STOCK PURCHASE AGREEMENT
Between
PRE-PAID LEGAL SERVICES, INC.
And
PIONEER FINANCIAL SERVICES, INC.
Dated as of October 5, 1998
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is entered into as of
October 5, 1998, by and between Pre-Paid Legal Services, Inc., an Oklahoma
corporation ("Buyer"), and Pioneer Financial Services, Inc., a Delaware
corporation ("Seller").
RECITALS
A. Seller has the beneficial interest in all of the outstanding
capital stock of Universal Fidelity Life Insurance Company, a
life and health insurance company domiciled in the State of
Oklahoma (the "Company"), which stock is held in escrow
pursuant to the terms of the Universal Fidelity Life Insurance
Company Escrow Agreement dated May 30, 1997 by and among
Conseco, Inc., an Indiana corporation, Rock Acquisition
Company, a Delaware corporation prior to its merger with and
into Seller, Seller, and Xxxxxx X. Xxxxxx, Xxxxxxx X.
Xxxxxxxx, Xxxx X. Xxxxxxx, Xxxxxx X. Xxxxxx, Xxxxxxx X.
Xxxxxxx, Xxxxxxx X. Xxx Xxxxx and Xxxxx X. Xxxxxxx, as the
Escrow Agents (the "Escrow Agreement").
B. Subject to the terms and conditions of this Agreement, Buyer
desires to purchase, and Seller desires to sell, all of the
outstanding stock of the Company.
STATEMENT OF AGREEMENT
Now, therefore, in consideration of the premises and the covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows.
ARTICLE ONE: PURCHASE AND SALE OF SHARES
SECTION 1.1: BASIC TRANSACTION.
On and subject to the terms and conditions of this Agreement, Buyer
agrees to purchase from Seller, and Seller agrees to sell to Buyer, all of the
outstanding shares (the "Shares") of the common stock, par value $1.00 per
share, of the Company (the "Common Stock") for the consideration specified in
Exhibit A attached hereto (the "Consideration").
SECTION 1.2: THE CLOSING.
The closing of the transactions contemplated by this Agreement (the
"Closing") shall take place at the offices of Buyer in Oklahoma, commencing at
10:00 a.m. local time on the third business day following the satisfaction or
waiver of all conditions to the obligations of the parties to consummate the
transactions contemplated hereby (other than conditions with respect to actions
the respective parties will take at the Closing itself) or such other date as
Buyer and Seller may mutually determine (the "Closing Date"); provided, however,
that the Closing Date shall be no later than December 31, 1998 unless further
extended by the mutual written agreement of the parties.
SECTION 1.3: PAYMENT OF CONSIDERATION.
Buyer shall pay the Consideration to Seller at Closing, in cash by
electronic wire transfer, or, if acceptable to Seller, delivery of other
immediately available funds payable to Seller, to an account designated by
Seller in writing to Buyer.
ARTICLE TWO: REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller, its successors and assigns as
follows:
SECTION 2.1: ORGANIZATION OF BUYER.
Buyer is a corporation duly organized, validly existing and in good
standing under the laws of Oklahoma.
SECTION 2.2: AUTHORIZATION OF TRANSACTION.
(A) Buyer has full corporate power and authority to execute and deliver
this Agreement, and to perform its obligations hereunder. Assuming this
Agreement constitutes the valid and legally binding obligation of Seller, this
Agreement constitutes the valid and legally binding obligation of Buyer,
enforceable in accordance with their respective terms and conditions, except to
the extent that enforceability may be impacted by bankruptcy, insolvency,
moratorium or other laws affecting creditors' rights generally, or by other
equitable principles.
(B) Except for (i) the filing with and approval by the Oklahoma
Department of Insurance of Buyer's Form A Statement Regarding Acquisition of
Control of a Domestic Insurer and such filings relating to the Co-Insurance
Agreement (as defined in Section 6.8 below) and the Service Agreement (as
defined in Section 6.7 below) as may be required (collectively, the "ODI
Approval"); (ii) the approval of the extraordinary dividend referred to in
Section 7.1(F) and (iii) the filing of premerger notification and report forms
under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), no prior notice to, filing with, authorization of, exemption by or
consent or approval of, any governmental authority is necessary for the
consummation by Buyer of the transactions contemplated by this Agreement.
SECTION 2.3: NONCONTRAVENTION.
Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (a) violate any
constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any government, governmental agency, or
court known to Buyer to which Buyer is subject; (b) violate any provision of
Buyer's charter or bylaws; or (c) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, or require any notice
under any agreement, contract, lease, license, instrument, or other arrangement
to which Buyer is a party or by which it is bound or to which any of its assets
is subject (or result in the imposition of any mortgage, pledge, lien,
encumbrance, charge or other security interest upon any of its assets).
SECTION 2.4: BROKERS AND FINDERS.
Neither Buyer nor any of its officers, directors or employees has
employed any broker or finder or incurred any liability for any financial
advisory fees, brokerage fees, commissions or finder fees, and no broker or
finder has acted directly or indirectly for Buyer in connection with this
Agreement or the transactions contemplated hereby.
SECTION 2.5: LITIGATION.
There is no action, suit or proceeding pending against, or to the
Knowledge (as defined in Section 4.1 below) of Buyer threatened against or
affecting, Buyer or any Affiliate (as defined in Section 4.1 below) of Buyer or
any of its properties before any court or arbitrator or any governmental body,
agency or official which in any manner challenges or seeks to prevent, enjoin,
alter or materially delay any of the transactions contemplated hereby.
SECTION 2.6: INVESTMENT INTENT.
Buyer is not acquiring the Shares with a view to or for sale in
connection with any distribution thereof within the meaning of the Securities
Act of 1933, as amended, and the rules and regulations thereunder (the
"Securities Act").
ARTICLE THREE: REPRESENTATIONS AND WARRANTIES OF SELLER
CONCERNING THE TRANSACTIONS AND THE SHARES
Seller represents and warrants to Buyer, its successors and assigns as
follows:
SECTION 3.1: ORGANIZATION OF SELLER.
Seller is a corporation duly organized, validly existing and in good
standing under the laws of Delaware.
SECTION 3.2: AUTHORIZATION OF TRANSACTION.
(A) Seller has full corporate power and authority to execute and
deliver this Agreement and to perform its obligations hereunder, Pioneer Life
Insurance Company ("Pioneer Life") has full corporate power and authority to
execute and deliver the Co-Insurance Agreement and to perform its obligations
thereunder, and Seller has full corporate power and authority to execute and
deliver the Service Agreement and to perform its obligations thereunder.
Assuming this Agreement constitutes, and the Co-Insurance Agreement and the
Service Agreement when executed and delivered by the Company as provided herein
will constitute, the valid and legally binding obligations of Buyer or the
Company, as the case may be, this Agreement constitutes, and when executed and
delivered by Pioneer Life or Seller as provided herein the Co-Insurance
Agreement and the Service Agreement will constitute, the valid and legally
binding obligations of Seller or Pioneer Life, as the case may be, enforceable
in accordance with their respective terms and conditions, except to the extent
that enforceability may be impacted by bankruptcy, insolvency, moratorium or
other laws affecting creditors' rights generally, or by other equitable
principles.
(B) Neither Seller nor Pioneer Life is required to give any notice to,
make any filing with, or obtain any authorization, consent, or approval of any
government or governmental agency in order for the consummation by Seller or
Pioneer Life, as the case may be, of the transactions contemplated by this
Agreement except for the ODI Approval, the filing under the HSR Act and any
actions contemplated by Section 7.2(I) and such filings and approvals relating
to the Co-Insurance Agreement or the Service Agreement as may be required.
SECTION 3.3: NONCONTRAVENTION.
Neither the execution and the delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, will (a) violate any
constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any government, governmental agency, or
court known to Seller to which Seller or Pioneer Life are subject; (b) violate
any provision of Seller's or Pioneer Life's charter or bylaws; or (c) conflict
with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which Seller is a party or by which it is
bound or to which any of its assets is subject (or result in the imposition of
any mortgage, pledge, lien, encumbrance, charge or other security interest upon
any of its assets) which should adversely affect the performance by Seller of
its obligations, hereunder or thereunder.
SECTION 3.4: BROKERS AND DEALERS.
Neither Seller nor any of its officers, directors or employees, has
employed any broker or finder or incurred any liability for any financial
advisory fees, brokerage fees, commissions or finder fees, and no broker or
finder has acted directly or indirectly for Seller in connection with this
Agreement or the transactions contemplated hereby.
SECTION 3.5: TITLE TO AND POWER TO SELL THE SHARES.
Seller owns beneficially all issued and outstanding Shares, free and
clear of any adverse claims, liens, proxies, voting trusts, restrictions on
transfer or encumbrances with respect thereto, except for the Escrow Agreement.
SECTION 3.6: LITIGATION.
Except as set forth in Section 3.6 of the Disclosure Schedule, there is
no action, suit or proceeding pending against, or to the Knowledge of Seller
threatened against or affecting, Seller or any of its properties before any
court or arbitrator or any governmental body, agency or official which in any
manner challenges or seeks to prevent, enjoin, alter or materially delay any of
the transactions contemplated hereby.
ARTICLE FOUR: REPRESENTATIONS AND WARRANTIES OF SELLER
CONCERNING THE COMPANY
Seller represents and warrants to Buyer, its successors and assigns as
follows:
SECTION 4.1: CERTAIN DEFINITIONS.
As used herein, the following terms shall have the following meanings:
(1) An "Affiliate" of a person shall mean any corporation,
partnership, joint venture, limited liability company,
association or other entity which, directly or through one or
more intermediaries, controls, is controlled by or is under
common control with such person.
(2) "Knowledge" or "known" shall mean actual knowledge of the
officers of such entity.
SECTION 4.2: ORGANIZATION, QUALIFICATION AND CORPORATE POWER.
The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Oklahoma. The Company has the full
corporate power, right and authority to own its properties and assets and to
carry on its business as it is now being conducted. The Company is not required
to qualify to do business in any state or foreign jurisdiction where it is not
already so qualified except where the failure to so qualify would not have a
Material Adverse Effect. For the purposes of this Agreement "Material Adverse
Effect" shall mean a material adverse effect on the business, financial
condition or results of operations of the Company. The Company has all necessary
governmental authorizations to own or lease its properties and assets, to
underwrite insurance and to otherwise carry on its business as now being
conducted in each of the states listed on Section 4.2 of the disclosure schedule
delivered by Seller to Buyer on the date hereof (the "Disclosure Schedule"),
which is a complete list of all jurisdictions in which the Company conducts any
insurance business or in which the Company is licensed to conduct business. The
Company is in good standing with the applicable insurance regulatory authorities
in all of the jurisdictions listed on Section 4.2 of the Disclosure Schedule,
and has capital and surplus in such amounts as are required by the applicable
insurance laws of each such jurisdiction. Copies of each of the Company's
existing licenses issued by each such jurisdiction listed on Section 4.2 of the
Disclosure Schedule have been or will be provided to Buyer prior to the Closing
Date.
SECTION 4.3: SUBSIDIARIES.
The Company does not have any Subsidiaries. For the purposes of this
Agreement, a Subsidiary shall mean any corporation of which the Company directly
or indirectly owns more than 50 % of the capital stock or other equity interest
or has the power to vote or direct the voting of sufficient securities to elect
a majority of directors.
SECTION 4.4: CAPITALIZATION.
The authorized capital stock of the Company consists of 500,000 shares
of preferred stock, par value $1.00, of which no shares are outstanding and
2,000,000 shares of common stock, par value $1.00, of which 1,000 are issued and
outstanding and which constitute the Shares. All of the Shares have been duly
authorized, are validly issued, fully paid, and nonassessable. Except for this
Agreement, there are no outstanding or authorized options, warrants, purchase
rights, subscription rights, conversion rights, exchange rights, or other
contracts or commitments that could require the Company to issue, sell, or
otherwise cause to become outstanding, any of its capital stock not presently
issued and outstanding. The Company has no outstanding or authorized stock
appreciation, phantom stock, profit participation, or similar rights. There are
no voting trusts, proxies, or other agreements or understandings other than the
Escrow Agreement with respect to the voting of the capital stock of the Company.
The Company has no liability to any former holder of any shares of capital stock
of the Company or to any other person or governmental authority relating to the
purchase, sale, redemption, retirement or cancellation thereof.
SECTION 4.5: NONCONTRAVENTION.
Neither the execution and the delivery of this Agreement, the
Co-Insurance Agreement or the Service Agreement, nor the consummation of the
transactions contemplated hereby or thereby, will (a) violate any constitution,
statute, regulation, rule, injunction, judgment, order, decree, ruling, charge,
or other restriction of any government, governmental agency, or court known to
the Company to which the Company is subject; (b) violate any provision of the
Company's charter or bylaws; or (c) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, or require any notice
under any agreement, contract, lease, license, instrument, or other arrangement
to which the Company is a party or by which it is bound or to which any of its
assets is subject (or result in the imposition of any mortgage, pledge, lien,
encumbrance, charge or other security interest upon any of its assets) which
would result in a Material Adverse Effect.
SECTION 4.6: BROKERS AND FINDERS.
Neither the Company, nor any of its officers, directors or employees,
has employed any broker or finder or incurred any liability for any financial
advisory fees, brokerage fees, commissions or finder fees, and no broker or
finder has acted directly or indirectly for the Company in connection with this
Agreement or the transactions contemplated hereby.
SECTION 4.7: FINANCIAL STATEMENTS.
The statutory financial statements (including the notes thereto) of the
Company as of and for the years ended December 31, 1995, December 31, 1996 and
December 31, 1997 (the "Annual Statements") and the statutory financial
statements including the notes thereto) of the Company for each of the fiscal
quarters ended March 31, 1998 and June 30, 1998 (the "Quarterly Statements") are
correct and complete, have been prepared in conformity with both statutory
accounting principles ("SAP") and any other accounting principles prescribed or
permitted by the Oklahoma Department of Insurance consistently applied, and
present fairly the admitted assets, liabilities and capital and surplus and
results of operations of the Company at the dates stated therein except as set
forth or disclosed in the notes, exhibits or schedules thereto, and except that
any unaudited statements are subject to year-end and audit adjustments and may
lack footnotes and other presentation items. Copies of the Annual Statements and
the Quarterly Statements have been previously provided to Buyer. The Annual
Financial Statements and the Quarterly Financial Statements are sometimes
referred to collectively herein as the "Company Financial Statements."
SECTION 4.8: TITLE TO PROPERTIES.
Except (1) as may be reflected in the Company Financial Statements, and
(2) for statutory mechanic's or materialmen's liens and liens for current taxes
not yet delinquent, the Company has good and marketable title to, or a valid
leasehold interest in, the properties and assets reflected in the June 30, 1998
Quarterly Statement or acquired after the date thereof (the "Assets"), free and
clear of any mortgage, pledge, lien, encumbrance, charge or other security
interest, except for properties and assets disposed of in the ordinary course of
business.
SECTION 4.9: REAL PROPERTY.
Except as set forth in Section 4.9 of the Disclosure Schedule, the
Company does not possess any beneficial or record interest in any real property,
or in any buildings, structures or appurtenances situated upon any real
property.
SECTION 4.10: CONTRACTS.
Section 4.10 of the Disclosure Schedule lists the following contracts
to which the Company is a party:
(A) Any agreement (or group of related agreements) for the
lease of personal property, by or to the Company, providing for lease
payments in excess of $25,000.00 per annum;
(B) Any agreement (or group of related agreements) (other than
insurance policies issued by the Company) for the purchase or sale of
raw materials, commodities, supplies, products, or other personal
property, or for the furnishing or receipt of services, the performance
of which will involve consideration in excess of $75,000.00;
(C) Any agreement concerning a partnership or joint venture;
(D) Any agreement (or group of related agreements) under which
the Company has created, incurred, assumed, or guaranteed any
indebtedness for borrowed money, or any capitalized lease obligation,
in excess of $75,000.00 or under which it has imposed a mortgage,
pledge, lien, encumbrance, charge or other security interest on any of
its assets, tangible or intangible;
(E) Any agreement requiring the Company to refrain from
competition;
(F) Any agreement with Seller or its Affiliates;
(G) Any agreement under which the Company has advanced or
loaned any amount to any of its directors, officers, and employees
outside the ordinary course of business;
(H) Any agreement (other than agreements with Seller or its
Affiliates) under which the consequences of a default or termination
could reasonably be expected to have a Material Adverse Effect;
(I) Any agreement of employment which is not on an "at will"
basis;
(J) Any agreement with an employee which provides for
severance or termination benefits; and
(K) Any other agreement (or group of related agreements)
(other than insurance policies issued by the Company) the performance
of which involves consideration in excess of $75,000.00.
The Company is in compliance in all material respects with all
agreements referred to in Section 4.10 of the Disclosure Schedule except for
such defaults which could not reasonably be expected to have a Material Adverse
Effect.
SECTION 4.11: INSURANCE COVERAGES.
The Company is now covered and has been covered during the past five
(5) years by insurance in scope and amount customary and reasonable for the
business in which it has engaged during that period.
SECTION 4.12: TAX MATTERS.
Except as disclosed on Section 4.12 of the Disclosure Schedule:
(A) All material Tax Returns (as defined in Section 4.12 (H) below)
required to be filed by the Company and all Tax Returns of any consolidated,
combined or unitary group which includes the Company have been timely filed, and
the Taxes (as defined in Section 4.12 (G) below) shown thereon as due to be paid
or withheld have been paid or withheld. Complete and correct copies of all
federal income Tax Returns filed by the Company for the calendar years ending
December 31, 1996 and 1997 have been provided to Buyer.
(B) All Taxes of the Company required to be paid by the Company prior
to the Closing Date have been (or at or prior to the Closing Date shall be)
timely paid, and all Tax Returns relating to all such Taxes have been (or at or
prior to the Closing Date shall be) filed when and as required. All liability
for Taxes of the Company which relate to or arise with respect to any period
prior to the Closing Date, whether or not they have become payable, have been
(or at or prior to the Closing Date shall be) paid in full or adequately
reserved for in accordance with SAP on the Annual Statements and Quarterly
Statements through the dates thereof and thereafter on the books and records of
the Company, and to the extent liabilities for Taxes have been accrued but not
become payable, they are adequately reflected in accordance with SAP on the
Annual Statements and Quarterly Statements through the dates thereof and
thereafter on the books and records of the Company.
(C) There are no federal, state or local Tax liens upon any property or
assets of the Company.
(D) Neither the Company nor any member of any consolidated, combined or
unitary group which includes the Company, has any current or pending request for
any extension of time within which to file any Tax Returns.
(E) Neither the Company nor any consolidated, combined or unitary group
which includes the Company has any pending or proposed audit of any Tax Returns
with respect to which the Company has or would have any material liability. No
deficiency or adjustment for Taxes has been claimed, proposed or assessed by any
taxing authority against either the Company or any member of any consolidated,
combined or unitary group which includes the Company with respect to which the
Company would have any material liability, and there is no basis for any such
deficiency or claim known to any of Seller and the directors and officers (and
employees with responsibility for employment matters) of the Company for which
adequate reserves in accordance with SAP have not been established on the
Company Financial Statements through the date thereof and thereafter on the
books and records of the Company.
(F) The Company has not filed a consent under Section 341(f) of the
Internal Revenue Code of 1986, as amended (the "Code"), concerning collapsible
corporations. The Company has not made any payments, is not obligated to make
any payments, and is not a party to any agreement that under certain
circumstances could obligate it to make any payments that will not be deductible
under Code Section 280G. The Company has not been a United States real property
holding corporation within the meaning of Code Section 897(c)(2) during the
applicable period specified in Code Section 897(c)(1)(A)(ii). The Company has
disclosed on its federal income Tax Returns all positions taken therein that
could give rise to a substantial understatement of federal income Tax within the
meaning of Code Section 6662. The Company is not a party to any Tax allocation
or sharing agreement (not otherwise disclosed in Section 4.12 of the Disclosure
Schedule). The Company (a) has not been a member of an Affiliated Group (within
the meaning of Code Section 1504) filing a consolidated federal income Tax
Return (other than a group the common parent of which was the Company), or (b)
has no Liability for the Taxes of any person (other than any of the Company)
under Treasury Regulation Sec.1.1502-6(or any similar provision of state, local,
or foreign law), as a transferee or successor, by contract, or otherwise (not
otherwise disclosed in Section 4.12 of the Disclosure Schedule).
(G) "Taxes" shall mean all taxes, charges, fees, levies or other
assessments of whatever kind or nature, including without limitation, all net
income, gross income, gross receipts, premium, sales, use, ad valorem, transfer,
franchise, profits, license, withholding, payroll, employment, excise,
estimated, severance, stamp, occupancy or property taxes, custom duties, fees,
assessments or charges of any kind whatever (together with any interest,
penalty, or addition to tax).
(H) "Tax Returns" shall mean all returns, amended returns,
declarations, reports, estimates, information returns and statements required or
permitted to be filed under federal, state, local or foreign law relating to
Taxes by, or including, the Company.
SECTION 4.13: EMPLOYEES AND EMPLOYEE BENEFITS.
(A) The Company is not a party to or bound by any collective bargaining
agreement, nor, to the Knowledge of Seller and the Company has it experienced
any strikes, grievances, claims of unfair labor practices, or other collective
bargaining disputes. To the Knowledge of Seller and the Company, the Company has
not committed any unfair labor practice. Neither Seller nor the Company has any
Knowledge of any organizational effort presently being made or threatened by or
on behalf of any labor union with respect to employees of the Company.
(B) Except as set forth on Section 4.13 of the Disclosure Schedule, the
Company does not maintain or contribute to any Employee Benefit Plan. The term
"Employee Benefit Plan" shall mean any (1) nonqualified deferred compensation or
retirement plan or arrangement which is an Employee Pension Benefit Plan (which
term has the meaning set forth in the Employee Retirement and Income Security
Act of 1974 ("ERISA") Section 3(2)); (2) qualified defined contribution
retirement plan or arrangement which is an Employee Pension Benefit Plan; (3)
qualified defined benefit retirement plan or arrangement which is an Employee
Pension Benefit Plan (including any Multiemployer Plan, which term has the
meaning set forth in ERISA Section 3(37); or (4) any Employee Welfare Benefit
Plan (which term has the meaning set forth in ERISA Section 3(1)) or material
fringe benefit plan or program. All such Employee Benefit Plans are being
operated in compliance in all material respects with ERISA.
SECTION 4.14: INSURANCE POLICIES: REINSURANCE.
(A) Section 4.14 (A) of the Disclosure Schedule contains a complete
list of all types of insurance policies issued by the Company. Prior to the
Closing Seller shall make available to Buyer complete and correct copies of all
forms of insurance policies currently being issued by the Company together with
all forms of endorsements thereto.
(B) Except as set forth on Section 4.14 (B) of the Disclosure Schedule
or in the Company Financial Statements, the Company is not a party to any
reinsurance agreements.
SECTION 4.15: LITIGATION. Except as set forth in Section 4.15 of the
Disclosure Schedule, the Company (a) is not a party to any claim, action, suit,
investigation or proceeding, pending or threatened, which if adversely
determined would reasonably be expected to have a Material Adverse Effect, (b)
is not subject to any order, judgment or decree issued by any court of competent
jurisdiction or other governmental authority, and (c) is not a party to any
claim, action, suit or investigation pending or, to the Knowledge of Seller or
the Company, threatened, for any bad faith or extra contractual claims, or
claims giving rise to punitive damages (in each case, excluding any and all
damages based on amounts recoverable under the terms of the applicable insurance
policy or policies) arising out of any action or inaction by the Company which
action by the Company was taken, or, in the case of any inaction by the Company,
was required to be taken, prior to the date hereof by the Company, with respect
to the denial of coverage under the Company's insurance policies, in each case,
as finally determined by a court of competent jurisdiction, and, to the
Knowledge of Seller and the Company, there does not exist any basis therefor,
which would reasonably be expected to result in a Material Adverse Effect.
Neither the Seller nor the directors and officers of the Company has any reason
to believe that any such action, suit, proceeding, hearing, or investigation may
be brought or threatened against the Company.
SECTION 4.16: REGULATORY AGREEMENTS. Except as set forth on Section
4.16 of the Disclosure Schedule, the Company is not a party to any supervisory
agreement, memorandum of understanding, consent order, cease and desist order,
or condition of any regulatory order or decree with or by the Oklahoma
Department of Insurance or any other regulatory authority that relates to the
conduct of the business of the Company.
SECTION 4.17: CONSENTS. Except as set forth on Section 4.17 of the
Disclosure Schedule, no consents or approvals of parties with whom Seller,
Seller's Affiliates or the Company has or has had contractual relationships are
or will be required to permit the consummation of the transactions contemplated
by this Agreement.
SECTION 4.18: ENVIRONMENTAL, HEALTH AND SAFETY LAWS.
(A) The Company (1) has complied in all material respects with all
Environmental, Health and Safety Laws (as defined in Section 4.18(C) below), and
no action, suit, proceeding, hearing, investigation, charge, complaint, claim,
demand, or notice has been Filed or commenced against it alleging any failure to
comply with any such Environmental, Health or Safety Law; and (2) has obtained
and been in compliance in all material respects with the terms and conditions of
all permits, licenses, and other authorizations which are required under, and
have complied in all material respects with all other limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedules, and
timetables which are contained in, all Environmental, Health and Safety Laws.
(B) The Company has no liability (whether known or unknown, asserted or
unasserted, absolute or contingent, accrued or unaccrued, liquidated or
unliquidated, and whether due or to become due), and the Company has not handled
or disposed of any substance, arranged for the disposal of any substance,
exposed any employee or other individual to any substance or condition, or owned
or operated any property or facility in any manner that could form the basis for
any valid present or future action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand against the Company giving rise to any such
liability, for damages to any site, location, or body of water (surface or
subsurface), for any illness of or personal injury to any employee or other
individual, or for any reason under any Environmental, Health and Safety Law.
(C) The term "Environmental, Health and Safety Laws" means the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
the Resource Conservation and Recovery Act of 1976, and the Occupational Safety
and Health Act of 1970, each as amended, together with all other laws (including
rules, regulations, codes, plans, injunctions, judgments, orders, decrees,
rulings, and charges thereunder) of federal, state, local, and foreign
governments (and all agencies thereof) concerning pollution or protection of the
environment, public health and safety, or employee health and safety, including
laws relating to emissions, discharges, releases, or threatened releases of
pollutants, contaminants, or chemical, industrial, hazardous, or toxic materials
or wastes into ambient air, surface water, ground water, or lands or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of pollutants, contaminants, or chemical,
industrial, hazardous, or toxic materials or wastes.
SECTION 4.19: LOSS RESERVES.
The reserves with respect to insurance as established or reflected in
the Company Financial Statements in the aggregate were determined in accordance
with SAP and the related life and health insurance annuity contracts and the
related reinsurance, coinsurance and other similar contracts of the Company, and
meet in all material respects the requirements of the insurance laws of each
applicable jurisdiction; provided, however, that no representation is made
pursuant to this Section 4.19 with respect to active life reserves.
SECTION 4.20: CERTAIN PAYMENTS.
All involuntary assessments relating to guaranty funds made against the
Company prior to the Closing have been paid or properly reserved on the books
and records of the Company.
SECTION 4.21: RATE AND FORM FILINGS.
The Company has timely made all required filings of rates and policy
forms as are required by applicable insurance regulatory authorities having
jurisdiction over its affairs and the conduct of the business of the Company has
been consistent with such filings in all material respects except in such
instances as would not reasonably be expected to have a Material Adverse Effect.
SECTION 4.22: UNDISCLOSED LIABILITIES.
The Company has no liability (whether known or unknown, asserted or
unasserted, absolute or contingent, accrued or unaccrued, liquidated or
unliquidated, and whether due or to become due), and there is no basis for any
present or future action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand against the Company giving rise to any such
liability, except for (a) liabilities set forth on the face of the June 30, 1998
Quarterly Statements (or in any notes, exhibits or schedules thereto), and (b)
liabilities which have arisen after June 30, 1998 in the ordinary course of
business (none of which results from, arises out of, relates to, is in the
nature of, or was caused by any breach of contract, breach of warranty, tort,
infringement, or violation of law, which would reasonably be expected to have a
Material Adverse Effect).
SECTION 4.23: BANK ACCOUNTS AND POWERS OF ATTORNEY.
Set forth in Section 4.23 of the Disclosure Schedule is an accurate and
complete list showing: (A) the name and address of each bank in which the
Company has an account or safe deposit box, the number of any such account or
any such box and the names of all persons authorized to draw thereon or to have
access thereto; and (B) the names of all persons, if any, holding powers of
attorney from the Company (other than customary powers of attorney granted to
governmental agencies) and a summary statement of the terms thereof.
SECTION 4.24: ABSENCE OF CERTAIN CHANGES.
Except as set forth on Section 4.24 of the Disclosure Schedule, during
the period from June 30, 1998 through the Closing, the Company has not:
(A) Experienced any change in its business, financial condition or
operations, financial or otherwise, which, in any case or in the aggregate,
would reasonably be expected to have a Material Adverse Effect, including but
not limited to, any material change in statutory surplus of the Company as a
result of any catastrophic event;
(B) Created or suffered to exist any lien, claim or encumbrance with
respect to any property, business or assets, tangible or intangible, other than
immaterial liens, claims or encumbrances created in the ordinary course of
business;
(C) Suffered any material damage, destruction or other casualty loss
(whether or not covered by insurance);
(D) Forgiven or canceled any material debts or claims, or waived any
material contractual or other rights;
(E) Written off as uncollectible any notes or other receivables, except
as write-offs in the ordinary course of business charged to applicable reserves,
none of which individually or in the aggregate would reasonably be expected to
have a Material Adverse Effect;
(F) Conducted its business except in the ordinary course of business;
(G) Made any change in the compensation or other direct or indirect
remuneration payable to any director, officer, or agent of the Company, or
become obligated or orally promised to change any such compensation, in each
case except as consistent with past practice or custom;
(H) Made or agreed to make any change in accounting practices;
(I) Amended its charter or bylaws;
(J) Declared, set aside, or paid any dividend or made any distribution
with respect to its capital stock;
(K) Redeemed, purchased or otherwise acquired any of its capital stock;
or
(L) Entered into any contract or commitment, or any preliminary letter
of intent, to do any of the things enumerated in this Section 4.24.
ARTICLE FIVE: PRE-CLOSING COVENANTS
SECTION 5.1: GENERAL.
Subject to the terms and conditions hereof, each of the parties agrees
to cooperate with the other and use all reasonable efforts to take, or cause to
be taken, all actions, and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws, regulations and contractual
arrangements to consummate and make effective the transactions contemplated by
this Agreement. Seller shall promptly give to Buyer, and Buyer shall promptly
give to Seller, as the case may be, written notification of the existence or
occurrence of any condition of which such party may become aware which might
make any representation or warranty made by such party herein then untrue or
which might prevent the consummation of the transactions contemplated hereby. No
disclosure by any party pursuant to this Section 5.1, however, shall be deemed
to amend or supplement any schedule or to prevent or cure any misrepresentation,
breach of warranty, or breach of covenant.
SECTION 5.2: REGULATORY APPROVALS.
Buyer, with the cooperation of Seller, shall prepare and shall file as
soon as practicable (a) a Form A Statement Regarding Acquisition of Control of a
Domestic Insurer with the Oklahoma Department of Insurance, and any other
documents which Buyer reasonably deems necessary or advisable in order to
expeditiously obtain the ODI Approval; and (b) such other forms, notices and
applications in such other applicable jurisdictions as may be required in order
to obtain any approvals necessary for the consummation of the transactions
contemplated hereby and the maintenance of the Company's insurance licenses in
effect on the date hereof after the Closing.
SECTION 5.3: OPERATION OF BUSINESS.
During the period between the execution and delivery of this Agreement
and the Closing, Seller shall not take any action which could cause the Company
to engage in any practice, take any action, or enter into any transaction
outside the ordinary course of business.
SECTION 5.4: ACCESS.
During the period between the execution and delivery of this Agreement
and the Closing, the Company shall permit representatives of Buyer to have
access, upon reasonable prior notice, during regular business hours, to all
premises, properties and personnel of, and all books, records (including Tax
records), contracts, and documents of or pertaining solely to, the Company.
ARTICLE SIX: ADDITIONAL AGREEMENTS
SECTION 6.1: COOPERATION.
In case at any time after the Closing any further action is necessary
or desirable to carry out the purposes of this Agreement, each of the parties
hereto will take such further action (including the execution and delivery of
such further instruments and documents) as the other party reasonably may
request, all at the sole cost and expense of the requesting party (unless the
requesting party is entitled to indemnification therefor under Article Nine
below). Buyer acknowledges and agrees that from and after the Closing, Seller
will be entitled to have reasonable access to, and Buyer and the Company shall
make available to Seller and its Affiliates, such Company personnel and such
Company documents, books, records (including Tax records), agreements, and
financial data as Seller or its Affiliates may reasonably request in order to
satisfy their respective obligations under this Agreement, the Co-Insurance
Agreement and the Service Agreement.
SECTION 6.2: LITIGATION SUPPORT.
In the event and for so long as Buyer, Seller or the Company actively
is contesting or defending against any action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand in connection with (a) any
transaction contemplated under this Agreement, the Co-Insurance Agreement or the
Service Agreement, or (b) any fact, situation, circumstance, status, condition,
activity, practice, plan, occurrence, event, incident, action, failure to act,
or transaction on or prior to the Closing Date involving the Company, each of
the parties hereto will cooperate with such other person and its counsel in the
contest or defense, make available its personnel, and provide such testimony and
access to its books and records as shall be necessary in connection with the
contest or defense, all at the sole cost and expense of the contesting or
defending party (unless the contesting or defending party is entitled to
indemnification therefor under Article Nine below).
SECTION 6.3: CONFIDENTIALITY.
(A) Seller and Buyer shall, except as required by law or requested by
any regulatory authority, each treat and hold as such all of the Confidential
Information (as defined in 6.3(B) below), refrain from using any of the
Confidential Information except in connection with this Agreement, and deliver
promptly to the other or destroy, at the request and option of the other, all
tangible embodiments (and all copies) of the Confidential Information which are
in its possession or under its control. In the event that either party is
requested by any regulatory authority or required (by oral question or request
for information or documents in any legal proceeding, interrogatory, subpoena,
civil investigative demand, or similar process) to disclose any Confidential
Information, such party shall notify the other promptly of the request or
requirement so that the other may seek an appropriate protective order. If, in
the absence of a protective order or the receipt of a waiver hereunder, either
party is, so requested or compelled to disclose any Confidential Information
such party shall use its best efforts to obtain, at the request of the other, an
order or other assurance that confidential treatment will be accorded to such
portion of the Confidential Information to be disclosed. The foregoing
provisions shall not apply to any Confidential Information which is generally
available to the public immediately prior to the time of disclosure, or which is
disclosed to a party by a person or entity not known by such party to be subject
to a confidentiality agreement relating to such Confidential Information. Each
party shall cause its directors, officers, employees and representatives to
comply with the provisions of this Section and shall be responsible for the
actions of such persons.
(B) As used in this Agreement, the term "Confidential Information"
shall mean information in whatever form, including without limitation
information which is written, electronically stored, orally transmitted, or
memorized, which is of commercial value to the recipient including any idea,
knowledge, know-how, process, system, formula, composition, method, technique,
research and development, drawing, design, specification, technology, software,
technical information, trade secret, trademark, copyrighted material, report,
record, documentation, data, agent, policyholder, customer or supplier lists,
pricing or cost information, tax or financial information, business or marketing
plan, proposal, strategy, or forecast and any information about the transactions
contemplated herein or the existence of a proposed transaction; provided, that
Confidential Information does not include information which is or becomes
generally known within Buyer's or the Company's industry through no act or
omission by Seller.
SECTION 6.5: TAX MATTERS.
The following Tax provisions shall apply after the Closing Date:
(A) The Company does not have any Tax sharing or Tax allocation
agreements or arrangements with Seller or its Affiliates. Seller, Buyer and the
Company shall cooperate fully, as and to the extent reasonably requested by the
other party, in connection with the matters referred to in this section and any
audit, litigation or other proceeding with respect to Taxes. Such cooperation
shall include the retention and (upon the other party's request) the provision
of records and information which are reasonably relevant to any such audit,
litigation or other proceeding and making employees available on a mutually
convenient basis to provide additional information and explanation of any
material provided hereunder. Seller and Buyer agree (i) to retain all books and
records with respect to Tax matters pertinent to the Company relating to any
taxable period beginning before the Closing Date until the expiration of the
statute of limitations (and, to the extent notified by Seller or Buyer, any
extensions thereof) of the respective Taxable periods, and to abide by all
record retention agreements entered into with any taxing authority, and (ii) to
give the other party reasonable written notice prior to transferring, destroying
or discarding any such books and records and, if the other party so requests,
Seller or Buyer, as the case may be, shall allow the other party to take
possession of such books and records.
(B) Seller and Buyer further agree, upon request, to use their best
efforts to obtain any certificate or other document from any governmental
authority or any other person as may be necessary to mitigate, reduce or
eliminate any Tax that could be imposed (including, but not limited to, with
respect to the transactions contemplated hereby).
(C) Seller and Buyer further agree, upon request, to provide the other
party with all information that either party may be required to report pursuant
to Section 6043 of the Code and all Regulations promulgated thereunder.
SECTION 6.6: TAX INDEMNIFICATION.
Notwithstanding anything to the contrary contained herein, in
calculating the amount of any claim for indemnification pursuant to this
Agreement, Buyer's Losses (as hereinafter defined) shall be reduced by any Tax
Benefit attributable to, realized (or to be realized) in connection with or
relating to such indemnifiable claim. The term "Tax Benefit" means the amount by
which any Taxes of Buyer or the Company or any affiliate thereof (the
"Benefitted Party") are or would be reduced by any loss, deduction, refund,
credit or other Tax benefit and includes, without limitation, an offsetting Tax
Benefit. The term "Offsetting Tax Benefit" means the amount of any Tax Benefit
realized or to be realized by the Benefitted Party in a subsequent taxable
period (including, without limitation, a taxable period ending after the Closing
Date) attributable to, realized (or to be realized) in connection with or
relating to an adjustment with respect to Taxes in a prior taxable period. For
purposes of the determination of the amount of any Tax Benefit which is not
currently realized, (i) the Benefitted Party shall be assumed to have sufficient
taxable income to use any Tax Benefit in the taxable period or periods in which
such Tax Benefit will first arise; (ii) the effective tax rate of 41% shall be
treated as applying to such Tax Benefit to be realized in such future taxable
period; (iii) the amount of Tax Benefits shall be discounted to the present
value of such Tax Benefits, determined using a discount rate equal to the
applicable federal rate under Section 1274 (d) of the Code for the period over
which such Tax Benefits are assumed to be realized under clause (i) above.
Interest will accrue on any Tax claims beginning the earlier of (i) the date of
such amount was received if owing to the other party, or (ii) 30 days after a
written claim has been made to the indemnifying party. Interest shall accrue at
the applicable rate charged by the Internal Revenue Service for overpayments.
SECTION 6.7: SERVICE AGREEMENT.
At or prior to the Closing Seller and the Company shall enter into an
administrative services agreement (the "Service Agreement") substantially in the
form of Schedule 6.7 attached hereto.
SECTION 6.8: CO-INSURANCE AGREEMENT.
At or prior to the Closing Pioneer Life and the Company shall enter
into a coinsurance agreement (the "Co-Insurance Agreement") substantially in the
form of Schedule 6.8 attached hereto.
ARTICLE SEVEN: CONDITIONS TO CLOSING
SECTION 7.1: CONDITIONS TO OBLIGATIONS OF BUYER.
The obligation of Buyer to consummate the transactions contemplated
hereunder is subject to satisfaction of each of the following conditions, unless
satisfaction is waived by Buyer in writing at or prior to the Closing:
(A) The representations and warranties of Seller set forth in Article
Three and Article Four above shall be true and correct in all material respects
at and as of the Closing Date as though made at and as of the Closing Date.
(B) Seller shall have performed and complied in all material respects
with all of its covenants hereunder which are to be performed by it at or prior
to the Closing.
(C) Seller shall have made all of the Closing deliveries required to be
made by it pursuant to Section 8.1 at or prior to the Closing.
(D) No action, suit, or proceeding shall be pending or known to be
threatened before any court or quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction or before any arbitrator wherein
an unfavorable injunction, judgment, order, decree, ruling, or charge would (1)
prevent the consummation of any of the transactions contemplated by this
Agreement, (2) cause any of the transactions contemplated by this Agreement to
be rescinded following consummation, or (3) adversely affect the right of Buyer
to own the Shares and to control the Company (and no such injunction, judgment,
order, decree, ruling, or change shall be in effect).
(E) Seller shall have delivered to Buyer a certificate of its President
and Secretary to the effect that each of the conditions specified in Sections
7.1(A) and (B) above have been satisfied in all respects.
(F) The ODI Approval and all other requisite regulatory approvals shall
have been received as well as an approval from the Oklahoma Department of
Insurance of an extraordinary dividend by UFL in an amount reasonably acceptable
to Buyer.
(G) All applicable waiting periods (and any extensions thereof) under
the HSR Act shall have expired or otherwise been terminated.
(H) Seller shall have executed and delivered the Service Agreement, and
Pioneer Life shall have executed and delivered the Co-Insurance Agreement.
SECTION 7.2: CONDITIONS TO OBLIGATION OF SELLER.
The obligation of Seller to consummate the transactions contemplated
hereunder is subject to satisfaction of each the following conditions, unless
satisfaction is waived in writing by Seller at or prior to the Closing:
(A) The representations and warranties of Buyer set forth in Article
Two shall be true and correct in all material respects at and as of the Closing
Date as though made and as of the Closing Date.
(B) Buyer shall have performed and complied in all material respects
with all of its covenants hereunder which are to be performed by it at or prior
to the Closing.
(C) Buyer shall have made all of the Closing deliveries required to be
made by it pursuant to Section 8.2 at or prior to the Closing.
(D) No action, suit, or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any arbitrator wherein an
unfavorable injunction, judgment, order, decree, ruling, or charge would (1)
prevent consummation of any of the transactions contemplated by this Agreement,
or (2) cause any of the transactions contemplated by this Agreement to be
rescinded following consummation (and no such injunction, judgment, order,
decree, ruling, or charge shall be in effect).
(E) Buyer shall have delivered to Seller a certificate of its President
and Secretary to the effect that each of the conditions specified above in this
Section 7.2(A) and (B) has been satisfied in all respects.
(F) The ODI Approval and all other requisite regulatory approvals shall
have been received.
(G) All applicable waiting periods (and any extensions thereof) under
the HSR Act shall have expired or otherwise been terminated.
(H) Buyer shall have executed and delivered the Service Agreement and
the Co-Insurance Agreement.
(I) The order with respect to the Seller's Form A filing with the
Oklahoma Department of Insurance shall have been modified in a manner reasonably
acceptable to Seller.
ARTICLE EIGHT: CLOSING DELIVERIES
SECTION 8.1: DELIVERY OBLIGATIONS OF SELLER.
At the Closing, Seller shall have delivered, or cause to be delivered,
each of the following items to Buyer:
(A) Stock certificates representing all of the Shares, properly
endorsed in blank and accompanied by such stock powers and other instruments of
assignment as may reasonably be requested by Buyer, in form and substance
reasonably satisfactory to Buyer;
(B) The officers' certificate required by Section 7.1(E); and
(C) A duly executed original letter of resignation, effective as of the
Closing, of each of the directors of the Company.
SECTION 8.2: DELIVERY OBLIGATIONS OF BUYER.
At the Closing, Buyer shall have delivered, or cause to be delivered,
each of the following items to Seller:
(A) The Consideration; and
(B) The officers' certificate required by Section 7.2(E) (to be
delivered to Seller).
ARTICLE NINE: INDEMNIFICATION, ARBITRATION AND TERMINATION
SECTION 9.1: SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
All of the representations and warranties of the parties contained in
this Agreement shall survive the Closing hereunder and shall expire 30 months
thereafter.
SECTION 9.2: SELLER'S INDEMNIFICATION OF BUYER.
Seller hereby indemnifies and agrees to defend and hold Buyer, the
Company and their respective successors and assigns harmless from and against
any and all claims, losses, damages, liabilities and legal or other expenses
(including, without limitation, reasonable attorneys' fees, witnesses' fees,
investigation fees, court reporters' fees and other out-of-pocket expenses)
incurred by or asserted against Buyer or the Company (less the amount of any tax
benefits received by Buyer, the Company or their respective successors and
assigns in connection therewith ("Buyer's Losses")), and directly or indirectly
resulting from, arising out of or relating to any misrepresentation or breach of
warranty or breach or nonperformance of any agreement, covenant or other
obligation of Seller (whether such misrepresentation, breach or nonperformance
is actual or alleged by a third party) contained in this Agreement, the
schedules hereto or any other instrument or document furnished or to be
furnished by Seller to Buyer in connection with the transactions contemplated by
this Agreement; provided, however, that notwithstanding the foregoing, there
shall be no liability for indemnification by Seller pursuant to this Article
Nine unless the aggregate amount of Buyer's Losses exceeds $100,000 after the
application of Section 6.6 hereof.
SECTION 9.3: BUYER'S INDEMNIFICATION OF SELLER.
Buyer hereby indemnifies and agrees to defend and hold Seller, its
successors and assigns harmless from and against any and all claims, losses,
damages, liabilities and legal or other expenses (including, without limitation,
reasonable attorneys' fees, witnesses' fees, investigation fees, court
reporters' fees and other out-of-pocket expenses) incurred by or asserted
against Seller, its successors and assigns, less any tax benefits received by
Seller, its successors and assigns in connection therewith, and directly or
indirectly resulting from or arising out of or relating to any misrepresentation
or breach of warranty or breach or nonperformance of any agreement, covenant or
other obligation of Buyer (whether such misrepresentation, breach or
nonperformance is actual or is alleged by a third party) contained in this
Agreement or any other instrument or document furnished or to be furnished by
Buyer to Seller in connection with the transactions contemplated by this
Agreement.
SECTION 9.4: ARBITRATION
(A) All claims, disputes and other matters in question between parties
arising out of or relating to the Agreement or the breach thereof, shall be
decided by arbitration with a panel of three arbitrators in accordance with the
Rules of the American Arbitration Association then obtaining, unless the parties
mutually agree otherwise. Each party to this Agreement shall select an
arbitrator, and the two arbitrators thus selected shall select a third
arbitrator. Such arbitrators must have expertise in the field of life and/or
health insurance. In the event that any party, or the two arbitrators, fail to
select an arbitrator, selection of that arbitrator shall be made by the American
Arbitration Association. The arbitrators shall reach their decision within 30
days following the close of the arbitration hearing.
(B) The foregoing agreement to arbitrate and any other agreement to
arbitrate with an additional person or persons duly consented to by the parties
to this Agreement shall be specifically enforceable under the prevailing
arbitration law. The award rendered by the arbitrators shall be final and
judgment may be entered upon it in accordance with applicable law in any court
having jurisdiction thereof.
(C) Notice of the demand for arbitration shall be filed in writing with
the other party to this Agreement and with the American Arbitration Association.
The demand for arbitration shall be made within a reasonable time after the
claim, dispute or other matter in question has arisen, and in no event shall it
be made after the date when institution of legal or equitable proceedings based
on such claim, dispute or other matter in question would be barred by the
applicable statute of limitation in the State of Oklahoma. All arbitration
proceedings shall be held in Oklahoma City, Oklahoma.
(D) Notwithstanding the foregoing, the parties agree that prior to the
Closing each party shall be entitled institute actions or proceedings in any
court of the United States or any state thereof to seek injunctive relief or
specific enforcement of the terms of this Agreement, it being understood that
after the closing the application for such relief shall be made through the
arbitration process.
SECTION 9.5: TERMINATION OF AGREEMENT.
(A) Buyer and Seller may terminate this Agreement by mutual written
consent at any time prior to the Closing.
(B) Buyer may terminate this Agreement by giving written notice to
Seller (1) at any time prior to the Closing in the event Seller has breached any
material representation, warranty, or covenant contained in this Agreement in
any material respect, Buyer has notified Seller of the breach, and the breach
has continued without cure for a period of 15 days after the notice of breach;
(2) at the Closing, by reason of the failure of any condition precedent under
Section 7.1 to be satisfied (unless the failure results primarily from Buyer
itself breaching any representation, warranty, or covenant contained in this
Agreement); or (3) if the Closing shall not have occurred on or before December
31, 1998 (unless extended as provided in Section 1.3 above), by reason of the
failure of any condition precedent under Section 7.1 to be satisfied (unless the
failure results primarily from Buyer itself breaching any representation,
warranty, or covenant contained in this Agreement); and
(C) Seller may terminate this Agreement by giving written notice to
Buyer (1) at any time prior to the Closing in the event Buyer has breached any
material representation, warranty, or covenant contained in this Agreement in
any material respect, Seller has notified Buyer of the breach, and the breach
has continued without cure for a period of 15 days after the notice of breach
(2) at the Closing, by reason of the failure of any condition precedent under
Section 7.2 to be satisfied (unless the failure results primarily from Seller
breaching any representation, warranty, or covenant contained in this
Agreement); or (3) if the Closing shall not have occurred on or before December
31, 1998 (unless extended as provided in Section 1.3 above), by reason of the
failure of any condition precedent under Section 7.2 to be satisfied (unless the
failure results primarily from Seller breaching any representation, warranty, or
covenant contained in this Agreement).
SECTION 9.6: EFFECT OF TERMINATION.
If this Agreement terminates pursuant to Section 9.5, all rights and
obligations of the parties hereunder shall terminate without any liability of
any party to any other party other than as expressly set forth herein (except
for any liability of a party then in breach and then only with respect to such
breach).
ARTICLE TEN: MISCELLANEOUS
SECTION 10.1: PRESS RELEASES AND PUBLIC ANNOUNCEMENTS.
No party shall issue any press release or make any public announcement
directly or indirectly relating to the subject matter of this Agreement prior to
the Closing without the prior written approval of both parties.
SECTION 10.2: NOTICES.
Any and all notices required to be given under this Agreement shall be
given by, and be deemed given (a) when delivered by personal delivery; (b) three
business days after deposited in U.S. first-class mail, postage prepaid; or (c)
when sent by facsimile with confirmation of receipt, addressed as follows:
If to Buyer: Pre-Paid Legal Services, Inc.
000 Xxxx Xxxx
Xxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxxxxx,
Chairman of the Board
and Chief Executive Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Seller: Pioneer Financial Services, Inc.
00000 X. Xxxxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxx 00000
Attention: Xxxx X. Xxxx, Executive Vice President,
General Counsel and Secretary
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
or to such other address as the party may designate in writing to the other
party from time to time.
SECTION 10.3: GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with
the domestic laws of the State of Oklahoma without giving effect to any choice
or conflict of law provision or rule (whether of the State of Oklahoma or any
other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Oklahoma.
SECTION 10.4: AMENDMENT AND WAIVER.
This Agreement shall not be amended or modified, and none of the
provisions hereof shall be waived, except in a writing signed by both parties
hereto, or, in the case of a waiver, by the party making a waiver. In the event
that any obligation, agreement or covenant contained in this Agreement should be
breached by either party and thereafter waived by the other party, such waiver
shall be limited to the particular breach so waived and shall not be decreed to
waive any other breach hereunder.
SECTION 10.5: SECTION HEADINGS.
Section headings contained in this Agreement are for convenience only
and shall not be considered in construing any provision hereof.
SECTION 10.6: ASSIGNMENT.
This Agreement shall inure to the benefit of and be binding upon the
parties named herein and their respective successors and assigns. No party may
assign either this Agreement nor any of its rights, interest, or obligations
hereunder without the prior written approval of the other party.
SECTION 10.7: ENTIRE AGREEMENT.
This Agreement (including the documents referred to herein) constitutes
the entire agreement among the parties and supersedes any prior understandings,
agreements, or representations by or among the parties, written or oral, to the
extent they related in any way to the subject matter hereof.
SECTION 10.8: SEVERABILITY.
Any term or provision of this Agreement which is invalid or
unenforceable in any situation or in any jurisdiction shall, as to such
situation or jurisdiction, be ineffective only to the extent of such invalidity
or unenforceability without thereby rendering invalid or unenforceable the
remaining terms and provisions hereof or affecting the validity or
enforceability of any of the terms or provisions of this Agreement in any other
situation or in any other jurisdiction.
SECTION 10.9: EXPENSES.
Each party shall bear its own costs and expenses (including legal fees
and expenses) incurred in connection with this Agreement and the transactions
contemplated hereby; provided that Buyer and Seller shall share equally the
filing fee under the HSR Act. Seller agrees that the Company has not borne and
will not bear any of Seller's costs and expenses (including any legal fees and
expenses) in connection with this Agreement or any of the transactions
contemplated hereby except those incurred in connection with the preparation of
the financial statements referred to herein.
SECTION 10.10: INCORPORATION OF EXHIBITS AND SCHEDULES.
The Exhibits and Schedules identified in this Agreement are
incorporated by reference and made a part hereof.
SECTION 10.11: SPECIFIC PERFORMANCE.
Each of the parties acknowledges and agrees that the other party would
be damaged irreparably in the event any of the provisions of this Agreement are
not performed in accordance with their specific terms or otherwise are breached.
Accordingly, each of the parties agrees that the other party shall be entitled
to injunction or injunctions to prevent breaches of the provisions of this
Agreement and to enforce specifically this Agreement and the terms and
provisions hereof in any action instituted in any court of the United States or
any state thereof having jurisdiction over the parties and the matter or through
the arbitration process as contemplated by Section 9.4, in addition to any other
remedy to which each may be entitled whether at law or in equity.
SECTION 10.12. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original but all of which together will constitute one
and the same instrument.
SECTION 10.13: GENERAL RULES OF CONSTRUCTION.
The parties have participated jointly in the negotiation and drafting
of this Agreement. If a question concerning intent or interpretation arises, no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of authorship. Any reference to any federal, state, local or foreign
statute or law shall be deemed also to refer to all related rules and
regulations unless the context requires otherwise. Each representation, warranty
and covenant shall have independent significance, and if any party has breached
any of them in any way, the fact that there exists another representation,
warranty or covenant relating to the same subject matter which the party has not
breached shall not detract from or mitigate the fact that the party is in such
breach.
SECTION 10.14: THIRD PARTY BENEFICIARIES.
This Agreement shall not confer any rights or remedies on any person
other than the parties and their respective successors and permitted assigns.
In Witness Whereof, the parties have executed this Agreement as of the
date first set forth above.
PRE-PAID LEGAL SERVICES, INC.
By: /s/ XXXXXXX X. XXXXXXXXXXX
------------------------------
Xxxxxxx X. Xxxxxxxxxxx
Chief Executive Officer
PIONEER FINANCIAL SERVICES, INC.
By: /s/ XXXXXX X. XXXXXX
-------------------------------
Xxxxxx X. Xxxxxx
President
Exhibit A
Calculation of Consideration
The valuation date for the Consideration (the "Valuation Date") shall
be the month end immediately preceding the Closing Date. Except as otherwise
indicated below, the Calculation shall be determined as of the Valuation Date
using valuations computed in accordance with SAP consistently with the
principles used in the Quarterly Statements. The Purchase Price shall be
calculated as follows (references to lines and pages refer to lines and pages
set forth in the Company's statutory financial statements):
Capital and Surplus (line 38, page 3), plus 17,343,874
Interest Maintenance Reserve (line 11.4, page 3), plus 6,366
Asset Valuation Reserve (line 24.1, page 3), plus 1,630,010
$1,000,000 1,000,000
----------
19,980,250
----------
plus or minus an adjustment as of the Closing Date for 65% of the
increase/decrease in the market value of bonds and stock as compared to
the statutory value of the bonds (line 1, page 2) and stock (lines 2.1
and 2.2, page 2) on the Valuation Date. This calculation will be made
after giving effect to the transfer of assets and liabilities pursuant
to the Co-Insurance Agreement.
The following is the market value calculation:
Preliminary purchase price $19,980,250
Market value adjustment 689,012
-----------
Purchase Price $20,669,262
===========
Book value Market value difference
---------- ------------ ----------
Bonds - total 11/30/98 portfolio $31,880,993
Common stocks - 11/30/98 portfolio 4,947,501
----------- ------------ ----------
$36,828,494 $37,888,512 $1,060,018
=========== ============
Taxes at 35% (371,006)
----------
Market value adjustment $ 689,012
==========
The undersigned hereby confirms that the terms of the Stock Purchase
Agreement dated as of October 5, 1998 between Pioneer Financial Services, Inc.
and Pre-Paid Legal Services, Inc. are acceptable to it.
Dated: October 5, 1998 CONSECO, INC.
By: /s/ XXXXXX X. XXXXXX
-----------------------------
Xxxxxx X. Xxxxxx
Executive Vice President