AGREEMENT AND PLAN OF MERGER
DATED AS OF MARCH 11, 1996
By and Among
CONSECO, INC.,
LPG ACQUISITION COMPANY
and
LIFE PARTNERS GROUP, INC.
TABLE OF CONTENTS
Page
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ARTICLE I
THE MERGER.................................................................................... 1
1.1 The Merger........................................................................... 1
1.2 Closing.............................................................................. 2
1.3 Effective Time....................................................................... 2
1.4 Certificate of Incorporation......................................................... 2
1.5 By-Laws.............................................................................. 2
1.6 Directors............................................................................ 2
1.7 Officers............................................................................. 2
1.8 Conversion of LPG Acquisition Shares................................................. 3
1.9 Conversion of Shares................................................................. 3
1.10 Exchange of Certificates............................................................. 4
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY................................................. 7
2.1 Organization, Standing and Corporate Power........................................... 7
2.2 Capital Structure.................................................................... 7
2.3 Authority; Noncontravention.......................................................... 8
2.4 SEC Documents........................................................................ 10
2.5 Absence of Certain Changes or Events................................................. 11
2.6 Absence of Changes in Benefit Plans.................................................. 12
2.7 Benefit Plans........................................................................ 12
2.8 Taxes................................................................................ 13
2.9 No Excess Parachute Payments; Section 162(m)
of the Code.......................................................................... 14
2.10 Voting Requirements.................................................................. 14
2.11 Compliance with Applicable Laws...................................................... 15
2.12 Opinion of Financial Advisor......................................................... 16
2.13 Brokers.............................................................................. 16
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF CONSECO AND LPG
ACQUISITION................................................................................... 16
3.1 Organization, Standing and Corporate Power........................................... 16
3.2 Conseco Capital Structure............................................................ 17
3.3 Authority; Noncontravention.......................................................... 18
3.4 SEC Documents........................................................................ 19
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3.5 Absence of Certain Changes or Events................................................. 20
3.6 Compliance with Applicable Laws...................................................... 21
3.7 No Prior Activities.................................................................. 21
3.8 Brokers.............................................................................. 22
3.9 Voting Requirements.................................................................. 22
ARTICLE IV
ADDITIONAL AGREEMENTS......................................................................... 22
4.1 Preparation of Form S-4 and the Joint Proxy
Statement; Information Supplied...................................................... 22
4.2 Meetings of Stockholders............................................................. 24
4.3 Letter of the Company's Accountants.................................................. 25
4.4 Letter of Conseco's Accountants...................................................... 25
4.5 Access to Information; Confidentiality............................................... 25
4.6 Best Efforts......................................................................... 26
4.7 Public Announcements................................................................. 26
4.8 Acquisition Proposals................................................................ 26
4.9 Fiduciary Duties..................................................................... 27
4.10 Consents, Approvals and Filings...................................................... 28
4.11 Certain Fees......................................................................... 29
4.12 Affiliates and Certain Stockholders.................................................. 30
4.13 NYSE Listing......................................................................... 31
4.14 Stockholder Litigation............................................................... 32
4.15 Indemnification...................................................................... 32
4.16 Financing............................................................................ 32
4.17 Officers' Certificates Relating to Tax
Treatment............................................................................ 32
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS PRIOR TO
MERGER........................................................................................ 33
5.1 Conduct of Business by the Company................................................... 33
5.2 Conduct of Business by Conseco....................................................... 36
5.3 Stock Options and Warrants........................................................... 38
5.4 Other Actions........................................................................ 39
5.5 Conduct of Business of LPG Acquisition............................................... 40
ARTICLE VI
CONDITIONS PRECEDENT.......................................................................... 40
6.1 Conditions to Each Party's Obligation To
Effect the Merger.................................................................... 40
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6.2 Conditions to Obligations of Conseco and LPG
Acquisition.......................................................................... 41
6.3 Conditions to Obligation of the Company.............................................. 42
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER............................................................. 43
7.1 Termination.......................................................................... 43
7.2 Effect of Termination................................................................ 43
7.3 Amendment............................................................................ 44
7.4 Extension; Waiver.................................................................... 44
7.5 Procedure for Termination, Amendment,
Extension or Waiver.................................................................. 44
ARTICLE VIII
SURVIVAL OF PROVISIONS........................................................................ 44
8.1 Survival............................................................................. 44
ARTICLE IX
NOTICES....................................................................................... 45
9.1 Notices.............................................................................. 45
ARTICLE X
MISCELLANEOUS................................................................................. 46
10.1 Entire Agreement.................................................................... 46
10.2 Expenses............................................................................ 47
10.3 Counterparts........................................................................ 47
10.4 No Third Party Beneficiary.......................................................... 47
10.5 Governing Law....................................................................... 47
10.6 Assignment; Binding Effect.......................................................... 47
10.7 Headings, Gender, etc............................................................... 48
10.8 Invalid Provisions.................................................................. 48
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is made and entered
into as of March 11, 1996 by and among CONSECO, INC., an Indiana corporation
("Conseco"), LPG ACQUISITION COMPANY, a Delaware corporation and wholly-owned
subsidiary of Conseco ("LPG Acquisition"), and LIFE PARTNERS GROUP, INC., a
Delaware corporation (the "Company").
PREAMBLE
WHEREAS, the respective Boards of Directors of Conseco, LPG Acquisition
and the Company have approved the merger of LPG Acquisition with and into the
Company, upon the terms and subject to the conditions set forth herein; and
WHEREAS, Conseco, LPG Acquisition and the Company desire to make
certain representations, warranties, covenants and agreements in connection with
such merger and also to prescribe various conditions to such merger;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. Subject to the terms and conditions of this Agreement,
at the Effective Time (as such term is defined in Section 1.3 hereof), LPG
Acquisition shall be merged with and into the Company (the "Merger"), in a
transaction intended to qualify as a tax-free reorganization under Sections
368(a)(1) and 368(a)(2)(E) of the Internal Revenue Code of 1986, as amended (the
"Code"), in accordance with the Delaware General Corporation Law (the "Delaware
Code") and the separate corporate existence of LPG Acquisition shall cease and
the Company shall continue as the surviving corporation under the laws of the
State of Delaware (the "Surviving Corporation") with all the rights, privileges,
immunities and powers, and subject to all the duties and liabilities, of a
corporation organized under the Delaware Code. The Merger shall have the effects
set forth in the Delaware Code.
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1.2 Closing. Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to Section
7.1, and subject to the satisfaction or waiver of the conditions set forth in
Article VI, the closing of the Merger (the "Closing") will take place at 9:00
a.m. on the second business day following the date on which the last to be
fulfilled or waived of the conditions set forth in Article VI shall be fulfilled
or waived in accordance with this Agreement (the "Closing Date"), at the office
of Conseco in Carmel, Indiana, unless another date, time or place is agreed to
in writing by the parties hereto.
1.3 Effective Time. The parties hereto will file with the Secretary of
State of the State of Delaware (the "Delaware Secretary of State") on the date
of the Closing (or on such other date as Conseco and the Company may agree) a
certificate of merger or other appropriate documents, executed in accordance
with the relevant provisions of the Delaware Code, and make all other filings or
recordings required under the Delaware Code in connection with the Merger. The
Merger shall become effective upon the filing of the certificate of merger with
the Delaware Secretary of State, or at such later time as is specified in the
certificate of merger (the "Effective Time").
1.4 Certificate of Incorporation. The Certificate of Incorporation of
the Company, as in effect immediately prior to the Effective Time, shall be the
Certificate of Incorporation of the Surviving Corporation until thereafter
amended as provided by law.
1.5 By-Laws. The By-Laws of LPG Acquisition, as in effect immediately
prior to the Effective Time, shall be the By-Laws of the Surviving Corporation
until thereafter amended as provided by law.
1.6 Directors. The directors of LPG Acquisition at the Effective Time
shall be the directors of the Surviving Corporation and will hold office from
the Effective Time until their respective successors are duly elected or
appointed and qualify in the manner provided in the Certificate of Incorporation
and By-Laws of the Surviving Corporation, or as otherwise provided by law
1.7 Officers. The officers of LPG Acquisition at the Effective Time
shall be the officers of the Surviving Corporation.
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1.8 Conversion of LPG Acquisition Shares. Each share of common stock
of LPG Acquisition issued and outstanding immediately prior to the Effective
Time shall, by virtue of the Merger and without any action on the part of the
holder thereof, be converted into and become one validly issued, fully paid and
nonassessable share of common stock of the Surviving Corporation.
1.9 Conversion of Shares. (a) Outstanding Shares. Each of the shares
of common stock, $.001 par value, of the Company (the "Shares") issued and
outstanding immediately prior to the Effective Time (other than Shares held as
treasury shares by the Company) shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into a right to receive
the fraction (rounded to the nearest ten-thousandth of a share) of a validly
issued, fully paid and nonassessable share of common stock, without par value,
of Conseco ("Conseco Common Stock") determined by dividing $21.00 by the Conseco
Share Price (as defined below). The "Conseco Share Price" shall be equal to the
Trading Average (as defined below); provided, however, that if the Trading
Average is less than $60.00, then the Conseco Share Price shall be $60.00, and
if the Trading Average is greater than $72.00, then the Conseco Share Price
shall be $72.00. The "Trading Average" shall be equal to the average of the
closing prices of the Conseco Common Stock on the New York Stock Exchange
("NYSE") Composite Transactions Reporting System, as reported in The Wall Street
Journal, for the 20 trading days immediately preceding the second trading day
prior to the Effective Time. The Conseco Common Stock to be issued to holders of
Shares in accordance with this Section and any cash to be paid in accordance
with Section 1.10 in lieu of fractional shares of Conseco Common Stock are
referred to collectively as the "Merger Consideration."
(b) Treasury Shares. Each Share issued and outstanding immediately
prior to the Effective Time which is then held as a treasury share by the
Company or any of its subsidiaries immediately prior to the Effective Time
shall, by virtue of the Merger and without any action on the part of the
Company, be cancelled and retired and cease to exist, without any conversion
thereof.
(c) Impact of Stock Splits, etc. In the event of any change in Conseco
Common Stock between the date of this Agreement and the Effective Time of the
Merger by reason of any stock split, stock dividend, subdivision,
reclassification, recapitalization, combination, exchange of shares or the like,
the number and class of shares of Conseco Common Stock to be issued and
delivered in the Merger in exchange for each outstanding Share as provided in
this Agreement and the calculation of all share prices provided for in this
Agreement shall be proportionately adjusted.
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1.10 Exchange of Certificates. (a) Paying Agent. As of the Effective
Time, Conseco shall deposit with its transfer agent and registrar (the "Paying
Agent"), for the benefit of the holders of Shares, certificates representing the
shares of Conseco Common Stock to be issued to holders of Shares pursuant to
Section 1.9(a) (such certificates, together with any dividends or distributions
with respect to such certificates, being hereinafter referred to as the "Payment
Fund").
(b) Exchange Procedures. As soon as practicable after the Effective
Time, each holder of an outstanding certificate or certificates which prior
thereto represented Shares shall, upon surrender to the Paying Agent of such
certificate or certificates and acceptance thereof by the Paying Agent, be
entitled to a certificate representing that number of whole shares of Conseco
Common Stock (and cash in lieu of fractional shares of Conseco Common Stock as
contemplated by this Section 1.10) which the aggregate number of Shares
previously represented by such certificate or certificates surrendered shall
have been converted into the right to receive pursuant to Section 1.9(a) of this
Agreement. The Paying Agent shall accept such certificates upon compliance with
such reasonable terms and conditions as the Paying Agent may impose to effect an
orderly exchange thereof in accordance with normal exchange practices. If the
consideration to be paid in the Merger (or any portion thereof) is to be
delivered to any person other than the person in whose name the certificate
representing Shares surrendered in exchange therefor is registered, it shall be
a condition to such exchange that the certificate so surrendered shall be
properly endorsed or otherwise be in proper form for transfer and that the
person requesting such exchange shall pay to the Paying Agent any transfer or
other taxes required by reason of the payment of such consideration to a person
other than the registered holder of the certificate surrendered, or shall
establish to the satisfaction of the Paying Agent that such tax has been paid or
is not applicable. After the Effective Time, there shall be no further transfer
on the records of the Company or its transfer agent of certificates representing
Shares and if such certificates are presented to the Company for transfer, they
shall be cancelled against delivery of the Merger Consideration as hereinabove
provided. Until surrendered as contemplated by this Section 1.10(b), each
certificate representing Shares (other than certificates representing Shares to
be cancelled in accordance with Section 1.9(b)), shall be deemed at any time
after the Effective Time to represent only the right to receive upon such
surrender the Merger Consideration, without any interest thereon, as
contemplated by Section 1.9. No interest will be paid or will accrue on any cash
payable as Merger Consideration.
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(c) Letter of Transmittal. Promptly after the Effective Time (but in no
event more than five business days thereafter), the Surviving Corporation shall
require the Paying Agent to mail to each record holder of certificates that
immediately prior to the Effective Time represented Shares which have been
converted pursuant to Section 1.9, a form of letter of transmittal and
instructions for use in surrendering such certificates and receiving the
consideration to which such holder shall be entitled therefor pursuant to
Section 1.9.
(d) Distributions with Respect to Unexchanged Shares. No dividends or
other distributions with respect to Conseco Common Stock with a record date
after the Effective Time shall be paid to the holder of any certificate that
immediately prior to the Effective Time represented Shares which have been
converted pursuant to Section 1.9, until the surrender for exchange of such
certificate in accordance with this Article I. Following surrender for exchange
of any such certificate, there shall be paid to the holder of such certificate,
without interest, (i) at the time of such surrender, the amount of dividends or
other distributions with a record date after the Effective Time theretofore paid
with respect to the number of whole shares of Conseco Common Stock into which
the Shares represented by such certificate immediately prior to the Effective
Time were converted pursuant to Section 1.9, and (ii) at the appropriate payment
date, the amount of dividends or other distributions with a record date after
the Effective Time, but prior to such surrender, and with a payment date
subsequent to such surrender, payable with respect to such whole shares of
Conseco Common Stock.
(e) No Further Ownership Rights in Shares. The Merger Consideration
paid upon the surrender for exchange of certificates representing Shares in
accordance with the terms of this Article I shall be deemed to have been issued
and paid in full satisfaction of all rights pertaining to the Shares theretofore
represented by such certificates, subject, however, to the Surviving
Corporation's obligation (if any) to pay any dividends or make any other
distributions with a record date prior to the Effective Time which may have been
declared by the Company on such Shares in accordance with the terms of this
Agreement or prior to the date of this Agreement and which remain unpaid at the
Effective Time.
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(f) No Fractional Shares. (i) No certificates or scrip representing
fractional shares of Conseco Common Stock shall be issued upon the surrender for
exchange of certificates that immediately prior to the Effective Time
represented Shares which have been converted pursuant to Section 1.9, and such
fractional share interests will not entitle the owner thereof to vote or to any
rights of a shareholder of Conseco.
(ii) Notwithstanding any other provisions of this Agreement, each
holder of Shares who would otherwise have been entitled to receive a fraction of
a share of Conseco Common Stock (after taking into account all certificates
delivered by such holder) shall receive, in lieu thereof, cash (without
interest) in an amount equal to such fractional part of a share of Conseco
Common Stock multiplied by the Conseco Share Price.
(g) Termination of Payment Fund. Any portion of the Payment Fund which
remains undistributed to the holders of the certificates representing Shares for
120 days after the Effective Time shall be delivered to Conseco, upon demand,
and any holders of Shares who have not theretofore complied with this Article I
shall thereafter look only to Conseco and only as general creditors thereof for
payment of their claim for any Merger Consideration and any dividends or
distributions with respect to Conseco Common Stock.
(h) No Liability. None of Conseco, LPG Acquisition, the Surviving
Corporation or the Paying Agent shall be liable to any person in respect of any
cash, shares, dividends or distributions payable from the Payment Fund delivered
to a public official pursuant to any applicable abandoned property, escheat or
similar law. If any certificates representing Shares shall not have been
surrendered prior to five years after the Effective Time (or immediately prior
to such earlier date on which any Merger Consideration in respect of such
certificate would otherwise escheat to or become the property of any
Governmental Entity (as defined in Section 2.3)), any such cash, shares,
dividends or distributions payable in respect of such certificate shall, to the
extent permitted by applicable law, become the property of the Surviving
Corporation, free and clear of all claims or interest of any person previously
entitled thereto.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth under the heading "General Matters" in the
Disclosure Schedule, dated the date hereof and delivered concurrently herewith
(the "Disclosure Schedule"), the Company hereby represents and warrants to
Conseco and LPG Acquisition as follows:
2.1 Organization, Standing and Corporate Power. Each of the Company and
each Significant Subsidiary of the Company (as hereinafter defined) is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction in which it is incorporated and has the requisite corporate
power and authority to carry on its business as now being conducted. Each of the
Company and each Significant Subsidiary of the Company is duly qualified or
licensed to do business and is in good standing in each jurisdiction in which
the nature of its business or the ownership or leasing of its properties makes
such qualification or licensing necessary. The Company has delivered to Conseco
complete and correct copies of its Certificate of Incorporation and By-laws, as
amended to the date of this Agreement. For purposes of this Agreement, a
"Significant Subsidiary" of the Company means each of Massachusetts General Life
Insurance Company, Philadelphia Life Insurance Company, ▇▇▇▇▇ Life Insurance
Company and any other subsidiary of the Company that would constitute a
Significant Subsidiary within the meaning of Rule 1-02 of Regulation S-X of the
Securities and Exchange Commission (the "SEC").
2.2 Capital Structure. The authorized capital stock of the Company
consists of (i) 50,000,000 Shares and (ii) 10,000,000 shares of Preferred Stock
$.01 par value (the "Preferred Stock"). At the close of business on March 8,
1996: (i) 27,910,918 Shares were issued and outstanding, 1,449,793 Shares were
reserved for issuance pursuant to outstanding options or warrants to purchase
Shares which have been granted to directors, officers or employees of the
Company or others ("Company Stock Options"); and (ii) no shares of Preferred
Stock were issued and outstanding. Except as set forth above, at the close of
business on March 8, 1996, no shares of capital stock or other equity securities
of the Company were issued, reserved for issuance or outstanding. All
outstanding shares of capital stock of the Company are, and all shares which may
be issued pursuant to the Life Partners Group, Inc. 1992 Incentive and
Nonstatutory Stock Option Plan, as amended to the date hereof (the "Company
Stock Option Plan"), or any outstanding Company Stock Options will be, when
issued, duly authorized, validly issued, fully paid and nonassessable and not
subject to preemptive rights. Except as set forth in Section 2.2 of
7
the Disclosure Schedule, no bonds, debentures, notes or other indebtedness of
the Company or any Significant Subsidiary of the Company having the right to
vote (or convertible into, or exchangeable for, securities having the right to
vote) on any matters on which the stockholders of the Company or any Significant
Subsidiary of the Company may vote are issued or outstanding. Except as
disclosed in Section 2.2 of the Disclosure Schedule, all the outstanding shares
of capital stock of each Significant Subsidiary of the Company have been validly
issued and are fully paid and nonassessable and are owned by the Company, by one
or more subsidiaries of the Company or by the Company and one or more such
subsidiaries, free and clear of all pledges, claims, liens, charges,
encumbrances and security interests of any kind or nature whatsoever
(collectively, "Liens") except as may be provided by law. Except as set forth
above or in Section 2.2 of the Disclosure Schedule, neither the Company nor any
Significant Subsidiary of the Company has any outstanding option, warrant,
subscription or other right, agreement or commitment which either (i) obligates
the Company or any Significant Subsidiary of the Company to issue, sell or
transfer, repurchase, redeem or otherwise acquire or vote any shares of the
capital stock of the Company or any Significant Subsidiary of the Company or
(ii) restricts the transfer of Shares.
2.3 Authority; Noncontravention. The Company has the requisite
corporate power and authority to enter into this Agreement and, subject to the
approval of its stockholders as set forth in Section 6.1(a) with respect to the
consummation of the Merger, to consummate the transactions contemplated by this
Agreement. The execution and delivery of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of the Company,
subject, in the case of the Merger, to the approval of its stockholders as set
forth in Section 6.1(a). This Agreement has been duly executed and delivered by
the Company and, assuming this Agreement constitutes the valid and binding
agreement of Conseco and LPG Acquisition, constitutes a valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms except that the enforcement thereof may be limited by (a) bankruptcy,
insolvency, reorganization, moratorium or
8
similar laws now or hereafter in effect relating to creditor's rights generally
and (b) general principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity. Except as disclosed in Section
2.3 of the Disclosure Schedule, the execution and delivery of this Agreement do
not, and the consummation of the transactions contemplated by this Agreement and
compliance with the provisions hereof will not, (i) conflict with any of the
provisions of the Certificate of Incorporation or By-laws of the Company or the
comparable documents of any Significant Subsidiary of the Company, (ii) subject
to the governmental filings and other matters referred to in the following
sentence, conflict with, result in a breach of or default (with or without
notice or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or loss of a material benefit
under, or require the consent of any person under, any indenture or other
agreement, permit, concession, franchise, license or similar instrument or
undertaking to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries or any of their assets is bound or
affected, or (iii) subject to the governmental filings and other matters
referred to in the following sentence, contravene any law, rule or regulation of
any state or of the United States or any political subdivision thereof or
therein, or any order, writ, judgment, injunction, decree, determination or
award currently in effect. No consent, approval or authorization of, or
declaration or filing with, or notice to, any governmental agency or regulatory
authority (a "Governmental Entity") which has not been received or made, is
required by or with respect to the Company or any of its subsidiaries in
connection with the execution and delivery of this Agreement by the Company or
the consummation by the Company of the transactions contemplated hereby, except
for (i) the filing of premerger notification and report forms under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the "HSR Act")
with respect to the Merger, (ii) the filings and/or notices required under the
insurance laws of the jurisdictions set forth in Section 2.3 of the Disclosure
Schedule, (iii) the filing with the SEC of (x) a proxy statement relating to the
approval by the stockholders of the Company of the Merger (such proxy statement,
together with the proxy statement relating to the approval of the
9
issuance of Conseco Common Stock in the Merger by an affirmative vote of the
holders of a majority of the votes entitled to be cast by the holders of Conseco
Common Stock and Conseco PRIDES present, or represented, and entitled to vote
thereon at the meeting to be called therefor (the "Conseco Stockholder
Approval"), in each case as amended or supplemented from time to time, the
"Joint Proxy Statement"), and (y) such reports under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), as may be required in connection with
this Agreement and the transactions contemplated by this Agreement, (iv) the
filing of the certificate of merger with the Delaware Secretary of State and
appropriate documents with the relevant authorities of other states in which the
Company is qualified to do business, (v) such other consents, approvals,
authorizations, filings or notices as are set forth in Section 2.3 of the
Disclosure Schedule and (vi) any applicable filings under state anti-takeover
laws.
2.4 SEC Documents. (i) The Company has filed all required reports,
schedules, forms, statements and other documents with the SEC since January 1,
1994 (such reports, schedules, forms, statements and other documents are
hereinafter referred to as the "SEC Documents"); (ii) as of their respective
dates, the SEC Documents complied with the requirements of the Securities Act of
1933, as amended (the "Securities Act"), or the Exchange Act, as the case may
be, and the rules and regulations of the SEC promulgated thereunder applicable
to such SEC Documents, and none of the SEC Documents as of such dates contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading; and (iii) the consolidated financial statements of the Company
included in the SEC Documents comply as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto, have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto or, in the case of
unaudited statements, as permitted by Rule 10-01 of Regulation S-X) and fairly
present, in all material respects, the consolidated financial position of the
Company and its consolidated subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended (subject, in the case of unaudited quarterly statements, to normal
year-end audit adjustments).
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2.5 Absence of Certain Changes or Events. Except as disclosed in the
SEC Documents filed and publicly available prior to the date of this Agreement
(the "Filed SEC Documents") or in Section 2.5 of the Disclosure Schedule, since
the date of the most recent audited financial statements included in the Filed
SEC Documents, the Company and its subsidiaries have conducted their business
only in the ordinary course, and there has not been (i) any change which would
have a material adverse effect on the business, financial condition or results
of operations of the Company and its subsidiaries taken as a whole, (ii) any
declaration, setting aside or payment of any dividend or other distribution
(whether in cash, stock or property) with respect to any of the Company's
outstanding capital stock (other than regular quarterly cash dividends of $.03
per Share, in accordance with usual record and payment dates and in accordance
with the Company's present dividend policy), (iii) any split, combination or
reclassification of any of its outstanding capital stock or any issuance or the
authorization of any issuance of any other securities in respect of, in lieu of
or in substitution for shares of its outstanding capital stock, (iv) (x) any
granting by the Company or any of its subsidiaries to any executive officer or
other employee of the Company or any of its subsidiaries of any increase in
compensation, except in the ordinary course of business consistent with prior
practice or as was required under employment agreements in effect as of the date
of the most recent audited financial statements included in the Filed SEC
Documents, (y) any granting by the Company or any of its subsidiaries to any
such executive officer or other employee of any increase in severance or
termination pay, except in the ordinary course of business consistent with prior
practice or as was required under any employment, severance or termination
agreements in effect as of the date of the most recent audited financial
statements included in the Filed SEC Documents or (z) any entry by the Company
or any of its subsidiaries into any employment, severance or termination
agreement with any such executive officer or other employee or (v) any change in
accounting methods, principles or practices by the Company or any of its
subsidiaries materially affecting its assets, liability or business, except
insofar as may have been required by a change in generally accepted accounting
principles.
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2.6 Absence of Changes in Benefit Plans. Except as disclosed in the
Filed SEC Documents or in Section 2.6 of the Disclosure Schedule, since the date
of the most recent audited financial statements included in the Filed SEC
Documents, there has not been any adoption or amendment in any material respect
by the Company or any of its subsidiaries of any collective bargaining agreement
or any Benefit Plan (as defined in Section 2.7). Except as disclosed in the
Filed SEC Documents or in Section 2.6 of the Disclosure Schedule, there exist no
employment, consulting, severance, termination or indemnification agreements,
arrangements or understandings between the Company or any of its subsidiaries
and any current or former employee, officer or director of the Company or any of
its subsidiaries.
2.7 Benefit Plans. (i) Each "employee pension benefit plan" (as
defined in Section 3(2) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")) (hereinafter a "Pension Plan"), "employee welfare benefit
plan" (as defined in Section 3(1) of ERISA) (hereinafter a "Welfare Plan"), and
each other plan, arrangement or policy (written or oral) relating to stock
options, stock purchases, compensation, deferred compensation, severance, fringe
benefits or other employee benefits, in each case maintained or contributed to,
or required to be maintained or contributed to, by the Company and its
subsidiaries for the benefit of any present or former officers, employees,
agents, directors or independent contractors of the Company or any of its
subsidiaries (all the foregoing being herein called "Benefit Plans") has been
administered in accordance with its terms. The Company, its subsidiaries and all
the Benefit Plans are in compliance with the applicable provisions of ERISA, the
Internal Revenue Code of 1986, as amended (the "Code"), all other applicable
laws and all applicable collective bargaining agreements.
(ii) None of the Company or any other person or entity that together
with the Company is treated as a single employer under Section 414(b), (c), (m)
or (o) of the Code (each a "Commonly Controlled Entity") (a) has incurred any
liability to a Pension Plan covered by Title IV of ERISA (other than for
contributions not yet due) or to the Pension Benefit Guaranty Corporation (other
than for the payment of premiums not yet due) which liability has not been fully
paid as of the date hereof.
12
(iii) No Commonly Controlled Entity is required to contribute to any
"multiemployer plan" (as defined in Section 4001(a)(3) of ERISA) or has
withdrawn from any multiemployer plan where such withdrawal has resulted or
would result in any "withdrawal liability" (within the meaning of Section 4201
of ERISA) that has not been fully paid.
2.8 Taxes. Except as disclosed in Section 2.8 of the Disclosure
Schedule,
(i) Each of the Company and its subsidiaries has filed all tax returns
and reports required to be filed by it or requests for extensions to file such
returns or reports have been timely filed, granted and have not expired, except
to the extent that such failures to file or to have extensions granted that
remain in effect individually and in the aggregate would not have a material
adverse effect on the business, financial condition or results of operations of
the Company and its subsidiaries taken as a whole. All tax returns filed by the
Company and each of its subsidiaries are complete and accurate except to the
extent that such failure to be complete and accurate would not have a material
adverse effect on the business, financial condition or results of operations of
the Company and its subsidiaries taken as a whole. The Company and each of its
subsidiaries has paid (or the Company has paid on the subsidiaries' behalf) all
taxes shown as due on such returns, and the most recent financial statements
contained in the Filed SEC Documents reflect an adequate reserve for all taxes
payable by the Company and its subsidiaries for all taxable periods and portions
thereof accrued through the date of such financial statements.
(ii) No deficiencies for any taxes have been proposed, asserted or
assessed against the Company or any of its subsidiaries that are not adequately
reserved for, except for deficiencies that individually or in the aggregate
would not have a material adverse effect on the business, financial condition or
results of operations of the Company and its subsidiaries taken as a whole, and,
except as set forth on Section 2.8 of the Disclosure Schedule, no requests for
waivers of the time to assess any such taxes have been granted or are pending.
The Federal income tax returns of the Company and each of its subsidiaries
consolidated in such returns have been examined by and settled with the United
States Internal Revenue Service, or the statute of limitations on assessment or
collection of any Federal income taxes due from the Company or any of its
subsidiaries has expired, through such taxable years as are set forth in Section
2.8 of the Disclosure Schedule.
13
(iii) As used in this Agreement, "taxes" shall include all Federal,
state, local and foreign income, property, premium, sales, excise, employment,
payroll, withholding and other taxes, tariffs or governmental charges of any
nature whatsoever and any interest, penalties and additions to taxes relating
thereto.
2.9 No Excess Parachute Payments; Section 162(m) of the Code. (i)
Except as disclosed in Section 2.9 of the Disclosure Schedule, any amount that
could be received (whether in cash or property or the vesting of property) as a
result of any of the transactions contemplated by this Agreement by any
employee, officer or director of the Company or any of its affiliates who is a
"disqualified individual" (as such term is defined in proposed Treasury
Regulation Section 1.280G-1) under any employment, severance or termination
agreement, other compensation arrangement or Benefit Plan currently in effect
would not be characterized as an "excess parachute payment" (as such term is
defined in Section 280G(b)(1) of the Code).
(ii) Except as disclosed in Section 2.9 of the Disclosure Schedule, the
disallowance of a deduction under Section 162(m) of the Code for employee
remuneration will not apply to any amount paid or payable by the Company or any
subsidiary of the Company under any contract, Benefit Plan, program, arrangement
or understanding currently in effect.
2.10 Voting Requirements. The affirmative vote of a majority of the
votes cast by the holders of the Shares entitled to vote thereon at the
Stockholders Meeting with respect to the approval of the Merger is the only vote
of the holders of any class or series of the Company's capital stock necessary
to approve this Agreement and the transactions contemplated by this Agreement.
14
2.11 Compliance with Applicable Laws. (i) Each of the Company and its
subsidiaries has in effect all Federal, state, local and foreign governmental
approvals, authorizations, certificates, filings, franchises, licenses, notices,
permits and rights ("Permits") necessary for it to own, lease or operate its
properties and assets and to carry on its business as now conducted, and there
has occurred no default under any such Permit. Except as disclosed in the Filed
SEC Documents, the Company and its subsidiaries are in compliance with all
applicable statutes, laws, ordinances, rules, orders and regulations of any
Governmental Entity. Except as disclosed in the Filed SEC Documents and except
for routine examinations by state Governmental Entities charged with supervision
of insurance companies ("Insurance Regulators"), as of the date of this
Agreement, to the knowledge of the Company, no investigation by any Governmental
Entity with respect to the Company or any of its subsidiaries is pending or
threatened.
(ii) The Annual Statements (including without limitation the Annual
Statements of any separate accounts) for the year ended December 31, 1995,
together with all exhibits and schedules thereto, and financial statements
relating thereto, and any actuarial opinion, affirmation or certification filed
in connection therewith, and the Quarterly Statements for the periods ended
after January 1, 1996, together with all exhibits and schedules thereto, with
respect to each subsidiary of the Company that is a regulated insurance company
(an "Insurance Company"), in each case as filed with the applicable Insurance
Regulator of its jurisdiction of domicile, were prepared in conformity with
statutory accounting practices prescribed or permitted by such Insurance
Regulator applied on a consistent basis ("SAP"), present fairly, in all material
respects, to the extent required by and in conformity with SAP, the statutory
financial condition of such Insurance Company at their respective dates and the
results of operations, changes in capital and surplus and cash flow of such
Insurance Company for each of the periods then ended, and were correct in all
material respects when filed and there were no material omissions therefrom when
filed. No deficiencies or violations material to the financial condition or
operations of any Insurance Company have been asserted in writing by any
Insurance Regulator which have not been cured or otherwise resolved to the
satisfaction of such Insurance Regulator and which have not been disclosed in
writing to Conseco prior to the date of this Agreement.
15
2.12 Opinion of Financial Advisor. The Company has received the opinion
of ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Securities Corp., dated the date hereof, to the
effect that, as of such date, the consideration to be received in the Merger by
the Company's stockholders is fair to the Company's stockholders.
2.13 Brokers. Except with respect to Hicks, Muse, ▇▇▇▇ & ▇▇▇▇▇
Incorporated ("HMTF") and ▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇ Securities Corp. ("DLJ"),
all negotiations relative to this Agreement and the transactions contemplated
hereby have been carried out by the Company directly with Conseco, without the
intervention of any person on behalf of the Company in such manner as to give
rise to any valid claim by any person against Conseco, the Company or any
subsidiary for a finder's fee, brokerage commission, or similar payment. The
Company has provided Conseco with true and complete copies of the agreements
between the Company and each of Hicks, Muse, ▇▇▇▇ & ▇▇▇▇▇ Incorporated and
▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇ Securities Corp., and the Company has no other
agreements or understandings (written or oral) with respect to such services.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF CONSECO AND LPG ACQUISITION
Conseco and LPG Acquisition hereby represent and warrant to the Company
as follows:
3.1 Organization, Standing and Corporate Power. Each of Conseco and LPG
Acquisition and each Significant Subsidiary of Conseco (as hereinafter defined)
is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction in which it is incorporated and has the requisite
corporate power and authority to carry on its business as now being conducted.
Each of Conseco and LPG Acquisition and each Significant Subsidiary of Conseco
is duly qualified or licensed to do business and is in good standing in each
jurisdiction in which the nature of its business or the ownership or leasing of
its properties makes such qualification or licensing necessary. Conseco has
delivered to the Company complete and correct copies of its Articles of
Incorporation and Bylaws, as amended to the date of this Agreement. For purposes
of this Agreement, a "Significant Subsidiary" of Conseco means any subsidiary of
Conseco that would constitute a Significant Subsidiary within the meaning of
Rule 1-02 of Regulation S-X of the SEC.
16
3.2 Conseco Capital Structure. The authorized capital stock of Conseco
consists of 500,000,000 shares of Conseco Common Stock and 20,000,000 shares of
preferred stock, without par value. At the close of business on March 8, 1996,
(i) 20,297,299 shares of Conseco Common Stock, 5,669,226 shares of $3.25 Series
D Cumulative Convertible Preferred Stock of Conseco (the "Conseco Series D
Preferred Stock") and 4,370,000 shares of Preferred Redeemable Increased
Dividend Equity Securities of Conseco (the "Conseco PRIDES") were issued and
outstanding (net of treasury shares or shares held by subsidiaries), (ii)
7,027,925 shares of Conseco Common Stock were reserved for issuance pursuant to
outstanding options to purchase shares of Conseco Common Stock and other
benefits granted under Conseco's benefit plans (the "Conseco Stock Plans"),
(iii) 4,446,373 shares of Conseco Common Stock were reserved for issuance upon
conversion of the Conseco Series D Preferred Stock and (iv) 4,370,000 shares of
Conseco Common Stock were reserved for issuance upon conversion of the Conseco
PRIDES. Except (x) as set forth above, (y) for outstanding options to purchase
an aggregate of 1,148,960 shares of Bankers Life Holding Corporation under its
Stock Option Plan and (z) with respect to stock units awarded under the Conseco
Stock Option Plans, at the close of business on March 8, 1996, no shares of
capital stock or other voting securities of Conseco were issued, reserved for
issuance or outstanding. All outstanding shares of capital stock of Conseco are,
and all shares which may be issued pursuant to this Agreement will be, when
issued, duly authorized, validly issued, fully paid and nonassessable and not
subject to preemptive rights. The authorized capital stock of LPG Acquisition
consists of 1,000 shares of common stock, par value $.001 per share, all of
which have been validly issued, are fully paid and nonassessable and are owned
by Conseco free and clear of any Lien. No bonds, debentures, notes or other
indebtedness of Conseco or any Significant Subsidiary of Conseco having the
right to vote (or convertible into, or exchangeable for, securities having the
right to vote) on any matters on which the stockholders of Conseco or any
Significant Subsidiary of Conseco may vote are issued or outstanding. All the
outstanding shares of capital stock of each Significant Subsidiary of Conseco
have been validly issued and are fully paid and nonassessable and (other than
Bankers Life Holding Corporation) are owned by Conseco, free and clear of all
Liens. Except as set forth above, neither Conseco nor any Significant Subsidiary
of Conseco has any outstanding option, warrant, subscription or other right,
agreement or commitment which either (i) obligates Conseco or any Significant
Subsidiary of Conseco to issue, sell or transfer, repurchase, redeem or
otherwise acquire or vote any shares of the capital stock of Conseco or any
Significant Subsidiary of Conseco or (ii) restricts the transfer of Conseco
Common Stock.
17
3.3 Authority; Noncontravention. Conseco and LPG Acquisition have all
requisite corporate power and authority to enter into this Agreement and,
subject to the Conseco Stockholder Approval with respect to the issuance of
Conseco Common Stock in the Merger, to consummate the transactions contemplated
by this Agreement. The execution and delivery of this Agreement by Conseco and
LPG Acquisition and the consummation by Conseco and LPG Acquisition of the
transactions contemplated by this Agreement have been duly authorized by all
necessary corporate action on the part of Conseco and LPG Acquisition and by the
stockholder of LPG Acquisition, subject, in the case of the issuance of Conseco
Common Stock in the Merger, to the Conseco Stockholder Approval. This Agreement
has been duly executed and delivered by and, assuming this Agreement constitutes
the valid and binding agreement of the Company, constitutes a valid and binding
obligation of each of Conseco and LPG Acquisition, enforceable against such
party in accordance with its terms except that the enforcement thereof may be
limited by (a) bankruptcy, insolvency, reorganization, moratorium or similar
laws now or hereafter in effect relating to creditor's rights generally and (b)
general principles of equity (regardless of whether enforceability is considered
in a proceeding at law or in equity). The execution and delivery of this
Agreement do not, and the consummation of the transactions contemplated by this
Agreement and compliance with the provisions of this Agreement will not (i)
conflict with any of the provisions of the Articles of Incorporation or By-laws
of Conseco, the Certificate of Incorporation or By-laws of LPG Acquisition or
the comparable documents of any Significant Subsidiary of Conseco, (ii) subject
to the governmental filings and other matters referred to in the following
sentence, conflict with, result in a breach of or default (with or without
notice or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or loss of a material benefit
under, or require the consent of any person under, any indenture, or other
agreement, permit, concession, franchise, license or similar instrument or
undertaking to which Conseco or any of its subsidiaries is a party or by which
Conseco or any of its subsidiaries or any of their assets is bound or affected,
18
or (iii) subject to the governmental filings and other matters referred to in
the following sentence, contravene any law, rule or regulation of any state or
of the United States or any political subdivision thereof or therein, or any
order, writ, judgment, injunction, decree, determination or award currently in
effect. No consent, approval or authorization of, or declaration or filing with,
or notice to, any Governmental Entity which has not been received or made is
required by or with respect to Conseco or LPG Acquisition in connection with the
execution and delivery of this Agreement by Conseco or LPG Acquisition or the
consummation by Conseco or LPG Acquisition, as the case may be, of any of the
transactions contemplated by this Agreement, except for (i) the filing of
premerger notification and report forms under the HSR Act with respect to the
Merger, (ii) the filings and/or notices required under the insurance laws of the
jurisdictions set forth in Section 2.3 of the Disclosure Schedule, (iii) the
filing with the SEC of the registration statement on Form S-4 to be filed with
the SEC by Conseco in connection with the issuance of Conseco Common Stock in
the Merger (the "Form S-4"), the Joint Proxy Statement relating to the Conseco
Stockholder Approval and such reports under the Exchange Act as may be required
in connection with this Agreement and the transactions contemplated hereby, (iv)
the filing of the certificate of merger with the Delaware Secretary of State,
and appropriate documents with the relevant authorities of the other states in
which the Company is qualified to do business, (v) such other consents,
approvals, authorizations, filings or notices as are set forth in Section 2.3 of
the Disclosure Schedule and (vi) any applicable filings under state
anti-takeover laws.
3.4 SEC Documents. Conseco and its subsidiaries have filed all required
reports, schedules, forms, statements and other documents with the SEC since
January 1, 1994 (the "Conseco SEC Documents"). As of their respective dates, the
Conseco SEC Documents complied with the requirements of the Securities Act or
the Exchange Act, as the case may be, and the rules and regulations of the SEC
promulgated thereunder applicable to such Conseco SEC Documents, and none of the
Conseco SEC Documents as of such dates contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
19
statements of Conseco included in the Conseco SEC Documents comply as to form in
all material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis during the periods involved (except as may be indicated in the notes
thereto or, in the case of unaudited statements, as permitted by Rule 10-01 of
Regulation S-X) and fairly present, in all material respects, the consolidated
subsidiaries as of the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments).
3.5 Absence of Certain Changes or Events. Except as disclosed in the
Conseco SEC Documents filed and publicly available prior to the date of this
Agreement (the "Filed Conseco SEC Documents"), since the date of the most recent
audited financial statements included in the Filed Conseco SEC Documents,
Conseco has conducted its business only in the ordinary course, and there has
not been (i) any change which would have a material adverse effect on the
business, financial condition or results of operations of Conseco and its
subsidiaries, taken as a whole, (ii) any declaration, setting aside or payment
of any dividend or distribution (whether in cash, stock or property) with
respect to any of Conseco's outstanding capital stock (other than the payment of
cash dividends in the aggregate amount of $.31 per share, and the declaration of
a cash dividend payable April 1, 1996 of $.04 per share, on Conseco Common Stock
and regular cash dividends on the Conseco Series D Preferred Stock and the
Conseco PRIDES, in each case in accordance with usual record and payment dates
and in accordance with Conseco's dividend policy and Articles of Incorporation
at the date of such payment), (iii) except for the two-for-one stock split to be
paid April 1, 1996 to holders of record of Conseco Common Stock at the close of
business on March 20, 1996 (the "Conseco Stock Split"), any split, combination
or reclassification of any of its outstanding capital stock or any issuance or
the authorization of any issuance of any other securities in respect of, in lieu
of or in substitution for shares of its capital stock, or (iv) any change in
accounting methods, principles or practices by Conseco materially affecting its
assets, liabilities or business, except as may have been required by a change in
generally accepted accounting principles.
20
3.6 Compliance with Applicable Laws. (i) Each of the Company and its
subsidiaries has in effect all Permits necessary for it to own, lease or operate
its properties and assets and to carry on its business as now conducted, and
there has occurred no default under any such Permit. Except as disclosed in the
Filed SEC Documents, the Company and its subsidiaries are in compliance with all
applicable statutes, laws, ordinances, rules, orders and regulations of any
Governmental Entity. Except as disclosed in the Filed SEC Documents and except
for routine examinations by state Governmental Entities charged with supervision
of insurance companies ("Insurance Regulators"), as of the date of this
Agreement, to the knowledge of the Company, no investigation by any Governmental
Entity with respect to the Company or any of its subsidiaries is pending or
threatened.
(ii) The Annual Statements (including without limitation the Annual
Statements of any separate accounts) for the year ended December 31, 1995,
together with all exhibits and schedules thereto, and any actuarial opinion,
affirmation or certification filed in connection therewith, and the Quarterly
Statements for the periods ended after January 1, 1996, together with all
exhibits and schedules thereto, with respect to each subsidiary of Conseco that
is an Insurance Company, in each case as filed with the applicable Insurance
Regulator of its jurisdiction of domicile, were prepared in conformity with,
present fairly, in all material respects, to the extent required by and in
conformity with SAP, the statutory financial condition of such Insurance Company
at their respective dates and the results of operations, changes in capital and
surplus and cash flow of such Insurance Company for each of the periods then
ended, and were correct in all material respects when filed and there were no
material omissions therefrom when filed. No deficiencies or violations material
to the financial condition or operations of any Insurance Company have been
asserted in writing by any Insurance Regulator which have not been cured or
otherwise resolved to the satisfaction of such Insurance Regulator and which
have not been disclosed in writing to the Company prior to the date of this
Agreement.
3.7 No Prior Activities. LPG Acquisition has not incurred, and will not
incur, directly or through any subsidiary, any liabilities or obligations for
borrowed money or otherwise, except incidental liabilities or obligations not
for borrowed money incurred in connection with its organization and except in
connection with obtaining financing in connection with the Merger. Except as
contemplated by this Agreement, LPG Acquisition (i) has not engaged, directly or
through any subsidiary, in any business activities of any type or kind
whatsoever, (ii) has not entered into any agreements or arrangements with any
person or entity, and (ii) is not subject to or bound by any obligation or
undertaking.
21
3.8 Brokers. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried out by Conseco directly with
the Company, without the intervention of any person on behalf of Conseco in such
manner as to give rise to any valid claim by any person against the Company or
any of the Subsidiaries for a finder's fee, brokerage commission, or similar
payment.
3.9 Voting Requirements. The affirmative vote of the holders of a
majority of the votes entitled to be cast by the holders of Common Stock and
Conseco PRIDES present, or represented, and entitled to vote thereon at the
Conseco Stockholders Meeting with respect to the issuance of shares of Conseco
Common Stock in the Merger is the only vote of the holders of any class or
series of Conseco's capital stock necessary to approve this Agreement and the
transactions contemplated by this Agreement.
ARTICLE IV
ADDITIONAL AGREEMENTS
4.1 Preparation of Form S-4 and the Joint Proxy Statement; Information
Supplied.
(a) As soon as practicable following the date of this Agreement, the
Company and Conseco shall prepare and file with the SEC the Joint Proxy
Statement and Conseco shall prepare and file with the SEC the Form S-4, in which
the Joint Proxy Statement will be included as a prospectus. Each of the Company
and Conseco shall use its best efforts to have the Form S-4 declared effective
under the Securities Act as promptly as practicable after such filing. The
Company will use its best efforts to cause the Joint Proxy Statement to be
mailed to the Company's stockholders, and Conseco will use its best efforts to
cause the Joint Proxy Statement to be mailed to Conseco's stockholders, in each
case as promptly as practicable after the Form S-4 is declared effective under
the Securities Act. Conseco shall also take any action (other than qualifying to
do business in any jurisdiction in which it is not now so qualified) required to
be taken under any applicable state securities laws in connection with the
issuance of Conseco Common Stock in the Merger and the Company shall furnish all
information concerning the Company and the holders of the Common Stock as may be
reasonably requested in connection with any such action.
22
(b) The Company agrees that none of the information supplied or to be
supplied by the Company specifically for inclusion or incorporation by reference
in (i) the Form S-4 will, at the time the Form S-4 is filed with the SEC, at any
time it is amended or supplemented or at the time it becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading or (ii) the Joint Proxy Statement will, at the
date it is first mailed to the Company's stockholders or at the time of the
Stockholders Meeting (as defined in Section 4.2), contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Joint Proxy
Statement will comply as to form in all material respects with the requirements
of the Exchange Act and the rules and regulations thereunder, except with
respect to statements made or incorporated by reference therein based on
information supplied by Conseco or LPG Acquisition specifically for inclusion or
incorporated by reference in the Joint Proxy Statement.
(c) Conseco agrees that none of the information supplied or to be
supplied by Conseco or LPG Acquisition specifically for inclusion or
incorporation by reference in (i) the Form S-4 will, at the time the Form S-4 is
filed with the SEC, at any time it is amended or supplemented or at the time it
becomes effective under the Securities Act, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, or (ii) the Joint
Proxy Statement will, at the date the Joint Proxy Statement is first mailed to
Conseco's stockholders or at the time of the Conseco Stockholders Meeting (as
defined in Section 4.2), contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
are made, not misleading. The Form S-4 will comply as to form in all material
respects with the requirements of the Securities Act and the rules and
regulations promulgated thereunder and the Joint Proxy Statement will comply as
to form in all material respects with the requirements of the Exchange Act and
the rules and regulations promulgated thereunder, except with respect to
statements made or incorporated by reference in either the Form S-4 or the Joint
Proxy Statement based on information supplied by the Company specifically for
inclusion or incorporation by reference therein.
23
4.2 Meetings of Stockholders. The Company will take all action
necessary in accordance with applicable law and its Certificate of Incorporation
and By-laws to convene a meeting of its stockholders (the "Stockholders
Meeting") to consider and vote upon the approval of the Merger. Conseco will
take all action necessary in accordance with applicable law and its Articles of
Incorporation and By-laws to convene a meeting of its stockholders (the "Conseco
Stockholders Meeting") to consider and vote upon the approval of the issuance of
Conseco Common Stock in the Merger. Conseco shall (i) cause LPG Acquisition to
submit this Agreement and the transactions contemplated hereby for approval and
adoption of Conseco, as sole stockholder, by written consent, (ii) cause the
shares of capital stock of LPG Acquisition to be voted for adoption and approval
of this Agreement and the transactions contemplated hereby, and (iii) cause to
be taken all additional actions necessary for LPG Acquisition to adopt and
approve this Agreement and the transactions contemplated hereby. Subject to
Section 4.9 hereof in the case of the Company, the Company and Conseco will,
through their respective Boards of Directors, recommend to their respective
stockholders approval of the foregoing matters. Without limiting the generality
of the foregoing, the Company agrees that, subject to its right to terminate
this Agreement pursuant to Section 4.9, its obligations pursuant to the first
sentence of Section 4.2 shall not be affected by (i) the commencement, public
proposal, public disclosure or communication to the Company of any Acquisition
Proposal (as defined in Section 4.8) or (ii) the withdrawal or modification by
the Board of Directors of the Company of its approval or recommendation of this
Agreement or the Merger. Conseco and the Company will use their best efforts to
hold the Stockholders Meeting and the Conseco Stockholders Meeting on the same
day and use best efforts to hold such Meetings and (except in the case of the
Company, subject to Section 4.9 hereof) to obtain the favorable votes of their
respective stockholders as soon as practicable after the date hereof.
24
4.3 Letter of the Company's Accountants. The Company shall use its best
efforts to cause to be delivered to Conseco a letter of Coopers & ▇▇▇▇▇▇▇
L.L.P., the Company's independent public accountants, and a letter of Ernst &
Young LLP, formerly the accountants for ▇▇▇▇▇ Life Insurance Company, each dated
a date within two business days before the date on which the Form S-4 shall
become effective and letters of Coopers & ▇▇▇▇▇▇▇ L.L.P. and Ernst & Young LLP,
each dated a date within two business days before the Closing Date, each
addressed to Conseco, in form and substance reasonably satisfactory to Conseco
and customary in scope and substance for letters delivered by independent public
accountants in connection with registration statements similar to the Form S-4.
4.4 Letter of Conseco's Accountants. Conseco shall use its best efforts
to cause to be delivered to the Company a letter of Coopers & ▇▇▇▇▇▇▇ L.L.P.,
Conseco's independent public accountants, dated a date within two business days
before the date on which the Form S-4 shall become effective and a letter of
Coopers & ▇▇▇▇▇▇▇ L.L.P., dated a date within two business days before the
Closing Date, each addressed to the Company, in form and substance reasonably
satisfactory to the Company and customary in scope and substance for letters
delivered by independent public accountants in connection with registration
statements similar to the Form S-4.
4.5 Access to Information; Confidentiality. Upon reasonable notice,
each of the Company and Conseco shall, and shall cause each of its respective
subsidiaries to, afford to the other party and to the officers, employees,
counsel, financial advisors and other representatives of such other party
reasonable access during normal business hours during the period prior to the
Effective Time to all its properties, books, contracts, commitments, personnel
and records and, during such period, each of the Company and Conseco shall, and
shall cause each of its respective subsidiaries to, furnish as promptly as
practicable to the other party such information concerning its business,
properties, financial condition, operations and personnel as such other party
may from time to time reasonably request. Except as required by law, Conseco
will hold, and will cause its respective directors, officers, partners,
employees, accountants, counsel, financial advisors and other representatives
and affiliates to hold, any nonpublic information obtained from the Company in
confidence to the extent required by, and in accordance with, the provisions of
the letter dated February 23, 1996, between Conseco and the Company (the
"Confidentiality Agreement"). Except as required by law, the Company will hold,
and will cause its directors, officers, partners, employees, accountants,
counsel, financial advisors and other representatives and affiliates to hold,
any nonpublic information obtained from Conseco in confidence to the same extent
that Conseco is required to hold information of the Company in confidence
pursuant to the Confidentiality Agreement.
25
4.6 Best Efforts. Upon the terms and subject to the conditions and
other agreements set forth in this Agreement, each of the parties agrees to use
its best efforts to take, or cause to be taken, all actions, and to do, or cause
to be done, and to assist and cooperate with the other parties in doing, all
things necessary, proper or advisable to consummate and make effective, in the
most expeditious manner practicable, the Merger and the other transactions
contemplated by this Agreement.
4.7 Public Announcements. Conseco and LPG Acquisition, on the one hand,
and the Company, on the other hand, will consult with each other before issuing,
and provide each other the opportunity to review and comment upon, any press
release or other public statements with respect to the transactions contemplated
by this Agreement, including the Merger, and shall not issue any such press
release or make any such public statement prior to such consultation, except as
may be required by applicable law, court process or by obligations pursuant to
any listing agreement with any national securities exchange.
4.8 Acquisition Proposals. The Company shall not, nor shall it permit
any of its subsidiaries to, nor shall it authorize or permit any officer,
director or employee of, or any investment banker, attorney or other advisor or
representative of, the Company or any of its subsidiaries to, directly or
indirectly, (i) solicit, initiate or encourage the submission of any Acquisition
Proposal (as hereinafter defined) or (ii) participate in any discussions or
negotiations regarding, or furnish to any person any information with respect
to, or take any other action to facilitate any inquiries or the making of any
proposal that constitutes, or may reasonably be expected to lead to, any
26
Acquisition Proposal; provided, however, that nothing contained in this Section
4.8 shall prohibit the Board of Directors of the company from furnishing
information to, or entering into discussions or negotiations with, any person or
entity that makes an unsolicited Acquisition Proposal if, and only to the extent
that (A) the Board of Directors of the Company, after consultation with and
based upon the advice of outside counsel, determines in good faith that such
action is necessary for the Board of Directors of the Company to comply with its
fiduciary duties to stockholders under applicable law and (B) prior to taking
such action, the Company (x) provides reasonable notice to Conseco to the effect
that it is taking such action and (y) receives from such person or entity an
executed confidentiality agreement in reasonably customary form. Notwithstanding
anything in this Agreement to the contrary, the Company shall promptly advise
Conseco orally and in writing of the receipt by it (or any of the other entities
or persons referred to above) after the date hereof of any Acquisition Proposal,
or any inquiry which could lead to any Acquisition Proposal, the material terms
and conditions of such Acquisition Proposal or inquiry, and the identity of the
person making any such Acquisition Proposal or inquiry. The Company will keep
Conseco fully informed of the status and details of any such Acquisition
Proposal or inquiry. For purposes of this Agreement, "Acquisition Proposal"
means any bona fide proposal with respect to a merger, consolidation, share
exchange or similar transaction involving the Company or any Significant
Subsidiary of the Company, or any purchase of all or any significant portion of
the assets of the Company or any Significant Subsidiary of the Company, or any
equity interest in the Company or any Significant Subsidiary of the Company,
other than the transactions contemplated hereby.
4.9 Fiduciary Duties. The Board of Directors of the Company shall not
(i) withdraw or modify, in a manner materially adverse to Conseco or LPG
Acquisition, the approval or recommendation by such Board of Directors of this
Agreement or the Merger, (ii) approve or recommend an Acquisition Proposal or
(iii) enter into any agreement with respect to any Acquisition Proposal, unless
the Company receives an Acquisition Proposal and the Board of Directors of the
Company determines in good faith, following consultation with outside counsel,
that in order to comply with its fiduciary duties to stockholders under
applicable law it is necessary for the Board of Directors to withdraw or modify,
in a manner materially adverse to Conseco or LPG Acquisition, its approval or
recommendation of this Agreement or the Merger, approve or recommend such
Acquisition Proposal, enter into an agreement with respect to such Acquisition
Proposal or terminate this Agreement. In the event the Board of Directors of the
27
Company takes any of the foregoing actions, the Company shall, concurrently with
the taking of any such action, pay to Conseco the Section 4.11 Fee pursuant to
Section 4.11. Nothing contained in this Section 4.9 shall prohibit the Company
from taking and disclosing to its stockholders a position contemplated by Rule
14e-2(a) promulgated under the Exchange Act or from making any disclosure to the
Company's stockholders which, in the good faith reasonable judgment of the Board
of Directors of the Company based on the advice of outside counsel, is required
under applicable law; provided that the Company does not withdraw or modify, in
a manner materially adverse to Conseco or LPG Acquisition, its position with
respect to the Merger or approve or recommend an Acquisition Proposal.
Notwithstanding anything contained in this Agreement to the contrary, any action
by the Board of Directors permitted by this Section 4.9 shall not constitute a
breach of this Agreement by the Company.
4.10 Consents, Approvals and Filings. The Company and Conseco will make
and cause their respective subsidiaries to make all necessary filings, as soon
as practicable, including, without limitation, those required under the HSR Act,
the Securities Act, the Exchange Act, and applicable state insurance laws in
order to facilitate prompt consummation of the Merger and the other transactions
contemplated by this Agreement. In addition, the Company and Conseco will each
use their best efforts, and will cooperate fully with each other (i) to comply
as promptly as practicable with all governmental requirements applicable to the
Merger and the other transactions contemplated by this Agreement and (ii) to
obtain as promptly as practicable all necessary permits, orders or other
consents of Governmental Entities and consents of all third parties necessary
for the consummation of the Merger and the other transactions contemplated by
this Agreement. Each of the Company and Conseco shall use best efforts to
promptly provide such information and communications to Governmental Entities as
such Governmental Entities may reasonably request. Each of the parties shall
provide to the other party copies of all applications in advance of filing or
submission of such applications to Governmental Entities in connection with this
Agreement and shall make such revisions thereto as reasonably requested by such
other party. Each party shall provide to the other party the opportunity to
participate in all meetings and material conversations with Governmental
Entities.
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4.11 Certain Fees. (a) The Company shall pay to Conseco upon demand $20
million (the "Section 4.11 Fee"), payable in same-day funds, if a bona fide
Acquisition Proposal is commenced, publicly proposed, publicly disclosed or
communicated to the Company (or the willingness of any person to make such an
Acquisition Proposal is publicly disclosed or communicated to the Company) and
(i) the Board of Directors of the Company, in accordance with Section 4.9,
withdraws or modifies in a manner materially adverse to Conseco its approval or
recommendation of this Agreement or the Merger, approves or recommends such
Acquisition Proposal, enters into an agreement with respect to such Acquisition
Proposal, or terminates this Agreement or (ii) the requisite approval of the
Company's stockholders for the Merger is not obtained at the Stockholders
Meeting.
(b) Unless Conseco is materially in breach of this Agreement
or is unable to satisfy the condition of Section 6.3(a) hereof, the Company
shall pay to Conseco upon demand $20 million, payable in same-day funds, if the
requisite approval of the Company's stockholders for the Merger is not obtained
(other than in the circumstances specified in Section 4.11(a) hereof) and all
other conditions contained in Section 6.1 of this Agreement have been satisfied,
waived or, with respect to any condition not then satisfied, it is substantially
likely that such condition will be satisfied on or before September 30, 1996,
through the exercise of best efforts to procure the satisfaction thereof;
provided, however, in the event that the Mailing Date Trading Average (as
defined below) is less than $52.80, then in lieu of the $20 million fee payable
above, Conseco shall receive reimbursement of its Expenses (as defined below)
not to exceed $2,000,000.
(c) Unless the Company is materially in breach of this
Agreement or is unable to satisfy the condition of Section 6.2(a) hereof,
Conseco shall pay to the Company upon demand $20 million, payable in same-day
funds, if the requisite approval of Conseco's stockholders for the Merger is not
obtained and all other conditions contained in Section 6.1 of this Agreement
have been satisfied, waived or, with respect to any condition not then
satisfied, it is substantially likely that such condition will be satisfied on
or before September 30, 1996, through the exercise of best efforts to procure
the satisfaction thereof.
29
(d) For purposes of this Section 4.11, "Mailing Date Trading
Average" shall be equal to the average of the closing prices of the Conseco
Common Stock on the NYSE Composite Transactions Reporting System, as reported in
The Wall Street Journal, for the 20 trading days immediately preceding the
second trading day prior to the date on which the Joint Proxy Statement is first
mailed to stockholders of the Company. For purposes of this Section 4.11,
"Expenses" shall mean all documented out-of-pocket fees and expenses incurred or
paid by or on behalf of Conseco to third parties in connection with the Merger
or the consummation of any of the transactions contemplated by this Agreement,
including all bank fees, financing fees, printing costs and reasonable fees and
expenses of counsel, investment banking firms, accountants, experts and
consultants to Conseco.
4.12 Affiliates and Certain Stockholders. Prior to the Closing Date,
the Company shall deliver to Conseco a letter identifying all persons who are,
at the time the Merger is submitted for approval to the stockholders of the
Company, "affiliates" of the Company for purposes of Rule 145 under the
Securities Act. The Company shall use its best efforts to cause to each such
person to deliver to Conseco on or prior to the Closing Date a written agreement
substantially in the form attached as Exhibit A hereto. Conseco shall maintain
the effectiveness of the Form S-4 subsequent to the Closing Date for the purpose
of resales of Conseco Common Stock by such affiliates, but shall not thereafter
be required to file any post-effective amendment thereto in accordance with Item
512(a) of Regulation S-K under the Securities Act. Subject to the remainder of
this Section 4.12, Conseco shall not otherwise be required to maintain the
effectiveness of the Form S-4 or any other registration statement under the
Securities Act for the purposes of resale of Conseco Common Stock by such
affiliates. Notwithstanding the foregoing, if at such time as the Form S-4 is no
longer available for the purpose of resales by such affiliates, any such
affiliate is unable because of the volume limitations of Rule 144 of the SEC to
sell pursuant to Rule 144 at least 75% of the shares of Conseco Common Stock
received by such affiliate as Merger Consideration and still held by such
affiliate, such affiliate shall have the right, for so long as any such balance
of the affiliate's Merger Consideration is not eligible for immediate sale under
the applicable provisions of Rule 144, to require Conseco to elect, in Conseco's
sole discretion, with respect to such balance, either to (i) acquire such shares
directly from such affiliate at the current market price, (ii) amend the Form
S-4 and maintain its effectiveness to provide for registration of such shares or
(iii) file a Registration Statement on Form S-3 with the SEC to register such
shares for resale by such affiliate.
30
In the case of the Form S-4 to be maintained effective following the
Closing Date with respect to affiliate resales in accordance with the third
sentence of this Section 4.12 and in such other cases as Conseco chooses option
(ii) or (iii) of the preceding sentence, Conseco shall (i) provide to such
affiliate such reasonable number of copies of the registration statement, the
prospectus, and such other documents as the affiliates may reasonably request in
order to facilitate the public offering of such securities; (ii) prepare and
file with the SEC such amendments and supplements to such registration statement
and the prospectus used in connection with such registration statement as may be
necessary to comply with the provisions of the Securities Act with respect to
the disposition of all securities covered by such registration statement; (iii)
pay all expenses of such registration other than underwriting or sales
commissions; and (iv) indemnify such affiliates, each of their officers and
directors and partners, and each person controlling such affiliates within the
meaning of Section 15 of the Securities Act, against all expenses, claims,
losses, damages or liabilities (or actions in respect thereof), including any of
the foregoing incurred in settlement of any litigation, commenced or threatened,
arising out of or based on any untrue statement (or alleged untrue statement) of
a material fact contained in such registration statement or prospectus, or any
amendment or supplement thereto, incident to any such registration, or based on
any omission (or alleged omission) to state therein a material fact required to
be stated therein or necessary to make the statements therein, in light of
circumstances in which they were made, not misleading, or any violation by
Conseco of the Securities Act or any rule or regulation in connection with such
registration, and reimburse each such person for any legal and any other
expenses reasonably incurred (as they are incurred) in connection with
investigating, preparing or defending any such claim, loss, damage, liability or
action.
4.13 NYSE Listing. Conseco shall use its best efforts to cause the
shares of Conseco Common Stock to be issued in the Merger to be approved for
listing on the NYSE, subject to official notice of issuance, prior to the
Closing Date.
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4.14 Stockholder Litigation. The Company shall give Conseco the
opportunity to participate in the defense or settlement of any stockholder
litigation against the Company and its directors relating to the transactions
contemplated by this Agreement; provided, however, that no such settlement shall
be agreed to without Conseco's consent, which consent shall not be unreasonably
withheld.
4.15 Indemnification. (a) The certificate of incorporation and by-laws
of the Surviving Corporation and each of its subsidiaries shall contain the
provisions with respect to indemnification set forth in the Certificate of
Incorporation and By-Laws of the Company on the date of this Agreement, and such
provisions shall not be amended, repealed or otherwise modified for a period of
six years after the Effective Time in any manner that would adversely affect the
rights thereunder of individuals who at any time prior to the Effective Time
were directors or officers of the Company or any of its subsidiaries (the
"Indemnified Parties") in respect of actions or omissions occurring at or prior
to the Effective Time (including, without limitation, the transactions
contemplated by this Agreement), unless such modification is required by law.
Conseco agrees to be jointly and severally liable for the indemnification
obligations of the Company to the Indemnified Parties, as set forth above.
(b) The provisions of this Section 4.15 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party, his heirs and
his personal representatives and shall be binding on all successors and assigns
of Conseco, LPG Acquisition, the Company and the Surviving Corporation.
4.16 Financing. Conseco shall have funds available sufficient to repay
when due all indebtedness outstanding under the Company's senior credit facility
and to pay when due the aggregate Change of Control Purchase Price (as defined)
for any of the Company's 12 3/4% Senior Subordinated Notes due 2002 which are
required to be repurchased by the Company in accordance with Section 4.09 of the
indenture pursuant to which such notes were issued.
4.17 Officers' Certificates Relating to Tax Treatment. Conseco shall
provide to the Tax Opinion Provider (as defined in Section 6.3(c) hereof), a
certificate in the form agreed to by Conseco dated the Closing Date and signed
on behalf of Conseco by the chief executive officer and the chief financial
officer of Conseco. The Company shall provide to the Tax Opinion Provider a
certificate in the form agreed to by the Company dated the Closing Date and
signed on behalf of the Company by the chief executive officer and the chief
financial officer of the Company. The Company shall use its best efforts to
cause each of its affiliates to deliver to the Tax Opinion Provider on or before
the Closing Date a signed certificate in the form agreed to by the Company.
32
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS PRIOR TO
MERGER
5.1 Conduct of Business by the Company. Except as contemplated by this
Agreement or as set forth in the Section 6.1 of the Disclosure Schedule, during
the period from the date of this Agreement to the Effective Time, the Company
shall, and shall cause its subsidiaries to, act and carry on their respective
businesses in the ordinary course of business and, to the extent consistent
therewith, use reasonable efforts to preserve intact their current business
organizations, keep available the services of their current key officers and
employees and preserve the goodwill of those engaged in material business
relationships with them. Without limiting the generality of the foregoing,
during the period from the date of this Agreement to the Effective Time, the
Company shall not, and shall not permit any of its subsidiaries to, without the
prior consent of Conseco:
(i) (x) declare, set aside or pay any dividends on, or make
any other distributions (whether in cash, stock or property) in respect
of, any of the Company's outstanding capital stock (other than regular
quarterly cash dividends not in excess of $.03 per Share, with usual
record and payment dates and in accordance with the Company's present
dividend policy), (y) split, combine or reclassify any of its
outstanding capital stock or issue or authorize the issuance of any
other securities in respect of, in lieu of or in substitution for
shares of its outstanding capital stock, or (z) purchase, redeem or
otherwise acquire any shares of outstanding capital stock or any
rights, warrants or options to acquire any such shares;
33
(ii) issue, sell, grant, pledge or otherwise encumber any
shares of its capital stock, any other voting securities or any
securities convertible into, or any rights, warrants or options to
acquire, any such shares, voting securities or convertible securities
other than upon the exercise of Company Stock Options outstanding on
the date of this Agreement;
(iii) amend its articles of organization, By-laws or other
comparable charter or organizational documents;
(iv) acquire any business or any corporation, partnership,
joint venture, association or other business organization or division
thereof;
(v) sell, mortgage or otherwise encumber or subject to any
Lien or otherwise dispose of any of its properties or assets that are
material to the Company and its subsidiaries taken as a whole, except
in the ordinary course of business;
(vi) (x) incur any indebtedness for borrowed money or
guarantee any such indebtedness of another person, other than
indebtedness owing to or guarantees of indebtedness owing to the
Company or any direct or indirect wholly-owned subsidiary of the
Company or (y) make any loans or advances to any other person, other
than to the Company, or to any direct or indirect wholly-owned
subsidiary of the Company and other than routine advances to employees;
(vii) make any tax election or settle or compromise any income
tax liability that would reasonably be expected to be material to the
Company and its subsidiaries taken as a whole;
(viii) pay, discharge, settle or satisfy any claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or
satisfaction, in the ordinary course of business consistent with past
practice or in accordance with their terms, of liabilities reflected or
reserved against in, or contemplated by, the most recent consolidated
financial statements (or the notes thereto) of the Company included in
the Filed SEC Documents or incurred since the date of such financial
statements in the ordinary course of business consistent with past
practice;
34
(ix) invest its future cash flow, any cash from matured and
maturing investments, any cash proceeds from the sale of its assets and
properties, and any cash funds currently held by it, in any investments
other than cash equivalent assets or in short-term investments
(consisting of United States government issued or guaranteed
securities, or commercial paper rated A-1 or P-1), except (i) as
otherwise required by law, (ii) as required to provide cash (in the
ordinary course of business and consistent with past practice) to meet
its actual or anticipated obligations or (iii) publicly-traded
corporate bonds that are rated investment grade by at least two
nationally recognized statistical rating organizations;
(x) except as may be required by law,
(i) make any representation or promise, oral or
written, to any employee or former director, officer or
employee of the Company or any subsidiary which is
inconsistent with the terms of any Benefit Plan;
(ii) make any change to, or amend in any way, the
contracts, salaries, wages, or other compensation of any
employee or any agent or consultant of the Company or any
subsidiary other than routine changes or amendments that are
required under existing contracts;
(iii) adopt, enter into, amend, alter or terminate,
partially or completely, any Benefit Plan or any election made
pursuant to the provisions of any Benefit Plan, to accelerate
any payments, obligations or vesting schedules under any
Benefit Plan; or
(iv) approve any general or company-wide pay
increases for employees;
(xi) except in the ordinary course of business, modify, amend
or terminate any material agreement, permit, concession, franchise,
license or similar instrument to which the Company or any subsidiary is
a party or waive, release or assign any material rights or claims
thereunder; or
35
(xii) authorize any of, or commit or agree to take any of, the
foregoing actions.
Without limiting the generality of this Section 5.1, during the period from the
date of this Agreement to the Effective Time, the Company shall and the Company
shall cause its subsidiaries, where applicable, to exercise their rights to
obtain all extensions through August 28, 1996, to the expiration of that certain
Data Processing Services Agreement, dated October 28, 1991 by and among ▇▇▇▇▇
Systems Corporation ("▇▇▇▇▇"), Wabash Life Insurance Company and the Company, as
amended ("the "DPS Agreement"); provided, however, that in the event the Company
is unable to obtain an extension to the DPS Agreement from August 28, 1996
through the date of the Closing on terms acceptable to the Company, the Company
shall be permitted to enter into a new data processing services agreement with
such third party provider or providers and upon such terms as are acceptable to
the Company in its sole discretion; provided further, however, that (i) prior to
entering into such new agreement, the Company shall give Conseco written notice
and Conseco shall have 15 days to arrange for alternative data processing
services to be provided to the Company, which services must be mutually
acceptable to Conseco and the Company, (ii) Conseco shall be presumptively
acceptable to the Company as the provider of services under such new agreement
if Conseco guarantees that the costs and other terms of such services will not
be less favorable to the Company than those offered by any other prospective
provider and (iii) if Conseco is not the provider of services under such new
agreement, the Company shall use its best efforts consistent with negotiations
to-date with ▇▇▇▇▇ and other possible providers and subsequent negotiations
after the date hereof to obtain the lowest possible cost and the shortest term
under any such new agreement.
5.2 Conduct of Business by Conseco. During the period from the date of
this Agreement to the Effective Time, Conseco shall, and shall cause its
subsidiaries to, carry on their respective businesses in the usual, regular and
ordinary course in substantially the same manner as heretofore conducted and, to
the extent consistent therewith, use all reasonable efforts to preserve intact
their current business organizations, keep available the services of their
current officers and employees and preserve their relationships with customers,
suppliers, licensors, licensees, distributors and others having business
dealings with them to the end that their goodwill and ongoing businesses shall
be unimpaired at the Effective Time. Without limiting the generality of the
foregoing, during the period from the date of this Agreement to the Effective
Time, Conseco shall not, and shall not permit any of its subsidiaries to:
36
(i) (x) declare, set aside or pay any dividends on, or make
any other distributions (whether in cash, stock or property) in respect
of, any outstanding capital stock of Conseco (other than regular
quarterly cash dividends of $.04 per share of Conseco Common Stock
(without giving effect to the Conseco Stock Split) and regular cash
dividends on the Conseco Series D Preferred Stock and the Conseco
PRIDES, in each case with usual record and payment dates and in
accordance with Conseco's Articles of Incorporation and its present
dividend policy) or (y) split, combine or reclassify any of its
outstanding capital stock (other than the Conseco Stock Split) or issue
or authorize the issuance of any other securities in respect of, in
lieu of or in substitution for shares of Conseco's outstanding capital
stock (other than under the Conseco Stock Plans);
(ii) issue, sell, grant, pledge or otherwise encumber any
shares of its capital stock, any other voting securities or any
securities convertible into, or any rights, warrants or options to
acquire, any such shares, voting securities or convertible securities,
in each case if any such action could reasonably be expected to (a)
delay materially the date of mailing of the Joint Proxy Statement or,
(B) if it were to occur after such date of mailing, require an
amendment of the Joint Proxy Statement;
(iii) acquire any business or any corporation, partnership,
joint venture, association or other business organization or division
thereof, in each case if any such action could reasonably be expected
to (A) delay materially the date of mailing of the Joint Proxy
Statement or, (B) if it were to occur after such date of mailing,
require an amendment of the Joint Proxy Statement; or
37
(iv) authorize any of, or commit or agree to take any of, the
foregoing actions.
5.3 Stock Options and Warrants. The Company agrees to use its best
efforts, including without limitation additional actions by its Board of
Directors or the committee thereof which administers the Company Stock Option
Plan, to cause to be made such clarifications, modifications, amendments or
supplements to the Company Stock Option Plan and to the agreements evidencing
outstanding Company Stock Options to give effect to the following desires and
intentions of the parties with respect to Company Stock Options which remain
outstanding immediately prior to the Effective Time:
(a) Company Stock Options held by persons who are officers or employees
of the Company at the Effective Time shall become options to purchase, for the
same aggregate consideration payable to exercise such Options, the number of
shares of Conseco Common Stock which the holder would have been entitled to
receive at the Effective Time if such Options had been exercised for Shares
prior to the Effective Time;
(b) Company Stock Options held by persons who are not currently
officers or employees of the Company shall be required to be exercised prior to
the Effective Time or forfeited;
(c) Company Stock Options held by the officers of the Company
identified in Paragraph 4 of Section 2.5 to the Disclosure Schedule shall be
amended as described in such Paragraph, subject to subsection (e) below;
(d) Company Stock Options held by officers of the Company covered by
Paragraph 5 of Section 2.5 to the Disclosure Schedule shall be amended as
described in such Paragraph, subject to subsection (e) below;
(e) Company Stock Options held by an officer or employee of the Company
shall expire and be forfeited if not exercised within three (3) months after the
date such person ceases to be an officer or employee of the Company, the
Surviving Corporation, Conseco, or any other subsidiary of Conseco;
(f) Company Stock Options held by an officer subject to Section 16 of
the Exchange Act who would incur liability under Section 16(b), if such Options
were to be exercised on the date on which such options would otherwise expire
under subsections (b), (c), (d) or (e) above, shall otherwise remain exercisable
for five (5) business days from the date after which no such liability would be
incurred; and
38
(g) Conseco shall take all corporate action necessary to reserve for
issuance a sufficient number of shares of Conseco Common Stock for delivery upon
exercise of the Company Stock Options assumed in accordance with this Section
5.3. As soon as practicable after the Effective Time, Conseco shall file a
registration statement on Form S-8 (or any successor form) or another
appropriate form with respect to the shares of Conseco Common Stock subject to
the Company Stock Options and shall use its best efforts to maintain the
effectiveness of such registration statement or registration statements (and
maintain the current status of the prospectus or prospectuses contained therein)
for so long as Company Stock Options remain outstanding.
If necessary to effectuate the foregoing provisions regarding Company Stock
Options, the parties agree to enter into an appropriate amendment to this Merger
Agreement to provide that LPG Acquisition shall be the Surviving Corporation at
the Effective Time rather than the Company. The parties agree that after the
date hereof, except for the Company Stock Options outstanding on the date hereof
and the changes thereto, as described in the Disclosure Schedule, no options,
warrants or other rights of any kind to purchase capital stock of the Company
shall be granted or made, under the Company Stock Plan or otherwise, and no
amendment, repricing or other change to the outstanding Company Stock Options
shall be made, without the prior written consent of Conseco, and any such grant,
issuance, amendment, repricing or other change without Conseco's consent shall
be null, void and unenforceable against the Surviving Corporation or Conseco.
5.4 Other Actions. The Company and Conseco shall not, and shall not
permit any of their respective subsidiaries to, take any action that would, or
that could reasonably be expected to, result in (i) any of the representations
and warranties of such party set forth in this Agreement becoming untrue in any
material respect or (ii) any of the conditions of the Merger set forth in
Article VI not being satisfied.
39
5.5 Conduct of Business of LPG Acquisition. During the period from the
date of this Agreement to the Effective Time, LPG Acquisition shall not engage
in any activities of any nature except as provided in or contemplated by this
Agreement.
ARTICLE VI
CONDITIONS PRECEDENT
6.1 Conditions to Each Party's Obligation To Effect the Merger. The
respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Stockholder Approval. This Agreement and the Merger shall
have been approved and adopted by the affirmative vote of the
stockholders of the Company entitled to cast at least a majority of the
votes which all stockholders of the Company are entitled to cast
thereon and the Conseco Stockholder Approval shall have been obtained.
(b) Governmental and Regulatory Consents. All required
consents, approvals, permits and authorizations to the consummation of
the transactions contemplated hereby by the Company, Conseco and LPG
Acquisition shall be obtained from (i) the Insurance Regulators in the
jurisdictions set forth in Section 6.1(b) of the Disclosure Schedule,
and (ii) any other Governmental Entity whose consent, approval,
permission or authorization is required by reason of a change in law
after the date of this Agreement, unless the failure to obtain such
consent, approval, permission or authorization would not reasonably be
expected to have a material adverse effect on the business, financial
condition or results of operations of the Company and its subsidiaries,
taken as a whole, or on the validity or enforceability of this
Agreement.
(c) HSR Act. The waiting period (and any extension thereof)
applicable to the Merger under the HSR Act shall have been terminated
or shall have otherwise expired.
(d) No Injunctions or Restraints. No temporary restraining
order, preliminary or permanent injunction or other order issued by any
court of competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the Merger shall be in effect; provided,
however, that the parties invoking this condition shall use best
reasonable efforts to have any such order or injunction vacated.
40
(e) NYSE Listing. The shares of Conseco Common Stock issuable
to the Company's stockholders pursuant to this Agreement shall have
been approved for listing on the NYSE, subject to official notice of
issuance.
(f) Form S-4. The Form S-4 shall have become effective under
the Securities Act and shall not be the subject of any stop order or
proceedings seeking a stop order.
6.2 Conditions to Obligations of Conseco and LPG Acquisition. The
obligations of Conseco and LPG Acquisition to effect the Merger are further
subject to the following conditions:
(a) Representations and Warranties. The representations and
warranties of the Company contained in this Agreement shall have been
true and correct on the date of this Agreement (except to the extent
that they expressly relate only to an earlier time, in which case they
shall have been true and correct as of such earlier time), other than
such breaches of representations and warranties which in the aggregate
would not reasonably be expected to have a material adverse effect on
the business, financial condition or results of operations of the
Company and its subsidiaries taken as a whole. The Company shall have
delivered to Conseco a certificate dated as of the Closing Date, signed
by its Chief Executive Officer and its Chief Financial Officer, in
their capacities as officers of the Company, to the effect set forth in
this Section 6.2(a).
(b) Performance of Obligations of the Company. The Company
shall have performed in all material respects all obligations required
to be performed by it under this Agreement at or prior to the Closing
Date, and Conseco shall have received a certificate signed on behalf of
the Company by the chief executive officer and the chief financial
officer of the Company to such effect.
41
6.3 Conditions to Obligation of the Company. The obligation of the
Company to effect the Merger is further subject to the following conditions:
(a) Representations and Warranties. The representations and
warranties of Conseco and LPG Acquisition contained in this Agreement
shall have been true and correct on the date of this Agreement (except
to the extent that they expressly relate only to an earlier time, in
which case they shall have been true and correct as of such earlier
time), other than such breaches of representations and warranties which
in the aggregate would not reasonably be expected to have a material
adverse effect on the business, financial condition or results of
operations of Conseco and its subsidiaries taken as a whole. Conseco
shall have delivered to the Company a certificate dated as of the
Closing Date, signed by its Chief Executive Officer and its Chief
Financial Officer, in their capacities as officers of Conseco, to the
effect set forth in this Section 6.3(a).
(b) Performance of Obligations of Conseco and LPG Acquisition.
Conseco and LPG Acquisition shall have performed in all material
respects all obligations required to be performed by them under this
Agreement at or prior to the Closing Date, and the Company shall have
received a certificate signed on behalf of Conseco by the chief
executive officer and the chief financial officer of Conseco to such
effect.
(c) Opinion of Counsel. The Company shall have received the
opinion dated the Closing Date of Weil, Gotshal & ▇▇▇▇▇▇ LLP, counsel
to the Company, or such other legal counsel reasonably acceptable to
the Company and Conseco (the "Tax Option Provider") substantially in
the form of Exhibit B, to the effect that the Merger will be treated as
a reorganization under Section 368(a)(1) of the Code and that
shareholders of LPG will not be subject to federal income tax on the
receipt of shares of Conseco Common Stock in exchange for Shares
pursuant to the Merger.
42
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 Termination. This Agreement may be terminated and abandoned at any
time prior to the Effective Time, whether before or after approval of matters
presented in connection with the Merger by the stockholders of the Company:
(a) by mutual written consent of Conseco and the Company;
(b) by either Conseco or the Company:
(i) if, upon a vote at a duly held Stockholders
Meeting or Conseco Stockholders Meeting or any adjournment
thereof, any required approval of the stockholders of the
Company or Conseco, as the case may be, shall not have been
obtained;
(ii) if the Merger shall not have been consummated on
or before September 30, 1996, unless the failure to consummate
the Merger is the result of a willful and material breach of
this Agreement by the party seeking to terminate this
Agreement;
(iii)if any Governmental Entity shall have issued an
order, decree or ruling or taken any other action permanently
enjoining, restraining or otherwise prohibiting the Merger and
such order, decree, ruling or other action shall have become
final and nonappealable; or
(iv) if the Board of Directors of the Company shall
have exercised its rights set forth in Section 4.9 of this
Agreement.
7.2 Effect of Termination. In the event of termination of this
Agreement by either the Company or Conseco as provided in Section 7.1, this
Agreement shall forthwith become void and have no effect, without any liability
or obligation on the part of Conseco, LPG Acquisition or the Company, other than
the last two sentences of Section 4.5 and Sections 2.13, 3.8, 4.11, 7.2 and
10.2. Nothing contained in this Section shall relieve any party from any
liability resulting from any material breach of the representations, warranties,
covenants or agreements set forth in this Agreement.
43
7.3 Amendment. Subject to the applicable provisions of the Delaware
Code, at any time prior to the Effective Time, the parties hereto may modify or
amend this Agreement, by written agreement executed and delivered by duly
authorized officers of the respective parties; provided, however, that after
approval of the Merger by the stockholders of the Company, no amendment shall be
made which reduces the consideration payable in the Merger or adversely affects
the rights of the Company's stockholders hereunder without the approval of such
stockholders. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties.
7.4 Extension; Waiver. At any time prior to the Effective Time, the
parties may (a) extend the time for the performance of any of the obligations or
other acts of the other parties, (b) waive any inaccuracies in the
representations and warranties of the other parties contained in this Agreement
or in any document delivered pursuant to this Agreement or (c) subject to
Section 7.3, waive compliance with any of the agreements or conditions of the
other parties contained in this Agreement. Any agreement on the part of a party
to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party. The failure of any party
to this Agreement to assert any of its rights under this Agreement or otherwise
shall not constitute a waiver of such rights.
7.5 Procedure for Termination, Amendment, Extension or Waiver. A
termination of this Agreement pursuant to Section 7.1, an amendment of this
Agreement pursuant to Section 7.3 or an extension or waiver pursuant to Section
7.4 shall, in order to be effective, require in the case of Conseco, LPG
Acquisition or the Company, action by its Board of Directors or the duly
authorized designee of its Board of Directors.
ARTICLE VIII
SURVIVAL OF PROVISIONS
8.1 Survival. The representations and warranties respectively required
to be made by the Company, Conseco and LPG Acquisition in this Agreement, or in
any certificate, respectively, delivered by the Company or Conseco pursuant to
Section 6.2 or Section 6.3 hereof will not survive the Closing.
44
ARTICLE IX
NOTICES
9.1 Notices. All notices and other communications under this Agreement
must be in writing and will be deemed to have been duly given if delivered,
telecopied or mailed, by certified mail, return receipt requested, first-class
postage prepaid, to the parties at the following addresses:
If to the Company, to:
Life Partners Group, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
Hicks, Muse, ▇▇▇▇ & ▇▇▇▇▇ Incorporated
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Weil, Gotshal & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: R. ▇▇▇▇▇ ▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
45
If to Conseco, to:
Conseco, Inc.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to LPG Acquisition, to:
LPG Acquisition Company
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
All notices and other communications required or permitted under this Agreement
that are addressed as provided in this Article IX will, if delivered personally,
be deemed given upon delivery, will, if delivered by telecopy, be deemed
delivered when confirmed and will, if delivered by mail in the manner described
above, be deemed given on the third Business Day after the day it is deposited
in a regular depository of the United States mail. Any party from time to time
may change its address for the purpose of notices to that party by giving a
similar notice specifying a new address, but no such notice will be deemed to
have been given until it is actually received by the party sought to be charged
with the contents thereof.
ARTICLE X
MISCELLANEOUS
10.1 Entire Agreement. Except for documents executed by the Company,
Conseco and LPG Acquisition pursuant hereto, this Agreement supersedes all prior
discussions and agreements between the parties with respect to the subject
matter of this Agreement, and this Agreement (including the exhibits hereto, the
Disclosure Schedule, and other documents delivered in connection herewith) and
the Confidentiality Agreement contain the sole and entire agreement between the
parties hereto with respect to the subject matter hereof.
46
10.2 Expenses. Except as otherwise expressly provided in Section 4.11,
whether or not the Merger is consummated, each of the Company, Conseco and LPG
Acquisition will pay its own costs and expenses incident to preparing for,
entering into and carrying out this Agreement and the consummation of the
transactions contemplated hereby except that the expenses incurred in connection
with the printing, mailing and distribution of the Joint Proxy Statement and the
preparation and filing of the Form S-4 shall be borne equally by Conseco and the
Company. The Company agrees and covenants that the fees and expenses of the
Company's legal and investment banking advisors (including DLJ and HMTF)
incurred in connection with the Merger (but excluding reasonable fees and
expenses incurred in connection with related litigation or Acquisition
Proposals) shall not exceed $5,500,000.
10.3 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original, but all of which will
constitute one and the same instrument and shall become effective when one or
more counterparts have been signed by each of the parties and delivered to the
other parties.
10.4 No Third Party Beneficiary. Except as otherwise provided herein,
the terms and provisions of this Agreement are intended solely for the benefit
of the parties hereto, and their respective successors or assigns, and it is not
the intention of the parties to confer third-party beneficiary rights upon any
other person.
10.5 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, regardless of the laws
that might otherwise govern under applicable principles of conflicts of laws
thereof.
10.6 Assignment; Binding Effect. Neither this Agreement nor any of the
rights, interests or obligations under this Agreement shall be assigned, in
whole or in part, by operation of law or otherwise by any of the parties without
the prior written consent of the other parties, and any such assignment that is
not consented to shall be null and void. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by,
the parties and their respective successors and assigns.
47
10.7 Headings, Gender, etc. The headings used in this Agreement have
been inserted for convenience and do not constitute matter to be construed or
interpreted in connection with this Agreement. Unless the context of this
Agreement otherwise requires, (a) words of any gender are deemed to include each
other gender; (b) words using the singular or plural number also include the
plural or singular number, respectively; (c) the terms "hereof," "herein,"
"hereby," "hereto," and derivative or similar words refer to this entire
Agreement; (d) the terms "Article" or "Section" refer to the specified Article
or Section of this Agreement; (e) all references to "dollars" or "$" refer to
currency of the United States of America; and (f) the term "person" shall
include any natural person, corporation, limited liability company, general
partnership, limited partnership, or other entity, enterprise, authority or
business organization.
10.8 Invalid Provisions. If any provision of this Agreement is held to
be illegal, invalid, or unenforceable under any present or future law, and if
the rights or obligations of the Company or Conseco under this Agreement will
not be materially and adversely affected thereby, (a) such provision will be
fully severable; (b) this Agreement will be construed and enforced as if such
illegal, invalid, or unenforceable provision had never comprised a part hereof;
and (c) the remaining provisions of this Agreement will remain in full force and
effect and will not be affected by the illegal, invalid, or unenforceable
provision or by its severance herefrom.
48
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the duly authorized officers of the Company, Conseco and LPG Acquisition
effective as of the date first written above.
CONSECO, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chairman of the Board
LPG ACQUISITION COMPANY
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇
Executive Vice President
LIFE PARTNERS GROUP, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
Chairman of the Board and
Chief Executive Officer
49
EXHIBIT A
[Closing Date]
CONSECO, INC.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Gentlemen:
I have been advised that I have been identified as a possible
"affiliate" of Life Partners Group, Inc., a Delaware corporation (the
"Company"), as that term is defined for purposes of paragraphs (c) and (d) of
Rule 145 of the General Rules and Regulations (the "Rules and Regulations") of
the Securities and Exchange Commission (the "Commission") under the Securities
Act of 1933 (the "Securities Act"), although nothing contained herein should be
construed as an admission of such fact.
Pursuant to the terms of an Agreement and Plan of Merger dated March
11, 1996 (the "Merger Agreement"), by and among Conseco, Inc., an Indiana
corporation ("Conseco"), LPG Acquisition Company, a Delaware corporation ("LPG
Acquisition") and a wholly-owned subsidiary of Conseco, and the Company, LPG
Acquisition will be merged with and into the Company (the "Merger"). As a result
of the Merger, I will receive Merger Consideration (as defined in the Merger
Agreement), including shares of Common Stock, without par value, of Conseco
("Conseco Common Stock") in exchange for shares of Common Stock, $.001 par
value, of the Company ("Shares") owned by me at the effective time of the Merger
as determined pursuant to the Merger Agreement.
A. In connection therewith, I represent, warrant and agree
that:
1. I shall not make any sale, transfer or other disposition of
the Conseco Common Stock I receive as a result of the Merger in
violation of the Securities Act or the Rules and Regulations.
2. I have been advised that the issuance of Conseco Common
Stock to me as a result of the Merger has been registered with the
Commission under the Securities Act on a Registration Statement on Form
S-4. However, I have also been advised that, because at the time the
Merger was submitted for a vote of the stockholders of the Company I
may have been an "affiliate" of the Company and, accordingly, any sale
by me of the shares of Conseco Common Stock I receive as a result of
the Merger must be (i) registered under the Securities Act,
(ii) made in conformity with the provisions of Rule 145 promulgated by
the Commission under the Securities Act or (iii) made pursuant to a
transaction which, in the opinion of counsel, reasonably satisfactory
to Conseco or as described in a "no action" or interpretive letter from
the staff of the Commission, is not required to be registered under the
Securities Act.
3. I have carefully read this letter and the Merger Agreement
and have discussed the requirements of the Merger Agreement and other
limitations upon the sale, transfer or other disposition of the shares
of Conseco Common Stock to be received by me, to the extent I have felt
necessary, with my counsel or with counsel for the Company.
B. Furthermore, in connection with the matters set forth
herein, I understand and agree that:
Conseco is under no further obligation to register the sale,
transfer or other disposition of the shares of Conseco Common Stock
received by me as a result of the Merger or to take any other action
necessary in order to make compliance with an exemption from
registration available, except as set forth in Section 4.12 of the
Merger Agreement and in paragraph C below.
C. Conseco hereby represents, warrants and agrees that:
For as long as resales of any shares of Conseco Common Stock
owned by me are subject to Rule 145, Conseco will use all reasonable
efforts to make all filings of the nature specified in paragraph (c)(1)
of Rule 144 of the Rules and Regulations.
Very truly yours,
EXHIBIT B
----------------------, 1996
Life Partners Group, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
You have requested our opinion regarding certain federal income tax
consequences of the merger (the "Merger") of LPG Acquisition Company
("Acquisition"), a Delaware corporation and a direct wholly-owned subsidiary of
Conseco, Inc. ("Conseco"), an Indiana corporation, with and into Life Partners
Group, Inc. ("LPG"), a Delaware corporation.
In formulating our opinion, we examined such documents as we deemed
appropriate, including the Agreement and Plan of Merger among Conseco,
Acquisition, and LPG dated March 11, 1996, as amended (the "Merger Agreement"),
the Joint Proxy Statement filed by Conseco and LPG with the Securities and
Exchange Commission (the "SEC")____________________on , 1996 (the "Joint Proxy
Statement"), and the Registration Statement on Form S-4, as filed by Conseco
with the SEC on ____________________, 1996, in which the Joint Proxy Statement
will be included as a prospectus, (with all amendments thereto, the
"Registration Statement"). In addition, we have obtained such additional
information as we have deemed relevant and necessary through consultation with
various officers and representatives of Conseco, Acquisition and LPG.
Our opinion set forth below assumes (1) the accuracy of the statements and
facts concerning the Merger set forth in the Merger Agreement, the Joint Proxy
Statement, and the Registration Statement, (2) the consummation of the Merger in
the manner contemplated by, and in accordance with the terms set forth in, the
Merger Agreement, the Joint Proxy Statement and the Registration Statement and
(3) the accuracy of (i) the representations made by Conseco, which are set forth
in the Officers' Certificate delivered to us by Conseco, dated the date hereof,
(ii) the representations made by LPG, which are set forth in the Officers'
Certificate
Life Partners Group, Inc.
_________________ _, 1996
Page 2
delivered to us by LPG, dated the date hereof and (iii) the representations made
by certain shareholders of LPG in Certificates delivered to us by such persons
pursuant to the terms of the Merger Agreement.
Based upon the facts and statements set forth above, our examination
and review of the documents referred to above and subject to the assumptions set
forth above, we are of the opinion that for federal income tax purposes:
1. The Merger will constitute a reorganization within the
meaning of Section 368(a)(1) of the Internal Revenue Code of
1986, as amended (the "Code").
2. No gain or loss will be recognized by the shareholders of LPG with
respect to the shares of the common stock of Conseco received by the
shareholders of LPG in the Merger.
We express no opinion concerning any tax consequences of the Merger other than
those specifically set forth herein.
Our opinion is based on current provisions of the Code, the Treasury
Regulations promulgated thereunder, published pronouncements of the Internal
Revenue Service and case law, any of which may be changed at any time with
retroactive effect. Any change in applicable laws or facts and circumstances
surrounding the Merger, or any inaccuracy in the statements, facts, assumptions
and representations on which we have relied, may affect the continuing validity
of the opinions set forth herein. We assume no responsibility to inform you of
any such change or inaccuracy that may occur or come to our attention.
Very truly yours,