PLAN OF MERGER
THIS PLAN OF MERGER (the "Plan") is adopted as of August 26, 1996 by
and between CONSECO, INC., an Indiana corporation ("Conseco"), and CIHC,
Incorporated, a Delaware corporation ("CIHC") with respect to the merger of
Bankers Life Holding Corporation, a Delaware corporation (the "Company") into
CIHC.
PREAMBLE
WHEREAS, the respective Boards of Directors of Conseco and CIHC have
approved the merger of the Company with and into CIHC, upon the terms and
subject to the conditions set forth herein; and
WHEREAS, the Merger is to be effected pursuant to Section 253 of the
General Corporation Law of the State of Delaware.
THE MERGER
1. The Merger. Subject to the terms and conditions of this Agreement,
at the Effective Time (as such term is defined in Section 2 hereof), the Company
shall be merged with and into CIHC (the "Merger"), in a transaction intended to
qualify as a tax-free reorganization under Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), in accordance with the Indiana
Business Corporation Law (the "IBCL") and the Delaware General Corporation Law
(the "DGCL"), and the separate corporate existence of the Company shall cease
and CIHC 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 DGCL.
2. Effective Time. CIHC will file with the Secretary of State of the
State of Delaware (the "Delaware Secretary of State") on the date a Registration
Statement on Form S-4 of Conseco which is to be filed with the Securities and
Exchange Commission (the "Commission") in connection with the Merger is declared
effective by the Commission or as soon thereafter as is practicable a
certificate of merger executed in accordance with the relevant provisions of the
DGCL, and make all other filings or recordings required under the DGCL 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").
3. Certificate of Incorporation. The Certificate of Incorporation of
CIHC, 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
4. By-Laws. The By-Laws of CIHC, 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.
5. Directors. The directors of CIHC at the Effective Time shall be
the directors of the Surviving Corporation.
6. Officers. The officers of CIHC at the Effective Time shall be the
officers of the Surviving Corporation.
7. 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 whole fraction (rounded to the
nearest ten- thousandth) of a validly issued, fully paid and nonassessable share
of common stock, without par value, of Conseco ("Conseco Common Stock"),
determined by dividing $25.00 by the Conseco Share Price. The "Conseco Share
Price" shall be equal to the Trading Average (as defined below). 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 ten 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 8(f) 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 immediately prior to the Effective Time shall, by virtue of the Merger
and without any action on the part of the Company, be canceled and retired and
cease to exist, without any conversion thereof.
(c) CIHC Shares. Each Share issued and outstanding immediately prior to
the Effective Time which is then owned by CIHC immediately prior to the
Effective Time shall, by virtue of the Merger and without any action on the part
of CIHC or the Company, be cancelled and retired and cease to exist, without any
conversion thereof.
(d) Impact of Stock Splits, etc. In the event of any change in Conseco
Common Stock between the date of this Plan 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
2
to be issued and delivered in the Merger in exchange for each outstanding Share
as provided in this Plan and the calculation of all share prices provided for in
this Plan and the calculation of all Share prices provided for in this Agreement
shall be proportionately adjusted.
(e) Treatment of Company Stock Options.
(i) From and after the Effective Time, each outstanding
unexpired stock option ("Company Stock Option") to purchase Shares which has
been granted pursuant to the Company's 1993 Stock Option Plan, as amended to the
date hereof (the "Company Stock Option Plan"), shall be exerciseable, for the
same aggregate consideration payable to exercise such Company Stock Option, for
the number of shares of Conseco Common Stock which the holder would have been
entitled to receive at the Effective Time if such Company Stock Option had been
fully vested and exercised for Shares prior to the Effective Time, and otherwise
on the same terms and conditions as were applicable under the Company Stock
Option Plan and the underlying stock option agreement.
(ii) Each Company Stock Option will continue to vest in
accordance with the grant thereof under the Company Stock Option Plan.
8. Exchange of Certificates.
(a) Exchange Agent. As of the Effective Time, Conseco shall deposit
with its transfer agent and registrar (the "Exchange 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 7(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 Exchange Agent of such
certificate or certificates and acceptance thereof by the Exchange 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 8) 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 7(a) of this Plan. The
Exchange Agent shall accept such certificates upon compliance with such
reasonable terms and conditions as the Exchange 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
3
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 Exchange 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 Exchange 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 canceled against delivery of the Merger Consideration as
hereinabove provided. Until surrendered as contemplated by this Section 8(b),
each certificate representing Shares (other than certificates representing
Shares to be canceled in accordance with Section 7(b)), shall be deemed at any
time after the Effective Time to represent only the right to receive upon such
surrender the Merger Consideration payable with respect to such Shares, without
any interest thereon, as contemplated by Section 7. No interest will be paid or
will accrue on any cash payable as Merger Consideration.
(c) Letter of Transmittal. Promptly after the Effective Time (but in no
event more than ten days thereafter), the Surviving Corporation shall require
the Exchange 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 7, 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 7.
(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 7, until the surrender for exchange of such
certificate in accordance herewith. 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 7, 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.
4
(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 Plan 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 which remain unpaid at the Effective
Time.
(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 7, 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 Plan, 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 Plan shall
thereafter look only to Conseco and only as general creditors thereof for
payment of their claim for the cash portion of any Merger Consideration and any
dividends or distributions with respect to Conseco Common Stock.
(h) No Liability. Neither Conseco nor the Exchange 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), 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.
5