SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): August 25, 1996
AMERICAN TRAVELLERS CORPORATION
(Exact name of Registrant as specified in its charter)
PENNSYLVANIA 0-14391 23-1738097
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
3220 Tillman Drive
Bensalem, PA 19020
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (215) 244-1600
ITEM 2: Acquisitions or Disposition of Assets.
The Company's press release dated August 26, 1996 filed
herewith as Exhibit 2.2 is incorporated herein by this reference.
ITEM 5: Other Events.
The Company's press release dated August 26, 1996 filed
herewith as Exhibit 2.2 is incorporated herein by this reference.
ITEM 7: Financial Statements and Exhibits.
Exhibits.
2.1 Agreement and Plan of Merger dated as of August 25,
1996 by and between Conseco, Inc. and American Travellers
Corporation with a list of omitted schedules thereto.
2.2 Press Release.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
AMERICAN TRAVELLERS CORPORATION
BY: /s/ SUSAN T. MANKOWSKI
Susan T. Mankowski
Vice President - Administration
DATE: August 28, 1996
EXHIBIT INDEX
Exhibit Page
2.1 Agreement and Plan of Merger dated as
of August 25, 1996 by and
between Conseco, Inc. and
American Travellers
Corporation with a list of
omitted schedules thereto
2.2 Press Release
The registrant hereby agrees to supplementally furnish
to the Securities and Exchange Commission, upon request, copies
of any omitted schedule to the Agreement and Plan of Merger dated
as of August 25, 1996 by and between Conseco, Inc. and American
Travellers Corporation.
AMERICAN TRAVELLERS CORPORATION
BY:/s/ SUSAN T. MANKOWSKI
Susan T. Mankowski
Vice President - Administration
DATE: August 28, 1996
EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
DATED AS OF AUGUST 25, 1996
By and Between
CONSECO, INC.
and
AMERICAN TRAVELLERS CORPORATION
TABLE OF CONTENTS
Page
ARTICLE I
THE MERGER 1
1.1 The Merger 1
1.2 Closing 1
1.3 Effective Time 2
1.4 Articles of Incorporation 2
1.5 By-Laws 2
1.6 Directors 2
1.7 Officers 2
1.8 Conversion of Shares 2
1.9 Exchange of Certificates 4
1.10 Conseco Substituted under Indenture and Debentures. 7
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY 7
2.1 Organization, Standing and Corporate Power 7
2.2 Capital Structure 8
2.3 Authority; Noncontravention 9
2.4 SEC Documents 10
2.5 Absence of Certain Changes or Events 11
2.6 Absence of Changes in Benefit Plans 11
2.7 Benefit Plans 12
2.8 Taxes 12
2.9 No Excess Parachute Payments; Section 162(m) of
the Code 13
2.10 Voting Requirements 14
2.11 Compliance with Applicable Laws 14
2.12 Opinion of Financial Advisor 15
2.13 Brokers 15
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF CONSECO 15
3.1 Organization, Standing and Corporate Power 15
3.2 Conseco Capital Structure 16
3.3 Authority; Noncontravention 17
3.4 SEC Documents 18
3.5 Absence of Certain Changes or Events 18
3.6 Compliance with Applicable Laws 19
3.7 Brokers 20
3.8 Voting Requirements 20
ARTICLE IV
ADDITIONAL AGREEMENTS 20
4.1 Preparation of Form S-4 and the Joint Proxy
Statement; Information Supplied 20
4.2 Meetings of Stockholders 21
4.3 Letter of the Company's Accountants 22
4.4 Letter of Conseco's Accountants 22
4.5 Access to Information; Confidentiality 22
4.6 Best Efforts 23
4.7 Public Announcements 23
4.8 Acquisition Proposals 23
4.9 Fiduciary Duties 24
4.10 Consents, Approvals and Filings 25
4.11 Certain Fees 25
4.12 Affiliates and Certain Stockholders 26
4.13 NYSE Listing 27
4.14 Stockholder Litigation 27
4.15 Indemnification 27
4.16 Financing 27
4.17 Stock Options 27
4.18 Employment Agreements 28
4.19 Officers' Certificates Relating to Tax Treatment 28
4.20 Supplemental Indenture; Other Actions 28
4.21 Severance and Other Payments 29
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS PRIOR TO MERGER 29
5.1 Conduct of Business by the Company 29
5.2 Conduct of Business by Conseco 32
5.3 Other Actions 33
5.4 Certificates 33
5.5 Investment Advisory Agreements 33
ARTICLE VI
CONDITIONS PRECEDENT 34
6.1 Conditions to Each Party's Obligation To Effect
the Merger 34
6.2 Conditions to Obligations of Conseco 36
6.3 Conditions to Obligation of the Company 37
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER 38
7.1 Termination 38
7.2 Effect of Termination 38
7.3 Amendment 39
7.4 Extension; Waiver 39
7.5 Procedure for Termination, Amendment,
Extension or Waiver 39
ARTICLE VIII
SURVIVAL OF PROVISIONS 40
8.1 Survival 40
ARTICLE IX
NOTICES 40
9.1 Notices 40
ARTICLE X
MISCELLANEOUS 41
10.1 Entire Agreement 41
10.2 Expenses 41
10.3 Counterparts 41
10.4 No Third Party Beneficiary 41
10.5 Governing Law 42
10.6 Assignment; Binding Effect 42
10.7 Enforcement 42
10.8 Headings, Gender, etc. 42
10.9 Invalid Provisions 43
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is made
and entered into as of August 25, 1996 by and between CONSECO,
INC., an Indiana corporation ("Conseco"), and AMERICAN TRAVELLERS
CORPORATION, a Pennsylvania corporation (the "Company").
PREAMBLE
WHEREAS, the respective Boards of Directors of Conseco and
the Company have approved the merger of the Company with and into
Conseco, upon the terms and subject to the conditions set forth
herein; and
WHEREAS, Conseco and the Company desire to make certain
representations, warranties, covenants and agreements in
connection with such merger and also to prescribe various
conditions to such merger;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, and for other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
THE MERGER
1 .1 The Merger. Subject to the terms and conditions of
this Agreement, at the Effective Time (as such term is defined in
Section 1.3 hereof), the Company shall be merged with and into
Conseco (the "Merger"), in a transaction intended to qualify as a
tax-free reorganization under Section 368(a)(1) (A) of the
Internal Revenue Code of 1986, as amended (the "Code"), in
accordance with the Indiana Business Corporation Law (the "IBCL
Code") and the Pennsylvania Business Corporation Law (the
"Pennsylvania Code") and the separate corporate existence of the
Company shall cease and Conseco shall continue as the surviving
corporation under the laws of the State of Indiana (the
"Surviving Corporation") with all the rights, privileges,
immunities and powers, and subject to all the duties and
liabilities, of a corporation organized under the IBCL. The
Merger shall have the effects set forth in the IBCL and the
Pennsylvania Code.
1 .2 Closing. Unless this Agreement shall have been
terminated and the transactions herein contemplated shall have
been abandoned pursuant to Section 7.1, and subject to the
satisfaction or waiver of the conditions set forth in Article VI,
the closing of the Merger (the "Closing") will take place at 9:00
a.m. on the second business day following the date on which the
last to be fulfilled or waived of the conditions set forth in
Article VI shall be fulfilled or waived in accordance with this
Agreement (the "Closing Date"), at the office of Conseco in
Carmel, Indiana, unless another date, time or place is agreed to
in writing by the parties hereto.
1 .3 Effective Time. The parties hereto will file with the
Secretary of State of the State of Indiana (the "Indiana
Secretary of State") and the Secretary of State of the
Commonwealth of Pennsylvania (the "Pennsylvania Secretary of
State") on the date of the Closing (or on such other date as
Conseco and the Company may agree) articles of merger or other
appropriate documents, executed in accordance with the relevant
provisions of the IBCL and the Pennsylvania Code, and make all
other filings or recordings required under the IBCL and the
Pennsylvania Code in connection with the Merger. The Merger
shall become effective upon the filing of the articles of merger
with the Indiana Secretary of State and the Pennsylvania
Secretary of State, or at such later time as is specified in the
articles of merger (the "Effective Time").
1 .4 Articles of Incorporation. The Articles of
Incorporation of Conseco, as in effect immediately prior to the
Effective Time, shall be the Articles of Incorporation of the
Surviving Corporation until thereafter amended as provided by
law.
1 .5 By-Laws. The By-Laws of Conseco, as in effect
immediately prior to the Effective Time, shall be the By-Laws of
the Surviving Corporation until thereafter amended as provided by
law.
1 .6 Directors. The directors of Conseco at the Effective
Time shall be the directors of the Surviving Corporation.
1 .7 Officers. The officers of Conseco at the Effective
Time shall be the officers of the Surviving Corporation.
1 .8 Conversion of Shares. (a) Outstanding Shares. Each of
the shares of common stock, $.01 par value, of the Company (the
"Shares") issued and outstanding immediately prior to the
Effective Time (other than Shares held as treasury shares by the
Company or Dissenting Shares (as defined below)) shall, by virtue
of the Merger and without any action on the part of the holder
thereof, be converted into a right to receive (i) if the Conseco
Share Price (as defined below) is greater than or equal to $42.25
per share and less than or equal to $46.25 per share, .7574 of a
validly issued, fully paid and nonassessable share of common
stock, without par value, of Conseco ("Conseco Common Stock"),
(ii) if the Conseco Share Price is less than $42.25 per share,
the fraction (rounded to the nearest ten-thousandth of a share)
of a share (or such fraction and whole number, as the case may
be) of Conseco Common Stock determined by dividing $32.00 by the
Conseco Share Price or (iii) if the Conseco Share Price is
greater than $46.25 per share, the fraction (rounded to the
nearest ten-thousandth of a share) of a share of Conseco Common
Stock determined by dividing $35.03 by the Conseco Share Price.
The "Conseco Share Price" shall be equal to the average of the
closing prices of the Conseco Common Stock on the New York Stock
Exchange ("NYSE") Composite Transactions Reporting System, as
reported in The Wall Street Journal, for the 10 trading days
immediately preceding the second trading day prior to the
Effective Time. The Conseco Common Stock to be issued to holders
of Shares in accordance with this Section and any cash to be paid
in accordance with Section 1.9 in lieu of fractional shares of
Conseco Common Stock are referred to collectively as the "Merger
Consideration."
(b) Treasury Shares. Each Share issued and outstanding
immediately prior to the Effective Time which is then held as a
treasury share by the Company or any of its subsidiaries
immediately prior to the Effective Time shall, by virtue of the
Merger and without any action on the part of the Company, be
canceled and retired and cease to exist, without any conversion
thereof.
(c) Impact of Stock Splits, etc. In the event of any
change in Conseco Common Stock between the date of this Agreement
and the Effective Time of the Merger by reason of any stock
split, stock dividend, subdivision, reclassification,
recapitalization, combination, exchange of shares or the like,
the number and class of shares of Conseco Common Stock to be
issued and delivered in the Merger in exchange for each
outstanding Share as provided in this Agreement and the
calculation of all share prices provided for in this Agreement
shall be proportionately adjusted.
(d) Company Dissenting Shares. Notwithstanding anything in
this Agreement to the contrary, Shares which are held by the
Company shareholders who shall have effectively dissented from
the Merger and perfected their dissenters' rights in accordance
with the provisions of Section 1571 et seq. of the Pennsylvania
Code (the "Dissenting Shares") shall not be converted into or be
exchangeable for the right to receive the Merger Consideration,
but the holders thereof shall be entitled to payment from the
Surviving Corporation of the appraised value of such shares in
accordance with the provisions of Section 1571 et seq. of the
Pennsylvania Code; provided, however, that if any such holder
shall have failed to perfect such dissenters' rights or shall
have effectively withdrawn or lost such rights, his or her
outstanding Shares shall thereupon be converted into and
exchangeable for, as if completed at the Effective Time, the
Merger Consideration, as determined and paid in the manner set
forth in this Agreement, without any interest thereon. The
Company shall give Conseco (i) prompt notice of any notice or
demands for payment for Dissenting Shares pursuant to Section
1571 et seq. of the Pennsylvania Code received by the Company and
(ii) the opportunity to participate in and direct all
negotiations and proceedings with respect to any such demands or
notices. The Company shall not, without the prior written
consent of Conseco, make any payment with respect to, settle,
offer to settle or otherwise negotiate, any such demands.
(e) Treatment of Company Stock Options. (i) At the
Effective Time each outstanding unexpired stock option ("Company
Stock Option") to purchase Shares which have been granted
pursuant to the Company's 1987 Stock Option Plan, 1989 Stock
Option Plan, 1993 Stock Option Plan, 1995 Stock Option Plan or
1996 Stock Option Plan, as amended to the date hereof (the
"Company Stock Option Plans") shall be deemed disposed to the
Company in accordance with final Rule 16b-3(e) as promulgated by
the Securities and Exchange Commission ("SEC") pursuant to
Release 34-37260 (May 31, 1996) and then converted automatically
into an option to purchase, for the same aggregate consideration
payable to exercise such Company Stock Options, the number of
shares of Conseco Common Stock which the holder would have been
entitled to receive at the Effective Time if such Company Stock
Options had been fully vested and exercised for shares prior to
the Effective Time, but otherwise on the same terms and
conditions as were applicable under the Company Stock Option Plan
and the underlying stock option agreement except as provided in
subsections (ii) and (iii) below.
(ii) Except as provided in subsection (iii) below, each
Company Stock Option, if not then vested, will vest in full at
the earlier of (x) the expiration of three months after the
Effective Time or (y) termination by Conseco of the employment of
the holder of such Company Stock Option.
(iii) Each Company Stock Option held by a non-employee
director of the Company, if not then vested, will vest in full at
the Effective Time.
1 .9 Exchange of Certificates. (a) Exchange Agent. As of
the Effective Time, Conseco shall deposit with its transfer agent
and registrar (the "Exchange Agent"), for the benefit of the
holders of Shares, certificates representing the shares of
Conseco Common Stock to be issued to holders of Shares pursuant
to Section 1.8(a) (such certificates, together with any dividends
or distributions with respect to such certificates, being
hereinafter referred to as the "Payment Fund").
(b) Exchange Procedures. As soon as practicable after the
Effective Time, each holder of an outstanding certificate or
certificates which prior thereto represented Shares shall, upon
surrender to the Exchange Agent of such certificate or
certificates and acceptance thereof by the Exchange Agent, be
entitled to a certificate representing that number of whole
shares of Conseco Common Stock (and cash in lieu of fractional
shares of Conseco Common Stock as contemplated by this Section
1.9) which the aggregate number of Shares previously represented
by such certificate or certificates surrendered shall have been
converted into the right to receive pursuant to Section 1.8(a) of
this Agreement. The Exchange Agent shall accept such
certificates upon compliance with such reasonable terms and
conditions as the Exchange Agent may impose to effect an orderly
exchange thereof in accordance with normal exchange practices.
If the consideration to be paid in the Merger (or any portion
thereof) is to be delivered to any person other than the person
in whose name the certificate representing Shares surrendered in
exchange therefor is registered, it shall be a condition to such
exchange that the certificate so surrendered shall be properly
endorsed or otherwise be in proper form for transfer and that the
person requesting such exchange shall pay to the Exchange Agent
any transfer or other taxes required by reason of the payment of
such consideration to a person other than the registered holder
of the certificate surrendered, or shall establish to the
satisfaction of the Exchange Agent that such tax has been paid or
is not applicable. After the Effective Time, there shall be no
further transfer on the records of the Company or its transfer
agent of certificates representing Shares and if such
certificates are presented to the Company for transfer, they
shall be canceled against delivery of the Merger Consideration as
hereinabove provided. Until surrendered as contemplated by this
Section 1.9(b), each certificate representing Shares (other than
certificates representing Shares to be canceled in accordance
with Section 1.8(b) and other than Dissenting Shares), shall be
deemed at any time after the Effective Time to represent only the
right to receive upon such surrender the Merger Consideration
payable with respect to such Shares, without any interest
thereon, as contemplated by Section 1.8. No interest will be
paid or will accrue on any cash payable as Merger Consideration.
(c) Letter of Transmittal. Promptly after the Effective
Time (but in no event more than five business days thereafter),
the Surviving Corporation shall require the Exchange Agent to
mail to each record holder of certificates that immediately prior
to the Effective Time represented Shares which have been
converted pursuant to Section 1.8, a form of letter of
transmittal and instructions for use in surrendering such
certificates and receiving the consideration to which such holder
shall be entitled therefor pursuant to Section 1.8.
(d) Distributions with Respect to Unexchanged Shares. No
dividends or other distributions with respect to Conseco Common
Stock with a record date after the Effective Time shall be paid
to the holder of any certificate that immediately prior to the
Effective Time represented Shares which have been converted
pursuant to Section 1.8, until the surrender for exchange of such
certificate in accordance with this Article I. Following
surrender for exchange of any such certificate, there shall be
paid to the holder of such certificate, without interest, (i) at
the time of such surrender, the amount of dividends or other
distributions with a record date after the Effective Time
theretofore paid with respect to the number of whole shares of
Conseco Common Stock into which the Shares represented by such
certificate immediately prior to the Effective Time were
converted pursuant to Section 1.8, and (ii) at the appropriate
payment date, the amount of dividends or other distributions with
a record date after the Effective Time, but prior to such
surrender, and with a payment date subsequent to such surrender,
payable with respect to such whole shares of Conseco Common
Stock.
(e) No Further Ownership Rights in Shares. The Merger
Consideration paid upon the surrender for exchange of
certificates representing Shares in accordance with the terms of
this Article I shall be deemed to have been issued and paid in
full satisfaction of all rights pertaining to the Shares
theretofore represented by such certificates, subject, however,
to the Surviving Corporation's obligation (if any) to pay any
dividends or make any other distributions with a record date
prior to the Effective Time which may have been declared by the
Company on such Shares in accordance with the terms of this
Agreement or prior to the date of this Agreement and which remain
unpaid at the Effective Time.
(f) No Fractional Shares. (i) No certificates or scrip
representing fractional shares of Conseco Common Stock shall be
issued upon the surrender for exchange of certificates that
immediately prior to the Effective Time represented Shares which
have been converted pursuant to Section 1.8, and such fractional
share interests will not entitle the owner thereof to vote or to
any rights of a shareholder of Conseco.
(ii) Notwithstanding any other provisions of this Agreement,
each holder of Shares who would otherwise have been entitled to
receive a fraction of a share of Conseco Common Stock (after
taking into account all certificates delivered by such holder)
shall receive, in lieu thereof, cash (without interest) in an
amount equal to such fractional part of a share of Conseco Common
Stock multiplied by the Conseco Share Price.
(g) Termination of Payment Fund. Any portion of the
Payment Fund which remains undistributed to the holders of the
certificates representing Shares for 120 days after the Effective
Time shall be delivered to Conseco, upon demand, and any holders
of Shares who have not theretofore complied with this Article I
shall thereafter look only to Conseco and only as general
creditors thereof for payment of their claim for any Merger
Consideration and any dividends or distributions with respect to
Conseco Common Stock.
(h) No Liability. Neither Conseco nor the Exchange Agent
shall be liable to any person in respect of any cash, shares,
dividends or distributions payable from the Payment Fund
delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law. If any certificates
representing Shares shall not have been surrendered prior to five
years after the Effective Time (or immediately prior to such
earlier date on which any Merger Consideration in respect of such
certificate would otherwise escheat to or become the property of
any Governmental Entity (as defined in Section 2.3)), any such
cash, shares, dividends or distributions payable in respect of
such certificate shall, to the extent permitted by applicable
law, become the property of the Surviving Corporation, free and
clear of all claims or interest of any person previously entitled
thereto.
1 .10 Conseco Substituted under Indenture and
Debentures. As of the Effective Time, Conseco shall succeed to,
be substituted for, and assume all obligations of, and may
exercise every right and power of, the Company under the
Indenture (the "Indenture") governing the 6.5% Convertible
Subordinated Debentures due October 1, 2005 (the "Debentures") by
and between the Company and American Bank, National Association
with the same effect as if Conseco had been named therein as the
Company. As of the Effective Time, Conseco shall assume all the
obligations of the Company pursuant to the Debentures.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Conseco and as
follows:
2 .1 Organization, Standing and Corporate Power. Each of
the Company and each Significant Subsidiary of the Company (as
hereinafter defined) is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction
in which it is incorporated and has the requisite corporate power
and authority to carry on its business as now being conducted.
Each of the Company and each Significant Subsidiary of the
Company is duly qualified or licensed to do business and is in
good standing in each jurisdiction in which the nature of its
business or the ownership or leasing of its properties makes such
qualification or licensing necessary. The Company has delivered
to Conseco complete and correct copies of its Certificate of
Incorporation and By-laws, as amended to the date of this
Agreement. For purposes of this Agreement, a "Significant
Subsidiary" of the Company means each of American Travellers Life
Insurance Company, United General Life Insurance Company, and any
other subsidiary of the Company that would constitute a
Significant Subsidiary within the meaning of Rule 1-02 of
Regulation S-X of the SEC.
2 .2 Capital Structure. The authorized capital stock of the
Company consists of (i) 50,000,000 Shares and (ii) 5,000,000
shares of Preferred Stock, $.01 par value (the "Preferred
Stock"). At the close of business on August 23, 1996: (i)
16,281,432 Shares were issued and outstanding, 2,668,826 Shares
were reserved for issuance pursuant to outstanding Company Stock
Options and 6,824,790 Shares were reserved for issuance upon
conversion of the Debentures; and (ii) no shares of Preferred
Stock were issued and outstanding. Except as set forth above, at
the close of business on August 23, 1996, no shares of capital
stock or other equity securities of the Company were issued,
reserved for issuance or outstanding. All outstanding shares of
capital stock of the Company are, and all shares which may be
issued pursuant to the Company Stock Option Plans or any
outstanding Company Stock Options will be, when issued, duly
authorized, validly issued, fully paid and nonassessable and not
subject to preemptive rights. Except for $103,500,000 of 6.5%
Convertible Subordinated Debentures due October 1, 2005, no
bonds, debentures, notes or other indebtedness of the Company or
any Significant Subsidiary of the Company having the right to
vote (or convertible into, or exchangeable for, securities having
the right to vote) on any matters on which the stockholders of
the Company or any Significant Subsidiary of the Company may vote
are issued or outstanding. Except as disclosed in Section 2.2 of
the Disclosure Schedule dated the date hereof and delivered by
the Company to Conseco concurrently herewith (the "Disclosure
Schedule"), all the outstanding shares of capital stock of each
Significant Subsidiary of the Company have been validly issued
and are fully paid and nonassessable and are owned by the
Company, by one or more subsidiaries of the Company or by the
Company and one or more such subsidiaries, free and clear of all
pledges, claims, liens, charges, encumbrances and security
interests of any kind or nature whatsoever (collectively,
"Liens") except as may be provided by law. Except as set forth
above or in Section 2.2 of the Disclosure Schedule, neither the
Company nor any Significant Subsidiary of the Company has any
outstanding option, warrant, subscription or other right,
agreement or commitment which either (i) obligates the Company or
any Significant Subsidiary of the Company to issue, sell or
transfer, repurchase, redeem or otherwise acquire or vote any
shares of the capital stock of the Company or any Significant
Subsidiary of the Company or (ii) restricts the transfer of
Shares. The Company has delivered to Conseco a complete and
correct copy of the Rights Agreement dated as of April 25, 1990,
as amended to the date of this Agreement (the "Rights
Agreement").
2 .3 Authority; Noncontravention. The Company has the
requisite corporate power and authority to enter into this
Agreement and, subject to the approval of its stockholders as set
forth in Section 6.1(a) with respect to the consummation of the
Merger, to consummate the transactions contemplated by this
Agreement. The execution and delivery of this Agreement by the
Company and the consummation by the Company of the transactions
contemplated hereby have been duly authorized by all necessary
corporate action on the part of the Company, subject, in the case
of the Merger, to the approval of its stockholders as set forth
in Section 6.1(a). A majority of the members of the Board of
Directors who are not officers of the Company and who are not
representatives, nominees, affiliates or associates of Conseco,
after receiving advice from one or more investment banking firms,
have determined that the price and terms of the conversion of the
Shares are (a) at a price which is fair to the stockholders of
the Company and (b) otherwise in the best interests of the
Company and its stockholders. This Agreement has been duly
executed and delivered by the Company and, assuming this
Agreement constitutes the valid and binding agreement of Conseco,
constitutes a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms
except that the enforcement thereof may be limited by (a)
bankruptcy, insolvency, reorganization, moratorium or similar
laws now or hereafter in effect relating to creditor's rights
generally and (b) general principles of equity (regardless of
whether enforceability is considered in a proceeding at law or in
equity). Except as disclosed in Section 2.3 of the Disclosure
Schedule, the execution and delivery of this Agreement do not,
and the consummation of the transactions contemplated by this
Agreement and compliance with the provisions hereof will not, (i)
conflict with any of the provisions of the Certificate of
Incorporation or By-laws of the Company or the comparable
documents of any Significant Subsidiary of the Company, (ii)
subject to the governmental filings and other matters referred to
in the following sentence, conflict with, result in a breach of
or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or
acceleration of any obligation or loss of a material benefit
under, or require the consent of any person under, any indenture
or other agreement, permit, concession, franchise, license or
similar instrument or undertaking to which the Company or any of
its subsidiaries is a party or by which the Company or any of its
subsidiaries or any of their assets is bound or affected, or
(iii) subject to the governmental filings and other matters
referred to in the following sentence, contravene any law, rule
or regulation of any state or of the United States or any
political subdivision thereof or therein, or any order, writ,
judgment, injunction, decree, determination or award currently in
effect. No consent, approval or authorization of, or declaration
or filing with, or notice to, any governmental agency or
regulatory authority (a "Governmental Entity") which has not been
received or made, is required by or with respect to the Company
or any of its subsidiaries in connection with the execution and
delivery of this Agreement by the Company or the consummation by
the Company of the transactions contemplated hereby, except for
(i) the filing of premerger notification and report forms under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act") with respect to the Merger, (ii) the
filings and/or notices required under the insurance laws of the
jurisdictions set forth in Section 2.3 of the Disclosure
Schedule, (iii) the filing with the SEC of (x) a proxy statement
relating to the approval by the stockholders of the Company of
the Merger (such proxy statement, together with the proxy
statement relating to the approval of the issuance of Conseco
Common Stock in the Merger by an affirmative vote of the holders
of a majority of the votes entitled to be cast by the holders of
Conseco Common Stock and Conseco PRIDES (as hereinafter defined)
present, or represented, and entitled to vote thereon at the
meeting to be called therefor (the "Conseco Stockholder
Approval"), in each case as amended or supplemented from time to
time, the "Joint Proxy Statement"), and (y) such reports under
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), as may be required in connection with this Agreement and
the transactions contemplated by this Agreement, (iv) the filing
of the articles of merger with the Pennsylvania Secretary of
State and the Indiana Secretary of State and appropriate
documents with the relevant authorities of other states in which
the Company is qualified to do business, (v) such other consents,
approvals, authorizations, filings or notices as are set forth in
Section 2.3 of the Disclosure Schedule and (vi) any applicable
filings under state anti-takeover laws.
2 .4 SEC Documents. (i) The Company has filed all required
reports, schedules, forms, statements and other documents with
the SEC since January 1, 1994 (such reports, schedules, forms,
statements and other documents are hereinafter referred to as the
"SEC Documents"); (ii) as of their respective dates, the SEC
Documents complied with the requirements of the Securities Act of
1933, as amended (the "Securities Act"), or the Exchange Act, as
the case may be, and the rules and regulations of the SEC
promulgated thereunder applicable to such SEC Documents, and none
of the SEC Documents as of such dates contained any untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which
they were made, not misleading; and (iii) the consolidated
financial statements of the Company included in the SEC Documents
comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations
of the SEC with respect thereto, have been prepared in accordance
with generally accepted accounting principles applied on a
consistent basis during the periods involved (except as may be
indicated in the notes thereto or, in the case of unaudited
statements, as permitted by Rule 10-01 of Regulation S-X) and
fairly present, in all material respects, the consolidated
financial position of the Company and its consolidated
subsidiaries as of the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended
(subject, in the case of unaudited quarterly statements, to
normal year-end audit adjustments).
2 .5 Absence of Certain Changes or Events. Except as
disclosed in the SEC Documents filed and publicly available prior
to the date of this Agreement (the "Filed SEC Documents") or in
Section 2.5 of the Disclosure Schedule, since the date of the
most recent audited financial statements included in the Filed
SEC Documents, the Company and its subsidiaries have conducted
their business only in the ordinary course, and there has not
been (i) any change which would have a material adverse effect on
the business, financial condition or results of operations of the
Company and its subsidiaries taken as a whole, (ii) any
declaration, setting aside or payment of any dividend or other
distribution (whether in cash, stock or property) with respect to
any of the Company's outstanding capital stock, (iii) any split,
combination or reclassification of any of its outstanding capital
stock or any issuance or the authorization of any issuance of any
other securities in respect of, in lieu of or in substitution for
shares of its outstanding capital stock, (iv) (x) any granting by
the Company or any of its subsidiaries to any executive officer
or other employee of the Company or any of its subsidiaries of
any increase in compensation, except in the ordinary course of
business consistent with prior practice or as was required under
employment agreements in effect as of the date of the most recent
audited financial statements included in the Filed SEC Documents,
(y) any granting by the Company or any of its subsidiaries to any
such executive officer or other employee of any increase in
severance or termination pay, except in the ordinary course of
business consistent with prior practice or as was required under
any employment, severance or termination agreements in effect as
of the date of the most recent audited financial statements
included in the Filed SEC Documents or (z) any entry by the
Company or any of its subsidiaries into any employment, severance
or termination agreement with any such executive officer or other
employee or (v) any change in accounting methods, principles or
practices by the Company or any of its subsidiaries materially
affecting its assets, liability or business, except insofar as
may have been required by a change in generally accepted
accounting principles.
2 .6 Absence of Changes in Benefit Plans. Except as
disclosed in the Filed SEC Documents or in Section 2.6 of the
Disclosure Schedule, since the date of the most recent audited
financial statements included in the Filed SEC Documents, there
has not been any adoption or amendment in any material respect by
the Company or any of its subsidiaries of any collective
bargaining agreement or any Benefit Plan (as defined in Section
2.7). Except as disclosed in the Filed SEC Documents or in
Section 2.6 of the Disclosure Schedule, there exist no
employment, consulting, severance, termination or indemnification
agreements, arrangements or understandings between the Company or
any of its subsidiaries and any current or former employee,
officer or director of the Company or any of its subsidiaries.
2 .7 Benefit Plans. (i) Each "employee pension benefit
plan" (as defined in Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) (hereinafter a
"Pension Plan"), "employee welfare benefit plan" (as defined in
Section 3(1) of ERISA) (hereinafter a "Welfare Plan"), and each
other plan, arrangement or policy (written or oral) relating to
stock options, stock purchases, compensation, deferred
compensation, severance, fringe benefits or other employee
benefits, in each case maintained or contributed to, or required
to be maintained or contributed to, by the Company and its
subsidiaries for the benefit of any present or former officers,
employees, agents, directors or independent contractors of the
Company or any of its subsidiaries (all the foregoing being
herein called "Benefit Plans") has been administered in
accordance with its terms and all applicable laws and
regulations. All required contributions to the Benefit Plans
have been made. The Company, its subsidiaries and all the
Benefit Plans are in compliance with the applicable provisions of
ERISA, the Internal Revenue Code of 1986, as amended (the
"Code"), all other applicable laws and all applicable collective
bargaining agreements.
(ii) None of the Company or any other person or entity that
together with the Company is treated as a single employer under
Section 414(b), (c), (m) or (o) of the Code (each a "Commonly
Controlled Entity") has incurred any liability to a Pension Plan
covered by Title IV of ERISA (other than for contributions not
yet due) or to the Pension Benefit Guaranty Corporation (other
than for the payment of premiums not yet due) which liability has
not been fully paid as of the date hereof.
(iii) No Commonly Controlled Entity is required to
contribute to any "multiemployer plan" (as defined in Section
4001(a)(3) of ERISA) or has withdrawn from any multiemployer plan
where such withdrawal has resulted or would result in any
"withdrawal liability" (within the meaning of Section 4201 of
ERISA) that has not been fully paid.
2 .8 Taxes. Except as disclosed in Section 2.8 of the
Disclosure Schedule,
(i) Each of the Company and its subsidiaries has filed all
tax returns and reports required to be filed by it or requests
for extensions to file such returns or reports have been timely
filed, granted and have not expired, except to the extent that
such failures to file or to have extensions granted that remain
in effect individually and in the aggregate would not have a
material adverse effect on the business, financial condition or
results of operations of the Company and its subsidiaries taken
as a whole. All tax returns filed by the Company and each of its
subsidiaries are complete and accurate except to the extent that
such failure to be complete and accurate would not have a
material adverse effect on the business, financial condition or
results of operations of the Company and its subsidiaries taken
as a whole. The Company and each of its subsidiaries has paid
(or the Company has paid on the subsidiaries' behalf) all taxes
shown as due on such returns, and the most recent financial
statements contained in the Filed SEC Documents reflect an
adequate reserve for all taxes payable by the Company and its
subsidiaries for all taxable periods and portions thereof accrued
through the date of such financial statements.
(ii) No deficiencies for any taxes have been proposed,
asserted or assessed against the Company or any of its
subsidiaries that are not adequately reserved for, except for
deficiencies that individually or in the aggregate would not have
a material adverse effect on the business, financial condition or
results of operations of the Company and its subsidiaries taken
as a whole, and, except as set forth on Section 2.8 of the
Disclosure Schedule, no requests for waivers of the time to
assess any such taxes have been granted or are pending. The
Federal income tax returns of the Company and each of its
subsidiaries consolidated in such returns have been examined by
and settled with the United States Internal Revenue Service, or
the statute of limitations on assessment or collection of any
Federal income taxes due from the Company or any of its
subsidiaries has expired, through such taxable years as are set
forth in Section 2.8 of the Disclosure Schedule.
(iii) As used in this Agreement, "taxes" shall include all
Federal, state, local and foreign income, property, premium,
sales, excise, employment, payroll, withholding and other taxes,
tariffs or governmental charges of any nature whatsoever and any
interest, penalties and additions to taxes relating thereto.
2 .9 No Excess Parachute Payments; Section 162(m) of the
Code. (i) Except as disclosed in Section 2.9 of the Disclosure
Schedule, any amount that could be received (whether in cash or
property or the vesting of property) as a result of any of the
transactions contemplated by this Agreement by any employee,
officer or director of the Company or any of its affiliates who
is a "disqualified individual" (as such term is defined in
proposed Treasury Regulation Section 1.280G-1) under any
employment, severance or termination agreement, other
compensation arrangement or Benefit Plan currently in effect
would not be characterized as an "excess parachute payment" (as
such term is defined in Section 280G(b)(1) of the Code).
(ii) Except as disclosed in Section 2.9 of the Disclosure
Schedule, the disallowance of a deduction under Section 162(m) of
the Code for employee remuneration will not apply to any amount
paid or payable by the Company or any subsidiary of the Company
under any contract, Benefit Plan, program, arrangement or
understanding currently in effect.
2 .10 Voting Requirements. The affirmative vote of a
majority of the votes cast by the holders of the Shares entitled
to vote thereon at the Stockholders Meeting with respect to the
approval of the Merger is the only vote of the holders of any
class or series of the Company's capital stock necessary to
approve this Agreement and the transactions contemplated by this
Agreement.
2 .11 Compliance with Applicable Laws. (i) Each of the
Company and its subsidiaries has in effect all Federal, state,
local and foreign governmental approvals, authorizations,
certificates, filings, franchises, licenses, notices, permits and
rights ("Permits") necessary for it to own, lease or operate its
properties and assets and to carry on its business as now
conducted, and there has occurred no default under any such
Permit. Except as disclosed in the Filed SEC Documents, the
Company and its subsidiaries are in compliance in all material
respects with all applicable statutes, laws, ordinances, rules,
orders and regulations of any Governmental Entity. Except as
disclosed in the Filed SEC Documents or Section 2.11 of the
Disclosure Schedule and except for routine examinations by state
Governmental Entities charged with supervision of insurance
companies ("Insurance Regulators"), as of the date of this
Agreement, to the knowledge of the Company, no investigation by
any Governmental Entity with respect to the Company or any of its
subsidiaries is pending or threatened.
(ii) The Annual Statements (including without limitation the
Annual Statements of any separate accounts) for the year ended
December 31, 1995, together with all exhibits and schedules
thereto, and financial statements relating thereto, and any
actuarial opinion, affirmation or certification filed in
connection therewith, and the Quarterly Statements for the
periods ended after January 1, 1996, together with all exhibits
and schedules thereto, with respect to each subsidiary of the
Company that is a regulated insurance company (an "Insurance
Company"), in each case as filed with the applicable Insurance
Regulator of its jurisdiction of domicile, were prepared in
conformity with statutory accounting practices prescribed or
permitted by such Insurance Regulator applied on a consistent
basis ("SAP"), present fairly, in all material respects, to the
extent required by and in conformity with SAP, the statutory
financial condition of such Insurance Company at their respective
dates and the results of operations, changes in capital and
surplus and cash flow of such Insurance Company for each of the
periods then ended, and were correct in all material respects
when filed and there were no material omissions therefrom when
filed. No deficiencies or violations material to the financial
condition or operations of any Insurance Company have been
asserted in writing by any Insurance Regulator which have not
been cured or otherwise resolved to the satisfaction of such
Insurance Regulator and which have not been disclosed in writing
to Conseco prior to the date of this Agreement.
2 .12 Opinion of Financial Advisor. The Company has
received the opinion of Donaldson, Lufkin & Jenrette Securities
Corp. ("DLJ"), dated the date hereof, to the effect that, as of
such date, the consideration to be received in the Merger by the
Company's stockholders is fair to the Company's stockholders.
2 .13 Brokers. Except with respect to DLJ, all
negotiations relative to this Agreement and the transactions
contemplated hereby have been carried out by the Company directly
with Conseco, without the intervention of any person on behalf of
the Company in such manner as to give rise to any valid claim by
any person against Conseco, the Company or any subsidiary for a
finder's fee, brokerage commission, or similar payment. The
Company has provided Conseco with a true and complete copy of the
agreement between the Company and DLJ, and the Company has no
other agreements or understandings (written or oral) with respect
to such services.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF CONSECO
Conseco hereby represents and warrants to the Company as
follows:
3 .1 Organization, Standing and Corporate Power. Each of
Conseco and each Significant Subsidiary of Conseco (as
hereinafter defined) is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction
in which it is incorporated and has the requisite corporate power
and authority to carry on its business as now being conducted.
Each of Conseco and each Significant Subsidiary of Conseco is
duly qualified or licensed to do business and is in good standing
in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification
or licensing necessary. Conseco has delivered to the Company
complete and correct copies of its Articles of Incorporation and
By-laws, as amended to the date of this Agreement. For purposes
of this Agreement, a "Significant Subsidiary" of Conseco means
any subsidiary of Conseco that would constitute a Significant
Subsidiary within the meaning of Rule 1-02 of Regulation S-X of
the SEC.
3 .2 Conseco Capital Structure. The authorized capital
stock of Conseco consists of 500,000,000 shares of Conseco Common
Stock and 20,000,000 shares of preferred stock, without par
value. At the close of business on August 23, 1996, (i)
58,416,433 shares of Conseco Common Stock, 5,264,767 shares of
$3.25 Series D Cumulative Convertible Preferred Stock of Conseco
(the "Conseco Series D Preferred Stock") and 4,369,700 shares of
Preferred Redeemable Increased Dividend Equity Securities of
Conseco (the "Conseco PRIDES") were issued and outstanding (net
of treasury shares or shares held by subsidiaries), (ii)
13,721,689 shares of Conseco Common Stock were reserved for
issuance pursuant to outstanding options to purchase shares of
Conseco Common Stock and other benefits granted under Conseco's
benefit plans (the "Conseco Stock Plans"), (iii) 8,258,314 shares
of Conseco Common Stock were reserved for issuance upon
conversion of the Conseco Series D Preferred Stock and (iv)
8,739,400 shares of Conseco Common Stock were reserved for
issuance upon conversion of the Conseco PRIDES. Except (x) as
set forth above, (y) for outstanding options to purchase an
aggregate of 1,105,550 shares of Bankers Life Holding Corporation
under its Stock Option Plan and (z) with respect to stock units
awarded under the Conseco Stock Option Plans, at the close of
business on August 23, 1996, no shares of capital stock or other
voting securities of Conseco were issued, reserved for issuance
or outstanding. All outstanding shares of capital stock of
Conseco are, and all shares which may be issued pursuant to this
Agreement will be, when issued, duly authorized, validly issued,
fully paid and nonassessable and not subject to preemptive
rights. No bonds, debentures, notes or other indebtedness of
Conseco or any Significant Subsidiary of Conseco having the right
to vote (or convertible into, or exchangeable for, securities
having the right to vote) on any matters on which the
stockholders of Conseco or any Significant Subsidiary of Conseco
may vote are issued or outstanding. All the outstanding shares
of capital stock of each Significant Subsidiary of Conseco have
been validly issued and are fully paid and nonassessable and,
except as set forth in the Filed Conseco SEC Documents (as
defined in Section 3.4), are owned by Conseco, free and clear of
all Liens. Except as set forth above or in the Filed Conseco SEC
Documents, neither Conseco nor any Significant Subsidiary of
Conseco has any outstanding option, warrant, subscription or
other right, agreement or commitment which either (i) obligates
Conseco or any Significant Subsidiary of Conseco to issue, sell
or transfer, repurchase, redeem or otherwise acquire or vote any
shares of the capital stock of Conseco or any Significant
Subsidiary of Conseco or (ii) restricts the transfer of Conseco
Common Stock.
3 .3 Authority; Noncontravention. Conseco has all requisite
corporate power and authority to enter into this Agreement and,
subject to the Conseco Stockholder Approval with respect to the
issuance of Conseco Common Stock in the Merger, to consummate the
transactions contemplated by this Agreement. The execution and
delivery of this Agreement by Conseco and the consummation by
Conseco of the transactions contemplated by this Agreement have
been duly authorized by all necessary corporate action on the
part of Conseco, subject, in the case of the issuance of Conseco
Common Stock in the Merger, to the Conseco Stockholder Approval.
This Agreement has been duly executed and delivered by and,
assuming this Agreement constitutes the valid and binding
agreement of the Company, constitutes a valid and binding
obligation of Conseco, enforceable against Conseco in accordance
with its terms except that the enforcement thereof may be limited
by (a) bankruptcy, insolvency, reorganization, moratorium or
similar laws now or hereafter in effect relating to creditor's
rights generally and (b) general principles of equity (regardless
of whether enforceability is considered in a proceeding at law or
in equity). The execution and delivery of this Agreement do not,
and the consummation of the transactions contemplated by this
Agreement and compliance with the provisions of this Agreement
will not (i) conflict with any of the provisions of the Articles
of Incorporation or By-laws of Conseco, or the comparable
documents of any Significant Subsidiary of Conseco, (ii) subject
to the governmental filings and other matters referred to in the
following sentence, conflict with, result in a breach of or
default (with or without notice or lapse of time, or both) under,
or give rise to a right of termination, cancellation or
acceleration of any obligation or loss of a material benefit
under, or require the consent of any person under, any indenture,
or other agreement, permit, concession, franchise, license or
similar instrument or undertaking to which Conseco or any of its
subsidiaries is a party or by which Conseco or any of its
subsidiaries or any of their assets is bound or affected, or
(iii) subject to the governmental filings and other matters
referred to in the following sentence, contravene any law, rule
or regulation of any state or of the United States or any
political subdivision thereof or therein, or any order, writ,
judgment, injunction, decree, determination or award currently in
effect. No consent, approval or authorization of, or declaration
or filing with, or notice to, any Governmental Entity which has
not been received or made is required by or with respect to
Conseco in connection with the execution and delivery of this
Agreement by Conseco or the consummation by Conseco of any of the
transactions contemplated by this Agreement, except for (i) the
filing of premerger notification and report forms under the HSR
Act with respect to the Merger, (ii) the filings and/or notices
required under the insurance laws of the jurisdictions set forth
in Section 2.3 of the Disclosure Schedule, (iii) the filing with
the SEC of the registration statement on Form S-4 to be filed
with the SEC by Conseco in connection with the issuance of
Conseco Common Stock in the Merger (the "Form S-4"), the Joint
Proxy Statement relating to the Conseco Stockholder Approval and
such reports under the Exchange Act as may be required in
connection with this Agreement and the transactions contemplated
hereby, (iv) the filing of the articles of merger with the
Indiana Secretary of State and the Pennsylvania Secretary of
State, and appropriate documents with the relevant authorities of
the other states in which the Company is qualified to do
business, (v) such other consents, approvals, authorizations,
filings or notices as are set forth in Section 2.3 of the
Disclosure Schedule and (vi) any applicable filings under state
anti-takeover laws.
3 .4 SEC Documents. Conseco and its subsidiaries have filed
all required reports, schedules, forms, statements and other
documents with the SEC since January 1, 1994 (the "Conseco SEC
Documents"). As of their respective dates, the Conseco SEC
Documents complied with the requirements of the Securities Act or
the Exchange Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder applicable to such
Conseco SEC Documents, and none of the Conseco SEC Documents as
of such dates contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
The financial statements of Conseco included in the Conseco SEC
Documents comply as to form in all material respects with
applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, have been prepared
in accordance with generally accepted accounting principles
applied on a consistent basis during the periods involved (except
as may be indicated in the notes thereto or, in the case of
unaudited statements, as permitted by Rule 10-01 of Regulation S-
X) and fairly present, in all material respects, the consolidated
financial statements of Conseco 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).
3 .5 Absence of Certain Changes or Events. Except as
disclosed in the Conseco SEC Documents filed and publicly
available prior to the date of this Agreement (the "Filed Conseco
SEC Documents") or in Section 3.5 of a Disclosure Schedule dated
the date hereof and delivered concurrently herewith by Conseco to
the Company (the "Conseco Disclosure Schedule"), since the date
of the most recent audited financial statements included in the
Filed Conseco SEC Documents, Conseco has conducted its business
only in the ordinary course, and there has not been (i) any
change which would have a material adverse effect on the
business, financial condition or results of operations of Conseco
and its subsidiaries, taken as a whole, (ii) any declaration,
setting aside or payment of any dividend or distribution (whether
in cash, stock or property) with respect to any of Conseco's
outstanding capital stock (other than the payment of cash
dividends of $.02 per share on July 1, 1996, and the declaration
of a cash dividend payable October 1, 1996 of $.0625 per share,
on Conseco Common Stock and regular cash dividends on the Conseco
Series D Preferred Stock and the Conseco PRIDES, in each case in
accordance with usual record and payment dates and in accordance
with Conseco's dividend policy and Articles of Incorporation at
the date of such payment), (iii) any split, combination or
reclassification of any of its outstanding capital stock or any
issuance or the authorization of any issuance of any other
securities in respect of, in lieu of or in substitution for
shares of its capital stock, or (iv) any change in accounting
methods, principles or practices by Conseco materially affecting
its assets, liabilities or business, except as may have been
required by a change in generally accepted accounting principles.
3 .6 Compliance with Applicable Laws. (i) Each of Conseco
and its subsidiaries has in effect all Permits necessary for it
to own, lease or operate its properties and assets and to carry
on its business as now conducted, and there has occurred no
default under any such Permit. Except as disclosed in the Filed
Conseco SEC Documents, Conseco and its subsidiaries are in
compliance in all material respects with all applicable statutes,
laws, ordinances, rules, orders and regulations of any
Governmental Entity. Except as disclosed in the Filed Conseco
SEC Documents and except for routine examinations by state
Governmental Entities charged with supervision of insurance
companies ("Insurance Regulators"), as of the date of this
Agreement, to the knowledge of Conseco, no investigation by any
Governmental Entity with respect to Conseco or any of its
subsidiaries is pending or threatened.
(ii) The Annual Statements (including without limitation the
Annual Statements of any separate accounts) for the year ended
December 31, 1995, together with all exhibits and schedules
thereto, and any actuarial opinion, affirmation or certification
filed in connection therewith, and the Quarterly Statements for
the periods ended after January 1, 1996, together with all
exhibits and schedules thereto, with respect to each subsidiary
of Conseco that is an Insurance Company, in each case as filed
with the applicable Insurance Regulator of its jurisdiction of
domicile, were prepared in conformity with, present fairly, in
all material respects, to the extent required by and in
conformity with SAP, the statutory financial condition of such
Insurance Company at their respective dates and the results of
operations, changes in capital and surplus and cash flow of such
Insurance Company for each of the periods then ended, and were
correct in all material respects when filed and there were no
material omissions therefrom when filed. No deficiencies or
violations material to the financial condition or operations of
any Insurance Company have been asserted in writing by any
Insurance Regulator which have not been cured or otherwise
resolved to the satisfaction of such Insurance Regulator and
which have not been disclosed in writing to the Company prior to
the date of this Agreement.
3 .7 Brokers. All negotiations relative to this Agreement
and the transactions contemplated hereby have been carried out by
Conseco directly with the Company, without the intervention of
any person on behalf of Conseco in such manner as to give rise to
any valid claim by any person against the Company or any of the
Subsidiaries for a finder's fee, brokerage commission, or similar
payment.
3 .8 Voting Requirements. The affirmative vote of the
holders of a majority of the votes entitled to be cast by the
holders of Common Stock and Conseco PRIDES present, or
represented, and entitled to vote thereon at the Conseco
Stockholders Meeting with respect to the issuance of shares of
Conseco Common Stock in the Merger is the only vote of the
holders of any class or series of Conseco's capital stock
necessary to approve this Agreement and the transactions
contemplated by this Agreement.
ARTICLE IV
ADDITIONAL AGREEMENTS
4 .1 Preparation of Form S-4 and the Joint Proxy Statement;
Information Supplied.
(a) As soon as practicable following the date of this
Agreement, the Company and Conseco shall prepare and file with
the SEC the Joint Proxy Statement and Conseco shall prepare and
file with the SEC the Form S-4, in which the Joint Proxy
Statement will be included as a prospectus. Each of the Company
and Conseco shall use its best efforts to have the Form S-4
declared effective under the Securities Act as promptly as
practicable after such filing. The Company will use its best
efforts to cause the Joint Proxy Statement to be mailed to the
Company's stockholders, and Conseco will use its best efforts to
cause the Joint Proxy Statement to be mailed to Conseco's
stockholders, in each case as promptly as practicable after the
Form S-4 is declared effective under the Securities Act. Conseco
shall also take any action (other than qualifying to do business
in any jurisdiction in which it is not now so qualified) required
to be taken under any applicable state securities laws in
connection with the issuance of Conseco Common Stock in the
Merger and the Company shall furnish all information concerning
the Company and the holders of the Common Stock as may be
reasonably requested in connection with any such action.
(b) The Company agrees that none of the information
supplied or to be supplied by the Company specifically for
inclusion or incorporation by reference in (i) the Form S-4 will,
at the time the Form S-4 is filed with the SEC, at any time it is
amended or supplemented or at the time it becomes effective under
the Securities Act, contain any untrue statement of a material
fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not
misleading or (ii) the Joint Proxy Statement will, at the date it
is first mailed to the Company's stockholders or at the time of
the Stockholders Meeting (as defined in Section 4.2), contain any
untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which
they are made, not misleading. The Joint Proxy Statement will
comply as to form in all material respects with the requirements
of the Exchange Act and the rules and regulations thereunder,
except with respect to statements made or incorporated by
reference therein based on information supplied by Conseco
specifically for inclusion or incorporated by reference in the
Joint Proxy Statement.
(c) Conseco agrees that none of the information supplied or
to be supplied by Conseco specifically for inclusion or
incorporation by reference in (i) the Form S-4 will, at the time
the Form S-4 is filed with the SEC, at any time it is amended or
supplemented or at the time it becomes effective under the
Securities Act, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, or
(ii) the Joint Proxy Statement will, at the date the Joint Proxy
Statement is first mailed to Conseco's stockholders or at the
time of the Conseco Stockholders Meeting (as defined in Section
4.2), contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. The
Form S-4 will comply as to form in all material respects with the
requirements of the Securities Act and the rules and regulations
promulgated thereunder and the Joint Proxy Statement will comply
as to form in all material respects with the requirements of the
Exchange Act and the rules and regulations promulgated
thereunder, except with respect to statements made or
incorporated by reference in either the Form S-4 or the Joint
Proxy Statement based on information supplied by the Company
specifically for inclusion or incorporation by reference therein.
4 .2 Meetings of Stockholders. The Company will take all
action necessary in accordance with applicable law and its
Certificate of Incorporation and By-laws to convene a meeting of
its stockholders (the "Stockholders Meeting") to consider and
vote upon the approval of the Merger. Conseco will take all
action necessary in accordance with applicable law and its
Articles of Incorporation and By-laws to convene a meeting of its
stockholders (the "Conseco Stockholders Meeting") to consider and
vote upon the approval of the issuance of Conseco Common Stock in
the Merger. Subject to Section 4.9 hereof in the case of the
Company, the Company and Conseco will, through their respective
Boards of Directors, recommend to their respective stockholders
approval of the foregoing matters. Without limiting the
generality of the foregoing, the Company agrees that, subject to
its right to terminate this Agreement pursuant to Section 4.9,
its obligations pursuant to the first sentence of Section 4.2
shall not be affected by (i) the commencement, public proposal,
public disclosure or communication to the Company of any
Acquisition Proposal (as defined in Section 4.8) or (ii) the
withdrawal or modification by the Board of Directors of the
Company of its approval or recommendation of this Agreement or
the Merger. Conseco and the Company will use their best efforts
to hold the Stockholders Meeting and the Conseco Stockholders
Meeting on the same day and use best efforts to hold such
Meetings and (except in the case of the Company, subject to
Section 4.9 hereof) to obtain the favorable votes of their
respective stockholders as soon as practicable after the date
hereof.
4 .3 Letter of the Company's Accountants. The Company shall
use its best efforts to cause to be delivered to Conseco a letter
of Arthur Andersen LLP, the Company's independent public
accountants, dated a date within two business days before the
date on which the Form S-4 shall become effective and a letter of
Arthur Andersen LLP, dated a date within two business days before
the Closing Date, addressed to Conseco, in form and substance
reasonably satisfactory to Conseco and customary in scope and
substance for letters delivered by independent public accountants
in connection with registration statements similar to the Form S-
4.
4 .4 Letter of Conseco's Accountants. Conseco shall use its
best efforts to cause to be delivered to the Company a letter of
Coopers & Lybrand L.L.P., Conseco's independent public
accountants, dated a date within two business days before the
date on which the Form S-4 shall become effective and a letter of
Coopers & Lybrand L.L.P., dated a date within two business days
before the Closing Date, each addressed to the Company, in form
and substance reasonably satisfactory to the Company and
customary in scope and substance for letters delivered by
independent public accountants in connection with registration
statements similar to the Form S-4.
4 .5 Access to Information; Confidentiality. Upon
reasonable notice, each of the Company and Conseco shall, and
shall cause each of its respective subsidiaries to, afford to the
other party and to the officers, employees, counsel, financial
advisors and other representatives of such other party reasonable
access during normal business hours during the period prior to
the Effective Time to all its properties, books, contracts,
commitments, personnel and records and, during such period, each
of the Company and Conseco shall, and shall cause each of its
respective subsidiaries to, furnish as promptly as practicable to
the other party such information concerning its business,
properties, financial condition, operations and personnel as such
other party may from time to time reasonably request. Except as
required by law, Conseco will hold, and will cause its respective
directors, officers, partners, employees, accountants, counsel,
financial advisors and other representatives and affiliates to
hold, any nonpublic information obtained from the Company in
confidence to the extent required by, and in accordance with, the
provisions of the letter dated August 14, 1996, between Conseco
and the Company (the "Confidentiality Agreement"). Except as
required by law, the Company will hold, and will cause its
directors, officers, partners, employees, accountants, counsel,
financial advisors and other representatives and affiliates to
hold, any nonpublic information obtained from Conseco in
confidence to the extent required by, and in accordance with, the
Confidentiality Agreement.
4 .6 Best Efforts. Upon the terms and subject to the
conditions and other agreements set forth in this Agreement, each
of the parties agrees to use its best efforts to take, or cause
to be taken, all actions, and to do, or cause to be done, and to
assist and cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate and make effective,
in the most expeditious manner practicable, the Merger and the
other transactions contemplated by this Agreement.
4 .7 Public Announcements. Conseco and the Company will
consult with each other before issuing, and provide each other
the opportunity to review and comment upon, any press release or
other public statements with respect to the transactions
contemplated by this Agreement, including the Merger, and shall
not issue any such press release or make any such public
statement prior to such consultation, except as may be required
by applicable law, court process or by obligations pursuant to
any listing agreement with any national securities exchange or
NASDAQ.
4 .8 Acquisition Proposals. The Company shall not, nor
shall it permit any of its subsidiaries to, nor shall it
authorize or permit any officer, director or employee of, or any
investment banker, attorney or other advisor or representative
of, the Company or any of its subsidiaries to, directly or
indirectly, (i) solicit, initiate or encourage the submission of
any Acquisition Proposal (as hereinafter defined) or (ii)
participate in any discussions or negotiations regarding, or
furnish to any person any information with respect to, or take
any other action to facilitate any inquiries or the making of any
proposal that constitutes, or may reasonably be expected to lead
to, any Acquisition Proposal (as defined below); provided,
however, that nothing contained in this Section 4.8 shall
prohibit the Board of Directors of the Company from furnishing
information to, or entering into discussions or negotiations
with, any person or entity that makes an unsolicited Acquisition
Proposal if, and only to the extent that (A) the Board of
Directors of the Company, after consultation with and based upon
the advice of outside counsel, determines in good faith that such
action is necessary for the Board of Directors of the Company to
comply with its fiduciary duties to stockholders under applicable
law and (B) prior to taking such action, the Company (x) provides
reasonable notice to Conseco to the effect that it is taking such
action and (y) receives from such person or entity an executed
confidentiality agreement in reasonably customary form.
Notwithstanding anything in this Agreement to the contrary, the
Company shall promptly advise Conseco orally and in writing of
the receipt by it (or any of the other entities or persons
referred to above) after the date hereof of any Acquisition
Proposal, or any inquiry which could lead to any Acquisition
Proposal, the material terms and conditions of such Acquisition
Proposal or inquiry, and the identity of the person making any
such Acquisition Proposal or inquiry. The Company will keep
Conseco fully informed of the status and details of any such
Acquisition Proposal or inquiry. For purposes of this Agreement,
"Acquisition Proposal" means any bona fide proposal with respect
to a merger, consolidation, share exchange or similar transaction
involving the Company or any Significant Subsidiary of the
Company, or any purchase of all or any significant portion of the
assets of the Company or any Significant Subsidiary of the
Company, or any equity interest in the Company or any Significant
Subsidiary of the Company, other than the transactions
contemplated hereby.
4 .9 Fiduciary Duties. The Board of Directors of the
Company shall not (i) withdraw or modify, in a manner materially
adverse to Conseco, the approval or recommendation by such Board
of Directors of this Agreement or the Merger, (ii) approve or
recommend an Acquisition Proposal or (iii) enter into any
agreement with respect to any Acquisition Proposal, unless the
Company receives an Acquisition Proposal and the Board of
Directors of the Company determines in good faith, following
consultation with outside counsel, that in order to comply with
its fiduciary duties to stockholders under applicable law it is
necessary for the Board of Directors to withdraw or modify, in a
manner materially adverse to Conseco, its approval or
recommendation of this Agreement or the Merger, approve or
recommend such Acquisition Proposal, enter into an agreement with
respect to such Acquisition Proposal or terminate this Agreement.
In the event the Board of Directors of the Company takes any of
the foregoing actions, the Company shall, concurrently with the
taking of any such action, pay to Conseco the Section 4.11 Fee
pursuant to Section 4.11. Nothing contained in this Section 4.9
shall prohibit the Company from taking and disclosing to its
stockholders a position contemplated by Rule 14e-2(a) promulgated
under the Exchange Act or from making any disclosure to the
Company's stockholders which, in the good faith reasonable
judgment of the Board of Directors of the Company based on the
advice of outside counsel, is required under applicable law;
provided that, subject to the provisions of the first sentence of
this Section, the Company does not withdraw or modify, in a
manner materially adverse to Conseco, its position with respect
to the Merger or approve or recommend an Acquisition Proposal.
Notwithstanding anything contained in this Agreement to the
contrary, any action by the Board of Directors permitted by this
Section 4.9 shall not constitute a breach of this Agreement by
the Company.
4 .10 Consents, Approvals and Filings. The Company and
Conseco will make and cause their respective subsidiaries to make
all necessary filings, as soon as practicable, including, without
limitation, those required under the HSR Act, the Securities Act,
the Exchange Act, and applicable state insurance laws in order to
facilitate prompt consummation of the Merger and the other
transactions contemplated by this Agreement. In addition, the
Company and Conseco will each use their best efforts, and will
cooperate fully with each other (i) to comply as promptly as
practicable with all governmental requirements applicable to the
Merger and the other transactions contemplated by this Agreement
and (ii) to obtain as promptly as practicable all necessary
permits, orders or other consents of Governmental Entities and
consents of all third parties necessary for the consummation of
the Merger and the other transactions contemplated by this
Agreement. Each of the Company and Conseco shall use best
efforts to promptly provide such information and communications
to Governmental Entities as such Governmental Entities may
reasonably request. Each of the parties shall provide to the
other party copies of all applications in advance of filing or
submission of such applications to Governmental Entities in
connection with this Agreement and shall make such revisions
thereto as reasonably requested by such other party. Each party
shall provide to the other party the opportunity to participate
in all meetings and material conversations with Governmental
Entities.
4 .11 Certain Fees. (a) The Company shall pay to
Conseco upon demand $20 million (the "Section 4.11 Fee"), payable
in same-day funds, if a bona fide Acquisition Proposal is
commenced, publicly proposed, publicly disclosed or communicated
to the Company (or the willingness of any person to make such an
Acquisition Proposal is publicly disclosed or communicated to the
Company) and the Board of Directors of the Company, in accordance
with Section 4.9, withdraws or modifies in a manner materially
adverse to Conseco its approval or recommendation of this
Agreement or the Merger, approves or recommends such Acquisition
Proposal, enters into an agreement with respect to such
Acquisition Proposal, or terminates this Agreement.
(b) Unless Conseco is materially in breach of this
Agreement or is unable to satisfy the condition of Section 6.3(a)
hereof, the Company shall pay to Conseco upon demand an amount,
not to exceed $2,000,000, to reimburse Conseco for its Expenses
(as such term is defined in subparagraph (d) of this Section
4.11), payable in same-day funds, if the requisite approval of
the Company's stockholders for the Merger is not obtained (other
than the circumstances specified in Section 4.11(a) hereof) and
all other conditions contained in Section 6.1 of this Agreement
have been satisfied, waived or, with respect to any condition not
then satisfied, it is substantially likely that such condition
will be satisfied on or before March 31, 1997, through the
exercise of best efforts to procure the satisfaction thereof.
(c) Unless the Company is materially in breach of this
Agreement or is unable to satisfy the condition of Section 6.2(a)
hereof, Conseco shall pay to the Company upon demand, an amount,
not to exceed $2,000,000, to reimburse the Company for its
Expenses, payable in same-day funds, if the requisite approval of
Conseco's stockholders for the Merger is not obtained and all
other conditions contained in Section 6.1 of this Agreement have
been satisfied, waived or, with respect to any condition not then
satisfied, it is substantially likely that such condition will be
satisfied on or before March 31, 1997, through the exercise of
best efforts to procure the satisfaction thereof.
(d) For purposes of this Section 4.11, "Expenses" shall
mean all documented out-of-pocket fees and expenses incurred or
paid by or on behalf of Conseco or the Company, as the case may
be, to third parties in connection with the Merger or the
consummation of any of the transactions contemplated by this
Agreement, including all bank fees, financing fees, printing
costs and reasonable fees and expenses of counsel, investment
banking firms, accountants, experts and consultants.
4 .12 Affiliates and Certain Stockholders. Prior to the
Closing Date, the Company shall deliver to Conseco a letter
identifying all persons who are, at the time the Merger is
submitted for approval to the stockholders of the Company,
"affiliates" of the Company for purposes of Rule 145 under the
Securities Act. The Company shall use its best efforts to cause
each such person to deliver to Conseco on or prior to the Closing
Date a written agreement substantially in the form attached as
Exhibit A hereto. Conseco shall not be required to maintain the
effectiveness of the Form S-4 or any other registration statement
under the Securities Act for the purposes of resale of Conseco
Common Stock by such affiliates and the certificates representing
Conseco Common Stock received by such affiliates in the Merger
shall bear a customary legend regarding applicable Securities Act
restrictions and the provisions of this Section 4.12.
4 .13 NYSE Listing. Conseco shall use its best efforts
to cause the shares of Conseco Common Stock to be issued in the
Merger to be approved for listing on the NYSE, subject to
official notice of issuance, prior to the Closing Date.
4 .14 Stockholder Litigation. The Company shall give
Conseco the opportunity to participate in the defense or
settlement of any stockholder litigation against the Company and
its directors relating to the transactions contemplated by this
Agreement; provided, however, that no such settlement shall be
agreed to without Conseco's consent, which consent shall not be
unreasonably withheld.
4 .15 Indemnification. (a) The certificate of
incorporation and by-laws of each of the Company's subsidiaries
shall contain the provisions with respect to indemnification set
forth therein on the date of this Agreement, and such provisions
shall not be amended, repealed or otherwise modified for a period
of six years after the Effective Time in any manner that would
adversely affect the rights thereunder of individuals who at any
time prior to the Effective Time were directors or officers of
the Company or any of its subsidiaries (the "Indemnified
Parties") in respect of actions or omissions occurring at or
prior to the Effective Time (including, without limitation, the
transactions contemplated by this Agreement), unless such
modification is required by law. Conseco agrees to indemnify the
Indemnified Parties, but only to the extent that the Company
would have been obligated to do so had it been the Surviving
Corporation.
(b) The provisions of this Section 4.15 are intended to be
for the benefit of, and shall be enforceable by, each Indemnified
Party, his heirs and his personal representatives and shall be
binding on all successors and assigns of Conseco.
4 .16 Financing. Conseco shall have funds available
sufficient to repay when due all indebtedness outstanding under
the Company's senior credit facility and to pay when due the
aggregate Repurchase Payment (as defined in the Indenture) for
any of the Debentures which are required to be repurchased by the
Company in accordance with Section 11.1 of the Indenture.
4.17 Stock Options. (a) As soon as practicable following
the date of this Agreement, the Board of Directors of the Company
(or, if appropriate, any committee administering a Company Stock
Option Plan) shall adopt such resolutions or take such actions as
may be required to adjust the terms of all outstanding Company
Stock Options in accordance with Section 1.8(e) and shall make
such other changes to the Company Stock Option Plans as it deems
appropriate to give effect to the Merger (subject to the approval
of Conseco, which shall not be unreasonably withheld). The
parties agree that after the date hereof, except for the Company
Stock Options outstanding on the date hereof and any changes
thereto described in this Agreement or the Disclosure Schedule,
no option, warrants or other rights of any kind to purchase
capital stock of the Company shall be granted or made, under the
Company Stock Plans or otherwise, and no amendment, repricing or
other change to the outstanding Company Stock Options shall be
made, without the prior written consent of Conseco, and any such
grant, issuance, amendment, repricing or other change without
Conseco's consent shall be null, void and unenforceable against
Conseco.
(b) Conseco shall take all corporate action necessary to
reserve for issuance a sufficient number of shares of Conseco
Common Stock for delivery upon exercise of the Company Stock
Options. Prior to the Effective Time, Conseco shall have filed a
registration statement on Form S-8 (or any successor form) or
another appropriate form with respect to the shares of Conseco
Common Stock subject to the Company Stock Options and shall use
its best efforts to maintain the effectiveness of such
registration statement or registration statements (and maintain
the current status of the prospectus or prospectuses contained
therein) for so long as Company Stock Options remain outstanding.
4.18 Employment Agreements. The Company shall enter into
the employment agreements described in Section 4.18 of the
Conseco Disclosure Schedule. Such employment agreements shall be
subject to the approval of Conseco, which shall not be
unreasonably withheld.
4.19 Officers' Certificates Relating to Tax Treatment.
Conseco shall provide to the Tax Opinion Provider (as defined in
Section 6.3(c) hereof), a certificate in the form agreed to by
Conseco dated the Closing Date and signed on behalf of Conseco by
the chief executive officer and the chief financial officer of
Conseco. The Company shall provide to the Tax Opinion Provider a
certificate in the form agreed to by the Company dated the
Closing Date and signed on behalf of the Company by the chief
executive officer and the chief financial officer of the Company.
4.20 Supplemental Indenture; Other Actions. Prior to the
Effective Time, Conseco shall execute and deliver to the Trustee,
a supplemental indenture or indentures evidencing the succession
of Conseco to the Company and meeting the requirements of the
Indenture and the Company and Conseco shall take any and all
other actions required by the Indenture to substitute Conseco for
the Company under the Indenture and Debentures as of the
Effective Time.
4.21 Severance and Other Payments. If, after the Effective
Time, the employment of employees (other than officers) of the
Company are terminated, the Employee Severance Pay Plan of
Conseco shall be applicable to such employees giving credit for
service to the Company as service to Conseco. In addition, an
aggregate of up to $2 million of additional severance pay may be
paid to the following individuals in such manner and in such
proportions as shall be determined from time to time by the
Company's present chief executive office after consultation with
the Chief Operations Officer of Conseco or his designee:
(i) employees of the Company (other than officers) whose
employment has been terminated by Conseco within 18 months after
the Effective Time;
(ii) outside actuarial consultants of the Company (other
than officers) whose services are terminated by Conseco within 18
months after the Effective Time; and
(iii) Ronald J. Holmer, Benedict J. Iacovetti, Ernest
Iannucci and Wayne G. Vosik in order to satisfy such individuals'
parachute payment tax liability pursuant to Section 4999 of the
Internal Revenue Code of 1986, as amended and the regulations
thereunder; provided that no individual shall receive a payment
in excess of $120,000.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS PRIOR TO
MERGER
5 .1 Conduct of Business by the Company. Except as
contemplated by this Agreement or as set forth in Section 5.1 of
the Disclosure Schedule, during the period from the date of this
Agreement to the Effective Time, the Company shall, and shall
cause its subsidiaries to, act and carry on their respective
businesses in the ordinary course of business and, to the extent
consistent therewith, use reasonable efforts to preserve intact
their current business organizations, keep available the services
of their current key officers and employees and preserve the
goodwill of those engaged in material business relationships with
them. In addition, the Company agrees on and after the Mailing
Date (as defined in Section 5.4) to allow representatives of
Conseco to have access to the management and other personnel of
the Company so that Conseco can be fully informed at all times as
to significant day-to-day executive, legal, financial, marketing
and other operational matters involving the Company, its
subsidiaries or their businesses. Prior to taking or approving
any action during such time with respect to any such significant
matters involving the Company, management of the Company will
notify the representative of Conseco designated by Conseco for
oversight of the functional area(s) involved with such decision
and will, if consistent with the fiduciary obligations of such
officer, follow any suggestions made by the Conseco
representative with respect to the proposed action. During such
time, the Company will cause its personnel to cooperate with
personnel from Conseco in preparing for any proposed relocation
by Conseco of the Company's operations following Closing.
Without limiting the generality of the foregoing, during the
period from the date of this Agreement to the Effective Time, the
Company shall not, and shall not permit any of its subsidiaries
to, without the prior consent of Conseco:
(i) (x) declare, set aside or pay any dividends on,
or make any other distributions (whether in cash, stock or
property) in respect of, any of the Company's outstanding
capital stock, (y) split, combine or reclassify any of its
outstanding capital stock or issue or authorize the issuance
of any other securities in respect of, in lieu of or in
substitution for shares of its outstanding capital stock, or
(z) purchase, redeem or otherwise acquire any shares of
outstanding capital stock or any rights, warrants or options
to acquire any such shares;
(ii) issue, sell, grant, pledge or otherwise encumber
any shares of its capital stock, any other voting securities
or any securities convertible into, or any rights, warrants
or options to acquire, any such shares, voting securities or
convertible securities other than upon the exercise of
Company Stock Options outstanding on the date of this
Agreement;
(iii) amend its articles of organization, By-laws or
other comparable charter or organizational documents or the
Rights Agreement;
(iv) acquire any business or any corporation,
partnership, joint venture, association or other business
organization or division thereof;
(v) sell, mortgage or otherwise encumber or subject to
any Lien or otherwise dispose of any of its properties or
assets that are material to the Company and its subsidiaries
taken as a whole, except in the ordinary course of business;
(vi)(x) incur any indebtedness for borrowed money or
guarantee any such indebtedness of another person, other
than indebtedness owing to or guarantees of indebtedness
owing to the Company or any direct or indirect wholly-owned
subsidiary of the Company or (y) make any loans or advances
to any other person, other than to the Company, or to any
direct or indirect wholly-owned subsidiary of the Company
and other than routine advances to employees;
(vii) make any tax election or settle or compromise any
income tax liability that would reasonably be expected to be
material to the Company and its subsidiaries taken as a
whole;
(viii) pay, discharge, settle or satisfy any claims,
liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than the
payment, discharge or satisfaction, in the ordinary course
of business consistent with past practice or in accordance
with their terms, of liabilities reflected or reserved
against in, or contemplated by, the most recent consolidated
financial statements (or the notes thereto) of the Company
included in the Filed SEC Documents or incurred since the
date of such financial statements in the ordinary course of
business consistent with past practice;
(ix) except as may be otherwise required in the
Company's contractual undertakings with Transport Life
Insurance Company or as may be otherwise provided in the
investment guidelines to be contained in the investment
advisory agreements specified in Section 5.6 hereof, invest
its future cash flow, any cash from matured and maturing
investments, any cash proceeds from the sale of its assets
and properties, and any cash funds currently held by it, in
any investments other than cash equivalent assets or in
short-term investments (consisting of United States
government issued or guaranteed securities, or commercial
paper rated A-1 or P-1), except (i) as otherwise required by
law, (ii) as required to provide cash (in the ordinary
course of business and consistent with past practice) to
meet its actual or anticipated obligations or (iii) publicly-
traded corporate bonds that are rated investment grade by at
least two nationally recognized statistical rating
organizations;
(x) except as may be required by law,
(i) make any representation or promise,
oral or written, to any employee or former
director, officer or employee of the Company or
any subsidiary which is inconsistent with the
terms of any Benefit Plan;
(ii) make any change to, or amend in any
way, the contracts, salaries, wages, or other
compensation of any employee or any agent or
consultant of the Company or any subsidiary other
than (a) changes or amendments that are required
under existing contracts of (b) individual,
routine changes or amendments that are made in the
ordinary course of business and consistent with
past practice and do not exceed 8%;
(iii) adopt, enter into, amend, alter or
terminate, partially or completely, any Benefit
Plan or any election made pursuant to the
provisions of any Benefit Plan, to accelerate any
payments, obligations or vesting schedules under
any Benefit Plan; or
(iv) approve any general or company-wide pay
increases for employees;
(xi) except in the ordinary course of business, modify,
amend or terminate any material agreement, permit,
concession, franchise, license or similar instrument to
which the Company or any subsidiary is a party or waive,
release or assign any material rights or claims thereunder;
(xii) hold any meeting of the board of directors of the
Company or any subsidiary or any committee of any such
board, or take any action by written consent of any such
board of committee, without providing (i) written notice
five days in advance of any such meeting or in advance of
the date of any proposed action by written consent and (ii)
an agenda of the specific matters intended to be considered
at such meeting or a copy of the proposed written consent;
provided, however, that the submission of an agenda shall
not prohibit the directors from considering matters not on
the agenda, if the Company made a reasonable effort to give
Conseco advance notice of such matters; or
(xiii) authorize any of, or commit or agree to take any
of, the foregoing actions.
5 .2 Conduct of Business by Conseco. Except as described in
Section 5.2 of the Conseco Disclosure Schedule, during the period
from the date of this Agreement to the Effective Time, Conseco
shall, and shall cause its subsidiaries to, carry on their
respective businesses in the usual, regular and ordinary course
in substantially the same manner as heretofore conducted and, to
the extent consistent therewith, use all reasonable efforts to
preserve intact their current business organizations, keep
available the services of their current officers and employees
and preserve their relationships with customers, suppliers,
licensors, licensees, distributors and others having business
dealings with them to the end that their goodwill and ongoing
businesses shall be unimpaired at the Effective Time. Without
limiting the generality of the foregoing, during the period from
the date of this Agreement to the Effective Time, Conseco shall
not, and shall not permit any of its subsidiaries to:
(i) (x) declare, set aside or pay any dividends on, or
make any other distributions (whether in cash, stock or
property) in respect of, any outstanding capital stock of
Conseco (other than regular quarterly cash dividends of
$.0625 per share of Conseco Common Stock and regular cash
dividends on the Conseco Series D Preferred Stock and the
Conseco PRIDES, in each case with usual record and payment
dates and in accordance with Conseco's Articles of
Incorporation and its present dividend policy) or (y) split,
combine or reclassify any of its outstanding capital stock
or issue or authorize the issuance of any other securities
in respect of, in lieu of or in substitution for shares of
Conseco's outstanding capital stock (other than under the
Conseco Stock Plans);
(ii) issue, sell, grant, pledge or otherwise encumber
any shares of its capital stock, any other voting securities
or any securities convertible into, or any rights, warrants
or options to acquire, any such shares, voting securities or
convertible securities, in each case if any such action
could reasonably be expected to (a) delay materially the
date of mailing of the Joint Proxy Statement or, (B) if it
were to occur after such date of mailing, require an
amendment of the Joint Proxy Statement;
(iii) except as described in Section 3.5 of the Conseco
Disclosure Schedule, acquire any business or any
corporation, partnership, joint venture, association or
other business organization or division thereof, in each
case if any such action could reasonably be expected to (A)
delay materially the date of mailing of the Joint Proxy
Statement or, (B) if it were to occur after such date of
mailing, require an amendment of the Joint Proxy Statement;
or
(iv) authorize any of, or commit or agree to take any
of, the foregoing actions.
5.3 Other Actions. The Company and Conseco shall not, and
shall not permit any of their respective subsidiaries to, take
any action that would, or that could reasonably be expected to,
result in (i) any of the representations and warranties of such
party set forth in this Agreement becoming untrue in any material
respect or (ii) any of the conditions of the Merger set forth in
Article VI not being satisfied.
5.4 Certificates. (a) On the date the Joint Proxy
Statement is first mailed to the stockholders of the Company (the
"Mailing Date"), the Company shall deliver to Conseco a
certificate dated as of the Mailing Date signed by its Chief
Executive Officer and its Chief Financial Officer, in their
capacities as officers of the Company, that the representations
and warranties of the Company contained in this Agreement are
true and correct on the Mailing Date (except to the extent that
they expressly relate only to an earlier time, in which case they
shall have been true and correct as of such earlier time), other
than such breaches of representations and warranties which in the
aggregate would not reasonably be expected to have a material
adverse effect on the business, financial condition or results of
operations of the Company and its subsidiaries taken as a whole.
(b) On the Mailing Date, Conseco shall deliver to the
Company a certificate dated as of the Mailing Date signed by its
Chief Executive Officer and its Chief Financial Officer, in their
capacities as officers of Conseco, that the representations and
warranties of Conseco contained in this Agreement are true and
correct on the Mailing Date (except to the extent that they
expressly relate only to an earlier time, in which case they
shall have been true and correct as of such earlier time), other
than such breaches of representations and warranties which in the
aggregate would not reasonably be expected to have a material
adverse effect on the business, financial condition or results of
operations of Conseco and its subsidiaries taken as a whole.
5.5 Investment Advisory Agreements. The Company agrees to
enter into. and to cause each of its subsidiaries to enter into,
an investment advisory agreement with Conseco Capital Management,
Inc., a wholly-owned subsidiary of Conseco. Such agreements
shall be effective as of the Mailing Date and shall contain terms
and conditions reasonably acceptable to the parties and which are
customary in investment advisory agreements.
ARTICLE VI
CONDITIONS PRECEDENT
6 .1 Conditions to Each Party's Obligation To Effect the
Merger. The respective obligation of each party to effect the
Merger is subject to the satisfaction or waiver on or prior to
the Closing Date of the following conditions:
(a) Stockholder Approval. This Agreement and the
Merger shall have been approved and adopted by the
affirmative vote of the stockholders of the Company in the
manner contemplated in Section 2.10 hereof and the Conseco
Stockholder Approval shall have been obtained.
(b) Governmental and Regulatory Consents. All
required consents, approvals, permits and authorizations to
the consummation of the transactions contemplated hereby by
the Company and Conseco shall be obtained from (i) the
Insurance Regulators in the jurisdictions set forth in
Section 6.1(b) of the Disclosure Schedule, and (ii) any
other Governmental Entity whose consent, approval,
permission or authorization is required by reason of a
change in law after the date of this Agreement, unless the
failure to obtain such consent, approval, permission or
authorization would not reasonably be expected to have a
material adverse effect on the business, financial condition
or results of operations of the Company and its
subsidiaries, taken as a whole, or on the validity or
enforceability of this Agreement. Notwithstanding the
foregoing, in the event that all governmental and regulatory
consents required hereunder shall have been obtained except
the approval of the Insurance Regulator of any life
insurance subsidiary of the Company which does not
constitute a "significant subsidiary" (within the meaning of
Rule 1-02 of Regulation S-X of the SEC) of the Company (a
"Non-Significant Life Subsidiary") to the transfer of
control of such Non-Significant Life Subsidiary, then,
subject to Article VII hereof, at any time thereafter at the
option of Conseco, the parties shall take one of the
following actions with respect to such Non-Significant Life
Subsidiary and otherwise proceed to consummate the Merger in
accordance with this Agreement: (a) place into escrow,
pursuant to an escrow agreement reasonably acceptable to the
parties, the outstanding shares of capital stock of such Non-
Significant Life Subsidiary; such escrow agreement shall
contain customary provisions concerning duties and
responsibilities of the escrow agent and payment of the fees
and expenses of the escrow agent and shall provide that (i)
pending transfer of control of the Non-Significant Life
Subsidiary to Conseco, its current Board of Directors shall
retain all power to vote its shares of capital stock and to
direct its business not inconsistent with this Agreement,
(ii) promptly following receipt of the approval of the
Insurance Regulator, control of the capital stock of such
Non-Significant Life Subsidiary shall be transferred to
Conseco and (iii) at any time following June 30, 1997 and
prior to receipt of the Insurance Regulator's approval,
Conseco may elect to terminate the escrow agreement, in
which event such Non-Significant Life Subsidiary shall be
liquidated and dissolved and the proceeds thereof shall be
paid to Conseco; (b) cause such Non-Significant Life
Subsidiary to surrender its certificate of authority to do
business in its state of domicile; (c) cause such Non-
Significant Life Subsidiary to commence proceedings for its
liquidation and dissolution; (d) enter into an agreement for
the sale and transfer of the Non-Significant Life Subsidiary
to a third party; or (e) take such other action as may be
mutually agreeable to the Company and Conseco.
(c) HSR Act. The waiting period (and any extension
thereof) applicable to the Merger under the HSR Act shall
have been terminated or shall have otherwise expired.
(d) No Injunctions or Restraints. No temporary
restraining order, preliminary or permanent injunction or
other order issued by any court of competent jurisdiction or
other legal restraint or prohibition preventing the
consummation of the Merger shall be in effect; provided,
however, that the parties invoking this condition shall use
best reasonable efforts to have any such order or injunction
vacated.
(e) NYSE Listing. The shares of Conseco Common Stock
issuable to the Company's stockholders pursuant to this
Agreement shall have been approved for listing on the NYSE,
subject to official notice of issuance.
(f) Form S-4. The Form S-4 shall have become
effective under the Securities Act and shall not be the
subject of any stop order or proceedings seeking a stop
order.
6 .2 Conditions to Obligations of Conseco. The obligation
of Conseco to effect the Merger is further subject to the
following conditions:
(a) Representations and Warranties. The
representations and warranties of the Company contained in
this Agreement shall have been true and correct on the date
of this Agreement and as of the Mailing Date (except to the
extent that they expressly relate only to an earlier time,
in which case they shall have been true and correct as of
such earlier time), other than such breaches of
representations and warranties which in the aggregate would
not reasonably be expected to have a material adverse effect
on the business, financial condition or results of
operations of the Company and its subsidiaries taken as a
whole. The Company shall have delivered to Conseco a
certificate dated as of the Closing Date, signed by its
Chief Executive Officer and its Chief Financial Officer, in
their capacities as officers of the Company, to the effect
set forth in this Section 6.2(a).
(b) Performance of Obligations of the Company. The
Company shall have performed in all material respects all
obligations required to be performed by it under this
Agreement at or prior to the Closing Date and shall not have
willfully or intentionally (i) breached any of its
representations or warranties herein or (ii) failed to
perform or satisfy any of its obligations or covenants
hereunder, and Conseco shall have received a certificate
dated as of the Closing Date signed on behalf of the Company
by its Chief Executive Officer and its Chief Financial
Officer to such effect.
(c) Dissenting Shares. No more than 20% of the Shares
shall have become Dissenting Shares.
6 .3 Conditions to Obligation of the Company. The
obligation of the Company to effect the Merger is further subject
to the following conditions:
(a) Representations and Warranties. The
representations and warranties of Conseco contained in this
Agreement shall have been true and correct on the date of
this Agreement and as of the Mailing Date (except to the
extent that they expressly relate only to an earlier time,
in which case they shall have been true and correct as of
such earlier time), other than such breaches of
representations and warranties which in the aggregate would
not reasonably be expected to have a material adverse effect
on the business, financial condition or results of
operations of Conseco and its subsidiaries taken as a whole.
Conseco shall have delivered to the Company a certificate
dated as of the Closing Date, signed by its Chief Executive
Officer and its Chief Financial Officer, in their capacities
as officers of Conseco, to the effect set forth in this
Section 6.3(a).
(b) Performance of Obligations of Conseco. Conseco
shall have performed in all material respects all
obligations required to be performed by them under this
Agreement at or prior to the Closing Date and shall not have
willfully or intentionally (i) breached any of its
representations or warranties herein or (ii) failed to
perform or satisfy any of its obligations or covenants
hereunder, and the Company shall have received a certificate
dated as of the Closing Date signed on behalf of Conseco by
its Chief Executive Officer and its Chief Financial Officer
to such effect.
(c) Opinion of Counsel. The Company shall have
received the opinion dated the Closing Date of Fox,
Rothschild, O'Brien & Frankel, counsel to the Company, (the
"Tax Opinion Provider") substantially in the form of Exhibit
B, to the effect that the Merger will be treated as a
reorganization under Section 368 (a) (1) of the Code and
that shareholders of the Company will not be subject to
federal income tax on the receipt of shares of Conseco
Common Stock in exchange for Shares pursuant to the Merger.
(d) Update Letter. Immediately prior to the mailing
of the Joint Proxy Statement, the Company shall have
received from DLJ an update of the opinion referred to in
Section 2.12 hereof, which update shall not in any material
way modify, rescind or revoke the opinion referred to in
said Section 2.12.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7 .1 Termination. This Agreement may be terminated and
abandoned at any time prior to the Effective Time, whether before
or after approval of matters presented in connection with the
Merger by the stockholders of the Company and the stockholders of
Conseco:
(a) by mutual written consent of Conseco and the
Company;
(b) by either Conseco or the Company:
(i) if, upon a vote at a duly held
Stockholders Meeting or Conseco Stockholders Meeting or
any adjournment thereof, any required approval of the
stockholders of the Company or Conseco, as the case may
be, shall not have been obtained;
(ii) at any time after December 31, 1996, if
the Merger shall not have been consummated by such
date, unless the failure to consummate the Merger is
the result of a willful and material breach of this
Agreement by the party seeking to terminate this
Agreement; provided, however, that either party may by
notice to the other extend such date to March 31, 1997
if the only conditions to closing not satisfied as of
December 31, 1996 are those set forth in Sections
6.1(a), (b) or (c) hereof;
(iii) if any Governmental Entity shall have
issued an order, decree or ruling or taken any other
action permanently enjoining, restraining or otherwise
prohibiting the Merger and such order, decree, ruling
or other action shall have become final and
nonappealable; or
(iv) if the Board of Directors of the Company
shall have exercised its rights set forth in Section
4.9 of this Agreement;
(c) by Conseco if the Company does not deliver the
certificate specified in Section 5.4(a); or
(d) by the Company if Conseco does not deliver the
certificate specified in Section 5.4(b).
7 .2 Effect of Termination. In the event of termination of
this Agreement by either the Company or Conseco as provided in
Section 7.1, this Agreement shall forthwith become void and have
no effect, without any liability or obligation on the part of
Conseco or the Company, other than the last two sentences of
Section 4.5 and Sections 2.13, 3.7, 4.11, 7.2 and 10.2. Nothing
contained in this Section shall relieve any party from any
liability resulting from any material breach of the
representations, warranties, covenants or agreements set forth in
this Agreement.
7 .3 Amendment. Subject to the applicable provisions of the
IBCL and the Pennsylvania Code, at any time prior to the
Effective Time, the parties hereto may modify or amend this
Agreement, by written agreement executed and delivered by duly
authorized officers of the respective parties; provided, however,
that after approval of the Merger by the stockholders of the
Company, no amendment shall be made which reduces the
consideration payable in the Merger or adversely affects the
rights of the Company's stockholders hereunder without the
approval of such stockholders. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of
the parties.
7 .4 Extension; Waiver. At any time prior to the Effective
Time, each party may (a) extend the time for the performance of
any of the obligations or other acts of the other party, (b)
waive any inaccuracies in the representations and warranties of
the other party contained in this Agreement or in any document
delivered pursuant to this Agreement or (c) subject to Section
7.3, waive compliance with any of the agreements or conditions of
the other party contained in this Agreement. Any agreement on
the part of a party to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on
behalf of such party. The failure of any party to this Agreement
to assert any of its rights under this Agreement or otherwise
shall not constitute a waiver of such rights.
7 .5 Procedure for Termination, Amendment, Extension or
Waiver. A termination of this Agreement pursuant to Section 7.1,
an amendment of this Agreement pursuant to Section 7.3 or an
extension or waiver pursuant to Section 7.4 shall, in order to be
effective, require in the case of Conseco or the Company, action
by its Board of Directors or the duly authorized designee of its
Board of Directors.
ARTICLE VIII
SURVIVAL OF PROVISIONS
8 .1 Survival. The representations and warranties
respectively required to be made by the Company and Conseco in
this Agreement, or in any certificate, respectively, delivered by
the Company or Conseco pursuant to Section 6.2 or Section 6.3
hereof will not survive the Closing.
ARTICLE IX
NOTICES
9 .1 Notices. All notices and other communications under
this Agreement must be in writing and will be deemed to have been
duly given if delivered, telecopied or mailed, by certified mail,
return receipt requested, first-class postage prepaid, to the
parties at the following addresses:
If to the Company, to:
American Travellers Corporation
3220 Tillman Drive
Bensalem, Pennsylvania 19020
Attention: John A. Powell, Chairman of the Board
Telephone: (215) 244-1600
Telecopy: (215) 244-4893
with copies to:
Fox, Rothschild, O'Brien & Frankel
2000 Market Street, Tenth Floor
Philadelphia, Pennsylvania 19103
Attention: Ramon R. Obod
Telephone: (215) 299-2036
Telecopy: (215) 299-2150
If to Conseco, to:
Conseco, Inc.
11825 N. Pennsylvania Street
Carmel, Indiana 46032
Attention: Lawrence W. Inlow
Telephone: (317) 817-6163
Telecopy: (317) 817-6327
All notices and other communications required or permitted under
this Agreement that are addressed as provided in this Article IX
will, if delivered personally, be deemed given upon delivery,
will, if delivered by telecopy, be deemed delivered when
confirmed and will, if delivered by mail in the manner described
above, be deemed given on the third Business Day after the day it
is deposited in a regular depository of the United States mail.
Any party from time to time may change its address for the
purpose of notices to that party by giving a similar notice
specifying a new address, but no such notice will be deemed to
have been given until it is actually received by the party sought
to be charged with the contents thereof.
ARTICLE X
MISCELLANEOUS
10 .1 Entire Agreement. Except for documents executed
by the Company and Conseco pursuant hereto, this Agreement
supersedes all prior discussions and agreements between the
parties with respect to the subject matter of this Agreement, and
this Agreement (including the exhibits hereto, the Disclosure
Schedule, the Conseco Disclosure Schedule and other documents
delivered in connection herewith) and the Confidentiality
Agreement contain the sole and entire agreement between the
parties hereto with respect to the subject matter hereof.
10 .2 Expenses. Except as otherwise expressly provided
in Section 4.11, whether or not the Merger is consummated, each
of the Company and Conseco will pay its own costs and expenses
incident to preparing for, entering into and carrying out this
Agreement and the consummation of the transactions contemplated
hereby except that the expenses incurred in connection with the
printing, mailing and distribution of the Joint Proxy Statement
and the preparation and filing of the Form S-4 shall be borne
equally by Conseco and the Company.
10 .3 Counterparts. This Agreement may be executed in
one or more counterparts, each of which will be deemed an
original, but all of which will constitute one and the same
instrument and shall become effective when one or more
counterparts have been signed by each of the parties and
delivered to the other parties.
10 .4 No Third Party Beneficiary. Except as otherwise
provided herein, the terms and provisions of this Agreement are
intended solely for the benefit of the parties hereto, and their
respective successors or assigns, and it is not the intention of
the parties to confer third-party beneficiary rights upon any
other person.
10 .5 Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of
Indiana, regardless of the laws that might otherwise govern under
applicable principles of conflicts of laws thereof.
10 .6 Assignment; Binding Effect. Neither this Agreement
nor any of the rights, interests or obligations under this
Agreement shall be assigned, in whole or in part, by operation of
law or otherwise by any of the parties without the prior written
consent of the other parties, and any such assignment that is not
consented to shall be null and void. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the
benefit of and be enforceable by, the parties and their
respective successors and assigns.
10.7 Enforcement. The parties agree that irreparable
damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly
agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any
court of the United States located in the State of Indiana, this
being in addition to any other remedy to which they are entitled
at law or in equity. In addition, each of the parties hereto (a)
consents to submit itself to the personal jurisdiction of any
Federal court located in the State of Indiana in the event any
dispute arises out of this Agreement or any of the transactions
contemplated by this Agreement, (b) agrees that it will not
attempt to deny or defeat such personal jurisdiction or venue by
motion or other request for leave from any such court and (c)
agrees that it will not bring any action relating to this
Agreement or any of the transactions contemplated by this
Agreement in any court other than a Federal court sitting in the
State of Indiana.
10.8 Headings, Gender, etc. The headings used in this
Agreement have been inserted for convenience and do not
constitute matter to be construed or interpreted in connection
with this Agreement. Unless the context of this Agreement
otherwise requires, (a) words of any gender are deemed to include
each other gender; (b) words using the singular or plural number
also include the plural or singular number, respectively; (c) the
terms "hereof," "herein," "hereby," "hereto," and derivative or
similar words refer to this entire Agreement; (d) the terms
"Article" or "Section" refer to the specified Article or Section
of this Agreement; (e) all references to "dollars" or "$" refer
to currency of the United States of America; and (f) the term
"person" shall include any natural person, corporation, limited
liability company, general partnership, limited partnership, or
other entity, enterprise, authority or business organization.
10.9 Invalid Provisions. If any provision of this
Agreement is held to be illegal, invalid, or unenforceable under
any present or future law, and if the rights or obligations of
the Company or Conseco under this Agreement will not be
materially and adversely affected thereby, (a) such provision
will be fully severable; (b) this Agreement will be construed and
enforced as if such illegal, invalid, or unenforceable provision
had never comprised a part hereof; and (c) the remaining
provisions of this Agreement will remain in full force and effect
and will not be affected by the illegal, invalid, or
unenforceable provision or by its severance herefrom.
IN WITNESS WHEREOF, this Agreement has been duly executed
and delivered by the duly authorized officers of Conseco and the
Company, effective as of the date first written above.
CONSECO, INC.
By: /s/ Stephen C. Hilbert
Stephen C. Hilbert
Chairman of the Board
AMERICAN TRAVELLERS CORPORATION
By: /s/ John A. Powell
John A. Powell
Chairman of the Board
EXHIBIT 2.2
FOR IMMEDIATE RELEASE
Contact: John A. Powell
Chairman & CEO
(215) 244-1600
AMERICAN TRAVELLERS ANNOUNCES MERGER WITH CONSECO
Bensalem, Pennsylvania, August 26, 1996... American
Travellers Corporation (NASDAQ: ATVC) today announced that it has
entered into an Agreement of Merger with Conseco, Inc., a Carmel,
Indiana based insurance holding company (NYSE-CNC).
Under the Agreement of Merger each issued and outstanding
share of ATVC Common Stock would be converted into shares of
Conseco Common Stock as follows: (i) if the average closing
prices of Conseco Common Stock for the ten trading days
immediately preceding the second trading day prior to the
consummation of the Merger ("the Conseco Share Price") is greater
than or equal to $42.25 per share and less than or equal to
$46.25 per share, 0.7574 of a share of Conseco Common Stock, (ii)
if the Conseco Share Price is less than $42.25 per share, the
fraction of a share of Conseco Common Stock determined by
dividing $32.00 by the Conseco Share Price, or (iii) if the
Conseco Share Price is greater than $46.25 per share, the
fraction of a share of Conseco Common Stock determined by
dividing $35.03 by the Conseco Share Price. Thus American
Travellers shareholders will receive Conseco Common Stock with a
value of not less than $32.00 per share and up to $35.03 per
share. The American Travellers 6-1/2% Convertible Subordinated
Debentures would become convertible into shares of Conseco Common
Stock on an equivalent basis.
Consummation of the transaction, which is subject to
customary terms and conditions, including approval by the
stockholders of both American Travellers and Conseco and
regulatory approvals, is expected by the end of the fourth
quarter of 1996.
American Travellers' primary insurance subsidiary, American
Travellers Life Insurance Company (ATL), will continue its focus
on long term care insurance as a wholly owned subsidiary of
Conseco. There are no immediate plans to move its operations
from Bensalem, PA or to make significant changes in management
underwriting philosophies or operations.
John A. Powell, Chairman, President and CEO of American
Travellers, said, "We are excited to be joining forces with
Conseco. The combined organization will have strong
profitability, diversified operations and great financial
flexibility. These benefits will translate, we believe, into
greater shareholder value and a more positive view by the rating
agencies. I am also pleased to be continuing as President of
American Travellers Life Insurance Company, with the opportunity
to continue to build on the Company's outstanding growth in the
long term care insurance marketplace."
American Travellers Corporation, through its subsidiaries,
is engaged in the marketing and underwriting of long term care
insurance, including both nursing home care and home health care
coverage. The Company is licensed in forty-six states, the
District of Columbia and the U.S. and British Virgin Islands.
