<PAGE>
SECURITIES AND EXCHANGE COMMISION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 1, 1998
Transamerica Finance Corporation
(Exact name of registrant as specified in its charter)
Delaware 1-6798 95-1077235
(State or other (Commission File (I.R.S. Employer
jurisdiction of) Number) Identification No.)
600 Montgomery Street 94111
San Francisco, California (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (415) 983-4000
Not applicable
(Former name or former address, if changed since last report.)
<PAGE>
Item 2(a)
Effective January 1, 1998, Transamerica Finance Corporation, principally through
its indirect subsidiary Transamerica Distribution Financial Corporation,
completed the acquisition of substantially all of the inventory and retail
finance business of Whirlpool Financial Corporation for a total purchase price
of approximately $1.3 billion in cash, subject to post-closing adjustments,
which was determined through negotiations with Whirlpool. A definitive agreement
for the acquisition was originally announced on September 18, 1997. The assets
acquired (hereinafter referred to as the "Lending Operations") consisted of
approximately $1.1 billion of net receivables and other assets of Whirlpool's
inventory financing, retail financing and international factoring businesses, as
well as Whirlpool Financial National Bank, a credit card bank. The assets were
acquired in a series of transactions. The acquisition of the inventory finance
business in the United States, Canada and Mexico, as well as the international
factoring business in Argentina, closed on October 16, 1997. The acquisition of
the retail finance business closed on January 1, 1998. The acquisition of most
of the remaining international assets has also now been completed.
Funds for the purchase of the assets were provided by short term borrowings.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial statements of the Lending Operations.
The following audited financial statements of the Lending Operations
acquired from Whirlpool Financial Corporation are filed as Exhibit 28.1
hereto, and are incorporated by reference in this report.
Independent Auditors' Report
Balance Sheet - December 31, 1996
Income Statement - Year ended December 31, 1996
Statement of Cash Flows - Year ended December 31, 1996
Notes to Financial Statements - Year ended December 31,1996
The following unaudited interim financial statements of the Lending
Operations are filed as Exhibit 28.2 hereto, and are incorporated by
reference in this report.
Balance Sheet - September 30, 1997
Income Statement - Nine months ended September 30, 1997 and
1996 Statement of Cash Flows - Nine months ended September 30,
1997 and 1996
<PAGE>
(b) Pro Forma Financial Information
The Pro Forma Condensed Consolidated Balance Sheet of Transamerica
Finance Corporation and subsidiaries as of September 30, 1997 reflects
the financial position of Transamerica Finance Corporation after giving
effect to the acquisition of the assets and assumption of the
liabilities discussed in Item 2 (a). The Pro Forma Condensed
Consolidated Balance Sheet assumes the acquisition took place on
September 30, 1997. The Pro Forma Condensed Consolidated Income
Statement for the year ended December 31, 1996 reflects adjustments to
the cost of borrowings at Transamerica Finance Corporation and the
Lending Operations, using rates in effect had the acquisition occurred
on January 1, 1996. The Pro Forma Condensed Consolidated Income
Statement for the nine months ended September 30, 1997 reflects
adjustments to the cost of borrowings at Transamerica Finance
Corporation and the Lending Operations, using rates in effect had the
acquisition occurred on January 1, 1997. No adjustments have been made
to reflect potential operating efficiencies from the consolidation of
these operations.
Pro Forma Condensed Consolidated Balance Sheet
as of September 30, 1997..............................Page F-1
Pro Forma Condensed Consolidated Income Statement
- Year ended December 31, 1996.........................Page F-2
Pro Forma Condensed Consolidated Income Statement
- Nine months ended September 30, 1997.................Page F-3
Notes to Pro Forma Financial Information..................Page F-4
The unaudited pro forma financial statements and accompanying notes
reflect the purchase of assets and the assumption of certain
liabilities of the Lending Operations. The purchase price will be
allocated to the Lending Operations' assets acquired and liabilities
assumed based on their estimated fair values at the closing dates. As
described in the accompanying notes, the amounts allocated to the
Lending Operations' assets and liabilities have been combined with the
recorded values of the assets and liabilities of Transamerica Finance
Corporation. However, changes to the adjustments already included in
the unaudited pro forma financial statements are expected as
evaluations of assets are completed and as additional information
becomes available. Accordingly, the final combined amounts will differ
from those set forth in the unaudited pro forma financial statements.
The unaudited pro forma condensed financial statements have been
prepared by Transamerica Finance Corporation based upon assumptions
deemed proper by it. The unaudited pro forma condensed financial
statements presented herein are shown for illustrative purposes only
and are not necessarily indicative of the future financial position or
future results of operations of the combined company, or of the
financial position or results of operations of the combined company
that would have actually occurred had the transaction been in effect as
of the date or for the periods presented. In addition, it should be
noted that Transamerica Finance Corporation's financial statements will
reflect the acquisition only from the closing dates of the
transactions.
The unaudited pro forma financial statements should be read in
conjunction with the historical financial statements and related notes
of Transamerica Finance Corporation and the Lending Operations.
<PAGE>
<TABLE>
Page F-1
PRO FORMA FINANCIAL INFORMATION
TRANSAMERICA FINANCE CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
September 30, 1997
(Unaudited)
(Amounts in Millions)
<CAPTION>
Transamerica
Finance Lending
Corporation Operations Pro Forma Pro Forma
Historical Historical Adjustments Consolidated
Amounts Amounts
<S> <C> <C> <C> <C>
ASSETS
Finance receivables, net
of allowance for losses
and unearned fees $4,286.9 $1,237.6 B $ (44.1) $5,480.4
Equipment held for lease, net
of accumulated depreciation 3,115.0 3,115.0
B 183.7
Other 1,181.5 9.8 B (3.5) 1,371.5
-------- -------- ------ --------
$8,583.4 $1,247.4 $136.1 $9,966.9
======== ======== ====== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
Notes and loans payable $6,115.0 C 1,056.7 $7,171.7
Other liabilities 858.6 88.6 B 8.2 955.4
Income taxes payable 347.5 B (7.9) 339.6
----- -------- ------- --------
7,321.1 88.6 1,057.0 8,466.7
Stockholder's equity 1,262.3 1,158.8 C (1,158.8) 1,500.2
C 237.9
-------- -------- ------- --------
$8,583.4 $1,247.4 $ 136.1 $9,966.9
======== ======== ======== ========
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
Page F-2
PRO FORMA FINANCIAL INFORMATION
TRANSAMERICA FINANCE CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED INCOME STATEMENT
Year Ended December 31, 1996
(Unaudited)
(Amounts in Millions)
<CAPTION>
Transamerica
Finance Lending
Corporation Operations Pro Forma Pro Forma
Historical Historical Adjustments Consolidated
Amounts Amounts
<S> <C> <C> <C> <C>
REVENUES
Finance charges $1,152.7 $156.4 $1,309.1
Leasing revenues 689.1 689.1
Other 87.9 6.1 94.0
-------- ------- --------
1,929.7 162.5 2,092.2
EXPENSES
Interest and debt expense 607.8 54.7 C $(54.7) 667.5
C 59.7
Depreciation on equipment
held for lease 255.0 255.0
Provision for losses on receivables
and assets held for sale 280.7 18.6 299.3
Salaries and other operating expense 640.5 55.1 E 12.5 708.1
-------- -------- ------- --------
1,784.0 128.4 17.5 1,929.9
Income before taxes 145.7 34.1 (17.5) 162.3
Income taxes 51.2 13.9 D (13.9) 57.1
D 5.9
-------- -------- ------- --------
Net Income $ 94.5 $ 20.2 $ (9.5) $ 105.2
======== ======== ======= ========
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
Page F-3
PRO FORMA FINANCIAL INFORMATION
TRANSAMERICA FINANCE CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED INCOME STATEMENT
Nine months ended September 30, 1997
(Unaudited)
(Amounts in Millions)
<CAPTION>
Transamerica
Finance Lending
Corporation Operations Pro Forma Pro Forma
Historical Historical Adjustments Consolidated
Amounts Amounts
<S> <C> <C> <C> <C>
REVENUES
Finance charges $ 633.5 $131.2 $ 764.7
Leasing revenues 565.3 565.3
Gain on sale of consumer
lending branch operation 469.0 469.0
Other 74.4 2.7 77.1
--------- -------- --------
1,742.2 133.9 1,876.1
EXPENSES
Interest and debt expense 362.4 46.0 C $(46.0) 408.6
C 46.2
Depreciation on equipment
held for lease 205.6 205.6
Provision for losses on receivables
and assets held for sale 48.0 16.7 64.7
Salaries and other operating expense 490.4 43.9 E 9.4 543.7
--------- -------- ------- --------
1,106.4 106.6 9.6 1,222.6
Income before taxes 635.8 27.3 (9.6) 653.5
Income taxes 258.6 11.6 D (11.6) 264.9
D 6.3
--------- --------- ------- ---------
- -----
Net Income $ 377.2 $ 15.7 $ (4.3) $ 388.6
========= ========= ======= =========
</TABLE>
<PAGE>
Page F-4
Notes to Pro Forma Financial Information
Note A Basis of Presentation
Under purchase accounting, the assets purchased and liabilities assumed
in the transaction, as described in item 2(a), are required to be adjusted to
estimated fair values based upon an allocation of the purchase price. For the
purposes of preparing the September 30, 1997 Pro Forma Balance Sheet, the assets
of the Lending Operations as of September 30, 1997 were valued based on the
information obtained during due diligence conducted by Transamerica prior to
execution of the Asset Purchase Agreement adjusted for actual changes occurring
between September 30, 1997 and the closing dates. The Lending Operations' assets
acquired and liabilities assumed will be recorded based upon fair values as of
the actual dates of acquisition.
Note B Allocation of Purchase Price
The purchase price has been allocated as described in the table below
(amounts in millions):
Increase (decrease) to the Lending Operations' net assets at September
30, 1997 as a result of estimated fair value adjustments to the net
assets purchased.
Finance receivables $ (8.4)
Other assets 183.7
Tax receivable 7.9
Addition of liabilities (9.8)
-------
Total adjustments 173.4
Net assets of the Lending Operations at
September 30, 1997 1,158.8
Changes in account balances between September 30, 1997 and the closing
dates.
Finance receivables (35.7)
Other assets (3.5)
Other liabilities 1.6
--------
$1,294.6
Note C Notes Payable
Notes payable have been adjusted to reflect the debt to be issued by
Transamerica Finance Corporation in connection with the acquisition.
Interest expense has been adjusted to reflect current interest rates on
the related Transamerica Finance Corporation notes. Equity has been
adjusted to reflect a leverage ratio consistent with Transamerica
Finance Corporation's other lending operations.
Note D Income Tax Expense
Income taxes have been calculated based on the effective income tax
rate for Transamerica Finance Corporation's lending operations.
Page F-5
<PAGE>
Note E Operating Expenses
Operating expenses have been adjusted to reflect the amortization of
goodwill and other identifiable intangibles.
c) Exhibits
EX-10.1 Asset Purchase Agreement by and among Whirlpool
Financial Corporation, Transamerica
Distribution Finance Corporation, Whirlpool
Corporation and Transamerica Commercial Finance
Corporation, I, dated as of September 17, 1997.
EX-28.1 The Lending Operations audited financial statements
for the year ended December 31, 1996.
EX-28.2 The Lending Operations unaudited financial statements
as of September 30, 1997 and for the nine month
periods ended September 30, 1997 and 1996.
Signatures
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TRANSAMERICA FINANCE CORPORATION
(Registrant)
Burton E. Broome
Vice President and Controller
Date: January 15, 1998
<PAGE>
REPORT OF INDEPENDENT AUDITORS
We have audited the accompanying balance sheet of the Lending Operations ("the
Company") as of December 31, 1996 and the related statements of income and cash
flows for the year then ended. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the basis of accounting used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
As described in Note One, the accompanying financial statements were prepared
for the purpose of complying with the rules and regulations of the Securities
and Exchange Commission for inclusion on Form 8-K of Transamerica Finance
Corporation, and are not intended to be a complete presentation of the Company's
financial position or revenue and expenses.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Lending Operations at
December 31, 1996, and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.
Ernst & Young LLP
January 13, 1998
Chicago, Illinois
<PAGE>
EXHIBIT 10.1
-------------------------------
Asset Purchase Agreement
by and among
WHIRLPOOL FINANCIAL CORPORATION
-------------------------------
(the "Seller")
TRANSAMERICA DISTRIBUTION FINANCE CORPORATION
---------------------------------------------
(the "Purchaser")
WHIRLPOOL CORPORATION
---------------------
(the "WFC Parent")
and
TRANSAMERICA COMMERCIAL FINANCE CORPORATION, I
----------------------------------------------
(the "Purchaser's Parent")
Date: September 17, 1997
<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS 1
ARTICLE II
PURCHASE AND SALE 11
2.1 Purchase and Sale 11
2.2 The Assets 11
2.3 Excluded Assets 15
2.4 Assumed Liabilities 18
2.5 Excluded Liabilities 19
2.6 Closing 20
2.7 WFNB Purchase 21
2.8 Foreign Purchases 23
ARTICLE III
PURCHASE PRICE ADJUSTMENT 25
3.1 Closing Statement of Net Assets 25
3.2 Determination of Closing Adjustments; Dispute
Resolution 25
(a) Cooperation 25
(b) Review by Purchaser; Disagreement 25
(c) Resolution of Disagreements 26
(d) Final Closing Net Asset Value 26
3.3 Post-Closing Adjustment 27
(a) Closing Payment 27
(b) Method of Payment 27
(c) Purchase Price Adjustment 27
(d) Additional Adjustments 28
3.4 Repurchase of Excluded Assets 28
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SELLER
AND WFC PARENT 29
4.1 Organization and Existence 29
4.2 Authority and Approval 30
4.3 No Conflict 30
4.4 Contracts 31
4.5 Financial Statements 31
<PAGE>
4.6 Title to Properties; Encumbrance; Sufficiency of Assets 32
4.7 WFC Stock Companies 32
4.8 Contracts and Receivables 33
4.9 Leases 34
4.10 Litigation 35
4.11 Tax Matters 35
4.12 Insurance 36
4.13 Benefit Plans 36
4.14 Contracts and Commitments 38
4.15 Permits and Other Operating Rights 39
4.16 Compliance with Laws 40
4.17 No Illegal or Improper Transactions 40
4.18 Certain Environmental Matters 40
4.19 Brokers' Fees or Commissions 41
4.20 Disclosure 41
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
AND PURCHASER'S PARENT 42
5.1 Organization and Existence 42
5.2 Authority and Approval 42
5.3 No Conflict 43
5.4 Funds Available 44
5.5 Litigation 44
5.6 Securities 44
5.7 Brokers' Fees or Commission 44
ARTICLE VI
COVENANTS OF THE SELLER 45
6.1 Conduct of Business 45
6.2 Access 48
6.3 HSR Act Notification; Other Governmental Consents 48
6.4 Reasonable Efforts 49
6.5 Accounts and Powers of Attorney; Insurance Matters 49
6.6 Other Confidentiality Agreements 49
6.7 Non-Transferability 50
6.8 Permit Transfer 51
6.9 Acquired Unsettled Accounts 52
6.10 Liabilities and Assets 52
6.11 Balance Sheet 53
6.12 Insurance Rebates 53
6.13 Post-Signing Delivery 53
6.14 Recourse Arrangements 53
<PAGE>
ARTICLE VII
COVENANTS OF THE PURCHASER 53
7.1 HSR Notification; Other Governmental Consents 53
7.2 Reasonable Efforts 53
7.3 Parent Guaranties 54
7.4 Access; Retention of Records 54
7.5 Confidentiality 54
7.6 Permits 54
ARTICLE VIII
CONDITIONS TO CLOSING 55
8.1 Conditions to the Obligations of the Purchaser 55
(a) Compliance; Warranties True 55
(b) Seller Certificates 55
(c Legal Opinions 55
(d) HSR Act 55
(e) Governmental Consents, Approvals, etc. 56
(f) Related Agreements 56
(g) Material Adverse Change 56
(h) Resolutions and Related Documents 56
(i) No Orders 56
(j) Untitled 57
8.2 Conditions to the Obligations of the Seller 57
(a) Compliance; Warranties True 57
(b) Purchaser's Certificate 57
(c) Legal Opinion 57
(d) HSR Act 57
(e) Related Instruments 57
(f) No Orders 57
(g) Resolutions and Related Documents 58
(h) Other Closing Transactions 58
ARTICLE IX
NONCOMPETITION COVENANT 58
9.1 Noncompetition Covenant 58
9.2 Scope 60
9.3 Remedy for Breach 60
<PAGE>
ARTICLE X
EMPLOYEES; EMPLOYEE BENEFITS
10.1 Offer of Employment 60
10.2 Service Crediting 62
10.3 401(k) Plan 62
10.4 Medical, Dental and Life Insurance Program 63
10.5 Long Term and Short Term Disability Programs 63
10.6 Educational Assistance 64
10.7 Amendment or Termination Plans 64
10.8 Bonus 64
ARTICLE XI
TERMINATION 64
11.1 Grounds for Termination 64
11.2 Effect of Termination 65
ARTICLE XII
EXTENT AND SURVIVAL OF REPRESENTATIONS, WARRANTIES,
COVENANTS AND AGREEMENTS; INDEMNIFICATION 66
12.1 Survival; Remedy for Breach 66
12.2 Indemnification by the Seller 66
12.3 Indemnification by the Purchaser 68
12.4 Procedures Governing Indemnification 69
ARTICLE XIII
DISPUTE RESOLUTION 72
13.1 General 72
13.2 Procedures Governing Dispute Resolution 72
13.3 Continuation of Commitments; Specific Performance 74
ARTICLE XIV
MISCELLANEOUS 74
14.1 Notices 74
14.2 Expenses 75
14.3 Bulk Sales 75
14.4 Successors and Assigns 75
14.5 No Third Party Beneficiaries 76
14.6 Entire Agreement; Waiver; Amendment 76
14.7 Public Statements 76
14.8 Severability 77
<PAGE>
14.9 Certain Expenses; Transfer Taxes; Recording and
Filing Fees; Proration of Certain Taxes 77
14.10 Counterparts 78
14.11 Necessary and Desirable Actions 78
14.12 Tax Matters 78
(a) Section 338 Elections and Forms 78
(b) Tax Indemnification by Seller 79
(c) Tax Indemnity by Purchaser 79
(d) Allocation of Certain Taxes 80
(e) Filing Responsibility 80
(f) Refunds 81
(g) Cooperation and Exchange of Information 81
(h) Definitions 82
14.13 Forum Selection and Consent to Jurisdiction 83
14.14 Governing Law 83
14.15 Waiver of Jury Trial 83
ARTICLE XV
GUARANTIES 84
15.1 Guaranty of the WFC Parent 84
15.2 Guaranty of the Purchaser's Parent 84
EXHIBITS
Exhibit A - Shared Facilities and Transition Services Agreement
Exhibit B - Trademark License Agreement
Exhibit 12.2 - Section 4.8
SCHEDULES
Schedule 1.12 - Client Contracts
Schedule 1.16 - Closing Payment Example
Schedule 1.49 - Owned Property
Schedule 1.55 - Premium Amount Methodology Schedule
1.55
(a) - Premium Amount Example
Schedule 1.66 - Knowledge of Seller and WFC Parent
Schedule 1.71 - WFC Asset Companies
Schedule 1.73 - WFC Stock Companies
Schedule 2.2(a)(ix) - Prepaid Expenses Example
Schedule 2.3
(g) - Excluded Real Property
<PAGE>
Schedule 2.3(h) - Excluded Contracts
Schedule 2.3(i) - Excluded Receivables
Schedule 2.3(j) - Excluded Accounts
Schedule 2.3(p) - Excluded Employee Arrangements
Schedule 2.3
(y) - Other Excluded Assets
Schedule 2.4(a)(ii) - Certain Liabilities
Schedule 2.4(a)(iv) - Lease Liabilities
Schedule 3.1 - Adjustments
Schedule 4.1 - Foreign Qualifications
Schedule 4.3 - Conflicts
Schedule 4.4 - Contracts
Schedule 4.5 - Financial Statements
Schedule 4.5(b) - Certain Transactions
Schedule 4.6 - Permitted Encumbrances
Schedule 4.7 - Matters Relating to WFC Stock
Companies
Schedule 4.8 - Contracts and Receivables
Schedule 4.9 - Leases
Schedule 4.10 - Litigation
Schedule 4.12 - Insurance
Schedule 4.13 - Benefit Plans
Schedule 4.14 - Contracts and Commitments
Schedule 4.15 - Permits
Schedule 4.16 - Compliance with Laws
Schedule 4.18 - Environmental Matters
Schedule 5.3 - Conflicts
Schedule 6.1 - Conduct of Business
Schedule 8.1(j) - Consents
Schedule 10.1(a) - Employees relating to the Business
Schedule 10.1(b) - Employees on Short Term Disability
Schedule 12.2 - Certain Contract and Receivable
Matters
Schedule 14.12 - Allocation of Trademark License
Agreement
<PAGE>
Asset Purchase Agreement
------------------------
This Asset Purchase Agreement, dated September 17, 1997, is entered
into by and among Whirlpool Financial Corporation (the "Seller"), Transamerica
Distribution Finance Corporation (the "Purchaser"), Whirlpool Corporation ("WFC
Parent"), and Transamerica Commercial Finance Corporation, I ("Purchaser's
Parent") (Purchaser's Parent is a party solely for the purposes of being bound
by the provisions of Articles V and XV hereof and WFC Parent is a party solely
for the purposes of being bound by the provisions of Articles IV, VI and XV
hereof).
W I T N E S S E T H:
-------------------
WHEREAS, the Seller desires to sell to the Purchaser, and the Purchaser
desires to purchase from the Seller certain of the assets of the Business (as
hereinafter defined), including (1) the assets of the Seller's inventory finance
division and consumer finance division, (2) certain assets of the Seller's
international finance group and (3) certain other assets of the Seller and to
assume certain liabilities of the Seller;
WHEREAS, the WFC Parent and the Purchaser's Parent desire to guaranty
the obligations and liabilities of the Seller and the Purchaser, respectively,
under this Agreement;
WHEREAS, the WFC Parent and the Purchaser intend to enter into a
Strategic Alliance Services Agreement which is an integral part of and is
essential to the acquisition contemplated by this Agreement; and
NOW, THEREFORE, in consideration of the premises and of the respective
representations, warranties, covenants, agreements and conditions contained
herein, the parties agree as follows:
ARTICLE I
As used in this Agreement, the following terms shall have the following
meanings:
1.1 "AAA" is defined in Section 13.2(e).
1.2 "Account Debtor" means, with respect to a Receivable, the obligor
thereunder.
1.3 "Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlled by, controlling or under common control with
such Person, including but not limited to majority-owned subsidiaries.
1.4 "Agreement" means this Asset Purchase Agreement, including the
Schedules and Exhibits attached hereto, and any restatement hereof and any
supplement, amendment or modification hereto made in accordance with the terms
hereof.
<PAGE>
1.5 "Asia" means the continent of Asia and the islands located in the
Pacific Ocean west of (and exclusive of) Hawaii, including the countries of
Australia, Japan, China, India, Pakistan, New Zealand, Thailand, Korea, the
Philippines, Sri Lanka, Taiwan and Vietnam, but excluding any United States
territories and Russia.
1.6 "Assets" are defined in Section 2.1.
1.7 "Assumed Liabilities" are defined in Section 2.4(a).
1.8 A Person shall be deemed "Bankrupt" if it commences a voluntary case
concerning it under Title 11 of the United States Code as now or hereafter in
effect, or any successor thereto (the "Bankruptcy Code") or any similar foreign
law; or an involuntary case is commenced against the Person under the Bankruptcy
Code or any similar foreign law and relief is ordered against such customer or
the petition is controverted but is not dismissed within 90 days after the
commencement of the case; such Person becomes insolvent or is unable to pay its
debts within the meaning of applicable Law or stops making payments generally or
declares a moratorium or suspension of payments with respect to all or a
substantial part of its debts or ceases to conduct its business or enters into
any composition or other arrangement with its creditors generally (or any class
of them); or a custodian (as defined in the Bankruptcy Code or any similar
foreign law) is appointed for, or takes charge of, all or a substantial part of
the property of the Person; or the Person commences any other proceeding under
any reorganization, arrangement, readjustment of debt, relief of debtors,
dissolution, insolvency or liquidation or similar Law of any jurisdiction
whether now or hereafter in effect relating to such Person or there is commenced
against the Person any such proceeding which remains undismissed for a period of
90 days or the Person is adjudicated insolvent or bankrupt; or the Person fails
to controvert in a timely manner any petition or action filed against it under
the Bankruptcy Code or any similar foreign law or any such proceeding or any
order of relief or other order approving any such case or proceeding or the
appointment of any custodian or the like of or for it or any substantial part of
its property or suffers any such appointment to continue undischarged or
unstayed for a period of 90 days; or the Person makes a general assignment for
the benefit of creditors; or any action is taken by such Person for the purpose
of effecting any of the foregoing.
1.9 "Benefit Plan" is defined in Section 4.13(a).
1.10 "Business" means the following business of the Seller and its
Affiliates: (a) inventory finance division, including the business of providing
floorplan financing and display programs to manufacturers, retailers,
distributors and dealers; (b) consumer finance division, including the business
of providing revolving charge, private label credit cards and installment
contract programs, the operation of WFNB and any commercial credit card program;
and (c) the factoring, receivable management and inventory and display financing
services business in Europe and, to the extent in existence, Argentina and
Mexico, as conducted by the Seller's international finance group and the WFC
Companies. The term "Business" excludes the Excluded Assets and the Excluded
Businesses and the operation thereof.
1.11 "Business Day" means any day other than a Saturday or Sunday or any
legal holiday on which banks in Chicago, Illinois are authorized or required to
be closed.
1.12 "Client Contract" means a Contract or a set of Contracts between the
Seller, WFNB or a WFC Company and a manufacturer, distributor, dealer or
retailer client thereof which establishes the relationship (including with
respect to recourse against such client) pursuant to which the Seller, WFNB, or
a WFC Company agrees to extend credit to such client or such client's
distributors, dealers, retailers or consumers, including in connection with the
acquisition of goods from or by such client, or to purchase retail installment
sale contracts held by such client or such client's distributors, dealers or
retailers and which may include early payment discounts, free floor plan, rate
participation, volume rebate and any other incentive arrangements. Schedule 1.12
has been provided to Purchaser and is an accurate and complete listing, as of
August 31, 1997, of the Persons who are parties to Client Contracts.
1.13 "Closing" and "Closing Date" are defined in Section 2.6.
1.14 "Closing Balance Sheet" is defined in Section 3.1.
1.15 "Closing Net Asset Value" is defined in Section 3.1.
1.16 "Closing Payment" means the book value at September 30, 1997 of the
Assets minus the book value of the Assumed Liabilities at September 30, 1997
plus the Premium Amount. An example of how the Closing Payment would have been
calculated if the Closing Date were June 30, 1997 is attached, for illustrative
purposes only, as Schedule 1.16 hereto.
1.17 "Code" means the Internal Revenue Code of 1986, as amended from time
to time.
1.18 "Competitive Activity" is defined in Section 9.1.
1.19 "Confidentiality Agreement" means the Confidentiality Agreement dated
August 19, 1997 between the Seller and Transamerica Corporation.
1.20 "Contract" means any contract, lease, finance lease, operating lease,
sales order, purchase order, security agreement, indenture, mortgage, note,
bond, software license agreement, installment sales contract, dealer stocking
agreement, chattel paper, factoring agreement, invoice discounting agreement,
revolving loan credit application, funding approval, invoice, transaction
statement, EDI agreement, lockbox agreement, instrument, license agreement or
other agreement or binding undertaking and any amendment, modification,
forbearance or supplement to any of the foregoing.
1.21 "Employees" are defined in Section 10.1.
1.22 "Employment Contract" means any employment contract, retention
agreement, employee non-competition agreement, employee confidentiality
agreement and collective bargaining agreement.
1.23 "Encumbrance" means any lien, pledge, charge, mortgage, security
interest or other adverse claim of any kind or description, whether or not of
record.
1.24 "Environmental Law" means any Law relating to environmental protection
or occupational safety or health or the use, generation, manufacture, storage,
treatment, management, discharge, release, disposal, transportation or other
handling of any substance, chemical, waste or other material which is listed,
defined or otherwise identified in such Law as hazardous, toxic or dangerous,
including asbestos, PCBs, petroleum, petroleum products or by-products, crude
oil, natural gas, natural gas liquids or synthetic gas usable for fuel.
1.25 "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
1.26 "ERISA Affiliate" means any trade or business (whether or not
incorporated) that is a member of a "controlled group" of which the Seller is a
member or under "common control" with the Seller (within the meaning of Section
414(b) and (c) of the Code).
1.27 "Europe" means all of the countries listed on Schedule 2.1 of the
Strategic Alliance Services Agreement.
1.28 "Excluded Accounts" are defined in Section 2.3(j).
1.29 "Excluded Assets" are defined in Section 2.3.
1.30 "Excluded Businesses" mean (a) the contracts, accounts, operations,
businesses and other rights and obligations arising from or in connection with
the operation of the Excluded Assets, (b) open accounts and consumer finance
liquidating receivables, including all accounts, activities, operations,
liabilities and obligations relating thereto, and (c) all accounts, plans,
proposals, activities, opportunities and operations, liabilities and obligations
constituting or necessary to the operation of the Seller's aerospace finance
division, asset management division and Asian finance division, including the
provision of accounts receivable management, factoring and retailer financial
marketing programs (including stock and display plans) and the provision of
consumer financing in or to customers located in Asia.
1.31 "Excluded Contracts" are defined in Section 2.3(h).
1.32 "Excluded Liabilities" are defined in Section 2.5.
1.33 "Excluded Real Property" is defined in Section 2.3(g).
1.34 "Excluded Receivables" are defined in Section 2.3(i).
1.35 "Financial Statements" mean the balance sheet of the Business, dated
June 30, 1997, the Consolidated Statement of Earnings of the Seller, dated
December 31, 1996, and the Consolidated Statement of Earnings of the Business
for the period January 1, 1997 through June 30, 1997, each attached hereto as
Schedule 4.5.
1.36 "Foreign Approvals" is defined in Section 2.8(a).
1.37 "GAAP" means United States generally accepted accounting principles.
1.38 "Governmental Authority" means any foreign or domestic federal, state,
provincial, local or other governmental subdivision, department, commission,
board, bureau, court, legislature, agency, instrumentality or other governmental
authority.
1.39 "Hazardous Material" means any substance, material, waste, pollutant
or contaminant listed or defined as hazardous or toxic under any Environmental
Law.
1.40 "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
1.41 "Independent Accounting Firm" is defined in Section 3.2(c).
1.42 "Insurance Collateral" means any credit life, casualty or similar
insurance policies (including credit unemployment, credit disability, inventory
finance property and casualty and keyman policies) obtained by Persons who are
provided financing by the Seller or any WFC Company or WFNB or pursuant to any
financing arrangement purchased by the Seller or any WFC Company or WFNB
(including consumers required to obtain insurance under retail installment sale
contracts purchased by the Seller or any WFC Company or WFNB).
1.43 "Law" means any foreign or domestic federal, state, provincial or
local or other statute, law, ordinance, rule, published administrative
interpretation, regulation, order, writ, injunction, directive, judgment, decree
or other requirement of any Governmental Authority.
1.44 "Leased Property" means the Real Property subject to the leases listed
on Schedule 4.9.
1.45 "Loss" or "Losses" means any and all damages, losses, actions,
proceedings, causes of action, obligations, liabilities, claims, encumbrances,
penalties, demands, assessments, judgments, costs and expenses including,
without limitation, court costs and reasonable attorneys' and consultants' fees
and costs of litigation, but shall not include consequential, punitive or
special damages.
1.46 "Material Adverse Effect" means any change in or effect on the
Business, the Seller, WFNB or any of the WFC Companies that is, individually or
in the aggregate, materially adverse to the business, assets, liabilities,
financial condition or results of operations of the Business, taken as a whole.
1.47 "Operating Assets" mean all equipment, computer software and hardware,
vehicles, furniture, phone, facsimile, imaging equipment, office equipment and
other communication systems and equipment.
1.48 "Operating Data" means all records, marketing materials and
information, financial data, credit, pricing and payment terms, floor checks,
portfolio control comments and codes, policies and procedures, credit and
collection information, pass codes, source codes, object codes, technical
information, confidential information, price lists, sales records, customer
lists and files and other proprietary information.
1.49 "Owned Property" means the Real Property listed on Schedule 1.49.
1.50 "Parent Guarantees" mean all guarantees, agreements, pledges,
mortgages, letters of credit, bonds or other instruments of the Seller
guaranteeing, securing or becoming otherwise obligated with respect to any
actual or contingent liabilities of the Business, the WFC Companies or WFNB.
1.51 "Permit" means any permit, license, authorization, registration,
qualification, approval or franchise issued or granted by or effected with any
Governmental Authority that is necessary under applicable Law to conduct the
Business or operate the Assets.
1.52 "Permitted Encumbrances" is defined in Section 4.6(a).
1.53 "Person" means any individual, sole proprietorship, firm, corporation,
partnership, limited liability company, trust, unincorporated association or
other entity.
1.54 "Post-Closing Interest Rate" means 5.5%.
1.55 "Premium Amount" means the sum of (A) (i) the aggregate Receivables in
each of the three Receivables Categories (less all unearned finance charges
(fees and discount income), FAS 91 balances and allowance for loss and consumer
deferred adjustments) as of September 30, 1997, times (ii) the Relevant
Receivable Premium, plus (B) one-half of the sum of the FAS 91 balances as of
September 30, 1997 for each Receivable Category. Schedule 1.55 demonstrates the
methodology pursuant to which the Premium Amount is determined. Schedule 1.55(a)
sets forth, for illustrative purposes only, how the Premium Amount would have
been calculated as of June 30, 1997.
1.56 "Real Property" means real property, including all privileges and
easements appurtenant thereto, and any and all buildings, plants, facilities,
installations, fixtures and other structures and improvements situated thereon
or attached thereto.
1.57 "Receivable" means an account receivable, trade receivable, floorplan
receivable, retail installment sale contract receivable, note receivable,
finance lease receivable, operating lease receivable or other account or right
to payment (whether of principal, interest or other charges) generated through
the extension of credit to distributors, dealers, retailers, consumers and other
Persons, or through the purchase of retail installment sales contracts from
dealers, whether conditional or unconditional, or through the leasing of
equipment, but not any amount due or other right under or with respect to the
Excluded Accounts, the Excluded Receivables, the Excluded Assets and the
Excluded Businesses.
1.58 "Receivable Collateral Document" means any Contract, instrument or
other document pursuant to which any Encumbrance was granted or any other
collateral was furnished by or on behalf of an Account Debtor.
1.59 "Receivable Credit Support Document" means, with respect to any
Receivable and Receivable Document, any guaranty, letter of credit, security
agreement, mortgage or other form of credit support given or any other
collateral which was furnished by or on behalf of a Person other than the
Account Debtor, but not including any Client Contract.
1.60 "Receivable Document" means any Contract, instrument or other document
evidencing a Receivable owed to the Seller or any of its Subsidiaries or
pursuant to which a Receivable owing to the Seller or any of its Subsidiaries
was or may be generated.
1.61 "Relevant Receivable Premium" means (a) for Receivables arising from
the inventory finance division of the Business, 18.4026%; (b) for Receivables
arising from the consumer finance division of the Business, 5.5255%; and (c) for
Receivables arising from the international finance group of the Business,
15.5255%. Each of clauses (a), (b) and (c) of the preceding sentence refers to a
separate "Receivables Category" for purposes of the definition of "Premium
Amount."
1.62 "Shared Facilities and Transition Services Agreement" means the shared
facilities and transition services agreement substantially in the form set forth
on Exhibit A.
1.63 "Subsidiary" means with respect to any Person, any corporation,
partnership, joint venture, limited liability company, business trust or other
entity, of which such Person, directly or indirectly, owns or controls at least
50% of the securities or other interests entitled to vote in the election of
directors or others performing similar functions with respect to such
corporation, partnership, joint venture, limited liability company, business
trust or other entity.
1.64 "Taxes" mean all taxes, charges, fees, duties, levies or other
assessments, including income, gross receipts, net proceeds, ad valorem,
turnover, real and personal property (tangible and intangible), sales, use,
franchise, excise, value added, stamp, leasing, lease, user, transfer, excess
profits, occupational, interest equalization, windfall profits, severance and
employees' income withholding, unemployment and Social Security taxes, which are
imposed by any Governmental Authority, including any interest, penalties or
additions to tax related thereto, whether or not disputed.
1.65 "Territory" is defined in Section 9.1(c).
1.66 "to the knowledge", of the Seller and/or WFC Parent means the actual
knowledge of the Persons listed on Schedule 1.66 after due inquiry.
1.67 "Trademark License Agreement" means the trademark license agreement
substantially in the form of Exhibit B to be entered into at Closing between WFC
Parent (or a wholly-owned subsidiary of WFC Parent having ownership rights in
the trademarks subject thereto) and the Purchaser, which provides for limited
use by the Purchaser and its Affiliates of certain trademarks.
1.68 "Transfer Instrument" means such customary bills of sale, assignments,
assignment and assumption agreements, special warranty deeds with respect to the
Owned Property, notice filings, tax declarations and other statements or filings
with any Governmental Authority as may be required for the sale of the Assets
and assumption of the Assumed Liabilities, each as contemplated by Article II,
and other instruments of sale, conveyance, transfer, assignment and assumption
and, if applicable, limited powers of attorney as may be necessary or
appropriate for the execution, delivery and recordation or filing of Transfer
Instruments, as prepared by the Purchaser (or, as to matters relating to
assumption of the Assumed Liabilities, by the Seller), in form and substance
reasonably satisfactory to the Seller (or, as to matters relating to assumption
of the Assumed Liabilities, to the Purchaser), and as shall be required to vest
in the Purchaser title to the Assets and as shall be required to evidence the
Purchaser's agreements to assume, pay, perform, fulfill and discharge the
Assumed Liabilities.
1.69 "WARN" means the federal Worker Adjustment and Retraining Notification
Act of 1988, as amended.
1.70 "Transferred Employees" is defined in Section 10.1.
1.71 "WFC Asset Company" means any of, and "WFC Asset Companies" means all
of the entities set forth on Schedule 1.71.
1.72 "WFC Company" means any of, and "WFC Companies" means all of, the WFC
Assets Companies and the WFC Stock Companies.
1.73 "WFC Stock Company" means any of, and "WFC Stock Companies" means all
of the entities set forth on Schedule 1.73.
1.74 "WFNB" means Whirlpool Financial National Bank, a nationally chartered
bank based in Delaware.
1.75 "WFNB Premium" is defined in Section 2.7(a).
1.76 "WFNB Purchase" is defined in Section 2.7(a).
1.77 "WFNB Shares" means 1,000 shares, $100 par value per share, of common
stock of WFNB.
Interpretation. The headings preceding the text of Articles, Sections and
subsections and Schedules included in this Agreement are for convenience only
and shall not be deemed part of this Agreement or be given any effect in
interpreting this Agreement. The use of the terms "including" or "include"
shall, in all cases, mean "including, without limitation," and "include, without
limitation," respectively. The language in all parts of this Agreement shall be
construed, in all cases, according to its fair meaning. The parties acknowledge
that each party and its counsel have reviewed and revised this Agreement and
that any rule of construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be employed in the interpretation
of this Agreement.
ARTICLE II
PURCHASE AND SALE
2.1 Purchase and Sale. Upon the terms, and subject to the conditions, of
this Agreement, the Seller agrees to sell, assign, transfer, convey and deliver
to the Purchaser, and the Purchaser agrees to purchase from the Seller, all of
the Business and assets related to the Business, as a going concern, together
with all of the properties, rights, interests, shares of stock or other equity
interests in the WFC Stock Companies and goodwill of the Seller and the
Affiliates of the Seller associated therewith, tangible and intangible, real,
personal and mixed, wherever located, whether now existing or hereafter
acquired, to the extent of their respective ownership interests as the same
exist on the Closing Date (except for the Excluded Assets), which, together with
the assets, properties, interests and rights (other than any which are Excluded
Assets) of the WFC Companies are herein collectively referred to as the
"Assets," free and clear of Encumbrances, other than Permitted Encumbrances, and
the Purchaser agrees to assume the Assumed Liabilities of the Seller, at and as
of the Closing.
2.2 The Assets.
---------------
(a) Subject to Section 2.2(b) and Section 2.3, the Assets shall
include, without limitation, the right, title and interest of Seller and
the WFC Companies in and to any of the following, but in each case
excluding the Excluded Assets:
(i) all assets of, or used in, the inventory finance division
of the Seller and the WFC Asset Companies, tangible or intangible,
real or personal, including all Contracts, Client Contracts,
Operating Assets, Operating Data (except to the extent transfer is
restricted by Law), Receivables, all accounts that have been charged
off, Receivable Credit Support Documents, Receivable Collateral
Documents, Receivable Documents, Permits, goodwill and Insurance
Collateral;
(ii) all assets of or used in the consumer finance division of
the Seller and the WFC Asset Companies, tangible or intangible, real
or personal, including all Contracts, Client Contracts, Operating
Assets, Operating Data (except to the extent transfer is restricted
by Law), Receivables, all accounts that have been charged off,
Receivable Credit Support Documents, Receivable Documents, Receivable
Collateral Documents, Permits, goodwill, Insurance Collateral, if
any, rights as licensee with respect to any private label credit card
program and the WFNB Shares;
(iii) all assets of or used in the international finance group
of the Seller and the WFC Asset Companies, tangible or intangible,
real or personal, to the extent, and only to the extent, used in the
conduct of the Business in Europe, Mexico and Argentina, including
all Contracts, Client Contracts, Employment Contracts, Operating
Assets, Operating Data (except to the extent transfer is restricted
by applicable law), Receivables, all accounts that have been charged
off, Receivable Credit Support Documents, Receivable Collateral
Documents, Receivable Documents, Permits, goodwill, Insurance
Collateral and all of the outstanding capital stock of the WFC Stock
Companies;
(iv) the Receivables, Receivable Credit Support Documents,
Receivable Collateral Documents and Receivable Documents;
(v) all furniture, fixtures and equipment; all computers,
computer hardware and peripherals; office supplies; and vehicles, in
each case that are related to the Business (other than 140 pieces of
artwork);
(vi) the Leased Property;
(vii) any and all insurance claims and rights with respect to
injury, damage or loss occurring on or prior to the Closing Date
under all current and past insurance policies and contracts of the
Seller or its Affiliates and proceeds thereof, to the extent
assignable and relating to an Assumed Liability;
(viii) any claim (other than insurance claims which are
covered by clause (vii)), counterclaim, cross claim, set-off and
other claim in the nature of indemnification or contribution, and
rights to the extent relating to any Assets or Assumed Liabilities;
(ix) all prepaid and similar items, including without
limitation, deferred charges, deposits, rebates and discounts from
customers and advance payments related to the Business. (An example
of such prepaid and similar items, as of June 30, 1997, is set forth,
for illustrative purposes only, on Schedule 2.2(a)(ix));
(x) all legal and credit files pertaining to all Contracts and
Client Contracts, including all financial analyses, credit
applications, internal memos and external correspondence (to the
extent permitted by law);
(xi) all unapplied credit memos with respect to, among other
matters, a right of credit or set off provided by a manufacturer in
respect of products or services supplied to a dealer but not utilized
as at the Closing Date to reduce the balance owing by the dealer;
(xii) all balances owing to the Seller or any WFC Asset
Company under any Contract or any Client Contract, in each case with
respect to the Business;
(xiii) all unapplied funds of the Seller or any WFC Asset
Company (including funds received by the Seller or any WFC Asset
Company and not yet applied to a specific amount owing by a dealer or
manufacturer);
(xiv) all returns (i.e., inventory identified by the Seller or
any WFC Asset Company as returned by a dealer to a manufacturer for
credit and for which credit or payment has not yet been received in
full by the Seller or WFC Asset Company from the manufacturer as at
the Closing Date);
(xv) all deferred income (i.e., the amount in respect of any
discounts which were deducted from invoices purchased from a
manufacturer to cover some or all of the carrying cost for any free
floor period or otherwise, in respect of any dealers);
(xvi) all open approvals (conditional obligations of the
Seller or any WFC Asset Company for approved but not yet funded
invoices from manufacturers);
(xvii) any contract under which the Seller or any WFC Asset
Company may arrange for dealers to obtain insurance coverage from a
licensed insurer;
(xviii) all manufacturer invoices and rights granted to the
Seller or any WFC Asset Company in inventory supplied by a
manufacturer to the dealer;
(xix) all rights under any and all confidentiality agreements
entered into by the Seller or any WFC Asset Company with any third
party (other than exclusively relating to the Excluded Businesses);
(xx) the unsettled accounts with respect to the Business which
the parties agree have a reasonable prospect of being paid in full
(the "Acquired Unsettled Accounts");
(xxi) the goodwill and going concern value and other
intangible assets, if any, that are related to the Business;
(xxii) the contra liability offsetting the certificate of
deposit and short-term debt of WFNB described in Section 6.10;
(xxiii) the Visionplus software and other software that is
included in the Financial Statements; and
(xxiv) any other assets related to or primarily used in the
Business.
(b) Anything in this Agreement to the contrary notwithstanding, this
Agreement shall not constitute an agreement to assign any Contract or
Client Contract, or any claim, right or benefit of the Seller or any of its
Affiliates thereunder or resulting therefrom, if an assignment thereof,
without the consent of a third Person, would constitute a breach or
violation thereof. If a consent to the assignment of a Contract or Client
Contract is not obtained prior to the Closing or if an attempted assignment
of a Contract or Client Contract is ineffective for any other reason, the
Seller shall cooperate with the Purchaser in continuing to attempt to
obtain such consent or otherwise procure an effective assignment of such
Contract or Client Contract and, pending the obtaining of such consent or
the procurement of such assignment, shall implement any commercially
reasonable arrangement requested by the Purchaser to provide the Purchaser
the benefits under any such Contracts or Client Contracts; provided,
however, that the Seller shall bear the costs and expenses incurred in
connection with establishing any such arrangement and thereafter the
Purchaser shall, insofar as is reasonable, otherwise assume the economic
burdens of such Contract or Client Contract (either directly or by
reimbursement of the Seller). If, with respect to any such Contract or
Client Contract, the consent to assignment is obtained or an effective
assignment can otherwise be made following the Closing, the Seller shall
promptly assign or cause to be assigned to the Purchaser all of its right,
title and interest in and to such Contract or Client Contract pursuant to a
Transfer Instrument substantially similar in form and substance to the
Transfer Instrument used for the assignment of similar Contracts or Client
Contracts at the Closing. If a consent to the assignment of a Contract or
Client Contract is not obtained prior to the Closing or if an attempted
assignment is ineffective for any other reason and the Purchaser requests
that it not receive the benefits thereof, or if an arrangement to provide
such benefits is not feasible, the Seller, in consultation with the
Purchaser, shall terminate or wind-up such Contract or Client Contract and
the Seller shall be responsible for all costs and expenses incurred by the
Seller as a result thereof.
The Purchaser acknowledges that all or some of the Permits used by
the Seller and its Affiliates in the Business may not be transferable.
Subject to the conditions set forth herein, the Purchaser assumes (i) the
risk that any or all such Permits are not transferable and (ii) the
obligation to obtain all requisite authorizations, approvals and permits
for its operation of the Business, performance of the Assumed Liabilities
and ownership of the Assets.
2.3 Excluded Assets. Notwithstanding Section 2.2(a) or anything in this
Agreement to the contrary, the right, title and interest of the Seller and its
Affiliates in and to the following (the "Excluded Assets") shall be retained by
the Seller and are not being sold, assigned, transferred, conveyed or delivered
to the Purchaser (whether or not held by the Seller or an Affiliate thereof,
including any WFC Stock Company or WFNB):
(a) any claim (including any claim for Tax refunds with respect to
any Tax return of the Seller), counterclaim, cross claim, setoff and other
claim in the nature of indemnification or contribution, and rights to the
extent relating to any Excluded Asset, the Excluded Receivables, the
Excluded Businesses or any Excluded Liability;
(b) any Permit and, subject to Section 2.2(b), any Contract or Client
Contract that cannot be effectively assigned to the Purchaser at the
Closing, to the extent and for so long as it is not assigned to the
Purchaser;
(c) all copyrights, service marks, trademarks, trade names, trade
dress, logos, product names, service names and all applications therefor
and registrations thereof, other than the Purchaser's rights under the
Trademark License Agreement and any copyright or other rights of the Seller
or any of its Affiliates in the any software which is an Asset set forth in
Section 2.2(a)(xxii).
(d) except as provided in Section 2.2(a), all insurance policies
other than those constituting assignable Insurance Collateral, if any;
(e) all securities representing an ownership interest in any entity
other than the WFC Stock Companies and WFNB;
(f) all cash and amounts on deposit with banks or other financial
institutions, except to the extent reflected on the Closing Balance Sheet
or to the extent constituting collateral for the obligations of any Account
Debtor in respect of an Asset;
(g) the Real Property listed or described on Schedule 2.3(g) (the
"Excluded Real Property");
(h) the Client Contracts and other Contracts listed on Schedule
2.3(h) (the "Excluded Contracts") and any rights thereunder, including the
right to receive any payments thereunder;
(i) the receivables listed on Schedule 2.3(i) (and related Receivable
Documents, Receivable Collateral Documents and Receivable Credit Support
Documents) (the "Excluded Receivables");
(j) all rights, goodwill or opportunities with respect to the
accounts and business opportunities listed on Schedule 2.3(j) (the
"Excluded Accounts") and all Client Contracts, Operating Data, Receivables,
Receivable Credit Support Documents and Receivable Documents relating
thereto;
(k) the tax records of the Seller and its Affiliates relating to the
Excluded Assets or Excluded Liabilities, in whatever form or media
embodied, and the historical financial records relating to the Excluded
Assets or Excluded Liabilities, in whatever form or media embodied
(provided, that the Seller shall provide copies of all such records to the
Purchaser as reasonably available and necessary or appropriate for the
Purchaser to comply with applicable Law and financial reporting
requirements);
(l) all assets of the Seller and its Affiliates' international
finance group, tangible or intangible, real or personal, to the extent, and
only to the extent, primarily used in the conduct by the Seller and its
Affiliates of the Seller's Asian finance division, including the factoring,
receivable management and inventory and display financing services business
in Asia, including all accounts that should have been, but were not,
charged off in accordance with the Seller's policies and practices, all
nonearning accounts and accounts relating to goods sold out of trust,
Contracts, Client Contracts, Employment Contracts, Owned Property,
Operating Assets, Operating Data, Receivables, Receivable Credit Support
Documents, Receivable Collateral Documents, Receivable Documents, Permits
and goodwill thereof;
(m) with respect to the inventory finance division of the Seller and
its Affiliates and the international finance group of the Seller and its
Affiliates: all nonearning accounts; all accounts that should have been,
but were not, charged off in accordance with the Seller's policies and
practices; all accounts with respect to which the counterparty is Bankrupt;
all accounts with respect to which an unreconcilable dispute exists between
the Seller or its Affiliates, on the one hand, and the counterparty
thereto, on the other hand; all accounts on which the counterparty
currently refuses to pay; all accounts with respect to which Seller, WFC
Parent or a WFC Company, as applicable, has begun legal proceedings or
taken similar steps; and all accounts relating to goods sold out of trust;
(n) with respect to the consumer finance division of Seller and its
Affiliates: all nonearning accounts; all accounts with respect to which the
counterparty is Bankrupt; all accounts that are blocked in accordance with
the Seller's practice; all accounts that should have been, but were not,
charged off in accordance with the Seller's policies and practices; and all
accounts relating to goods sold out of trust;
(o) any assets, properties and rights of the Seller and its
Affiliates (including all Operating Data), to the extent primarily related
to the Excluded Businesses, including all right, title and interest in and
to Whirlpool Financial India (Private) Limited, Whirlpool Financial
(Mauritius) Limited, Whirlpool Apple Consumer Credit (Private) Limited, and
WFC (Thailand) Co., Ltd.;
(p) the employee Contracts, arrangements and plans listed on Schedule
2.3(p) and all bonus accruals with respect to employees of the Business;
(q) any unamortized prepaid pension expense as of the Closing Date;
(r) this Agreement and the Schedules, Exhibits and other instruments
contemplated herein;
(s) all prepaid and similar items, including without limitation all
prepaid expenses, deferred charges, deposits, rebates and discounts from
customers and advance payments related to the Business made or incurred in
respect of any Excluded Asset or Excluded Liability;
(t) all Operating Data relating to the Excluded Assets or extension
of credit terms by WFC Parent or its Affiliates on open account;
(u) any and all claims of Seller or any of its Affiliates for
refunds, credits, carrybacks or carryforwards in connection with any Taxes
for tax periods ending on or prior to the Closing Date and proceeds
thereof;
(v) all insurance rebates net of any losses with respect to the
consumer finance division of the Business and the inventory finance
division of the Business relating to periods prior to Closing paid
following Closing;
(w) the unsettled accounts with respect to the Business which the
parties do not agree have a reasonable prospect of being paid in full;
(x) 140 pieces of artwork; and
(y) the assets listed in Schedule 2.3(y).
2.4 Assumed Liabilities.
(a) On the Closing Date, the Purchaser shall assume and agree to pay,
perform and discharge as and when due all of the following liabilities and
obligations, whether fixed, absolute or contingent, material or immaterial,
matured or unmatured, incurred by the Seller and the WFC Asset Companies,
as the same exist on the Closing Date (except for the Excluded
Liabilities), which are herein collectively referred to as the "Assumed
Liabilities", and the Purchaser shall not assume any other liabilities or
obligations, whether fixed, absolute or contingent, material or immaterial,
matured or unmatured, whatsoever of the Seller or any of its Affiliates:
(i) except as specified in Section 2.5, all obligations and
liabilities of the Seller, whenever performable or arising, under any
Client Contracts or other Contracts, whether in effect on the date
hereof or entered into in accordance with Section 6.1 and in effect
on the Closing Date, which shall have been assigned to the Purchaser
or as to which satisfactory arrangements shall have been made in
accordance with Section 2.2(b) to provide the Purchaser the benefits
under such Client Contracts or other Contracts;
(ii) all liabilities of the Seller in the categories specified
in Schedule 2.4(a)(ii) which are set forth in the Closing Balance
Sheet to the extent set forth thereon;
(iii) the obligations of the Seller expressly assumed or
otherwise undertaken by the Purchaser pursuant to Article X; and
(iv) all liabilities and obligations relating to the leases
set forth on Schedule 2.4(a)(iv) which arise (i) after the Closing or
(ii) on or before the Closing, only to the extent of any accrual
therefor on the Closing Balance Sheet.
2.5 Excluded Liabilities. Notwithstanding Section 2.4, the liabilities and
obligations of the Seller and its Affiliates (including the WFC Stock Companies)
which are not Assumed Liabilities (the "Excluded Liabilities") and thus which
shall be retained by the Seller and its Affiliates (excluding the WFC Stock
Companies) and shall not be assumed by the Purchaser (whether or not held by
Purchaser or an Affiliate thereof, including any WFC Stock Company) shall
include, without limitation:
(a) any liability or obligation of the Seller, the WFC Companies and
WFNB for any Taxes, other than any Taxes which the Purchaser has expressly
agreed to pay pursuant to this Agreement;
(b) any liability or obligation under or with respect to any debt or
equity securities including the Series A, Series B and Series C Preferred
Stock issued by the Seller;
(c) any liability or obligation arising in respect of any Excluded
Assets, including any existing or future liability or obligation resulting
from any legal, administrative or arbitration proceeding, suit or action of
any nature (collectively, an "Action") with respect thereto;
(d) any liability or obligation (i) to any Person as a result of any
personal injury sustained by such Person in connection with the conduct of
the Business prior to the Closing, (ii) to any employee of WFNB or any WFC
Company who is offered employment with the Purchaser in accordance with
Section 10.1 and who does not accept such employment and (iii) to any
employee as a result of any breach of the terms and conditions of
employment of such employee with the Seller, WFNB or any WFC Company
occurring prior to the Closing or, to the extent not related to a breach of
such terms and conditions of employment, related to the conduct of the
Business prior to the Closing;
(e) the obligations of the Seller that are being retained pursuant to
Article X;
(f) all liabilities and obligations under Contracts and Client
Contracts which are not assigned or transferred to the Purchaser at the
Closing Date pursuant to this Agreement, except with respect to those
Contracts and Client Contracts as to which satisfactory arrangements shall
have been made in accordance with Section 2.2(b) to provide the Purchaser
the benefits under such Contracts and Client Contracts;
(g) all liabilities and obligations of or incurred by the Seller or
any of its Affiliates to the extent (i) arising out of the current or
former facilities or operations that are not included as an Asset, or (ii)
not related to the Business;
(h) all liabilities and obligations relating to charitable
contributions and pledges of the Seller, WFC Parent, WFNB or any WFC
Company;
(i) all liabilities and obligations to the extent arising out of
circumstances or events occurring or existing on or prior to the Closing
Date with respect to which written claims or Actions are made, presented or
filed, whether on or prior to or following the Closing Date, including,
without limitation, the claims and Actions identified on any of the
Schedules and any other Actions pending on or prior to the Closing Date,
other than those arising out of any Contract or Client Contract which is an
Assumed Liability unless arising out of an asserted violation of Law; and
(j) all liabilities and obligations (except to the extent
specifically provided with respect to severance pay in Section 10.1) under
any Benefit Plan (including, without limitation, any Benefit Plan in which
the WFC Stock Companies are a sponsor or participating employer).
2.6 Closing. The closing (the "Closing") of the purchase and sale of the
Assets hereunder shall, subject to the satisfaction of the conditions set forth
in Article VIII, take place at the offices of Mayer, Brown & Platt in Chicago,
Illinois, on the date that is the sooner of (x) the 15th of the month (or, if
not a Business Day, the next Business Day) during which satisfaction of the
conditions set forth in Article VIII occurs or (y) the last Business Day of the
month during which satisfaction of the conditions set forth in Article VIII
occurs, but in no event shall the parties be obligated to close until three
Business Days have transpired since the satisfaction of such conditions (the
date of the Closing being hereinafter called the "Closing Date"). At the Closing
(subject to Sections 2.7 and 2.8):
(i) The Purchaser shall pay to the Seller an amount in cash equal to
the Closing Payment less the sum of (i) $500,000 and, if Section 2.7 is
inapplicable, (ii) an amount (the "Delinquency Payment") equal to 40% of
the amount by which the Consumer Receivables that are delinquent 60 days or
more have increased from the date hereof to the applicable Closing Date at
which there shall occur the sale of the Consumer Receivables, if such
amount is a positive number by wire transfer of immediately available funds
to such bank account or accounts as may be designated in a writing
delivered to the Purchaser by the Seller, such writing to be delivered at
least two (2) Business Days prior to the Closing.
(ii) The Seller and the WFC Asset Companies shall execute and deliver
to the Purchaser such Transfer Instruments as may be required by the
Purchaser to be executed and delivered by the Seller and the WFC Asset
Companies and the Purchaser shall execute and deliver to the Seller and the
WFC Asset Companies such Transfer Instruments as may be required by the
Seller to be executed and delivered by the Purchaser.
(iii) The Seller and the WFC Asset Companies shall deliver to the
Purchaser stock certificates representing the shares of the outstanding
capital stock of the WFC Stock Companies and the WFNB Shares duly endorsed
in blank or accompanied by stock powers duly executed in blank and adequate
to transfer such shares.
(iv) The other executions, deliveries and actions contemplated in Sections
8.1 and 8.2 shall be made.
2.7 WFNB Purchase
----------------------
(a) If, at the time all other conditions to the consummation of the
transactions contemplated by this Agreement contained in Article VIII have
been satisfied or waived (other than those conditions or portions thereof
applicable to Section 2.8), the Purchaser has not obtained the approvals of
the Office of the Comptroller of the Currency and the Federal Deposit
Insurance Corporation which are required for the acquisition of the WFNB
Shares (collectively, the "OCC Approval"), then the parties agree promptly
to take all actions necessary to (i) consummate pursuant to this Article II
the Closing and all other transactions contemplated hereby (other than as
contemplated by Section 2.8) except the WFNB Purchase (as defined below),
and reduce the Closing Payment by an amount equal to the book value of WFNB
and of the Receivables of the consumer finance division of the Business
(the "Consumer Receivables") included on the balance sheet of the Business,
dated September 30, 1997, reduced by the Assumed Liabilities of WFNB and
which arise in connection with the Consumer Receivables as reflected on
such balance sheet, plus an amount equal to the product of (x) the Consumer
Receivables included in the balance sheet of the Business, dated September
30, 1997, multiplied by (y) the Relevant Receivable Premium (the "WFNB
Premium"), and (ii) delay the consummation of the purchase and sale of the
WFNB Shares and the Consumer Receivables and the transfer of the employees
related to the consumer finance division of the Business (the "WFNB
Purchase") until such time as the OCC Approval has been obtained. For
purposes of the Closing referred to in clause (i) of the preceding
sentence, if, in addition to the failure to obtain the OCC Approval, one of
more other conditions to the Closing contemplated by this Agreement
contained in Article VIII as they relate to WFNB (an "Other WFNB
Condition") has not been satisfied as of the date on which all such other
conditions have been satisfied or waived, the parties shall nevertheless
consummate the Closing and the transactions contemplated hereby other than
the WFNB Purchase in accordance with this Article II. The consummation of
the WFNB Purchase shall be conditioned on the OCC Approval having been
obtained and the satisfaction or waiver of all Other WFNB Conditions, and
no other conditions to the Closing contained in Article VIII, and at such
consummation the Purchaser shall pay the Seller by wire transfer of
immediately available funds to the Seller's account an amount equal to the
WFNB Premium plus the book value of WFNB and of the Consumer Receivables as
reflected on a balance sheet prepared by the Seller as of the last day of
the month immediately preceding the date of such consummation ("Prior Month
End Balance Sheet"), reduced by the Assumed Liabilities of WFNB and which
arise in connection with the Consumer Receivables, as reflected on such
Prior Month End Balance Sheet, and further reduced by the amount of the
Delinquency Payment, and Seller shall deliver the WFNB Shares. The
consummation of the WFNB Purchase after consummation of the Closing and
other transactions contemplated hereby shall be subject to the same
representations, warranties, covenants and conditions contained herein as
applied on the Closing Date to the Seller, on the one hand, and the
Purchaser, on the other hand, applying to the Seller and WFNB and the
Purchaser, respectively, on the date on which the WFNB Purchase is
consummated, with only such modifications as are necessary to reflect the
Closing of all transactions contemplated hereby other than the WFNB
Purchase.
(b) If the consummation of the WFNB Purchase is delayed pursuant to
Section 2.7(a), (i) the WFNB Shares and the Consumer Receivables shall
constitute and be treated as Excluded Assets, and all Assumed Liabilities
of WFNB and which arise in connection with the Consumer Receivables shall
constitute and be treated as Excluded Liabilities until such time as the
WFNB Purchase and (ii) the Employees relating to the consumer finance
division of the Business shall not be transferred until the time of the
WFNB Purchase.
(c) The failure of the consummation of the WFNB Purchase to occur for
any reason shall affect neither the Closing of the other transactions
contemplated hereby nor any rights or obligations of the parties under
Section 12.2, 12.3 or 14.13.
2.8 Foreign Purchases
-------------------------
(a) If, at the time all other conditions to the consummation of the
transactions contemplated by this Agreement contained in Article VIII have
been satisfied or waived (other than those conditions or portions thereof
applicable to Section 2.7), the Purchaser has not obtained certain
regulatory approvals of foreign Governmental Authorities which are required
for consummation of the transactions contemplated hereby in accordance with
the laws of, or for the conduct of the Business in, one or more foreign
countries (the "Foreign Approvals"), then the parties agree promptly to
take all actions necessary to (i) consummate pursuant to this Article II
the Closing and all other transactions contemplated hereby (other than as
contemplated by Section 2.7) and except the Delayed Foreign Purchases (as
defined below), and reduce the Closing Payment by an amount equal to (A)
the book value of the Assets, as reduced by the Assumed Liabilities of the
Business, in each case which are located in or attributable to the country
or countries as to which all Foreign Approvals have not been obtained (the
"Unapproved Country or "Unapproved Countries") as reflected on the balance
sheet of the Business, dated September 30, 1997, plus (B) an amount equal
to the portion of the total Premium Amount which the Balance Sheet of the
Business as of September 30, 1997 shows to be allocable to each of the
countries included thereon which at such time are Unapproved Countries (the
"Relevant Country Premium"), and (ii) delay the consummation of the
purchase and sale of the Assets and the assumption of the Assumed
Liabilities and the transfer of the employees in each case which are
located in or attributable to each Unapproved Country (including, if
applicable, the sale of the stock of the WFC Stock Company domiciled in
such Unapproved Country) (the "Delayed Foreign Purchase") until such time
as the applicable Foreign Approval has been obtained. For purposes of the
Closing referred to in clause (i) of the preceding sentence, if, in
addition to the failure to obtain any Foreign Approval, one of more other
conditions to the Closing contemplated by this Agreement contained in
Article VIII as they relate to an Unapproved Country (an "Other Foreign
Condition") has not been satisfied as of the date on which all such other
conditions have been satisfied or waived, the parties shall nevertheless
consummate the Closing and the transactions contemplated hereby other than
the applicable Delayed Foreign Purchase in accordance with this Article II.
The consummation of each Foreign Purchase shall be conditioned on the
applicable Foreign Approval having been obtained and the satisfaction or
waiver of all Other Foreign Conditions, and no other conditions to the
Closing contained in Article VIII, and at such consummation the Purchaser
shall pay the Seller by wire transfer of immediately available funds to the
Seller's account an amount equal to the book value of the Assets located in
or attributable to each theretofore Unapproved Country as reflected on the
Prior Month End Balance Sheet, reduced by the Assumed Liabilities of the
Unapproved Country and which arise in connection with the Receivables
relating to the applicable Unapproved Country, as reflected on such Balance
Sheet, plus an amount equal to the relevant Country Premium. The
consummation of any Foreign Purchase after consummation of the Closing and
other transactions contemplated hereby shall be subject to the same
representations, warranties, covenants and conditions contained herein as
applied on the Closing Date to the Seller, on the one hand, and the
Purchaser, on the other hand, applying to the Seller and the Purchaser,
respectively, with respect to the Business in the relevant Unapproved
Country on the date on which the applicable Foreign Purchase is
consummated, with only such modifications as are necessary to reflect the
Closing of all transactions contemplated hereby other than the applicable
Foreign Purchase.
(b) If the consummation of a Foreign Purchase is delayed pursuant to
Section 2.8(a), the Assets located in each Unapproved Country shall
constitute and be treated as Excluded Assets, and all Assumed Liabilities
which arise in connection with such Assets and the employees related
thereto (including those which are to become Assumed Liabilities) shall
constitute and be treated as Excluded Liabilities until such time as the
closing of the relevant Foreign Purchase.
(c) The failure of the consummation of a Foreign Purchase to occur
for any reason shall affect neither the Closing of the other transactions
contemplated hereby nor any rights or obligations of the parties under
Sections 12.2, 12.3 or 14.13.
(d) Each Foreign Purchase shall be completed as promptly as
practicable after the Foreign Approval relevant thereto shall have been
obtained.
ARTICLE III
PURCHASE PRICE ADJUSTMENT
3.1 Closing Statement of Net Assets.
-------------------------------
Preparation. As promptly as practicable after the Closing Date, the Seller
will cause to be prepared (a) a statement of the book value of the Assets and
the Assumed Liabilities that were assumed by the Purchaser pursuant to this
Agreement as of the close of business on the Closing Date (the "Closing Balance
Sheet"), and (b) the calculation of Closing Net Asset Value based upon the
Closing Balance Sheet and the adjustments set forth in Schedule 3.1
(collectively, the "Adjustment Statements"). The Closing Balance Sheet shall be
prepared in accordance with GAAP as consistently applied by the Seller and shall
be prepared on a basis consistent with the preparation of the Balance Sheet of
the Business dated June 30, 1997, and shall present fairly in all material
respects the financial position of the Business. The Purchaser and its
representatives and accountants shall have the right to participate in and
observe the process of the preparation of the Adjustment Statements, and such
access as they may reasonably request to any books, records, workpapers or other
information. The "Closing Net Asset Value" shall mean an amount equal to the
remainder of (i) the book value of the Assets on the Closing Date, as reflected
on the Closing Balance Sheet, less (ii) the Assumed Liabilities on the Closing
Date, as reflected on the Closing Balance Sheet, as each of the foregoing
amounts shall be finally and conclusively determined as specified in Section
3.2(d). The Adjustment Statements shall be prepared at the Seller's expense with
the assistance, to the extent reasonably necessary, of former personnel of the
Business, which the Purchaser shall use commercially reasonable efforts to
provide to the Seller at no cost to the Seller. As promptly as practicable, but
no later than ninety (90) days after the Closing Date, the Seller will cause the
Adjustment Statements to be delivered to the Purchaser and the Purchaser's
accountants.
3.2 Determination of Closing Adjustments; Dispute Resolution.
-------------------------------------------------------------
(a) Cooperation. The parties hereto agree that they will cooperate
and assist in the preparation and review of the Adjustment Statements
including making available all relevant books, records, work papers and
personnel.
(b) Review by Purchaser; Disagreement. If the Purchaser disagrees
with the calculation of the Closing Net Asset Value, the Purchaser may,
within 60 days after receipt of the Adjustment Statements, deliver a
written notice to the Seller disagreeing with such calculation or
calculations, setting forth its calculation of such amount or amounts in
accordance with the terms of this Agreement. Any such notice of
disagreement shall specify those items or amounts or calculation methods as
to which the Purchaser disagrees. If the Purchaser fails to object within
the time period required by this Section 3.2(b), the Closing Balance Sheet
and the Closing Net Asset Value, as prepared and determined by the Seller,
shall be conclusive and binding, absent manifest error.
(c) Resolution of Disagreements. If a notice of disagreement shall be
delivered within the time period specified in Section 3.2(b), and if the
Seller does not agree with the Purchaser's objections, if any (it being
agreed that the failure of the Seller to deliver written notice to the
Purchaser of the Seller's disagreement with the Purchaser's objection
within 10 days of receipt of such objection shall be deemed acceptance by
the Seller), or such objections are not resolved on a mutually agreeable
basis within thirty (30) days after the Seller's receipt thereof, any
disagreement between the parties regarding the same shall be resolved
within an additional sixty (60) day period by the Chicago office of Arthur
Andersen LLP, or another independent accounting firm of nationally
recognized standing reasonably satisfactory to, and mutually agreed upon
by, the Seller and the Purchaser (who shall not have any material
relationship with the Seller or the Purchaser) (the "Independent Accounting
Firm"), promptly to review this Agreement and the remaining items or
amounts disputed by the parties hereto. The Seller and the Purchaser shall
furnish the Independent Accounting Firm such documents and other materials
as each finds relevant and such other documents and materials requested by
the Independent Accounting Firm. The Independent Accounting Firm shall
apply the terms of this Agreement and adopt either the Seller's position or
the Purchaser's position for each separate item in dispute. The Independent
Accounting Firm will be required to adopt either the position of the Seller
or the Purchaser for each separate item in dispute, and will not have the
authority to modify the position it adopts. No later than sixty (60) days
following its commencement of its review, the Independent Accounting Firm
shall deliver to the Seller and the Purchaser a written report setting
forth the positions adopted by the Independent Accounting Firm. Such report
shall be conclusive and binding on the parties, absent manifest error. The
fees and charges of the Independent Accounting Firm in making such review
and preparing such report shall be borne equally by the Seller and the
Purchaser.
(d) Final Closing Net Asset Value. For purposes hereof, the final and
conclusive Closing Net Asset Value shall be the amount (i) set forth as the
Seller's calculation thereof in the Adjustment Statements if no notice of
disagreement with respect thereto is delivered within the time period
specified in Section 3.2(b) or (ii) if such a notice of disagreement is
delivered, (A) as agreed by the parties pursuant to Section 3.2(c)
(including a deemed acceptance by the Seller pursuant to said Section) or
(B) in the absence of such agreement, as adopted in the report of the
Independent Accounting Firm delivered pursuant to Section 3.2(c).
3.3 Post-Closing Adjustment.
(a) Closing Payment. If the Closing Payment minus the Premium Amount
exceeds the Closing Net Asset Value, the Seller shall pay to the Purchaser,
in the manner and with interest as provided in Section 3.3(b), the amount
of such excess. If the Closing Net Asset Value exceeds the Closing Payment
minus the Premium Amount, the Purchaser shall pay to the Seller, in the
manner and with interest as provided in Section 3.3(b), the amount of such
excess. Any such payment pursuant to this Section 3.3(a) shall be made at a
mutually convenient time and place (i) within thirty (30) days after the
Seller's delivery of the Adjustment Statements if no notice of disagreement
is delivered pursuant to Section 3.2(b) or (ii) if a notice of disagreement
is delivered pursuant to Section 3.2(b) then within ten (10) days after the
earlier of (A) agreement between the parties pursuant to Section 3.2(c)
with respect to the Closing Net Asset Value (including a deemed acceptance
by the Seller pursuant to said Section) and (B) delivery of the report of
the Independent Accounting Firm referred to in Section 3.2(c).
(b) Method of Payment. Any payment pursuant to this Section 3.3 shall
be made by wire transfer by the Purchaser or the Seller, as the case may
be, of immediately available funds to such account of the party or parties
to receive such payment as may be designated by such party or parties. The
amount of any payment to be made pursuant to this Section 3.3 shall bear
interest from the Closing Date until the date of payment at a rate per
annum equal to the Post- Closing Interest Rate. Such interest shall be
payable at the same time as the payment to which it relates and shall be
calculated daily on the basis of a year of 365 days and the actual number
of days for which due.
(c) Purchase Price Adjustment. The purchase price shall be increased
by the amount that the Closing Net Asset Value is greater, or shall be
reduced by the amount that the Closing Net Asset Value is less, than the
Closing Payment minus the Premium Amount.
(d) Additional Adjustments. (i) If Section 2.7 shall be applicable,
the provisions of Sections 3.1, 3.2 and this Section 3.3 shall apply to
ascertain and to adjust for the differences in the book value of the WFNB
Shares and the Consumer Receivables, reduced by the Assumed Liabilities of
WFNB and which arise in connection with the Consumer Receivables, between
the amounts reflected on the Prior Month End Balance Sheet and the book
values thereof as of the close of business on the date on which the WFNB
Purchase is consummated, with a payment to be made as a result thereof
(including interest thereon) to the party which is owed the same.
(ii) If Section 2.8 shall be applicable, the provisions of
Sections 3.1, 3.2 and this Section 3.3 apply with respect to each
Foreign Purchase to ascertain and to adjust for the differences in
the book value of the Assets as reduced by the Assumed Liabilities
located in or attributable to the theretofore Unapproved Country
which are the subject of the applicable Foreign Purchase, as
reflected on the Prior Month End Balance Sheet, and the book values
thereof as of the close of business on the date on which the
applicable Foreign Purchase is consummated, with a payment to be made
as a result thereof (including interest thereon) to the party which
is owed the same.
3.4 Repurchase of Excluded Assets.
(a) In the event that any receivable, loan or other asset indirectly
transferred to the Purchaser through the purchase of the WFC Stock
Companies is an Excluded Asset, or any receivable, loan or other asset
transferred to the Purchaser pursuant to this Agreement is an Excluded
Asset, the Purchaser shall promptly provide the Seller with written notice
identifying such Excluded Asset, and the Seller shall be obligated to
repurchase such Excluded Asset to the extent set forth in this Section 3.4.
(b) On the fifteenth (15th) day of each month (or the following
Business Day, if such day is not a Business Day), the Seller shall deliver
to Purchaser an amount equal to the aggregate Repurchase Price for all
Excluded Assets for which Purchaser has given notice in the preceding
calendar month. The Repurchase Price for any receivable or loan which is an
Excluded Asset shall be (i) the sum of the outstanding balance thereof as
of the date of repurchase, plus (ii) Purchaser's documented recording or
transfer costs of conveying such receivable or loan to the Seller, plus
(iii) accrued interest thereon in accordance with the terms of the
applicable loan documentation, plus (iv) the product of the outstanding
balance as of the date of repurchase multiplied by the Relevant Receivable
Premium. The Repurchase Price for any other Excluded Asset shall be (x) the
book value of such Excluded Asset as of the Closing Date, plus (y) interest
on such amount from the Closing Date until the date such Repurchase Price
is received by Purchaser at the Post-Closing Interest Rate, plus (z)
documented recording or transfer costs of conveying such Excluded Asset to
Seller. Upon payment of the Repurchase Price as set forth herein, Purchaser
shall deliver any and all documentation relating to each repurchased loan
and shall execute and deliver such instruments of transfer or assignment,
in each case without recourse, as shall be necessary to vest in the Seller
title to such loan or other Excluded Asset.
(c) The period within which the Purchaser may assert the right to
require the Seller to repurchase Excluded Assets as provided in this
Section shall expire nine months after the applicable closing date,
provided, however, that such expiration shall have no effect on the
obligations of the Seller and WFC Parent with respect to any Excluded Asset
that is the subject of a repurchase demand made prior to such expiration,
nor upon any representation and warranty relating to Excluded Assets and
indemnification.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SELLER AND WFC PARENT
The Seller and WFC Parent hereby jointly and severally represent and
warrant to the Purchaser (i) as set forth in Sections 4.1, 4.2 and 4.7, clause
(a) of Section 4.3 and clause (a) of Section 4.5, and, (ii) except for
circumstances that, taken in the aggregate, would not reasonably be expected to
have a Material Adverse Effect, in the case of all other representations and
warranties herein, as follows:
4.1 Organization and Existence. Each of the Seller, WFC Parent, WFNB and
each WFC Company is a corporation duly incorporated, validly existing and in
good standing under the laws of its jurisdiction of organization. Each of the
Seller, WFC Parent, WFNB, and the WFC Companies has full corporate power and
authority to own and operate the Assets and to carry on the Business as and
where such Assets are now owned and the Business is now conducted. Each of the
Seller, WFC Parent, WFNB, and the WFC Companies is duly licensed or qualified to
do business as a foreign corporation and is in good standing in all
jurisdictions in which the character of the Assets or the nature of the Business
requires it to be so licensed or qualified and, in the case of WFC Parent, in
which failure to be so licensed, qualified and in good standing would reasonably
be expected to have a Material Adverse Effect. Schedule 4.1 sets forth each
jurisdiction in which any of the Seller, WFNB, and the WFC Companies is licensed
or qualified to do business as a foreign corporation. Complete and correct
copies of the articles of incorporation and by-laws, as amended, of the Seller,
each WFC Company and WFNB have been made available to Purchaser. Seller has made
available to Purchaser the minute books of Seller, each WFC Company and WFNB
from date of incorporation through the date hereof, and such minute books
contain complete and accurate records of all meetings held by the board of
directors and stockholders of Seller, each WFC Company and WFNB and of all
corporate actions authorized at such meetings since the respective dates of
incorporation.
4.2 Authority and Approval. Each of the Seller and WFC Parent has the
corporate power and authority to execute, deliver and perform this Agreement and
the applicable agreements, documents and instruments contemplated herein and to
consummate the transactions contemplated hereby and thereby. All corporate
(including shareholder) acts and proceedings required to be taken by or on the
part of the Seller and the WFC Parent to authorize it to execute, deliver and
perform this Agreement and the applicable agreements, documents and instruments
contemplated herein and to consummate the transactions contemplated hereby have
been duly and validly taken and remain in full force and effect. This Agreement
constitutes the legal, valid and binding agreement of the Seller and WFC Parent,
enforceable against the Seller and WFC Parent in accordance with its terms
except as such enforcement may be limited by bankruptcy, insolvency or other
similar laws affecting the enforcement of creditors' rights generally or by
judicial discretion as to the availability of equitable remedies or by general
equitable principles.
4.3 No Conflict. The execution, delivery and performance by the Seller and
WFC Parent of this Agreement and the applicable agreements, documents and
instruments contemplated herein do not, and the consummation by the Seller and
WFC Parent of the transactions contemplated hereby and thereby will not: (a)
violate or conflict with the certificate of incorporation or by-laws of the
Seller, WFC Parent, WFNB or any WFC Company; (b) assuming satisfaction of the
matters referred to in the following clause (c), violate, contravene or conflict
with any order, writ, injunction, directive, judgment, award or decree of any
Governmental Authority to which the Seller, WFC Parent, WFNB or any WFC Company
is a party, or to which any of the Assets is subject or, to the knowledge of the
Seller, any statute, law, ordinance, rule or regulation of any Governmental
Authority applicable to it or any of the Assets; or (c) require, to the
knowledge of the Seller or WFC Parent, any filing or registration by the Seller
or WFC Parent with, or approval, consent, authorization or other action with
respect to any Governmental Authority other than (i) the notification under the
HSR Act referred to in Section 6.3, (ii) the filings, registrations,
authorizations, approvals, consents and other actions listed in Schedule 4.3,
and (iii) any such filing, registration, authorization, approval, consent or
other action that would not be required if any Person other than the Purchaser
were to acquire the Assets hereunder or (d) result in the creation or imposition
of any Encumbrance on any of the Assets or equity of any of the WFC Companies or
WFNB.
4.4 Contracts. Except as set forth on Schedule 4.4, the execution, delivery
and performance of this Agreement and the agreements, documents and instruments
contemplated herein by the Seller and WFC Parent do not, and the consummation of
the transactions contemplated hereby and thereby will not: (a) violate or
conflict with, result in a breach of, constitute a default under (whether with
notice or the lapse of time or both), accelerate or permit the acceleration of
the performance required by, or require the consent under or notice with respect
to, any Contract or Client Contract (other than Excluded Contracts) to which the
Seller, WFC Parent, any WFC Company, or WFNB is a party or by which it is bound
or by which any of its assets or property is bound, or (b) result in the
creation of any Encumbrance upon the Assets (other than Permitted Encumbrances).
4.5 Financial Statements.
(a) Schedule 4.5 sets forth a true and complete copy of the Financial
Statements. The Financial Statements were prepared in accordance with GAAP
as applied by the Seller on a consistent basis throughout the period
involved and fairly present the financial position of the Business in all
material respects as at the date thereof and the results of the operation
of the Business for the period then ended which are reflected therein.
Between June 30, 1997 and the date hereof, there has not been a Material
Adverse Effect with respect to the Business.
(b) Since June 30, 1997 through the date hereof, the Seller, WFNB and
the WFC Companies have not engaged in any transaction which, if done after
the execution hereof, would violate Section 6.1 except as described in
Schedule 4.5(b).
4.6 Title to Properties; Encumbrance; Sufficiency of Assets.
(a) The Seller has legal and beneficial title to the Assets, which
title may be sold, assigned or otherwise conveyed as contemplated in this
Agreement, provided, that no representation or warranty is being made as to
the effectiveness of any arrangement to convey the benefits and burdens of
any Contract, Client Contract or Permit pursuant to Section 2.2(b). None of
the Assets is subject to any Encumbrance, except any Encumbrances which
shall be removed prior to the Closing and except the following: (a)
Encumbrances securing specified liabilities or obligations immaterial in
amount, individually and in the aggregate, and with respect to which no
default exists (or event that, with notice or lapse of time, or both, would
constitute a default); (b) mechanics', carriers', workers', suppliers', and
other similar liens arising in the ordinary course of business and
consistent with past practice for any amount the payment of which is not
delinquent; (c) exceptions disclosed in Schedule 4.6; (d) minor
imperfections of title, if any, none of which, individually or in the
aggregate, is substantial in amount, substantially detracts from the value
or substantially impairs the use of the property subject thereto, or
materially impairs the operations of the Business as conducted immediately
prior to the Closing; and (e) liens for current taxes not yet due and
payable (collectively, the "Permitted Encumbrances"). The WFC Companies,
including WFNB, together with the Seller, are all of the entities that
currently conduct the Business and together hold all of the Assets.
(b) The Assets, together with the Excluded Assets and the rights of
Purchaser under the Strategic Alliance Agreement, the Trademark License
Agreement, the Transition Services Agreement and any Permits which
Purchaser is required to obtain due to the fact that it is not a subsidiary
of a manufacturing company constitute, and upon consummation of the
transactions contemplated hereby will constitute, all of the rights,
assets, properties and interests which are sufficient for, the operation of
the Business as the Business is currently being operated and conducted.
4.7 WFC Stock Companies. All of the outstanding shares of capital stock of
the WFC Stock Companies and the WFNB Shares are duly authorized, validly issued,
fully paid, nonassessable and free of preemptive rights. The shares of
outstanding capital stock of the WFC Stock Companies to be purchased hereunder
constitute all of the issued and outstanding capital stock of such WFC Stock
Companies. The WFNB Shares constitute all of the issued and outstanding capital
stock of WFNB. None of WFNB or the WFC Stock Companies is bound by any
outstanding subscriptions, options, warrants, calls, commitments or agreements
of any character calling for the transfer, purchase or issuance of any shares of
its capital stock or any securities representing the right to purchase,
subscribe, or otherwise receive any such shares. Except as set forth on Schedule
4.7, Seller is the owner, beneficially and of record, directly or indirectly, of
all of the outstanding shares of capital stock of the WFC Stock Companies and
the WFNB Shares, free of all Encumbrances other than Permitted Encumbrances. At
the applicable Closing, the Purchaser shall receive legal, beneficial, good and
marketable title to the outstanding shares of capital stock of the WFC Stock
Companies and the WFNB Shares, free and clear of all Encumbrances. Except as set
forth on Schedule 4.7, there is no corporation in which any WFC Stock Company or
WFNB has any direct or indirect equity interest. There are no proxies or voting
agreements with respect to any shares of stock of any WFC Stock Company or WFNB.
4.8 Contracts and Receivables. For purposes of this Section 4.8, "Seller"
shall be deemed to refer to Seller, WFNB and the WFC Companies. The Seller
believes that, in all material respects and to the best of its knowledge, except
as set forth on Schedule 4.8(a):
(a) Each Contract, Client Contract, Receivable Collateral Document
and Receivable Credit Support Document was originated in the ordinary
course of business. Each security or other interest created or intended to
be created thereunder in inventory the purchase of which is financed by the
Seller is valid, subsisting, binding and enforceable and is intended to be
a first priority interest in favor of the grantee thereof. Each Contract,
Client Contract, Receivable Collateral Document and Receivable Credit
Support Document is valid, genuine, binding and enforceable against the
counterparty thereto in accordance with its terms except as such
enforcement may be limited by bankruptcy, insolvency or other similar laws
affecting the enforcement of creditors rights generally or by judicial
discretion as to the availability of equitable remedies or by general
equitable principles, is absolute and unconditional, is fully transferable
and assignable, and is not and shall not be (due to acts or omissions
committed or omitted by or on behalf of the Seller) subject to any
defenses, setoffs, off-sets, adjustments, rescission or counterclaims of
any kind or nature. Each Contract, Client Contract, Receivable Collateral
Document and Receivable Credit Support Document was in compliance with all
applicable Laws at the time of its execution, subject to the enforceability
of the choice of law provisions contained in such documents. No Contract,
Client Contract, Receivable Collateral Document and Receivable Credit
Support Document is subject to any Law under which the sale, transfer or
assignment thereof is unlawful, void, voidable or otherwise prohibited.
Each Contract, Client Contract, Receivable Collateral Document and
Receivable Credit Support Document was fully and properly executed with
genuine signatures and is in proper order.
(b) Schedule 4.8(b) has been previously provided to the Purchaser and
accurately and completely sets forth, as of August 31, 1997 and with
respect to each Receivable, the amount owing and the aging of such
Receivable and the name of the party from whom such Receivable is owing,
and the coding of the Receivable (e.g., bankruptcy or litigation). Seller
has made available, and at Closing shall deliver, to Purchaser complete and
correct copies of all Contracts, Client Contracts, Receivable Collateral
Documents and Receivable Credit Support Documents evidencing or otherwise
relating to the Receivables and of all Contracts, Client Contracts,
Receivable Collateral Documents and Receivable Credit Support Documents
creating security in the collateral as described therein. Seller has not
expressly or by its conduct or inaction waived or prejudiced the binding
effect or priority or enforceability of any Receivable or any Contracts,
Client Contracts, Receivable Collateral Documents or Receivable Credit
Support Documents evidencing or otherwise relating to the Receivables, and
none of the Receivables has been waived or amended in a manner adverse to
Seller since June 30, 1997. Security interests (i) in inventory the
purchase of which has been financed by Seller and (ii) to the extent
required under the Seller's credit policies and procedures, or individual
credit decisions, or WFC Parent decisions or if an attempt is made to
create a security interest, in all other collateral, for each Receivable
have been, and remain, validly and properly perfected in accordance with
the applicable state's Uniform Commercial Code or, outside the United
States, in accordance with applicable local law. No Receivables are owing
by any Governmental Authority.
4.9 Leases. Schedule 4.9 contains an accurate and complete list of each
lease for Leased Property used in the Business (other than leases that are
Excluded Contracts), including such lease's expiration date. Each such lease is
in full force and effect and is a valid and binding obligation of the Seller,
the respective WFC Company or WFNB, enforceable against the Seller, the
respective WFC Company or WFNB and, to the knowledge of the Seller, the
counterparty thereto, in accordance with its terms. Each such lease has been
duly authorized and validly executed by the Seller, the respective WFC Company
or WFNB. Except as set forth in Schedule 4.9, none of the Seller, WFNB, WFC
Parent, any WFC Company or, to the knowledge of Seller, any party to any such
lease is in violation thereof or in default thereunder. None of the Seller, WFNB
or any WFC Company has received any notice of default under any other such lease
which has not been remedied or waived. None of the Seller or any WFC Company or
WFNB has received any notice or has any knowledge of any pending or threatened
condemnation proceeding or assessment for public improvements affecting any
Leased Property or of any sale or other disposition thereof in lieu of
condemnation. The leased Real Estate is adequate in all respects to conduct the
Business as it is currently being conducted.
4.10 Litigation. Except as set forth in Schedule 4.10, there is no legal,
administrative or arbitration proceeding, suit or action of any nature pending
or, to the knowledge of the Seller or WFC Parent, threatened against (i) the
Seller (with respect to the Business) or any WFC Company or WFNB which involves
claims against such party exceeding $250,000 or could reasonably be expected to
have a Material Adverse Effect, or (ii) the Seller, WFC Parent or any of the
Seller's Affiliates which questions or challenges the validity of this Agreement
or any action taken or to be taken by the Seller, WFC Parent or any of the
Seller's Affiliates pursuant to this Agreement or in connection with the
transactions contemplated hereby. Schedule 4.10 sets forth as of the date hereof
a true and complete list of all proceedings, suits or actions of which the
Seller (with respect to the Business), WFC Parent (with respect to the
Business), WFNB or any WFC Company is a plaintiff and which is material to the
applicable plaintiff. Except as set forth in Schedule 4.10, there is no order,
agreement, memorandum of understanding or similar instrument issued by a
Governmental Authority or to which a Governmental Authority is a party in effect
specifically with respect to the Business. Except as set forth in Schedule 4.10,
there are no pending or, to the knowledge of the Seller, threatened disputes,
investigations or controversies between the Seller (with respect to the
Business), WFC Parent (with respect to the Business), any WFC Company or WFNB
and any Governmental Authority. At the date of this Agreement, the Seller, WFC
Parent (with respect to the Business), any WFC Company or WFNB has not received
any communication from any Governmental Authority that such authority would
oppose or refuse to grant or issue its consent or approval to, if required, or
would impose a materially burdensome condition on, the Seller or WFC Parent with
respect to the transactions contemplated by this Agreement.
4.11 Tax Matters. All Tax returns with respect to the WFC Companies and
WFNB that are required to have been filed through the date hereof have been duly
filed, and all material Taxes shown to be due on such Tax returns or otherwise
required to be paid have been paid in full. None of the Seller, the WFC
Companies or WFNB are delinquent in the payment of any Taxes, the failure of
which to pay would result in an Encumbrance on all or a substantial part of the
Assets or a liability to the Purchaser as a matter of law.
4.12 Insurance. Schedule 4.12 contains a summary of all policies of fire,
liability, worker's compensation and other forms of insurance maintained for the
benefit of the Business (other than insurance policies relating to the benefit
plans listed on Schedule 4.13 and credit life, casualty or similar insurance
policies, credit unemployment, credit disability, inventory finance property and
casualty, Insurance Collateral, if any, and keyman policies obtained by Persons
who are provided financing by the Business). Such insurance policies are of the
kinds, covering such risks and in such amounts and with such deductibles and
exclusions as are consistent with past business practices of the Business.
Except as set forth in Schedule 4.12, none of the Seller, WFC Parent, WFNB or
any WFC Company has received any notice of cancellation or termination with
respect to any material insurance policy.
4.13 Benefit Plans.
(a) With respect to the Business, the Seller does not maintain,
administer or contribute to, and with respect to any Employee or any
employee of WFNB, no ERISA Affiliate maintains, administers or contributes
to: (i) any employee benefit plan (as defined in Section 3(3) of ERISA),
including, without limitation, any multiemployer plan as defined in Section
3(37) of ERISA or (ii) any bonus, deferred compensation, performance
compensation, stock purchase, stock option, stock appreciation, severance,
salary continuation, vacation, sick leave, holiday pay, fringe benefit,
personnel policy, reimbursement program, incentive, insurance, welfare or
similar plan, program, policy or arrangement ("Benefit Plan"), other than
those Benefit Plans described on Schedule 4.13. All Benefit Plans,
including the Whirlpool 401(k) Plan and the Whirlpool 401(k) Trust comply
in all material respects with and are and have been operated in all
material respects in accordance with ERISA, the Code, and all other
applicable Federal statutes, state law and the regulations and rules
promulgated pursuant thereto or in connection therewith. All contributions
required to be made to any Benefit Plan have been made, and there does not
exist an accumulated funding deficiency (within the meaning of Section 302
of ERISA or Section 412 of the Code) with respect to any Benefit Plan.
Seller has made available to Purchaser true and complete copies of each
Benefit Plan, and all documents relating thereto, including, but not
limited to, plan documents, summary plan descriptions, trust agreements,
insurance contracts, the most recent Annual Report (Form 5500 Series) and
IRS determination letter and accountant or trustee reports, if any.
(b) The Seller shall fully indemnify and hold harmless Purchaser and
its Affiliates with respect to any liability or obligation under any
Benefit Plan for life insurance, medical or other employee welfare benefits
to any employee (or beneficiary) upon such employee's retirement or
termination of employment.
(c) None of the Seller, WFC Parent, WFNB or any of the WFC Companies
maintains nor has entered into any document, plan or agreement which
contains, directly or indirectly, any change in control provisions which
could cause an increase or acceleration of benefits or benefit entitlement
to employees or former employees of the Business or of the Seller, WFNB or
any of the WFC Companies which would create a liability to the Purchaser as
a result of the transactions contemplated by this Agreement.
(d) All contributions required to be made to any Benefit Plan have
been made, and there does not exist an accumulated funding deficiency
(within the meaning of Section 302 or ERISA or Section 412 of the Code)
with respect to any Benefit Plan. Seller shall fully indemnify and hold
harmless Purchaser and its Affiliates for any liability to the Pension
Benefit Guaranty Corporation or to a multiemployer plan (as defined in
Section 3(37) of ERISA) with respect to any Benefit Plan listed on Schedule
4.13.
(e) The Internal Revenue Service has issued a favorable determination
letter with respect to each Benefit Plan that is intended to be a
"qualified plan" under Section 401(a) of the Code, and, to the knowledge of
the Seller, there are no existing circumstances nor any events that have
occurred which could reasonably be expected to affect the qualified status
of any such Benefit Plan.
(f) Neither the Seller nor any ERISA Affiliate, at any time within
the last six years, has contributed to or been obligated to contribute to
any multiemployer plan (as defined in Section 3(37) of ERISA).
(g) There are no pending or threatened claims (other than routine
benefit claims), lawsuits or arbitrations which have been asserted or
instituted against any Benefit Plan, any of the fiduciaries thereof or the
Seller, WFNB or any WFC Company with respect to their duties under the
Benefit Plans.
(h) All Benefit Plans that are group health plans, within the meaning
of Section 5000(b)(1) of the Code or Section 607(1) of ERISA, have been
operated in substantial compliance with the provisions of Section 4980B and
Sections 9801 through 9806 of the Code and Sections 601 through 734 of
ERISA, and to the knowledge of Seller, no liability under Sections 4980B or
Sections 9801 through 9806 of the Code or Sections 601 through 734 of ERISA
has been incurred by Seller, WFNB or any WFC Company or any ERISA
Affiliate.
(i) To the knowledge of the Seller, there has not occurred a
nonexempt "prohibited transaction" (within the meaning of Section 4975 of
the Code or Sections 406 or 407 of ERISA) with respect to the Seller or any
Benefit Plan.
4.14 Contracts and Commitments.
(a) Except for this Agreement, the agreements, documents and
instruments contemplated herein and the Excluded Assets and except as set
forth in Schedule 4.14:
(i) none of the Seller or WFC Parent (each with respect to the
Business) nor any of the WFC Companies or WFNB has any Employment
Contract with any officer or employee, or any Contract that contains
any severance or termination pay liabilities or obligations to any
officer or employee in excess of $100,000;
(ii) neither the Seller or WFC Parent (each with respect to
the Business) nor any of the WFC Companies or WFNB has any employee
to whom it is paying aggregate direct remuneration at the annual rate
of more than $150,000 for services rendered or commissions at a rate,
which, based on the performance by such employee during the last
fiscal year, would exceed $150,000;
(iii) neither the Seller or WFC Parent (each with respect to
the Business) nor any of the WFC Companies or WFNB has any collective
bargaining or union Contracts;
(iv) neither the Seller or WFC Parent (each with respect to
the Business) nor any of the WFC Companies or WFNB is restricted by
Contract from carrying on its business or any part thereof anywhere
in the world or from competing in any line of business;
(v) none of the WFC Companies or WFNB has any direct debt
obligation for borrowed money;
(vi) except as described in subsection (v), neither the Seller
(with respect to the Business) nor any of the WFC Companies or WFNB
has any obligation or liability pursuant to Contract as guarantor,
surety, co-signer, endorser, co-maker, indemnitor or otherwise in
respect of the obligation of any other Person under which the
exposure of Seller, such WFC Company or WFNB would exceed $50,000,
other than in respect of the obligations of another WFC Company;
(vii) except as described in subsections (v) and (vi), neither
the Seller nor any of the WFC Companies or WFNB is subject to any
obligation or requirement to provide funds to or make any investment
(in the form of a loan, capital contribution or otherwise) in any
Person whether under a loan agreement, note or otherwise in excess of
$100,000; and
(viii) neither the Seller or WFC Parent (with respect to the
Business) nor any of the WFC Companies or WFNB has given any
irrevocable power of attorney to any Person for any purpose
whatsoever, except the appointment of agents to accept service of
process.
(b) True and complete copies of all documents (including all
amendments thereto) identified on Schedule 4.14 have been made available
for inspection by the Purchaser.
(c) Each Contract set forth on Schedule 4.14 or otherwise material to
the Business (collectively, the "Material Contracts") is in full force and
effect and is a valid and binding obligation of the Seller or the
respective WFC Company or WFNB, enforceable in accordance with its terms
except as such enforceability may be limited by applicable bankruptcy,
reorganization, insolvency, moratorium or other similar laws from time to
time in effect affecting creditors' rights generally or by principles
governing the availability of equitable remedies. Each Material Contract
has been duly authorized and validly executed by the Seller or the
respective WFC Company or WFNB. None of Seller, WFNB, WFC Parent, any WFC
Company or, to the knowledge of Seller or WFC Parent, any other party to
any Material Contract is in violation thereof or in default thereunder, and
no Material Contract is currently under negotiation or renegotiation.
4.15 Permits and Other Operating Rights. Each of the Seller, WFNB and the
WFC Companies possesses, and is in good standing and not subject to any
suspension, adverse modification, revocation or adverse proceeding with respect
to, any Permit which is necessary for the Seller, such WFC Company or WFNB to
engage in its respective business as currently conducted. All material Permits
possessed by the Seller, the WFC Companies or WFNB are listed on Schedule 4.15.
4.16 Compliance with Laws. Except as disclosed in Schedule 4.16, the
Business and the Assets has been, and is being conducted in all respects in
compliance with all applicable Laws, including, without limitation, as
applicable, bankruptcy, insolvency and debtor relief laws (including, without
limitation, the provisions thereof relating to reaffirmation agreements), usury
laws, the Federal Truth-in-Lending Act, the Federal Equal Credit Opportunity
Act, the Fair Credit Reporting Act, the Fair Debt Collection Practices Act, the
Federal Trade Commission Act, the Magnuson- Moss Warranty Act, Regulations B, M
and Z of the Federal Reserve Board, the Federal Bankruptcy Code, state
adaptations of the National Consumer Act, of the Uniform Commercial Code and of
the Uniform Consumer Credit Code, and all other banking, usury, consumer credit
laws, sales finance agency acts, consumer credit sales laws, small loan acts,
equal credit opportunity, disclosure laws, laws governing the collection of
amounts owing under consumer obligations and laws relating to unfair and
deceptive practices, the ability of an entity to charge interest or a time price
differential and discrimination. Except as set forth on Schedule 4.16, none of
Seller, WFC Parent, WFNB or any WFC Company has received any notice from any
Governmental Authority that, or has any basis to believe that, the Business is
being conducted in violation of any applicable Laws.
4.17 No Illegal or Improper Transactions. None of WFC Parent (with respect
to the Business), the Seller, WFNB or any WFC Company has, nor has any director,
officer, or employee of the Seller, any WFC Company or WFNB, directly or
indirectly, used funds or other assets of the Seller, any WFC Company or WFNB,
or made any promise or undertaking in such regard, for (a) illegal
contributions, gifts, entertainment or other expenses relating to political
activity; (b) illegal payments to or for the benefit of governmental officials
or employees, whether domestic or foreign; (c) illegal payments to or for the
benefit of any Person, or any director, officer, employee, agent or
representative thereof; or (d) the establishment or maintenance of a secret or
unrecorded fund. There have been no intentionally false or intentionally
fictitious entries made in the books or records of the Seller, WFC Parent (with
respect to the Business), any WFC Company or WFNB.
4.18 Certain Environmental Matters. Except as disclosed on Schedule 4.18:
(a) The Seller, WFC Parent, WFNB or any of the WFC Companies has not
used the Owned Property or the Leased Property, or any part thereof, for
the generation, treatment, storage, handling or disposal of any Hazardous
Materials in violation of any Environmental Laws.
(b) There is not now pending or, to the knowledge of the Seller,
threatened any action, suit, or proceeding by or before any Governmental
Authority (i) alleging violation by any of the Seller, WFNB, WFC Parent
(with respect to the Business) or any WFC Company of (with respect to the
Business) or any liability of any of the Seller, WFNB, WFC Parent or any
WFC Company under, any Environmental Law in connection with the conduct of
its business (ii) alleging failure by any of the Seller, WFNB, WFC Parent
(with respect to the Business) or any WFC Company to have any permit,
certificate, license or authorization required under any Environmental Law
in connection with the conduct of its business or (iii) with respect to the
release, disposal, transportation or storage of any Hazardous Material by
any of the Seller, WFNB, WFC Parent or any of the WFC Companies at, upon,
or under any Owned Property or Leased Property. Except as disclosed in
Schedule 4.18, there are no past or present actions, circumstances,
conditions, or events that could reasonably be expected to result in a
notice, demand, request for information, citation, claim, action,
proceeding, summons, or complaint against any of the Seller, WFNB, WFC
Parent (with respect to the Business) or any WFC Company with respect to
any violation by any of the Seller, WFNB, WFC Parent (with respect to the
Business) or any WFC Company of, or liability of any of the Seller, WFNB,
WFC Parent (with respect to the Business) or any WFC Company under, any
Environmental Law in connection with the conduct of its business.
4.19 Brokers' Fees or Commissions. Except for Goldman, Sachs & Co., neither
the Seller nor any of its Affiliates has employed any investment banker, broker
or finder in connection with the transactions contemplated thereby who might be
entitled to a fee or any commission upon consummation of the transactions
contemplated hereby.
4.20 Disclosure. No representations or warranties made by the Seller or WFC
Parent in this Agreement contain or will contain any untrue statement of
material fact or omit or will omit to state any material fact necessary to make
the statements herein, in light of the circumstances under which they were made,
not misleading.
EXCEPT AS TO THOSE MATTERS EXPRESSLY COVERED BY THE REPRESENTATIONS AND
WARRANTIES BY THE SELLER IN THIS AGREEMENT, THE SELLER EXPRESSLY DISCLAIMS ALL
REPRESENTATIONS AND WARRANTIES, WHETHER EXPRESSED OR IMPLIED, INCLUDING, WITHOUT
LIMITATION, ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR ANY
PARTICULAR PURPOSE. EXCEPT AS OTHERWISE PROVIDED IN THIS AGREEMENT, THE
PURCHASER WAIVES ANY RIGHTS TO INDEMNIFICATION OR CONTRIBUTION PURSUANT TO THE
COMPREHENSIVE ENVIRONMENTAL RESPONSE COMPENSATION AND LIABILITY ACT AND ANY
SIMILAR STATE LAWS.
Except as set forth in this Agreement the Seller is not hereby making any
representation with respect to (a) the information set forth in (i) the
Confidential Memorandum distributed by Goldman, Sachs & Co. with respect to the
Seller and the Business, or (ii) that certain slide presentation given to the
Purchaser or copies of such slides delivered to Purchaser or (b) any financial
projection or forecast relating to the Assets, the Business, WFNB or the WFC
Companies. With respect to any such projection or forecast delivered by or on
behalf of the Seller to the Purchaser, the Purchaser acknowledges that (x) there
are uncertainties inherent in such projections and forecasts and that no
assurance can be given as to whether such projections and forecasts can be
realized and (y) the Purchaser is familiar with such uncertainties and takes
full responsibility for making its own evaluation of the adequacy and accuracy
of all such projections and forecasts. The Purchaser shall have no claim against
the Seller, and the Seller shall have no liability to the Purchaser, with
respect to any such disclaimed information, including, without limitation, the
Confidential Information Memorandum, the slide presentation given to the
Purchaser or copies of such slides delivered to the Purchaser or any financial
projection or forecast relating to the Assets, the Business, WFNB or the WFC
Companies.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
AND PURCHASER'S PARENT
The Purchaser and Purchaser's Parent hereby jointly and severally
represents and warrants to the Seller:
5.1 Organization and Existence. The Purchaser is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware.
5.2 Authority and Approval. Each of the Purchaser and Purchaser's Parent
has the corporate power and authority to execute, deliver and perform this
Agreement and the agreements, documents and instruments contemplated herein and
to consummate the transactions contemplated hereby. All corporate acts and
proceedings required to be taken by or on the part of each of the Purchaser and
the Purchaser's Parent to authorize it to execute, deliver and perform this
Agreement and the agreements, documents and instruments contemplated herein and
to consummate the transactions contemplated hereby have been duly and validly
taken and remain in full force and effect. This Agreement constitutes the legal,
valid and binding agreement of each of the Purchaser and the Purchaser's Parent,
enforceable against the Purchaser and the Purchaser's Parent in accordance with
its terms except as such enforcement may be limited by bankruptcy, insolvency or
other similar laws affecting the enforcement of creditors' rights generally or
by judicial discretion as to the availability of equitable remedies or by
general equitable principles.
5.3 No Conflict. The execution, delivery and performance of this Agreement
by each of the Purchaser and the Purchaser's Parent and the agreements,
documents and instruments contemplated herein do not, and the consummation of
the transactions contemplated hereby and thereby will not: (a) violate or
conflict with the certificate or articles of incorporation or by-laws of the
Purchaser and the Purchaser's Parent; (b) except as would not be expected to
materially adversely affect the ability of the Purchaser or the Purchaser's
Parent to consummate the transactions contemplated hereby or thereby, (i)
assuming satisfaction of the matters referred to in the following clause (c),
violate, contravene or conflict with any order, writ, injunction, directive,
judgment, award or, to the knowledge of the Purchaser, decree of any
Governmental Authority to which the Purchaser or the Purchaser's Parent is a
party or to which any of its property or assets is subject or, to the knowledge
of the Purchaser, any statute, law, ordinance, rule or regulation of any
Governmental Authority applicable to it or any of its property or assets; or
(ii) violate or conflict with, result in a breach of, constitute a default under
(whether with notice or the lapse of time or both), or accelerate or permit the
acceleration of the performance required by, any Contract to which the Purchaser
or the Purchaser's Parent is a party or by which it is bound or by which any of
its property or assets is bound; or (c) require any filing or registration with,
or approval, consent, authorization or other action with respect to any
Governmental Authority other than (i) the notification under the HSR Act
referred to in Section 7.1, (ii) the filings, registrations, authorizations,
approvals, consents and other actions listed in Schedule 5.3 and (iii) any such
filings or registrations the failure of which to make, and any such approvals,
consents, authorizations or actions the failure of which to obtain, would not be
expected to materially adversely affect the ability of the Purchaser or the
Purchaser's Parent to consummate the transactions contemplated hereby or
thereby.
5.4 Funds Available. The Purchaser has sufficient cash, lines of credit or
other sources of available funds to enable it to make the payments contemplated
by this Agreement.
5.5 Litigation. There is no legal, administrative or arbitration
proceeding, suit or action of any nature pending or, to Purchaser's knowledge,
threatened against the Purchaser or the Purchaser's Parent or any of its
Affiliates which questions or challenges the validity of this Agreement or any
of the agreements, documents and instruments contemplated herein or any action
taken or to be taken by the Purchaser or the Purchaser's Parent pursuant to this
Agreement or in connection with the transactions contemplated hereby. There are
no pending or, to the knowledge of Purchaser, threatened disputes or
controversies between the Purchaser or the Purchaser's Parent or any of their
respective Affiliates and any Governmental Authority that would reasonably be
expected to materially adversely affect the ability of Purchaser or the
Purchaser's Parent to consummate the transactions contemplated by this
Agreement. As of the date of this Agreement, none of the Purchaser, Purchaser's
Parent nor any of its Affiliates has received any written communication from any
Governmental Authority that such authority would oppose or refuse to grant or
issue its consent or approval to, if required, or would impose a materially
burdensome condition on the Purchaser or the Purchaser's Parent with respect to,
the transactions contemplated by this Agreement.
5.6 Securities. The Purchaser hereby acknowledges that the shares of the
WFC Stock Companies and the WFNB Shares are not registered under the Securities
Act of 1933, as amended, or registered or qualified for sale under any state or
foreign securities Law and cannot be resold without registration thereunder or
exemption therefrom. The Purchaser is acquiring the shares of the WFC Stock
Companies and the WFNB Shares for its own account as principal, for investment
and not with a view toward the sale or distribution thereof except with respect
to any sale or distribution for which an exemption from registration is or
hereafter becomes available. The Purchaser has sufficient knowledge and
experience in financial and business matters to enable it to evaluate the risks
of investment in the shares of the WFC Stock Companies and the WFNB Shares and
has the ability to bear the economic risks of such investment.
5.7 Brokers' Fees or Commission. Neither the Purchaser nor any of its
Affiliates has employed any investment banker, broker or finder in connection
with the transactions contemplated hereby who would have a valid claim to a fee
or any commission upon consummation of the transactions contemplated hereby.
ARTICLE VI
COVENANTS OF THE SELLER
Each of the Seller and WFC Parent covenants and agrees with the Purchaser
as follows:
6.1 Conduct of Business.
(a) Except as otherwise contemplated by this Agreement, and except as
described in Schedule 6.1, or as otherwise consented to in writing by the
Purchaser, from the date hereof until the Closing, the Seller will conduct,
and shall cause the WFC Companies and WFNB to conduct, their businesses in
the usual and ordinary course in compliance with all applicable Laws and
shall, and shall cause the WFC Companies and WFNB to:
(i) use commercially reasonable efforts to preserve
satisfactory relationships with its suppliers, clients, borrowers and
others having business relations with it;
(ii) use commercially reasonable efforts to preserve its
business organization and goodwill intact and retain the services of
its present officers, key employees and agents;
(iii) notify the Purchaser of any notice received by it of, or
any other information received which gives a reasonable basis to
believe that there has been, any default or breach or alleged default
or breach under any material Contract or Client Contract to which it
is a party or by which it is bound;
(iv) notify the Purchaser of any notice received by it of the
commencement of any proceeding, suit or action of the type described
in clause (ii) of Section 4.10 or the threat to commence any such
proceeding, suit or action;
(v) maintain its books and records in all material respects in
the same manner and with the same care that such books and records
have been maintained prior to the execution of this Agreement; and
(vi) use commercially reasonable efforts to maintain in full
force and effect through the Closing Date the insurance policies
listed in Schedule 4.12.
(b) Except as otherwise contemplated hereby, and except as described
in Schedule 6.1, from the date hereof until the Closing, the Seller will
not, and shall cause the WFC Companies and WFNB not to, without the consent
of the Purchaser:
(i) enter into or amend any Material Contract or Client
Contract except in the ordinary course of business consistent with
past practice and except for such amendments to existing Contracts or
Client Contracts the effect of which would be expected to be
advantageous to the Seller or the WFC Company in question or WFNB;
(ii) declare or pay any dividend on, or make any other
distribution with respect to, any capital stock of any WFC Company or
WFNB;
(iii) except in the ordinary course of business consistent
with past practice, borrow or agree to borrow any funds or incur,
assume or become subject to, whether directly or by way of guaranty
or otherwise, any obligation or liability with respect to borrowed
money;
(iv) loan or advance any material amount to directors or
officers, except pursuant to existing programs, or make any loans or
advances to any other person other than in the ordinary course of the
Business;
(v) merge or consolidate with any other corporation or
acquire, except in the ordinary course of collection, a material
amount of assets constituting all or substantially all of the
business or assets of any Person;
(vi) amend or modify its credit policies or procedures in any
material respect;
(vii) other than pursuant to this Agreement, sell, lease or
otherwise dispose of any of the Assets except in the ordinary course
of business;
(viii) permit or allow any of the Assets to be subjected to
any Encumbrances of any kind, other than the Permitted Encumbrances
and the other Encumbrances referred to in Section 4.6;
(ix) other than as required by applicable Law or with respect
to the Whirlpool 401(k) Plan, take any action to amend or terminate
any Benefit Plan or adopt any other plan, program, Contract or
practice providing benefits for or compensation to or on behalf of
employees or former employees of Seller (with respect to the
Business), any WFC Company or WFNB, or permit any Affiliate of
Seller, any WFC Company or WFNB to take any such action if such
action could subject any WFC Company or WFNB to an obligation or
liability except for increases in employee compensation or benefits
in the ordinary course of business; provided, that such increases do
not exceed $10,000 with respect to any individual employee;
(x) make any capital expenditure or commitment therefor in excess of
$25,000 individually or in excess of $100,000 in the aggregate;
(xi) other than in the ordinary course or to protect the Business,
enter into or amend or cancel or agree to the amendment or
cancellation of any insurance Contract;
(xii) change any provision of its articles of incorporation or
by-laws or similar governing documents;
(xiii) directly or indirectly redeem, purchase or otherwise acquire,
any shares of its outstanding capital stock (other than preferred
stock of the Seller), change the number of shares of its authorized
or issued capital stock, permit any shares of its capital stock held
in treasury to become outstanding, or issue any capital stock or
issue or grant any option, warrant, call, commitment, subscription,
right to purchase or contract of any character relating to its
authorized or issued capital stock or any securities convertible
into, relating to or based on shares of such stock;
(xiv) purchase any Real Property or personal property or purchase or
sell any options to purchase any Real Property or personal property,
with a market value in excess of $50,000 in the aggregate;
(xv) permit any insurance policy naming it as a beneficiary or a loss
payable payee to be canceled or terminated or any of the coverage
thereunder to lapse unless (1) simultaneously with such termination
or cancellation substantially similar replacement policies reasonably
satisfactory to Purchaser are in full force and effect, (2) the cost
of renewal is commercially unreasonable or (3) such coverage is not
commercially reasonably available;
(xvi) hire any employees (other than executive employees) other than
in connection with filling a vacancy;
(xvii) sell or otherwise transfer to any third party any list of
customers, past customers or prospects; or
(xviii) enter any Contract to do any of the foregoing.
(c) As used in this Section 6.1, "ordinary course of business" shall
be determined by reference to the practices of the Seller, the WFC
Companies and WFNB.
(d) Anything to the contrary in this Agreement notwithstanding, the
covenants of the Seller in this Section 6.1 shall not be deemed to apply to
the extent otherwise applicable in respect of any Excluded Assets (other
than Contracts that are subject to an arrangement to convey the benefit
thereof pursuant to Section 2.2(b)), Excluded Liabilities or the Excluded
Businesses.
6.2 Access. The Seller will afford to the Purchaser and its authorized
representatives and agents reasonable access from the date hereof until the
Closing, during normal business hours, to its properties, books, records and
employees of the Seller, WFNB and the WFC Companies to the extent relating to
the Assets or the Business and furnish to the Purchaser such additional
financial and operating data and other information as it may reasonably request
(including, without limitation, obtaining landlord estoppel certificates) to the
extent that such access and disclosure would not violate the terms of any
agreement to which the Seller is bound or any applicable Law. The Seller will,
at and after the Closing, furnish the Purchaser with such additional financial
and operating data and other information about the Assets and the Business as
may be reasonably available and necessary or appropriate for the Purchaser to
comply with applicable Law and financial reporting requirements.
6.3 HSR Act Notification; Other Governmental Consents. If required under
the HSR Act, the Seller shall cause to be filed as promptly as practicable with
the Federal Trade Commission and the Department of Justice the notification and
report form required for the transactions contemplated by this Agreement and the
agreements, documents and instruments contemplated herein and any supplemental
information that may be reasonably requested in connection therewith, which
notification and report form and supplemental information will comply with the
requirements of the HSR Act; provided, that the Purchaser shall pay all filing
fees in connection therewith. The Seller will make the filings with, and take
all reasonable steps to obtain the authorizations, approvals, consents and other
actions of, Governmental Authorities described in Schedule 4.3.
6.4 Reasonable Efforts. The Seller shall use commercially reasonable
efforts to cause the conditions set forth in Section 8.1 to be satisfied as soon
as practicable after the date hereof. To the extent that any Asset requires the
consent of any third
Person for its assignment or any Assumed Liability requires the consent of any
third Person for its assumption, in each case as contemplated in this Agreement,
the Seller shall use all commercially reasonable efforts to obtain such consents
or to cause such other actions to be taken prior to the Closing Date; provided,
that the Seller shall not be required to incur out-of-pocket expenses in
connection therewith.
6.5 Accounts and Powers of Attorney; Insurance Matters. (a) Prior to
Closing, Seller shall provide Purchaser with a complete and correct description
of all banking, safe deposit box and lock-box arrangements with respect to the
Business or Assets maintained at such time by any WFC Asset Company or WFNB,
maintained at such time by any WFC Stock Company or otherwise used in connection
with the Business, all powers of attorney in connection with such arrangements,
and the names of all persons authorized to draw thereon or to have access
thereto. Except as disclosed to Purchaser in writing prior to Closing, no WFC
Company or WFNB will enter into any power of attorney that will survive the
Closing.
(b) Prior to the Closing and, if Section 2.7 and/or 2.8 shall be
applicable, any closing effected pursuant thereto, the Seller shall report
all known claims for insurance and notices of occurrence for claims-made
insurance policies which will no longer be in effect with respect to the
WFC Companies and WFNB following the Closing or the closings contemplated
by Sections 2.7 and 2.8.
6.6 Other Confidentiality Agreements. Promptly following the date hereof,
WFC Parent shall request each party to a confidentiality agreement entered into
in connection with the exploration of an acquisition of the Business or any
material portion thereof or the WFC Companies and/or WFNB (collectively, the
"Other Confidentiality Agreements") to (i) return to WFC Parent all materials
and documents received from WFC Parent, Seller, WFNB or any WFC Company in
connection with such exploration or (ii) destroy such materials and documents
and certify such destruction to WFC Parent in writing. From and after the
Closing, WFC Parent shall, upon the request of Purchaser, use commercially
reasonable efforts to enforce any covenants relating to confidentiality and non-
solicitation contained in any Other Confidentiality Agreements. To the extent
permitted under the Other Confidentiality Agreements, WFC Parent hereby assigns
to Purchaser its rights relating to confidentiality and non-solicitation
contained in the Other Confidentiality Agreements.
6.7 Non-Transferability.
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(a) To the extent that any of the Assets is not capable of being
sold, assigned, transferred, delivered or subleased without the consent or
waiver of any third Person, or if such sale, assignment, transfer, delivery
or sublease or attempted sale, assignment, transfer, delivery or sublease
would constitute a breach thereof or a violation of any Law, subject to the
provisions of clause (b) below, this Agreement shall not constitute a sale,
assignment, transfer, delivery or sublease thereof, or an attempted sale,
assignment, transfer, delivery or sublease thereof.
(b) Notwithstanding anything in this Agreement to the contrary, with
respect to any Asset referred to in clause (a) hereof, none of Seller, WFNB
or any WFC Company shall be obligated to sell, assign, transfer, deliver or
sublease to Purchaser (and Purchaser shall not be required to accept) such
Asset without first having obtained all necessary consents and waivers with
respect to such Asset. Seller shall use all commercially reasonable
efforts, and Purchaser shall cooperate with Seller, to obtain said consents
and waivers and to resolve the impediments to the sale, assignment,
transfer, delivery or subleases required by this Agreement and to obtain
any other consents and waivers and necessary to convey to Purchaser any of
the Assets; provided, however, that Seller shall not be obligated to pay
any consideration therefor to the party from whom any such consent or
waiver is requested in order to obtain any consent or waiver.
(c) To the extent that the consents or waivers referred to in clause
(b) hereof are not obtained by Seller, or until the impediments to the
sale, assignment, transfer, delivery or sublease referred to therein are
resolved, Seller shall use all commercially reasonable efforts, with the
costs of Seller related thereto to be promptly reimbursed by Purchaser, to
(i) provide, at the request of Purchaser, to Purchaser the benefits of any
Asset referred to in clause (a) hereof, to the extent related to the
Business, (ii) cooperate in any reasonable and lawful arrangement designed
to provide such benefits to Purchaser, without incurring any material
financial obligation to Purchaser, and (iii) enforce, at the request of and
for the account of Purchaser, any rights of Seller arising from any Asset
referred to in clause (a) hereof against any third Person, including the
right to elect to terminate in accordance with the terms thereof upon the
advice of Purchaser. Purchaser shall not be required by this clause (c) to
enter into any arrangement that would impose any additional cost, expense
or liability upon the Purchaser than if such Assets had been transferred to
the Purchaser or that would deprive Purchaser of any benefits or profits
arising out of the Asset in question. Nothing in this Section 6.7 shall
affect the conditions to Purchaser's obligations set forth in Article VIII.
(d) To the extent that Purchaser is provided the benefits of any
Asset referred to in clause (a) hereof (whether from Seller or otherwise)
in accordance with clause (c) hereof, Purchaser shall perform at the
direction of Seller and for the benefit of any third Person the obligations
of Seller thereunder or in connection therewith; provided that if Purchaser
shall fail to perform to the extent required herein, Purchaser shall hold
Seller harmless and indemnify it therefor, and in the event of a failure of
such indemnity Seller shall cease to be obligated under this Section 6.7 in
respect of the Asset which is the subject of such failure to perform.
6.8 Permit Transfer.
(a) Except for those Permits that are not transferable by law,
Seller, WFNB, and the WFC Companies shall, with the Purchaser's assistance
and cooperation, to the extent possible under applicable Law, and unless
necessary for the operation of the Excluded Business, cause the issuance or
transfer of the Permits to Purchaser upon the Closing Date in form and
substance the same as the Permits which were held by Seller, WFNB or any
WFC Company; provided, that none of Seller, WFNB or the WFC Companies shall
be required to transfer any Permit which it has by virtue of its status as
a subsidiary of a manufacturing company and is not transferable to
Purchaser under applicable Law. Seller, with Purchaser's assistance and
cooperation, shall give and make all required notices and reports to the
appropriate Persons with respect to the Permits that may be necessary for
the ownership, operation and use of the Assets by Purchaser after the
Closing.
(b) Seller shall assist and cooperate with Purchaser in obtaining the
issuance in the name of Purchaser of any Permit that is not transferable,
and Seller, WFNB and the WFC Companies, as applicable, shall with
Purchaser's assistance and cooperation, take all actions reasonably
requested by Purchaser to facilitate that issuance, including but not
limited to the preparation of any Permit application or necessary
documents, whether for signature by Seller or by Purchaser.
(c) If any Permit to be transferred or issued to Purchaser under
clauses (a) or (b) of this Section 6.8 is not transferred or issued to
Purchaser on or before the Closing, Seller, WFNB, and the WFC Companies,
with the assistance and cooperation of Purchaser, shall take all reasonable
necessary steps to implement such transfer or issuance, without delay.
Pending any delayed transfer or issuance, Seller, WFNB and the WFC
Companies undertake to maintain in force, and authorize Purchaser to
operate under and utilize, the Permits in question, to the extent permitted
by applicable Law, and provided Purchaser operates in compliance with the
Permits, for the period from and after the Closing until such Permits are
issued or transferred to Purchaser.
(d) Nothing in this Section 6.8 shall affect the conditions to Purchaser's
obligations set forth in Article VIII.
6.9 Acquired Unsettled Accounts. To the extent any of the Acquired
Unsettled Accounts have not been paid in full by the date that is six months
following the Closing Date, the Seller shall pay to Purchaser an amount equal to
the extent such Acquired Unsettled Accounts have not been paid in full. Any
amounts with respect to the Acquired Unsettled Accounts paid to the Purchaser
after such date that is six months following the Closing Date that have been
theretofore paid to the Purchaser by the Seller shall be refunded to the Seller.
6.10 Liabilities and Assets. At or prior to Closing, Seller and WFC Parent
shall cause all indebtedness (except the certificate of deposit and short-term
debt of WFNB to the Seller), and, to the extent practicable, all other
liabilities and obligations of each WFC Stock Company and of WFNB to be removed
or otherwise satisfied such that, immediately following the Closing, the WFC
Stock Companies and WFNB shall have no liabilities or obligations other than
Assumed Liabilities. Prior to the applicable closing, Seller and WFC Parent
shall cause the WFC Companies to retain assets held by the WFC Companies which
constitute Assets and shall transfer all Excluded Assets to the Seller or
Affiliates of the Seller which are not WFC Companies or WFNB.
6.11 Balance Sheet. WFC and the Parent shall prepare and deliver to
Purchaser as promptly as practicable the Balance Sheet of the Business as of
September 30, 1997, but in no event later than October 14, 1997.
6.12 Insurance Rebates. The Purchaser shall pay over to the Seller any
insurance rebates received by the Purchaser or any Affiliate thereof with
respect to the Business relating to periods prior to the Closing.
6.13 Post-Signing Delivery. Prior to Closing, Seller shall deliver to
Purchaser a true and complete list of all noncorporate borrowers (excluding
Consumer Receivables) borrowing at a rate of 15% or more per annum and setting
forth in each case the applicable rate and the amount borrowed.
6.14 Recourse Arrangements. To the extent recourse arrangements for
Receivables arising from the international finance group of the Business are in
place with the Seller, WFNB or any WFC Company, WFC Parent will continue to
honor such arrangements with Purchaser.
ARTICLE VII
COVENANTS OF THE PURCHASER
The Purchaser covenants and agrees with the Seller as follows:
7.1 HSR Notification; Other Governmental Consents. If required under the
HSR Act, the Purchaser will cause to be filed as promptly as practicable with
the Federal Trade Commission and the Department of Justice the notification and
report form required for the transactions contemplated hereby and any
supplemental information that may be reasonably requested in connection
therewith, which notification and report form and supplemental information will
comply with the requirements of the HSR Act and pay all filing fees in
connection with such filing. The Purchaser shall make as promptly as practicable
the filings with, and take all commercially reasonable steps to obtain the
authorizations, approvals, consents and other actions of, Governmental
Authorities described in Schedule 5.3.
7.2 Reasonable Efforts. The Purchaser shall use all commercially reasonable
efforts to cause the conditions set forth in Section 8.2 to be satisfied as soon
as practicable, after the date hereof. To the extent that any Asset requires the
consent of any third Person for its assignment or any Assumed Liability requires
the consent of any third Person for its assumption, in each case as contemplated
in this Agreement, the Purchaser shall cooperate with the Seller in attempting
to obtain such consents or to cause such other actions to be taken prior to the
Closing Date; provided, that the Seller shall not be required to incur
out-of-pocket expenses in connection therewith.
7.3 Parent Guaranties. The Purchaser agrees that it will, effective upon
the Closing, use commercially reasonable efforts to cause the release of WFC
Parent from any liability under, and assume in writing on terms reasonably
satisfactory to WFC Parent, (a) all guaranties by WFC Parent or any of its
Affiliates of the indebtedness and other obligations of the Seller which are
Assumed Liabilities and (b) all Contracts and Client Contracts under which WFC
Parent or any of its Affiliates has agreed to be jointly and severally liable or
otherwise liable for any indebtedness or other obligations of the Seller which
are Assumed Liabilities.
7.4 Access; Retention of Records. The Purchaser will, upon prior notice, at
and after the Closing, afford promptly to the Seller and its agents reasonable
access during normal business hours to the properties, books, records, employees
and auditors of the Business, to the extent reasonably available and necessary
or appropriate for the Seller to comply with applicable Law and financial
reporting requirements. Without limiting the foregoing, the Purchaser shall also
cooperate, at Seller's sole cost and expense, with the Seller in connection with
claims, suits, actions and proceedings of the types referred to in Section
12.2(a), including making available the personnel of the Purchaser, whether as
witnesses or for informational purposes. The Seller will hold all information
provided to it pursuant to this Section 7.4 in confidence and will not disclose
any such information other than (a) as may be reasonably necessary to determine,
exercise or perform its rights or obligations under this Agreement and (b) as
required by applicable Law.
7.5 Confidentiality. The Purchaser reaffirms its obligations under the
Confidentiality Agreement.
7.6 Permits. On or prior to the Closing, the Purchaser shall, at its sole
expense, use commercially reasonable efforts to obtain any and all Permits which
are necessary for the Purchaser to engage in the Business as conducted by the
Seller and the WFC Companies immediately prior to the Closing, other than such
Permits, the failure of which to possess, would not impair in any manner the
Purchaser's ability to consummate the transactions contemplated herein or to
conduct the Business thereafter.
ARTICLE VIII
CONDITIONS TO CLOSING
8.1 Conditions to the Obligations of the Purchaser. The obligations of the
Purchaser to proceed with the Closing contemplated hereby are subject to the
satisfaction at or prior to the Closing of all of the following conditions, any
one or more of which may be waived, in whole or in part, by the Purchaser:
(a) Compliance; Warranties True. The Seller and WFC Parent shall have
performed and complied in all material respects with all of its covenants,
obligations and agreements contained herein to be performed or complied
with by it on or prior to the Closing Date. The representations and
warranties of the Seller and WFC Parent contained herein (giving effect to
the preamble to Article IV) shall be (a) accurate, true and correct on and
as of the date of this Agreement (except to the extent that they
specifically relate to another date, in which case they need only be
accurate, true and correct as of such other date), and (b) shall also be
accurate, true and correct on and as of the Closing Date (except to the
extent that they specifically relate to another date, in which case they
shall be accurate, true and correct as of such other date); provided, that
for all purposes of this Section 8.1(a), Section 4.8 shall be deemed to
read in its entirety as set forth in Exhibit 12.2.
(b) Seller Certificates. The Purchaser shall have received a
certificate, dated the Closing Date, of the Seller certifying as to the
matters specified in Section 8.1(a).
(c) Legal Opinions. The Purchaser shall have received a legal
opinion, dated the Closing Date, from Mayer, Brown & Platt, counsel to the
Seller, with respect to the matters covered in (i) Section 4.2 and (ii)
clause (a) of Section 4.3 with respect to Seller, WFC Parent and WFNB. The
Purchaser shall have received a legal opinion, dated the Closing Date, from
the Assistant General Counsel of WFC Parent with respect to (i) the first
three sentences of Section 4.1 as they relate to the Domestic WFC
Companies; (ii) clause (a) of Section 4.3 with respect to the WFC Companies
which are incorporated or organized in a state of the United States (the
"Domestic WFC Companies"); (iii) clauses (b) and (c) of Section 4.3 to such
Assistant General Counsel's knowledge; and (iv) the first three sentences
and the fifth sentence of Section 4.7 with respect to Domestic WFC
Companies.
(d) HSR Act. The waiting period under the HSR Act relating to the
transactions contemplated hereby, if applicable, shall have expired or been
terminated.
(e) Governmental Consents, Approvals, etc. There shall have been
received all of the required material (on a country-by-country basis)
consents, authorizations and approvals from Governmental Authorities,
including all consents, authorizations and approvals of anti-competition,
acquisition or similar authorities and consents, authorizations and
approvals which are necessary for the Purchaser or its Affiliates to own or
operate the Business in each jurisdiction where it is currently operated
and the OCC Approval.
(f) Related Agreements. The Seller and, where applicable, its
Affiliates shall have executed and delivered the Transfer Instruments, the
Shared Facilities and Transition Services Agreement and the Trademark
License Agreement. The WFC Parent and the Purchaser shall have entered into
the Strategic Alliance Services Agreement, dated as of the Closing Date.
(g) Material Adverse Change. There shall not have occurred since June
30, 1997 any event or circumstance that has or may reasonably be expected
to have a Material Adverse Effect.
(h) Resolutions and Related Documents. The Purchaser shall have
received (i) a certified copy of the Seller's Certificate of Incorporation,
as amended to date; (ii) certified Bylaws of the Seller, as amended to
date; (iii) a certified copy of resolutions of the Board of Directors of
the Seller and WFC Parent, or a duly authorized committee thereof, giving
any necessary approval or authorization with respect to this Agreement; and
(iv) an incumbency certificate as to officers of the Seller executing
documents on behalf of the Seller and WFC Parent.
(i) No Orders. The consummation of the transactions contemplated
hereby shall not violate any order or decree of any Governmental Authority
having competent jurisdiction entered after the date hereof or any law or
regulation applicable to the Seller or the Purchaser and no suit or action
by any Governmental Authority shall have been instituted that questions the
validity or legality of the transactions contemplated hereby. No
Governmental Authority having jurisdiction over the Seller or the Purchaser
or any of their respective Affiliates shall have communicated any concern,
formally or informally, in writing or orally, with respect to the
transactions contemplated hereunder, which is reasonably likely to make
consummation of such transactions unfeasible or materially burdensome for
the Seller or the Purchaser or any of their respective Affiliates.
(j) The Seller shall have received the consents to the consummation
of the transactions contemplated hereby set forth on Schedule 8.1(j).
8.2 Conditions to the Obligations of the Seller. The obligations of the
Seller to proceed with the Closing contemplated hereby are subject to the
satisfaction at or prior to the Closing of all of the following conditions, any
one or more of which may be waived, in whole or in part, by the Seller:
(a) Compliance; Warranties True. The Purchaser shall have performed
and complied in all material respects with each of its covenants,
obligations and agreements contained herein to be performed or complied
with by it on or prior to the Closing Date. The representations and
warranties of the Purchaser contained herein shall be (a) accurate, true
and correct on and as of the date of this Agreement (except to the extent
that they specifically relate to another date, in which case they shall be
accurate, true and correct as of such other date), and (b) shall also be
accurate, true and correct on and as of the Closing Date (except to the
extent that they specifically relate to another date, in which case they
shall be accurate, true and correct as of such other date).
(b) Purchaser's Certificate. The Seller shall have received a
certificate, dated the Closing Date, of the Purchaser certifying as to the
matters specified in Section 8.2(a).
(c) Legal Opinion. The Seller shall have received an opinion, dated
the Closing Date, from Wachtell, Lipton, Rosen & Katz, counsel to the
Purchaser, with respect to the matters covered in Section 5.1, Section 5.2
and clause (a) of Section 5.3.
(d) HSR Act. The waiting period under the HSR Act relating to the
transactions contemplated hereby, if applicable, shall have expired or been
terminated.
(e) Related Instruments. The Purchaser shall have executed and
delivered the Transfer Instruments, the Shared Facilities and Transition
Services Agreement, the Trademark License Agreement and the Strategic
Alliance Services Agreement, dated as of the date hereof, between the WFC
Parent and the Purchaser.
(f) No Orders. The consummation by the Seller of the transactions
contemplated hereby shall not violate any order or decree of any
Governmental Authority having competent jurisdiction entered after the date
hereof or any law or regulation applicable to the Seller and no suit or
action by any Governmental Authority shall have been instituted that
questions the validity or legality of the transactions contemplated hereby.
No Governmental Authority having jurisdiction over the Seller or Purchaser
or any of their respective Affiliates shall have communicated any concern,
formally or informally, in writing or orally, with respect to the
transactions contemplated hereunder, which is reasonably likely to make
consummation of such transactions unfeasible or materially burdensome for
the Seller or the Purchaser or any of their respective Affiliates.
(g) Resolutions and Related Documents. The Seller shall have received
(i) certified Articles of Incorporation of the Purchaser, as amended to
date; (ii) certified Bylaws of the Purchaser, as amended to date; (iii) a
certified copy of the resolutions of the Board of Directors of the
Purchaser or a duly authorized committee thereof, giving any necessary
approval or authorization with respect to this Agreement; and (iv) an
incumbency certificate as to officers of the Purchaser executing documents
on behalf of the Purchaser.
(h) Other Closing Transactions. Subject to Sections 2.7 and 2.8
hereof, the Purchaser shall have paid the Closing Payment in accordance
with Section 2.6.
ARTICLE IX
NONCOMPETITION COVENANT
9.1 Noncompetition Covenant.
-----------------------
(a) The Seller agrees that for a period equal to the term of the
Strategic Alliance Agreement neither the Seller, WFC Parent nor any of WFC
Parent's majority-owned Subsidiaries shall engage in any Competitive
Activity in the Territory. "Competitive Activity" means: (i) providing
floor plan financing and display programs to manufacturers, retailers,
distributors and dealers; (ii) providing revolving charge, private label
credit cards and retail installment contract purchase programs to
consumers; or (iii) providing factoring, receivable management and
inventory and display financing services, it being understood that such
services are not intended to encompass the management of the in-house
credit function of any of WFC Parent and its Subsidiaries, including the
provision or management of WFC Parent and its Subsidiaries open accounts to
retailers, distributors or dealers purchasing the products of WFC Parent
and its Subsidiaries.
(b) Notwithstanding the foregoing, "Competitive Activity" does not
include (i) the sale by WFC Parent and its Subsidiaries of its products to
retailers, distributors and dealers on open account terms; (ii) the
ownership, operation, servicing or sale of any or all of the Excluded
Assets, Excluded Accounts, Excluded Receivables and Excluded Businesses,
regardless of where conducted; (iii) any operations in Asia, including the
provision of floorplan financing and display programs, the provision of
revolving charge, private label credit cards and installment contract
programs and the provision of factoring, receivable management and
inventory and display financing services; (iv) acquiring or investing in
(including through a joint venture or similar arrangement) any theretofore
unrelated Person (including its other subsidiaries or Affiliates), or
business thereof, that is engaged in a Competitive Activity if not more
than 20% of such Person's or such business' average net earnings or average
net revenues over the prior three years (in each case excluding businesses
that were sold or discontinued) on a consolidated or combined basis arises
from such Competitive Activity; (v) acquiring or investing in (including
through a joint venture or similar arrangement) any theretofore unrelated
Person (including its other subsidiaries or Affiliates), or business
thereof, that is engaged in a Competitive Activity if more than 20% and
less than 50% of such Person's or such business' average net earnings or
average net revenues over the prior three years (in each case excluding
businesses that were sold or discontinued) on a consolidated or combined
basis arises from such Competitive Activity so long as WFC Parent or its
Subsidiary, as applicable, agrees to hold such Person or business separate
and apart from its other businesses and those of its affiliates (with no
integration of businesses, operations or personnel) and to offer Purchaser
the opportunity to purchase such Person or business and, if Purchaser
declines such opportunity, to dispose of such Person or business as soon as
reasonably practicable and in any case within eighteen months of the date
of such acquisition or investment on terms no more favorable to WFC Parent
or its Subsidiary than those offered to Purchaser; (vi) engaging in any
business engaged in by WFC Parent or its Subsidiaries (other than WFNB,
Seller or the WFC Companies) on the date of this Agreement; and (vii)
owning securities of up to five percent (5%) of the total shares of all
classes of voting securities outstanding of any entity having securities
listed on a national securities exchange or NASDAQ.
(c) Notwithstanding anything contained herein, the provisions of this
Article IX shall not apply to the Seller, WFC Parent or any Subsidiary of
WFC Parent with respect to any portion of the Business or to any Assets
which have not been subject to closing provided for in Article II until
such closing has occurred.
"Territory" means any locality, state or territory in the United States and
Mexico and any locality, state, territory or country in Europe.
9.2 Scope. The parties understand and agree that the scope of the covenants
contained in this Article IX, as to activities, time and area covered, are
necessary and are intended to protect the interests of the Purchaser in the
Business and the Assets while protecting the interest of the Seller and its
Affiliates in the continuing business of the Seller and its Affiliates. It is
the parties' intention that these covenants be enforced to the greatest extent
(but to no greater extent) in time, area and degree of participation as is
permitted by applicable Law.
9.3 Remedy for Breach. The parties agree that, in the event of a breach or
threatened breach of the Seller's covenants in Section 9.1, the damage to the
value of the Assets will be irreparable and extremely difficult to estimate,
making any relief under Article XII inadequate. Accordingly, the parties agree
that the Purchaser shall be entitled to injunctive relief against the Seller (or
applicable Affiliate thereof), upon making an adequate showing of a breach or
threatened breach of any of such covenants by the Seller or by the Purchaser (or
applicable Affiliate thereof), respectively, in addition to any other relief
available under Article XII of this Agreement.
<PAGE>
ARTICLE X
EMPLOYEES; EMPLOYEE BENEFITS
10.1 Offer of Employment. Schedule 10.1(a) contains a list of all employees
of the Seller, WFC Parent, WFC Companies and their Affiliates who were actively
performing services in connection with the Business as of August 31, 1997.
Schedule 10.1(b) contains a list of all employees of the Seller, WFC Parent, WFC
Companies and their Affiliates who would have been actively performing services
in connection with the Business as of August 31, 1997 but for the fact that they
were on short term disability leave pursuant to the short term disability plan
of the Seller, WFC Parent, WFC Companies or their Affiliates. Schedule 10.1(a)
shall be updated by the Seller immediately prior to the Closing Date (and, if
Section 2.8 shall be applicable immediately prior to each closing provided for
thereunder) (a "Subsequent Closing Date") to reflect new employees of the
Seller, WFC Parent, WFC Companies and their Affiliates hired after such date in
the normal course who performed services in connection with the Business, and
employees who recover from short term disability and return to active employment
by said Closing Date (and any Subsequent Closing Date), and to remove any
individual who becomes entitled to short term disability benefits under any
Benefit Plan after August 31, 1997. Schedule 10.1(b) shall be updated by the
Seller immediately prior to the Closing Date (and any Subsequent Closing Date)
to add employees who were previously listed on Schedule 10.1(a) who suffer a
short term disability prior to the Closing Date (or any Subsequent Closing Date)
and to delete employees who recover from a short term disability prior to the
Closing Date (or a Subsequent Closing Date). On the Closing Date and on any
Subsequent Closing Date, as applicable, the Purchaser shall offer employment to
all persons on Schedule 10.1(a) other than WFNB employees who were employees of
the Seller, WFC Parent, WFC Companies or their Affiliates on the day immediately
preceding the Closing Date or such Subsequent Closing Date, at which the portion
of the Business in which such person was primarily engaged is to be acquired by
the Purchaser. In addition, the Purchaser shall offer employment, as of the date
Purchaser confirms in accordance with Purchaser's standard personnel policies
that each such person has recovered from said disability, to those persons
listed on Schedule 10.1(b) who recover from their short term disability on or
before six months after the relevant Closing Date or Subsequent Closing Date.
Persons who are offered employment by the Purchaser pursuant to the immediately
preceding two sentences hereto shall be referred to hereto as the "Employees."
The offer of employment shall be at substantially the same compensation and upon
the same terms and conditions as those under which they were employed by the
Seller, WFC Parent, WFC Companies or their Affiliates, as applicable; except
that Employees who are hired by Purchaser and WFNB employees ("Transferred
Employees") shall generally be eligible to participate in the Purchaser's
employee benefit plans available to Purchaser's similarly situated employees on
such terms and conditions as are customarily employed by Purchaser. The
Purchaser shall pay any Transferred Employee (except any Transferred Employee
who has entered into a written employment agreement with WFC Parent, WFC
Companies or their Affiliates and is designated as a "senior manager" on
Schedule 10.1(a) or Schedule 10.1(b)) whose employment is terminated on or
before the first anniversary of the Closing Date severance pay in cash in an
amount equal to 0.28% of such Employee's annual base salary as of the date of
termination of employment multiplied by the number of full months of such
Employee's service with Seller, WFC Parent, WFC Companies or their Affiliates,
as applicable. Any other obligations and liabilities with respect to severance
pay, however incurred, whether by contract, law or otherwise, shall be the sole
responsibility of the Seller.
The parties agree that any WARN liability (including the duty to
issue WARN notices) and any liability under similar foreign or state Laws,
including the Michigan employee-owned corporation act, which is attributable to
terminations of employees of the Seller, WFC Parent, WFC Companies or their
Affiliates before the Closing Date or the relevant Subsequent Closing Date, as
applicable, is the responsibility of the Seller, WFC Parent, WFC Companies or
their Affiliates in connection with the Business or the transaction contemplated
by the Agreement and that any WARN liability (including the duty to issue WARN
notices) and any liability under similar foreign or state Laws, including the
Michigan employee-owned corporation act, which is attributable to terminations
of employment on or after the Closing Date or the relevant Subsequent Closing
Date, as applicable, is the responsibility of the Purchaser. The Purchaser
covenants and agrees to honor any reinstatement rights of the Employees under
any federal, foreign and state law.
10.2 Service Crediting. Effective as of the Closing Date or the relevant
Subsequent Closing Date, as applicable, the Purchaser will count the service of
each Transferred Employee with Seller, WFC Parent, WFC Companies and their
Affiliates under Purchaser's vacation policy and welfare benefit Plans
applicable to such Transferred Employee. On or prior to the Closing Date or the
relevant Subsequent Closing Date, as applicable, Seller shall pay each
Transferred Employee, in cash, the full amount of his or her accrued vacation
under all plans or policies of Seller, WFC Parent, WFC Companies and its
Affiliates. In addition, such service shall be counted by Purchaser in
terminations determining each Transferred Employee's eligibility to participate
in, and each such Transferred Employee's vested percentage in, each of
Purchaser's employee benefit plans (as defined in Section 3(3) of ERISA)
applicable to such Transferred Employee.
10.3 401(k) Plan. Immediately following the retirement or other termination
of employment with Purchaser and all of its Affiliates of each Transferred
Employee, Purchaser shall notify the sponsor of the Whirlpool 401(k) Trust in
writing of such fact in order to enable the Whirlpool 401(k) Trust to make
distribution to such Transferred Employee. In addition, Purchaser shall use its
reasonable best efforts to facilitate the transmission to each such Transferred
Employee of information about the Whirlpool 401(k) Trust and the Whirlpool
401(k) Plan including but not limited to the transmission of summary plan
descriptions, summaries of material modification, and summary annual reports.
10.4 Medical, Dental and Life Insurance Programs. Transferred Employees
shall generally be eligible to participate in the Purchaser's medical, dental
and life insurance programs available to Purchaser's similarly situated
employees on such terms and conditions as are customarily employed by Purchaser.
Seller and WFC Parent shall retain or assume all liabilities for active and
retiree medical, dental and life insurance benefits for all disabled, former or
retired employees of Seller, WFC Companies or WFC Parent, including all
Employees who are not Transferred Employees. With respect to Transferred
Employees (i) Purchaser and its medical, dental and life insurance programs will
be liable only for claims covered under the terms of Purchaser's plans that are
incurred after the Closing Date or the relevant Subsequent Closing Date, as
applicable, (ii) Purchaser's medical plan shall take into account expenses
incurred by Transferred Employees during the plan year in which the Closing Date
or the relevant Subsequent Closing Date, as applicable, occurs, for purposes of
determining deductibles and out-of-pocket limits under Purchaser's medical plan
for the remainder of the plan year under Purchaser's medical plan, and (iii)
Purchaser and its medical plan shall waive all limitations as to pre-existing
condition exclusions and waiting periods with respect to participation and
coverage requirements applicable to the Transferred Employees that were not
satisfied as of the close of business on the date preceding the Closing Date or
the relevant Subsequent Closing Date, as applicable. Purchaser shall have no
liability for any continuation coverage under Part 6 of Title I of ERISA or
under Code Section 4980B under any Benefit Plan maintained by Seller or an ERISA
Affiliate. All such liabilities shall be Seller's exclusively.
10.5 Long Term and Short Term Disability Programs. Transferred Employees
shall generally be eligible to participate in the Purchaser's long term and
short term disability programs available to Purchaser's similarly situated
employees on such terms and conditions as are customarily employed by Purchaser.
Seller and WFC Parent shall retain all liabilities for long term and short term
disability benefits for all former, disabled or retired employees of Seller, WFC
Parent and WFC Companies, including all Employees who are not Transferred
Employees. With respect to Transferred Employees, Purchaser and its long and
short term disability programs will be liable only for claims covered under the
terms of Purchaser's plans that are incurred after the Closing Date or the
relevant Subsequent Closing Date, as applicable.
10.6 Educational Assistance Programs. Transferred Employees shall generally
be eligible to participate in the Purchaser's educational assistance program for
similarly situated employees on such terms and conditions as are customarily
employed by Purchaser. Purchaser's educational assistance programs will only be
liable for claims covered under the terms of Purchaser's plans that are incurred
after the Closing Date or the relevant Subsequent Closing Date, as applicable.
10.7 Amendment or Termination Plans. Nothing in this Article X shall be
construed to limit or restrict the Purchaser, Purchaser's Parent or any of the
Purchaser's Affiliates in any way from amending or terminating any employee
benefit or compensation plan program or arrangement that it maintains or to
which it contributes, except to the extent that such amendment or termination
would cause the Purchaser to violate any of the obligations imposed upon it
under this Article X.
10.8 Bonuses. Seller shall pay all bonuses owed to employees of the
Business with respect to which there shall be an accrual on the books of Seller,
such payments to be made in accordance with the Seller's customary policies and
practices.
ARTICLE XI
TERMINATION
11.1 Grounds for Termination. This Agreement may be terminated, and the
transactions contemplated hereby abandoned, at any time prior to the Closing:
(a) by the mutual written agreement of the Seller and the Purchaser;
(b) by the Seller or by the Purchaser if the Closing contemplated by
Section 2.6 shall not have been consummated on or before January 31, 1998,
or such other date, if any, as the Seller and the Purchaser shall agree to
in writing (the "Termination Date"), provided, however, that a party shall
not have the right to so terminate this Agreement if the failure of the
purchase and sale to have occurred shall be due to a breach by such party
(or an Affiliate of such party) of any of its agreements or covenants
contained herein required to be performed by it at or prior to the Closing
pursuant to the terms hereof; and
(c) by the Seller or the Purchaser, respectively, in the event of a
material breach by the other parties, of any representation, warranty,
covenant or agreement contained herein, material to the overall transaction
contemplated hereby, which is not cured or cannot be cured within thirty
(30) days after written notice of such proposed termination has been
delivered to the breaching party.
Any party desiring to terminate this Agreement pursuant to any of the foregoing
clauses (b) and (c) shall give notice of such proposed termination to the other
parties.
11.2 Effect of Termination.
---------------------
(a) If this Agreement is terminated as permitted by Section 11.1,
such termination shall be without liability of any party (or any
shareholder, Affiliate, director, officer, employee, agent, consultant or
representative of such party) to the other party; (a) provided, that if
such termination shall result from a willful breach by a party of its
representations, warranties, agreements or covenants set forth in this
Agreement, such party which has so willfully breached shall be fully liable
for, subject to any applicable limitations in Article XII, any and all
Losses sustained or incurred by the other party as a result of such breach.
Notwithstanding anything in this Section 11.2 or any other provision in
this Agreement to the contrary, neither the Purchaser nor the Seller shall
have any liability to the other if the transactions contemplated hereunder
are not consummated by virtue of the failure to obtain any approval,
consent or other clearance from any Governmental Authority required by
either of them to be obtained by it in order to consummate the transactions
contemplated hereunder, except if such failure is caused by a willful
breach by such party of its representations, warranties, agreements or
covenants hereunder, in which case the proviso of the immediately preceding
sentence shall apply. Article XII and Sections 14.3, 14.8, 14.13, 14.14 and
14.15 shall survive any termination of this Agreement.
(b) If the Seller terminates this Agreement pursuant to Section
11.1(c), then, in addition to the retention of the $500,000 specified in
the following sentence, the Purchaser shall pay the Seller the amount of
$10 million as liquidated damages and not as a penalty. The Seller shall
retain the $500,000 paid by Purchaser or an Affiliate thereof prior to the
date hereof, plus accrued interest thereon, as partial payment of the
liquidated damages provided for in the preceding sentence. Recovery of such
liquidated damages shall be the sole and exclusive remedy of the Seller
against the Purchaser, the Purchaser's Parent and any Affiliate thereof.
The Seller shall be entitled to recover such liquidated damages regardless
of the amount of damages actually incurred, the parties agreeing that
actual damages would be difficult to determine and that the amount set
forth herein is a fair and equitable amount to compensate the Seller.
<PAGE>
ARTICLE XII
EXTENT AND SURVIVAL OF REPRESENTATIONS,WARRANTIES,
COVENANTS AND AGREEMENTS; INDEMNIFICATION
12.1 Survival; Remedy for Breach.
---------------------------
(a) The representations and warranties contained in this Agreement or
in any agreement, certificate or other document delivered at the Closing
(collectively, the "Closing Documents") shall survive the Closing until the
first anniversary of the Closing Date, at which time they shall expire,
except that the representations and warranties set forth in Sections 4.2,
4.6(a), 4.11 and 5.2 shall survive the Closing and not expire until the
expiration of the applicable statutes of limitation. No claim regarding a
breach of any such representation or warranty shall be made for the first
time after the date such representation or warranty expires. The agreements
and covenants of the parties contained in this Agreement or in any Closing
Document shall survive the Closing).
(b) Except as provided otherwise in Articles VII, IX and XI, the sole
and exclusive monetary remedy of the Purchaser and the Seller for any
breach of any covenant or agreement, or any inaccuracy or other breach of
any representation or warranty, contained in this Agreement or any Closing
Document (but excluding the Shared Facilities and Transition Services
Agreement, the Trademark License Agreement and the Strategic Alliance
Services Agreement) shall be the indemnities contained in Sections 12.2 and
12.3, respectively.
12.2 Indemnification by the Seller.
-----------------------------
(a) Subject to Sections 12.1, 12.2(b) and 12.2(c), the Seller hereby
agrees to indemnify and defend the Purchaser, its Affiliates, officers,
directors, employees, agents, successors and assigns and related entities
against, and agrees to hold the Purchaser, its Affiliates, officers,
directors, employees, agents, successors and assigns and related entities
harmless from, any Losses incurred or suffered by them arising out of:
(i) any inaccuracy or other breach of any representation or
warranty made by the Seller or WFC Parent in this Agreement or any
Closing Document;
(ii) any breach of any covenant or agreement to be performed
by the Seller pursuant to this Agreement or any Closing Document;
(iii) the Excluded Liabilities, the Excluded Assets and the
Excluded Business and any legal, administrative or arbitration
proceeding, suit or action of any nature with respect thereto
(including, without limitation, with respect to reaffirmation
agreements relating to bankruptcy, insolvency and debtor relief
laws);
(iv) the fees of Goldman, Sachs & Co. owed by the Seller as a
result of the transactions contemplated hereunder; and
(v) the waiver set forth in Section 14.3 hereof.
(b) The liability of the Seller to provide indemnification pursuant
to Section 12.2 shall be limited as follows:
(i) the aggregate of all Losses for breaches of Section 4.8
shall be reduced by the specific reserves related to the accounts
covered thereby which are set forth on the Closing Balance Sheet, to
the extent applicable;
(ii) the Seller shall not be liable with respect to any matter
referred to in Section 12.2(a)(i), except to the extent that the
aggregate Losses (after giving effect to clause (i) above, to the
extent applicable) exceed $1 million and, in such event, only for
aggregate Losses in excess of such $1 million. The Seller's aggregate
liability under Section 12.2(a)(i) shall not exceed $150 million;
(iii) notwithstanding anything to the contrary in this Section
12.2(b), the limits on liability set forth in this Section 12.2(b)
shall not apply to any payments required to be made under Section
3.3.
(c) The amount for which the Seller shall be liable in respect of any
Loss pursuant to Section 12.2(a) shall be reduced to the extent that the
Purchaser or any Affiliate thereof shall realize:
(i) any net Tax benefit arising from the Loss; and (ii) any
net proceeds recovered from insurers or other third parties with
respect to such Loss. If the Purchaser shall have received or shall
have had paid on its behalf an indemnity payment in respect of a Loss
and shall subsequently receive directly or indirectly such proceeds,
then the Purchaser shall promptly pay to the Seller, the net amount
of such proceeds or, if less, the amount of such indemnity payment.
The Purchaser shall promptly recover insurance proceeds or net Tax
benefits that may be due to the Purchaser. If a net Tax benefit is
realized through a reduction of Taxes or a credit against Taxes due,
such benefit shall be considered realized upon the earlier of the
filing date or the due date of the Tax return or report on which such
reduction or credit is reflected or upon the due date of the payment
against which such credit is offset. If a net Tax benefit is realized
by the receipt of a refund of Taxes, such benefit shall be considered
realized upon the date such refund is received. Such net Tax benefit
shall be calculated by taking into account the effect of any event
giving rise to a Loss and the effect of any payment pursuant to this
Section 12.2.
(d) For purposes of determining if an Indemnified Party is entitled
to indemnification hereunder and the amount thereof, (i) all
representations and warranties contained herein shall be considered without
reference to materiality, material adverse effect or knowledge qualifiers
and (ii) Section 4.8 shall be deemed to read in its entirety as set forth
in Exhibit 12.2.
12.3 Indemnification by the Purchaser.
--------------------------------
(a) Subject to Sections 12.1 and 12.3(b), the Purchaser hereby agrees
to indemnify and defend the Seller and its Affiliates against, and agrees
to hold it and them harmless from, any Losses incurred or suffered by it
arising out of:
(i) any inaccuracy or other breach of any representation or
warranty made by the Purchaser in this Agreement or any of the
Closing Documents;
(ii) any breach of any covenant or agreement to be performed
by the Purchaser pursuant to this Agreement or any Closing Document;
(iii) any Assumed Liability;
(iv) any liability or obligation arising with respect to an
arrangement requested by the Purchaser to provide the Purchaser the
benefits under a Contract or Client Contract pursuant to Section
2.2(b);
(v) any liability or obligation arising from the operation of
the Business or the Assets by the Purchaser (or any of its
Affiliates, or their respective successors or assigns) after the
Closing;
(vi) the claims of any Employees arising out of the
Purchaser's failure to offer employment as required in Section 10.1,
and if such offer is subsequently accepted, failure to hire, that
person or persons; and
(vii) any liability or obligation assumed by the Purchaser
pursuant to Article X.
(b) The Purchaser shall not be liable with respect to any matter
referred to in Section 12.3(a)(i), except to the extent that the aggregate
Losses exceed $1 million and, in such event, only for aggregate Losses in
excess of such $1 million. The Purchaser's aggregate liability under
Section 12.3(a)(i) shall not exceed $150 million.
(c) The amount for which the Purchaser shall be liable in respect of
any Loss pursuant to Section 12.3(a) shall be reduced to the extent that
the Seller or any Affiliate thereof shall realize: (i) any net Tax benefit
arising from the Loss, and (ii) any net proceeds recovered from insurers or
other third parties with respect to such Loss. If the Seller shall have
received or shall have had paid on its behalf an indemnity payment in
respect of a Loss and shall subsequently receive directly or indirectly
such proceeds, then the Seller shall promptly pay to the Purchaser, as
applicable, the net amount of such proceeds or, if less, the amount of such
indemnity payment. The Seller shall promptly recover insurance proceeds or
net Tax benefits that may be due to the Seller. If a net Tax benefit is
realized through a reduction of Taxes or a credit against Taxes due, such
benefit shall be considered realized upon the earlier of the filing date or
the due date of the Tax return or report on which such reduction or credit
is reflected or upon the due date of the payment against which such credit
is offset. If a net Tax benefit is realized by the receipt of a refund of
Taxes, such benefit shall be considered realized upon the date such refund
is received. Such net Tax benefit shall be calculated by taking into
account the effect of any event giving rise to a Loss and the effect of any
payment pursuant to this Section 12.3.
12.4 Procedures Governing Indemnification.
------------------------------------
(a) Except as provided in Sections 12.4(b) and 12.4(e), as soon as is
reasonably practicable after becoming aware of a claim for indemnification
under this Article XII and of any actual or reasonably likely Loss in
connection therewith, the party hereto seeking such indemnification (an
"Indemnified Person") shall promptly give notice to the party hereto
against whom such indemnification is sought (the "Indemnifying Person") of
such claim and, if known, the amount of the Loss the Indemnified Person
will be entitled to receive hereunder from the Indemnifying Person
(together with such information, if available, as may be necessary for the
Indemnifying Person to determine that the limitations contained in Section
12.2(b), as applicable, have been satisfied or do not apply). The failure
of the Indemnified Person to give such notice shall not relieve the
Indemnifying Person of its obligations with respect to such claim for
indemnification except to the extent (if any) that the Indemnifying Person
shall have been materially prejudiced thereby.
(b) This Section 12.4(b) shall apply if a Person not a party hereto
(or an Affiliate of such party) shall assert any claim, or commence any
suit, action or proceeding against an Indemnified Person in respect of
which indemnity may be sought under this Article XII. The Indemnified
Person shall give notice as promptly as is reasonably practicable to the
Indemnifying Person of the assertion of such claim, or the commencement of
any such suit, action or proceeding (together with such information, if
available, as may be necessary for the Indemnifying Person to determine
that the limitations contained in Section 12.2(b) have been satisfied or do
not apply). The failure of the Indemnified Person to give notice shall not
relieve the Indemnifying Person of its obligations under this Article XII
except to the extent (if any) that the Indemnifying Person shall have been
materially prejudiced thereby. The Indemnifying Person may, at its own
expense, (i) participate in the defense of any such claim, suit, action or
proceeding; and (ii) within 15 business days of receipt of such notice and
upon notice to the Indemnified Person, assume the defense thereof;
provided, however, that the Indemnifying Person shall thereafter consult
with the Indemnified Person upon the Indemnified Person's reasonable
request for such consultation from time to time with respect to such claim,
suit, action or proceeding. If the Indemnifying Person assumes such
defense, the Indemnified Person shall have the right (but not the duty) to
participate in the defense thereof and to employ counsel, at its own
expense, separate from the counsel employed by the Indemnifying Person. If,
however, the Indemnified Person reasonably determines in its judgment that
representation by the Indemnifying Person's counsel of both the
Indemnifying Person and the Indemnified Person would present such counsel
with a material conflict of interest, then such Indemnified Person may
employ separate counsel to represent or defend it in any such claim,
action, suit or proceeding and the Indemnifying Person shall, subject to
the limitations contained in Section 12.2, pay the reasonable fees and
disbursements of such separate counsel.
(c) Any settlement or compromise made or caused to be made by the
Indemnified Person or the Indemnifying Person, as the case may be, of any
such claim, suit, action or proceeding of the kind referred to in Section
12.4(b) being defended by such Person shall be binding upon the other
Person, in the same manner as if a final judgment or decree had been
entered by a court of competent jurisdiction in the amount of such
settlement or compromise. Notwithstanding the foregoing, (i) no obligation,
restriction or expense shall be imposed on the Indemnified Person as a
result of such settlement without its prior written consent; and (ii) the
Indemnified Person will give the Indemnifying Person at least thirty (30)
days' notice of any proposed settlement or compromise of any claim, suit,
action or proceeding it is defending, during which time the Indemnifying
Person may reject such proposed settlement or compromise; provided,
however, that from and after such rejection, the Indemnifying Person shall
be obligated to assume the defense of such claim, suit, action or
proceeding (subject to any limitations on the Indemnifying Person's
obligation to indemnify the Indemnified Person set forth in this
Agreement).
(d) In the event that the Indemnifying Person, after written notice
thereof, does not elect to assume the defense of any claim, suit, action or
proceeding of the type referred to in Section 12.4(b), then any failure of
the Indemnified Person to defend or to participate in the defense of any
such claim, suit, action or proceeding, or to cause the same to be done,
shall not relieve the Indemnifying Person of its obligations hereunder.
(e) With respect to any claim, suit, action or proceeding of the type
referred to in Section 12.4(b), and whether or not the Indemnifying Person
chooses to defend or prosecute any such claim, suit, action or proceeding,
the Indemnifying Person shall cooperate with the Indemnified Person,
including, as may be reasonably requested by the Indemnifying Person,
making available all relevant records and files with respect to any such
claim, suit, action or proceeding, providing access to counsel of the
Indemnified Person, if applicable, and making available the personnel of
such Indemnified Person, whether as witnesses or for informational
purposes; provided, that (i) such access shall only take place in the
presence of a representative of the Indemnified Party, (ii) the Indemnified
Party shall not be required to disclose any information with respect to
itself or any of its Affiliates and shall not be required to participate in
the defense of any claim to be indemnified hereunder unless otherwise
required or reasonably necessary to the defense of any claim to be
indemnified hereunder and (iii) the Indemnifying Party shall keep any
information of which it has come into possession confidential and not use
such information except in connection with indemnification hereunder.
ARTICLE XIII
DISPUTE RESOLUTION
13.1 General. Except as set forth in Sections 3.2 and 11.2(b), the
procedures for arbitration set forth in this Article XIII will be the sole
remedies of the parties under this Agreement. In the event any dispute arises in
connection with this Agreement or the services provided hereunder, the parties
agree to use all commercially reasonable efforts to settle such dispute by
consulting and negotiating with each other, in good faith and understanding of
their mutual interest, to reach an equitable solution satisfactory to both
parties. In the event the parties are unable to resolve a dispute, either party
may request in writing that the dispute be referred to senior executives. If
such two senior executives of each party cannot resolve the dispute within 15
days of the matter being referred to them, the disputes or differences shall be
finally settled by arbitration in accordance with the provisions of this Article
XIII.
13.2 Procedures Governing Dispute Resolution. (a) Subject to Section 13.1,
Any party may demand that any unresolved dispute hereunder be resolved by
binding arbitration. Notice of the demand for arbitration by one party shall be
given in writing to the other party to this Agreement. Upon such demand, the
dispute will be decided by arbitrators in accordance with the rules set forth in
this Section 13.2.
(b) A notice of demand for arbitration by one party given as set
forth in Section 13.2(a) shall include the appointment of an arbitrator
named therein. Within 30 days after such notice of demand for arbitration
is given, the party to which such notice is given shall similarly appoint
an arbitrator by giving written notice to the initiating party. If such
party fails to appoint an arbitrator within such time period, the
initiating party may apply to any court having jurisdiction over the
parties and the controversy to compel arbitration, and such court shall be
empowered to select the failing party's arbitrator.
(c) The two arbitrators appointed in accordance with Section 13.2(b)
shall, within thirty (30) days after the appointment of the later of them
to be appointed, select a third arbitrator who shall act as chairman of the
arbitration panel. In the event that the arbitrators so appointed do not,
within thirty (30) days after the appointment of the later of them to be
appointed, agree on the selection of a third arbitrator, either party may
apply to any court having jurisdiction over the parties and the controversy
to select the third arbitrator. The arbitration panel shall set a time for
the hearing of the dispute which shall not be later than sixty (60) days
after the date of appointment of the third arbitrator, and the final
decision of the arbitrators shall be rendered in writing to the parties not
later than sixty (60) days after the last hearing date, unless otherwise
agreed by the parties in writing.
(d) The place of any arbitration hereunder shall be Chicago,
Illinois, or at such other place as agreed to by the parties.
(e) Any arbitration hereunder shall be conducted in accordance with
the rules of the American Arbitration Association ("AAA") then prevailing,
and the decision of the arbitrators shall be final and binding on the
parties, and shall be enforceable in any court having jurisdiction over the
parties. Compliance with the provisions of this Agreement concerning
arbitration of disputes is a condition precedent to the commencement of any
suit, action or proceeding in any federal, state or local court with
respect to any controversy or dispute under this Agreement, except a suit,
action or proceeding which challenges the validity of any provision of this
Agreement.
(f) Any party may send out requests to compel document production
from the other party. Disputes concerning the scope of document production
and enforcement of the document production requests will be determined by
written agreement of the parties or, failing such agreement, will be
referred to the arbitration panel for resolution. All discovery requests
shall be subject to the proprietary rights and rights of privilege of the
parties, and the arbitrators shall adopt procedures to protect such rights.
Except where contrary to the provisions set forth in this Agreement, the
rules of the AAA for commercial arbitration shall be applied to all matters
of procedure, including discovery; provided, however, that the arbitration
shall not be conducted under the auspices of the AAA and the fee schedule
of the AAA shall not apply. The arbitrators may obtain independent legal
counsel to aid in their resolution of legal questions presented in the
course of arbitration, to the extent they consider that such counsel is
absolutely necessary to a fair resolution of the dispute, and to the extent
that it is economical to do so considering financial consequences of the
dispute. The arbitrators shall be limited to interpreting or construing the
applicable provisions of this Agreement, and shall have no authority or
power to alter, amend, modify, revoke or suspend any condition or provision
of this Agreement; it being understood, however, that the arbitrators shall
have full authority to implement the provisions of this Agreement,
including provisions requiring further agreement of the parties hereunder,
and to fashion appropriate remedies for breaches of this Agreement,
provided that the arbitrators shall not have any authority in excess of the
authority a court having jurisdiction over the parties and the controversy
or dispute would have absent these arbitration provisions.
(g) If a party fails or refuses to appear at and participate in an
arbitration hearing after due notice, the arbitration panel may hear and
determine the controversy upon evidence produced by the appearing party.
(h) The arbitration costs will be borne one-half by the Seller and
one-half by the Purchaser, except that each party will be responsible for
its own expenses and the costs of witnesses selected by such party.
13.3 Continuation of Commitments; Specific Performance. Unless otherwise
agreed in writing, the parties will continue to provide service and honor all
other commitments under this Agreement during the course of dispute resolution
pursuant to the provisions of this Article XIII. In addition, each party shall
be entitled to obtain specific performance of the obligations of the other
parties hereunder.
<PAGE>
ARTICLE XIV
MISCELLANEOUS
14.1 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given (a) when delivered, if delivered personally,
(b) when sent and receipt is confirmed, if sent by facsimile transmission and
(a) five (5) Business Days after mailing, if mailed by registered or certified
mail, return receipt requested, to the parties at the following addresses (or
such other addresses as they may hereafter specify by a notice complying
herewith):
(a) If to the Seller, to:
Whirlpool Corporation
2000 M 63 North
Benton Harbor, Michigan 49022
Attention: General Counsel
Facsimile No.: (616) 923-3722
with a copy to:
Mayer, Brown & Platt
190 South LaSalle Street
Chicago, Illinois 60603
Attention: John R. Sagan
Facsimile No.: (312) 701-7711
(b) If to the Purchaser, to:
Transamerica Corporation
600 Montgomery Street
San Francisco, California 94111
Attention: Richard H. Fearon
Facsimile No.: (415) 983-4165
with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Daniel A. Neff
Facsimile No.: (212) 403-2000
14.2 Expenses. Except as otherwise specifically provided in this Agreement,
including Section 14.10, all legal and other costs and expenses incurred in
connection with the preparation, execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby shall be paid by the
party that incurred such costs and expenses.
14.3 Bulk Sales. The parties hereby waive compliance with the requirements
of: (a) all applicable state Tax laws that may require notification of state
taxing authorities and related actions in respect of bulk sales of assets
outside of the ordinary course of business, and (b) any bulk transfer laws (such
as Article 6 of the Uniform Commercial Code as enacted in any state).
14.4 Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of the parties and their respective successors and assigns.
Neither this Agreement, any agreement, document or instrument contemplated
herein nor any right or obligation hereunder or thereunder may be assigned by
any party without the consent of the other; provided, however that any party
may, without the consent of the other, assign this Agreement, any agreement,
document or instrument contemplated herein or any right or obligation hereunder
or thereunder to (i) one or more of its wholly-owned, direct or indirect
subsidiaries or (ii) one or more of its direct or indirect parent entities.
Notwithstanding the foregoing, no party shall have the right to assign any right
or obligation under this Agreement or any agreement, document or instrument
contemplated herein if such assignment may reasonably be expected to result in
(a) any material increase in the obligations of the other party under this
Agreement or any agreement, document or instrument contemplated herein, or (b)
the failure of the Closing to occur or a delay in the occurrence of the Closing.
14.5 No Third Party Beneficiaries. This Agreement is solely for the benefit
of the parties hereto and no provision of this Agreement shall be deemed to
confer upon any other third party any remedy, claim, liability, reimbursement,
cause of action or other right; provided, however that those Persons expressly
set forth in Section 12.2 are intended beneficiaries of Article XII.
14.6 Entire Agreement; Waiver; Amendment.
(a) This Agreement, together with any agreement, document or
instrument contemplated herein, embodies the entire agreement of the
parties hereto with respect to the subject matter hereof and supersedes all
prior agreements with respect thereto.
(b) This Agreement may not be amended except upon the written
agreement of the parties. Any failure of the Seller or the Purchaser to
comply with any provision of this Agreement may be expressly waived by the
Purchaser or the Seller, respectively, but any such waiver or failure to
insist upon full compliance with such provision shall not operate as a
waiver of, or estoppel with respect to, any subsequent or other failure. No
failure to exercise and no delay in exercising any right, remedy or power
hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, remedy or power hereunder preclude any other
or further exercise thereof or the exercise of any other right, remedy or
power provided herein or by law or in equity. The waiver by either party of
the time for performance of any act or condition hereunder does not
constitute a waiver of the act or condition itself.
14.7 Public Statements. Prior to the Closing Date, except as required by
law (including in connection with any other transactions in which the Seller or
the Purchaser or any of their respective Affiliates is a participant, with
respect to filings with the Securities and Exchange Commission pursuant to the
Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as
amended) or the rules of any stock exchange, no public announcement or other
publicity regarding the transactions referred to herein shall be made by the
Purchaser or the Seller or any of their respective Affiliates without the prior
agreement of the parties as to content, form, timing and publication; provided,
that nothing in this Section 14.7 shall prevent such parties from discussing
such transactions with, or making such announcements to, those Persons the
notification of whom or whose approval, waiver, consent, agreement or opinion,
as the case may be, is required for consummation of such particular transaction
or transactions. Such parties shall exercise all reasonable efforts to assure
that such Persons will agree to keep confidential any information relating to
this Agreement or any agreement, document or instrument contemplated herein.
14.8 Severability. If any provision of this Agreement shall be held
invalid, illegal or unenforceable, the validity, legality or enforceability of
the other provisions hereof shall not be affected thereby, and there shall be
deemed substituted for the provision at issue a valid and enforceable provision
as similar as possible to the provision at issue.
14.9 Certain Expenses; Transfer Taxes; Recording and Filing Fees; Proration
of Certain Taxes.
(a) The Purchaser and the Seller shall share equally all sales, use,
stamp, transfer and like Taxes, if any, excluding income and capital gains
Taxes of the Seller, which may become due and payable and are required to
be paid in connection with the transfer of the Assets pursuant hereto and
shall share equally all recording, filing, transfer and other fees (and the
fees and costs of any agent retained to effect any such recordations,
filings or transfers) required to be paid in connection with the transfer
of the Assets pursuant to this Agreement or any agreement, document or
instrument contemplated herein.
All real estate, personal property and ad valorem Taxes relating to
the Assets which shall have accrued and become payable prior to the latest
of the Closing Date, the date of the WFNB Purchase or the date on which all
Foreign Purchases have been consummated shall be paid by the Seller. All
such taxes which shall be accrued but unpaid shall be prorated to the date
of the applicable closing. All such Taxes accruing on or after the latest
of the Closing Date, the date of the WFNB Purchase or the date on which all
Foreign Purchases have been consummated shall be paid by the Purchaser. In
connection with such proration of taxes, in the event that actual Tax
figures are not available at the date of the applicable closing, proration
of Taxes shall be based upon the actual Taxes for the preceding year for
which actual Tax figures are available. The amount due one party as the
result of such proration shall be paid to the other party at the time of
the delivery of the Closing Statement.
14.10 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall together constitute one and the same original
instrument, and shall become effective when one or more counterparts hereof have
been signed by the Purchaser and delivered to the Seller and one or more
counterparts hereof have been signed by the Seller and delivered to the
Purchaser.
14.11 Necessary and Desirable Actions. The Seller and the Purchaser agree
to cooperate fully with each other in connection with obtaining the satisfaction
of the conditions set forth in Article VIII. The Seller and the Purchaser agree
to execute and deliver such other documents, certificates, agreements and other
writings and to take such other actions as may be reasonable, and necessary or
desirable, in order to consummate or implement expeditiously the transactions
contemplated by this Agreement and any agreement, document or instrument
contemplated herein.
14.12 Tax Matters.
For purposes of this Section 14.12, "Closing Date" shall mean, with
respect to each of WFNB and each WFC Company, the date on which the closing with
respect to such entity occurs.
(a) Section 338 Elections and Forms. (i) With respect to Purchaser's
acquisition of the WFNB Shares and the shares of capital stock of the WFC
Stock Companies (together, the "Acquired Shares"), Purchaser shall properly
make all available Section 338(g) Elections in accordance with applicable
Tax Laws. With respect to Seller's sale of the Acquired Shares hereunder,
Seller and Purchaser shall jointly make all available Section 338(h)(10)
Elections in accordance with applicable Tax Laws and as set forth herein.
Purchaser and Seller agree to report the transfers under this Agreement
consistent with the Section 338 Elections, and shall take no position
contrary thereto unless required to do so by applicable Tax Laws pursuant
to a Determination.
Purchaser shall be responsible for the preparation and filing of all
Section 338 Forms in accordance with applicable Tax Laws and the terms of
this Agreement. Seller shall execute and deliver to Purchaser such
documents or forms as are reasonably requested and are required by any Tax
Laws properly to complete the Section 338 Forms, at least 20 days prior to
the date such Section 338 Forms are required to be filed.
Purchaser and Seller agree that they shall use their best efforts to
enter into an agreement (the "Allocation Agreement") as soon as practicable
after the Closing Date concerning the computation of the Modified Aggregate
Deemed Sale Price (as defined under applicable Treasury Regulations) of the
Assets and (x) the allocation of such Modified Aggregate Deemed Sale Price
and (y) amounts allocable to the other assets of the Business among such
assets in accordance with Section 1060 of the Code. Purchaser shall deliver
to Seller a proposed Allocation no later than 75 days after the Closing
Date. If Seller has not objected to such Allocation Agreement within thirty
(30) days of receipt, such agreement shall be deemed accepted and shall be
the Allocation Agreement. If Seller objects to Purchaser's proposed
Allocation Agreement, Seller shall give Purchaser notice of its objections
(the "Seller Notice") and Seller and Purchaser shall use all reasonable
efforts to resolve their differences. If, sixty days after delivery of the
Seller Notice, Purchaser and Seller have not adopted the Allocation
Agreement as described above, any disputed aspects of the Allocation
Agreement or such revision shall be resolved within 30 days by the
Independent Accounting Firm. The costs, expenses and fees of the
Independent Accounting Firm shall be borne equally by Purchaser and Seller.
Purchaser and Seller agree to act in accordance with the allocations
contained in the Allocation Agreement in any relevant Tax returns or
similar filings. Notwithstanding the foregoing, the parties hereto agree to
allocate the amount set forth on Schedule 14.12 to the Trademark License
Agreement.
(b) Tax Indemnification by Seller. Seller shall be liable for, and
shall hold Purchaser and its Affiliates and any successor corporations
thereto harmless from and against the following Taxes with respect to the
Seller, the WFC Companies and WFNB or the Business:
(i) any and all Taxes for any taxable period ending (or
deemed, pursuant to Section 14.12(d) hereof, to end) on or before the
Closing Date, including any Taxes incurred as a result of making the
Section 338(h)(10) Election or Elections other than Taxes properly
reflected as liabilities on the Closing Balance Sheet; and
(ii) any several liability of any WFC Stock Company or WFNB
for Taxes attributable to any taxable period ending on or before the
Closing Date under Treasury Regulations Section 1.1502-6 or under any
comparable or similar provision under state, local or foreign laws or
regulations.
(c) Tax Indemnity by Purchaser. Purchaser shall be liable for, and
shall hold Seller harmless from and against any and all Taxes for any
taxable period beginning (or deemed pursuant to Section 14.12(d) hereof, to
begin) on or after the Closing Date incurred by the WFC Companies or WFNB
or the Business.
(d) Allocation of Certain Taxes. (i) Purchaser and Seller agree that
if any of the WFC Companies or WFNB is permitted but not required under
applicable state or local Tax laws to treat the day before the Closing Date
or the Closing Date as the last day of a taxable period, Purchaser and
Seller shall treat the Closing Date as the last day of a taxable period.
(ii) Any Taxes based on income, gain or similar items ("Income
Taxes") for a taxable period beginning before the Closing Date and
ending after the Closing Date (a "Straddle Period") shall be
apportioned between Seller and Purchaser based on the actual
operations of the WFC Companies and WFNB, as the case may be, during
the portion of such period ending on the Closing Date and the portion
of such period beginning on the day following the Closing Date, and
for purposes of the provisions of paragraphs (b), (c), (d) and (f) of
this Section 14.12, each portion of such period shall be deemed to be
a taxable period (whether or not it is in fact a taxable period). All
Taxes other than Income Taxes ("Other Taxes") relating to a Straddle
Period shall be apportioned between Purchaser and Seller based on the
number of days during the portion of such period occurring on and
before the Closing Date, and the number of days during such period
occurring after the Closing Date and for purposes of paragraphs (b),
(c), (d) and (f) of this Section 14.12 each portion of such period
shall be deemed to be a taxable period (whether or not it is in fact
a taxable period). To the extent estimated Taxes have been paid prior
to the Closing Date or are accrued on the Balance Sheet with respect
to a Straddle Period, Seller's liability, with respect thereto shall
be reduced by that amount; provided, further that if such payment or
accrual of Taxes exceeds Seller's liability as calculated pursuant to
the apportionment described in this paragraph (d), Purchaser shall
promptly pay Seller the amount of such excess. Upon timely notice
from Purchaser, Seller shall pay to Purchaser at least 10 days prior
to the date any payment for Taxes as described in this paragraph (d)
is due, Seller's share of such Taxes as described in this paragraph
(d).
(e) Filing Responsibility. (i) Seller shall prepare and file or shall
cause the WFC Companies and WFNB to prepare and file the following returns
with respect to the WFC Companies and WFNB:
(x) all Income Tax returns for any taxable period
ending on or before the Closing Date (including, without
limitation, any deemed sale return resulting from the filing
of a Section 338 Election) other than returns for Straddle
Periods referred to in paragraph (d);
(y) all other returns with respect to Other Taxes
required to be filed (taking into account extensions) prior to
the Closing Date; and
(ii) Purchaser shall file all other returns with respect to
the WFC Companies and WFNB.
(f) Refunds. (i) Seller shall be entitled to any refunds or credits
of Taxes with respect to the Business attributable to or arising in taxable
periods ending (or deemed, pursuant to Section 14(d), to end) on or before
the Closing Date.
(ii) Purchaser shall be entitled to any refunds or credits of
Taxes with respect to the Business attributable to or arising in
taxable periods beginning (or deemed, pursuant to Section 14(d), to
begin) on or after the Closing Date.
(iii) Purchaser shall promptly forward to Seller or to
reimburse Seller for any refunds or credits due Seller (pursuant to
the terms of this Section 14.12) after receipt thereof, and Seller
shall promptly forward to Purchaser or reimburse Purchaser for any
refunds or credits due Purchaser (pursuant to the terms of this
Section 14.12) after receipt thereof.
(g) Cooperation and Exchange of Information. (i) For a period of six
(6) years after the Closing Date, Purchaser shall retain all returns, books
and records (including computer files) of, or with respect to the
activities of the Business for all taxable periods ending on or prior to
the Closing Date. Thereafter, Purchaser shall not dispose of any such
returns, books or records unless it first offers such returns, books and
records to Seller and Seller fails to accept such offer within sixty (60)
days of its being made.
(ii) Purchaser and Seller and their respective Affiliates
shall cooperate in the preparation of all returns relating in whole
or in part to taxable periods ending on or before or including the
Closing Date that are required to be filed after such date. Such
cooperation shall include, but not be limited to, furnishing prior
years' returns or return preparation packages illustrating previous
reporting practices or containing historical information relevant to
the preparation of such returns, and furnishing such other
information within such party's possession requested by the party
filing such returns as is relevant to their preparation. In the case
of any state, local or foreign joint, consolidated, combined, unitary
or group relief system returns, such cooperation shall also relate to
any other taxable periods in which one party could reasonably require
the assistance of the other party in obtaining any necessary
information.
(iii) Seller shall have the right, at its own expense, to
control any audit or examination by any Taxing Authority ("Tax
Audit"), initiate any claim for refund, contest, resolve and defend
against any assessment, notice of deficiency, or other adjustment or
proposed adjustment relating to any and all Taxes for any taxable
period ending on or before the Closing Date with respect to the
Business. Purchaser shall have the right, at its own expense, to
control any other Tax Audit, initiate any other claim for refund, and
contest, resolve and defend against any other assessment, notice of
deficiency, or other adjustment or proposed adjustment relating to
the following Taxes with respect to the Business.
(h) Definitions. For purposes of this Section 14.13, the following
terms shall have the meanings ascribed to them below:
(i) "Determination" means a "determination" as defined by
Section 1313(a) of the Code.
(ii) "IRS" means the United States Internal Revenue Service.
(iii) "Returns" means returns, reports and forms required to
be filed with any domestic or foreign Taxing authority.
(iv) "Section 338 Forms" means all returns, documents,
statements, and other forms that are required to be submitted to any
federal, state, county, or other local Taxing Authority in connection
with a Section 338(g) Election or a Section 338(h)(10) Election.
Section 338 Forms shall include, without limitation, any "statement
of section 338 election" and IRS Form 8023-A (together with any
schedules or attachments thereto) that are required pursuant to
Treas. Reg. Section 1.338-1 or Treas. Reg. Section 1.338(h)(10)-1.
(v) "Section 338 Elections" shall mean both a Section 338(g)
Election and a Section 338(h)(10) Election.
(vi) "Section 338(g) Election" means an election described in
Section 338(g) of the Code with respect to Purchaser's acquisition of
the Acquired Shares and any "target affiliate". Section 338(g)
Election shall include any corresponding election under any other
applicable Tax Laws that requires a separate election with respect to
Purchaser's acquisition of the Acquired Shares.
(vii) "Section 338(h)(10) Election" means an election
described in Section 338(h)(10) of the Code with respect to Seller's
sale of the Acquired Shares to Purchaser pursuant to this Agreement.
Section 338(h)(10) Election shall include any corresponding election
under any other relevant Tax Laws for which a separate election is
permissible with respect to Purchaser's acquisition of the Acquired
Shares from Seller under this Agreement.
(viii) "Tax Laws" means the Code, federal, state, county,
local, or foreign laws relating to Taxes and any regulations or
official administrative pronouncements released thereunder.
(ix) "Taxing Authority" means any governmental authority,
domestic or foreign, having jurisdiction over the assessment,
determination, collection, or other imposition of Tax.
14.13 Forum Selection and Consent to Jurisdiction. EACH OF THE PARTIES
HERETO AGREE THAT ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH THIS AGREEMENT SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN
THE COURTS OF THE STATE OF DELAWARE OR IN THE UNITED STATES DISTRICT COURT FOR
THE DISTRICT OF DELAWARE. EACH OF THE PARTIES HERETO HEREBY EXPRESSLY AND
IRREVOCABLY SUBMITS TO JURISDICTION OF THE COURTS OF THE STATE OF DELAWARE AND
OF THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE. EACH OF THE
PARTIES HERETO HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING
OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND
ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
14.14 Governing Law. THIS AGREEMENT IS BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, APPLICABLE TO CONTRACTS MADE
AND TO BE ENTIRELY PERFORMED IN SAID STATE.
14.15 Waiver of Jury Trial. TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE
PARTIES HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
ARTICLE XV
GUARANTIES
15.1 Guaranty of the WFC Parent. The WFC Parent hereby irrevocably and
unconditionally guarantees the full and prompt performance of all of the
covenants and agreements made by the Seller under this Agreement and by
Whirlpool Properties, Inc. under the Trademark License Agreement, and the prompt
and full payment of all of the obligations and liabilities of the Seller arising
from or assumed under this Agreement.
15.2 Guaranty of the Purchaser's Parent. The Purchaser's Parent hereby
irrevocably and unconditionally guarantees the full and prompt performance of
all of the covenants and agreements made by the Purchaser under this Agreement
and by the Purchaser under the Trademark License Agreement, and the prompt and
full payment of all of the obligations and liabilities of the Purchaser arising
from or assumed under this Agreement.
<PAGE>
Exhibit 28.1
Page 1
<TABLE>
Lending Operations
Balance Sheet
December 31, 1996
(Amounts in thousands)
<CAPTION>
Assets
<S> <C>
Cash and cash equivalents ............................................. $ 4,424
Finance Receivables, net of unearned fees ............................. 1,360,576
Allowance for Losses .............................................. (18,426)
-----------
Finance Receivables, net .................................... 1,342,150
Furniture and equipment, at cost less accumulated
amortization of $10,398 ........................................... 7,691
Other receivables and assets .......................................... 2,601
-----------
Total Assets .......................................................... $ 1,356,866
===========
Liabilities and Equity
Unfunded finance receivables .......................................... $ 73,195
Accounts payable and accrued liabilities .............................. 7,878
-----------
Total liabilities ................................................. 81,073
-----------
Equity ................................................................ 1,275,793
-----------
Total Liabilities and Equity .......................................... $ 1,356,866
===========
See accompanying notes
</TABLE>
<PAGE>
Exhibit 28.1
Page 2
<TABLE>
Lending Operations
Income Statement
Year Ended December 31, 1996
(Amounts in thousands)
<CAPTION>
REVENUES
<S> <C>
Finance charges ........................................................... $156,363
Other Income .............................................................. 6,163
--------
Total Revenues ........................................................ 162,526
EXPENSES
Interest and debt expense ................................................. 54,753
Salaries and other operating expenses ..................................... 55,139
Provision for credit losses ............................................... 18,570
--------
Total expenses ........................................................ 128,462
--------
Income before income taxes ................................................ 34,064
Income taxes .............................................................. 13,854
--------
Net income ................................................................ $ 20,210
========
See accompanying notes
</TABLE>
<PAGE>
Exhibit 28.1
Page 3
<TABLE>
Lending Operations
Statement of Cash Flows
Year ended December 31, 1996
(Amounts in thousands)
<CAPTION>
<S> <C>
Operating Activities
Net income .............................................................. $ 20,210
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization .................................. 3,071
Provision for credit losses .................................... 18,570
Change in accounts payable & other liabilities ................. 1,534
Change in other assets ......................................... (22)
Other .......................................................... (409)
-----------
Net cash provided by operating activities ............................... 42,954
Investing Activities
Finance receivables originated .......................................... (3,751,839)
Finance receivables collected ........................................... 3,582,613
Increase in unfunded financing transactions ............................. 13,781
Credit losses, net of recoveries ........................................ (18,074)
Net property and equipment at cost ...................................... (2,364)
-----------
Net cash used in investing activities ................................... (175,883)
-----------
Financing Activities
Change in equity/net cash provided by financing activities .............. 134,791
-----------
Increase in cash ........................................................ 1,862
Cash at beginning of year ............................................... 2,562
-----------
Cash at end of year ..................................................... $ 4,424
===========
See accompanying notes
</TABLE>
<PAGE>
Exhibit 28.1
Page 4
LENDING OPERATIONS
NOTES TO FINANCIAL STATEMENTS
(Amounts in thousands)
December 31, 1996
NOTE ONE - SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation: The Lending Operations (the "Company") consists of
certain business operations formerly owned by Whirlpool Financial Corporation
("WFC"), a majority-owned subsidiary of Whirlpool Corporation. These operations
were sold by WFC to Transamerica Distribution Finance ("TDF"), a wholly-owned
subsidiary of Transamerica Finance Corporation ("TFC"). The statements enclosed
were prepared for the purpose of complying with the rules and regulations of the
Securities and Exchange Commission for inclusion in the current report on Form
8-K of TFC, and are not intended to be a complete presentation of the financial
position or revenue and expenses.
As part of the sale agreement, TDF did not assume any of WFC's debt. Because the
Company was historically operated as an integral part of WFC, management has
determined it is not feasible to allocate specific debt and related interest
expense incurred by WFC to the Company. As a result, the balance sheet includes
a "Balancing Account" (Equity) that represents all assets sold less liabilities
directly assumed by TDF, and is not reflective of a capital structure that would
be typical for such a company. Similarly, the income statement includes amounts
that represent management's estimated allocation of interest expense, taxes, and
employee costs related to the operations of the assets and liabilities sold.
The balance sheet and income statement include all balances and transactions of
the operation sold to TDF, including Whirlpool Financial National Bank ("WFNB"),
as if the Company functioned as a stand-alone entity.
Operations: The Company's inventory finance division provides domestic floorplan
financing and display programs to retailers throughout the United States, and
factoring, inventory and display financing for retailers of products of
Whirlpool's operations in Europe and Latin America and Vitromatic, Whirlpool's
joint venture company in Mexico. The consumer finance division provides
revolving charge financing and through WFNB, the Company's credit card bank,
consumer credit card programs throughout the United States.
Use of Estimates: Certain amounts reported in the combined financial
statements are based on management estimates. Actual results could differ from
those estimates.
Cash and Cash Equivalents: The Company considers all highly liquid debt
instruments purchased with a maturity of three months or less to be cash
equivalents.
Income Recognition: Interest and discount charges are recognized in financing
income using the effective yield method. For inventory financing receivables,
finance charges to cover the initial period (generally 90 days) for each item
financed on a discount basis are credited to unearned finance charge accounts
and recognized as revenues over the initial period on the effective yield
method. Origination fees and related costs are deferred and amortized over the
life of the related receivables as a yield adjustment using the interest method.
The Company suspends interest income recognition on nonearning receivables when
receipt of principal or interest is questionable.
<PAGE>
Exhibit 28.1
Page 5
LENDING OPERATIONS
NOTES TO FINANCIAL STATEMENTS
(Amounts in thousands)
December 31, 1996
NOTE ONE- SIGNIFICANT ACCOUNTING POLICIES (Continued)
Depreciation and Amortization: Depreciable assets are carried at cost net of
accumulated depreciation or amortization. Furniture and equipment are
depreciated by use of the straight-line method over their estimated useful life.
Leasehold improvements are amortized over the related lease period or estimated
economic life, whichever is shorter.
Allowance for Losses: The allowance for losses is maintained at an amount
necessary to cover estimated losses on the collection of finance receivables
based on management's assessment of various factors, including loss experience
and review of problem accounts. Management's assessments are inherently
subjective and require material estimates, including the amounts and timing of
future cash flows expected to be received on impaired finance receivables. All
accounts deemed uncollectible are charged off monthly.
Impaired Loans: Impaired loans are measured based on the present value of
expected future cash flows discounted at the loans' effective interest rate.
Evaluation for impairment is performed as part of the portfolio management
review process. Income is recognized in the same manner as it is on accruing
receivables.
Income Taxes: Tax results of the Company's operation are included in the
consolidated federal and state income taxes filed by WFC. TDF did not assume
existing tax liabilities of the Company. The expenses reflected in these
financial statements represent management's estimate of the expenses applicable
to the net assets being sold. The difference between the effective rate and the
statutory rate is due to non-deductible financing expenses.
Interest Expense: The Company's operations were financed by WFC, which borrowed
in the commercial paper and other markets and issued redeemable preferred stock
to institutional investors. Interest expense and dividends on the redeemable
preferred stock are allocated to the operations based on management estimates of
the debt service requirements of the operation and the division equity ratios
mandated by the parent company based on the net assets of the operations being
sold. Preferred stock dividends of $1,825 are classified as interest expense on
an after tax basis.
<PAGE>
Exhibit 28.1
Page 6
LENDING OPERATIONS
NOTES TO FINANCIAL STATEMENTS
(Amounts in thousands)
December 31, 1996
NOTE TWO - FINANCE RECEIVABLES
Finance Receivables
Finance receivables, including unamortized deferred fees and expenses comprised
the following amounts at December 31, 1996:
Inventory finance $1,018,072
Consumer 352,273
----------
Finance receivables 1,370,345
Less unearned finance charges ( 9,769)
----------
Net finance receivables $1,360,576
==========
Contractual maturities of finance receivables outstanding, before deduction of
unearned finance charges, at December 31, 1996 were:
Inventory Consumer Total
1997 $1,018,072 $ 133,399 $1,151,471
1998 - 117,338 117,338
1999 - 78,894 78,894
2000 - 15,450 15,450
2001 - 5,143 5,143
Thereafter - 2,049 2,049
---------- ----------- ----------
Total $1,018,072 $ 352,273 $1,370,345
========== =========== ==========
The Company's experience has shown that a number of the consumer finance
receivables will be paid off prior to contractual maturity. Accordingly the
foregoing amounts are not to be regarded as a forecast of future cash flows.
Earned finance revenue from inventory finance receivables includes $50,744 from
Whirlpool Corporation. Earned financing revenue for finance receivables in
Europe and Latin America were $15,723 in 1996.
Inventory finance receivables included $966,394 from household appliance and
electronics dealers and were generally secured by the assets being financed. Of
this amount $221,279 and $67,680 represent receivables due from borrowers in
Europe and Latin America respectively.
Finance receivables at December 31, 1996 included $11,136 of nonearning
accounts. The interest that would have been recorded on these receivables in
1996 had they been paid in accordance with their contractual terms was $644.
<PAGE>
Exhibit 28.1
Page 7
LENDING OPERATIONS
NOTES TO FINANCIAL STATEMENTS
(Amounts in thousands)
December 31, 1996
NOTE THREE - ALLOWANCE FOR LOSSES
Finance receivables consist primarily of variable rate receivables that reprice
frequently and have no significant change in credit risk. The carrying amount of
these assets approximates fair value.
An analysis of the allowance for losses on finance receivables is as follows:
Balance at December 31, 1995 $17,930
Provision charged to income 18,570
Losses, net of recoveries (18,074)
--------
Balance at December 31, 1996 $18,426
=======
NOTE FOUR - COMMITMENTS AND CONTINGENCIES
The Company leases certain office space, automobiles and data processing
equipment under several operating leases. Total rental expense for all leases
accounted for under operating leases amounted to $2,464 in 1996. Rent paid on
leases with Whirlpool Corporation was $1,583.
Minimum future rental commitments under operating leases having initial or
remaining non-cancelable lease terms in excess of one year, including the
Company's corporate headquarters and other facilities leased from Whirlpool
Corporation, as of December 31, 1996 were as follows:
1997 $2,676
1998 2,350
1999 2,260
2000 625
2001 216
------
$8,127
======
Contingent liabilities arising from litigation, income taxes and other matters
are not expected to have a material effect on the financial position or results
of operations of the Company.
<PAGE>
Exhibit 28.2
Page 1
<TABLE>
(Unaudited)
Lending Operations
Balance Sheet
September 30, 1997
(Amounts in thousands)
<CAPTION>
<S> <C>
Assets
Cash and cash equivalents ............................................. $ 3,561
Finance Receivables, net of unearned fees ............................. 1,249,557
Allowance for Losses .............................................. (11,977)
-----------
Finance Receivables, net .................................... 1,237,580
Furniture and equipment, at cost less accumulated
amortization of $11,539 ........................................... 4,550
Other receivables and assets .......................................... 1,660
-----------
Total Assets .......................................................... $ 1,247,351
===========
Liabilities and Equity
Unfunded finance receivables .......................................... 83,230
Accounts payable and accrued liabilities .............................. 5,333
-----------
Total liabilities ................................................. 88,563
-----------
Equity ................................................................ 1,158,788
-----------
Total Liabilities and Equity .......................................... $ 1,247,351
===========
</TABLE>
<PAGE>
Exhibit 28.2
Page 2
<TABLE>
(Unaudited)
Lending Operations
Income Statement
(Amounts in thousands)
<CAPTION>
Nine Months Ended September 30
1997 1996
<S> ............................................................................ <C> <C>
REVENUES
Finance charges ...........................................................$131,233 $113,781
Other Income .............................................................. 2,706 3,987
-------- --------
Total Revenues ........................................................ 133,939 117,768
EXPENSES
Interest and debt expense ................................................. 46,000 39,731
Salaries and other operating expenses ..................................... 43,862 41,583
Provision for credit losses ............................................... 16,725 12,946
-------- --------
Total expenses ........................................................ 106,587 94,260
Income before income taxes ................................................ 27,352 23,508
Income taxes .............................................................. 11,675 10,254
-------- --------
Net income ................................................................$ 15,677 $ 13,254
======== ========
</TABLE>
<PAGE>
Exhibit 28.2
Page 3
<TABLE>
(Unaudited)
Lending Operations
Statement of Cash Flows
(Amounts in thousands)
<CAPTION>
Nine Months Ended September 30
1997 1996
---- ----
<S> <C> <C>
Operating Activities
Net income .................................................... $ 15,677 $ 13,254
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and Amortization ................................. 2,302 2,316
Provision for credit losses ................................... 16,725 12,946
Change in accounts payable & other liabilities ................ (2,545) (4,780)
Change in other assets ........................................ 941 137
Other ......................................................... (611) 1,128
----------- -----------
Net cash provided by operating activities ..................... 32,489 25,001
Investing Activities
Finance receivables originated ................................ (2,793,064) (2,579,450)
Finance receivables collected - net ........................... 2,904,694 2,497,963
Increase in unfunded financing transactions ................... 10,035 31,771
Credit losses, net of recoveries .............................. (23,174) (15,692)
Net property and equipment at cost ............................ 839 (1,638)
Other ......................................................... (100)
----------- -----------
Net cash used in investing activities ......................... 99,330 (67,146)
----------- -----------
Financing Activities
Change in equity/net cash provided by
financing activities ...................................... (132,682) 45,230
----------- -----------
Increase (Decrease) in cash ................................... (863) 3,085
Cash at beginning of period ................................... 4,424 2,562
----------- -----------
Cash at end of period ......................................... $ 3,561 $ 5,647
=========== ===========
</TABLE>
