) so as to
provide Purchaser with a fair market value basis in the assets of Texas LP for
Texas income or franchise tax purposes (the "Restructuring"); provided, however,
that Seller and Seller Parent shall not have any obligation to indemnify
Purchaser for any incremental Taxes or loss of Tax benefits relating to the
basis in the assets of Texas LP for state and local income or franchise tax
purposes. Seller and Seller Parent agree that this Agreement shall, at
Purchaser's request, be modified as reasonably necessary to take into account
the Restructuring and that they enter into any other conveyance agreements
reasonably requested by Purchaser to effect such Restructuring, all of which
modifications and conveyance agreements shall be reasonably satisfactory to
Seller and Seller Parent.
10.8 Refunds. Any refunds of Taxes of the Subject Companies
for any taxable year that includes an Interim Period shall be equitably
apportioned between Purchaser and Seller. Any refunds of Taxes of the Subject
Companies for any Pre-Closing Period shall be for the account of Seller. Any
refund of Taxes of the Subject Companies for any taxable period beginning on or
after the Closing Date shall be for the account of Purchaser.
10.9 Confidentiality. Notwithstanding anything in this
Agreement to the contrary, except as reasonably necessary to comply with
applicable securities laws, each party to this Agreement (and each employee,
representative, or other agent of such party) may (i) consult any tax advisor
regarding the U.S. federal income tax treatment or tax structure of the
transaction, and (ii) disclose to any and all persons, without limitation of any
kind, the U.S. federal income tax treatment and tax structure of the transaction
and all materials of any kind (including opinions or other tax analyses) that
are provided to the taxpayer relating to such tax treatment and tax structure.
For this purpose, "tax structure" is limited to any facts relevant to the U.S.
federal income tax treatment of the transaction and does not include information
relating to the identity of the parties.
10.10 Miscellaneous. (a) Except as otherwise required by
Applicable Law, the parties agree to treat all payments made under this Article
X or under Article XI as adjustments to the Purchase Price for Tax purposes.
(b) The obligations of the parties set forth in this Article X
and the representation set forth in Section 4.12(b) shall survive the Closing
and shall remain in full force and effect until 60 days after the expiration of
all applicable statutes of limitations (including
49
extensions) for the assessment or collection of Taxes for which indemnification
may be claimed under this Article X. Claims made with respect to a breach of any
representation or warranty set forth in Section 4.12(a) or Section 4.12(c) can
be made, solely with respect to a Pre-Closing Period, until 60 days after the
expiration of all applicable statutes of limitations (including extensions).
(c) FIRPTA Certificate. On or prior to the Closing Date,
Purchaser shall have received from Seller a certificate in compliance with
Treasury Regulation Section 1.1445-2(b), certifying that Seller is not a
"foreign person" under Section 1445 of the Code.
ARTICLE XI
INDEMNIFICATION
11.1 Indemnification by Seller and Seller Parent. (a) In
addition to and not in limitation of the indemnities provided in Section 3.1(c)
and in Article X (which Section and Article sets forth the exclusive remedy of
Purchaser and Seller Parent in respect of Tax matters), from and after the
Closing Date, subject to the other provisions of this Article XI, Seller and
Seller Parent, jointly and severally, agree to indemnify Purchaser, its
affiliates and their respective officers, directors and employees (collectively,
the "Indemnified Purchaser Entities") and to hold each of them harmless from and
defend them against, any and all actions, suits, proceedings, demands,
assessments, judgments, claims, liabilities, losses, costs, damages, expenses or
penalties, and reasonable attorneys' fees, expenses and disbursements in
connection with any action, suit, proceeding, demand, assessment, judgment or
claim against such Person (but excluding, in any case, loss of profits or other
consequential damages and punitive or other exemplary damages, except to the
extent that such damages have been awarded to a Third Party against an
Indemnified Purchaser Entity) (collectively, "Damages"), suffered, paid or
incurred by such Indemnified Purchaser Entity arising out of or in connection
with, resulting from or caused by: (i) any breach of any of the representations
and warranties made by Seller and Seller Parent to Purchaser in Article IV of
this Agreement (it being understood that such representations and warranties,
other than those contained in Sections 4.7(b), (c), (d) and (e), 4.10(a)(ii),
4.11(a) and the first sentence of Section 4.15(a), shall be interpreted without
giving effect to any limitations or qualifications as to "materiality" or
"Material Adverse Effect"); (ii) any breach by Seller or Seller Parent of any
covenant or agreement of Seller or Seller Parent contained in this Agreement;
(iii) any Excluded Litigation, (iv) any Excluded Liability; (v) any Retained
Seller Plan; (vi) any Pre-Closing FG Employee Retained Liability; and (vii) any
Pre-Closing Environmental Liability.
(b) Notwithstanding anything to the contrary contained in this
Section 11.1, the Indemnified Purchaser Entities shall be entitled to
indemnification pursuant to Section 11.1(a) with respect to any claim for
indemnification pursuant to Section 11.1(a)(i):
(A) only if the amount of Damages with respect to such claim
exceeds $30,000 (any claim involving Damages equal to or less than such
amount being referred to as a "De Minimis Claim");
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(B) only if, and then only to the extent that, the aggregate
Damages to all Indemnified Purchaser Entities (without duplication),
with respect to all claims for indemnification pursuant to Section
11.1(a)(i) (other than De Minimis Claims), exceed $6,000,000 (the
"Deductible"), whereupon (subject to the provisions of clause (C)
below) Seller and Seller Parent shall be obligated to pay in full all
such amounts but only to the extent such aggregate Damages are in
excess of the amount of the Deductible; and provided that (i) the
Indemnified Purchaser Entities shall only be entitled to (A) 100% of
aggregate Damages otherwise indemnifiable pursuant to Section
11.1(a)(i) up to an aggregate amount of Damages equal to fifteen
percent (15%) of the Purchase Price and (B) fifty percent (50%) of any
Damages otherwise indemnifiable pursuant to Section 11.1(a)(i) above
that amount and (ii) the Indemnified Purchaser Entities shall not be
entitled to indemnification pursuant to Section 11.1(a)(i) of aggregate
Damages in excess of 35 percent (35%) of the Purchase Price; and
(C) only with respect to Claim Notices received on or before
the date that is twenty-four months after the Closing Date; provided,
however, that claims made with respect to a breach of the
representations and warranties set forth in Section 4.1(a), the first
sentence of Section 4.1(b), or Sections 4.2, 4.5, 4.6 or 4.18 may be
made at any time after the Closing Date; provided further, however,
that claims made with respect to a breach of the representations set
forth in Section 4.11 may be made within 30 days of the expiration of
the applicable statute of limitation governing such claims.
(c) Notwithstanding anything contained in Article IV or any
other provision of this Agreement to the contrary, Purchaser understands and
agrees that neither Seller and Seller Parent, nor any Person acting on their
behalf, has made, and are not making, any representation or warranty whatsoever,
express or implied, with respect to Seller, Seller Parent, the Subject Companies
or FG, the respective businesses and properties of the Subject Companies and FG,
the transactions contemplated hereby or any other matter, other than those
representations and warranties of Seller and Seller Parent expressly set forth
in this Agreement.
(d) Purchaser understands that any cost estimates, projections
or other predictions which have been provided to Purchaser by or on behalf of
Seller or Seller Parent (including in the Confidential Memorandum) are not and
shall not be deemed to be representations or warranties of Seller or Seller
Parent. Purchaser acknowledges that (i) there are uncertainties inherent in
attempting to make such estimates, projections and other predictions, (ii)
Purchaser is taking full responsibility for making its own evaluation of the
adequacy and accuracy of all estimates, projections and other predictions so
furnished to it, and (iii) under no circumstances shall Purchaser have any claim
against Seller or Seller Parent or any of their respective officers, directors,
affiliates, agents or representatives (including, without limitation, Xxxxxx
Brothers Inc.) with respect thereto.
11.2 Indemnification by Purchaser. (a) In addition to and not
in limitation of the indemnities provided in Sections 3.1(c) and 6.5 and Article
X (which sections and Article set forth the exclusive remedy of Purchaser and
Seller in respect of the matters covered thereby), from and after the Closing
Date, subject to the other provisions of this Article XX, Xxxxxxxxx
00
agrees to indemnify Seller and Seller Parent and their respective officers,
directors, employees and affiliates (collectively, the "Indemnified Seller
Entities") and to hold each of them harmless from and against any and all
Damages, suffered, paid or incurred by such Indemnified Seller Entity resulting
from or caused by: (i) any breach of any of the representations and warranties
made by Purchaser to Seller in Article V of this Agreement; (ii) any breach by
Purchaser of any covenant or agreement of Purchaser contained in this Agreement;
and (iii) any of the FG Assumed Liabilities.
(b) Notwithstanding anything to the contrary contained in this
Section 11.2, the Indemnified Seller Entities shall be entitled to
indemnification pursuant to Section 11.2(a) with respect to any claim for
indemnification pursuant to Section 11.2(a)(i):
(A) only with respect to claims which do not constitute De
Minimis Claims;
(B) only if, and then only to the extent that, the aggregate
Damages to all Indemnified Seller Entities (without duplication), with
respect to all claims for indemnification pursuant to Section
11.2(a)(i) (other than De Minimis Claims), exceed the amount of the
Deductible, whereupon (subject to the provisions of clause (C) below)
Purchaser shall be obligated to pay in full all such amounts but only
to the extent such aggregate Damages are in excess of the amount of the
Deductible; and provided that (i) the Indemnified Seller Entities shall
only be entitled to (A) 100% of aggregate Damages otherwise
indemnifiable pursuant to Section 11.2(a)(i) up to an aggregate amount
of Damages equal to fifteen percent (15%) of the Purchase Price and (B)
fifty percent (50%) of any Damages otherwise indemnifiable pursuant to
Section 11.2(a)(i) above that amount and (ii) the Indemnified Seller
Entities shall not be entitled to indemnification pursuant to Section
11.2(a)(i) of aggregate Damages in excess of 35 percent (35%) of the
Purchase Price; and
(C) only with respect to Claim Notices received on or before
the date that is twenty-four months after the Closing Date; provided,
however, that claims made with respect to a breach of the
representations and warranties set forth in Sections 5.1, 5.2 and 5.5
may be made at any time after the Closing Date.
(c) Notwithstanding anything contained in Article V or any
other provision of this Agreement to the contrary, Seller and Seller Parent
understand and agree that Purchaser has not made, and is not making, any
representation or warranty whatsoever, express or implied, with respect to
Purchaser, the transactions contemplated hereby or any other matter, other than
those representations and warranties of Purchaser expressly set forth in this
Agreement.
11.3 Indemnification Procedures. (a) If an Indemnified
Purchaser Entity or an Indemnified Seller Entity (each, an "Indemnified Entity")
believes that a claim, demand or other circumstances exists that has given or
may reasonably be expected to give rise to a right of indemnification under this
Article XI (whether or not the amount of Damages relating thereto is then
quantifiable), such Indemnified Entity shall assert its claim for
indemnification by giving written notice thereof (a "Claim Notice") to the party
from which indemnification is sought (the
52
"Indemnifying Party") (i) if the event or occurrence giving rise to such claim
for indemnification is, or relates to, a claim, suit, action or proceeding
brought by a Person not a party to this Agreement or affiliated with any such
party (a "Third Party"), within ten Business Days following receipt of notice of
such claim, suit, action or proceeding by such Indemnified Entity, or (ii) if
the event or occurrence giving rise to such claim for indemnification is not, or
does not relate to, a claim, suit, action or proceeding brought by a Third
Party, within 30 days after the discovery by the Indemnified Entity of the
circumstances giving rise to such claim for indemnity; provided, however, that
the failure to provide such notice shall not release the Indemnifying Party from
any of its obligations under this Article XI except to the extent that the
Indemnifying Party is materially prejudiced by such failure. Each Claim Notice
shall describe the claim in reasonable detail.
(b) If any claim or demand by an Indemnified Entity under this
Article XI relates to an action or claim filed or made against an Indemnified
Entity by a Third Party, the Indemnifying Party may elect at any time to
negotiate a settlement or a compromise of such action or claim or to defend such
action or claim, in each case at its sole cost and expense (subject to the last
sentence of this Section 11.3(b)) and with its own counsel, provided that no
such settlement or compromise shall be permitted without the prior written
consent of the Indemnified Entity, which shall not be unreasonably withheld or
delayed, if it would impose on the Indemnified Entity any monetary obligations
for which it would not be fully indemnified by the Indemnifying Party or any
injunctive or similar relief that would affect the conduct of such Indemnified
Entity's business. If, within thirty days of receipt from an Indemnified Entity
of any Claim Notice with respect to a Third Party action or claim, the
Indemnifying Party (i) advises such Indemnified Entity in writing that the
Indemnifying Party will not elect to defend, settle or compromise such action or
claim or (ii) fails to make such an election in writing, such Indemnified Entity
may, at its option, defend, settle or otherwise compromise or pay such action or
claim; provided that any such settlement or compromise shall be permitted
hereunder only with the written consent of the Indemnifying Party, which consent
shall not be unreasonably withheld. Unless and until the Indemnifying Party
makes an election in accordance with this Section 11.3(b) to defend, settle or
compromise such action, all of the Indemnified Entity's reasonable costs and
expenses arising out of the defense, settlement or compromise of any such action
or claim shall be Damages subject to indemnification hereunder to the extent
provided herein. Each Indemnified Entity shall make available to the
Indemnifying Party all information reasonably available to such Indemnified
Entity relating to such action or claim. In addition, the parties shall render
to each other such assistance as may reasonably be requested in order to ensure
the proper and adequate defense of any such action or claim. The party in charge
of the defense shall keep the other parties fully apprised at all times as to
the status of the defense or any settlement negotiations with respect thereto.
If the Indemnifying Party elects to defend any such action or claim, then the
Indemnified Entity shall be entitled to participate in such defense with counsel
reasonably acceptable to the Indemnifying Party, at such Indemnified Entity's
sole cost and expense; provided, however, that if there exists or is reasonably
likely to exist a conflict of interest that would, in the reasonable judgment of
counsel to the Indemnified Entity, make it inappropriate for the same counsel to
represent both the Indemnifying Party and the Indemnified Entity, then the
Indemnified Entity shall be entitled to retain its own counsel in each
jurisdiction for which the Indemnified Entity reasonably determines counsel is
required, at the expense of the Indemnifying Party (provided that in no event
will the Indemnifying Party be responsible for the costs of more than one
counsel (in addition to local counsel) for all Indemnified Entities in
53
respect of any single action or claim or group of related actions or claims). In
the event the Indemnifying Party assumes the defense of (or otherwise elects to
negotiate, settle or compromise) any action or claim as described above, the
Indemnified Entity shall reimburse the Indemnifying Party for all costs and
expenses incurred by the Indemnifying Party in connection with such defense (or
negotiation, settlement or compromise) to the extent that such costs and
expenses do not exceed the amount of the remaining Deductible.
11.4 General. (a) Each Indemnified Entity shall be obligated
in connection with any claim for indemnification under this Article XI to use
all commercially reasonable efforts to obtain any insurance proceeds available
to such Indemnified Entity with regard to the applicable claims and to recover
any amounts to which it may be entitled in respect of the applicable claims
pursuant to contractual or other indemnification rights that any of the Subject
Companies may have against Third Parties. The amount which the Indemnifying
Party is or may be required to pay to any Indemnified Entity pursuant to this
Article XI shall be reduced (retroactively, if necessary) by any insurance
proceeds, tax benefits or other amounts actually recovered by or on behalf of
such Indemnified Entity in reduction of the related Damages and increased
(retroactively, if necessary) by any related tax cost or other expense. If an
Indemnified Entity shall have received the payment required by this Agreement
from the Indemnifying Party in respect of Damages and shall subsequently receive
insurance proceeds, tax benefits or other amounts in respect of such Damages,
then such Indemnified Entity shall promptly repay to the Indemnifying Party a
sum equal to the amount of such insurance proceeds, tax benefits or other
amounts actually received less the amount of any tax cost or other related
expense. In the case of tax benefits, the Indemnified Entity shall claim on the
appropriate Tax Return any tax benefits arising from the incurrence or payment
of Damages that are allowable under Applicable Law. Not more than ten (10)
Business Days after filing the Tax Return on which such tax benefits are
claimed, the Indemnified Entity shall pay the Indemnifying Party the amount of
any realized tax benefits (net of the tax cost, including the net present value
of any future tax cost, to the Indemnified Entity from the receipt of the
indemnification payment).
(b) In addition to the requirements of Section 11.4(a), each
Indemnified Entity shall be obligated in connection with any claim for
indemnification under this Article XI to use all commercially reasonable efforts
to mitigate Damages upon and after becoming aware of any event which could
reasonably be expected to give rise to such Damages.
(c) The Indemnifying Party shall be subrogated to any right of
action which the Indemnified Entity may have against any other Person with
respect to any matter giving rise to a claim for indemnification hereunder.
(d) The indemnification provided in this Article XI shall be
the exclusive post-Closing remedy available to any party hereto with respect to
any breach of any representation, warranty, covenant or agreement in this
Agreement, or otherwise in respect of the transactions contemplated by this
Agreement, except as otherwise expressly provided in this Agreement.
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ARTICLE XII
GENERAL PROVISIONS
12.1 Survival. Except for the representations and warranties
contained in Section 4.12 of this Agreement, each of the representations and
warranties of the parties hereunder shall survive the Closing to and until the
date which is twenty-four months from the Closing Date, at which date they shall
terminate and be of no further force or effect; provided, however, that the
representations and warranties set forth in Section 4.1(a), the first sentence
of 4.1(b), and Sections 4.2, 4.5, 4.6, 4.18, 5.1, 5.2 and 5.5 shall survive
indefinitely; provided further, however, that the representations and warranties
set forth in Section 4.11 shall survive until 30 days after the expiration of
the relevant statute of limitation governing such claims; and provided further,
however, that the representations and warranties dealing with Tax matters shall
survive as provided in Article X. Notwithstanding the foregoing, any
representation or warranty in respect of which indemnity may be sought under
Article XI of this Agreement shall survive the time at which it would otherwise
terminate pursuant to this Section 12.1 if written notice of a claim for
indemnification in respect of such representation or warranty shall have been
duly given prior to such time, in which event such representation or warranty
shall survive solely with respect to such claim until the final resolution
thereof. Neither the period of survival nor the liability of Seller Parent or
Seller, on the one hand, or Purchaser on the other hand, with respect to such
parties' representations shall be reduced by any investigation made at any time
by or on behalf of the other party hereto.
12.2 Notices. All notices and other communications required or
permitted to be given hereunder shall be in writing and shall be deemed given if
delivered personally, transmitted by facsimile (and telephonically confirmed),
mailed by registered or certified mail with postage prepaid and return receipt
requested, or sent by commercial overnight courier, courier fees prepaid (if
available; otherwise, by the next best class of service available), to the
parties at the following addresses:
(a) if to Purchaser, to it at:
CitiFinancial Credit Company
000 Xx. Xxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxxx, Executive Vice President,
CitiFinancial Credit Company, and General
Counsel, Consumer Finance N.A.
Telecopy: (000) 000-0000
Confirmation: (000) 000-0000
55
with a copy to:
CitiFinancial Credit Company
000 Xx. Xxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxx, Executive Vice President,
CitiFinancial Credit Company, and Chief
Administrative Officer, Consumer Finance N.A.
Telecopy: (000) 000-0000
Confirmation: (000) 000-0000
with a copy to:
Shearman & Sterling LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X'Xxxxxxxx
Telecopy: (000) 000-0000
Confirmation: (000) 000-0000
(b) if to Seller or Seller Parent, to it at:
Washington Mutual, Inc.
0000 Xxxxx Xxxxxx
Xxxxxxx, XX 00000
Attn: Xxxx Xxxxx, Executive Vice President
of Corporate Strategy & Development
Telecopy: (000) 000-0000
Confirmation: (000) 000-0000
with copies to:
Washington Mutual, Inc.
0000 Xxxxx Xxxxxx
Xxxxxxx, XX 00000
Attn: Legal Department
Telecopy: (000) 000-0000
Confirmation: (000) 000-0000
Xxxxxxx Xxxxxxx & Xxxxxxxx LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Xxx Xxxxxxxx
Xxxxxxx Xxxxxxx
Telecopy: (000) 000-0000
Confirmation: (000) 000-0000
56
or to such other Person or address as any party shall specify by notice in
writing to the other parties in accordance with this Section 12.2. All such
notices or other communications shall be deemed to have been received on the
date of the personal delivery or on the third Business Day after the mailing or
dispatch thereof; provided that notice of change of address shall be effective
only upon receipt.
12.3 Interpretation. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
12.4 Amendment and Modification; Waiver. (a) This Agreement
and the Disclosure Schedules hereto may not be amended except by an instrument
or instruments in writing signed and delivered on behalf of each of the parties
hereto.
(b) At any time prior to the Closing Date, any party hereto
which is entitled to the benefits hereof may (i) extend the time for the
performance of any of the obligations or other acts of the other parties, (ii)
waive any inaccuracy in the representations and warranties of any other party
contained herein or in any schedule hereto or in any document delivered pursuant
hereto, and (iii) waive compliance with any of the agreements of any other party
or conditions contained herein. Any agreement on the part of a party hereto to
any such extension or waiver shall be valid if set forth in an instrument in
writing signed and delivered on behalf of such party.
12.5 Entire Agreement. This Agreement (including the
Disclosure Schedules, documents and instruments referred to herein), the
Confidentiality Agreement and the letter agreement dated the date hereof among
Seller, Seller Parent and Purchaser constitute the entire agreement and
supersede all other prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof.
12.6 Fees and Expenses. Whether or not the transactions
contemplated hereby are consummated, all fees and expenses incurred in
connection with this Agreement, and the transactions contemplated hereby, shall
be paid by the party incurring such expenses.
12.7 Disclosure Schedules. Seller Parent, Seller and Purchaser
agree that, for purposes of the representations and warranties of such parties
in this Agreement, items disclosed in one Section of the Seller Disclosure
Schedule are deemed to be disclosed in any other Sections of the Seller
Disclosure Schedule where it would be reasonably apparent that such item should
be an exception to the representation and warranty corresponding to such other
Section. The disclosure of any item or matter in the Seller Disclosure Schedule
shall not be deemed to constitute an admission by Seller or Seller Parent that
such item or matter is material for purposes of this Agreement.
12.8 Third Party Beneficiaries. Nothing in this Agreement,
express or implied, is intended to confer upon any Person other than the parties
hereto or their respective successors and assigns any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
12.9 Specific Performance. The parties agree that if any of
the provisions of this Agreement were not performed by the parties hereto in
accordance with their specific terms or were otherwise breached thereby,
irreparable damage would occur, no adequate remedy at law would exist and
damages would be difficult to determine, and that each party hereto will be
57
entitled to specific performance to prevent breaches of the provisions of this
Agreement and to enforce specifically the terms and provisions hereof, in
addition to any other remedy to which it may be entitled at law or in equity.
12.10 Assignment; Binding Effect. This Agreement shall not be
assigned by any party hereto without the prior written consent of the other
parties. This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and assigns.
12.11 Governing Law. THIS AGREEMENT AND THE RIGHTS AND DUTIES
OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAW OF THE STATE OF DELAWARE.
12.12 Jurisdiction. The parties hereby irrevocably and
unconditionally consent to submit to the exclusive jurisdiction of the courts of
the State of Delaware and of the United States of America located in the State
of Delaware with respect to any actions, suits or proceedings arising out of or
relating to this Agreement and the transactions contemplated hereby. The parties
hereby irrevocably and unconditionally waive any objection to the laying of
venue of any action, suit or proceeding arising out of this agreement or the
transactions contemplated hereby, in the courts of the State of Delaware and of
the United States of America located in the State of Delaware, and hereby
further irrevocably and unconditionally waive and agree not to plead or claim in
any such court that any such action, suit or proceeding brought in any such
court has been brought in an inconvenient forum.
12.13 Waiver of Jury Trial. Each of the parties hereto hereby
waives to the fullest extent permitted by applicable law any right it may have
to a trial by jury with respect to any litigation directly or indirectly arising
out of, under or in connection with this Agreement or the transactions
contemplated by this Agreement. Each of the parties hereto hereby (a) certifies
that no representative, agent or attorney of the other party has represented,
expressly or otherwise, that such other party would not, in the event of
litigation, seek to enforce the foregoing waiver and (b) acknowledges that it
has been induced to enter into this Agreement and the transactions contemplated
by this Agreement, as applicable, by, among other things, the mutual waivers and
certifications in this Section 12.13.
12.14 Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated
so long as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner materially adverse to any party. Upon such
a determination, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner in order that the transactions contemplated
hereby be consummated as originally contemplated to the fullest extent possible.
12.15 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
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[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed on their behalf by their respective officers hereunto
duly authorized all as of the date first written above.
WASHINGTON MUTUAL, INC.
By:/s/ Xxxx Xxxxx
--------------------------------------
Name: Xxxx Xxxxx
Title: Executive Vice President
GREAT WESTERN SERVICE CORPORATION TWO
By: /s/ Xxxxx Xxxxxxx
--------------------------------------
Name: Xxxxx Xxxxxxx
Title: President
CITIFINANCIAL CREDIT COMPANY
By: /s/ Xxxxx Xxxxxxxxx
--------------------------------------
Name: Xxxxx Xxxxxxxxx
Title: Executive Vice President
Stock and Asset Purchase Agreement - Signature Page
