AMENDED AND RESTATED AGREEMENT
This Amended and Restated Agreement (this "Agreement") is made and
entered into this 22nd day of September, 2000 by and among Conseco Finance Corp.
(the "Company"), Conseco, Inc. ("Conseco"), CIHC, Incorporated ("CIHC"), Green
Tree Residual Finance Corp I ("Green Tree Residual"), Green Tree Finance Corp. B
Five ("Green Tree Five") and Lehman Brothers Holdings Inc. (collectively with
its direct and indirect subsidiaries "Lehman").
WHEREAS, the Company, Conseco, CIHC and Lehman have entered into the
Agreement dated May 11, 2000 (the "Original Agreement");
WHEREAS, Lehman ALI Inc. (as assignee of Lehman Commercial Paper Inc.)
has entered into the Asset Assignment Agreement dated as of February 13, 1998
with Green Tree Residual, the Master Repurchase Agreement dated as of September
30, 1999 with Lehman Brothers Inc., and the other agreements, instruments and
documents delivered under or in connection therewith (such agreements, as
amended, supplemented or otherwise modified from time to time, collectively the
"Residual Facility Documents");
WHEREAS, Lehman Commercial Paper Inc. and Green Tree Finance Corp. B
Five ("Green Tree Five") have entered into the Amended and Restated Repurchase
Agreement dated May 9, 2000 (the "Repurchase Agreement") and the other
agreements, instruments and documents delivered under or in connection therewith
(such agreements, as amended, supplemented or otherwise modified from time to
time, collectively the "Warehouse Facility Documents");
WHEREAS, Conseco has entered into the Facilities (as defined in the
Credit Agreement dated as of September 25, 1998 among Conseco, the lenders party
thereto and Bank of America, N.A., as agent, as amended on the date hereof)
(such Facilities, collectively the "Existing Bank Facilities");
WHEREAS, the parties hereto desire to amend and restate the Original
Agreement on the Effective Date (as defined in Section 1 below) to (a) modify
certain provisions in the Original Agreement, including the provision
restricting distributions to Conseco, (b) add additional covenants on the part
of Conseco and the Company, and (c) provide for the delivery of amendments to
the Residual Facility Documents and the Warehouse Facility Documents;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
1. Effective Date. The following conditions shall be satisfied on the date on
or prior to September 22, 2000 (the date on which such conditions are
satisfied is the "Effective Date"):
(a) All documentation to be entered into in connection with the
restructuring by Conseco of the Existing Bank Facilities (such agreements,
as amended, supplemented or otherwise modified from time to time, the "New
Bank Facility Documents") shall be in form and substance and on terms
satisfactory to Lehman,
<PAGE>
and all conditions precedent to the effectiveness thereof shall have been
satisfied on or prior to the Effective Date.
(b) There shall not have occurred any material default or any event of
default under any of the Original Agreement, the Warehouse Facility
Documents or the Residual Facility Documents.
(c) There shall have occurred no material adverse change in the
financial markets generally (including without limitation the repurchase
markets) from that which existed on September 11, 2000 which, in the
reasonable judgment of Lehman, renders it impractical or inadvisable to
enter into the transactions contemplated hereby.
(d) All fees and expenses of Lehman incurred in connection with this
Agreement and the transactions contemplated hereby (including without
limitation the reasonable fees and expenses of counsel to Lehman, and all
other fees and expenses owing to Lehman under the Original Agreement, the
Residual Facility Documents, the Warehouse Facility Documents through and
including the Effective Date) and all other fees and expenses due and
payable on the Effective Date shall have been paid.
(e) A portion of the principal amount outstanding under the
intercompany note issued by the Company to Conseco dated May 11, 2000 in an
amount not less than $750 million shall have been converted by Conseco into
redeemable preferred stock (the "Preferred Stock") with an annual dividend
rate not to exceed 9% per annum.
(f) Lehman shall have received (1) this Agreement, duly executed and
delivered by the parties thereto; (2) amendments to the Residual Facility
Documents in form and substance satisfactory to Lehman, duly executed and
delivered by the parties thereto; (3) amendments to the Warehouse Facility
Documents in form and substance satisfactory to Lehman, duly executed and
delivered by the parties thereto; (4) a fee letter in form and substance
satisfactory to Lehman, duly executed and delivered by the parties thereto;
(5) a copy of the note by the Company in favor of CIHC evidencing
indebtedness of $1,460,799,080, in form and substance satisfactory to
Lehman (the "Intercompany Note"), duly executed and delivered by the
Company, together with a copy of the prior note or notes evidencing the
intercompany indebtedness marked "cancelled"; (6) a side letter in form and
substance satisfactory to Lehman, duly executed and delivered by the
parties thereto; (7) the guaranty by CIHC in form and substance
satisfactory to Lehman (the "CIHC Guaranty"), duly executed and delivered
by CIHC; and (8) a copy of all documentation necessary to effect the
conversion and the issuance of Preferred Stock referred to in clause (e)
above (each of the foregoing, together with the Residual Facility
Documents, the Warehouse Facility Documents and the New Bank Facility
Documents, collectively the "Transaction Documents").
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(g) Lehman shall have received certified copies of (a) resolutions of
the Board of Directors of each of Conseco, the Company, CIHC, Green Tree
Five, Green Tree Residual and authorizing each such party to enter into
this Agreement and each other Transaction Document to which it is a party
and the transactions contemplated hereby and thereby and (b) the New Bank
Facilities.
(h) Lehman shall have received a favorable opinion of counsel to each
of Conseco, the Company, CIHC, Green Tree Residual and Green Tree Five as
to the matters relating to this Agreement and the other Transaction
Documents and the transactions contemplated hereby and thereby, in form and
substance satisfactory to Lehman.
(i) A certificate signed by the applicable officer of each of Conseco,
the Company, CIHC, Green Tree Residual and Green Tree Five certifying that:
(x) The representations and warranties contained in the
Transaction Documents to which such Person is a party are correct on
and as of the date of such certificate as though made on and as of such
date, and
(y) no event has occurred and is continuing which constitutes a
Default or an Event of Default. For purposes of this Agreement,
"Default" means the occurrence of any event which, with the giving of
notice or the passage of time or both would become an Event of Default,
and "Event of Default" means any "event of default" under and as
defined in any Transaction Document.
(j) Lehman shall have received all Securities (as defined in the
Residual Facility Documents) constituting B2 Securities that are required
by the terms of the Residual Facility Documents to be delivered on or prior
to the Effective Date.
(k) A certificate in the form required under Section 4.1(d)(i) (it
being understood that Lehman waives the requirement therein for delivery at
least 3 business days prior to the transfers to be made on the Effective
Date).
2. Affiliate Transactions.
2.1 Repayment of Existing Intercompany Indebtedness. The Company shall not
directly or indirectly repay any indebtedness for borrowed money outstanding on
the date hereof owed to Conseco or any Affiliate (as defined below) thereof
except as provided on Exhibit A hereto. The term "Affiliate" means any Person
(as defined below) that directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with the
person specified, provided however, that for purposes of all sections of this
Agreement other than Sections 9 and 13.4 the term "Affiliate" shall not include
any direct or indirect majority-owned subsidiaries of the Company. The term
"Person" means any natural person, corporation, limited liability company,
general partnership, limited partnership, proprietorship, trust, union,
association, court, tribunal, agency, government, department, commission,
self-regulatory organization, arbitrator, board, bureau, instrumentality, or
other entity, enterprise, authority, or business organization.
<PAGE>
2.2 Dividend Restrictions. The Company shall not directly or indirectly pay
any dividends, or purchase, redeem, retire, defease or otherwise acquire for
value or establish a sinking fund with respect to any preferred stock, or make
any distributions or transfer any assets of the Company to Conseco or any of its
Affiliates, in each case except as provided on Exhibit A hereto.
2.3 Restrictions on Other Affiliate Transactions. The Company shall not
effect any transactions or enter into, amend, modify or waive any agreement,
arrangement or understanding (including without limitation any guaranty, loan,
note (including without limitation the Intercompany Note), or extension of
credit by or to the Company) with Conseco or any of its Affiliates, or make any
payments thereunder, except (i) as provided on Exhibit A hereto, (ii) that the
Company may borrow funds and/or obtain extensions of credit from Conseco and any
of its Affiliates at any time and from time to time during the term hereof but
none of such indebtedness shall be due, payable or paid except for short-term
loans made by Conseco or an Affiliate to the Company to provide the Company with
liquidity pending receipt of funding from other sources which is expected to be
received within seven business days of such loan provided such funding is
actually received, whether or not within such period, (iii) that the Company may
borrow funds from Conseco at any time and from time to time in an amount not to
exceed $250,000,000 outstanding at any time provided that each such loan is made
in accordance with the terms set forth in Section 4.09(a) of the Credit
Agreement dated as of September 25, 1998 (the "Five-Year Credit Agreement")
among Conseco, the lenders party thereto and Bank of America, N.A., as agent, as
amended as of the Effective Date and (iv) that the Company may enter into
agreements, arrangements or understandings with Conseco or any of its Affiliates
(other than those covered by clauses (ii) and (iii) above) upon terms no less
favorable to the Company than the Company could obtain from third parties in
arms length transactions. Nothing in this Agreement shall be deemed to prohibit
the Company from paying interest on any indebtedness incurred by the Company
after the date hereof in accordance with clause (ii) above, provided that the
interest rate paid shall not exceed the interest rate charged on the
Intercompany Note.
2.4 Tax Sharing Agreement. Conseco shall (and shall cause its Affiliates
to) pay to the Company when due any and all amounts owed to the Company by
Conseco (or any Affiliate of Conseco) under the Consolidated Federal Income Tax
Agreement as in effect on May 11, 2000 (the "Tax Sharing Agreement") among
Conseco, the Company, and the other Conseco Affiliates party thereto.
2.5 Intercompany Receivables. Conseco shall (and shall cause its Affiliates
to) pay interest on any amount owed by Conseco or any of its Affiliates to the
Company or any subsidiary thereof as of May 11, 2000 a rate per annum equal to
150 basis points in excess of the London interbank offered rate for a
three-month period, as published in The Wall Street Journal. Such interest shall
be paid monthly.
2.6 Maintenance of Separate and Independent Corporate Identities. The
Company, CIHC and Conseco shall maintain separate and independent corporate
identities and shall observe separate and independent corporate formalities
related thereto. Without limiting the generality of the foregoing, each of
Conseco and CIHC, on the one hand, and the Company, on the other, shall (i)
maintain separate and independent (A) business locations, (B) operating
<PAGE>
accounts, (C) employees, (D) assets and liabilities, and (E) proceeds from the
sale of each entity's respective stock (it being recognized that an immaterial
sharing of employees and facilities may occur so long as there is an appropriate
allocation of costs relating thereto) and (ii) not commingle any funds or other
assets.
2.7 No Guaranty of Indebtedness. Without limiting the generality of Section
2.3, the Company shall not assume or guaranty any indebtedness of Conseco or any
Affiliate thereof.
2.8 Notice of Dividend Payments. The Company shall not declare or pay any
dividend or make any other distribution, direct or indirect, on account of the
Common Stock of the Company unless written notice of such dividend or other
distribution is given to Lehman at least 5 business days' prior to the record
date for such dividend or other distribution. The obligations of the Company
under this covenant shall terminate upon the exchange of the Warrant pursuant to
Section 12 hereof.
30 Maintenance of Financing Facilities And Obtaining Commitments. The Company
shall use commercially reasonable efforts to maintain the Company's current
warehouse financing facilities with parties other than Lehman and to obtain
commitments thereunder similar to the commitments provided by Lehman under
the applicable warehouse financing facilities, provided that the Company
may replace such warehouse financing facilities with facilities having
substantially similar or more favorable terms to those currently in
existence or proposed by an existing lender to the Company.
40 Additional Covenants.
4.1 Financial Reporting By the Company. The Company shall furnish to Lehman
the following:
(a) Monthly. (i) As soon as available but not later than 30 days after
the end of each month commencing with December 2000 financial information
regarding the Company consisting of consolidated unaudited balance sheets
as of the close of such month and the related statements of income and cash
flow for such month, in each case certified by the chief executive officer,
chief operating officer, chief financial officer or treasurer, or any other
officer having substantially the same authority and responsibility,
including any vice president with responsibility for or knowledge of
financial matters (a "Responsible Officer"), of the Company as fairly
presenting the consolidated financial position of the Company and its
subsidiaries as at the dates indicated and the results of their operations
and cash flow for the periods indicated in accordance with generally
accepted accounting principles set forth from time to time in the opinions
and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements
of the Financial Accounting Standards Board (or agencies with similar
functions of comparable stature and authority within the U.S. accounting
profession), which are applicable to the circumstances as of the date of
determination ("GAAP"); (ii) as soon as available but not later than 15
days after the end of each month commencing with December 2000, a budget
forecast for
<PAGE>
cash use by the Company for the two month period then commencing, setting
forth sources and uses of such cash by the Company for such period,
certified by a Responsible Officer of the Company; (iii) as soon as
available but not later than 15 days after the end of each month commencing
December 2000, a certificate of a Responsible Officer of the Company
stating that, to the best knowledge of such officer, no Default or Event of
Default has occurred and is continuing, or if a Default or an Event of
Default has occurred and is continuing, stating the nature thereof and the
action which the Company proposes to take with respect thereto; and (iv) as
soon as available but not later than the 20th day in each calendar month
commencing with December 2000, a report prepared by management of the
Company setting forth in reasonable detail (A) all principal and interest
payments received in respect of all Purchased Securities, Additional
Purchased Securities and Pledged Assets (in each case as defined in the
Residual Facility Documents) for the immediately preceding month, (B) an
analysis of the aging (or other applicable measurement as agreed to by the
parties) by each category of asset for all Purchased Eligible Assets (as
defined in the Warehouse Facility Documents) and (C) a schedule calculating
the applicable advance rates based upon assets pledged and actual advances
in respect of all Purchased Eligible Assets;
(b) Quarterly. (i) As soon as available but not later than 60 days
after the end of each fiscal quarter of each of the first three fiscal
quarters of each fiscal year, (A) financial information regarding the
Company and its subsidiaries consisting of consolidated unaudited balance
sheets as of the close of such quarter and the related statements of income
and cash flow for such quarter and that portion of the fiscal year ending
as of the close of such quarter, setting forth in comparative form the
figures for the corresponding period in the prior year, in each case
certified by a Responsible Officer of the Company as fairly presenting the
consolidated financial position of the Company and its subsidiaries as at
the dates indicated and the results of their operations and cash flow for
the periods indicated in accordance with GAAP, (B) forecasts prepared by
management of the Company for each of the succeeding months for a twelve
month period setting forth in reasonable detail the projected origination
level, operating cost and estimate of the net interest margin assumptions
and resulting cash flow, balance sheet and income statement as at the end
of each such month and such twelve-month period, together with a statement
of all the material assumptions on which such forecasts are based; and (C)
a compliance certificate of a Responsible Officer of the Company setting
forth in reasonable detail the calculations used in determining the
financial covenants set forth in Section 4.4 and demonstrating compliance
with all such financial covenants;
(c) Annual. As soon as available but not later than 120 days after the
end of each fiscal year of the Company, (i) copies of the audited
consolidated balance sheet of the Company and its subsidiaries and the
unaudited consolidating balance sheet of the Company and its subsidiaries
as at the end of such year and the related consolidated statements of
earnings, shareholders' equity and cash flows
<PAGE>
for such year, setting forth in the case of the audited consolidated
statements in comparative form the figures for the previous fiscal year,
and accompanied by an opinion of PricewaterhouseCoopers or another
nationally recognized independent accounting firm which report shall state
that such audited consolidated financial statements present fairly the
financial positions and result of operations of the Company and its
subsidiaries for the periods indicated in conformity with GAAP applied on a
basis consistent with prior years, except as stated therein, (such opinion
shall not be qualified or limited because of a restricted or limited
examination by such auditors of any material portion of the Company's or
any subsidiary's records); and (ii) a compliance certificate of a
Responsible Officer of the Company setting forth in reasonable detail the
calculations used in determining the financial covenants set forth in
Section 4.4 and demonstrating compliance with all such financial covenants
for all applicable periods during such fiscal year.
(d) Minimum Liquidity Amount Test. As soon as available but at least 3
business days prior to any proposed dividend, distribution or transfer by
the Company to Conseco or any of its Affiliates permitted under Items 4 or
5 of Exhibit A, the Company shall furnish to Lehman (i) a certificate
prepared by the management of the Company showing in reasonable detail (a)
the calculations used in determining the Liquidity Amount and the Liquidity
Threshold and demonstrating compliance with the Minimum Liquidity Amount
Test, before and after giving effect to such dividend, distribution or
transfer, and (b) describing the nature and material terms (including the
proposed amounts) and conditions of such proposed dividend, distribution or
transfer, identifying whether the event giving rise to such proposed action
is set forth on Schedule I to Exhibit A, certified by a Responsible Officer
of the Company; and (ii) certificate of a Responsible Officer of the
Company stating that, to the best knowledge of such officer, (a) no Default
or Event of Default has occurred and is continuing and (b) there is no
significant reasonably anticipated cash need of the Company or any of its
subsidiaries in excess of projected cash sources for the thirty day period
following such dividend, distribution or transfer.
(e) Default Notices. The Company shall promptly notify Lehman in
writing of the occurrence of any Default or Event of Default under any
Transaction Document.
(f) Other. Promptly, but in any event not later than 10 business days
after Lehman's request therefor, a report prepared by management of the
Company setting forth in reasonable detail (x) all principal and interest
payments received in respect of all assets other than the Purchased
Securities, Additional Purchased Securities and Pledged Assets for the
applicable thirty day period, such payment schedule to provide such
information as per each category of asset, (y) an analysis of the aging (or
other applicable measurement as agreed to by the parties) by each category
of asset for all such assets and (z) a schedule calculating the applicable
<PAGE>
advance rates based upon assets pledged and actual advances in respect of
such assets financed by a Person other than a party hereto.
The parties agree that it shall not constitute a breach of the
applicable requirements set forth above if any financial statements
required to be delivered under clauses (b) or (c) above are filed pursuant
to a filing with the Securities and Exchange Commission within the required
time period and delivered promptly thereafter by the Company to Lehman.
4.2 Financial Reporting By Conseco. Conseco shall furnish to Lehman (a)
promptly after the furnishing thereof, but not later than 5 days thereafter,
copies of all compliance certificates and other financial reports furnished to
the lenders pursuant to the New Bank Facility Documents, and (b) written notice
of the occurrence of any Default or Event of Default under any Transaction
Document.
4.3 Compliance with Transaction Documents. Each of Conseco, the Company,
CIHC, Green Tree Residual and Green Tree Five shall comply with all terms,
covenants or agreements contained in any Transaction Document (including without
limitation the Transaction Documents referred to in Section 1(f)(4) and (6)) on
its part to be performed or observed within the applicable grace period, if any,
specified in the relevant Transaction Document.
4.4 Financial Covenants.
The Company on a consolidated basis with its subsidiaries shall:
(i) at all times commencing December 31, 2000, maintain an
Adjusted Tangible Net Worth of at least $1,950,000,000;
(ii) for the three-month period ending on the last day of the
fiscal quarter ending December 31, 2000, the six-month period ending on the last
day of the fiscal quarter ending March 31, 2001, the nine-month period ending on
the last day of the fiscal quarter ending June 30, 2001, the twelve-month period
ending on the last day of the fiscal quarter ending September 30, 2001, and the
twelve-month period ending on the last day of each subsequent fiscal quarter,
maintain a Fixed Charge Coverage Ratio of not less than 1.0:1.0;
(iii) at all times commencing December 31, 2000, maintain a ratio
of GAAP Net Worth to Total Managed Receivables of not less than 4:100;
(iv) for each fiscal quarter commencing with the fiscal quarter
ending December 31, 2000, maintain a ratio of Non-Warehouse Debt to GAAP Net
Worth of not more than 1.0:2.0;
(v) for the three-month period ending on the last day of the
fiscal quarter ending December 31, 2000, the six-month period ending on the last
day of the fiscal quarter ending March 31, 2001, the nine-month period ending on
the last day of the fiscal quarter ending June 30, 2001, the twelve-month period
ending on the last day of
<PAGE>
the fiscal quarter ending September 30, 2001, and the twelve-month period ending
on the last day of each subsequent fiscal quarter, maintain positive Operating
Cash Flow; and
(vi) on any date a dividend, distribution or other transfer is
permitted hereunder to be made by the Company to Conseco or any of its
Affiliates under Items 4 or 5 on Exhibit A, maintain on such date the Liquidity
Amount of not less than the Liquidity Threshold, before and after giving effect
to such dividend, distribution or transfer (such requirement, the "Minimum
Liquidity Amount Test").
For purposes of this Section 4.4:
"Adjusted Tangible Net Worth" means, at any date, the sum of (a) GAAP
Net Worth plus (b) the amount of intercompany indebtedness converted to
Preferred Stock on the Effective Date in accordance with Section 1(e) (to the
extent such Preferred Stock is not included in GAAP Net Worth), plus (c)
writedowns after the Effective Date of all IOs and capitalized servicing rights
of the Company and its subsidiaries, in an aggregate amount not to exceed
$450,000,000, minus (d) any indebtedness owing by Conseco or any of its
Affiliates (other than the Company or any Subsidiary thereof) to the Company or
any Subsidiary thereof as of such date, minus (e) any amount that would be
included on the consolidated balance sheet of the Company as goodwill and
deferred charges in accordance with GAAP.
"Cash Equivalents" means (a) securities issued or fully guaranteed or
insured by the United States government or any agency thereof, (b) certificates
of deposit, eurodollar time deposits, overnight bank deposits and bankers'
acceptances of any commercial bank organized under the laws of the United
States, any state thereof, the District of Columbia, any foreign bank, or its
branches or agencies (fully protected against currency fluctuations) which, at
the time of acquisition, are rated at least "A-1" by Standard & Poor's Rating
Services ("S&P") or "P-1" by Moody's Investors Services, Inc. ("Moody's"), (c)
commercial paper of an issuer rated at least "A-1" by S&P or "P-1" by Moody's,
and (d) shares of any money market fund that (i) has at least 95% of its assets
invested continuously in the types of investments referred to in clauses (a)
through (c) above, (ii) has net assets of not less than $500,000,000 and (iii)
is rated at least "A-1" by S&P or "P-1" by Moody's; provided, however, that the
maturities of all obligations of the type specified in clauses (a) through (c)
above shall not exceed 180 days.
"Fixed Charge Coverage Ratio" means, for any period, the ratio of (a)
Pre Tax Operating Income for such period to (b) Interest Expense for such
period.
"GAAP Net Worth" means, at any date, the stockholders' equity that
would be reflected on a consolidated balance sheet of the Company and its
subsidiaries at such date prepared in accordance with GAAP, inclusive of
Preferred Stock, to the extent such Preferred Stock is not included in
stockholders' equity in accordance with GAAP.
"Interest Expense" means, for any period, all interest paid or accrued
during such period by the Company and its subsidiaries on a consolidated basis,
determined in accordance with GAAP.
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"IOs" means interest only securities.
"Liquidity Amount" means, on any date, the sum of Unrestricted Cash and
Cash Equivalents (including an amount not to exceed $150,000,000 in liquidity
available at Conseco Bank, Inc. and other banking subsidiaries of the Company
plus the aggregate amount available to be drawn under all committed and
uncommitted facilities to which the Company, Green Tree Residual, Green Tree
Five or any other Affiliate is a party, and calculated on the basis of eligible
excess collateral pledged to the lender thereunder multiplied by the advance
rate applied by such lender to such collateral). For purposes hereof, the
Liquidity Amount shall be calculated as of any date that the Minimum Liquidity
Amount Test is to be measured by determining the average of Unrestricted Cash,
Cash Equivalents and other such available amounts for the 30-day period ending
on and including such date.
"Liquidity Threshold" means $250,000,000 plus an amount equal to (a)
50% of cash up to $100,000,000 generated by the Company at any time from and
after the date hereof and (b) 25% of cash generated by the Company in excess of
such $100,000,000, provided that the aggregate amount of the Liquidity Threshold
shall not exceed $350,000,000, and provided further that the calculation of cash
generated by the Company for purposes of this definition shall not include
operating cash flow operated in the normal course of business or net cash
proceeds actually received by the Company from those asset sales and other
events set forth on Schedule I to Exhibit A.
"Net Income" means, for any period, with respect to the Company and its
subsidiaries on a consolidated basis (other than any subsidiary which is
prohibited from declaring or paying dividends or otherwise advancing funds to
its parent whether by contract or otherwise), cumulative net income earned
during such period as determined in accordance with GAAP.
"Non-Warehouse Debt" means, at any time, all indebtedness of the
Company for borrowed money (including without limitation all liabilities in
respect of deposit products, notes payable, note payables to Conseco (net of
receivables due from Conseco), bonds and other indebtedness) less the sum of
Unrestricted Cash and Cash Equivalents at such time plus the book value of all
finance receivables and plus 85% of servicing advance receivables.
"Operating Cash Flow" means, for any period, cash flow from the
operations of the Company for such period (as reported under "Cash Flow From
Operations" in the Company's statements of cash flow filed with the Securities
and Exchange Commission) for such period.
"Pre Tax Operating Income" means, for any period, Net Income for such
period, plus (a) income and franchise taxes paid or accrued during such period,
(b) Interest Expense, (c) losses derived from discontinued operations of the
Company and its subsidiaries during such period and (d) extraordinary losses and
non-recurring losses of the Company and its subsidiaries in an amount with
respect to IOs and capitalized servicing rights of the Company and its
subsidiaries not to exceed $450,000,000 in the
<PAGE>
aggregate minus (a) income derived from discontinued operations of the Company
and its subsidiaries during such period and (b) extraordinary gains and
non-recurring gains of the Company and its subsidiaries.
"Total Managed Receivables" means, for any period, the "averaged
managed receivables", as such term is reported in the related filing with the
Securities and Exchange Commission for such period.
"Unrestricted Cash" means, at any date, all available cash on deposit
in bank accounts of the Company, provided the accounts into which such cash is
deposited are not subject to any lien, security interest or control agreement or
otherwise encumbered (excluding customary rights of set-off) or restricted in
any way. No new borrowings after the Effective Date from Conseco or its
Subsidiaries shall constitute Unrestricted Cash other than the amounts not to
exceed $50,000,000 in the aggregate received pursuant to Section 4.09(a)(i)(x)
of the Five-Year Credit Agreement as in effect on the Effective Date.
4.5 Other Agreements. None of Conseco, the Company, Green Tree Residual or
Green Tree Five shall enter into any agreement containing any provision which
(a) would be violated or breached by the performance of its obligations
hereunder or under any instrument or document delivered or to be delivered by it
hereunder or in connection herewith or (b) prohibits or restricts the ability of
any such Person to amend or otherwise modify this Agreement or any other
document executed in connection herewith. The documentation governing any
guarantee by CIHC of any of the obligations under the New Bank Facility
Documents (including any related subordination arrangements) shall not at any
time be materially more favorable to the beneficiaries thereof than the CIHC
Guaranty.
4.6 Application of Payments. Each of CIHC and Conseco shall apply all
amounts received from any dividend, distribution or transfer permitted to be
made under Item 5 of Exhibit B after the Effective Date as follows: first, to
any unpaid interest accruing on the Intercompany Note; second, to repay or
prepay principal of the Intercompany Note or an increase in any intercompany
receivable; third, to dividends on the Preferred Stock; fourth, to the
redemption of the Preferred Stock; and fifth, as a common stock dividend.
4.7 Conduct of Business. Each of Conseco and the Company shall, and shall
cause their respective subsidiaries to, pay and discharge when the same becomes
due and payable all obligations owing therefrom, consistent with past practice.
4.8 Certain Actions. Neither Conseco nor the Company, nor any of their
respective directors or officers, shall take any action, and the Company shall
not permit any of its subsidiaries to take any action, in connection with any
sale, assignment, lease, encumbrance, transfer, contribution or disposition of
any material assets or property of the Company, which would be inconsistent with
their respective fiduciary duties under Delaware law to Lehman (or any assignee
of Lehman) as the holder of the Warrant referred to in Section 12 hereof.
Notwithstanding any other provision of this Agreement,
<PAGE>
the Warehouse Facility Documents, the Residual Facility Documents or the New
Bank Facility Documents, a breach of this Section 4.8 shall not constitute an
Event of Default under the Warehouse Facility Documents, the Residential
Facility Documents or the New Bank Facility Documents.
4.9 No Restriction on Certain Dispositions. Except in the ordinary course
of business, none of Conseco, the Company, Green Tree Residual or Green Tree
Five shall enter into any agreement which directly or indirectly prohibits or
restricts the ability of the Company or any of its subsidiaries to sell, assign,
lease, transfer, contribute, convey, issue or dispose of, or grant any rights
with respect to (a) loans, leases, receivables, installment contracts and other
financial products originated, acquired, sold or securitized by the Company or
any of its subsidiaries or (b) interests in or components of any interest,
including servicing fees, retained by the Company or any of its subsidiaries
relating to the sale or securitization of loans, leases receivables or
installment contracts, which constitutes either an interest only security or a
servicing right asset in accordance with GAAP.
50 Board Matters.
5.1 Independent Board Member. Concurrently herewith, Conseco shall nominate
an Independent Director (as defined in the certificate of incorporation of the
Company) to the Company's Board of Directors (the "Independent Board Member").
The Independent Board Member shall be subject to Lehman's consent and approval,
which shall not be unreasonably delayed. Conseco and the Company agree to take
all action within their respective power (including, without limitation, the
voting of capital stock of the Company owned by Conseco and any of its
Affiliates) required to cause the Board of Directors of the Company to at all
times include such nominee (and any replacement nominee) as a director of the
Company's Board of Directors.
5.2 Vacancies. If, prior to election to the Board of Directors of the
Company pursuant to Section 5.1 hereof, any Independent Board Member shall be
unable or unwilling to serve as a director of the Company, Conseco shall
promptly nominate a replacement in accordance with Section 5.1 hereof, who shall
then be the Independent Board Member for purposes of this Section 6. If,
following an election to the Board of Directors of the Company pursuant to this
Section 6, any Independent Board Member shall resign or be removed or be unable
to serve for any reason prior to the expiration of his term as a director of the
Company, Conseco shall notify the Board of Directors of the Company in writing
of a replacement Independent Board Member, and either (i) Conseco shall vote its
shares of capital stock of the Company, at any regular or special meeting called
for the purpose of filling positions on the Board of Directors of the Company or
by written consent executed in lieu of such a meeting of stockholders, and shall
take all such other actions necessary to ensure the election to the Board of
Directors of the Company of such replacement Independent Board Member to fill
the unexpired term of the Independent Board Member whom such new Independent
Board Member is replacing or (ii) the remaining members of the Board of
Directors (whether or not constituting a quorum) shall elect such replacement
Independent Board Member to fill the unexpired
<PAGE>
term of the Independent Board Member who such new Independent Board Member is
replacing.
5.3 Observer Designee. Lehman shall be entitled to have one designee (an
"Observer Designee") attend all of the meetings of the Board of Directors (and
each committee thereof) of the Company, in each case other than those portions
(if any) of any meeting (a) dealing with (i) the Company's obligations to Lehman
or Lehman's Affiliates, (ii) matters reasonably expected to be adverse to Lehman
or (iii) matters the disclosure of which to Lehman could reasonably be expected
to be adverse to the Company or (b) where necessary to protect the
attorney-client privilege of any matter material to the Company. The Observer
Designee shall not be entitled to vote on any matters presented to the Board of
Directors or to such committees. The Company shall give notice, including,
without limitation, any proposed agenda, to Lehman of each such meeting at the
same time and in the same manner as the members of the Board of Directors (or
any committee thereof) receive notice of such meetings. Lehman shall be entitled
to receive all written materials and other information given to the directors of
the Company in connection with such meetings at the same time such materials are
given to such directors. If the Company proposes to take action by written
consent in lieu of a meeting of its Board of Directors, the Company shall give a
copy of such consent to Lehman at the same time as the members of the Board of
Directors. Such Observer Designee shall maintain the confidentiality of all
confidential information of the Company, provided that such Observer Designee
may share such information with Lehman.
5.4 Costs and Expenses. The Company shall pay all reasonable out-of-pocket
expenses incurred by the Independent Board Member and the Board Observer in
connection with their participation in meetings of the Board of Directors (and
committees thereof) of the Company. The Company shall also pay the Independent
Board Member customary and appropriate retainer and fees as may be mutually
agreed upon by the Company and such Independent Board Member. The Company and
such Independent Board Member shall negotiate such retainer and fees in good
faith so as to ensure that such amounts are customary and appropriate.
60 Restrictions on Transfer of Stock
6.1 Tag Along Right.
(a) No Stockholder (as defined below) shall Transfer (as defined below)
any Stock (as defined below), if, after giving effect to all prior
Transfers from and after the date hereof by such Stockholder such Transfers
constitute more than ten percent (10%) of the Common Stock (as defined
below) owned by all Stockholders on the date hereof, in a single
transaction or related series of transactions, to any Purchaser (as defined
below) unless the terms and conditions of such sale, transfer or other
disposition (the "Tag Along Sale") to such Purchaser shall contain an offer
to each Potential Seller (as defined below) to include in such Tag Along
Sale such number of shares of Common Stock as is determined in accordance
with Section 6.1(b) below. At least 15 days prior to effecting any Tag
Along Sale, such selling Stockholder (the "Selling Stockholder") shall
promptly
<PAGE>
cause the terms and conditions of the Tag Along Sale to be reduced to a
reasonably detailed writing (which writing shall identify the Purchaser and
shall include the offer to Potential Sellers to purchase or otherwise
acquire their Common Stock according to the terms and subject to the
conditions of this Section 6), and shall deliver, or cause the Purchaser to
deliver, written notice (the "Notice") of the terms of such Tag Along Sale
to each Potential Seller. The Notice shall be accompanied by a true and
correct copy of the agreement, if any, embodying the terms and conditions
of the proposed Tag Along Sale or such written summary thereof if there is
no agreement. At any time after receipt of the Notice (but in no event
later than 10 business days after receipt), each Potential Seller may
accept the offer included in the Notice for up to such number of its shares
of Common Stock as determined in accordance with the provisions of Section
6.1(b) below, by furnishing irrevocable written notice of such acceptance
to the Selling Stockholder and to the Purchaser.
(b) In the event that any Potential Seller elects to accept the offer
included in the Notice described in Section 6.1(a) above, such Potential
Seller (the "Included Stockholder") shall have the right to sell, transfer
or otherwise dispose of such number of its shares of Common Stock pursuant
to, and upon consummation of, the Tag Along Sale which is equal to the
product of (X) the total number of shares of Common Stock owned by the
Included Stockholder and (Y) a fraction, the numerator of which shall equal
the total number of shares of Common Stock to be sold to the Purchaser by
the Selling Stockholder, and the denominator of which shall equal the total
number of shares of Common Stock owned by the Selling Stockholder. If the
Purchaser is not willing to purchase such additional shares, the number of
shares to be sold by the Selling Stockholder and the Included Stockholders
shall be proportionately reduced.
(c) The purchase of Stock pursuant to this Section 6 shall be made on
the same terms (including, without limitation, the per share consideration
and method of payment, and the date of sale, transfer or other
disposition), and subject to the same conditions, if any, as are provided
to the Selling Stockholder and stated in the Notice.
(d) Upon the consummation of the disposition of Stock to the Purchaser
pursuant to the Tag Along Sale, the Selling Stockholder shall (i) cause the
Purchaser to remit directly to each Included Stockholder the sales price of
its Stock disposed of pursuant thereto, and (ii) furnish such other
evidence of the completion and time of completion of such disposition and
the terms thereof as may reasonably be requested by such Included
Stockholder.
(e) If a Potential Seller has not delivered to the Selling Stockholder
and to the Purchaser written notice of its acceptance of the offer
contained in the Notice within 10 business days after the receipt of such
Notice, it shall be deemed to have waived any and all rights pursuant to
this Section 6 with respect to the disposition of its Stock described in
the Notice, and the Selling Stockholder shall have 45
<PAGE>
days (calculated from the first day next succeeding the expiration of the
10 business day acceptance period described above), in which to dispose of
the aggregate amount of Stock described in the Notice to the Purchaser
identified in the Notice, on terms not more favorable to the Selling
Stockholder than those which were set forth in the Notice. If a Potential
Seller has delivered irrevocable written notice of acceptance as described
in the preceding sentence and, if after 30 days following receipt of the
Notice, the Selling Stockholder and the Purchaser shall not have completed
the disposition of Stock to be sold in connection therewith in accordance
with the terms of the Tag Along Sale, all the restrictions on the
disposition of Stock contained in this Section 6 shall again be in force
and effect.
6.2 Drag-Along Right.
(a) If a Stockholder proposes to Transfer to any Purchaser a number of
shares of Stock which represents at least a majority of the outstanding
shares of Common Stock on a fully-diluted basis (the "Transferred Shares")
then, at the election of such holder or holders (a "Drag Along Seller"),
each other Stockholder (each, a "Drag Along Stockholder") shall be required
to sell to such Purchaser (a "Drag Along Sale") a number of shares of Stock
determined by the Drag Along Seller up to the total number of shares of
Stock then held by such Drag Along Stockholder (the "Drag Along Shares").
If the percentage of any Drag Along Stockholder's Stock required to be sold
as Drag Along Shares exceeds the percentage of the Drag Along Seller's
Stock to be sold to Purchaser in a Drag Along Sale, Drag Along Seller,
shall, at its sole expense, arrange for the delivery of a fairness opinion
by an investment banking firm of nationally recognized standing acceptable
to such Drag Along Stockholder (which acceptance shall not be unreasonably
withheld or delayed). Such fairness opinion shall confirm that the terms of
the Drag Along Sale are fair to the Drag Along Stockholders from a
financial point of view.
(b) The Drag Along Seller shall deliver to each Drag Along Stockholder
written notice (the "Drag Along Notice") of any sale to be made pursuant to
Section 6.2(a) above, which notice shall set forth the consideration to be
paid by the Purchaser for each Transferred Share, the number of Transferred
Shares to be sold by the Drag Along Seller, the number of shares to be sold
by each Drag Along Stockholder, and the other terms and conditions, if any,
of such transaction. Pending consummation of the Drag Along Sale, the Drag
Along Seller shall promptly notify each Drag Along Stockholder of any
changes in the proposed timing for the Drag Along Sale and any other
material developments in connection therewith. The Drag Along Sale shall be
on the same terms and conditions as the sale of the Transferred Shares by
the Drag Along Seller. The Drag Along Stockholder shall only be required to
give representations and warranties as to its due organization, its due
authorization and title to the Drag Along Shares and shall only be required
to indemnify for breach of its own representations and warranties.
<PAGE>
(c) If, within 15 days after the Drag Along Seller provides the Drag
Along Notice, no sale of the Transferred Shares owned by the Drag Along
Seller or the Drag Along Stockholder in accordance with the provisions of
this Section 6 shall have been completed, the Drag Along Sale shall be
terminated for purposes hereof.
(d) Simultaneously with the consummation of the sale of the Transferred
Shares pursuant to this Section 6 the Drag Along Seller shall cause the
Purchaser to remit directly to the Drag Along Stockholder the consideration
with respect to the Drag Along Shares and shall furnish such other evidence
of the completion and time of completion of such sale and terms and
conditions, if any, thereof as may reasonably be requested by the Drag
Along Stockholder.
(e) The provisions of this Section 6, however, shall remain in effect
for any subsequent proposed sale.
6.3 Permitted Dispositions of Stock. Each Stockholder shall be entitled to
directly or indirectly Transfer all or any portion of its Stock to any Affiliate
of such Stockholder, and no such Transfer (other than a Transfer to a Purchaser)
shall give rise to any rights under Sections 6.1 or 6.2. No Transfer may be made
under this Section 6.3 unless the Person acquiring the shares of Stock pursuant
to such Transfer agrees in writing to be bound by the provisions of this Section
6. No Transfer permitted by this Section 6.3 shall relieve the Stockholder
effecting such Transfer from its obligations hereunder.
6.4 Definitions. For the purposes hereof, the following terms have the
respective meanings:
(a) "Common Stock" means the common stock, $.01 par value, of the
Company.
(b) "Potential Seller(s)" means any Stockholder other than the Selling
Stockholder.
(c) "Purchaser" means any Person to which shares of Stock are proposed
to be Transferred, but shall not include:
(i) any Person 30% or more of the fully diluted capital stock or
other equity or ownership interests of which are directly or indirectly owned by
the Selling Stockholder(s) and/or any Affiliates thereof (in the case of a Tag
Along Sale) or the Drag Along Seller(s) and/or any Affiliates thereof (in the
case of a Drag Along Sale); or
(ii) any Person 30% or more of the voting power of which is
directly or indirectly owned by the Selling Stockholder(s) and/or any Affiliates
thereof (in the case of a Tag Along Sale) or the Drag Along Seller(s) and/or any
Affiliates thereof (in the case of a Drag Along Sale).
<PAGE>
(d) "Stock" means (i) Common Stock, (ii) any capital stock into which
such common stock may be changed or converted, (iii) capital stock of the
Company of any other class (regardless of how denominated) issued to the
holders of shares of Common Stock upon any reclassification thereof which
is also not preferred as to dividends or assets on liquidation over any
other class of stock of the Company and which is not subject to redemption,
(iv) shares of common stock of any successor or acquiring corporation
received by or distributed to the holders of Common Stock of the Company
and (v) any warrant, option or other right exercisable for or convertible
into capital stock of the Company (including without limitation that
certain Warrant, dated May 11, 2000, issued by the Company to Lehman),
together with any shares of capital stock of the Company issued upon the
exercise or conversion thereof. For purposes of all calculations under this
Section 6, any warrants, options and other rights referred to in Section
6.4(c)(v) shall be assumed to have been fully vested, exercised, and
converted, as the case may be, immediately prior to any such calculation,
and shall be treated for purposes of such calculations as the number of
shares of Common Stock into which such warrants, options and other rights
are exercisable or convertible.
(e) "Stockholders" means each of the parties hereto and their
respective successors and assigns (other than the Company), whom on the
date hereof are holders of shares of Stock (including without limitation
Lehman).
(f) "Transfer(s)" means to directly or indirectly, transfer, sell,
assign, donate, contribute, or otherwise voluntarily or involuntarily
dispose of.
6.5 Non-Cash Consideration. Notwithstanding anything in this Section 6 to
the contrary, if (i) the consideration payable for shares of Stock to be sold in
a Tag Along Sale or a Drag Along Sale consists of property other than cash
("Non-Cash Consideration") and (ii) the Purchaser acquiring such shares so
requests in writing, each Included Stockholder or Drag Along Stockholder
(collectively, "Holders") shall receive cash in lieu of Non-Cash Consideration
that would otherwise be received by such Holder as consideration for the shares
of Stock to be sold in such Tag Along Sale or Drag Along Sale (as the case may
be). The amount of such cash shall equal the Appraised Value of the Non-Cash
Consideration that would otherwise be received by such Holder. The term
"Appraised Value" means:
(A) in respect of any share of capital stock included in the Non-Cash
Consideration for which there is not a public market, the fair saleable value of
such share of capital stock (determined without giving effect to the discount
for (i) a minority interest or (ii) any lack of liquidity of such capital stock
or to the fact that the company issuing such capital stock may have no class of
equity registered under the Securities Exchange Act of 1934, as amended) as of
the last day of the most recent fiscal month end based on the value of the
Company, as determined by an investment banking firm of recognized national
standing acceptable to the Holder (which acceptance shall not be
<PAGE>
unreasonably withheld or delayed) divided by the number of fully diluted shares
of capital stock of such issuer;
(B) in respect of any share of capital stock included in the Non-Cash
Consideration for which there is a public market, the average of the daily
market prices of such stock for 30 consecutive business days commencing 45 days
before such date. The daily market price for each such business day shall be (i)
the last sale price on such day on the principal stock exchange on which such
capital stock is then listed or admitted to trading, (ii) if no sale takes place
on such day on any such exchange, the average of the last reported closing bid
and asked prices on such day as officially quoted on any such exchange, (iii) if
such capital stock is not then listed or admitted to trading on any stock
exchange, the average of the last reported closing bid and asked prices on such
day in the over-the-counter market, as furnished by the National Association of
Securities Dealers Automatic Quotation System or the National Quotation Bureau,
Inc., (iv) if neither such corporation at the time is engaged in the business of
reporting such prices, as furnished by any similar firm then engaged in such
business, or (v) if there is no such firm, as furnished by any member of the
NASD selected mutually by the Holder and the Company or, if they cannot agree
upon such selection, an investment banking firm of recognized national standing
as selected by two such members of the NASD, one of which shall be selected by
the Holder and one of which shall be selected by the Company; and
(C) in respect of any property included in the Non-Cash Consideration
other than those types described in paragraphs (A) and (B) above, the fair
market value of such property as determined by an entity qualified to make such
determinations acceptable to the Holder (which acceptance shall not be
unreasonably withheld or delayed).
7. Representations and Warranties.
7.1 Conseco, CIHC, the Company, Green Tree Residual and Green Tree Five.
Conseco, CIHC, the Company, Green Tree Residual and Green Tree Five hereby
represent and warrant to Lehman as follows:
(a Organization. Each of Conseco, CIHC, the Company, Green Tree
Residual and Green Tree Five is a corporation duly organized, validly
existing, and in good standing under the Laws (as defined below) of its
jurisdiction of incorporation, and has full corporate power and authority
to enter into this Agreement and the other Transaction Documents to which
it is a party and to perform its obligations under this Agreement and the
other Transaction Documents to which it is a party. The term "Law" shall
mean all laws, statutes, ordinances, Orders, and regulations of the United
States of America or any state, commonwealth, city, county, or municipality
thereof. The term "Order" shall mean an order, writ, ruling, judgment,
directive, injunction or decree of any arbitrator, mediator or governmental
or regulatory authority. Each of Conseco and the Company are operated as
separate and independent corporations, and each maintains separate and
independent (i) corporate books and records including but
<PAGE>
not limited to all matters related thereto and (ii) financial statements
and balance sheets.
(b Authority. The execution and delivery of this Agreement by Conseco,
CIHC, Green Tree Residual, Green Tree Five and the Company and the
performance by Conseco, CIHC, Green Tree Residual, Green Tree Five and the
Company of their respective obligations under this Agreement and the
Transaction Documents to which they are a party have been duly and validly
authorized by all necessary corporate action on the part of Conseco, CIHC,
Green Tree Residual, Green Tree Five and the Company. This Agreement (i)
has been duly executed and delivered by Conseco, CIHC, Green Tree Residual,
Green Tree Five and the Company, (ii) constitutes a legal, valid, and
binding obligation of Conseco, CIHC, Green Tree Residual, Green Tree Five
and the Company and (iii) is enforceable against Conseco, CIHC, Green Tree
Residual, Green Tree Five and the Company in accordance with its terms,
except to the extent that (a) enforcement may be limited by or subject to
any bankruptcy, insolvency, reorganization, moratorium, or similar Laws now
or hereafter in effect relating to or limiting creditors' rights generally
and (b) the remedy of specific performance and injunctive and other forms
of equitable relief are subject to certain equitable defenses and to the
discretion of the court or other similar Person before which any proceeding
therefor may be brought.
(c Business Structure. Conseco and CIHC, on the one hand, and the
Company, on the other, being separate and independent corporations, (i)
have observed separate and independent corporate formalities related
thereto and have separate and independent (A) business locations, (B)
operating accounts, (C) employees, (D) assets and liabilities, and (E)
proceeds from the sale of each entity's respective stock (it being
recognized that an immaterial sharing of employees and facilities has
occurred with an appropriate allocation of costs related thereto) and (ii)
do not commingle funds or other assets.
(d No Conflicts or Violations. The execution and delivery of this
Agreement by Conseco, CIHC, Green Tree Residual, Green Tree Five and the
Company do not, and the performance by Conseco, CIHC, Green Tree Residual,
Green Tree Five and the Company of their respective obligations under this
Agreement will not:
(i) violate any term or provision of any Law applicable to
Conseco, CIHC, Green Tree Residual, Green Tree Five or the Company or any of
their respective subsidiaries, other than such violations that would not
reasonably be expected to result in a Material Adverse Effect (as defined below)
on the Company, CIHC, Green Tree Residual, Green Tree Five or Conseco;
(ii) conflict with or result in a violation or breach of any of
the provisions of the certificate of incorporation or bylaws of Conseco, CIHC,
Green Tree Residual, Green Tree Five or the Company or any of their respective
subsidiaries;
<PAGE>
(iii) conflict with or result in a violation or breach of, or
constitute a default under, any contract or other agreement to which Conseco,
CIHC, Green Tree Residual, Green Tree Five or the Company or any of their
respective subsidiaries is a party other than such conflicts, violations,
breaches or defaults that would not reasonably be expected to result in a
Material Adverse Effect on the Company, CIHC, Green Tree Residual, Green Tree
Five or Conseco; or
(iv) require Conseco, CIHC, Green Tree Residual, Green Tree Five
or the Company or any of their respective subsidiaries to obtain any consent,
approval, or action of, or make any filing with or give any notice to, any
Person (except disclosure of the transactions contemplated in this Agreement in
public filings as may be required by applicable securities laws or stock
exchange rules), other than those the failure of which to obtain or make would
not reasonably be expected to result in a Material Adverse Effect on the
Company, CIHC, Green Tree Residual, Green Tree Five or Conseco.
The term "Material Adverse Effect" shall mean, as to any party hereto,
any material adverse effect on (i) the assets, properties, business,
licenses, income, condition (financial or otherwise) or results of the
respective operations of such party, (ii) the transactions contemplated by
this Agreement, (iii) the legality, validity or enforceability of this
Agreement and the agreements and instruments to be entered into in
connection herewith, or the realization of the rights and remedies
thereunder, or (iv) the ability of such party to perform its respective
obligations under this Agreement.
(e Capitalization of the Company. As of the date hereof after giving
effect to the transactions contemplated hereby, (i) the authorized capital
stock of the Company consists of 1,000 shares of common stock, par value
$.01 per share, of the Company ("Common Stock") and 1,000 shares of
preferred stock, par value $.001 per share, of the Company and (ii) there
are 103 shares of Common Stock issued and outstanding and 750 shares of
Preferred Stock issued and outstanding. All issued and outstanding shares
of Common Stock of the Company are duly authorized, validly issued, fully
paid, and nonassessable and are owned beneficially and of record by CIHC
and all issued and outstanding shares of Preferred Stock are duly
authorized, validly issued, fully paid and nonassessable and are owned
beneficially and of record by Conseco. Conseco directly owns all of the
issued and outstanding common stock of CIHC. There are no outstanding
securities, rights (preemptive or other), subscriptions, calls, warrants,
options, or other agreements (except for the warrant issued as of May 11,
2000 by the Company to Lehman (the "Warrant")) that give any Person the
right to purchase or otherwise receive or be issued any shares of capital
stock of the Company or CIHC or any security convertible into or
exchangeable for any shares of capital stock of the Company or CIHC.
Immediately after issuance of the Warrant, the shares of Common Stock into
which the Warrant will be exercisable represented 5% of the fully diluted
common stock of the Company (assuming full vesting, conversion, and
exercise of all securities, options, warrants, and other rights).
<PAGE>
(f Charter Documents and Bylaws. The Company has heretofore made
available to Lehman true and complete copies of the certificate of
incorporation and bylaws of the Company, in each case as in effect on the
date hereof after giving effect to the Effective Date.
(g Intercompany Indebtedness. Schedule 7.1(g) hereto sets forth the
amount and nature of all indebtedness for borrowed money owed by the
Company to Conseco or any Affiliate thereof as of the date hereof.
(h CIHC Guaranty. The obligations of CIHC under the CIHC Guaranty do
and will rank at least pari passu in priority of payment with all other
unsecured indebtedness of CIHC.
7.2 Lehman. Lehman hereby represents and warrants to the Company, CIHC,
Green Tree Residual, Green Tree Five and Conseco as follows:
(a Organization. Lehman is a corporation duly organized, validly
existing, and in good standing under the Laws of its jurisdiction of
incorporation, and has full corporate power and authority to enter into
this Agreement and to perform its obligations under this Agreement.
(b Authority. The execution and delivery of this Agreement by Lehman
and the performance by Lehman of its obligations under this Agreement have
been duly and validly authorized by all necessary corporate action on the
part of Lehman. This Agreement (i) has been duly executed and delivered by
Lehman, (ii) constitutes a legal, valid, and binding obligation of Lehman
and (iii) is enforceable against Lehman in accordance with its terms,
except to the extent that (a) enforcement may be limited by or subject to
any bankruptcy, insolvency, reorganization, moratorium, or similar Laws now
or hereafter in effect relating to or limiting creditors' rights generally
and (b) the remedy of specific performance and injunctive and other forms
of equitable relief are subject to certain equitable defenses and to the
discretion of the court or other similar Person before which any proceeding
therefor may be brought.
(c No Conflicts or Violations. The execution and delivery of this
Agreement by Lehman do not, and the performance by Lehman of its
obligations under this Agreement will not:
(i) violate any term or provision of any Law applicable to Lehman
or any of its subsidiaries other than such violations that would not reasonably
be expected to result in a Material Adverse Effect on Lehman;
(ii) conflict with or result in a violation or breach of any of
the provisions of the certificate of incorporation or bylaws of Lehman or any of
its subsidiaries;
(iii) conflict with or result in a violation or breach of, or
constitute a default under, any contract or other agreement to which Lehman or
any of its
<PAGE>
subsidiaries is a party, other than such conflicts, violations, breaches or
defaults that would not reasonably be expected to result in a Material Adverse
Effect on Lehman;
(iv) require Lehman or any of its subsidiaries to obtain any
consent, approval, or action of, or make any filing with or give any notice to,
any Person, other than those the failure to obtain or make would not reasonably
be expected to result in a Material Adverse Effect on Lehman.
8. Survival of Representations and Warranties.
8.1 Survival. Subject to Section 8.2 hereof, the representations and
warranties respectively made by the parties in this Agreement will expire on the
second anniversary hereof, except that the representations and warranties set
forth in Sections 7.1(e) and 7.1(g) hereof will remain in full force and effect
until the expiration of all applicable statutes of limitation (including all
periods of extension, whether automatic or permissive).
8.2 Pursuit of Claims. Any breach of any representation or warranty as to
which a bona fide claim for indemnification has not been asserted in accordance
with Section 9.3 hereof during the applicable survival period set forth in
Section 8.1 hereof may not be pursued and is hereby irrevocably waived, except
that if a claim for indemnification is made in accordance with Section 9.3
hereof before the expiration of the applicable survival period set forth in
Section 8.1 hereof, then (notwithstanding such survival period) the
representation or warranty applicable to such claim shall survive until, but
only for purposes of, the resolution of such claim.
9. Indemnification.
9.1 Indemnification by Conseco and the Company. Subject to the provisions
of Section 8 hereof, Conseco, CIHC and the Company shall jointly and severally
indemnify, defend, and hold harmless the Lehman Indemnitees (as defined below)
for any and all Damages (as defined below) resulting from or relating to (i) any
breach by Conseco, CIHC, Green Tree Residual, Green Tree Finance or the Company
of any covenant or agreement made by Conseco, CIHC, Green Trees Residual, Green
Tree Finance, the Company or any Affiliate thereof that subsequently becomes a
party to this Agreement, in this Agreement and (ii) any breach by Conseco, CIHC,
Green Tree Residual, Green Tree Five, the Company or any Affiliate thereof that
subsequently becomes a party to this Agreement of any representation or warranty
contained in Section 9.1 of this Agreement. The term "Lehman Indemnitee" shall
mean Lehman, any Affiliate of Lehman, and any officer, director, employee,
agent, or other representative of such entities. The term "Damages" shall mean
any and all monetary damages, liabilities, fines, fees, penalties, interest
obligations, deficiencies, losses, costs, expenses (including reasonable fees
and expenses of attorneys, accountants, actuaries, and other experts).
9.2 Indemnification by Lehman. Subject to the provisions of Section 8
hereof, Lehman shall indemnify, defend, and hold harmless the Conseco
Indemnitees (as defined below) for any and all Damages resulting from or
relating to (i) any breach by Lehman of
<PAGE>
any covenant or agreement made by Lehman in this Agreement and (ii) any breach
by Lehman of any representation or warranty contained in Section 7.2 of this
Agreement. The term "Conseco Indemnitee" shall mean Conseco, any Affiliate of
Conseco, and any officer, director, employee, agent, or other representative of
such entities.
9.3 Indemnification Procedures.
(a If an Indemnitee becomes aware of any matter that it believes is
indemnifiable pursuant to Section 9.1 or 9.2 hereof and such matter
involves (i) any claim made against the Indemnitee by any Person other than
any Lehman Indemnitee or Conseco Indemnitee or (ii) the commencement of any
action, suit, investigation, arbitration, or similar proceeding against the
Indemnitee by any Person other than any Lehman Indemnitee or Conseco
Indemnitee, the Indemnitee shall give the Indemnifying Party prompt written
notice of such claim or the commencement of such action, suit,
investigation, arbitration, or similar proceeding, which notice must (A) be
given during the applicable survival period, (B) provide (with reasonable
specificity) the basis on which indemnification is being asserted, (C) set
forth the actual or good-faith estimated amount of Damages for which
indemnification is being asserted, if known, and (D) be accompanied by
copies of all relevant pleadings, demands, and other papers served on the
Indemnitee. Failure to provide notice shall not relieve an Indemnifying
Party of any obligation to provide indemnity hereunder, except to the
extent that the Indemnifying Party is prejudiced by such failure in its
efforts to defend such claim
(b The Indemnifying Party shall have a period of 30 days after the
delivery of each notice required by Section 9.3(a) hereof during which to
respond to such notice. If the Indemnifying Party elects to defend the
claim described in such notice or does not respond within such 30-day
period, the Indemnifying Party shall be obligated to compromise or defend
(and shall control the defense of) such claim, at its own expense and by
counsel chosen by the Indemnifying Party. The Indemnitee shall cooperate
fully with the Indemnifying Party and counsel for the Indemnifying Party in
the defense against any such claim, and the Indemnitee shall have the right
to participate at its own expense in the defense of any such claim. If the
Indemnifying Party responds within such 30-day period and elects not to
defend such claim, the Indemnitee shall be free to compromise or defend
(and control the defense of) such claim and to pursue such remedies as may
be available to the Indemnitee under applicable Law.
(c Any compromise or settlement of any claim (whether defended by the
Indemnitee or by the Indemnifying Party) shall require the prior written
consent of the Indemnitee and the Indemnifying Party, which consent shall
not be unreasonably withheld or delayed. If, however, the Indemnitee
refuses to consent to a bona fide offer of compromise or settlement that
the Indemnifying Party desires to accept, the Indemnitee may continue to
pursue such claim, free of any participation by the Indemnifying Party, at
the sole expense of the Indemnitee. In
<PAGE>
such event, the obligation of the Indemnifying Party to the Indemnitee will
equal the lesser of (i) the amount of the offer of compromise of settlement
that the Indemnifying Party desired to accept, plus the reasonable
out-of-pocket expenses (except for expenses resulting from the Indemnitee's
participation in any defense controlled by the Indemnifying Party) incurred
by the Indemnitee before the date the Indemnifying Party notified the
Indemnitee of the offer of compromise or settlement, or (ii) the actual
out-of-pocket amount that the Indemnitee is obligated to pay as a result of
the Indemnitee's continued pursuit of such claim, plus the reasonable
out-of-pocket expenses incurred by the Indemnitee after the Indemnifying
Party notified the Indemnitee of the offer of compromise or settlement,
minus the reasonable out-of-pocket expenses incurred by the Indemnifying
Party after such notice date.
(d If an Indemnitee becomes aware of any matter that it believes is
indemnifiable pursuant to Section 9.1 or 9.2 hereof and such matter
involves a claim made by Lehman, Conseco or the Company, the Indemnitee
shall give the Indemnifying Party prompt written notice of such claim,
which notice must (i) be given during the applicable survival period, (ii)
provide (with reasonable specificity) the bases for which indemnification
is being asserted, and (iii) set forth the actual or good-faith estimated
amount of Damages for which indemnification is being asserted. The
Indemnifying Party will have a period of 30 days after the delivery of each
notice required by this Section 9.3(d) during which to respond to such
notice. If the Indemnifying Party accepts (in writing) full responsibility
for the claim described in such notice, the Indemnifying Party shall pay
upon demand to the Indemnitee the actual or estimated amount of Damages
reflected in such notice. If the Indemnifying Party has disputed such claim
or does not respond within such 30-day period, the Indemnifying Party and
the Indemnitee agree to proceed in good faith to negotiate a resolution of
such dispute. If all such disputes are not resolved through negotiations
within 30 days after such negotiations begin or if such negotiations are
not initiated within 30 days after notice is given, either the Indemnifying
Party or the Indemnitee may initiate litigation to resolve such disputes.
(e The term "Indemnitee" shall mean a Person claiming indemnification
under this Section 9. The term "Indemnifying Party" shall mean a Person
against whom claims of indemnification are being asserted under this
Section 9.
10. Termination.
10.1 Termination Events. This Agreement shall terminate and be of no
further force or effect automatically and without any action of the parties
hereto at such time as (i) all indebtedness under the Residual Facility
Documents shall have been repaid in full in accordance with the terms of the
Residual Facility Documents and all commitments thereunder terminated and
obligations owing thereunder paid in full and (ii) the Company or an Affiliate
shall have repurchased all of the Esoteric Assets (as defined in the Warehouse
Facility Documents) and owned by Lehman Commercial Paper Inc. on the
<PAGE>
repurchase date in accordance with the terms of the Warehouse Facility Documents
and Conseco and its Affiliates shall have taken all action necessary including,
without limitation, the repurchase of other assets sold under the Warehouse
Facility Documents in accordance with the terms thereof so that immediately
after giving effect to such repurchases and actions, neither the Company nor
Green Tree Five would be in default under the Warehouse Facility Documents and
the aggregate amount of wet financing under Section 11(e) of the Repurchase
Agreement then outstanding would not exceed $150 million.
10.2 Effect of Termination. If this Agreement terminates pursuant to
Section 10.1 hereof, this Agreement shall become null and void except that, (a)
the provisions of Sections 6, 10, 11, and 13 and the last sentence of Section
5.3 hereof will continue to apply following any such termination, and (b) no
party hereto will be relieved of any Liability (as defined below) for Damages
that such party may have to the other parties by reason of such party's breach
of this Agreement (or any representation, warranty, covenant, or agreement
included herein). The term "Liability" shall mean all debts, obligations, and
other liabilities (including without limitation surplus relief transactions) of
a person (whether known or unknown and whether absolute, accrued, contingent,
fixed, or otherwise, or whether due or to become due).
11. Public Announcements. No party shall make any public announcement or media
comment regarding the existence or subject matter of this Agreement without
prior consultation with the other parties hereto, except as required by
law, applicable regulation or the rules of any securities exchange on which
a party's securities are publicly traded. Each party shall not, and shall
cause its direct and indirect subsidiaries to not, issue any press release
or make any other public announcement or filing regarding any matter
associated with this Agreement or the matters described herein unless the
other parties hereto have been afforded a reasonable opportunity to review
such release or announcement.
12. Warrant. Lehman, the Company and Conseco shall negotiate in good faith for
the exchange of the Warrant No. 1 to Purchase Common Stock of the Company
issued on May 11, 2000 to Lehman with a warrant to purchase common stock of
Conseco.
13. Miscellaneous
13.1 Notices. Any notice or other communication given pursuant to this
Agreement must be in writing and (a) delivered personally, (b) sent by
telefacsimile or other similar facsimile transmission, (c) delivered by
overnight express, or (d) sent by registered or certified mail, postage prepaid,
as follows:
(a If to Conseco, CIHC, Green Tree Residual, Green Tree Five or the
Company:
<PAGE>
Conseco, Inc.
11825 North Pennsylvania Street
Carmel, IN 46032
Attention: Gary C. Wendt, Chairman of the Board
Facsimile: 317-817-6327
With a copy to:
Conseco, Inc.
11825 North Pennsylvania Street
Carmel, IN 46032
Attention: David K. Herzog, Executive Vice President
and Secretary
Facsimile: 317-817-6327
(b If to Lehman:
Lehman Brothers Holdings Inc.
3 World Financial Center
New York, NY 10285
Attention: Kurt Locher, Managing Director - FAS
Facsimile: 212-526-8579
and to:
Lehman Brothers Holdings Inc.
3 World Financial Center
New York, NY 10285
Attention: Vincent Primiano
Facsimile: 212-526-0035
With a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
Attention: Paul R. Lovejoy
Facsimile: 212-310-8007
(c All notices and other communications required or permitted under
this Agreement that are addressed as provided in this Section will (A) if
delivered personally or by overnight express, be deemed given upon
delivery; (B) if delivered by telefacsimile or similar facsimile
transmission, be deemed given when electronically confirmed; and (C) if
sent by registered or certified mail, be deemed given when received. Any
party from time to time may change its address for the purpose of notices
to that party by giving a similar notice specifying a new address, but no
such notice will be deemed to have been given until it is actually received
by the party sought to be charged with the contents thereof
13.2 Entire Agreement. Except for any Transaction Document or related
agreement executed by Lehman, Green Tree Residual, Green Tree Five, Conseco
and/or the Company prior hereto or concurrently herewith, this Agreement
supersedes all prior discussions and agreements between the parties with respect
to the subject matter of this Agreement, and this Agreement contains the sole
and entire agreement between the parties hereto with respect to the subject
matter hereof.
<PAGE>
13.3 Expenses. Except as otherwise expressly provided in this Agreement,
each of the parties hereto shall pay its own costs and expenses in connection
with this Agreement and the transactions contemplated hereby.
13.4 Brokers.
(a Indemnification by Conseco and the Company. Conseco and the Company
shall jointly and severally indemnify and hold harmless each Lehman
Indemnitee in respect of any and all claims or demands for commission,
compensation, or other Damages by any broker, finder, or other agent
(whether or not a present or former employee or agent of either of Conseco
or the Company) claiming to have been engaged by Conseco, the Company or
any of their respective Affiliates in connection with the transactions
contemplated by this Agreement, and Conseco and the Company shall bear the
cost of the reasonable out-of-pocket expenses incurred by each Lehman
Indemnitee in investigating, defending against, or appealing any such claim
or demand.
(b Indemnification by Lehman. Lehman shall indemnify and hold harmless
each Conseco Indemnitee in respect of any and all claims or demands for
commission, compensation, or other Damages by any broker, finder, or other
agent (whether or not a present or former employee or agent of Lehman)
claiming to have been engaged by Lehman or any Affiliate of Lehman in
connection with the transactions contemplated by this Agreement, and Lehman
shall bear the cost of the reasonable out-of-pocket expenses incurred by
each Conseco Indemnitee in investigating, defending against, or appealing
any such claim or demand.
13.5 Waiver. Any term or condition of this Agreement may be waived at any
time by the party that is entitled to the benefit thereof. Such waiver must be
in writing and must be executed by an executive officer of such party. A waiver
on one occasion will not be deemed to be a waiver of the same or any other
breach or nonfulfillment on a future occasion. All remedies, either under this
Agreement, or by Law or otherwise afforded, will be cumulative and not
alternative.
13.6 Amendment. This Agreement may be modified or amended only by a writing
duly executed by or on behalf of all of the parties hereto.
13.7 Counterparts. This Agreement may be executed simultaneously in any
number of counterparts, each of which will be deemed an original, but all of
which will constitute one and the same instrument.
13.8 No Third Party Beneficiary. The terms and provisions of this Agreement
are intended solely for the benefit of Conseco, the Company, CIHC, Green Tree
Residual, Green Tree Five and Lehman, and their respective successors and
permitted assigns, and it is not the intention of the parties to confer
third-party beneficiary rights upon any other Person.
13.9 Governing Law; Venue. This Agreement will be governed by and construed
and enforced in accordance with the laws of the State of New York applicable
<PAGE>
to a Contract executed and performable in such state. EXCLUSIVE VENUE FOR ANY
ACTION RELATING TO THIS AGREEMENT SHALL BE MAINTAINED IN ANY FEDERAL OR STATE
COURT SITTING IN NEW YORK COUNTY, NEW YORK. EACH PARTY HEREBY CONSENTS TO
PERSONAL JURISDICTION AND SERVICE OF PROCESS IN THE STATE OF NEW YORK FOR
MATTERS BETWEEN THE PARTIES HERETO THAT ARISE OUT OF THIS AGREEMENT.
13.10 Binding Effect. This Agreement is binding upon and will inure to the
benefit of the parties and their respective successors and permitted assigns.
13.11 No Assignment. Neither this Agreement nor any right or obligation
hereunder or part hereof may be assigned by any parties hereto without the prior
written consent of the other parties hereto (and any attempt to do so will be
void), except (a) as otherwise specifically provided herein and (b) that Lehman
may assign all or any part of its rights or obligations hereunder to one or more
of its Affiliates without the consent of the other parties hereto, provided
however, that such assignment shall not relieve Lehman of its responsibilities
hereunder.
13.12 Invalid Provisions. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable under any present or future Law, and if the
rights or obligations under this Agreement of the parties hereto will not be
materially and adversely affected thereby, (a) such provision will be fully
severable; (b) this Agreement will be construed and enforced as if such illegal,
invalid, or unenforceable provision had never comprised a part hereof; and (c)
the remaining provisions of this Agreement will remain in full force and effect
and will not be affected by the illegal, invalid, or unenforceable provision or
by its severance from this Agreement.
13.13 Amendment and Restatement. Upon its effectiveness, this Agreement
amends and restates in its entirety the Original Agreement. This Agreement does
not constitute and shall not be construed to evidence a novation or termination
of the Original Agreement.
13.14 Headings. The headings of the Sections of this Agreement have been
inserted for convenience of reference only, are not intended to be considered a
part hereof, and shall not modify or restrict any term or provision hereof.
13.15 Specific Performance. The parties recognize that if any of the
parties hereto refuses to perform under the provisions of this Agreement (each,
a "Breaching Party"), monetary damages alone will not be adequate to compensate
the other parties for their injury. Each party hereto that has not refused to
perform under the provisions of this Agreement required to be performed by it
(each, a "Non-Breaching Party") shall therefore be entitled, in addition to any
other remedies that may be available, to obtain specific performance of the
terms of this Agreement. If any such action is brought by any party to enforce
this Agreement, any Breaching Parties shall waive the defense that there is an
adequate remedy at law. In the event of a default by any party which results in
the filing of a lawsuit for damages, specific performances, or other remedies,
any Non-Breaching
<PAGE>
Parties shall be entitled to reimbursement by any Breaching Parties of
reasonable legal fees and expenses incurred by such Non-Breaching Party.
13.16 Releases. In further consideration of the execution of this
Agreement, each of Conseco, CIHC, the Company, Green Tree Five and Green Tree
Residual hereby release Lehman and its affiliates, officers, employees,
directors, agents and attorneys (collectively, the "Releasees" from any and all
claims, demands, liabilities, responsibilities, disputes, causes of action
(whether at law or equity) and obligations of every nature whatsoever whether
liquidated or unliquidated, known or unknown, matured or unmatured, fixed or
contingent that any of such Persons may have against Releasees which arise
solely from or relate to any Transaction Document (other than the New Bank
Facility Documents), to the extent arising out of, or relating to, actions,
dealings or matters occurring on or prior to the date hereof (including, without
limitation, any actions or inactions which Releasees may have taken prior to the
date hereof); provided that such release shall in no manner amend, terminate,
alter or release any contractual right any party may have with respect to any
Releasee with respect to the terms and provisions of (a) agreements related to
financial advisory services, (b) that certain letter agreement by and between
Lehman and the Company dated May 11, 2000, (c) underwriting or placement
agreements entered into in connection with the sale of securities and (d) the
Warrant referred to in Section 12.
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
as of the date first written above by the duly authorized representatives of the
parties hereto.
CONSECO, INC.
By: /s/ James S. Adams
-------------------------------------
Name: James S. Adams
Title: Senior Vice President, Chief
Accounting Officer and Treasurer
CONSECO FINANCE CORP.
By: /s/ James S. Adams
-------------------------------------
Name: James S. Adams
Title: Senior Vice President and Chief
Accounting Officer
LEHMAN BROTHERS HOLDINGS INC.
By: /s/ Vincent Primiano
-------------------------------------
Name: Vincent Primiano
Title: Vice President
CIHC, INCORPORATED
By: /s/ David A. Hill
-------------------------------------
Name: David A. Hill
Title: Vice President
GREEN TREE RESIDUAL FINANCE CORP. I
By: /s/ Phyllis A. Knight
-------------------------------------
Name: Phyllis A. Knight
Title: Senior Vice President and Treasurer
GREEN TREE FINANCE CORP. - FIVE
By: /s/ Phyllis A. Knight
-------------------------------------
Name: Phyllis A. Knight
Title: Senior Vice President and Treasurer
<PAGE>
Exhibit A
Permitted Dividends, Distributions and Transfers
1. The Company may pay interest and scheduled payments of principal under
the Intercompany Note in accordance with the terms thereof.
2. The Company may make customary and usual payments to Conseco for
products and services provided by Conseco to or for the benefit of the
Company consistent with past practices consistently applied, provided
that the Company shall have at least ten business days in which to cure
any failure to pay any such amount on the date such payment was
requested.
3. The Company may make payments to Conseco under the Tax Sharing
Agreement in accordance with the terms of such agreement.
4. The Company may repay loans made by Conseco pursuant to Section
2.3(iii) provided that (a) at the time of such repayment the Company
shall be Solvent before and after giving effect to such repayment, (b)
no Default or Event of Default shall have occurred and be continuing or
would result therefrom under any Transaction Document, and (c) in the
case of amounts to be repaid exceeding $200,000,000 in the aggregate,
the Minimum Liquidity Amount Test shall be satisfied before and after
giving effect to such repayment and Lehman shall have received the
items required pursuant to Section 4.1(d). For purposes hereof,
"Solvent" means, with respect to the Company, that the value of the
assets of the Company (both at fair value and present fair saleable
value) is, on the date of determination, greater than the total amount
of liabilities (including contingent and unliquidated liabilities) of
the Company as of such date, and that, as of such date, the Company is
able to pay all liabilities of it as such liabilities mature and does
not have unreasonably small capital. In computing the amount of
contingent or unliquidated liabilities at any time, such liabilities
will be computed at the amount which, in light of all the facts and
circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.
5. The Company may (a) prepay principal owed under the Intercompany Note,
(b) pay dividends to its Stockholder(s) and (c) make other
distributions to Conseco, provided that the Minimum Liquidity Amount
Test shall be satisfied before and after giving effect to each such
prepayment, dividend or other distribution, Lehman shall have received
the items required pursuant to Section 4.1(d) and no Default or Event
of Default shall have occurred and be continuing or would result
therefrom under any Transaction Document, and provided further that the
Company shall not purchase, redeem, retire, defease or otherwise
acquire for value or establish a sinking fund with respect to any
Preferred Stock
<PAGE>
unless and until (i) all amounts due and owing by the Company under the
Intercompany Note shall have been paid in full and the Intercompany
Note shall be cancelled and (ii) all amounts due and owing by Conseco
or any of its Affiliates to the Company or any subsidiary thereof shall
have been paid in full.
<PAGE>
Schedule I Certain Asset Sales and Other Liquidity Raising Events
Certain Asset Sales
-------------------
VISA/MC Portfolio
ABL Portfolio
Vendor Services
Truck Portfolio
Other Liquidity Raising Events
------------------------------
Reduction/Elimination of Ineligible Inventory in an aggregate amount not to
exceed $25,000,000
Sale/Contribution of Private Label Credit Cards to Conseco Bank, Inc.
Increase in Lehman Residual Facility ($100 million)/Pledge of Additional
Securities
Re-instatement of US Bank Credit Line
Reduction of Dealer Floorplan Overconcentrations in Master Trust
Renegotiate Repo Lines with Merrill Lynch
Financing/Sale of Insurance Receivables
<PAGE>
Schedule 7.1(g)Indebtedness for Borrowed Money
Principal balance as of September 22, 2000 $1,460,799,080
Including:
Total cash advances of $5,819,200,000
Total cash payments of (3,812,266,995)
Conversion to Preferred Stock (750,000,000)
Money borrowed for intercompany fees 61,279,246
Capitalized interest 142,586,829
