SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(AMENDMENT NO. 3)
GENERAL ACCEPTANCE CORPORATION
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(Name of Issuer)
Common Stock
- --------------------------------------------------------------------------------
(Title of Class of Securities)
368749107
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(CUSIP Number)
John J. Sabl
11825 N. Pennsylvania Street
Carmel, Indiana 46032
(317) 817-6708
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(Name, Address, Telephone Number of Persons Authorized to Receive
Notices and Communications)
March 12, 1998
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(Date of Event which requires filing of this Statement)
If the filing person has previously filed a Statement on Schedule 13G to report
the acquisition which is the subject of this Statement and is filing this
Statement because of Rule 13d-1(b)(3) or (4), check the following box.
[ ]
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CUSIP No. ............................................368749107
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1. NAME OF REPORTING PERSON..................................Conseco, Inc.
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON............35-1468632
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ] (b) [ X ]
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3. SEC USE ONLY
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4. SOURCE OF FUNDS ......................................... NA
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
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6. CITIZENSHIP OR PLACE OF ORGANIZATION Indiana
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Number of 7. SOLE VOTING POWER 0
Shares ______________________________________________________________
Beneficially 8. SHARED VOTING POWER 73,314,000
Owned By ______________________________________________________________
Each 9. SOLE DISPOSITIVE POWER 0
Reporting ______________________________________________________________
Person With 10. SHARED DISPOSITIVE POWER 73,314,000
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11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
73,314,000
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12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES SHARES
[ ]
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13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
97.1%
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14. TYPE OF REPORTING PERSON HC
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CUSIP No. ............................................368749107
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1. NAME OF REPORTING PERSON.............................CIHC, Incorporated
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON 51-0356511
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ] (b) [ X ]
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3. SEC USE ONLY
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4. SOURCE OF FUNDS N/A
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
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6. CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
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Number of 7. SOLE VOTING POWER 19,814,000
Shares ______________________________________________________________
Beneficially 8. SHARED VOTING POWER 53,000,000
Owned By ______________________________________________________________
Each 9. SOLE DISPOSITIVE POWER 19,814,000
Reporting ______________________________________________________________
Person With 10. SHARED DISPOSITIVE POWER 53,000,000
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11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
72,814,000
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12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES SHARES
[ ]
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13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
97.0%
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14. TYPE OF REPORTING PERSON HC
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CUSIP No. ............................................368749107
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1. NAME OF REPORTING PERSON........Capitol American Life Insurance Company
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON 34-1083130
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ] (b) [ X ]
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3. SEC USE ONLY
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4. SOURCE OF FUNDS WC
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
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6. CITIZENSHIP OR PLACE OF ORGANIZATION Arizona
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Number of 7. SOLE VOTING POWER 40,000,000
Shares ______________________________________________________________
Beneficially 8. SHARED VOTING POWER 0
Owned By ______________________________________________________________
Each 9. SOLE DISPOSITIVE POWER 40,000,000
Reporting _______________________________________________________________
Person With 10. SHARED DISPOSITIVE POWER 0
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11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
40,000,000
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12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES SHARES
[ ]
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13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
86.9%
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14. TYPE OF REPORTING PERSON IC
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CUSIP No. ............................................368749107
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1. NAME OF REPORTING PERSON.......Great American Reserve Insurance Company
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON 75-0300900
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ] (b) [ X ]
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3. SEC USE ONLY
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4. SOURCE OF FUNDS WC
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
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6. CITIZENSHIP OR PLACE OF ORGANIZATION Texas
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Number of 7. SOLE VOTING POWER 13,000,000
Shares ______________________________________________________________
Beneficially 8. SHARED VOTING POWER 0
Owned By ______________________________________________________________
Each 9. SOLE DISPOSITIVE POWER 13,000,000
Reporting ______________________________________________________________
Person With 10. SHARED DISPOSITIVE POWER 0
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11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
13,000,000
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12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES SHARES
[ ]
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13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
68.3%
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14. TYPE OF REPORTING PERSON IC
5
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Item 1. Security and Issuer.
This Amendment No. 3 to Schedule 13D is being filed by Capitol American
Life Insurance Company ("Capitol American"), Conseco, Inc. ("Conseco"), CIHC,
Incorporated, ("CIHC") and Great American Reserve Insurance Company ("Great
American") relating to the Common Stock, no par value (the "Common Stock"), of
General Acceptance Corporation, an Indiana corporation (the "Company"). Great
American and Capitol American are wholly-owned subsidiaries of CIHC. CIHC is a
wholly-owned subsidiary of Conseco.
The Company's principle executive offices are located at 1025 Acuff
Road, Bloomington, Indiana 47404.
Item 2. Identity and Background.
Except as indicated below, the information previously filed pursuant to
Item 2 of this Schedule 13D, as amended, is unchanged.
This statement is filed by Great American, the principal business
address and principal office address of which is 11825 N. Pennsylvania Street,
Carmel, Indiana 46032. Great American is an insurance corporation, organized
under the laws of the State of Texas, which primarily sells annuities and life
insurance.
The executive officers and directors of Great American are:
Mr. Stephen C. Hilbert, whose business address is 11825 N. Pennsylvania
Street, Carmel Indiana 46032, is Chairman of the Board and Chief Executive
Officer of Great American.
Mr. Donald F. Gongaware, whose business address is 11825 N.
Pennsylvania Street, Carmel, Indiana 46032, is President and a director of Great
American.
Mr. Rollin M. Dick, whose business address is 11825 N. Pennsylvania
Street, Carmel, Indiana 46032, is Executive Vice President and a director of
Great American.
Ms. Ngaire E. Cuneo, whose business address is 745 Fifth Avenue, Suite
2700, New York, New York 10151, is a director of Great American.
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Mr. John J. Sabl, whose business address is 11825 N. Pennsylvania
Street, Carmel, Indiana 46032, is Executive Vice President and General Counsel
and a director of Great American.
Mr. James S. Adams, whose business address is 11825 N. Pennsylvania
Street, Carmel, Indiana 46032, is Senior Vice President of Great American.
All of the executive officers and directors of Great American are
United States citizens. During the last five years, no executive officer of
Great American has been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) nor has any such person been party to civil
proceedings of a judicial or administrative body of competent jurisdiction
resulting in a judgement, decree or final order enjoining future violations of,
or prohibiting or mandating activities subject to, federal or state securities
laws.
Item 3. Source and Amount of Funds or Other Consideration.
On March 12, 1998, CIHC entered into a Securities Purchase Agreement
with members of the Algood family to purchase 3,814,000 shares of Common Stock
for $.30 per share and to purchase $3,250,000 of 12% Subordinated Convertible
Notes of the Company (the "Algood Notes") at par. The Algood Notes are
convertible into Common Stock at the rate of $.25 per share. On March 24, 1998,
CIHC assigned its rights to acquire the Algood Notes to Great American. Great
American and CIHC will acquire such securities out of their working capital.
Also on March 12, 1998, CIHC entered into a Securities Purchase
Agreement with the Company to acquire 16,000,000 shares of Common Stock for $.25
per share. Such shares will be acquired out of the working capital of CIHC. The
foregoing transactions will be closed upon termination of the waiting period
under the Hart-Scott- Rodino Antitrust Improvement Act.
As a result of the Company entering into the Securities Purchase
Agreement with CIHC, the conversion price for Common Stock under the 12%
Convertible Notes of the Company (the "Debentures") held by Capitol American has
been adjusted to $.25 per share. Such adjustment resulted in an increase in the
number of shares beneficially owned by Capitol American. The exercise price
under the warrant to purchase 500,000 shares of Common Stock (the "Warrant")
held by Conseco has likewise been adjusted to $.25.
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Because the Company no longer must comply with the rules of the NASDAQ
National Market, none of the foregoing transactions or securities are subject to
shareholder approval. In all other respects, the information previously filed
pursuant to Item 3 of this Schedule 13D, as amended, is unchanged.
Item 4. Purpose of Transaction.
The Company had been in violation of certain covenants under its senior
lending facility with its primary lender. Conseco has guaranteed up to $10
million of such credit facility. In connection with the covenant violations, the
primary lender required the Company to obtain an additional $4 million of
capital, and instead of funding under the guaranty, Conseco negotiated with the
Company to provide $4 million of capital through the acquisition of Common Stock
directly from the Company. In addition, Conseco conditioned such purchase upon
the acquisition of the Common Stock held by the Algood family. Following the
acquisition of such securities, the Company will become a majority owned
subsidiary of Conseco.
Item 5. Interest in Securities of the Issuer.
(a) As a result of Capitol American's ownership of $10,000,000 of
the Debentures, Capitol American beneficially owns 40,000,000 shares of the
Common Stock representing approximately 86.9% of the shares of Common Stock
deemed to be outstanding. Such beneficial ownership is based upon the
conversion of the Debentures at a conversion price of $.25 per share for
$10,000,000 of Debentures.
As a result of Great American's agreement to acquire $3,250,000 of
the Algood Notes, Great American beneficially owns 13,000,000 shares of the
Common Stock representing approximately 68.3% of the shares of Common Stock
deemed to be outstanding. Such beneficial ownership is based upon the
conversion of the Algood Notes at a conversion price of $.25 per share for
$3,250,000 of Algood Notes.
As a result of CIHC's agreement to acquire 16,000,000 shares of
Common Stock from the Company and to purchase 3,814,000 shares of Common
Stock from the Algoods, CIHC beneficially owns, directly, 19,814,000 shares
of Common Stock representing approximately 89.9% of the shares of Common
Stock deemed to be outstanding. As a result of the beneficial
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ownership of Capitol American and Great American, CIHC, directly and
indirectly, beneficially owns 72,814,000 shares of Common Stock
representing 97% of the deemed outstanding shares of Common Stock.
As a result of its ownership of the Warrant, Conseco directly
beneficially holds approximately 7.6% of the shares of Common Stock deemed
to be outstanding. As a result of the ownership of Common Stock by CIHC,
Capitol American and Great American, Conseco, directly and indirectly,
beneficially owns 73,314,000 shares of Common Stock representing
approximately 97.1% of the deemed outstanding shares of Common Stock.
(b) Upon conversion of the Debentures, Capitol American will have
the sole power to vote or to direct the vote and the sole power to dispose
or to direct the disposition of 40,000,000 shares of Common Stock. Upon
conversion of the Algood Notes, Great American will have the sole power to
vote or to direct the vote and the sole power to dispose or to direct the
disposition of 13,000,000 shares of Common Stock. Upon purchase of the
Common Stock by CIHC as described above, CIHC will have the sole power to
vote or to direct the vote and the sole power to dispose or to direct the
disposition of 19,814,000 shares of Common Stock. Through its ownership of
Capitol American and Great American, CIHC may be deemed to share the power
to direct the vote or disposition of the 53,000,000 shares of Common Stock
beneficially owned by Capitol American and Great American. Pursuant to Rule
13d-4 under the Securities Exchange Act of 1934, CIHC expressly disclaims
beneficial ownership of such shares and declares that the filing of this
statement shall not be construed as an admission of any such beneficial
ownership. Upon exercise of the Warrant, Conseco would have the sole power
to vote and to direct the vote and the sole power to dispose or to direct
the disposition of 500,000 shares of Common Stock. Through its ownership of
CIHC, Capitol American and Great American, Conseco may be deemed to share
the power to direct the vote or disposition of the 72,814,000 shares of
Common Stock beneficially owned by CIHC, Capitol American and Great
American. Pursuant to Rule 13d-4 under the Securities Exchange Act of 1934,
Conseco expressly disclaims beneficial ownership of the shares beneficially
owned by Capitol American and Great American and declares that the filing
of this statement shall not be construed as an admission of any such
beneficial ownership.
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(c) The only transactions involving the Common Stock effected during
the past 90 days by Capitol American, Great American, Conseco or CIHC are
as described in this Schedule 13D, as amended hereby.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer.
On March 12, 1998, the Company and CIHC entered into a Securities Purchase
Agreement pursuant to which CIHC agreed to acquire 16,000,000 shares of Common
Stock for $.25 per share. Also on March 12, 1998, CIHC and members of the Algood
family entered into a Securities Purchase Agreement pursuant to which CIHC
agreed to acquire 3,814,000 shares of Common Stock from the Algoods for $.30 per
share and to acquire $4,750,000 of debentures of the Company, $3,250,000 of
which are currently convertible into Common Stock at $.25 per share. On March
24, 1998, CIHC assigned to Great American CIHC's rights to acquire the
debentures from the Algoods. The closings under the Securities Purchase
Agreements are to occur within two business days following termination of the
waiting period under the Hart-Scott-Rodino Antitrust Improvement Act.
In all other respects, the information previously filed pursuant to Item 6
of the Schedule 13D, as amended, is unchanged.
Item 7. Material to Be Filed as Exhibits.
*(1) Securities Purchase Agreement, dated as of April 11, 1997,
between the Company and Capitol American.
*(2) 12% Subordinated Convertible Note, dated April 11, 1997, in the
principal amount of $10,000,000 issued to Capitol American.
*(3) Stockholders' Agreement, dated as of April 11, 1997, among the
Company, Conseco, Capitol American and the stockholders named therein.
*(4) Registration Rights Agreement, dated as of April 11, 1997,
between the Company and Capitol American.
(5) Joint Filing Agreement, dated as of March 23, 1998, between
Capitol American, Great American, Conseco and CIHC.
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**(6) Agreement, dated as of September 16, 1997, between the Company
and Conseco.
**(7) Guaranty, dated September 16, 1997, issued by Conseco for the
benefit of General Electric Capital Corporation.
**(8) Warrant, dated as of September 16, 1997, issued by the Company
to Conseco.
**(9) 12% Subordinated Convertible Note, dated as of September 16,
1997, issued by the Company to Conseco.
**(10) Amendment No. 1 to Securities Purchase Agreement, dated as of
September 16, 1997, between the Company and Capitol American.
**(11) Amendment No. 1 to Stockholders' Agreement, dated as of
September 16, 1997, among the Company, Conseco, Capitol American and the
stockholders named therein.
**(l2) Registration Rights Agreement, dated as of September 16, 1997,
between the Company and Conseco.
**(13) Conseco Subordination Agreement, dated as of September 16,
1997, among the Company, Capitol American, Conseco and the stockholders
named therein.
**(14) Algood Subordination Agreement, dated as of September 16, 1997,
among the Company, Capitol American and the stockholders named therein.
(15) Securities Purchase Agreement, dated as of March 12, 1998,
between the Company and CIHC.
(16) Securities Purchase Agreement, dated as of March 12, 1998, among
CIHC and the stockholders named therein.
(17) Assignment, dated March 24, 1998, between CIHC and Great
American.
*(18) 12% Subordinated Convertible Note, dated April 11, 1997, payable
by General Acceptance Corporation to
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Malvin J. Algood.
*(19) 12% Subordinated Convertible Note, dated April 11, 1997,
payable by General Acceptance Corporation to Russell E. Algood.
* Incorporated by reference from the Form 10-K filed by the Company
on April 15, 1997.
** Incorporated by reference from the Schedule 13D Filed by Capitol
American, Conseco and CIHC on September 29,1997.
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SIGNATURES
After reasonable Inquiry and to the best of our knowledge and belief,
the undersigned certify that the information set forth in this statement is
true, complete and correct.
Date: March 24, 1998
Capitol American Life Insurance
Company
By: /s/ROLLIN M. DICK
---------------------------
Name: Rollin M. Dick
Title: Executive President
Conseco, Inc.
By:/s/ROLLIN M. DICK
----------------------------
Name: Rollin M. Dick
Title: Executive Vice President
CIHC, Incorporated
By:/s/WILLIAM T. DEVANNEY, JR.
----------------------------
Name: William T. Devanney, Jr.
Title: Vice President
Great American Reserve Insurance
Company
By:/s/ROLLIN M. DICK
----------------------------
Name: Rollin M. Dick
Title: Executive Vice President
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JOINT FILING AGREEMENT
This will confirm the agreement by and among all the undersigned that
the Schedule 13D filed on or about this date with respect to the beneficial
ownership of the undersigned of shares of the Common Stock of General Acceptance
Corporation is being filed on behalf of each of the undersigned. This agreement
may be executed in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
Dated: March 23, 1998 CONSECO, INC.
By:/s/ROLLIN M. DICK
-----------------------------
Rollin M. Dick,
Executive Vice President
CAPITAL AMERICAN LIFE INSURANCE
COMPANY
By:/s/ROLLIN M. DICK
-----------------------------
Rollin M. Dick,
Executive Vice President
CIHC, INCORPORATED
By:/s/WILLIAM T. DEVANNEY, JR.
-----------------------------
William T. Devanney, Jr.,
Vice President
GREAT AMERICAN RESERVE INSURANCE
COMPANY
By:/s/ROLLIN M. DICK
-----------------------------
Rollin M. Dick,
Executive Vice President
SECURITIES PURCHASE AGREEMENT
Dated as of March 12, 1998
between
GENERAL ACCEPTANCE CORPORATION
and
CIHC, INCORPORATED
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TABLE OF CONTENTS
Section Page
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1. Definitions................................................... 1
2. The Purchase of Securities
2.1. Sale and Purchase of Securities......................... 7
2.2. Use of Proceeds......................................... 7
3. Conditions Precedent
3.1. Conditions to the Purchase.............................. 8
4. Representations and Warranties of the Purchaser
4.1. Organization............................................ 9
4.2. Due Execution, Delivery and Performance
of the Agreement........................................ 10
4.3. Investment Representation............................... 10
5. Representations and Warranties of the Company
5.1. Corporate Existence; Compliance with Law................ 11
5.2. Corporate Power; Authorization;
Enforceable Obligations................................. 11
5.3. SEC Documents........................................... 12
5.4. Absence of Certain Changes or Events.................... 13
5.5. No Default.............................................. 13
5.6. Employment Matters...................................... 13
5.7. Other Ventures.......................................... 14
5.8. Taxes................................................... 14
5.9. No Litigation........................................... 15
5.10. Other Contracts......................................... 15
5.11. Licenses................................................ 16
5.12. Capital Structure of the Company........................ 16
5.13. Broker's or Finder's Fee................................ 16
5.14. Disclosure.............................................. 17
6. Affirmative Covenants
6.1. Maintenance of Existence and Conduct
of Business............................................. 17
6.2. Payment of Obligations.................................. 17
6.3. Books and Records....................................... 18
7. Securities Law Matters........................................ 18
8. Miscellaneous
8.1. Press Releases.......................................... 18
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Section Page
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8.2. Expenses................................................. 18
8.3. Indemnification.......................................... 18
8.4. Assignment............................................... 19
8.5. Remedies................................................. 19
8.6. Waiver of Jury Trial..................................... 19
8.7. Arbitration.............................................. 19
8.8. Severability............................................. 20
8.9. Parties.................................................. 20
8.10. Conflict of Terms........................................ 20
8.11. Governing Law............................................ 20
8.12. Notices.................................................. 20
8.13. Survival................................................. 21
8.14. Section Titles........................................... 22
8.15. Counterparts............................................. 22
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SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT, dated as of March 12, 1998 by and among
GENERAL ACCEPTANCE CORPORATION, an Indiana corporation (the "Company") and CIHC,
INCORPORATED, a Delaware corporation (the "Purchaser").
W I T N E S S E T H:
WHEREAS, upon the terms and conditions hereinafter provided, the
Company has agreed to issue and sell to the Purchaser, and the Purchaser has
agreed to purchase from the Company, 16,000,000 shares of common stock of the
Company (the "Common Stock" or the "Securities") for $4,000,000.
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, it is agreed as follows:
I. DEFINITIONS
In addition to the defined terms appearing above, capitalized terms
used in this Agreement shall have (unless otherwise provided elsewhere in this
Agreement) the following respective meanings when used herein:
"Affiliate" shall mean, with respect to any Person, (i) each Person
that, directly or indirectly, owns or controls, whether of record or
beneficially, or as a trustee, guardian or other fiduciary, 5 percent or more of
the Stock having ordinary voting power in the election of directors of such
Person, (ii) each Person that controls, is controlled by or is under common
control with such Person or any Affiliate of such Person, or (iii) each of such
Person's officers, directors and general partners. For the purpose of this
definition, "control" of a Person shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of its management or
policies, whether through the ownership of voting securities, by contract or
otherwise. For purposes of this definition the Purchaser shall not be deemed to
be an Affiliate of the Company or any of the Affiliates of the Company by reason
of the purchase of the Securities.
"Agreement" shall mean this Securities Purchase Agreement, including
all amendments, modifications and supplements hereto and any appendices,
exhibits or schedules to any of the foregoing, and shall refer to this
Securities Purchase Agreement as the same may be in effect at the time such
reference becomes operative.
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"Algood Debentures" shall collectively mean those 12% Subordinated
Convertible Notes of like tenor and effect as the Debentures in the aggregate
sum of up to $4,750,000 issued to J.G. Algood, M.L. Algood, Janet Algood, and
R.E. Algood dated April 11, 1997 and September 16, 1997 in such aggregate
principal amount.
"Algood Family" shall mean Malvin J. Algood, Russell E.
Algood, Shirley Cook, John G. Algood, Jeffrey J. Algood Irrevocable
Trust, David R. Algood Irrevocable Trust and Stuart R. Algood
Irrevocable Trust.
"Ancillary Agreements" shall mean any supplemental agreement,
undertaking, instrument, document or other writing executed by the Company or
any of its Subsidiaries or by any of their Stockholders as a condition to
purchasing any of the Securities under this Agreement or otherwise in connection
herewith, including, without limitation, the Stockholders' Agreement and the
Registration Rights Agreements.
"Board" shall mean the Company's Board of Directors.
"Business Day" shall mean any day that is not a Saturday, a Sunday or a
day on which banks are required or permitted to be closed in the State of
Indiana.
"Capital Lease" shall mean any obligation that is required to be
classified and accounted for as a capital lease on the face of a balance sheet
of such person prepared in accordance with generally accepted accounting
principles; and the amount of such obligations shall be the capitalized amount
thereof, determined in accordance with generally accepted accounting principles.
"Capital Expenditures" shall mean all payments for any fixed assets or
improvements (whether paid in cash or accrued as liabilities, and including in
all events all amounts expended or capitalized under capital leases and any
expenditures financed by anybody during that period), including, without
limitation, computer software and computer software licenses, or for
replacements, substitutions or additions thereto, that have a useful life of
more than one year and which are required to be capitalized under GAAP.
"Charges" shall mean all Federal, state, county, city, municipal,
local, foreign or other governmental taxes at the time due and payable, levies,
assessments, charges, liens, claims or encumbrances upon or relating to (i) the
Obligations, (ii) the
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Company or any of its Subsidiaries' employees, payroll, income or gross
receipts, (iii) the Company or any of its Subsidiaries' ownership or use of any
of its assets, or (iv) any other aspect of the Company or any of its Affiliates'
business, in each case including any and all interest and penalties.
"Closing Date" shall mean that date upon which the Closing occurs and
shall be a date agreed upon between the Company and the Purchaser and "Closing"
shall mean the moment on the Closing Date on which the purchase and sale of the
Securities is made.
"Company's Stock Option Plan" shall mean the General Acceptance
Corporation Employee Stock Option Plan and the General Acceptance Corporation
Outside Directors' Stock Option Plan, collectively.
"Conseco Directors" shall mean the individuals designated by Conseco,
Inc. pursuant to the Stockholders' Agreement to be elected to the Board.
"Debentures" shall mean the 12% Subordinated Convertible Debentures of
the Company held by Purchaser or any of its Affiliates.
"Default" shall mean any event which, with the passage of time or
notice or both, would, unless cured or waived, become an Event of Default.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974
(or any successor legislation thereto), as amended from time to time.
"ERISA Affiliate" shall mean, with respect to the Company, any trade or
business (whether or not incorporated) under common control with the Company and
which, together with the Company, are treated as a single employer under Section
414(b), (c), (m) or (o) of the IRC.
"ERISA Event" shall mean, with respect to the Company or any ERISA
Affiliate, (i) a Reportable Event with respect to a Title IV Plan or a
Multiemployer Plan; (ii) the withdrawal of the Company, any of its Subsidiaries
or any ERISA Affiliate from a Title IV Plan subject to Section 4063 of ERISA
during a plan year in which it was a substantial employer, as defined in Section
4001(a)(2) of ERISA; (iii) the complete or partial withdrawal of the Company,
any of its
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Subsidiaries or any ERISA Affiliate from any Multiemployer Plan; (iv) the filing
of a notice of intent to terminate a Title IV Plan or the treatment of a plan
amendment as a termination under Section 4041 of ERISA; (v) the institution of
proceedings to terminate a Title IV Plan or Multiemployer Plan by the PBGC; (vi)
the failure to make required contributions to a Qualified Plan; or (vii) any
other event or condition which might reasonably be expected to constitute
grounds under Section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Title IV Plan or Multiemployer Plan or the
imposition of any liability under Title IV of ERISA, other than PBGC premiums
due but not delinquent under Section 4007 of ERISA.
"Financing Agreements" shall mean the following agreements, together
with the related documents thereto, in each case as such agreements may be
amended (including any amendment and restatement thereof), supplemented or
otherwise modified from time to time, including any agreement extending the
maturity of, refinancing, refunding, replacing or otherwise restructuring all or
any portion of the indebtedness under such agreement or any successor or
replacement agreement: Amended and Restated Motor Vehicle Installment Contract
Loan and Security Agreement by and between the Company and General Electric
Capital Corporation ("GECC") dated as of April 11, 1997.
"Fiscal Year" shall mean the calendar year.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time.
"Governmental Authority" shall mean any nation or government, any state
or other political subdivision thereof, and any agency, department or other
entity exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Indebtedness" of any Person shall mean (i) all indebtedness of such
Person for borrowed money (including, without limitation, reimbursement and all
other obligations with respect to surety bonds, letters of credit and bankers'
acceptances, whether or not matured), but not including accounts payable and
other obligations to trade creditors and normal operating expenses characterized
as liabilities incurred in the ordinary course of business, (ii) all obligations
evidenced by notes, bonds, debentures or similar instruments (except where such
instruments evidence repayment of amounts referred to in subparagraph (i)),
(iii) all Capital Lease
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Obligations, and (iv) in the case of the Company, the Debentures.
"IRC" shall mean the Internal Revenue Code of 1986, as amended, and any
successor thereto.
"IRS" shall mean the Internal Revenue Service, or any successor
thereto.
"Licenses" shall have the meaning assigned to such term in Section
5.11; individually a "License."
"Lien" shall mean any mortgage or deed of trust, pledge, hypothecation,
assignment, deposit arrangement, lien, Charge, claim, security interest,
easement or encumbrance, preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including, without
limitation, any Capital Lease or title retention agreement, any financing lease
having substantially the same economic effect as any of the foregoing, and the
filing of, or agreement to give, any financing statement perfecting a security
interest under the Uniform Commercial Code or comparable law of any
jurisdiction).
"Material Adverse Effect" shall mean any material adverse effect on the
business, assets, operations, or financial or other condition or prospects of
the Company or any of its Subsidiaries.
"Multiemployer Plan" shall mean a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA, and to which the Company, any of its Subsidiaries
or any ERISA Affiliate is obligated to make, or has made or been obligated to
make, contributions on behalf of participants who are employed by any of them.
"Obligations" shall mean any principal, interest, premium, penalties,
fees and other liabilities and obligations due under the documentation governing
any Indebtedness (including interest after the commencement of any bankruptcy,
insolvency, rehabilitation, liquidation, conservation, supervision or similar
proceedings).
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
successor thereto.
"Pension Plan" shall mean an employee pension benefit plan, as defined
in Section (3)(2) of ERISA (other than a Multiemployer Plan), which is not an
individual account plan, as defined in Section 3(34) of ERISA, and which the
Company, any of its Subsidiaries or, if a Title IV Plan, any ERISA Affiliate
maintains,
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contributes to or has an obligation to contribute to on behalf of participants
who are or were employed by any of them.
"Person" shall mean any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, association, corporation,
limited liability company, institution, public benefit corporation, entity or
government (whether Federal, state, county, city, municipal or otherwise,
including, without limitation, any instrumentality, division, agency, body or
department thereof).
"Plan" shall mean an employee benefit plan, as defined in Section 3(3)
of ERISA, which the Company or any of its Subsidiaries maintains or makes or is
obligated to make contributions to on behalf of participants who are or were
employed by any of them.
"Qualified Plan" shall mean an employee pension benefit plan, as
defined in Section 3(2) of ERISA, which is intended to be tax-qualified under
Section 401(a) of the IRC, and which the Company, any of its Subsidiaries or any
ERISA Affiliate maintains or makes or is obligated to make contributions to on
behalf of participants who are or were employed by any of them.
"SEC" shall mean the Securities and Exchange Commission.
"SEC Documents" shall mean all reports, schedules, forms, statements
and other documents required to be filed with the SEC.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Senior Indebtedness" shall mean all Indebtedness under the Financing
Agreements whether or not existing or hereinafter incurred and whether fixed or
contingent.
"Stock" shall mean all shares, options, warrants, general or limited
partnership interests, participations or other equivalents (regardless of how
designated) of or in a corporation, partnership or equivalent entity whether
voting or nonvoting, including, without limitation, common stock, preferred
stock, or any other "equity security" (as such term is defined in Rule 3a11-1 of
the General Rules and Regulations promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended).
"Subsidiary" shall mean, with respect to any Person, (a) any
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corporation of which an aggregate of 50 percent or more of the outstanding Stock
(irrespective of whether, at the time, Stock of any other class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time, directly or indirectly, owned
legally or beneficially by such Person and/or one or more Subsidiaries of such
Person, and (b) any partnership in which such Person and/or one or more
Subsidiaries of such Person shall have an interest (whether in the form of
voting or participation in profits or capital contribution) of 50 percent or
more.
"Taxes" shall mean any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with respect
thereto, excluding taxes imposed on or measured by the net income of the
Purchaser by the jurisdictions under the laws of which the Purchaser are
organized or is engaged in business (other than by reason of the transactions
contemplated by this Agreement or the Ancillary Agreements) or any political
subdivision thereof.
"Title IV Plan" shall mean a Pension Plan, other than a Multiemployer
Plan, which is covered by Title IV of ERISA.
"Transactions" shall mean the purchase and sale of the Securities as
described in the recitals to this Agreement, and all transactions related or
incidental thereto.
"Unfunded Pension Liability" shall mean, at any time, the aggregate
amount, if any, of the sum of (i) the amount by which the present value of all
accrued benefits under each Title IV Plan exceeds the fair market value of all
assets of such Title IV Plan allocable to such benefits in accordance with Title
IV of ERISA, all determined as of the most recent valuation date for each such
Title IV Plan using the actuarial assumptions in effect under such Title IV
Plan, and (ii) for a period of five (5) years following a transaction reasonably
likely to be covered by Section 4069 of ERISA, the liabilities (whether or not
accrued) that could be avoided by the Company, any of its Subsidiaries or any
ERISA Affiliate as a result of such transaction.
"Withdrawal Liability" shall mean, at any time, the aggregate amount of
the liabilities, if any, pursuant to Section 4201 of ERISA, and any increase in
contributions pursuant to Section 4243 of ERISA with respect to all
Multiemployer Plans.
Any accounting term used in this Agreement shall have, unless
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otherwise specifically provided herein, the meaning customarily given such term
in accordance with GAAP and all financial computations hereunder shall be
computed, unless otherwise specifically provided herein, in accordance with GAAP
consistently applied and consistent with the Financials. That certain terms or
computations are explicitly modified by the phrase "in accordance with GAAP"
shall in no way be construed to limit the foregoing.
The words "herein," "hereof" and "hereunder" and other words of similar
import refer to this Agreement as a whole, including the Exhibits and Schedules
hereto, as the same may from time to time be amended, modified or supplemented
and not to any particular section, subsection or clause contained in this
Agreement. As used herein, the word "or" is not exclusive.
"The knowledge of the Company" shall mean the knowledge of the chief
executive officer and chairman of the Board, or the chief financial officer of
the Company.
Wherever from the context it appears appropriate, each term stated in
either the singular or plural shall include the singular and the plural, and
pronouns stated in the masculine, feminine or neuter gender shall include the
masculine, the feminine and the neuter.
II. THE PURCHASE OF SECURITIES
2.1. Sale and Purchase of Securities. (a) Subject to the terms and
conditions herein, on the Closing Date, the Purchaser agrees to purchase from
the Company, and the Company agrees to issue and sell to the Purchaser,
16,000,000 shares of Common Stock for an aggregate purchase price of $4,000,000.
The Closing shall take place in Indianapolis, Indiana on the Closing Date. On
the Closing Date, the Company will deliver to the Purchaser the Common Stock
sold by the Company, against delivery by the Purchaser of the purchase price to
the Company in immediately available funds.
2.2. Use of Proceeds. The Company shall use the proceeds of the sale of
the Securities to repay the $1,000,000 Demand Promissory Note, dated January 26,
1998 held by American Life and Casualty Insurance Company, purchase of real
estate and improvements that currently serve as the Company's headquarters,
purchase and originate automobile loans and fund working capital needs in
connection with such purchases and originations and for other purposes in the
ordinary course of business.
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III. CONDITIONS PRECEDENT
3.1. Conditions to the Purchase. Notwithstanding any other provision of
this Agreement and without affecting in any manner the rights of the Purchaser
hereunder, the Company shall have no rights under this Agreement (but shall have
all applicable obligations hereunder), and the Purchaser shall not be obligated
to make the purchases of the Securities hereunder, unless and until each of the
following conditions precedent shall have been fulfilled or waived by the
Purchaser, and the Company shall have delivered, where applicable, in form and
substance satisfactory to the Purchaser, and (unless otherwise indicated) each
dated the Closing Date:
(a) All of the representations and warranties of the Company contained
in this Agreement or in any of the Ancillary Agreements shall be correct in all
material respects as though made on and as of the Closing Date, except to the
extent that any such representation or warranty expressly relates to an earlier
date.
(b) The Purchaser shall have received a written certification by the
chief financial officer of the Company as to the matters set forth in Section
3.1(a) hereof.
(c) The Purchaser shall have purchased the Algood Debentures and common
stock held by the Algood Family pursuant to an agreement of even date herewith.
(d) Resolutions of the Board certified by the Secretary or Assistant
Secretary of the Company, to be dated, duly adopted and in full force and effect
as of the Closing Date, authorizing (i) the consummation of the Transactions and
(ii) specific officers to execute and deliver the Ancillary Agreements.
(e) Certificates of the secretary or an assistant secretary of the
Company, dated the Closing Date, as to the incumbency and signatures of the
officers or representatives of such entity executing this Agreement and the
Ancillary Agreements and any other certificates or other documents to be
delivered pursuant hereto or thereto, together with evidence of the incumbency
of such secretary or assistant secretary.
(f) Certificate of Existence from the Indiana Secretary of State, dated
the most recent practicable date prior to the Closing Date, showing that the
Company is organized and in good standing in the State of Indiana.
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(g) Each consent, license and approval required in connection with the
execution, delivery, performance, validity and enforceability of this Agreement,
the Ancillary Agreements, and the consummation of the Transactions; such
consents, licenses and approvals shall be in full force and effect and be
satisfactory in form and substance to the Purchaser.
(h) A copy of the certificate of incorporation and all amendments
thereto of each of the Company, General Acceptance Corporation Reinsurance,
Limited and copies of their respective by-laws all of which shall be certified
by the secretary or assistant secretary of each respective corporation as true
and correct as of the Closing Date.
(i) The Purchaser shall have received the Financials, projections and
such other financial and other information regarding the Company and its
Subsidiaries as the Purchaser deems appropriate.
(j) The Company shall have acquired the headquarters building of the
Company from Russell Algood.
(k) A stock certificate representing 16,000,000 shares of Common Stock.
(l) Employment Agreements for Malvin Algood and Russell Algood shall
have been terminated pursuant to separation agreements of even date herewith.
(m) Agreement by General Electric Capital Corporation to amend various
covenants and waive various covenant violations under the Credit Agreement
between the Company and General Electric Capital Corporation being executed
concurrently herewith.
(n) The waiting period (and any extension thereof) applicable to the
transactions contemplated by this Securities Purchase Agreement under the Hart,
Scott, Rodino Antitrust Improvement Act shall have been terminated or shall have
otherwise expired.
(o) Such additional information and materials as the Purchaser may
request.
IV. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser makes the following representations and warranties to the
Company, each and all of which shall survive the execution and delivery of this
Agreement and the Closing until the Securities are no longer held by the
Purchaser:
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4.1 Organization. The Purchaser is a corporation duly organized,
validly existing, and in good standing under the laws of the state of its
respective incorporation and it has full corporate power and authority to enter
into this Agreement and to perform its obligations hereunder. The Purchaser is a
wholly owned subsidiary of Conseco, Inc.
4.2 Due Execution, Delivery and Performance of the Agreement. The
execution, delivery, and performance of this Agreement (i) have been duly
authorized by all requisite corporate action by the Purchaser, and (ii) will not
violate the Certificate of Incorporation or Bylaws of the Purchaser or any
provision of any material indenture, mortgage, agreement, contract, or other
instrument to which it is a party or by which it or any of its material
properties or assets are bound, or be in conflict with, result in a breach of or
constitute (upon notice or lapse of time or both) a default under any such
indenture, mortgage, agreement, contract, or other instrument. This Agreement is
a legal, valid, and binding obligation of the Purchaser enforceable against the
Purchaser in accordance with its terms.
4.3 Investment Representation. The Purchaser represents and warrants
that it is purchasing the Securities for its own account, for investment
purposes and not with a view to the distribution thereof. The Purchaser agrees
that it will not, directly or indirectly, offer, transfer, sell, assign, pledge,
hypothecate or otherwise dispose of any of the Securities (or solicit any offers
to buy, purchase, or otherwise acquire or take a pledge of any of the
Securities), except in compliance with the Securities Act of 1933, as amended
(the "Act"), the rules and regulations thereunder and any applicable state
securities laws.
The Purchaser recognizes that investing in the Securities involves a
high degree of risk, and the Purchaser is in a financial position to hold the
Securities indefinitely and is able to bear the economic risk and withstand a
complete loss of its investment in the Securities. The Purchaser is a
sophisticated investor and is capable of evaluating the merits and risks of
investing in the Company. The Purchaser has had an opportunity to discuss the
Company's business, management and financial affairs with the Company's
management, has been given full and complete access to information concerning
the Company, and has utilized such access to its satisfaction for the purpose of
obtaining information or verifying information and has had the opportunity to
inspect the Company's operation. The Purchaser has had the opportunity to ask
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questions of, and receive answers from the management of the Company concerning
the Securities and the terms and conditions of this Agreement and the agreements
and transactions contemplated hereby, and to obtain any additional information
as the Purchaser may have requested in making its investment decision. The
Purchaser is an "accredited investor", as defined by Regulation D promulgated
under the Act. The Purchaser understands that the Securities have not been, and
will not be registered under the Securities Act by reason of their issuance by
the Company in a transaction exempt from the registration requirements of the
Act; and that the Securities must be held by the Purchaser indefinitely unless a
subsequent disposition thereof is registered under the Act or is exempt from
registration.
Notwithstanding anything to the contrary in this Agreement, no
investigation by the Purchaser shall affect the representations and warranties
of the Company under this Agreement or contained in any document, certificate or
other writing furnished or to be furnished to the Purchaser in connection with
the transactions contemplated hereby.
V. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
To induce the Purchaser to purchase the Securities as herein provided,
the Company makes the following representations and warranties to the Purchaser,
each and all of which shall survive the execution and delivery of this Agreement
and the Closing:
5.1. Corporate Existence; Compliance with Law. Each of the Company and
its Subsidiaries (i) is a corporation duly organized, validly existing and in
good standing under the laws of its state or country of incorporation; (ii) is
duly qualified to do business and is in good standing under the laws of each
jurisdiction where its ownership or lease of property or the conduct of its
business requires such qualification (except for jurisdictions in which such
failure to so qualify or to be in good standing would not have a Material
Adverse Effect); (iii) has the requisite corporate power and authority and the
legal right to own, pledge, mortgage or otherwise encumber and operate its
properties, to lease the property it operates under lease, and to conduct its
business as now, heretofore and proposed to be conducted; (iv) has all material
licenses, permits, consents or approvals from or by, and has made all material
filings with, and given all material notices to, all Governmental Authorities
having jurisdiction, to the extent required for such ownership, operation and
conduct (including,
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without limitation, the consummation of the Transactions) (v) is in compliance
with its certificate or articles of incorporation, as applicable, and by-laws;
and (vi) is in compliance with all applicable provisions of law where the
failure to comply would have a Material Adverse Effect.
5.2. Corporate Power; Authorization; Enforceable Obligations. The
execution, delivery and performance by the Company of this Agreement and the
Ancillary Agreements and all instruments and documents to be delivered by the
Company: (i) are within the Company's corporate power; (ii) have been duly
authorized by all necessary or proper corporate action; (iii) are not in
contravention of any provision of the Company's articles of incorporation or
by-laws; (iv) will not violate any law or regulation, including any and all
Federal and state securities laws, or any order or decree of any court or
governmental instrumentality; (v) except as set forth on Schedule 5.2, will not,
in any material respect, conflict with or result in the breach or termination
of, constitute a default under or accelerate any performance required by, any
indenture, mortgage, deed of trust, lease, agreement or other instrument 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 property is bound (including, but not
limited to, the Financing Agreements); and (vi) will not result in the creation
or imposition of any Lien upon any of the property of the Company or any of its
Subsidiaries. Except as set forth on Schedule 5.2, no consent, waiver or
authorization of, or filing with, any Person (including, without limitation, any
Governmental Authority), which has not been obtained as of the Closing Date is
required in connection with the execution, delivery, performance by, or validity
of this Agreement or the Ancillary Agreements. All such consents, waivers,
authorizations and filings, except as set forth on Schedule 5.2, have been
obtained or made. On or prior to the Closing Date, each of this Agreement and
the Ancillary Agreements shall have been duly executed and delivered on behalf
of the Company and each shall then constitute a legal, valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms, except to the extent that (a) enforcement may be limited by or subject to
the principles of public policy and any bankruptcy and insolvency,
reorganization, moratorium or similar laws now or hereafter in effect relating
to or limited to creditors' rights generally and (b) the remedy of specific
performance and injunctive and other forms of equitable relief are subject to
certain equitable defenses and to the discretion of the court or other similar
entity before which any proceeding thereafter may be brought.
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5.3. SEC Documents. (i) The Company has filed all required reports,
schedules, forms, statements and other documents with the SEC (such reports,
schedules, forms, statements and other documents are hereinafter referred to as
the "SEC Documents") or has filed adequate extensions therefor; (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 with applicable accounting requirements and
the published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with GAAP applied on a consistent basis during the
periods involved and fairly present 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).
5.4. 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 previously disclosed to Purchaser, 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, (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, (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
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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.
5.5. No Default. Neither the Company nor any of its Subsidiaries is in
default, nor to the best knowledge of any of the Company or any of its
Subsidiaries is any third party in default, under or with respect to any
contract, agreement, lease or other instrument, including, but not limited to,
the Financing Agreements, to which any of the Company or its Subsidiaries is a
party, except for any default which (either individually or collectively with
other defaults arising out of the same event or events) would not have a
Material Adverse Effect or which has been waived or will be waived pursuant to
the agreement with General Electric Capital Corporation referred to in Section
3.1(m) of this Agreement. No Default or Event of Default exists on the date
hereof.
5.6. Employment Matters. Hours worked by and payments made to employees
of the Company or any of its Subsidiaries are not in violation of the Fair Labor
Standards Act or any other applicable law dealing with such matters which would
have a Material Adverse Effect. All payments due from the Company or any of its
Subsidiaries on account of employee health and welfare insurance which would
have a Material Adverse Effect if not paid have been paid or accrued as a
liability on the books of the Company or such Subsidiary.
5.7. Other Ventures. Except as set forth in the Filed SEC Documents or
on Schedule 5.7 hereto, neither the Company nor any of its Subsidiaries is
engaged in any joint venture or partnership with any other Person.
5.8. Taxes. Except as set forth on Schedule 5.8 hereto, all Federal,
state, local and foreign tax returns, reports and
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statements required to be filed (including, for all purposes of this Section
5.8, any filed or to be filed on a consolidated, combined or unitary basis with
any other company) by each of the Company or any of its Subsidiaries have been
timely filed with the appropriate Governmental Authority and such returns,
reports and statements were true, correct and complete in all respects to the
knowledge of the Company. All Charges and other impositions shown to be due and
payable have been paid prior to the date on which any fine, penalty, interest or
late charge may be added thereto for nonpayment thereof, or any such fine,
penalty, interest or late charge has been paid. Proper and accurate amounts have
been withheld by each of the Company and its Subsidiaries from their respective
employees for all periods in full and complete compliance with the tax, social
security and unemployment withholding provisions of applicable Federal, state,
local and foreign law and such withholdings have been timely paid to the
respective Governmental Authorities. The Federal income tax returns of each of
the Company and its Subsidiaries have been examined by the IRS or the period
covered by such tax returns has been closed by applicable statute of
limitations, for all periods prior to 1995. The state income or franchise tax
returns of each of the Company and its subsidiaries have not been examined by
any relevant Governmental Authority and no examinations are noticed or in
process. Except as set forth on Schedule 5.8 hereto, all deficiencies asserted
as a result of such examinations or otherwise have been paid, fully settled or
adequately provided for in the Financials and no issue has been raised by a
Federal, state, local or foreign Governmental Authority in any such examination
which, by application of the same or similar principles, could reasonably be
expected to result in a proposed deficiency for any subsequent taxable period.
No other deficiency for any Charges has been proposed, asserted or assessed
against any of the Company or its Subsidiaries by any Federal, state, local or
foreign Governmental Authority. Except as set forth on Schedule 5.8 hereto, no
Federal, state, local or foreign tax audits or other administrative proceedings
or court proceedings are presently pending with regard to any Charges or tax
returns of any of the Company or its Subsidiaries. Except as described in
Schedule 5.8 hereto, none of the Company or its Subsidiaries has executed or
filed with the IRS or any other Governmental Authority any agreement or other
document extending, or having the effect of extending, the period of time within
which to file a tax return, report or statement which has not since been filed
or the period for assessment or collection of any Charges. None of the Company
or its subsidiaries has agreed or has been requested to or has an application
pending to make any adjustment under IRC Section 481(a) by reason of a change in
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accounting method or otherwise. Except as set forth on Schedule 5.8 hereto,
neither the Company nor any of its Subsidiaries is a party to, bound by or has
any obligation under any tax sharing or similar agreement or arrangement.
5.9. No Litigation. Except as set forth on Schedule 5.9 hereto, no
material action, claim or proceeding is now pending or, to the knowledge of the
Company or any of its Subsidiaries, threatened against any of the Company or any
of its Subsidiaries, at law, in equity or otherwise, before any court, board,
commission, agency or instrumentality of any Federal, state, local or foreign
government or of any agency or subdivision thereof, or before any arbitrator or
panel of arbitrators nor to the knowledge of any of the Company or any of its
Subsidiaries does a state of facts exist which is reasonably likely to give rise
to such proceedings. None of the matters set forth therein questions the
validity of any of this Agreement or the Ancillary Documents or any action taken
or to be taken pursuant thereto, or would have either individually or in the
aggregate a Material Adverse Effect.
5.10. Other Contracts. The Company has previously disclosed to the
Purchaser each agreement, contract, lease, sublease, promissory note or evidence
of indebtedness (whether written or oral) that involves the payment or potential
payment by or to the Company or any of its Subsidiaries of more than One Hundred
Thousand Dollars ($100,000) or that is otherwise individually material to the
business of the Company or such Subsidiary.
Each of such disclosed agreements, contracts, commitments, leases,
plans and other instruments, documents and undertakings is valid and enforceable
in accordance with its terms, except to the extent that (a) enforcement may be
limited by or subject to the principles of public policy and any bankruptcy and
insolvency, reorganization, moratorium or similar laws now or hereafter in
effect relating to or limited to creditors' rights generally and (b) the remedy
of specific performance and injunctive and other forms of equitable relief are
subject to certain equitable defenses and to the discretion of the court or
other similar entity before which any proceeding therefor may be brought. To the
knowledge of the Company, there does not exist any default by any third party to
any such agreement, contract, commitment, lease, plan or other instrument,
document or undertaking which default would have a Material Adverse Effect.
5.11. Licenses. The Company or any of its Subsidiaries hold active
licenses, permits or authorizations to transact business
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(collectively, the "Licenses") in all jurisdictions where the conduct of their
business requires such License unless the failure to obtain such License would
not result in a Material Adverse Effect. Except as set forth on Schedule 5.11,
no such License is the subject of a proceeding for suspension or revocation or
any similar proceedings and to the Company's knowledge no such suspension or
revocation has been threatened by any licensing authority.
5.12. Capital Structure of the Company. The entire authorized capital
stock of the Company consists solely of 25,000,000 shares of common stock, no
par value, of which 6,022,000 shares are issued and outstanding, and 5,000,000
shares of preferred stock, no par value, none of which are outstanding. All of
the issued and outstanding shares of capital stock of the Company have been duly
authorized, are not subject to preemptive rights and were issued in full
compliance with all federal, state and local laws, rules and regulations. Except
for the Securities and options to purchase Common Stock and warrants to purchase
Common Stock as set forth on Schedule 5.12 hereto and the options issuable under
the Company's Stock Option Plan to purchase 600,000 shares of Common Stock,
there are no outstanding or authorized subscriptions, options, warrants, calls,
commitments, agreements or arrangements of any kind relating to the issuance,
transfer, delivery or sale of any additional shares of capital stock or other
securities of the Company, including, but not limited to, any right of
conversion or exchange under any outstanding security, agreement or other
instrument. None of the options and warrants to purchase Common Stock will have
their vesting period accelerated as a result of this Agreement, the Ancillary
Agreements and the transactions contemplated hereby and thereby (other than any
subsequent tender offer by Conseco, Inc.). Except as set forth on Schedule 5.12,
there are no authorized or outstanding voting agreements, voting trusts,
proxies, stockholder agreements, rights to purchase, transfer restrictions, or
other similar arrangements with respect to any of the capital stock of the
Company of which the Company has knowledge. There are no outstanding or
authorized stock appreciation, phantom stock or similar rights with respect to
the capital stock of the Company. The Company has no indebtedness for dividends,
interest or other distributions declared or accumulated but unpaid with respect
to any securities of the Company. No Person has a claim arising out of a
violation of any preemptive rights of a stockholder of the Company, nor any
claim based upon ownership, repurchase or redemption of any shares of the
Company's capital stock.
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5.13. Broker's or Finder's Fee. No agent, broker, investment banker,
person or firm acting on behalf of or under the authority of the Company is or
will be entitled to any broker's or finder's fee or any other commission or
similar fee directly or indirectly from the Company in connection with any of
the transactions contemplated by this Agreement.
5.14. Disclosure. The Company has not withheld from the Purchaser any
material facts relating to the assets, properties, operations, financial
condition, or prospects of the Company. No representation or warranty of the
Company in this Agreement or the Ancillary Agreements, and no statement
contained in any certificate or other instrument delivered by the Company in
connection with the transactions contemplated by this Agreement or the Ancillary
Agreements contains or will contain any untrue statement of a material fact, or
omits or will omit to state a material fact necessary in order to make the
statements contained herein or therein not misleading.
VI. AFFIRMATIVE COVENANTS
The Company covenants and agrees that, unless the Purchaser shall
otherwise consent in writing, from and after the date hereof and until March 12,
2000:
6.1. Maintenance of Existence and Conduct of Business. The Company
shall and shall cause each of its Subsidiaries to (a) do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence, including, without limitation, all Licenses or similar qualifications
required by them to engage in their business in all jurisdictions in which they
are at the time so engaged; (b) continue to conduct its business substantially
as now conducted or as otherwise permitted hereunder; and (c) at all times
maintain, preserve and protect all of its trademarks and tradenames (if any),
and preserve all the remainder of its material property, in use or useful in the
conduct of its business and keep the same in good repair, working order and
condition (taking into consideration ordinary wear and tear) and from time to
time make, or cause to be made, all needful and proper repairs, renewals and
replacements, betterments and improvements thereto consistent with industry
practices, so that the business carried on in connection therewith may be
properly and advantageously conducted at all times.
6.2. Payment of Obligations. (a) Subject to subsection (b) below, the
Company shall and shall cause each of its Subsidiaries
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to pay and discharge or cause to be paid and discharged all its Indebtedness, as
and when due and payable (including any applicable grace period).
(b) Notwithstanding subsection (a) above, the Company and its
Subsidiaries shall not be required to pay Indebtedness so long as (i) it is in
good faith and by appropriate proceedings diligently contesting such
Indebtedness, (ii) any reserve required by GAAP shall have been made therefor,
and (iii) the contest will not result in the forfeiture or loss of any asset or
property of the Company or its Subsidiaries other than cash or its equivalent.
6.3. Books and Records. The Company shall and shall cause each of its
Subsidiaries to keep adequate records and books of account with respect to its
business activities, in which proper entries, reflecting all of their financial
transactions, are made in accordance with GAAP and on a basis consistent with
the Financials.
VII. SECURITIES LAW MATTERS
Each certificate or instrument representing the Securities shall bear a
legend substantially in the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED BY
THE HOLDER PURSUANT TO A SECURITIES PURCHASE AGREEMENT DATED MARCH 12,
1998 BY AND BETWEEN GENERAL ACCEPTANCE CORPORATION AND CIHC,
INCORPORATED, AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED ("THE ACT"), OR ANY APPLICABLE STATE SECURITIES LAWS.
THESE SECURITIES MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF
IN THE ABSENCE OF REGISTRATION, UNDER THE ACT, BASED ON AN OPINION
LETTER OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY OR A NO-ACTION
LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION."
VIII. MISCELLANEOUS
8.1. Press Releases. Except as required by applicable law, the
Purchaser and the Company will not give notice to third parties or otherwise
make any public statement or releases concerning this Agreement or the
transactions contemplated hereby except for such written information as shall
have been approved as to form and content by the other party, which approval
shall not be unreasonably withheld.
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8.2. Expenses. The Company will pay its own costs and expenses and the
costs and expenses of the Purchaser incident to preparing for, entering into and
carrying out this Agreement and the consummation of the transactions
contemplated hereby.
8.3. Indemnification. (a) The Company shall indemnify and hold harmless
the Purchaser against and from any losses, claims, damages, liabilities or
expenses ("Losses") insofar as the Losses (or actions in respect thereof) arise
out of or are based upon (i) the falsity or incorrectness as of the Closing Date
of any representation or warranty of the Company contained in or made pursuant
to this Agreement or any of the Ancillary Agreements, or (ii) the existence of
any condition, event or fact constituting, or which with notice or passage of
time, or both, would constitute a default in the observance of any of the
Company's undertakings or covenants under or pursuant to the Articles of
Incorporation. The Company shall also pay all reasonable attorneys' and
accountants' fees and costs and court costs incurred by the Purchaser in
enforcing the indemnification provided for in this Section 8.3(a).
Notwithstanding the foregoing, the Company expressly agrees and acknowledges
that the right of indemnification granted herein to the Purchaser shall not be
deemed to be the exclusive remedy available to the Purchaser for any of the
matters described in this Section 8.3(a).
(b) The Purchaser shall indemnify and hold harmless the Company against
and from any Losses insofar as the Losses (or actions in respect thereof) arise
out of or are based upon the falsity or incorrectness as of the Closing Date of
any representation or warranty of the Purchaser contained in or made pursuant to
this Agreement or any of the Ancillary Agreements. The Purchaser shall also pay
all reasonable attorneys' and accountants' fees and costs and court costs
incurred by the Company in enforcing the indemnification provided for in this
Section 8.3(b). Notwithstanding the foregoing, the Purchaser expressly agrees
and acknowledges that the right of indemnification granted herein to the Company
shall not be deemed to be the exclusive remedy available to the Company for any
of the matters described in this Section 8.3(b).
8.4. Assignment. Neither party may assign any of its rights, title,
interest, remedies, powers and duties hereunder without prior written consent of
the other parties hereto. However, the Company hereby consents to the
Purchaser's assignments, at any time or times, of any of the Purchaser's rights,
title, interests, remedies, powers and duties hereunder, whether evidenced by a
21
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writing or not, to any of the Affiliates of the Purchaser that are Subsidiaries
of Conseco, Inc. The Company agrees that it will use its best efforts to assist
and cooperate with the Purchaser in any manner reasonably requested by the
Purchaser to effect such assignments.
8.5. Remedies. The Purchaser' rights and remedies under this Agreement
shall be cumulative and nonexclusive of any other rights and remedies which the
Purchaser may have under any other agreement, including without limitation, the
Ancillary Agreements, by operation of law or otherwise.
8.6. Waiver of Jury Trial. The parties hereto waive all right to trial
by jury in any action or proceeding to enforce or defend any rights under this
Agreement or the Ancillary Agreements.
8.7. Arbitration. If a dispute arises as to interpretation of this
Agreement, it shall be decided finally by three arbitrators in an arbitration
proceeding conforming to the Rules of the American Arbitration Association
applicable to commercial arbitration. The arbitrators shall be appointed as
follows: one by the Company, one by the Purchaser and the third by the said two
arbitrators, or, if they cannot agree, then the third arbitrator shall be
appointed by the American Arbitration Association. The third arbitrator shall be
chairman of the panel and shall be impartial. The arbitration shall take place
in Carmel, Indiana. The decision of a majority of the Arbitrators shall be
conclusively binding upon the parties and final, and such decision shall be
enforceable as a judgment in any court of competent jurisdiction. Each party
shall pay the fees and expenses of the arbitrator appointed by it, its counsel
and its witnesses. The parties shall share equally the fees and expenses of the
impartial arbitrator.
8.8. Severability. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
8.9. Parties. This Agreement and the other Ancillary Agreements shall
be binding upon, and inure to the benefit of, the successors of the Company, and
the successors and assigns of the Purchaser.
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<PAGE>
8.10. Conflict of Terms. Except as otherwise provided in this Agreement
or any of the Ancillary Agreements by specific reference to the applicable
provisions of this Agreement, if any provision contained in this Agreement is in
conflict with, or inconsistent with, any provision in any of the Ancillary
Agreements, the provision contained in this Agreement shall govern and control.
8.11. GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS
AGREEMENT OR IN ANY OF THE ANCILLARY AGREEMENTS, IN ALL RESPECTS, INCLUDING ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THE
OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF INDIANA APPLICABLE TO CONTRACTS
MADE AND PERFORMED IN SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES THEREOF
REGARDING CONFLICT OF LAWS, AND ANY APPLICABLE LAWS OF THE UNITED STATES OF
AMERICA. THE PURCHASER AND THE COMPANY AGREE TO SUBMIT TO PERSONAL JURISDICTION
AND TO WAIVE ANY OBJECTION AS TO VENUE IN THE FEDERAL OR STATE COURTS IN THE
COUNTY OF MARION, STATE OF INDIANA. SERVICE OF PROCESS ON THE COMPANY OR THE
PURCHASER IN ANY ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF
THE ANCILLARY AGREEMENTS SHALL BE EFFECTIVE IF MAILED TO SUCH PARTY AT THE
ADDRESS LISTED IN SECTION 8.12 HEREOF. NOTHING HEREIN SHALL PRECLUDE THE
PURCHASER OR THE COMPANY FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY
OTHER JURISDICTION.
8.12. Notices. Except as otherwise provided herein, whenever it is
provided herein that any notice, demand, request, consent, approval, declaration
or other communication shall or may be given to or served upon any of the
parties by another, or whenever any of the parties desires to give or serve upon
another any communication with respect to this Agreement, each such notice,
demand, request, consent, approval, declaration or other communication shall be
in writing and either shall be delivered in person with receipt acknowledged or
by registered or certified mail, return receipt requested, postage prepaid, or
telecopied and confirmed by telecopy answer back, addressed as follows:
(a) If to the Purchaser at:
11825 North Pennsylvania Street
Carmel, Indiana 46032
Attention: John J. Sabl
Facsimile: (317) 817-6327
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(b) If to the Company at:
1025 Acuff Road
Bloomington, Indiana 47404
Attention: Chief Financial Officer
Facsimile: (812) 337-6029
With copies to:
Hackman McClarnon Hulett & Cracraft
Suite 2400 One Indiana Square
Indianapolis, Indiana 46204
Attention: Marvin L. Hackman
Facsimile: (317) 686-3288
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration or other communication hereunder shall be deemed
to have been duly given or served on the date on which personally delivered,
with receipt acknowledged, or upon receipt if the same shall have been
telecopied and confirmed by telecopy answer back or three (3) Business Days
after the same shall have been deposited in the United States mail. Failure or
delay in delivering copies of any notice, demand, request, consent, approval,
declaration or other communication to the persons designated above to receive
copies shall in no way adversely affect the effectiveness of such notice,
demand, request, consent, approval, declaration or other communication.
8.13. Survival. The representations and warranties of the Company and
the Purchaser in this Agreement shall survive the execution, delivery and
acceptance hereof by the parties hereto and the Closing for a period ending on
March 12, 2000.
8.14. Section Titles. The Section titles and Table of Contents
contained in this Agreement are and shall be without substantive meaning or
content of any kind whatsoever and are not a part of the agreement between the
parties hereto.
8.15. Counterparts. This Agreement may be executed in any number of
separate counterparts, each of which shall, collectively and separately,
constitute one agreement.
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<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed as of the
date first written above.
CIHC, INCORPORATED
As the Purchaser
By:/s/WILLIAM T. DEVANNEY
---------------------------
William T. Devanney, Senior
Vice President
GENERAL ACCEPTANCE CORPORATION
As the Company
By:/s/JAMES J. LARKIN
---------------------------
James J. Larkin, Chief
Executive Officer
SECURITIES PURCHASE AGREEMENT
Dated as of March 12, 1998
between
MALVIN L. ALGOOD
RUSSELL E. ALGOOD
JOHN G. ALGOOD
JANET ALGOOD
SHIRLEY COOK
STEVEN H. COOK
JEFFERY J. ALGOOD IRREVOCABLE TRUST
DAVID R. ALGOOD IRREVOCABLE TRUST
STUART R. ALGOOD IRREVOCABLE TRUST
and
CIHC, INCORPORATED
<PAGE>
TABLE OF CONTENTS
Section Page
- ------- ----
1. Definitions..................................................... 1
2. The Purchase of Securities...................................... 4
3. Conditions Precedent
3.1. Conditions to the Purchase................................ 5
4. Representations and Warranties of the Purchaser
4.1. Organization.............................................. 6
4.2. Due Execution, Delivery and Performance
of the Agreement............................ 6
4.3. Investment Representation................................. 7
5. Representations and Warranties of the Company
5.1. Enforceable Obligations................................... 7
5.2. Ownership of Securities; All Securities................... 8
5.3. No Litigation ............................................ 8
5.4. Broker's or Finder's Fees ................................ 8
6. Securities Law Matters.......................................... 8
7. Miscellaneous
7.1. Press Releases............................................ 8
7.2. Expenses.................................................. 9
7.3. Indemnification........................................... 9
7.4. Assignment................................................ 9
7.5. Remedies.................................................. 10
7.6. Waiver of Jury Trial...................................... 10
7.7. Arbitration............................................... 10
7.8. Severability.............................................. 10
7.9. Parties................................................... 10
7.10. Conflict of Terms......................................... 10
7.11. Governing Law............................................. 10
7.12. Notices................................................... 11
7.13. Survival.................................................. 12
7.14. Section Titles............................................ 12
7.15. Counterparts.............................................. 12
EXHIBIT A - COPY OF DEBENTURES
EXHIBIT B - FORM OF COMPANY SECURITIES PURCHASE AGREEMENT
EXHIBIT C - FORM OF REAL ESTATE PURCHASE AGREEMENT
i
<PAGE>
EXHIBIT D - FORM OF EMPLOYMENT AGREEMENT FOR MALVIN ALGOOD
EXHIBIT E - FORM OF EMPLOYMENT AGREEMENT FOR RUSSELL ALGOOD
ii
<PAGE>
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT, dated as of March 12, 1998 by and among
MALVIN L. ALGOOD, RUSSELL E. ALGOOD, JOHN G. ALGOOD, JANET ALGOOD, SHIRLEY COOK,
STEVEN H. COOK, JEFFERY J. ALGOOD IRREVOCABLE TRUST, DAVID R. ALGOOD IRREVOCABLE
TRUST and STUART R. ALGOOD IRREVOCABLE TRUST (the "Sellers") and CIHC,
INCORPORATED, a Delaware corporation (the "Purchaser").
W I T N E S S E T H:
WHEREAS, upon the terms and conditions hereinafter provided, the
Sellers have agreed to sell to the Purchaser, and the Purchaser has agreed to
purchase from the Sellers, $4,750,000 of 12% Subordinated Convertible Notes of
General Acceptance Corporation, a Delaware corporation (the "Company"), copies
of which are attached hereto as Exhibit A (the "Debentures") convertible into
shares of Common Stock, no par value, of the Company (the "Common Stock") and
3,814,000 shares of Common Stock held by the Sellers for $.30 per share (the
Debentures and the Common Stock are together referred to herein as the
"Securities").
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, it is agreed as follows:
I. DEFINITIONS
In addition to the defined terms appearing above, capitalized terms
used in this Agreement shall have (unless otherwise provided elsewhere in this
Agreement) the following respective meanings when used herein:
"Affiliate" shall mean, with respect to any Person, (i) each Person
that, directly or indirectly, owns or controls, whether of record or
beneficially, or as a trustee, guardian or other fiduciary, 5 percent or more of
the Stock having ordinary voting power in the election of directors of such
Person, (ii) each Person that controls, is controlled by or is under common
control with such Person or any Affiliate of such Person, or (iii) each of such
Person's officers, directors and general partners. For the purpose of this
definition, "control" of a Person shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of its management or
policies, whether through the ownership of voting securities, by contract or
otherwise. For purposes of this definition the Purchaser shall not be deemed to
be an Affiliate of the Company or any of the Affiliates of the Company
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<PAGE>
by reason of the purchase of the Debentures.
"Agreement" shall mean this Securities Purchase Agreement, including
all amendments, modifications and supplements hereto and any appendices,
exhibits or schedules to any of the foregoing, and shall refer to this
Securities Purchase Agreement as the same may be in effect at the time such
reference becomes operative.
"Ancillary Agreements" shall mean any supplemental agreement,
undertaking, instrument, document or other writing executed by the Sellers, the
Company or any of its Subsidiaries or by any of their Stockholders as a
condition to purchasing any of the Securities under this Agreement or otherwise
in connection herewith, including, without limitation, the Real Estate Purchase
Agreement and the Company Securities Purchase.
"Board" shall mean the Company's Board of Directors.
"Business Day" shall mean any day that is not a Saturday, a Sunday or a
day on which banks are required or permitted to be closed in the State of
Indiana.
"Closing Date" shall mean that date upon which the Closing occurs and
shall be a date agreed upon between the Company and the Purchaser and "Closing"
shall mean the moment on the Closing Date on which the purchase and sale of the
Securities is made.
"Company Securities Purchase Agreement" shall mean the Securities
Purchase Agreement by and among Purchaser and the Company, in substantially the
form attached hereto as Exhibit B.
"Default" shall mean any event which, with the passage of time or
notice or both, would, unless cured or waived, become an Event of Default.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time.
"Indebtedness" of any Person shall mean (i) all indebtedness of such
Person for borrowed money (including, without limitation, reimbursement and all
other obligations with respect to surety bonds, letters of credit and bankers'
acceptances, whether or not matured), but not including accounts payable and
other obligations to trade creditors and normal operating expenses characterized
as liabilities incurred in the ordinary course of business, (ii) all obligations
evidenced by notes, bonds, debentures or similar
2
<PAGE>
instruments (except where such instruments evidence repayment of amounts
referred to in subparagraph (i)), (iii) all Capital Lease Obligations, and (iv)
in the case of the Company, the Debentures.
"Licenses" shall have the meaning assigned to such term in Section
5.19; individually a "License."
"Lien" shall mean any mortgage or deed of trust, pledge, hypothecation,
assignment, deposit arrangement, lien, Charge, claim, security interest,
easement or encumbrance, preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including, without
limitation, any Capital Lease or title retention agreement, any financing lease
having substantially the same economic effect as any of the foregoing, and the
filing of, or agreement to give, any financing statement perfecting a security
interest under the Uniform Commercial Code or comparable law of any
jurisdiction).
"Material Adverse Effect" shall mean any material adverse effect on the
business, assets, operations, or financial or other condition or prospects of
the Company or any of its Subsidiaries.
"Obligations" shall mean any principal, interest, premium, penalties,
fees and other liabilities and obligations due under the documentation governing
any Indebtedness (including interest after the commencement of any bankruptcy,
insolvency, rehabilitation, liquidation, conservation, supervision or similar
proceedings).
"Person" shall mean any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, association, corporation,
limited liability company, institution, public benefit corporation, entity or
government (whether Federal, state, county, city, municipal or otherwise,
including, without limitation, any instrumentality, division, agency, body or
department thereof).
"Real Estate Purchase Agreement" shall mean the Real Estate Purchase
Agreement by and among the Company and Russell E. Algood in substantially the
form attached hereto as Exhibit C.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Senior Indebtedness" shall mean all Indebtedness under the Financing
Agreements whether or not existing or hereinafter incurred and whether fixed or
contingent.
3
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"Stock" shall mean all shares, options, warrants, general or limited
partnership interests, participations or other equivalents (regardless of how
designated) of or in a corporation, partnership or equivalent entity whether
voting or nonvoting, including, without limitation, common stock, preferred
stock, or any other "equity security" (as such term is defined in Rule 3a11-1 of
the General Rules and Regulations promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended).
"Subsidiary" shall mean, with respect to any Person, (a) any
corporation of which an aggregate of 50 percent or more of the outstanding Stock
(irrespective of whether, at the time, Stock of any other class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time, directly or indirectly, owned
legally or beneficially by such Person and/or one or more Subsidiaries of such
Person, and (b) any partnership in which such Person and/or one or more
Subsidiaries of such Person shall have an interest (whether in the form of
voting or participation in profits or capital contribution) of 50 percent or
more.
"Transactions" shall mean the purchase and sale of the Securities as
described in the recitals to this Agreement, and all transactions related or
incidental thereto.
Any accounting term used in this Agreement shall have, unless otherwise
specifically provided herein, the meaning customarily given such term in
accordance with GAAP and all financial computations hereunder shall be computed,
unless otherwise specifically provided herein, in accordance with GAAP
consistently applied and consistent with the Financials. That certain terms or
computations are explicitly modified by the phrase "in accordance with GAAP"
shall in no way be construed to limit the foregoing.
The words "herein," "hereof" and "hereunder" and other words of similar
import refer to this Agreement as a whole, including the Exhibits and Schedules
hereto, as the same may from time to time be amended, modified or supplemented
and not to any particular section, subsection or clause contained in this
Agreement. As used herein, the word "or" is not exclusive.
Wherever from the context it appears appropriate, each term stated in
either the singular or plural shall include the singular and the plural, and
pronouns stated in the masculine, feminine or neuter gender shall include the
masculine, the feminine and the
4
<PAGE>
neuter.
II. THE PURCHASE OF SECURITIES
Subject to the terms and conditions herein, on the Closing Date, the
Purchaser agrees to purchase from the Sellers, and the Sellers agree, jointly
and severally, to sell to the Purchaser, the Debentures for an aggregate
purchase price of $4,750,000 (General Acceptance Corporation will pay the
accrued interest up to the Closing Date). Copies of the Debentures are attached
hereto as Exhibit A. Subject to the terms and conditions herein, on the Closing
Date, the Purchaser agrees to purchase from the Sellers, and the Sellers agree,
jointly and severally, to sell to the Purchaser an aggregate of 3,814,000 shares
of Common Stock for $.30 per share; provided, however, that in the event
Purchaser, or any of its affiliates purchases shares of Common Stock for more
than $.30 per share after the date hereof and until such time as Purchaser and
its affiliates owns 100% of the outstanding Common Stock, if ever, Purchaser
shall pay the Sellers an additional aggregate amount equal to the number of
shares of Common Stock purchased pursuant to this Agreement times the amount by
which the highest price per share paid by Purchaser for shares of Common Stock
exceeds $.30 per share. The Closing shall take place in Indianapolis, Indiana on
the Closing Date. On the Closing Date, the Sellers will deliver to the Purchaser
the Securities, against delivery by the Purchaser of the purchase price to the
Sellers in immediately available funds.
III. CONDITIONS PRECEDENT
3.1. Conditions to the Purchase. Notwithstanding any other provision of
this Agreement and without affecting in any manner the rights of the Purchaser
hereunder, the Sellers shall have no rights under this Agreement (but shall have
all applicable obligations hereunder), and the Purchaser shall not be obligated
to make the purchases of the Securities hereunder, unless and until each of the
following conditions precedent shall have been fulfilled or waived by the
Purchaser, and the Sellers shall have delivered, where applicable, in form and
substance satisfactory to the Purchaser, and (unless otherwise indicated) each
dated the Closing Date:
(a) All of the representations and warranties of the Sellers contained
in this Agreement or in any of the Ancillary Agreements shall be correct in all
material respects as though made on and as of the Closing Date, except to the
extent that any such representation or warranty expressly relates to an earlier
date.
5
<PAGE>
(b) The waiting period (and any extension thereof) applicable to the
transactions contemplated by this Securities Purchase Agreement under the Hart
Scott Rodino Antitrust Improvement Act shall have been terminated or shall have
otherwise expired.
(c) Resolutions of the Board certified by the Secretary or Assistant
Secretary of the Company, to be dated, duly adopted and in full force and effect
as of the Closing Date, authorizing (i) the consummation of the Transactions and
(ii) specific officers to execute and deliver the Ancillary Agreements.
(d) Certificate of Existence from the Indiana Secretary of State, dated
the most recent practicable date prior to the Closing Date, showing that the
Company is organized and in good standing in the State of Indiana.
(e) Each consent, license and approval required in connection with the
execution, delivery, performance, validity and enforceability of this Agreement,
the Ancillary Agreements, and the consummation of the Transactions; such
consents, licenses and approvals shall be in full force and effect and be
satisfactory in form and substance to the Purchaser.
(f) A copy of the certificate of incorporation and all amendments
thereto of each of the Company, General Acceptance Corporation Reinsurance,
Limited and copies of their respective by-laws all of which shall be certified
by the secretary or assistant secretary of each respective corporation as true
and correct as of the Closing Date.
(g) The closing of the transactions under the Company Securities
Purchase Agreement.
(h) The closing of the transactions under the Real Estate Purchase
Agreement and resolution of issues related to the mortgage provided by First
Chicago NBD National Bank in a manner satisfactory to Purchaser in its sole
discretion.
(i) The Debentures and 3,814,000 shares of Common Stock are free and
clear of all Liens.
(j) Employment Agreements for Malvin Algood and Russell Algood, copies
of which are attached hereto as Exhibits D and E, respectively, shall have been
terminated in exchange for full payment thereunder, and Malvin Algood and
Russell Algood shall have resigned from all of their positions with the Company
and its
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subsidiaries.
(k) Agreement by General Electric Capital Corporation to amend the
terms of its loan agreement with the Company which amendment shall be
satisfactory to Purchaser in its sole discretion;
(l) Such additional information and materials as the Purchaser may
request.
IV. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser makes the following representations and warranties to the
Sellers, each and all of which shall survive the execution and delivery of this
Agreement and the Closing until the Securities are no longer held by the
Purchaser:
4.1 Organization. The Purchaser is a corporation duly organized,
validly existing, and in good standing under the laws of the state of its
incorporation and it has full corporate power and authority to enter into this
Agreement and to perform its obligations hereunder. The Purchaser is a wholly
owned subsidiary of Conseco, Inc.
4.2 Due Execution, Delivery and Performance of the Agreement. The
execution, delivery, and performance of this Agreement (i) have been duly
authorized by all requisite corporate action by the Purchaser, and (ii) will not
violate the Certificate of Incorporation or Bylaws of the Purchaser or any
provision of any material indenture, mortgage, agreement, contract, or other
instrument to which it is a party or by which it or any of its material
properties or assets are bound, or be in conflict with, result in a breach of or
constitute (upon notice or lapse of time or both) a default under any such
indenture, mortgage, agreement, contract, or other instrument. This Agreement is
a legal, valid, and binding obligation of the Purchaser enforceable against the
Purchaser in accordance with its terms.
4.3 Investment Representation. The Purchaser represents and warrants
that it is purchasing the Securities for its own account, for investment
purposes and not with a view to the distribution thereof. The Purchaser agrees
that it will not, directly or indirectly, offer, transfer, sell, assign, pledge,
hypothecate or otherwise dispose of any of the Securities (or solicit any offers
to buy, purchase, or otherwise acquire or take a pledge of any of the
Securities), except in compliance with the Securities Act of
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1933, as amended (the "Act"), the rules and regulations thereunder and any
applicable state securities laws.
V. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
To induce the Purchaser to purchase the Securities as herein provided,
the Sellers, jointly and severally, make the following representations and
warranties to the Purchaser, each and all of which shall survive the execution
and delivery of this Agreement and the Closing:
5.1. Enforceable Obligations. The execution, delivery and performance
by the Sellers of this Agreement and the Ancillary Agreements and all
instruments and documents to be delivered by the Sellers: (i) will not violate
any law or regulation, including any and all Federal and state securities laws,
or any order or decree of any court or governmental instrumentality; (ii) except
as set forth on Schedule 5.1, will not, in any material respect, conflict with
or result in the breach or termination of, constitute a default under or
accelerate any performance required by, any indenture, mortgage, deed of trust,
lease, agreement or other instrument to which any of the Sellers is a party or
by which any of the Sellers or any of their property is bound; and (iii) will
not result in the creation or imposition of any Lien upon any of the Securities.
Except as set forth on Schedule 5.1, no consent, waiver or authorization of, or
filing with, any Person (including, without limitation, any Governmental
Authority), which has not been obtained as of the Closing Date is required in
connection with the execution, delivery, performance by, or validity of this
Agreement or the Ancillary Agreements. All such consents, waivers,
authorizations and filings, except as set forth on Schedule 5.1, have been
obtained or made. On or prior to the Closing Date, each of this Agreement and
the Ancillary Agreements shall have been duly executed and delivered by each of
the Sellers and each shall then constitute a legal, valid and binding obligation
of the Sellers enforceable against the Sellers in accordance with its terms,
except to the extent that (a) enforcement may be limited by or subject to the
principles of public policy and any bankruptcy and insolvency, reorganization,
moratorium or similar laws now or hereafter in effect relating to or limited to
creditors' rights generally and (b) the remedy of specific performance and
injunctive and other forms of equitable relief are subject to certain equitable
defenses and to the discretion of the court or other similar entity before which
any proceeding thereafter may be brought.
8
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5.2. Ownership of Securities; All Securities. The Sellers have good and
marketable title to all of the Securities, free and clear of all Liens. The
Securities include all of the securities of the Company owned by any of the
Sellers.
5.3. No Litigation. No material action, claim or proceeding is now
pending or, to the knowledge of the Sellers, threatened against any of the
Sellers, at law, in equity or otherwise, before any court, board, commission,
agency or instrumentality of any Federal, state, local or foreign government or
of any agency or subdivision thereof, or before any arbitrator or panel of
arbitrators nor to the knowledge of any of the Sellers does a state of facts
exist which is reasonably likely to give rise to such proceedings which
questions the validity of any of this Agreement or the Ancillary Documents or
any action taken or to be taken pursuant thereto.
5.4. Broker's or Finder's Fee. No agent, broker, investment banker,
person or firm acting on behalf of or under the authority of any of the Sellers
is or will be entitled to any broker's or finder's fee or any other commission
or similar fee directly or indirectly from the Company in connection with any of
the transactions contemplated by this Agreement.
VI. SECURITIES LAW MATTERS
Each certificate or instrument representing the Securities shall bear a
legend substantially in the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED BY
THE HOLDER PURSUANT TO A SECURITIES PURCHASE AGREEMENT DATED APRIL 11,
1997 BY AND BETWEEN GENERAL ACCEPTANCE CORPORATION AND CAPITOL AMERICAN
LIFE INSURANCE COMPANY, AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED ("THE ACT"), OR ANY APPLICABLE STATE
SECURITIES LAWS. THESE SECURITIES MAY NOT BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF REGISTRATION, UNDER THE ACT,
BASED ON AN OPINION LETTER OF COUNSEL REASONABLE SATISFACTORY TO THE
COMPANY OR A NO-ACTION LETTER FROM THE SECURITIES AND EXCHANGE
COMMISSION."
VII. MISCELLANEOUS
7.1. Press Releases. Except as required by applicable law, the
Purchaser and the Sellers will not give notice to third parties
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<PAGE>
or otherwise make any public statement or releases concerning this Agreement or
the transactions contemplated hereby except for such written information as
shall have been approved in writing as to form and content by the other party,
which approval shall not be unreasonably withheld.
7.2. Expenses. The Sellers will pay their own costs and expenses and
the Purchaser 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.
7.3. Indemnification. (a) The Sellers shall indemnify and hold harmless
the Purchaser against and from any losses, claims, damages, liabilities or
expenses ("Losses") insofar as the Losses (or actions in respect thereof) arise
out of or are based upon the falsity or incorrectness as of the Closing Date of
any representation or warranty of the Sellers contained in or made pursuant to
this Agreement or any of the Ancillary Agreements. The Sellers shall also pay
all reasonable attorneys' and accountants' fees and costs and court costs
incurred by the Purchaser in enforcing the indemnification provided for in this
Section 7.3(a). Notwithstanding the foregoing, the Sellers expressly agree and
acknowledge that the right of indemnification granted herein to the Purchaser
shall not be deemed to be the exclusive remedy available to the Purchaser for
any of the matters described in this Section 7.3(a).
(b) The Purchaser shall indemnify and hold harmless the Sellers against
and from any Losses insofar as the Losses (or actions in respect thereof) arise
out of or are based upon the falsity or incorrectness as of the Closing Date of
any representation or warranty of the Purchaser contained in or made pursuant to
this Agreement or any of the Ancillary Agreements. The Purchaser shall also pay
all reasonable attorneys' and accountants' fees and costs and court costs
incurred by the Sellers in enforcing the indemnification provided for in this
Section 7.3(b). Notwithstanding the foregoing, the Purchaser expressly agrees
and acknowledges that the right of indemnification granted herein to the Sellers
shall not be deemed to be the exclusive remedy available to the Sellers for any
of the matters described in this Section 7.3(b).
7.4. Assignment. Neither party may assign any of its rights, title,
interest, remedies, powers and duties hereunder without prior written consent of
the other parties hereto. However, the
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Sellers hereby consent to the Purchaser's assignments, at any time or times, of
any of the Purchaser's rights, title, interests, remedies, powers and duties
hereunder, whether evidenced by a writing or not, to any of the Affiliates of
the Purchaser that are Subsidiaries of Conseco, Inc. The Sellers agree that they
will use their best efforts to assist and cooperate with the Purchaser in any
manner reasonably requested by the Purchaser to effect such assignments.
7.5. Remedies. The Purchaser's rights and remedies under this Agreement
shall be cumulative and nonexclusive of any other rights and remedies which the
Purchaser may have under any other agreement, including without limitation, the
Ancillary Agreements, by operation of law or otherwise.
7.6. Waiver of Jury Trial. The parties hereto waive all right to trial
by jury in any action or proceeding to enforce or defend any rights under this
Agreement or the Ancillary Agreements.
7.7. Arbitration. If a dispute arises as to interpretation of this
Agreement, it shall be decided finally by three arbitrators in an arbitration
proceeding conforming to the Rules of the American Arbitration Association
applicable to commercial arbitration. The arbitrators shall be appointed as
follows: one by the Sellers, one by the Purchaser and the third by the said two
arbitrators, or, if they cannot agree, then the third arbitrator shall be
appointed by the American Arbitration Association. The third arbitrator shall be
chairman of the panel and shall be impartial. The arbitration shall take place
in Carmel, Indiana. The decision of a majority of the Arbitrators shall be
conclusively binding upon the parties and final, and such decision shall be
enforceable as a judgment in any court of competent jurisdiction. Each party
shall pay the fees and expenses of the arbitrator appointed by it, its counsel
and its witnesses. The parties shall share equally the fees and expenses of the
impartial arbitrator.
7.8. Severability. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
7.9. Parties. This Agreement and the other Ancillary Agreements shall
be binding upon, and inure to the benefit of, the
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<PAGE>
successors of the Sellers, and the successors and assigns of the Purchaser.
7.10. Conflict of Terms. Except as otherwise provided in this Agreement
or any of the Ancillary Agreements by specific reference to the applicable
provisions of this Agreement, if any provision contained in this Agreement is in
conflict with, or inconsistent with, any provision in any of the Ancillary
Agreements, the provision contained in this Agreement shall govern and control.
7.11. GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS
AGREEMENT OR IN ANY OF THE ANCILLARY AGREEMENTS, IN ALL RESPECTS, INCLUDING ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THE
OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF INDIANA APPLICABLE TO CONTRACTS
MADE AND PERFORMED IN SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES THEREOF
REGARDING CONFLICT OF LAWS, AND ANY APPLICABLE LAWS OF THE UNITED STATES OF
AMERICA. THE PURCHASER AND THE SELLERS AGREE TO SUBMIT TO PERSONAL JURISDICTION
AND TO WAIVE ANY OBJECTION AS TO VENUE IN THE FEDERAL OR STATE COURTS IN THE
COUNTY OF MARION, STATE OF INDIANA. SERVICE OF PROCESS ON THE SELLERS OR THE
PURCHASER IN ANY ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF
THE ANCILLARY AGREEMENTS SHALL BE EFFECTIVE IF MAILED TO SUCH PARTY AT THE
ADDRESS LISTED IN SECTION 7.9 HEREOF. NOTHING HEREIN SHALL PRECLUDE THE
PURCHASER OR THE SELLERS FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY
OTHER JURISDICTION.
7.12. Notices. Except as otherwise provided herein, whenever it is
provided herein that any notice, demand, request, consent, approval, declaration
or other communication shall or may be given to or served upon any of the
parties by another, or whenever any of the parties desires to give or serve upon
another any communication with respect to this Agreement, each such notice,
demand, request, consent, approval, declaration or other communication shall be
in writing and either shall be delivered in person with receipt acknowledged or
by registered or certified mail, return receipt requested, postage prepaid, or
telecopied and confirmed by telecopy answer back, addressed as follows:
(a) If to the Purchaser at:
11825 North Pennsylvania Street
Carmel, Indiana 46032
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Attention: John J. Sabl
Facsimile: (317) 817-6327
(b) If to the Sellers at:
Mr. Russell E. Algood
2800 South Olcott Boulevard
Bloomington, Indiana 47401
Mr. Malvin L. Algood
3810 Easy Street
Bloomington, Indiana 47404
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration or other communication hereunder shall be deemed
to have been duly given or served on the date on which personally delivered,
with receipt acknowledged, or upon receipt if the same shall have been
telecopied and confirmed by telecopy answer back or three (3) Business Days
after the same shall have been deposited in the United States mail. Failure or
delay in delivering copies of any notice, demand, request, consent, approval,
declaration or other communication to the persons designated above to receive
copies shall in no way adversely affect the effectiveness of such notice,
demand, request, consent, approval, declaration or other communication.
7.13. Survival. The representations and warranties of the Sellers in
this Agreement shall survive the execution, delivery and acceptance hereof by
the parties hereto and the Closing.
7.14. Section Titles. The Section titles and Table of Contents
contained in this Agreement are and shall be without substantive meaning or
content of any kind whatsoever and are not a part of the agreement between the
parties hereto.
7.15. Counterparts. This Agreement may be executed in any number of
separate counterparts, each of which shall, collectively and separately,
constitute one agreement.
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IN WITNESS WHEREOF, this Agreement has been duly executed as of the
date first written above.
CIHC, INCORPORATED
As the Purchaser
By:/s/ WILLIAM T. DEVANNEY
---------------------------
William T. Devanney, Senior
Vice President
/s/MALVIN L. ALGOOD
------------------------------
Malvin L. Algood
/s/RUSSELL E. ALGOOD
------------------------------
Russell E. Algood
/s/JOHN G. ALGOOD
------------------------------
John G. Algood
/s/JANET ALGOOD
------------------------------
Janet Algood
/s/SHIRLEY COOK
------------------------------
Shirley Cook
/s/STEVEN H. COOK
------------------------------
Steven H. Cook
JEFFERY J. ALGOOD IRREVOCABLE
TRUST
By:/s/JOHN G. ALGOOD
------------------------------
John G. Algood, Trustee
By:/s/SHIRLEY COOK
------------------------------
Shirley Cook, Trustee
<PAGE>
DAVID R. ALGOOD IRREVOCABLE
TRUST
By:/s/JOHN G. ALGOOD
------------------------------
John G. Algood, Trustee
By:/s/SHIRLEY COOK
------------------------------
Shirley Cook, Trustee
STUART R. ALGOOD IRREVOCABLE
TRUST
By:/s/JOHN G. ALGOOD
------------------------------
John G. Algood, Trustee
By:/s/SHIRLEY COOK
------------------------------
Shirley Cook, Trustee
ASSIGNMENT AGREEMENT
This Assignment Agreement (the "Agreement"), is made by and between
CIHC, Incorporated, a Delaware corporation ("Assignor") and Great American
Reserve Insurance Company, a Texas stock life insurance company ("GARCO")and
witnesses that:
WHEREAS, Assignor has entered into that certain Securities Purchase
Agreement dated as of March 12, 1998 by and between Assignor and certain
shareholders and holders of $4,750,000 of 12% Subordinated Convertible Notes
(the "Notes") of General Acceptance Corporation, an Indiana corporation, a true
and correct copy of which is attached hereto and made a part hereof by reference
(the "Purchase Agreement"); and
WHEREAS, Assignor desires to assign to GARCO the right to acquire the
Notes under the Purchase Agreement and GARCO desires to purchase the Notes.
NOW, THEREFORE, in consideration of the foregoing recitals and of the
mutual covenants and agreements contained herein, and for good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
undersigned hereby agree as follows:
1. Assignor hereby assigns and transfers to GARCO the right to purchase
the Notes under the Purchase Agreement.
2. GARCO hereby assumes and agrees to perform all of the duties and
obligations of Assignor under the terms and conditions of the Purchase Agreement
with respect to the purchase of the Notes.
3. This Agreement shall be governed by the laws of the state of
Indiana.
4. This Agreement shall inure to the benefit of and shall be binding
upon the successors and assigns of the parties hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as of March 24, 1998.
CIHC, INCORPORATED GREAT AMERICAN RESERVE INSURANCE
COMPANY
By:/s/WILLIAM T. DEVANNEY By:/s/ROLLIN M. DICK
----------------------------- ----------------------------
William T. Devanney, Rollin M. Dick,
Senior Vice President Executive Vice President
