STOCK AND WARRANT PURCHASE AGREEMENT by and between CONSECO, INC. and PAULSON & CO. INC. October 13, 2009
EXHIBIT 10.1
EXECUTION VERSION
STOCK AND WARRANT
PURCHASE AGREEMENT
by and between
CONSECO, INC.
and
XXXXXXX & CO. INC.
October 13, 2009
CONSECO, INC.
This Stock and Warrant Purchase Agreement (this “Agreement”) is made as of October 13,
2009, by and between Conseco, Inc., a Delaware corporation (the “Company”), and Xxxxxxx &
Co. Inc., a Delaware corporation, on behalf of the several investment funds and accounts managed by
it (“Purchaser”).
RECITALS
WHEREAS, the Company desires to issue and sell and Purchaser desires to purchase certain
shares of the Company’s common stock, par value $0.01 per share (the “Company Common
Stock”), and warrants to purchase shares of Company Common Stock, in each case on the terms set
forth herein;
WHEREAS, prior to the date of this Agreement, the New York Stock Exchange (the “NYSE”)
has agreed to grant the Company an exemption from the shareholder approval requirements of Section
312 of the NYSE Listed Company Manual with respect to the transactions contemplated by this
Agreement (the “NYSE Exemption”); and
WHEREAS, simultaneously with the Closing hereunder, the Company and Purchaser intend to enter
into an Investor Rights Agreement in substantially the form attached hereto as Exhibit A (the
“Investor Rights Agreement” and together with the Warrants (as defined below) and this
Agreement, the “Transaction Documents”).
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual promises hereinafter
set forth, the parties hereto agree as follows:
SECTION 1
Agreement to Sell and Purchase
Subject to the terms and conditions hereof, Purchaser agrees to purchase from the Company and
the Company agrees to sell and issue to the Purchaser, on the Closing Date, 16,400,000 shares (the
“Shares”) of Company Common Stock and warrants to purchase 5,000,000 shares of Company
Common Stock in the aggregate in substantially the form and subject to the terms set forth in
Exhibit B hereto (the “Warrants” and together with the Shares, the “Securities”)
for an aggregate purchase price payable by Purchaser for the Securities (the “Purchase
Price”) equal to $77,900,000 (such issuance, sale and purchase of the Securities, along with
the other commitments by each party to the other set forth in this Agreement, the
“Transaction”).
SECTION 2
Closing, Delivery and Payment
2.1 Closing. The closing (the “Closing”) of the purchase and sale of the
Securities shall take place at the offices of Xxxxxxx Xxxxxxx & Xxxxxxxx LLP, 000 Xxxxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx, at 10:00 a.m., local time on (i) the first Business Day (as
defined below) upon which each of the conditions set forth in Section 8 (other than those
conditions that by their nature are to be satisfied at the Closing, but subject to the fulfillment
or waiver of those conditions) are waived or fulfilled or (ii) such other date and time as the
parties hereto may mutually agree. The date on which the Closing occurs is referred to herein as
the “Closing Date.” For purposes of this Agreement, a “Business Day” shall mean
any day that is not a Saturday, Sunday or other day in which banks in the State of Indiana or the
State of New York are authorized or required by law to be closed.
2.2 Delivery. At the Closing, subject to the terms and conditions hereof, the Company
will deliver to Purchaser (i) a certificate or certificates evidencing the Shares and (ii) the
Warrants, in each case registered in such names and denominations as set forth in the instructions
of Purchaser provided to the Company at least three (3) Business Days in advance of the Tender
Offer Closing free and clear of any liens or other encumbrances (other than those placed thereon by
or on behalf of Purchaser and subject to any restrictions on resale in accordance with applicable
law or the provisions of the Investor Rights Agreement) and Purchaser will make payment to the
Company of the Purchase Price, by wire transfer of immediately available funds to an account
designated in writing by the Company at least three (3) Business Days in advance of the Tender
Offer Closing. Purchaser and the Company shall execute a cross receipt acknowledging receipt of
the Securities and the Purchase Price, respectively.
2.3 Anti-Dilution. If, between the date of this Agreement and the Closing Date, the
outstanding shares of Company Common Stock shall have been changed into or exchanged for a
different number or kind of shares or securities as a result of any reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse stock split or other
substantially similar transaction (a “Recapitalization”), a reasonable, appropriate and
proportionate adjustment shall be made to the number of Shares, the number of shares of Common
Stock subject to, or the exercise price reflected in, the Warrants, and, as applicable, to the
Purchase Price, as the case may be, for the Shares, to the extent that such Recapitalization is
consistent with the covenants of the Company contained in this Agreement and subject to such
anti-dilution adjustments being reasonably acceptable to the Purchaser.
SECTION 3
Representations and Warranties of the Company
Except (i) as otherwise disclosed or incorporated by reference and readily apparent in the
Company’s Annual Report on Form 10-K for the year ended December 31, 2008, its Quarterly Report on
Form 10-Q for the quarter ended March 30, 2009, its Quarterly Report on Form 10-Q for the quarter
ended June 30, 2009, each Current Report on Form 8-K of the Company filed after June 30, 2009 and
prior to the date hereof (in each case, including any supplements or amendments thereto) and the
Current Report on Form 8-K of the Company regarding certain accounting matters to be filed the date
hereof, a draft of which has been provided to Purchaser (the “2009 Reports”) or (ii) as
disclosed on Schedule 3 hereto, the Company hereby represents and warrants to Purchaser, as of the
date hereof and as of the Closing, as follows:
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3.1 Organization and Standing. (a) The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware. The Company is duly
qualified to do business and is in good standing as a foreign corporation in each jurisdiction
where the ownership or operation of its assets or properties or conduct of its business requires
such qualification, except where the failure to be so qualified or in good standing is not
reasonably likely to have, individually or in the aggregate, a Material Adverse Effect (as defined
below). As used in this Agreement, a “Material Adverse Effect” means any effect,
circumstance, occurrence or change that is material and adverse to the business, assets, results of
operations or financial condition of the Company and Company Subsidiaries (as defined below), taken
as a whole, or the legality, validity or enforceability of this Agreement or the Company’s ability
to perform any of its obligations under this Agreement in substantially the manner set forth
herein; provided, however, that Material Adverse Effect shall not be deemed to include (A) any
effects, circumstances, occurrences or changes generally affecting the insurance industry, the
economy, or the financial, real estate, securities or credit markets in the United States,
including effects on such industry, economy or markets resulting from any regulatory or political
conditions or developments, or any outbreak or escalation of hostilities, declared or undeclared
acts of war or terrorism, (B) changes in generally accepted accounting principles in the United
States (“GAAP”), (C) changes in laws governing financial institutions and laws of general
applicability or related policies or interpretations of any Governmental Authority), (in the case
of each of clause (A), (B) and (C), other than effects, circumstances, occurrences or changes that
arise after the date of this Agreement but before the Closing to the extent that such effects,
circumstances, occurrences or changes have a materially disproportionate adverse effect on the
Company and Company Subsidiaries relative to other companies in the insurance industry), or (D)
changes in the market price or trading volume of Company Common Stock (it being understood and
agreed that the exception set forth in this clause (D) does not apply to the underlying reason or
cause giving rise to or contributing to any such change).
(b) Each Company Subsidiary is duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization or incorporation. Each Company Subsidiary is duly
qualified to do business and is in good standing as a foreign corporation in each jurisdiction
where the ownership or operation of its assets or properties or conduct of its business requires
such qualification, except where the failure to be so qualified or in good standing is not
reasonably likely to have, individually or in the aggregate, a Material Adverse Effect. The
Company has delivered to Purchaser a true and complete list as of the date hereof of each Company
Subsidiary that conducts insurance operations (“Company Insurance Subsidiaries”),
identifying the states or jurisdictions where such Company Insurance Subsidiaries are domiciled or
“commercially domiciled” for insurance regulatory purposes. As used in this Agreement,
“Company Subsidiary” means any person of which at least a majority of the securities or
ownership interests having by their terms ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions is directly or indirectly owned or
controlled by the Company or by one or more of its Company Subsidiaries; and “person” means
an individual, corporation, limited liability company, partnership, association, trust,
unincorporated organization, other entity or group (as defined in Section 13(d) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)).
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3.2 Company Capital Stock.
(a) As of the date hereof, the authorized capital stock of the Company consists solely of
8,000,000,000 shares of Company Common Stock, of which 184,886,216 shares are issued and
outstanding (excluding 677,500 shares of unvested restricted stock), and 265,000,000 shares of
preferred stock, par value $0.01 per share, none of which are issued and outstanding. As of the
date hereof, 8,615,150 shares of Company Common Stock are issuable upon the exercise of outstanding
options to acquire such shares, 1,475,525 shares of Company Common Stock are issuable pursuant to
unvested performance share units and there are 677,500 outstanding shares of unvested restricted
stock. Each outstanding option to acquire Company Common Stock was granted with an exercise price
per share equal to or greater than the per share fair market value (as such term is used in Section
409A of the Internal Revenue Code of 1986, as amended (the “Code”), and the Department of
Treasury regulations and other interpretive guidance issued thereunder) of the Company Common Stock
underlying such option on the grant date thereof and was otherwise issued in compliance with
applicable laws. The outstanding shares of Company Common Stock have been duly authorized and are
validly issued, fully paid and nonassessable, have been issued in compliance with all federal and
state securities laws and are not subject to preemptive rights (and were not issued in violation of
any preemptive rights). Except for (a) the Company’s 3.50% Convertible Debentures due September
30, 2035 (the “Convertible Debentures”), issued pursuant to an Indenture, dated as of
August 15, 2005, between the Company and The Bank of New York Trust Company, N.A., as trustee (as
may be amended from time to time, the “Indenture”), (b) the Section 382 Rights Agreement,
dated as of January 20, 2009, between the Company and American Stock Transfer & Trust Company, LLC
(the “382 Rights Agreement”), (c) the Amended and Restated Long Term Incentive Plan of the
Company and equity awards granted thereunder, (d) the Purchase Agreement between the Company and
Xxxxxx Xxxxxxx & Co., Incorporated, dated as of the date of this Agreement, pursuant to which
Xxxxxx Xxxxxxx has agreed to purchase up to $293 million in aggregate principal amount of the
Company’s 7% Convertible Senior Debentures due 2016 (the “Purchase Agreement”), (e) the
Indebtedness issued pursuant to the Company Refinancing (as defined below) and (f) the Warrants,
neither the Company nor any Company Subsidiary has, and none is bound by, (i) any outstanding
subscriptions, options, warrants, calls, commitments or agreements of any character calling for the
purchase, repurchase, redemption or other acquisition of, or issuance of, or securities or rights
convertible into or exchangeable for, any shares of capital stock of the Company or any securities
representing the right to purchase or otherwise receive any shares of capital stock of the Company
(including any rights plan or agreement), (ii) any right of first refusal or offer, preemptive
right, right of participation, or any similar right to participate in the transactions contemplated
by this Agreement, (iii) any stockholders agreements, voting agreements or other similar agreements
with respect to the Company’s capital stock, nor does, to the knowledge of the Company, any such
agreement exist between or among any of the Company’s stockholders, (iv) any obligation to issue
shares of Company Common Stock or other securities to any person (other than the Purchaser), (v)
any obligation to, as a result of the issuance and the sale of the Securities, adjust (whether
automatically or otherwise) the exercise, conversion, exchange or reset price under any Company
securities.
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(b) Each of the Shares, the Warrants and the shares of Company Common Stock issuable upon
exercise of the Warrants have been duly authorized by all necessary corporate action on the part of
the Company and, when issued and paid for in accordance with this Agreement and, as applicable, the
terms of the Warrants, will be duly and validly issued, fully paid and nonassessable, free and
clear of all liens, other than restrictions on transfer provided for by applicable federal and
state securities laws and the Transaction Documents and liens imposed by or through the Purchasers.
3.3 Subsidiaries. The names, jurisdictions of organization and authorized and issued
capital stock and other equity and voting interests of all Company Subsidiaries are set forth on
Schedule 3.3. Except as set forth on Schedule 3.3 hereto, the Company owns, directly or
indirectly, all of the capital stock or other equity or voting interests of each Company Subsidiary
free and clear of any liens (other than pursuant to the Credit Agreement, as defined below) and all
the issued and outstanding shares of capital stock or other equity or voting interests of each
Company Subsidiary have been duly authorized and validly issued and are fully paid, non-assessable
and free of preemptive and similar rights to subscribe for or purchase securities. No Company
Subsidiary owns any shares of Company Common Stock. There are no outstanding options, warrants,
rights to subscribe to, calls or commitments of any character whatsoever relating to, or
securities, rights or obligations convertible into or exercisable or exchangeable for, or giving
any person any right to subscribe for or acquire, any shares of capital stock or other equity or
voting interests of any Company Subsidiary, or contracts, commitments, understandings or
arrangements by which the Company or any Company Subsidiary is or may become bound to issue
additional shares of capital stock or other equity or voting interests of any Company Subsidiary or
any securities convertible into or exercisable or exchangeable for shares of capital stock or other
equity or voting interests of any Company Subsidiary. There are no outstanding agreements of any
kind which obligate the Company or any Company Subsidiaries to repurchase, redeem or otherwise
acquire any capital stock or other equity or voting interests of any Company Subsidiary.
3.4 Corporate Power. The Company and each Company Subsidiary has all requisite power
and authority (corporate and otherwise) to carry on its business as it is now being conducted and
to own, lease or operate all its properties and assets; and the Company has all requisite corporate
power and authority and has taken all corporate action necessary in order to execute, deliver and
perform its obligations under the Transaction Documents and to consummate the Transaction. Neither
the Company nor any Company Subsidiary is in violation or default of any of the provisions of its
respective certificate or articles of incorporation, certificate of designations, bylaws or charter
documents.
3.5 Corporate Authority. This Agreement and the Transaction, including the issuance
of the Shares, the Warrants, and any shares of Company Common Stock issuable upon exercise of the
Warrants, have been, and the other Transaction Documents when delivered hereunder will have been,
duly authorized by all necessary corporate action of the Company and the board of directors of the
Company (the “Company Board”). This Agreement has been, and the other Transaction
Documents when delivered hereunder will have been, duly executed and delivered by the Company and,
assuming the due authorization, execution and delivery of this Agreement by Purchaser, this
Agreement is, and the other Transaction Documents when delivered hereunder will be, valid and
legally
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binding agreements of the Company, enforceable against the Company in accordance with their
respective terms, subject to bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer and similar laws of general applicability relating to or affecting creditors’ rights or to
general equity principles.
3.6 Regulatory Approvals; No Violations. (a) Assuming the accuracy of Purchaser’s
representations and warranties set forth in Sections 4.1, 4.2 and, solely as this representation
relates to requirements under the Xxxx-Xxxxx-Xxxxxx Act of 1976, as amended (the “HSR
Act”), 4.7, no consents, approvals, permits, orders or authorizations of, exemptions, reviews
or waivers by, or notices, reports, filings, declarations or registrations with, any federal, state
or local court, governmental, legislative, judicial, administrative or regulatory authority,
agency, commission, body or other governmental entity or self regulatory organization or stock
exchange (each, a “Governmental Authority”) or of, by or with any other third party are
required to be made or obtained by the Company or any Company Subsidiary in connection with the
execution, delivery and performance by the Company of this Agreement, or, when delivered hereunder,
the other Transaction Documents, or the consummation of the Transaction, except for (A) forms,
filings, registrations, submissions, statements, certifications, reports and documents required to
be filed or furnished by the Company with the U.S. Securities and Exchange Commission (the
“SEC”) after the date hereof under the Exchange Act or the Securities Act of 1933, as
amended (the “Act”), (B) a supplemental listing application and supporting documents
required to be filed with the NYSE in respect of the Shares and the shares of Common Stock reserved
in respect of the Warrants, and (C) any securities or “blue sky” filings of any state.
(b) The execution, delivery and performance of this Agreement by the Company does not, and the
execution, delivery and performance of the other Transaction Documents when delivered hereunder,
and the consummation by the Company of the Transaction, the Company Refinancing and the Public
Offering, will not, (A) constitute or result in a breach or violation of, or a default under, the
acceleration of any obligations or penalties or the creation of any charge, mortgage, pledge,
security interest, restriction, claim, lien, equity, encumbrance or any other encumbrance or
exception to title of any kind on the assets of the Company or any Company Subsidiaries (with or
without notice, lapse of time, or both) pursuant to, agreements binding upon the Company or any
Company Subsidiary or to which the Company or any Company Subsidiary or any of their respective
properties is subject or bound or any law, regulation, judgment or governmental or non-governmental
permit or license to which the Company or any Company Subsidiary or any of their respective
properties is subject, (B) constitute or result in a breach or violation of, or a default under,
the certificate of incorporation of the Company, as amended, or the bylaws of the Company or (C)
require any consent or approval or notice or other filing under any such agreement except, in the
case of clauses (A) or (C) above, for any breach, violation, default, acceleration, creation,
change, consent or approval that, individually or in the aggregate, is not reasonably likely to
have a Material Adverse Effect.
(c) As of the date of this Agreement, after giving effect, pro forma, to the
Transaction and the other transactions contemplated hereby, the Company Refinancing and the Public
Offering, the Company is in compliance with the covenants set forth in Sections 7.11, 7.12, 7.14,
7.15, 7.16 and 7.17 of the Credit Agreement as of September 30, 2009.
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3.7 No Brokers. Neither the Company nor any Company Subsidiary nor any of their
respective officers, directors, employees, agents or representatives has employed any broker or
finder or incurred any liability for any brokerage fees, commissions or finders or similar fees in
connection with the Transaction, other than fees and expenses payable to Xxxxxx Xxxxxxx & Co.
pursuant to an engagement letter, which fees have been previously disclosed to Purchaser.
3.8 Company Reports; Financial Statements. Except as set forth on Schedule 3.8
hereto:
(a) The Company, and each Company Subsidiary has filed or furnished, as applicable, all forms,
filings, registrations, submissions, statements, certifications, reports and documents required to
be filed or furnished by it with the SEC under the Exchange Act or the Act since December 31, 2006
(the forms, statements, reports and documents filed or furnished since December 31, 2006 and
through the date hereof, including any amendments thereto, the “Company Reports”). Each of
the Company Reports, at the time of its filing or being furnished complied, or if not yet filed or
furnished, will comply, in all material respects with the applicable requirements of the Act and
the Exchange Act, and any rules and regulations promulgated thereunder applicable to the Company
Reports. As of their respective dates (or, if amended prior to the date hereof, as of the date of
such amendment), the Company Reports did not, and any Company Reports filed or furnished with the
SEC subsequent to the date hereof will not, contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the statements made
therein, in light of the circumstances in which they were made, not misleading.
(b) The Company’s consolidated financial statements (including, in each case, any notes
thereto) contained in the Company Reports, were or will be prepared (i) in accordance with GAAP
applied on a consistent basis throughout the periods indicated (except as may be indicated in the
notes thereto or, in the case of interim consolidated financial statements, where information and
footnotes contained in such financial statements are not required under the rules of the SEC to be
in compliance with GAAP) and (ii) in compliance as to form, as of their respective date of filing
with the SEC, in all material respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto, and in each case such consolidated
financial statements fairly presented, in all material respects, the consolidated financial
position, results of operations, changes in stockholder’s equity and cash flows of the Company and
the consolidated Company Subsidiaries as of the respective dates thereof and for the respective
periods covered thereby (subject, in the case of unaudited statements, to normal year-end
adjustments which were not and which are not expected to be, individually or in the aggregate,
material to the Company and its consolidated Company Subsidiaries taken as a whole).
(c) The audited balance sheets of each of the Company Insurance Subsidiaries as of December
31, 2006, 2007, and 2008 and the related statements of income, surplus and cash flows for the years
thus ended, and their respective annual statements for the fiscal years ended December 31, 2006,
2007, and 2008 (the “Insurance Subsidiary Annual Statements”), as filed with the principal
Regulatory Authority overseeing insurance businesses conducted in the jurisdiction of domicile of
such Company Insurance Subsidiary
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and the National Association of Insurance Commissioners (together, the “Principal
Insurance Regulatory Authorities”), have been prepared in accordance with SAP (as defined
below) applied on a consistent basis and present fairly in all material respects their respective
statutory financial conditions as of such date and the results of their respective statutory
operations and cash flows for the year then ended. As used herein, “SAP” means the
accounting procedures and practices prescribed or permitted from time to time by the respective
states of domicile of the Company Insurance Subsidiaries and applied in a consistent manner
throughout the periods involved. The balance sheets of the Company and the Company Subsidiaries at
dates after December 31, 2008, and the related statements of income, surplus and cash flows, which
have been filed with the Principal Insurance Regulatory Authorities (the “2009 SAP
Statements” and together with the Insurance Subsidiary Annual Statements, the “SAP
Statement”), copies of which have been made available to the Purchaser by the Company, have
been prepared in accordance with SAP applied on a consistent basis and present fairly in all
material respects the applicable Company Insurance Subsidiaries’ respective statutory financial
conditions as of such dates and the results of their respective operations and cash flows.
Schedule 3.8(c) hereto sets forth all prescribed or permitted accounting practices that have been
adopted since December 31, 2006, by any of the Company Insurance Subsidiaries, and the effect of
such prescribed or permitted practices are fully and accurately reflected in the SAP-basis
financial statements described above.
(d) The Company Common Stock is registered pursuant to Section 12(b) of the Exchange Act, and
the Company has taken no action designed to, or which to its knowledge is likely to have the effect
of, terminating the registration of the Company Common Stock under the Exchange Act nor has the
Company received any notification that the SEC is contemplating terminating such registration.
(e) The Company is in compliance in all material respects with the applicable listing and
corporate governance rules and regulations of the New York Stock Exchange (the “NYSE”) and
any further requirements imposed by the NYSE Exemption or any subsequent exemption that would
satisfy the condition to closing set forth in Section 8.1(e). Except as set forth on Schedule
3.8(e), the Company has not, in the preceding twelve (12) months, received notice from the NYSE to
the effect that the Company is not in compliance with the listing or maintenance requirements of
the NYSE. The Company is, and, assuming the consummation of the transactions contemplated hereby,
the Company Refinancing and the Public Offering, has no reason to believe that it will not in the
foreseeable future continue to be, in compliance with all such listing and maintenance
requirements.
(f) Except as set forth on Schedule 3.8(f), the Company is in material compliance with
all provisions of the Sarbanes Oxley Act of 2002 that are applicable to it. The Company maintains
disclosure controls and procedures required by Rule 13a-15 or 15d-15 under the Exchange Act. Such
disclosure controls and procedures are designed to provide reasonable assurance that information
required to be disclosed by the Company is recorded and reported on a timely basis to the
individuals responsible for the preparation of the Company’s filings with the SEC and other public
disclosure documents. The Company maintains internal control over financial reporting (as defined
in Rule 13a-15 or 15d-15, as applicable, under the Exchange Act). Such internal control over
financial reporting is
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designed to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with GAAP and includes
policies and procedures that (i) pertain to the maintenance of records that in reasonable detail
accurately and fairly reflect the transactions and dispositions of the assets of the Company, (ii)
provide reasonable assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with GAAP, and that receipts and expenditures of the Company are
being made only in accordance with authorizations of management and directors of the Company, and
(iii) provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of the Company’s assets that could have a material effect on its
financial statements.
(g) The Company has disclosed, based on the most recent evaluation of its chief executive
officer and its chief financial officer prior to the date hereof, to the Company’s auditors and the
audit committee of the Company Board (A) any significant deficiencies and material weaknesses in
the design or operation of its internal control over financial reporting that are reasonably likely
to adversely affect the Company’s ability to record, process, summarize and report financial
information and has identified for the Company’s auditors and audit committee of the Company Board
any material weaknesses in internal control over financial reporting and (B) any fraud, whether or
not material, that involves management or other employees who have a significant role in the
Company’s internal control over financial reporting. Since the filing date of the Company’s most
recently filed periodic report under the Exchange Act, there have been no changes in the Company’s
internal control over financial reporting or disclosure controls and procedures or, to the
knowledge of the Company, in other factors that could significantly affect the Company’s internal
controls.
(h) The Company and Company Subsidiaries have filed all reports and statements, together with
any amendments required to be made with respect thereto, that they were required to file since
December 31, 2006, with any Governmental Authority having jurisdiction over its business or any of
its assets or properties (each a “Regulatory Authority”), and has paid all fees and
assessments due and payable in connection therewith, except where the failure to so file such
reports and statements or pay such fees is not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect. As of their respective dates, such reports and statements
complied in all material respects with all the laws, rules and regulations of the applicable
Regulatory Authority with which they were filed.
3.9 Absence of Certain Changes. Since December 31, 2008, (1) the Company and Company
Subsidiaries have conducted their respective businesses in all material respects in the ordinary
course, consistent with prior practice, and (2) no event or events have occurred that have had or
would be reasonably likely to have, individually or in the aggregate, a Material Adverse Effect.
3.10 Compliance with Laws; Insurance.
(a) The Company and each Company Subsidiary have all material permits, licenses,
authorizations, orders and approvals of, and have made all material filings,
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applications and registrations with, any Governmental Authority that are required in order to
permit them to own or lease their properties and assets and to carry on their business as presently
conducted and that are material to the business of the Company or such Company Subsidiary; and all
such material permits, licenses, certificates of authority, orders and approvals are in full force
and effect and, to the knowledge of the Company, no material suspension or cancellation of any of
them is threatened, and all such filings, applications and registrations are current. The conduct
by the Company and each Company Subsidiary of their business and the condition and use of their
properties does not violate or infringe any applicable domestic (federal, state or local) or
foreign law, statute, ordinance, license or regulation, except for conduct which has not had or is
not reasonably likely to have a Material Adverse Effect. Neither the Company nor any Company
Subsidiary is in default under any order, license, regulation, demand, writ, injunction or decree
of any Governmental Authority, except for any default which has not had or is not reasonably likely
to have a Material Adverse Effect. The Company and the Company Subsidiaries currently are
complying with, and to the knowledge of the Company, none of them has been threatened to be charged
with or given notice of any violation of, all applicable federal, state, local and foreign laws,
regulations, rules, judgments, injunctions or decrees, except where such non-compliance has not had
nor is reasonably likely to have a Material Adverse Effect. Except for statutory or regulatory
restrictions of general application to life and health insurance companies, no Governmental
Authority has placed any material restriction on the business or properties of the Company or any
Company Subsidiary. Except for routine examinations by insurance regulators, as of the date
hereof, no investigation by any Governmental Authority with respect to the Company or any of the
Company Subsidiaries is pending or, to the knowledge of the Company, threatened.
(b) The Company and each Company Subsidiary is presently insured, and during each of the past
five calendar years (or during such lesser period of time as the Company has owned such Company
Subsidiary) has been insured, for amounts and against such risks as companies engaged in a similar
business would, in accordance with good business practice, customarily be insured. All insurance
policies issued by any Company Subsidiary that are now in force are, to the extent required under
applicable law, in a form acceptable in all material respects to applicable Governmental
Authorities, or have been filed with and not objected to by such Governmental Authorities within
the period provided for such objection.
3.11 Litigation. Except as set forth on Schedule 3.11 hereto, as of the date hereof,
(i) no civil, criminal or administrative litigation, claim, action, suit, hearing, arbitration,
investigation or other proceeding before any Governmental Authority or arbitrator is pending or, to
the actual knowledge of the Company, threatened against the Company or any Company Subsidiary, (ii)
neither the Company nor any Company Subsidiary is subject to any order, judgment or decree, and
(iii) there are no facts or circumstances that could result in any claims against, or obligations
or liabilities of, the Company or any Company Subsidiary, except with respect to (i), (ii) and
(iii) for those that are not, individually or in the aggregate, reasonably likely to have a
Material Adverse Effect.
3.12 Reserves.
(a) The aggregate reserves of the Company Insurance Subsidiaries as recorded in the Company
SAP Statements have been determined in all material respects in accordance
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with generally accepted actuarial principles consistently applied (except as set forth
therein) and are considered by management of the Company to be adequate as of the date of such
statements to cover the total amount of all reasonably anticipated insurance liabilities of the
Company Insurance Subsidiaries. All reserves of the Company Insurance Subsidiaries set forth in
the Company SAP Statements are fairly stated in accordance with sound actuarial principles and meet
the requirements of all applicable Insurance Laws including the applicable SAP, except where
failure to so state reserves or meet such requirements, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect.
(b) Each Company Insurance Subsidiary (i) is in compliance with all applicable insurance
regulatory minimum capital or surplus requirements; (ii) has not become subject to any “Company
Action Level” pursuant to applicable risk-based capital guidelines, and has not received notice
of any pending action that would result in its becoming so subject; (iii) has not taken any steps
towards commencing, and has not received notice of any actions taken by relevant Regulatory
Authorities to commence, any rehabilitation, delinquency or insolvency proceedings under applicable
insurance laws in any state or foreign jurisdiction; (iv) has assets that exceed its respective
total reserves, all as computed in accordance with applicable statutory accounting principles
applied consistently with past practice and (v) has sufficient financial resources, based on
reasonable assumptions as to future pay-out patterns, premium increases and other relevant factors,
to pay its policy liabilities and other obligations as the foregoing become due in the ordinary
course of business.
3.13 Rights Agreement. On or prior to the date hereof, the Company Board has taken all action necessary and
appropriate to ensure that the Purchaser shall be an “Exempted Entity” under the 382 Rights
Agreement in connection with the purchase of the Securities, the purchase and the exercise of the
Warrants and the purchase and the conversion of any Convertible Debentures that Purchaser may
purchase in the Company Refinancing.
3.14 Undisclosed Events. Neither the Company nor any of the Company Subsidiaries has
any liabilities or obligations of any nature (absolute, accrued, contingent or otherwise) which are
not properly reflected or reserved against in the Company’s financial statements included in the
2009 Reports to the extent required to be so reflected or reserved against in accordance with GAAP,
except for (i) liabilities that have arisen in the ordinary course of business consistent with past
practice and that have not had a Material Adverse Effect, and (ii) liabilities that have not had
and would not reasonably be expected to have a Material Adverse Effect.
3.15 Labor. Neither the Company nor any Company Subsidiary is a party to any
collective bargaining agreement or employs any member of a union. The Company and the Company
Subsidiaries are in material compliance with all U.S. federal, state and local laws and regulations
relating to employment and employment practices, terms and conditions of employment and wages and
hours, and employee benefits plans (including, without limitation, the Employee Retirement Income
Securities Act of 1974, as amended), except where such non-compliance has not had or is not
reasonably likely to have a Material Adverse Effect. Neither the chief executive officer nor the
chief financial officer of the
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Company has notified the Company of his intended resignation or retirement or other
termination of such officer’s employment with the Company.
3.16 Transactions With Affiliates and Employees. Except as set forth in the Company
Reports, none of the officers or directors of the Company and, to the knowledge of the Company,
none of the employees of the Company is currently a party to any transaction with the Company or
any Company Subsidiary (other than for services as employees, officers and directors), including
any contract, agreement or other arrangement providing for the furnishing of services to or by,
providing for rental of real or personal property to or from, or otherwise requiring payments to or
from any officer, director or such employee or, to the knowledge of the Company, any entity in
which any officer, director, or any such employee has a substantial interest or is an officer,
director, trustee or partner, in each case in excess of $120,000 other than for (i) payment of
salary or consulting fees for services rendered, (ii) reimbursement for expenses incurred on behalf
of the Company and (iii) other employee benefits, including agreements under any equity
compensation plans.
3.17 Investment Company. The Company is not, and immediately after receipt of payment
for the Securities, will not be, an “investment company” within the meaning of the Investment
Company Act of 1940, as amended.
3.18 No Integrated Offering. Assuming the accuracy of the Purchaser’s representations
and warranties set forth in Section 4 hereof, the sale of the Securities to Purchaser and the
Company Refinancing does not require the registration of the Shares, the Warrants or any shares of
Company Common Stock issuable upon exercise of the Warrants under the Act.
3.19 Taxes. The Company and each Company Subsidiary has timely filed all material
federal, state, local and foreign income, franchise and other tax returns, reports and declarations
required by any Governmental Authority with jurisdiction over the Company or any Company Subsidiary
and has paid or accrued all taxes shown as due thereon except for any taxes which are being
contested in good faith (by appropriate proceedings and in respect of which adequate reserves with
respect thereto are maintained in accordance with GAAP), or where the failure to file such returns
or pay such taxes would not, individually or in the aggregate, have or be reasonably likely to have
a Material Adverse Effect. All such returns were complete and correct in all material respects and
the Company has no knowledge of a material tax deficiency which has been asserted or threatened
against the Company or any Company Subsidiary. Except as set forth on Schedule 3.19 hereto, the
Company is not under audit by any taxing authority. The Company has set aside on its books
provisions reasonably adequate for the payment of all taxes for periods to which those returns,
reports or declarations apply. The Company is not, nor has it been in the last five (5) years, a
U.S. real property holding corporation under Section 897 of the Code. There are no unpaid taxes in
any material amount claimed to be due by any taxing authority. For purposes of this Section 3.19,
taxes shall include any and all interest and penalties.
3.20 Indebtedness; Other Contracts.
(a) Neither the Company nor any of its Subsidiaries has any outstanding material Indebtedness.
For purposes of this Agreement: (x) “Indebtedness” of any person
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means, without duplication (A) all indebtedness for borrowed money, (B) all obligations
issued, undertaken or assumed as the deferred purchase price of property or services, including,
without limitation, “capital leases” in accordance with GAAP (other than trade payables entered
into in the ordinary course of business), (C) all reimbursement or payment obligations with respect
to letters of credit, surety bonds and other similar instruments, (D) all obligations evidenced by
notes, bonds, debentures or similar instruments, including obligations so evidenced incurred in
connection with the acquisition of property, assets or businesses, (E) all indebtedness created or
arising under any conditional sale or other title retention agreement, or incurred as financing, in
either case with respect to any property or assets acquired with the proceeds of such indebtedness
(even though the rights and remedies of the seller or bank under such agreement in the event of
default are limited to repossession or sale of such property), (F) all monetary obligations under
any leasing or similar arrangement which, in connection with GAAP, consistently applied for the
periods covered thereby, is classified as a capital lease, (G) all indebtedness referred to in
clauses (A) through (F) above secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any mortgage, lien, pledge, charge,
security interest or other encumbrance upon or in any property or assets (including accounts and
contract rights) owned by any person, even though the person which owns such assets or property has
not assumed or become liable for the payment of such indebtedness, and (H) all Contingent
Obligations (as defined below) in respect of indebtedness or obligations of others of the kinds
referred to in clauses (A) through (G) above; (y) “Contingent Obligation” means, as to any
person, any direct or indirect liability, contingent or otherwise, of that person with respect to
any indebtedness, lease, dividend or other obligation of another person if the primary purpose or
intent of the person incurring such liability, or the primary effect thereof, is to provide
assurance to the obligee of such liability that such liability will be paid or discharged, or that
any agreements relating thereto will be complied with, or that the holders of such liability will
be protected (in whole or in part) against loss with respect thereto.
(b) True, complete and correct copies of each material contract of the Company or any Company
Subsidiary required to be filed on a Current Report on Form 8-K, a Quarterly Report on Form 10-Q,
or an Annual Report on Form 10-K, in each case pursuant to Item 601(a) and Item 601(b)(10) of
Regulation S-K under the Exchange Act (the “Company Material Agreements”) are attached or
incorporated as exhibits to the 2009 Reports. Except as set forth in the 2009 Reports: (1) each of
the Company Material Agreements is valid and binding on the Company and the Company Subsidiaries,
as applicable, and in full force and effect, (2) the Company and each of the Company Subsidiaries,
as applicable, are in all material respects in compliance with and have in all material respects
performed all obligations required to be performed by them to date under each Company Material
Agreement; (3) neither the Company nor any of the Company Subsidiaries knows of, or has received
notice of, any material violation or default (or any condition which with the passage of time or
the giving of notice would cause such a violation of or a default) by any party under any Company
Material Agreement.
3.21 Environmental Matters. The Company and the Company Subsidiaries (i) are in
compliance with any and all applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants (“Environmental
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Laws”), (ii) have received all permits, licenses or other approvals required of them
under applicable Environmental Laws to conduct their respective businesses and (iii) are in
compliance with all terms and conditions of any such permit, license or approval, except, in the
case of (i), (ii) and (iii), where such non-compliance or failure to receive such permit, license
or approval has not had and would not be reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect.
3.22 Regulation M Compliance. The Company has not, and to its knowledge no one acting
on its behalf has, (i) taken, directly or indirectly, any action designed to cause or to result in
the stabilization or manipulation of the price of any security of the Company to facilitate the
sale or resale of any of the Securities or (ii) sold, bid for, purchased or paid any compensation
for soliciting purchases of any of the Securities.
3.23 Shell Company Status. The Company is not, and has never been, an issuer of the
type described in paragraph (i) of Rule 144 under the Act.
3.24 NYSE Exemption. The NYSE notified the Company that the NYSE will grant the NYSE
Exemption upon execution by NYSE of a supplemental listing application for, among other things, the
Shares and the shares of Company Common Stock issuable upon exercise of the Warrants. The
transactions contemplated by this Agreement will, prior to and through the Closing Date, be exempt
from the requirements of Section 312 of the NYSE Listed Company Manual as a result of the NYSE
Exemption.
3.25 Estimates and Projections. The Company has previously provided the Purchaser
with operating and financial projections and forecasts prepared as of June 30, 2009 (the “June 30
Projections”). It is the Company’s practice to prepare and update its internal operating and
financial projections and forecasts on a quarterly basis, and such projections and forecasts
prepared for the quarter ending September 30, 2009, to the extent any portion of the June 30
Projections are no longer relevant, shall supersede such portions of the June 30 Projections.
3.26 Certain Business Practices. To the knowledge of the Company, none of the Company or any Company Subsidiary or any director,
officer, agent, employee or other person acting for or on behalf of Company or any Company
Subsidiary has violated the U.S. Foreign Corrupt Practices Act of 1977, as amended, or any other
anti-bribery or anti-corruption laws applicable to the Company or any Company Subsidiary.
SECTION 4
Representations and Warranties of Purchaser
Purchaser hereby represents and warrants to the Company as follows:
4.1 Institutional Accredited Investor; Experience. Purchaser is an “accredited
investor” (as defined in Rule 501 under the Act) and is capable of evaluating the merits and risks
of its investment in the Company and has the capacity to protect its own interests.
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4.2 Investment. Purchaser is acquiring the Securities for its own account, for
investment and not with the view to distribution in violation of securities laws; provided, that
this representation and warranty shall not be deemed to limit the Purchaser’s right to sell the
Securities pursuant to an effective registration statement or otherwise in compliance with
applicable federal and state securities laws. As used in this Agreement, “Affiliate”
means, with respect to any person, any other person that directly or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with, such person, and
the term “control” (including the terms “controlled by” and “under common
control with”) means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of such person, whether through ownership of voting
securities, by contract or otherwise.
4.3 No Reliance. Purchaser has relied upon the representations and warranties set
forth herein and its own investigations and diligence, including a review of the 2009 Reports filed
with the SEC and including with respect to the tax consequences of this investment and the
Transaction. Purchaser understands and acknowledges that neither the Company nor any of the
Company’s representatives, agents or attorneys is making or has made at any time any warranties or
representations of any kind or character, express or implied, with respect to any matter or the
Company Common Stock, except as expressly set forth herein.
4.4 Organization and Standing. Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of the States of Delaware and is qualified to do
business and in good standing in the State of New York.
4.5 Corporate Power. Purchaser has all requisite corporate power and authority and
has taken all corporate action necessary in order to execute, deliver and perform its obligations
under this Agreement and to consummate the Transaction.
4.6 Corporate Authority. This Agreement and the Transaction have been duly authorized
by all necessary corporate action of Purchaser. This Agreement has been duly executed and
delivered by Purchaser, and, assuming the due authorization, execution and delivery of this
Agreement by the Company, this Agreement is a valid and legally binding agreement of Purchaser,
enforceable against Purchaser in accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws of general applicability relating
to or affecting creditors’ rights or to general equity principles.
4.7 Regulatory Approvals; No Violations. (a) No consents, approvals, permits, order
or authorizations of, exemptions, reviews or waivers by, or notices, reports, filings or
registrations with any Governmental Authority or with any other third party are required to be made
or obtained by Purchaser or any of its Affiliates or any of their respective officers, directors or
employees in connection with the execution, delivery and performance by Purchaser of this Agreement
or the consummation of the Transaction except for those already obtained or made.
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(b) Immediately following the purchase of the Securities, no ultimate parent entity of any
investment fund managed by the Purchaser will hold more than $65,200,000 of shares of Company
Common Stock.
(c) The execution, delivery, and performance of this Agreement by Purchaser does not, and the
consummation by Purchaser of the Transaction will not, (A) constitute or result in a breach or
violation of, or a default under, or the acceleration or creation of any obligations, penalties or
the creation of any charge, mortgage, pledge, security interest, restriction, claim, lien or
equity, encumbrance or any other encumbrance or exception to title of any kind on the assets or
properties of Purchaser (with or without notice, lapse of time, or both) pursuant to agreements
binding upon Purchaser or to which Purchaser or any of its properties is subject or bound or any
law, regulation, judgment or governmental or non-governmental permit or license to which Purchaser
or any of its properties is subject, (B) constitute or result in a breach or violation of, or a
default under, the certificate of incorporation, as amended, or the bylaws or other organizational
documents of Purchaser or (C) require any consent or approval under any such agreement except, in
the case of clauses (A) or (C) above, for any breach, violation, default, acceleration, creation,
change, consent or approval that, individually or in the aggregate, is not reasonably likely to
have a material adverse effect on the ability of Purchaser to timely consummate the Transaction.
4.8 Ownership of Shares. As of the date of this Agreement, Purchaser and its Affiliates are the owners of record or
the beneficial owners (as such term is defined under Rule 13d-3 under the Exchange Act) of
3,600,000 shares of Company Common Stock or securities convertible into or exchangeable for Company
Common Stock. As of the Closing, Purchaser and its Affiliates shall not be the owners of record or
the beneficial owners of Company Common Stock other than the shares or securities set forth in the
preceding sentence (and any securities issued in respect thereof, or in substitution therefor, in
connection with any stock split, dividend, spin-off or combination, or any reclassification,
recapitalization, merger, consolidation, exchange or other similar reorganization or business
combination) and the Securities purchased hereunder.
4.9 Available Funds. Purchaser will have available to it at Closing all funds
necessary for the payment to the Company of the aggregate Purchase Price.
SECTION 5
Covenants
5.1 Reasonable Best Efforts; Further Assurances. (a) Subject to the terms and conditions of this Agreement, each of the Company and
Purchaser agrees to cooperate with the other and use its reasonable best efforts in good faith to
take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary on
its part under this Agreement or under applicable laws to consummate and make effective the
Transaction as promptly as reasonably practicable, including the satisfaction of the conditions set
forth in Section 8 hereof; provided, however, that neither Purchaser nor the Company shall be
required to obtain or seek any Principal Insurance Regulatory Authority’s clearance, approval,
consent, authorization, exemption, waiver or similar order (“Insurance Regulatory
Approvals”). Purchaser hereby covenants and agrees that it shall not, prior to the Closing,
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knowingly take any action that is reasonably likely to require that Purchaser obtain an
Insurance Regulatory Approval that will be an Approval (as defined in Section 8.1(c) hereof).
(b) (i) Purchaser and the Company each has made its own legal determination, based on existing
facts and, in the case of the Company, based in part upon and assuming the accuracy of Purchaser’s
representations and warranties set forth in Section 4.7(b) hereof, that no premerger notification
is required by the HSR Act in connection with the Closing. Purchaser hereby covenants and agrees
that it shall not, prior to the Closing, knowingly take any action that is reasonably likely to
result in an HSR Event.
(ii) Notwithstanding the foregoing, in the event that either the Company or Purchaser, in
consultation with legal counsel, finally determines that the Transaction will, or is reasonably
likely to, require a premerger notification under the HSR Act (an “HSR Event”), such party
shall notify the other as soon as is reasonably practicable, and in any event within 24 hours after
making such final determination.
(c) If, at any time a filing is required by the HSR Act with respect to the Transaction, then
the parties shall reasonably cooperate and consult with each other and each of the Company and
Purchaser shall use their respective reasonable best efforts to make any filings required by the
HSR Act as promptly as practicable and, in the case of a filing under the HSR Act that is an
Approval, in any event within twenty (20) days following delivery of notice in respect of an HSR
Event. The Company shall pay any filing fees in connection with such filing under the HSR Act.
If, after the Closing, Purchaser determines that a filing under the HSR Act is necessary for it or
its affiliates to acquire, convert or exercise any securities of the Company, the parties will also
cooperate and consult with each other in the same manner.
(d) Subject to the terms and conditions of this Agreement, each of the Company and Purchaser
shall use reasonable best efforts, at the Company’s sole expense, to lift any injunction to the
Transaction as promptly as reasonably practicable.
(e) Upon the request of Purchaser, the Company shall, and shall cause each of its controlled
Affiliates to, (i) cooperate with the filing of any statement, notice, petition or application by
or on behalf of the Purchaser or any of its Affiliates in order to obtain any Insurance Regulatory
Approvals in connection with Purchaser’s acquisition of beneficial ownership of Company Common
Stock or securities convertible into Company Common Stock, (ii) furnish to Purchaser all
information concerning the Company and each Company Subsidiary, and their respective directors,
officers and stockholders and such other matters as may be reasonably necessary or advisable in
connection with any such Insurance Regulatory Approvals, (iii) respond to any government requests
for information, and (iv) contest and resist any action, including any legislative, administrative
or judicial action, and to have vacated, lifted, reversed or overturned any Order that restricts,
prevents or prohibits the consummation of the transactions contemplated by any such filing,
including by pursuing all available avenues of administrative and judicial appeal and all available
legislative action, (v) cooperate with Purchaser in connection with any analyses, appearances,
presentations, memoranda, briefs, arguments, opinions and proposals made or submitted by or on
behalf of Purchaser or any of its Affiliates in connection with
- 17 -
proceedings under or relating to such Insurance Regulatory Approvals or any other federal,
state or foreign laws applicable to the insurance industry as conducted by the Company and its
Affiliates, and (vi) provide Purchaser with copies of all material communications from and filings
with, any Governmental Authorities in connection with this Section 5.1(e).
(f) Notwithstanding anything to the contrary herein, neither party nor any of their respective
Affiliates shall be required to take any action pursuant to this Section 5.1 which would be
reasonably likely to be unreasonably burdensome on such party or any of its respective Affiliates,
or to require such party or its respective Affiliates to divest or dispose of any assets,
securities or other instruments whether now owned or hereafter acquired or to accept any limitation
on any of its investment activities.
5.2 Press Releases. The Company shall, by 8:30 a.m. (New York City time) on the
Business Day immediately following the date of this Agreement and the Closing Date, issue a press
release disclosing the material terms of the transactions contemplated hereby and file a Current
Report on Form 8-K, filing the Transaction Documents as exhibits thereto. The Company and
Purchaser shall consult with each other before issuing any press release with respect to the
Transaction or this Agreement and shall not issue any such press release or make any public
statements (including any non-confidential filings with Governmental Authorities that name another
party hereto) without the prior consent of such other party, which consent shall not be
unreasonably withheld or delayed; provided, however, that a party may, without the prior consent of
the other party, issue such press release or make such public statements as may upon the advice of
outside counsel be required by law or the rules or regulations of the NYSE, the SEC, any other
Governmental Authority or any other applicable regulation, in which such case the disclosing party
shall provide the other party with prior notice of such public statement; provided that such party
shall use its reasonable best efforts to consult with and coordinate such press release with the
other party; provided, further, that such party shall only include in a press release not receiving
the consent of the non-filing party such information that is legally required to be disclosed upon
the advice of counsel.
5.3 Conduct of Business Prior to the Closing. Except as otherwise expressly
contemplated or permitted by this Agreement or with the prior written consent of Purchaser (which
consent shall not be unreasonably withheld or delayed), during the period from the date of this
Agreement to the Closing Date, the Company shall, and shall cause each Company Subsidiary to, (i)
conduct its business only in the usual, regular and ordinary course consistent with past practice
and (ii) take no action which would reasonably be expected to adversely affect or delay (x) the
receipt of any approvals of any Governmental Authority required to consummate the transactions
contemplated hereby or (y) the consummation of the transactions contemplated hereby.
5.4 Company Forbearances. Except as expressly contemplated or permitted by this
Agreement or as set forth in Schedule 5.4, during the period from the date of this Agreement to the
Closing, the Company shall not, and shall not permit any Company Subsidiary to, without the prior
written consent of Purchaser (which consent shall not be unreasonably withheld or delayed):
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(a) set any record or payment dates for the payment of any dividends or distributions on its
capital stock, including, without limitation, any shares of preferred stock, or other equity
interest or make, declare or pay any dividend or make any other distribution on, or directly or
indirectly redeem, purchase or otherwise acquire, any shares of its capital stock or other equity
interest or any securities or obligations convertible into or exchangeable for any shares of its
capital stock or other equity interest or stock appreciation rights or grant any person any right
to acquire any shares of its capital stock or other equity interest, other than (A) dividends paid
by any of Company Subsidiaries so long as such dividends are only paid to the Company or any of its
other wholly owned Subsidiaries; (B) pursuant to the Company Refinancing and (C) pursuant to the
Company’s equity incentive plan;
(b) issue or commit to issue any additional shares of capital stock, including, without
limitation, any shares of preferred stock or other equity interest, or any securities convertible
into or exercisable for, or any rights, warrants or options to acquire, any additional shares of
capital stock or other equity interest, except (i) pursuant to the Company Refinancing, (ii)
options, restricted stock or other equity grants under the Company’s equity incentive plan or (iii)
pursuant to the exercise of Company options or vesting of restricted stock or other equity grants
under the Company’s equity incentive plan;
(c) take any action which would result in the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby to cause the Purchaser to become an “Acquiring
Person” for purposes of the 382 Rights Agreement; or
(d) effect any Recapitalization, enter into or agree to enter into any merger or consolidation
with any person, or sell any properties or assets that are material to the business of Company or
any Company Subsidiary, as applicable, except for reinsurance in the ordinary course of business;
(e) incur any Indebtedness for borrowed money or guarantee any such Indebtedness, except for
(i) the Company Refinancing and (ii) intercompany Indebtedness among the Company and or one or more
of its wholly-owned Company Subsidiaries; or
(f) agree to, or make any commitment to, take any of the actions prohibited by this Section
5.4
5.5 Public Offering; Registration of Shares. Without limiting any rights of the
Purchaser set forth in the Investor Rights Agreement, the Company will file a registration
statement on Form S-1 (or other reasonably appropriate form) for a registered public offering of
the Company Common Stock for net cash proceeds to the Company of not less than $200 million (the
“Public Offering”), no later than forty five (45) days after the date of the Tender Offer Closing
(as defined below) and the Company shall use its reasonable best efforts to have such registration
statement declared effective by the SEC and use its reasonable best efforts to consummate the
Public Offering, in each case, no later than one hundred and twenty (120) days after the date of
the Tender Offer Closing; provided that, the net cash proceeds to the Company required to
be received in such Public Offering shall be reduced if, and to the extent that, the Company Board
determines in good faith that the Public Offering will otherwise jeopardize or endanger the
availability to the Company of its
- 19 -
net operating loss carryforwards to be used to offset its taxable income in such year or
future years, and the basis for such determination is provided in writing to Purchaser.
5.6 Refinancing. Subject to the terms and conditions of, and to the extent permitted by, the Second Amended
and Restated Credit Agreement, dated as of October 10, 2006, by and among the Company, the lenders
signatory thereto, and Bank of America N.A. as administrative agent, as amended by Amendment No. 1
thereto dated June 12, 2007, and Amendment Xx. 0 xxxxxxx xxxxx Xxxxx 00, 0000 (xx may be further
amended from time to time, the “Credit Agreement”), the Convertible Debentures and the
Indenture, the Company shall use its reasonable best efforts to promptly consummate one or more
offerings of Indebtedness (as such term is defined in the Credit Agreement) substantially on the
terms set forth in on Schedule 5.6 hereto, resulting in aggregate proceeds to the Company
sufficient to allow the Company to purchase up to the outstanding principal amount of the
Convertible Debentures (such transaction, the “Company Refinancing”); provided
that, for the avoidance of doubt, the Company’s obligation to use reasonable best efforts shall not
create any obligation of the Company to agree to alter the proposed terms of any such Company
Refinancing, including the prices paid upon tender of Convertible Debentures, interest or
conversion rates applicable to offered Indebtedness, or otherwise.
5.7 Listing of Shares. The Company shall use its reasonable best efforts to cause the
Shares to be approved for listing on the NYSE, subject to official notice of issuance, as promptly
as practicable, and in any event before the Closing.
5.8 Preservation of NOLs. The Company will not enter into any transaction (other than
a sale of the entire Company) with any person that would result in the loss of or limit the ability
of the Company to fully utilize their net operating losses without the prior written consent of
Purchaser, except in connection with a transaction that the Company Board determines in good faith
is reasonably likely to provide a benefit to the Company and its stockholders that exceeds the harm
caused by and resulting from the loss of or limitation of the ability of the Company to fully
utilize their net operating losses. Notwithstanding the foregoing, the Company’s obligations under
this Section 5.8 shall expire on the first date that the Purchaser and its Affiliates beneficially
own or own of record less than 5% of the voting stock of the Company on an as-converted basis.
5.9 Takeover Protections. Except with respect to the Company’s 382 Rights Agreement,
which is addressed in Section 3.13 hereof, prior to the Closing, the Company and the Company Board
will have taken all necessary action, if any, in order to render inapplicable any control share
acquisition, business combination, poison pill (including any distribution under a rights
agreement) or other similar anti takeover provision under the Company’s certificate of
incorporation (or similar charter documents) or the laws of the state of Delaware (including
Section 203 of the Delaware General Corporation Law) that is or could become applicable to the
Purchaser as a result of the Purchaser and the Company fulfilling their obligations or exercising
their rights hereunder, including, without limitation, as a result of the Company’s issuance of the
Shares and the Warrants and Purchaser’s ownership of the Shares and Warrants and any Indebtedness
of the Company that Purchaser may acquire in the Company Refinancing.
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5.10 Material Non-Public Information. Except in connection with any notice required
to be provided hereunder or in connection with any reasonable response to unsolicited written or
oral requests from Purchaser or its representatives and affiliates for information, between the
date hereof and Closing, the Company shall use its reasonable best efforts to refrain from
providing the Purchaser with any material, non-public information without the Purchaser’s prior
written consent.
SECTION 6
Private Placement of the Securities
6.1 Securities Act Exemption. It is intended that the Company Common Stock and
Warrants to be issued pursuant to this Agreement will not be registered under the Act in reliance
on the exemption from the registration requirements of Section 5 of the Act set forth in Section
4(2) and Regulation D under the Act.
6.2 Rule 144 Reporting. With a view to making available to Purchaser the benefits of
certain rules and regulations of the SEC which may permit the sale of the Securities to the public
without registration, the Company agrees, at all times after the effective date of this Agreement
and until the Purchaser no longer holds any Securities, any shares of Common Stock issuable upon
exercise of the Warrants, any convertible Indebtedness it may acquire in the Company Refinancing or
any Common Stock issuable upon conversion thereof, to use its reasonable best efforts to:
(a) make and keep public information available, as those terms are understood and defined in
Rule 144(c)(1) under the Act or any similar or analogous rule promulgated under the Act;
(b) file with the SEC, in a timely manner, all reports and other documents required of the
Company under the Exchange Act;
(c) not terminate its status as an issuer required to file reports under the Exchange Act
(even if the Exchange Act or the rules and regulations thereunder would permit such termination);
and
(d) furnish to Purchaser forthwith upon request: a written statement by the Company as to its
compliance with the reporting requirements of Rule 144 under the Act, and of the Exchange Act; a
copy of the most recent annual or quarterly report of the Company; and such other reports and
documents as Purchaser may reasonably request in availing itself of any rule or regulation of the
SEC allowing it to sell any such securities without registration.
SECTION 7
Indemnity
7.1 Indemnity for Purchaser. (a) The Company agrees to
indemnify and hold harmless Purchaser and its Affiliates and each of their
respective officers, directors, partners,
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members and employees, and each person who controls Purchaser within the meaning of the Exchange
Act and the rules and regulations promulgated thereunder (each an “Indemnified Person”), to
the fullest extent lawful, from and against any and all claims, damages, liabilities, deficiencies,
judgments, fines, amounts paid in settlement and expenses (including reasonable attorneys’ fees and
expenses) (collectively, “Losses”) arising out of or resulting from any action, suit,
claim, arbitration, mediation, proceeding or investigation by any Governmental Authority,
stockholder of the Company or any other person arising out of or resulting from (i) any inaccuracy
in or breach of the Company’s representations or warranties in this Agreement; (ii) the Company’s
breach of agreements or covenants made by the Company in this Agreement; (iii) any third party
claims arising out of or resulting from the Transaction or any other Transaction Document (unless
such claim is based upon conduct by the Purchaser that constitutes fraud, gross negligence or
willful misconduct); or (iv) any third party claims arising directly or indirectly out of the
Purchaser’s status as owner of the Securities or the actual, alleged or deemed control or ability
to influence the Company or any Company Subsidiary (unless such claim is based upon conduct by the
Purchaser that constitutes fraud, gross negligence or willful misconduct); provided, that Losses
shall not include any consequential or punitive damages (except to the extent Purchaser and its
Affiliates are liable to a third party for such consequential or punitive damages).
(b) Notwithstanding the foregoing, the Company shall have no liability to indemnify any
Indemnified Person on account of any claim pursuant to clauses (i) and (ii) of Section 7.1(a) (1)
unless and until the liability of the Company with respect to any individual claim or demand (or
series of reasonably related claims or demands) equals or exceeds $100,000, (2) unless and until
the liability of the Company in respect of such claims, when aggregated with their liability in
respect of all other claims made pursuant to clauses (i) and (ii) of Section 7.1(a), amounts to
more than $1,000,000 and (3) in respect of claims made pursuant to clause (i) of Section 7.1(a),
unless such claim is asserted in writing by such Indemnified Party prior to the termination of the
applicable representation and warranty as set forth in Section 9.5 hereof, whereupon the Company
shall be liable to pay amounts due pursuant to clauses (i) and (ii) of Section 7.1(a). The maximum
aggregate liability of the Company for any and all claims under clauses (i) and (ii) of Section
7.1(a) shall not exceed the Purchase Price.
7.2 Indemnity Procedures. Each Indemnified Person shall give prompt written notice to
the Company of any claim, action, suit or proceeding commenced against it in respect of which
indemnity may be sought hereunder, but failure to so notify the Company shall not relieve the
Company from any liability which it may have under the indemnity provided in Section 7.1, unless
and to the extent the Company shall have been actually and materially prejudiced by the failure of
such Indemnified Person to so notify the Company. Such notice shall describe in reasonable detail
such claim. In case any claim, action, suit or proceeding is brought against an Indemnified
Person, the Indemnified Person shall be entitled to hire, at its own expense, separate counsel and
participate in the defense thereof. If the Company so elects within a reasonable time after
receipt of notice, the Company may assume the defense of the action or proceeding at the Company’s
own expense with counsel chosen by the Company and approved by the Indemnified Person, which
approval shall not be unreasonably withheld, and the Indemnified Party may participate in such
defense at its own expense; provided, however, that the Company will not settle or compromise any
claim,
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action, suit or proceeding, or consent to the entry of any judgment with respect to any such
pending or threatened claim, action, suit or proceeding without the written consent of the
Indemnified Person unless such settlement, compromise or consent secures the unconditional release
of the Indemnified Person from all liabilities arising out of such claim, action, suit or
proceeding and requires nothing other than the payment of money by the Company; provided, further,
that if the defendants in any such claim, action, suit or proceeding include both the Indemnified
Person and the Company and the Indemnified Person reasonably determines, based upon advice of legal
counsel, that such claim, action, suit or proceeding involves a conflict of interest (other than
one of a monetary nature) that would reasonably be expected to make it inappropriate for the same
counsel to represent both the Company and the Indemnified Person, then the Company shall not be
entitled to assume the defense of the Indemnified Person and the Indemnified Person shall be
entitled to separate counsel at the Company’s expense, which counsel shall be chosen by the
Indemnified Person and approved by the Company, which approval shall not be unreasonably withheld;
and provided, further, that it is understood that the Company shall not be liable for the fees,
charges and disbursements of more than one separate firm for the Indemnified Persons. If the
Company assumes the defense of any claim, action, suit or proceeding, all Indemnified Persons shall
thereafter deliver to the Company copies of all notices and documents (including court papers)
received by such Indemnified Persons relating to the claim, action, suit or proceeding, and each
Indemnified Person shall cooperate in the defense or prosecution of such claim. Such cooperation
shall include the retention and (upon the Company’s request) the provision to the Company of
records and information that are reasonably available to the Indemnified Party and that are
reasonably relevant to such claim, action, suit or proceeding, and making employees available on a
mutually convenient basis to provide additional information and explanation of any material
provided hereunder. If the Company is not entitled to assume the defense of such claim, action,
suit or proceeding as a result of the second proviso to the fourth sentence of this Section 7.2,
the Company’s counsel shall be entitled to conduct the Company’s defense and counsel for the
Indemnified Person shall be entitled to conduct the defense of the Indemnified Person, it being
understood that both such counsel will cooperate with each other, to the extent feasible in light
of the conflict of interest or different available legal defenses, to conduct the defense of such
action or proceeding as efficiently as possible. If the Company is not so entitled to assume the
defense of such action or does not assume the defense, after having received the notice referred to
in the first sentence of this Section 7.2, the Company will pay the reasonable fees and expenses of
counsel for the Indemnified Person; in that event, however, the Company will not be liable for any
settlement of any claim, action, suit or proceeding effected without the written consent of the
Company, which may not be unreasonably withheld, delayed or conditioned. If the Company is
entitled to assume, and assumes, the defense of an action or proceeding in accordance with this
Section 7.2, the Company shall not be liable for any fees and expenses of counsel for the
Indemnified Person incurred thereafter in connection with that action or proceeding except as set
forth in the proviso in the fourth sentence of this Section 7.2. Unless and until a final judgment
is rendered that an Indemnified Person is not entitled to the costs of defense under the provisions
of this Section 7.2, the Company shall reimburse, promptly as they are incurred, the Indemnified
Person’s costs of defense. The Company’s obligation to indemnify the Indemnified Persons for
Losses hereunder is irrespective of whether the Indemnified Person has itself made payments in
respect of such Losses.
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7.3 Exclusive Remedy. Following the Closing, the indemnification obligations of this
Article VII shall be the sole and exclusive remedy for any Indemnified Party in respect of the
Company’s breaches of this Agreement, and no other remedy shall be had in contract, tort or
otherwise, except in cases of fraud.
SECTION 8
Conditions
8.1 Conditions to Each Party’s Obligations to Close the Transaction. The obligation
of Purchaser to purchase the Securities, and of the Company to issue and sell the Securities, at
Closing is subject to the fulfillment of the following conditions as of the Closing Date:
(a) No Injunction. No Governmental Authority of competent jurisdiction shall have
enacted, issued, promulgated, enforced or entered any statute, law, ordinance, rule, regulation,
judgment, decree, injunction or other order (whether temporary, preliminary or permanent) that is
in effect and restrain, enjoins or otherwise prohibits consummation of any transaction contemplated
by this Agreement (collectively, an “Order”).
(b) Purchase Agreement. The Purchase Agreement shall be in full force and effect.
(c) Approvals. All material consents, authorizations, approvals and filings required
to be obtained from or filed with a Governmental Authority in order to consummate the Transaction
(collectively, “Approvals”) shall have been obtained or made (as applicable), and such
Approvals shall not contain any condition that would (i) require Purchaser or the Company or any of
its Subsidiaries to divest or dispose of any assets, securities or other instruments, (ii) restrain
or impose any limit on the Purchaser’s or the Company’s or any of its Subsidiaries’ investment
activities, (iii) require an amendment or waiver of any term or condition of any Transaction
Document, or (iv) be reasonably likely to have a material adverse effect on the Purchaser or a
Material Adverse Effect.
(d) Refinancing. The first closing of the Company Refinancing shall have occurred or
shall occur simultaneously, and the Company shall, on the Closing Date, apply 100% of the proceeds
therefrom to repurchase Convertible Notes at the closing of a tender offer for such Convertible
Notes (collectively, the “Tender Offer Closing”); provided, however, that no party may
delay or prevent the Closing on the basis that this condition has not been satisfied if the failure
of this condition to be so satisfied is as a result of or arises from such party’s actions or its
failure to act or its breach of this Agreement.
(e) NYSE Exemption. The transactions contemplated hereby shall not require the
approval of the Company’s shareholders pursuant to Section 312 of the NYSE Listed Company Manual,
whether as a result of the NYSE Exemption or a comparable exemption granted by the NYSE imposing
conditions and subject to qualifications no more burdensome to Purchaser or the Company than those
anticipated to be included in the NYSE Exemption and delivered to Purchaser prior to the date
hereof, or otherwise reasonably acceptable to Purchaser and the Company.
- 24 -
8.2 Conditions to the Obligations of Purchaser. The obligation of Purchaser to
purchase the Securities is, at the option of Purchaser, subject to the fulfillment of the following
conditions as of the Closing Date:
(a) Representations and Warranties; Covenants. The representations and warranties of
the Company set forth in this Agreement shall be true and correct at and as of the date hereof and
as of the Closing Date (except to the extent such representations and warranties relate to an
earlier date, in which case such representations and warranties shall be true and correct on and as
of such earlier date). The Company shall have performed or complied in all material respects with
all covenants and agreements of the Company in this Agreement.
(b) Bringdown Certificate. The Company shall have delivered to Purchaser a
certificate of the Company, executed by the chief executive officer and chief financial officer of
the Company, dated the Closing Date, and certifying to the fulfillment of the conditions specified
in clause (a) of this Section 8.2.
(c) Legal Opinion. The Company shall have (i) caused the primary legal officer of the
Company to deliver a legal opinion to Purchaser in the form of Exhibit C hereto; and (ii) caused
Xxxxxxx Xxxxxxx & Xxxxxxxx LLP to deliver a legal opinion to Purchaser in substantially the form of
Exhibit D hereto.
(d) No Delisting. From the date of this Agreement to and including the Closing Date
the Company Common Stock shall not have been delisted by the NYSE nor shall trading in the Company
Common Stock have been suspended by the NYSE.
(e) Credit Agreement Repayment Acceleration; Pro Forma Compliance. No acceleration of
the Company’s repayment obligations pursuant to Section 8.2 of the Credit Agreement shall have
occurred and not been withdrawn. No “Default” or “Event of Default” shall have occurred and be
continuing under the Credit Agreement. As of September 30, 2009, pro forma for the
transactions contemplated by this Agreement, the Company Refinancing and the Public Offering, the
Company shall be in compliance with each of the covenants set forth in Sections 7.11, 7.12, 7.14,
7.15, 7.16 and 7.17 of the Credit Agreement.
(f) Investor Rights Agreement. The Company shall have executed and delivered the
Investor Rights Agreement to Purchaser.
8.3 Conditions to Closing of Company. The Company’s obligation to sell and issue the
Securities is, at the option of the Company, subject to the fulfillment of the following conditions
as of the Closing Date:
(a) Representations and Warranties; Covenants. The representations and warranties of
Purchaser in this Agreement shall be true and correct at and as of the Closing (except to the
extent such representations and warranties relate to an earlier date, in which case such
representations and warranties shall be true and correct on and as of such earlier date).
Purchaser shall have performed or complied in all material respects with all covenants and
agreements of Purchaser in this Agreement.
- 25 -
(b) Bringdown Certificate. Purchaser shall have delivered to the Company a
certificate of Purchaser, executed by an authorized officer of Purchaser, dated the Closing Date,
and certifying to the fulfillment of the conditions specified in clause (a) of this Section 8.3.
(c) Investor Rights Agreement. Purchaser shall have executed and delivered the
Investor Rights Agreement to the Company.
SECTION 9
Miscellaneous
9.1 Governing Law; Venue. This Agreement shall be deemed to be made in and in all
respects shall be interpreted, construed and governed by and in accordance with the laws of the
State of New York (except to the extent that mandatory provisions of Delaware law are applicable).
The parties hereby irrevocably submit to the jurisdiction of the courts of the State of New York
and the federal courts of the United States of America located in the State of New York solely for
the purposes of any suit, action or other proceeding between any of the parties hereto arising out
of this Agreement or any transaction contemplated hereby, and hereby waive, and agree to assert, as
a defense in any action, suit or proceeding for the interpretation or enforcement hereof, that it
is not subject thereto or that such action, suit or proceeding may not be brought or is not
maintainable in said courts or that the venue thereof may not be appropriate or that this Agreement
may not be enforced in or by such courts, and the parties hereto irrevocably agree that all claims
with respect to such action or proceeding shall be heard and determined in such New York state or
federal court. The parties hereby consent to and grant any such court jurisdiction over the person
of such parties and over the subject matter of such dispute and agree that mailing of process or
other papers in connection with any such action or proceeding in the manner provided in Section 9.8
or in such other manner as may be permitted by law, shall be valid and sufficient service thereof.
EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
9.2 Fees and Expenses. The Company shall reimburse Purchaser for all reasonable costs
and expenses incurred in connection with the transactions contemplated by this Agreement (including
all reasonable legal fees and disbursements in connection with the documentation and implementation
of the transactions contemplated by this Agreement and due diligence in connection therewith and
fees incurred in connection with regulatory filings and clearances including one filing under the
HSR Act and under insurance regulations of each Principal Insurance Regulatory Authority incurred
in connection with each of (i) the Purchaser’s acquisition of the Shares, (ii) the Purchaser’s
exercise of the Warrants and (iii) the Purchaser’s conversion of any convertible Indebtedness of
the Company acquired by Purchaser in the Refinancing, which amount shall be withheld by the
Purchaser from the Purchase Price payable by the Purchaser at the Closing or, if incurred after the
Closing, shall be promptly reimbursed to the Purchaser by the Company. The Company shall be
responsible for its own fees and expenses incurred in connection with the transactions contemplated
by this Agreement. The Company shall pay all fees of its transfer agent,
- 26 -
stamp taxes and other taxes and duties levied in connection with the delivery of the
Securities to the Purchaser.
9.3 Attorney’s Fees. In the event of any action of any kind between the parties
hereto with respect to this Agreement, the prevailing party shall be entitled to recover from the
other party its reasonable attorney’s fees and related costs, expenses and disbursements incurred
in connection with such action.
9.4 Termination. This Agreement may be terminated at any time prior to the Closing:
(a) by either Purchaser or the Company if the Closing shall not have occurred by October 15,
2010 (the “Termination Date”), provided, however that the right to terminate this Agreement
under this Section 9.4(a) shall not be available to any party whose breach of any representation or
warranty or failure to perform any obligation under this Agreement shall have caused or resulted in
the failure of the Closing to occur on or prior to such date; or
(b) by either Purchaser or the Company in the event that any Governmental Authority shall have
issued an Order and such Order shall have become final and nonappealable; or
(c) by the Company if there has been a breach of any representation, warranty, covenant or
agreement made by Purchaser in this Agreement, or any such representation and warranty shall have
become untrue after the date of this Agreement, such that Section 8.3(a) would not be satisfied and
such breach or condition is not curable or, if curable, is not cured within thirty (30) days after
written notice thereof is given by the Company to Purchaser (but in any event not later than the
Termination Date); or
(d) by Purchaser if there has been a breach of any representation, warranty, covenant or
agreement made by the Company in this Agreement, or any such representation and warranty shall have
become untrue after the date of this Agreement, such that Section 8.2(a) would not be satisfied and
such breach or condition is not curable or, if curable, is not cured within thirty (30) days after
written notice thereof is given by Purchaser to the Company (but in any event not later than the
Termination Date); or
(e) by either party if the NYSE notifies the Company that it will not provide the NYSE
Exemption, or if the NYSE Exemption (or any subsequent exemption applicable hereunder), after
issuance, is revoked, rescinded, expires or is no longer in full force and is not replaced within
ten (10) Business Days with an exemption that satisfies the condition to each party’s obligation to
close the Transaction set forth in Section 8.1(e); or
(f) by the mutual written consent of Purchaser and the Company.
In the event of termination of this Agreement as provided in this Section 9.4, this Agreement shall
forthwith become void, except that (a) this Section 9 shall survive, (b) the Mutual Nondisclosure
Agreement, dated as of August 27, 2009, by and between the Company and Purchaser (the
“Confidentiality Agreement”) shall survive in accordance with its terms and
- 27 -
(c) no such termination shall relieve any party from liability for any breach of this Agreement,
material misrepresentation or fraud.
9.5 Survival. The representations and warranties made herein shall expire as of the
third anniversary of the Closing, provided, however, that (i) the representations
and warranties contained in Section 3.2(b) shall survive the Closing and remain in effect
indefinitely and (ii) the representations and warranties contained in Sections 3.10, 3.19 and 3.21
shall survive the Closing until the expiration of the applicable statute of limitations. The
covenants and agreements set forth in Sections 5.1(b)(ii),
5.1(c), 5.1(e), 5.1(d), 5.2, 5.5, 5.6, 5.7, 5.8,
5.9, 5.10, 6.2, 7 and 9 shall survive the Closing.
9.6 Successors and Assigns. Except as otherwise provided herein, the provisions
hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs,
executors and administrators of the parties hereto.
9.7 Entire Agreement; Amendment. This Agreement, the Investor Rights Agreement and
the Confidentiality Agreement (in each case including any Exhibits, Schedules or other attachments
thereto) constitute the full and entire understanding and agreement between the parties with regard
to the subjects hereof and thereof, and no party shall be liable or bound to any other party in any
manner by any warranties, representations or covenants except as specifically set forth herein or
therein. Except as expressly provided herein, neither this Agreement nor any term hereof may be
amended, waived, discharged or terminated other than by a written instrument signed by the party
against whom enforcement of any such amendment, waiver, discharge or termination is sought.
9.8 Notices, Etc. Any notice, request, instruction or other document to be given
hereunder by any party to the other will be in writing and will be deemed to have been duly given
(a) on the date of delivery if delivered personally or by telecopy or facsimile, upon confirmation
of receipt, (b) on the first Business Day following the date of dispatch if delivered by a
recognized next-day courier service, or (c) on the third Business Day following the date of mailing
if delivered by registered or certified mail, return receipt requested, postage prepaid. All
notices hereunder shall be delivered as set forth below, or pursuant to such other instructions as
may be designated in writing by the party to receive such notice.
If to Purchaser to it at:
Xxxxxxx & Co. Inc.
0000 Xxxxxx xx xxx Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX, 00000
Attn: Xx. Xxxxxxx Xxxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
0000 Xxxxxx xx xxx Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX, 00000
Attn: Xx. Xxxxxxx Xxxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
with a copy to (which copy alone shall not constitute notice):
Kleinberg, Kaplan, Xxxxx & Xxxxx, P.C.
000 Xxxxx Xxxxxx, 00xx Xxxxx
000 Xxxxx Xxxxxx, 00xx Xxxxx
- 28 -
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Fax: (000) 000-0000
If to the Company:
Conseco, Inc.
00000 Xxxxx Xxxxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxx 00000
Attn: General Counsel
Telephone: (000) 000-0000
Fax: (000) 000-0000
00000 Xxxxx Xxxxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxx 00000
Attn: General Counsel
Telephone: (000) 000-0000
Fax: (000) 000-0000
with a copy to (which copy alone shall not constitute notice):
Xxxxxxx Xxxxxxx & Xxxxxxxx LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx X. Xxxxxxxx, Esq.
Telephone: (000) 000-0000
Fax: (000) 000-0000
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx X. Xxxxxxxx, Esq.
Telephone: (000) 000-0000
Fax: (000) 000-0000
9.9 Specific Performance. The Company and Purchaser acknowledge and agree that
irreparable damage to the other party 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 each party shall be entitled to an injunction, injunctions or other
equitable relief, without the necessity of posting a bond, to prevent or cure breaches of the
provisions of this Agreement and to enforce specifically the terms and provisions hereof, this
being in addition to any other remedy to which the parties may be entitled by law or equity.
9.10 Delays or Omissions. It is agreed that no delay or omission to exercise any
right, power or remedy accruing to any party, upon any breach, default or noncompliance by another
party under this Agreement, shall impair any such right, power or remedy, nor shall it be construed
to be a waiver of any such breach, default or noncompliance, or any acquiescence therein, or of or
in any similar breach, default or noncompliance thereafter occurring. It is further agreed that any
waiver, permit, consent or approval of any kind or character on the part of any party hereto of any
breach, default or noncompliance under this Agreement or any waiver on such party’s part of any
provisions or conditions of this Agreement, must be in writing and shall be effective only to the
extent specifically set forth in such writing. All remedies, either under this Agreement, by law,
or otherwise afforded to any party, shall be cumulative and not alternative.
9.11 No Third Party Beneficiaries. Other than as set forth in Section 7.3, nothing in
this Agreement, expressed or implied, is intended to confer upon any person, other than the parties
hereto or their respective successors, any rights, remedies, obligations or liabilities under or by
reason of this Agreement.
- 29 -
9.12 No Assignment. This Agreement shall not be assignable other than by operation of
law; provided, however, that Purchaser may assign its rights and obligations under this Agreement
without the Company’s consent to any Affiliate, but only if the assignee agrees in writing with the
Company in form and substance reasonably satisfactory to the Company to be bound by the terms of
this Agreement and, in conjunction therewith, makes to the Company representations and warranties
substantially equivalent (with necessary conforming changes) to those contained in Section 4 as if
such assignee were “Purchaser” therein (any such transferee shall be included in the term
“Purchaser”); provided, further, that no such assignment shall be permitted without the Company’s
consent if it (x) would require any consents or approvals from or filings or notices with any
Governmental Authority or other person or (y) would reasonably be expected to adversely affect or
delay the consummation of the transactions contemplated hereby.
9.13 Counterparts. This Agreement may be executed in any number of counterparts, each
of which shall be enforceable against the parties actually executing such counterparts, and all of
which together shall constitute one instrument. This Agreement may be executed by facsimile
signature(s).
9.14 Severability. In the event that any provision of this Agreement becomes or is
declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement
shall continue in full force and effect without said provision; provided that no such severability
shall be effective if it materially changes the economic benefit of this Agreement to any party.
9.15 Titles and Subtitles. The titles and subtitles used in this Agreement are used
for convenience only and are not considered in construing or interpreting this Agreement.
[SIGNATURE PAGE FOLLOWS]
- 30 -
This STOCK AND WARRANT PURCHASE AGREEMENT is hereby executed as of the date first above
written.
| “COMPANY” | CONSECO, INC. | |||||
| By: | /s/ C. Xxxxx Xxxxxx | |||||
| Name: C. Xxxxx Xxxxxx | ||||||
| Title: Chief Executive Officer | ||||||
| “PURCHASER” | XXXXXXX & CO. INC., on behalf of the several investment funds and accounts managed by it | |||||
| By: | /s/ Xxxxxxx Xxxxxxx | |||||
| Name: Xxxxxxx Xxxxxxx | ||||||
| Title: Managing Director | ||||||
