Exhibit 1.1
PURCHASE AGREEMENT
June 29, 1999
Warburg Dillon Read LLC
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
UBS AG, London Branch
c/o Warburg Dillon Read LLC
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Conseco, Inc., an Indiana corporation (the "Company"), desires to make
arrangements with Warburg Dillon Read LLC (the "Purchaser"), pursuant to which
the Purchaser will purchase from the Company shares of Common Stock, in
accordance with Section 1(a), below. The Company understands that the Purchaser
intends to transfer any Purchased Shares (as defined in Section 1(a)) to UBS AG,
London Branch, the indirect parent of the Purchaser (the "Selling Stockholder").
The Company has prepared for filing with the Securities and Exchange
Commission (the "Commission") a registration statement for the registration of
3,115,000 shares of its Common Stock, including the Purchased Shares (as defined
in Section 1(a)) and up to 467,000 in the aggregate, of Payment Shares (as
defined in Section 1(b)) and Make-whole Shares (as defined in Section 1(b)),
under the Securities Act of 1933, as amended (the "1933 Act"), and the offering
thereof from time to time by the Purchaser, as agent for the Selling
Stockholder, in accordance with Rule 415 of the rules and regulations of the
Commission under the 1933 Act (the "1933 Act Regulations"). The Company will
file such amendments and post-effective amendments thereto as may be required
prior to any sale of the Purchased Shares by or on behalf of the Selling
Stockholder. Such registration statement, as so amended at the time it is
declared effective by the Commission, is referred to herein as the "Registration
Statement." The final prospectus, in the form in which it is filed with the
Commission under Rule 424 or (if no such filing is required) first furnished to
the Purchaser and the Selling Stockholder by the Company for use in connection
with the offering of the Purchased Shares, and all applicable amendments or
supplements thereto, are collectively
1
referred to herein as the "Prospectus." A "Preliminary Prospectus" shall mean
any preliminary prospectus included in the Registration Statement prior to the
time the Registration Statement was declared effective.
All references to the "Registration Statement," the "Prospectus" or any
"Preliminary Prospectus" shall be deemed to include all documents incorporated
therein by reference pursuant to the Securities Exchange Act of 1934, as amended
(the "1934 Act"), which were filed with the Commission under the 1934 Act on or
before the date that the Registration Statement is declared effective or the
issue date of the Prospectus or Preliminary Prospectus, as the case may be, and
all references in this Agreement to financial statements and schedules and other
information which is "contained," "included," "stated" or "described" in the
Registration Statement, the Prospectus, or any Preliminary Prospectus (or other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is incorporated
by reference in the Registration Statement, the Prospectus, or any Preliminary
Prospectus, as the case may be. Any reference herein to the terms "amend,"
"amendment," or "supplement" shall be deemed to refer to and include the filing
of any document under the 1934 Act after the date on which the Registration
Statement is declared effective or the issue date of the Prospectus, as the case
may be, that is deemed incorporated therein by reference. If the Company files a
registration statement with the Commission pursuant to Section 462(b) of the
1933 Act Regulations (a "Rule 462(b) Registration Statement"), then after such
filing, all references to the Registration Statement shall also be deemed to
include the Rule 462(b) Registration Statement. For purposes of this Agreement,
all references to the Registration Statement, the Prospectus, any Preliminary
Prospectus, or any amendment or supplement to any of the foregoing shall be
deemed to include the copy filed with the Commission pursuant to its Electronic
Data Gathering, Analysis and Retrieval system ("▇▇▇▇▇").
The Company, the Purchaser and the Selling Stockholder hereby agree as
follows:
1. Agreement to Sell and Purchase.
(a) On the basis of the representations and warranties and subject to
the terms and conditions set forth in this Agreement, the Purchaser shall
purchase from the Company, and the Company shall sell to the Purchaser,
3,115,000 shares of Common Stock (the "Purchased Shares") at a purchase price
per share of $29-1/16 (the "Purchase Price"). The Company understands and
acknowledges that the Purchaser intends to transfer the Purchased Shares to the
Selling Stockholder immediately following the Closing (as defined in Section
1(d)).
(b) Concurrently with the execution and delivery of this Agreement, the
Company and the Selling Stockholder have entered into a forward equity
confirmation providing for the purchase, by the Company, at the Purchase Price
per share, of a number of shares of Common Stock equal to the number of
Purchased Shares (the "Forward Purchase Agreement"). The Company may issue
additional shares of Common Stock to the Selling Stockholder under the Forward
Purchase Agreement, on the terms and conditions specified therein, including
Payment Shares (as defined in the Forward Purchase Agreement) and Make-whole
Shares (as defined in the Forward Purchase Agreement). The Purchased Shares,
Payment Shares and Make-whole Shares are collectively referred to in this
Agreement as the "Shares").
2
(c) As compensation to the Purchaser for its advisory services in
structuring the transaction, the Company shall pay the Purchaser a fee of
$905,000 (the "Advisory Fee").
(d) The closing of the purchase and sale of the Purchased Shares (the
"Closing") shall take place on the third business day following the date of this
Agreement (the "Closing Date") at 10:00 a.m., New York City time, at the offices
of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇. The
Purchaser shall pay the Purchase Price per share for the Purchased Shares to, or
at the direction of the Company, by federal funds wire transfer against delivery
of the Purchased Shares to the Purchaser through the facilities of The
Depository Trust Company, and the Company shall pay the Purchaser the Advisory
Fee, by federal funds wire transfer or as an offset against the aggregate
Purchase Price per share for the Purchased Shares.
(e) The Company shall not pay or give, directly or indirectly, any
commission or other remuneration to the Purchaser or any other person or entity
for soliciting, within the meaning of Section 3(a)(9) of the 1933 Act,
conversions of the 6-1/2% Convertible Subordinated Notes due 2003 of Pioneer
Financial Services, Inc., a wholly-owned subsidiary of the Company (the
"Notes"), into Common Stock, and the Purchaser shall not solicit, within the
meaning of that Section, any such conversions.
(f) The Selling Stockholder may sell the Shares at any time or from
time to time pursuant to the Registration Statement, provided that the
effectiveness of the Registration Statement has not been suspended pursuant to
Section 3(f), or an available exemption under the 1933 Act. All such sales shall
be made through the Purchaser.
(g) The Company shall have the right to direct the Selling Stockholder
to sell, from time to time, such number of Purchased Shares as may be held by
the Selling Stockholder at the time of such notice by giving verbal notice,
followed by written confirmation thereof, to the Selling Stockholder directing
such sale (a "Direction to Sell") in connection and concurrent with notice to
the Selling Stockholder of early termination of all or a portion of the Forward
Purchase Agreement. A Direction to Sell may be given on any day that is a
trading day on the New York Stock Exchange, Inc. (the "NYSE") other than a day
on which trading on the NYSE is scheduled to close prior to its regular weekday
closing time (an "Exchange Business Day"); provided, however, that no Direction
to Sell may be given within ten Exchange Business Days prior to the Termination
Date (as defined in the Forward Purchase Agreement) in the event that the
Company has given notice to the Selling Stockholder of its election to settle
the Forward Purchase Agreement on a net share basis on the Termination Date.
Each Direction to Sell shall specify the number of, and date or dates on which
such number of, Purchased Shares are to be sold. Each date specified for such
sale must be an Exchange Business Day; provided, however, that if any date
specified for such sale is the same Exchange Business Day on which the Direction
to Sell is delivered to the Selling Stockholder, such Direction to Sell must be
delivered to the Selling Stockholder no later than 9:30 a.m., New York City
time, on such Exchange Business Day, unless otherwise agreed upon by the Selling
Stockholder. Upon receipt of a Direction to Sell that complies with this Section
1(g) and subject to the receipt, by the Selling Stockholder, of any deliveries
required under Section 6(b), the Selling Stockholder shall direct the Purchaser
to, and the Purchaser shall use, commercially reasonable efforts to sell
Purchased Shares in accordance with the Direction to Sell; provided, however,
that the Purchaser shall not be obligated to sell more Purchased Shares than
required to produce net proceeds equal to the Total Forward Price (as defined in
the Forward Purchase Agreement) at the time that such Direction to Sell is
received by the Purchaser.
3
2. Representations and Warranties of the Company.
(a) The Company represents and warrants to the Purchaser and the
Selling Stockholder on and as of the date hereof, the Closing Date, each date
that the Company delivers a Direction to Sell or Make-whole Shares to the
Selling Stockholder, and each date that the Company files a Material Amendment
or Supplement to the Registration Statement (as defined in Section 6(c)) (each,
a "Representation Date") as follows :
(i) The Company meets the requirements for use of Form S-3
under the ▇▇▇▇ ▇▇▇. The Company has prepared and filed the Registration
Statement with the Commission and, as of the Closing Date, the
Registration Statement (including any Rule 462(b) Registration
Statement) will have become effective under the 1933 Act; as of the
Closing Date and each Representation Date following the Closing Date,
no stop order suspending the effectiveness of the Registration
Statement (including any Rule 462(b) Registration Statement) will have
been issued under the 1933 Act and no proceedings for that purpose will
have been instituted or will be pending or, to the knowledge of the
Company, contemplated by the Commission, and any request on the part of
the Commission for additional information will have been complied with;
at the respective times that the Registration Statement, any Rule
462(b) Registration Statement, and any post-effective amendment thereto
(including the filing of the Company's most recent Annual Report on
Form 10-K with the Commission (the "Annual Report on Form 10-K"))
become effective and at each subsequent Representation Date, the
Registration Statement (including any Rule 462(b) Registration
Statement) and any amendments thereto comply and will comply in all
material respects with the requirements of the 1933 Act and the 1933
Act Regulations and do not and will not contain an untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading;
each Preliminary Prospectus and Prospectus filed as part of the
Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the 1933 Act, complied or
will comply when so filed in all material respects with the 1933 Act;
each Preliminary Prospectus and the Prospectus delivered to the
Purchaser for use in connection with the offering of the Shares are or
will be identical to any electronically transmitted copies thereof
filed with the Commission pursuant to ▇▇▇▇▇, except to the extent
permitted by Regulation S-T; and neither the Prospectus nor any
amendment or supplement thereto includes or will include an untrue
statement of a material fact or omits or will omit to state a material
fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading; provided,
however, that the representations and warranties in this subsection
shall not apply to statements in or omissions from the Registration
Statement or the Prospectus made in reliance upon and in conformity
with information furnished to the Company in writing by the Purchaser
or the Selling Stockholder expressly for use in the Registration
Statement or the Prospectus.
(ii) The documents incorporated or deemed to be incorporated
by reference in the Registration Statement or the Prospectus, at the
time they were or hereafter are filed with the Commission, complied and
will comply in all material respects with the requirements of the 1934
Act and the rules and regulations of the Commission under the 1934 Act
(the "1934 Act Regulations").
4
(iii) PricewaterhouseCoopers LLP and KPMG Peat Marwick LLP,
which certified the financial statements and supporting schedules of
the Company and Green Tree Financial Corporation ("Green Tree"),
respectively, included or incorporated by reference in the Registration
Statement and the Prospectus, each are independent public accountants
as required by the 1933 Act and the 1933 Act Regulations with respect
to the Company and Green Tree, respectively.
(iv) The financial statements of the Company included or
incorporated by reference in the Registration Statement and the
Prospectus, together with the related schedules and notes, present
fairly the financial position of the Company and its subsidiaries as of
the dates indicated and the results of their operations for the periods
specified. Except as otherwise stated therein, said financial
statements have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis throughout the
periods involved. The supporting schedules, if any, included or
incorporated by reference in the Registration Statement and the
Prospectus present fairly the information required to be stated
therein. Any selected financial data and summary financial information
included in the Prospectus present fairly the information shown therein
and have been compiled on a basis consistent with that of the audited
financial statements included in the Registration Statement and the
Prospectus. Any pro forma financial statements and the related notes
thereto included in the Registration Statement and the Prospectus
present fairly the information shown therein, have been prepared in
accordance with the Commission's rules and guidelines with respect to
pro forma financial statements and have been properly compiled on the
bases described therein, and the assumptions used in the preparation
thereof are reasonable and the adjustments used therein are appropriate
to give effect to the transactions and circumstances referred to
therein.
(v) The statutory financial statements of each of the
Company's insurance subsidiaries, from which certain ratios and other
statistical data contained in the Registration Statement from time to
time have been derived, have for each relevant period been prepared in
accordance with accounting practices prescribed or permitted by the
National Association of Insurance Commissioners, and with respect to
each insurance subsidiary, the appropriate insurance department of the
state of domicile of such insurance subsidiary, and such accounting
practices have been applied on a consistent basis throughout the
periods involved, except as disclosed therein.
(vi) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, and except as
otherwise stated therein, (A) there has been no material adverse change
and no development which could reasonably be expected to result in a
material adverse change in the condition, financial or otherwise, or in
the earnings, business affairs or business prospects of the Company and
its subsidiaries, considered as one enterprise, whether or not arising
in the ordinary course of business (a "Material Adverse Effect"), (B)
there have been no transactions entered into by the Company or any of
its subsidiaries, other than those arising in the ordinary course of
business, which are material with respect to the Company and its
subsidiaries, considered as one enterprise, or (C) except for regular
dividends on the Common Stock or on the preferred stock of the Company
in amounts per share that are consistent with past practice (which
includes periodic dividend increases) or the applicable charter
document or supplement thereto,
5
respectively, there has been no dividend or distribution of any kind
declared, paid or made by the Company on any class of its capital
stock.
(vii) The Company has been duly incorporated, is validly
existing as a corporation and its status is active under the laws of
the State of Indiana, with corporate power and authority to own, lease
and operate its properties and to conduct its business as presently
conducted and as described in the Prospectus and to enter into and
perform its obligations under, or as contemplated under, this Agreement
and the Forward Purchase Agreement. The Company is qualified as a
foreign corporation to transact business and is in good standing in
each jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property or the conduct of
business, except where the failure to so qualify or be in good standing
would not have a Material Adverse Effect.
(viii) Each significant subsidiary (as such term is defined in
Rule 1-02 of Regulation S-X promulgated under the ▇▇▇▇ ▇▇▇) (each, a
"Significant Subsidiary") of the Company is set forth on Schedule A
hereto and has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own, lease and
operate its properties and to conduct its business as presently
conducted and as described in the Prospectus, and is qualified as a
foreign corporation to transact business and is in good standing in
each jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property or the conduct of
business, except where the failure to so qualify or be in good standing
would not have a Material Adverse Effect. Except as otherwise stated in
the Registration Statement and the Prospectus, all of the issued and
outstanding shares of capital stock of each Significant Subsidiary of
the Company have been duly authorized and validly issued, are fully
paid and non-assessable and all such shares are owned by the Company,
directly or through its subsidiaries, free and clear of any material
security interest, mortgage, pledge, lien, encumbrance, claim or
equity.
(ix) The Company and its subsidiaries possess such permits,
licenses, approvals, consents and other authorizations issued by the
appropriate federal, state, local or foreign regulatory agencies or
bodies (including, without limitation, insurance licenses from the
insurance departments of the various states where the subsidiaries
write insurance business (the "Insurance Licenses")) that are material
to the Company and its subsidiaries taken as a whole and are necessary
to conduct the business now conducted by them; the Company and its
subsidiaries are in compliance with the terms and conditions of all
such Insurance Licenses, except where the failure to comply would not,
singly or in the aggregate, result in a Material Adverse Effect; all of
such Insurance Licenses are valid and in full force and effect, except
where the invalidity of such Insurance Licenses or the failure of such
Insurance Licenses to be in full force and effect would not result in a
Material Adverse Effect; and neither the Company nor any of its
subsidiaries has received any notice of proceedings relating to the
revocation or modification of any such Insurance Licenses which, singly
or in the aggregate, may reasonably be expected to result in a Material
Adverse Effect.
(x) All of the issued and outstanding shares of capital
stock of the Company have been duly authorized and are validly issued,
fully paid and non-assessable; and none of the outstanding shares of
capital stock of the Company were issued in violation of
6
preemptive or other similar rights of any securityholder of the
Company; each of the Purchased Shares, when issued and delivered in
accordance with the provisions of this Agreement, and the Payment
Shares and Make-whole Shares, when issued and delivered in accordance
with the provisions of the Forward Purchase Agreement, will be duly
authorized, validly issued and fully paid and non-assessable and will
conform in all material respects to the description thereof contained
in the Prospectus; and the issuance of the Shares will not be subject
to preemptive or other similar rights.
(xi) Neither the Company nor any of its Significant
Subsidiaries is in violation of its charter or by-laws. None of the
Company or any of its Significant Subsidiaries is in default in the
performance or observance of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, note, lease,
loan or credit agreement or any other agreement or instrument (the
"Agreements and Instruments") to which the Company or any of its
Significant Subsidiaries is a party or by which any of them may be
bound, or to which any of the property or assets of the Company or any
of its Significant Subsidiaries is subject, or in violation of any
applicable law, rule or regulation or any judgment, order or decree of
any government, governmental instrumentality or court, domestic or
foreign, having jurisdiction over the Company or any of its Significant
Subsidiaries or any of their respective properties or assets, which
violation or default would, singly or in the aggregate, have a Material
Adverse Effect or materially and adversely affect the Company's
performance of its obligations under this Agreement or the Forward
Purchase Agreement.
(xii) The offer of the Shares as contemplated herein and in
the Prospectus, the execution, delivery and performance of this
Agreement and the Forward Purchase Agreement, and the consummation of
the transactions contemplated herein, therein and in the Registration
Statement (including the issuance and sale of the Shares and the use of
proceeds from the sale of the Purchased Shares as described in the
Prospectus under the caption "Use of Proceeds") and compliance by the
Company with its obligations hereunder and thereunder do not and will
not, whether with or without the giving of notice or passage of time or
both, conflict with or constitute a breach of any of the terms or
provisions of, or constitute a default or Repayment Event (as defined
below) under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or any
subsidiary pursuant to, the Agreements and Instruments (except for such
conflicts, breaches or defaults or liens, charges or encumbrances that
would not result in a Material Adverse Effect or materially and
adversely affect the Company's performance of its obligations under
this Agreement or the Forward Purchase Agreement), nor will such action
result in any violation of any applicable law, statute, rule,
regulation, judgment, order, writ or decree of any government,
governmental instrumentality or court, domestic or foreign, having
jurisdiction over the Company or any of its Significant Subsidiaries,
or any of their assets, properties or operations (except for such
violations that would not result in a Material Adverse Effect or
materially and adversely affect the Company's performance of its
obligations under this Agreement or the Forward Purchase Agreement),
nor will such action result in any violation of the provisions of the
charter or by-laws of the Company or any Significant Subsidiary. As
used herein, a "Repayment Event" means any event or condition which
gives the holder of any note, debenture or other evidence of
indebtedness of the Company or any Significant Subsidiary (or any
person acting on such holder's behalf) the
7
right to require the repurchase, redemption or repayment of all or a
portion of such indebtedness by the Company or any Significant
Subsidiary.
(xiii) There is no action, suit, proceeding, inquiry or
investigation before or by any court or governmental agency or body,
domestic or foreign (including, without limitation, any proceeding to
revoke or deny renewal of any Insurance Licenses), now pending, or, to
the knowledge of the Company, threatened, against or affecting the
Company or any of its Significant Subsidiaries which is required to be
disclosed in the Registration Statement and the Prospectus (other than
as stated therein), or which might be reasonably expected to result in
a Material Adverse Effect or to materially and adversely affect the
Company's performance of its obligations under this Agreement or the
Forward Purchase Agreement. The aggregation of all pending legal or
governmental proceedings to which the Company or any of its
subsidiaries is a party or of which any of their respective properties
or assets is the subject which are not described in the Registration
Statement or the Prospectus, including ordinary routine litigation
incidental to the business of the Company or any of its subsidiaries,
could not be reasonably expected to result in a Material Adverse
Effect; and there are no contracts or documents of the Company or any
of its subsidiaries which are required to be filed as exhibits to the
Registration Statement, or to be incorporated by reference therein, by
the 1933 Act, the 1933 Act Regulations, the 1934 Act or the 1934 Act
Regulations, which have not been so filed or incorporated by reference.
(xiv) No authorization, approval, consent, order, registration
or qualification of or with any court or governmental authority or
agency (including, without limitation, any insurance regulatory agency
or body) is required in connection with the issuance and sale of the
Shares hereunder or under the Forward Purchase Agreement, or the
consummation by the Company of any other transactions contemplated
hereby, except such as have been obtained and made under the federal
securities laws or state insurance laws and such as may be required
under state or foreign securities or Blue Sky laws.
(xv) There are no holders of securities of the Company with
currently exercisable registration rights to have any securities
registered as part of the Registration Statement or included in the
offering contemplated by this Agreement.
(xvi) This Agreement and the Forward Purchase Agreement have
been duly authorized, executed and delivered by the Company and
constitute valid and legally binding agreements of the Company,
enforceable against the Company in accordance with their terms except
to the extent that enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally or by general principles of equity
(regardless of whether enforcement is considered in a proceeding at law
or in equity) (the "Bankruptcy Exceptions") or that enforcement of the
indemnification and contribution provisions of this Agreement may be
subject to public policy limitations.
(xvii) The Company is in compliance with the provisions of
that certain Florida act relating to disclosure of doing business in
Cuba, codified as Section 517.075 of the Florida statutes, and the
rules and regulations thereunder or is exempt therefrom.
8
(xviii) Neither the Company nor any of its Significant
Subsidiaries is, or upon the issuance and sale of the Shares as herein
contemplated and the application of the net proceeds therefrom as
described in the Prospectus will be, an "investment company" or an
entity "controlled" by an "investment company" as such terms are
defined in the Investment Company Act of 1940, as amended (the "1940
Act").
(xix) None of the Company, its Significant Subsidiaries or any
of their respective directors, officers or controlling persons, has
taken, directly or indirectly, any action resulting in a violation of
Regulation M under the 1934 Act, or designed to cause or result in, or
that has constituted or that reasonably might be expected to
constitute, the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the Common
Stock, in each case in violation of applicable law.
(b) Any certificate signed by an officer of the Company and delivered
to the Purchaser or the Selling Stockholder or to counsel for the Purchaser or
the Selling Stockholder pursuant to the provisions of this Agreement or the
Forward Purchase Agreement shall be deemed a representation and warranty by the
Company to the Purchaser or the Selling Stockholder, as applicable, as to the
matters covered thereby.
3. Certain Covenants of the Company, the Purchaser and the Selling
Stockholder. The Company, the Purchaser, and the Selling Stockholder agree as
follows:
(a) The Company and the Purchaser shall use commercially reasonable
efforts to have the Registration Statement declared effective on or before the
Closing Date and shall make any required filing of the Prospectus pursuant to
Rule 424(b) in the manner and within the time period required by Rule 424(b).
(b) The Company shall not mail or cause to be mailed a notice of
redemption of $85,965,000 principal amount of Notes to holders of record of the
Notes sooner than the second business day following the date of this Agreement.
(c) The Company shall use reasonable commercial efforts to have the
Purchased Shares and up to 467,000, in the aggregate, of Payment Shares and
Make-whole Shares listed, subject to official notice of issuance, on the NYSE on
or before the Closing Date.
(d) The Company shall furnish to the Purchaser and the Selling
Stockholder two signed copies of the Registration Statement, as initially filed
with the Commission, and of all amendments thereto, including all exhibits
thereto and all documents incorporated by reference therein.
(e) Subject to Section 3(f), the Company shall maintain the
effectiveness of the Registration Statement from the Closing Date until ten
Exchange Business Days following the settlement of the Company's obligations, if
any, under the Forward Purchase Agreement or such earlier date upon which the
Purchaser, as agent for the Selling Stockholder, has notified the Company that
all of the Shares (including the Payment Shares and Make-whole Shares, if any)
have been sold by the Purchaser on behalf of the Selling Stockholder (the
"Effective Period"). During the Effective Period, the Company shall:
9
(i) file all documents required to be filed by the Company
with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of
the 1934 Act within the time periods required by the 1934 Act and the
1934 Act Regulations;
(ii) advise the Purchaser and the Selling Stockholder
promptly after the Company receives notice thereof, of the issuance by
the Commission of any stop order or of any order preventing or
suspending the use of any Prospectus, or the suspension of the
qualification of the Shares for offering or sale in any jurisdiction,
of the initiation or threatening of any proceeding for any such
purpose, or of any request by the Commission for the amendment or
supplementation of the Registration Statement or Prospectus or for
additional information; and in the event of the issuance of any such
stop order by the Commission or of any such order preventing or
suspending the use of any such prospectus or suspending any such
qualification, promptly use commercially reasonable efforts to obtain
its withdrawal;
(iii) subject to Section 3(e)(iv) and 3(f), prepare and file
such amendment or amendments to the Registration Statement and the
Prospectus as may be necessary to comply with the requirements of
Section 10(a)(3) of the 1933 Act;
(iv) furnish the Purchaser and the Selling Stockholder with a
copy of any proposed amendment or supplement to the Registration
Statement or Prospectus (other than any document proposed to be filed
by the Company pursuant to ▇▇▇▇▇▇▇ ▇▇, ▇▇ ▇▇ ▇▇(▇)▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇) a
reasonable amount of time before the proposed filing of such amendment
or supplement with the Commission and with such other information as
the Purchaser or Selling Stockholder may from time to time reasonably
request concerning the Company and its subsidiaries;
(v) advise the Purchaser and the Selling Stockholder
promptly after the Company receives notice thereof of the time when any
amendment to the Registration Statement has been filed or becomes
effective or any supplement to the Prospectus or any amended Prospectus
has been filed with the Commission;
(vi) furnish such information as may be required and
otherwise to cooperate in qualifying the Shares for offering and sale
under the securities or blue sky laws of such states as the Purchaser,
as agent for the Selling Stockholder, may designate and maintain such
qualifications in effect so long as required for the distribution of
the Shares; provided that the Company shall not be required to qualify
as a foreign corporation in any jurisdiction in which it is not so
qualified or subject itself to taxation in respect of doing business in
any jurisdiction in which it is not otherwise so subject or to consent
to the service of process under the laws of any such state (except
service of process with respect to the offering and sale of the
Shares); and promptly advise the Purchaser, as agent for the Selling
Stockholder, of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Shares for sale
in any jurisdiction or the initiation or threatening of any proceeding
for such purpose;
(vii) make available to the Purchaser, as agent for the
Selling Stockholder, as soon as practicable after the Closing Date, and
thereafter from time to time furnish to the
10
Purchaser, as many copies of the Prospectus (or of the Prospectus as
amended or supplemented if the Company shall have made any amendments
or supplements thereto after the effective date of the Registration
Statement) as the Purchaser may reasonably request for the purposes
contemplated by the 1933 Act; and
(viii) furnish, as soon as practicable after the Closing Date,
and thereafter from time to time to the NYSE such number of copies of
the Prospectus (or of the Prospectus as amended or supplemented if the
Company shall have made any amendments or supplements thereto after the
effective date of the Registration Statement) as may be requested by
the NYSE under Rule 153 of the 1933 Act Regulations.
(f) The Company shall provide prompt notice, confirmed in writing, to
the Purchaser and the Selling Stockholder of (i) the discovery of any
information or the happening of any event known to the Company which, in the
judgment of the Company, would require the making of any change in the
Prospectus then being used, or in the information incorporated therein by
reference, so that the Prospectus would not include an untrue statement of
material fact or omit to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they are made, not
misleading, (ii) the Company's determination, for any reason, that it is
necessary to amend or supplement the Prospectus, or (iii) the Company's
election, for any business reason that the Company reasonably deems sufficient,
to delay filing an amendment or amendment to the Registration Statement or
Prospectus that it would otherwise be required to file under Section 3(e)(iii).
Upon the receipt of such notice, the Purchaser shall immediately discontinue
disposition of the Shares pursuant to the Registration Statement on behalf of
the Selling Stockholder until such time as the Purchaser and the Selling
Stockholder shall have received from the Company an amended or supplemented
Prospectus or, if appropriate, written notice from the Company that dispositions
of Shares may be resumed without amendment or supplementation of the
Registration Statement or Prospectus. The Company shall not have the right to
deliver to the Selling Stockholder a Direction to Sell or to elect net share
settlement or elect to deliver Make-whole Shares in payment of the Make-whole
Amount (as defined in the Forward Purchase Agreement) under the Forward Purchase
Agreement until such time as the Company shall have filed with the Commission
such amendment or supplement to the Registration Statement or Prospectus as may
be required and shall have delivered an amended or supplemented Prospectus to
the Purchaser and Selling Stockholder or shall have provided, if appropriate,
written notice to the Purchaser and Selling Stockholder that dispositions of
Shares may be resumed without amendment or supplementation of the Registration
Statement or Prospectus.
(g) The Purchaser and the Selling Stockholder shall each provide prompt
notice, confirmed in writing, to the Company of the discovery of any information
or the happening of any event known to the Purchaser or the Selling Stockholder,
respectively, which would require the making of any change in the information
furnished to the Company by the Purchaser or the Selling Stockholder,
respectively, for use in the Prospectus then being used so that such information
would not include an untrue statement of a material fact or omit to state a
material fact necessary to make the statements included in such information, in
the light of the circumstances in which they are made, not misleading.
(h) The Purchaser shall inform the Company of its intent to sell any of
the Purchased Shares on behalf of the Selling Stockholder, other than pursuant
to a Direction to Sell, sufficiently
11
in advance of such sale to enable the Company to verify that the Prospectus then
being used will meet the requirements of the 1933 Act at the time of the
intended sales and to amend such Prospectus if it will not meet those
requirements.
(i) The Company shall apply the net proceeds from the sale of the
Purchased Shares in the manner set forth under the caption "Use of Proceeds" in
the Prospectus.
(j) The Company shall timely file such reports pursuant to the 1934 Act
as are necessary in order to make generally available to its security holders as
soon as practicable earnings statements of the Company satisfying the provisions
of Section 11(a) of the 1933 Act.
(k) The Company, if necessary or appropriate, shall file a registration
statement pursuant to Rule 462(b) under the 1933 Act to the extent necessary to
register the offering and sale of all Payment Shares and Make-whole Shares
issued under the Forward Purchase Agreement.
(l) The Company shall pay all costs, expenses, fees and taxes in
connection with (i) the preparation and filing of the Registration Statement,
any Preliminary Prospectus, the Prospectus, and any amendments or supplements
thereto, and the printing and furnishing of copies of each thereof to the
Purchaser and the Selling Stockholder (including costs of mailing and shipment),
(ii) the registration, issue, sale and delivery of the Shares to the Purchaser,
(iii) the producing and/or printing of this Agreement, any powers of attorney
and any closing documents (including compilations thereof) and the reproduction
and/or printing and furnishing of copies of each thereof to the Purchaser and
the Selling Stockholder (including costs of mailing and shipment), (iv) the
qualification of the Shares for offering and sale under state securities laws,
(v) the listing of the Shares on the NYSE, and (vi) the performance of the
Company's other obligations hereunder.
4. Conditions to the Obligations of the Purchaser to Purchase the
Purchased Shares.
The obligations of the Purchaser to purchase and pay for the Purchased
Shares shall be subject to the accuracy, as of the date of this Agreement and
the Closing Date, of the representations and warranties of the Company contained
herein and in the certificates of any officer of the Company or any of its
subsidiaries pursuant to the provisions hereof, to the performance by the
Company of its obligations hereunder, and to the following additional
conditions:
(a) The Registration Statement (including any Rule 462(b) Registration
Statement) shall have become effective not later than 10:00 a.m., New York City
time, on the Closing Date, no stop order suspending the effectiveness of the
Registration Statement or any part thereof shall have been issued under the 1933
Act or proceedings therefor instituted or threatened by the Commission, and any
request on the part of the Commission for additional information shall have been
complied with to the satisfaction of counsel to the Purchaser. If the filing of
a Prospectus, or any supplement thereto, is required pursuant to Rule 424(b),
such Prospectus shall have been filed within the manner and within the time
period required by the 1933 Act and the 1933 Act Regulations.
(b) The Shares shall have been approved for listing on the NYSE,
subject to official notice of issuance.
12
(c) The Purchaser shall have received the favorable opinion of ▇▇▇▇ ▇.
▇▇▇▇, Executive Vice President, General Counsel and Secretary of the Company,
dated the Closing Date, in form and substance satisfactory to counsel for the
Purchaser, to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation under the laws of the State of Indiana.
(ii) The Company has corporate power and authority to own,
lease, and operate its properties and to conduct its business as
described in the Prospectus.
(iii) The Company is qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in which
such qualification is required, except where the failure to so qualify
or be in good standing would not result in a Material Adverse Effect.
(iv) All of the issued and outstanding shares of capital
stock of the Company have been duly authorized and are validly issued,
fully paid and non-assessable; none of the outstanding shares of
capital stock of the Company were issued in violation of preemptive or
other similar rights of any securityholder of the Company.
(v) Each Significant Subsidiary has been duly incorporated
and is validly existing as a corporation in good standing under the
laws of the jurisdiction of its incorporation, has the corporate power
and authority to own, lease and operate its properties and to conduct
its business as described in the Prospectus, and is qualified as a
foreign corporation to transact business and is in good standing in
each jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property or the conduct of
business, except where the failure to so qualify or be in good standing
would not have a Material Adverse Effect; all of the issued and
outstanding capital stock of each Significant Subsidiary has been duly
authorized and validly issued, is fully paid and nonassessable, and,
except as set forth in the Prospectus, all such shares are owned by the
Company, directly or through its subsidiaries, free and clear of any
material security interest, mortgage, pledge, lien, encumbrance, claim
or equity.
(vi) All legally required proceedings in connection with the
authorization and valid issuance of the Shares in accordance with this
Agreement and the Forward Purchase Agreement and the sale of the Shares
in accordance with this Agreement and the Prospectus (other than the
filing of post-issuance reports, the non-filing of which would not
render the Shares invalid) have been taken, and all legally required
orders, consents or other authorizations or approvals of any other
public boards or bodies (including, without limitation, any insurance
regulatory agency or body) in connection with the authorization and
valid issuance of the Shares in accordance with this Agreement and the
Forward Purchase Agreement and the sale of the Shares in accordance
with this Agreement and the Prospectus (other than in connection with
or in compliance with the provisions of the securities or Blue Sky laws
of any jurisdictions, as to which no opinion need be expressed) have
been obtained and are in full force and effect.
(vii) The Registration Statement is effective under the 1933
Act; any required filing of the Prospectus pursuant to Rule 424(b) has
been made in the manner and within the time
13
period required by Rule 424(b); and, to the knowledge of counsel, no
stop order suspending the effectiveness of the Registration Statement
has been issued under the 1933 Act, and no proceedings therefor have
been initiated or threatened by the Commission.
(viii) The Registration Statement, as of its effective date,
and the Prospectus and each amendment or supplement thereto, as of its
issue date (in each case, other than the financial statements and the
notes thereto, the financial schedules, and any other financial data
included or incorporated by reference therein, as to which such counsel
need express no opinion) complied as to form in all material respects
with the requirements of the 1933 Act and the 1933 Act Regulations.
(ix) Each of the documents incorporated by reference in the
Registration Statement or Prospectus, at the time they were filed or
last amended (other than the financial statements and the notes
thereto, the financial schedules, and any other financial data included
or incorporated by reference therein, as to which such counsel need
express no opinion) complied as to form in all material respects with
the requirements of the 1934 Act and the 1934 Act Regulations, as
applicable.
(x) The Common Stock, including the Shares, conforms in all
material respects to the description thereof contained in the
Prospectus and the Registration Statement.
(xi) This Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and legally binding
obligation of the Company, enforceable against the Company in
accordance with its terms, except to the extent that enforcement
thereof may be limited by the Bankruptcy Exceptions and that
enforcement of the indemnification and contribution provisions thereof
may be subject to public policy limitations.
(xii) The Forward Purchase Agreement has been duly authorized,
executed and delivered by the Company and constitutes a valid and
legally binding obligation of the Company, enforceable against the
Company in accordance with its terms, except to the extent that
enforcement thereof may be limited by the Bankruptcy Exceptions; the
Forward Purchase Agreement conforms in all material respects to the
description thereof contained in the Prospectus.
(xiii) The issuance and sale of the Purchased Shares, in
accordance with the provisions of this Agreement, and the issuance and
sale of the Payment Shares and Make- whole Shares, in accordance with
the provisions of the Forward Purchase Agreement, have been duly
authorized by the Company, and the Purchased Shares, when issued and
delivered in accordance with the provisions of this Agreement, and the
Payment Shares and Make-whole Shares, if and when issued in accordance
with the provisions of the Forward Purchase Agreement, will be validly
issued and fully paid and non-assessable and will conform in all
material respects to the description thereof contained in the
Prospectus; the issuance of the Shares is not subject to preemptive or
other similar rights; the Purchased Shares and up to 467,000 in the
aggregate, of Payment Shares and Make- whole Shares have been approved
for listing on the NYSE, upon official notice of issuance.
14
(xiv) The offer of the Shares as contemplated herein and in
the Prospectus, the execution, delivery and performance of this
Agreement and the Forward Purchase Agreement, and the consummation of
the transactions contemplated herein, therein and in the Registration
Statement (including the issuance and sale of the Shares and the use of
the proceeds from the sale of the Purchased Shares as described in the
Prospectus under the caption "Use of Proceeds") and compliance by the
Company with its obligations hereunder and thereunder have been
authorized by all necessary corporate action and do not and will not,
whether with or without the giving of notice or passage of time or
both, conflict with or constitute a breach of any of the terms or
provisions of, or constitute a default or Repayment Event under, or
result in the creation or imposition of any lien, charge or encumbrance
upon any property or assets of the Company or any Significant
Subsidiary pursuant to, the Agreements and Instruments (except for such
conflicts, breaches, defaults, or liens, charges or encumbrances that
would not result in a Material Adverse Effect or materially and
adversely affect the Company's performance of its obligations under
this Agreement or the Forward Purchase Agreement) nor will such action
result in any violation of any applicable law, statute, rule,
regulation, judgment, order, writ or decree of any government,
government instrumentality or court, domestic or foreign, having
jurisdiction over the Company or any Significant Subsidiary or any of
their assets, properties, or operations (except for such violations
that would not result in a Material Adverse Effect or materially and
adversely affect the Company's performance of its obligations under
this Agreement or the Forward Purchase Agreement), nor will such action
result in any violation of the provisions of the charter or by-laws of
the Company or any Significant Subsidiary.
(xv) To such counsel's knowledge, there are no statutes
required to be described or incorporated by reference in the
Registration Statement which are not described or incorporated by
reference, and there are no legal or governmental proceedings pending
or, to such counsel's knowledge, threatened which are required to be
disclosed or incorporated by reference in the Registration Statement,
other than those disclosed or incorporated by reference therein.
(xvi) To such counsel's knowledge, there are no contracts,
indentures, mortgages, agreements, notes, leases or other instruments
required to be described or referred to or incorporated by reference in
the Registration Statement or to be filed as exhibits thereto other
than those described or referred to or incorporated by reference
therein or filed as exhibits thereto; the descriptions thereof or
references thereto are true and correct in all material respects.
(xvii) To such counsel's knowledge, neither the Company nor
any of its Significant Subsidiaries is in violation of its charter or
by-laws and no default by the Company or any of its Significant
Subsidiaries exists in the due performance or observance of any
material obligation, agreement, covenant or condition contained in any
Agreement and Instrument that is described or referred to in the
Registration Statement or the Prospectus or filed or incorporated by
reference as an exhibit to the Registration Statement.
(xviii) No authorization, approval, consent, registration or
qualification of or with any court or governmental authority or agency
(including, without limitation, any insurance regulatory agency or
body) is required for the issuance and sale of the Shares by the
15
Company to the Purchaser or the performance by the Company of its
obligations under this Agreement and the Forward Purchase Agreement,
except such as has been obtained and made under the federal securities
laws or such as may be required under state or foreign securities or
Blue Sky laws.
(xix) The Company and its subsidiaries possess such permits,
licenses, approvals, consents and other authorizations issued by the
appropriate federal, state, local or foreign regulatory agencies or
bodies (including, without limitation, the Insurance Licenses) that are
material to the Company and its subsidiaries taken as a whole and are
necessary to conduct the business now conducted by them; the Company
and its subsidiaries are in compliance with the terms and conditions of
all such Insurance Licenses, except where the failure to so comply
would not, singly or in the aggregate, result in a Material Adverse
Effect; all of the Insurance Licenses are valid and in full force and
effect, except where the invalidity of such Insurance Licenses or the
failure of such Insurance Licenses to be in full force and effect would
not result in a Material Adverse Effect or materially and adversely
affect the Company's performance of its obligations under this
Agreement or the Forward Purchase Agreement; and neither the Company
nor any of its subsidiaries has received any notice of proceedings
relating to the revocation or modification of any such Insurance
Licenses which, singly or in the aggregate, may reasonably be expected
to result in a Material Adverse Effect or to materially and adversely
affect the Company's performance of its obligations under this
Agreement or the Forward Purchase Agreement.
(xx) Neither the Company nor any of its subsidiaries is, and
upon the consummation of the transactions contemplated in this
Agreement and the Forward Purchase Agreement and the application of the
net proceeds from the Shares as described in the Prospectus will be, an
"investment company" or an entity "controlled" by an "investment
company," as such terms are defined in the 1940 Act.
Moreover, such counsel shall confirm that nothing has come to such
counsel's attention that causes such counsel to believe that the Registration
Statement (except for financial statements and the notes thereto, the financial
schedules and any other financial data included or incorporated by reference
therein as to which such counsel need express no opinion), at the time it became
effective or at the Representation Date, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading or that the
Prospectus (except for financial statements and the notes thereto, the financial
schedules and any other financial data included or incorporated by reference
therein as to which such counsel need express no opinion), on the date of issue
or the Representation Date, included or includes an untrue statement of a
material fact or omitted or omits to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
(d) On the Closing Date, the Purchaser shall have received from ▇▇▇▇▇▇
▇▇▇▇▇▇ & ▇▇▇▇▇, counsel for the Purchaser, such opinion or opinions, dated the
date hereof, with respect to the issuance and sale of the Shares, the
Registration Statement, the Prospectus (together with any supplement thereto)
and other related matters as the Purchaser may reasonably require.
16
(e) On the Closing Date, the Purchaser shall have received a
certificate of the President or a Vice-President of the Company and of the Chief
Financial Officer or Chief Accounting Officer of the Company, dated the Closing
Date, to the effect that:
(i) The Registration Statement has been declared effective,
and no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
initiated or, to the knowledge of such officers, threatened by the
Commission;
(ii) the representations and warranties of the Company in
Section 1 of this Agreement are true and correct as though expressly
made at and as of the Closing Date;
(iii) the Company has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied at or
prior to the Closing Date; and
(iv) since the date of the most recent financial statements
included in the Prospectus (exclusive of any supplement thereto), there
has been no material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects
of the Company and its subsidiaries considered as one enterprise,
whether or not in the ordinary course of business, except as set forth
in the Prospectus (exclusive of any supplement thereto).
(f) On the Closing Date, PricewaterhouseCoopers LLP shall have
furnished to the Purchaser a letter, dated the Closing Date, in form and
substance satisfactory to the Purchaser, to the effect set forth in Exhibit A.
(g) Since the execution of this Agreement or, if earlier, the dates as
of which information is given in the Registration Statement (exclusive of any
amendment thereof) and the Prospectus (exclusive of any supplement thereto), no
material adverse change shall have occurred in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of the
Company and its subsidiaries, considered as one enterprise, whether or not in
the ordinary course of business.
(h) Counsel for the Purchaser shall have been furnished with such
documents and opinions as they may require for the purpose of enabling them to
pass upon the issuance and sale of the Shares under this Agreement and the
Forward Purchase Agreement, as herein and therein contemplated, and related
proceedings, or in order to evidence the accuracy of any of the representations
or warranties, or the fulfillment of any of the conditions herein contained; and
all proceedings taken by the Company in connection with the issuance and sale of
the Shares under this Agreement and the Forward Purchase Agreement as herein and
therein contemplated shall be satisfactory in form and substance to the
Purchaser and counsel for the Purchaser.
5. Reimbursement of Purchaser's Expenses. The Company shall reimburse
the Purchaser and the Selling Stockholder for all reasonable out-of-pocket
expenses (including reasonable fees and disbursements of counsel in connection
with the transactions contemplated by this Agreement), up to a maximum
reimbursement of $150,000 in the aggregate for all such out-of-pocket expenses
incurred by the Purchaser and the Selling Stockholder in connection with the
17
proposed purchase and sale of the Shares. Such reimbursement shall be made, from
time to time, within 20 days of the Company's receipt of a written invoice from
the Purchaser and the Selling Stockholder itemizing such expenses.
6. Additional Covenants of the Company.
The Company further covenants and agrees with the Purchaser and the
Selling Stockholder as follows:
(a) Each delivery by the Company of a Direction to Sell to the
Purchaser or of Make- whole Shares to the Selling Stockholder shall be deemed to
be an affirmation that the representations and warranties of the Company
contained in Section 1 of this Agreement and in any officers' certificate
delivered to the Purchaser or the Selling Stockholder pursuant hereto are true
and correct at the time of such delivery, and an undertaking that such
representations and warranties will be true and correct at the date of sale
specified in the Direction to Sell, as though made at and as of each such time
(it being understood that such representations and warranties shall relate to
the Registration Statement and Prospectus as amended and supplemented to each
such time).
(b) Each time that (i) the Company shall file a Material Amendment or
Supplement to the Registration Statement or the Prospectus (as defined in
Section 6(c)), (ii) the Purchaser or the Selling Stockholder shall so require as
a condition to the sale of Purchased Shares pursuant to a Direction to Sell, or
(iii) the Selling Stockholder shall so require as a condition to the acceptance
by the Selling Stockholder of Make-whole Shares under the Forward Purchase
Agreement in payment of the Make-whole Amount (as defined in the Forward
Purchase Agreement), the Company shall furnish or cause to be furnished to the
Purchaser and/or the Selling Stockholder, as applicable, the following:
(i) a certificate, dated the date of filing with the
Commission or the date of effectiveness of such amendment or
supplement, as applicable, or the date of delivery of a Direction to
Sell or of Make-whole Shares, as the case may be, in form and substance
reasonably satisfactory to the Purchaser and/or the Selling
Stockholder, as applicable, to the effect that the representations
contained in Section 1 of this Agreement and in the certificate
referred to in Section 4(e) hereof are true and correct at the time of
the filing or effectiveness of such amendment or supplement, as
applicable, or of the delivery of the Direction to Sell or of
Make-whole Shares, as the case may be, as though made at and as of such
time (except that such representations and warranties shall be deemed
to relate to the Registration Statement and the Prospectus as amended
and supplemented to such time) or, in lieu of such certificate, a
certificate of the same tenor as the certificate referred to Section
4(e) hereof, modified as necessary to relate to the Registration
Statement and the Prospectus as amended and supplemented to the time of
delivery of such certificate;
(ii) the written opinion of ▇▇▇▇ ▇. ▇▇▇▇, Executive Vice
President, General Counsel and Secretary of the Company, or other
counsel satisfactory to the Purchaser and/or the Selling Stockholder,
as the case may be, dated the date of filing with the Commission or the
date of effectiveness of such amendment or supplement, as applicable,
or the date of delivery of a Direction to Sell or of Make-whole Shares,
as the case may be,
18
in form and substance satisfactory to the Purchaser and/or the Selling
Stockholder, as applicable, of the same tenor as the opinion referred
to in Section 4(c) hereof, but modified as necessary to relate to the
Registration Statement and the Prospectus as amended and supplemented
to the time of delivery of such opinion or, in lieu of such opinion,
counsel last furnishing such opinion to the Purchaser and/or the
Selling Stockholder shall furnish the Purchaser and/or the Selling
Stockholder, as applicable, with a letter substantially to the effect
that the Purchaser and/or the Selling Stockholder, as applicable, may
rely on such last opinion to the same extent as though it were dated
the date of such letter authorizing reliance (except that statements in
such last opinion shall be deemed to relate to the Registration
Statement and the Prospectus as amended and supplemented to the time of
delivery of such letter authorizing reliance); and
(iii) a letter, dated the date of filing with the Commission
or the date of effectiveness of such amendment or supplement, as
applicable, or the date of such delivery of a Direction to Sell or of
Make-whole Shares, as the case may be, of PricewaterhouseCoopers LLP to
the same tenor as the letter referred to in Section 4(f) hereof, but
modified to relate to the Registration Statement and Prospectus as
amended and supplemented to the date of such letter.
(c) A "Material Amendment or Supplement to the Registration Statement
or the Prospectus" shall mean, during the Effective Period, (i) any amendment to
the Registration Statement filed by the Company under the 1933 Act, (ii) each
Annual Report on Form 10-K or Quarterly Report on Form 10-Q filed by the
Company, (iii) any Current Report on Form 8-K which contains financial
information required to be set forth in or incorporated by reference into the
Prospectus pursuant to Item 11 of Form S-3 under the Securities Act, and (iv)
any Current Report on Form 8-K , upon the reasonable request of the Purchaser
and the Selling Stockholder. The Company shall deliver the documents provided
for in Section 6(b) upon the date of filing of any Material Amendment or
Supplement to the Registration Statement or Prospectus or such other date
mutually agreed upon by the Company, the Purchaser and the Selling Stockholder.
(d) In the event that the Purchaser or the Selling Stockholder elects
to exercise its right to require delivery of the documents provided for in
Section 6(b) as a condition to the sale of Purchased Shares pursuant to a
Direction to Sell or that the Selling Stockholder elects to exercise its right
to require delivery of such documents as a condition to its acceptance of
Make-whole Shares in payment of the Make-whole Amount, the Purchaser or the
Selling Stockholder, as applicable, shall provide written notice of its intent
to require delivery of such documents within 24 hours of receipt of a Direction
to Sell or of receipt by the Selling Stockholder of notice from the Company of
its election to pay the Make-whole Amount in Make-whole Shares. Neither the
Selling Stockholder nor the Purchaser shall have any obligation to sell
Purchased Shares pursuant to a Direction to Sell and the Selling Stockholder
shall have no obligation to accept Payment Shares or Make-whole Shares in
payment of the Make-whole Amount until such time as the Company has complied
with the provisions of Section 6(b).
7. Termination by the Purchaser.
(a) The Purchaser may terminate this Agreement in its absolute
discretion at any time prior to the purchase of the Purchased Shares, if (i)
since the time of execution of this Agreement,
19
there has been any material adverse change, financial or otherwise (other than
as disclosed in the Registration Statement and Prospectus), in the operations,
business, condition or prospects of the Company and its subsidiaries, considered
as one enterprise, (ii) at the time of such termination, (x) trading in
securities on the NYSE, the American Stock Exchange or the Nasdaq National
Market shall have been suspended or limitations or minimum prices shall have
been established on any such exchange or market, (y) a banking moratorium shall
have been declared either by the United States or New York State authorities, or
(z) the United States shall have declared war in accordance with its
constitutional processes or there shall have occurred any material outbreak or
escalation of hostilities or other national or international calamity or crisis
of such magnitude in its effect on the financial markets of the United States
as, in the Purchaser's judgment, to make it impracticable to market the Shares
in the manner contemplated by this Agreement, or (iii) the Common Stock shall
have ceased to be registered under the 1934 Act or listed on the NYSE, or the
Commission, the NYSE or the Company shall have initiated proceedings for such
deregistration or delisting.
(b) If the Purchaser elects to terminate this Agreement as provided in
this Section 7, the Purchaser shall notify the Company promptly of such
termination. Such termination shall be effective upon the Company's receipt of
such notice. Upon such termination, the Purchaser shall not be under any
obligation or liability to the Company under this Agreement, and Company shall
not be under any obligation or liability under this Agreement (except to the
extent provided in Sections 3(l) and 5).
8. Indemnification.
(a) The Company agrees to indemnify and hold harmless the Purchaser and
each person, if any, who controls the Purchaser within the meaning of Section 15
of the 1933 Act or Section 20 of the 1934 Act, as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto) or the omission or
alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein not misleading or
arising out of any untrue statement or alleged untrue statement of a
material fact included in any Preliminary Prospectus or the Prospectus
(or any amendment or supplement thereto), or the omission or alleged
omission therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened,
or of any claim whatsoever arising out of or based upon any such untrue
statement or omission, or any such alleged untrue statement or
omission, provided, that (subject to Section 8(f) below) any such
settlement is effected with the written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by the
Purchaser), reasonably incurred in investigating,
20
preparing or defending against any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened,
or any claim whatsoever arising out of or based upon any such untrue
statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under (i) or
(ii) above; provided, however, that the foregoing indemnity agreement
shall not apply to any loss, liability, claim, damage or expense to the
extent arising out of or based upon any untrue statement or omission or
alleged untrue statement or omission (A) made in reliance upon and in
conformity with written information furnished to the Company by the
Purchaser expressly for use in the Registration Statement (or any
amendment thereto), or any Preliminary Prospectus or the Prospectus (or
any amendment or supplement thereto), or (B) made in any Preliminary
Prospectus and corrected in the Prospectus, as supplemented, where the
person asserting any such loss, liability, claim, damage or expense
purchased the Shares that are the subject thereof, and it shall have
been established (i) that there was not sent or given, at or prior to
the written confirmation of such sale, a copy of the Prospectus
(excluding documents incorporated by reference) in any case where such
delivery is required by the 1933 Act and (ii) the Company shall have
previously furnished copies thereof in sufficient quantities to the
Purchaser.
(b) The Purchaser agrees to indemnify and hold harmless the Company,
its directors, each of its officers who signed the Registration Statement, and
each person, if any, who controls the Company within the meaning of Section 15
of the 1933 Act or Section 20 of the 1934 Act against any and all loss,
liability, claim, damage and expense described in the indemnity contained in
Section 8(a), as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Registration
Statement (or any amendment thereto), or any Preliminary Prospectus or the
Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Company by the Purchaser
expressly for use in the Registration Statement (or any amendment thereto) or
such preliminary prospectus or the Prospectus (or any amendment or supplement
thereto).
(c) The Company agrees to indemnify and hold harmless the Selling
Stockholder and each person, if any, who controls the Selling Stockholder within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act, as
follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto) or the omission or
alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein not misleading or
arising out of any untrue statement or alleged untrue statement of a
material fact included in any Preliminary Prospectus or the Prospectus
(or any amendment or supplement thereto), or the omission or alleged
omission therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened,
or of any claim whatsoever arising out of or based upon any such untrue
21
statement or omission, or any such alleged untrue statement or
omission, provided, that (subject to Section 8(f) below) any such
settlement is effected with the written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by the Selling
Stockholder), reasonably incurred in investigating, preparing or
defending against any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever arising out of or based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, to the
extent that any such expense is not paid under (i) or (ii) above;
provided, however, that the foregoing indemnity agreement shall not
apply to any loss, liability, claim, damage or expense to the extent
arising out of or based upon any untrue statement or omission or
alleged untrue statement or omission (A) made in reliance upon and in
conformity with written information furnished to the Company by the
Selling Stockholder expressly for use in the Registration Statement (or
any amendment thereto), or any Preliminary Prospectus or the Prospectus
(or any amendment or supplement thereto), or (B) made in any
Preliminary Prospectus and corrected in the Prospectus, where the
person asserting any such loss, liability, claim, damage or expense
purchased the Shares that are the subject thereof, and it shall have
been established (i) that there was not sent or given, at or prior to
the written confirmation of such sale, a copy of the Prospectus
(excluding documents incorporated by reference) in any case where such
delivery is required by the 1933 Act and (ii) the Company shall have
previously furnished copies thereof in sufficient quantities to the
Selling Stockholder or the Purchaser, as agent for the Selling
Stockholder.
(d) The Selling Stockholder agrees to indemnify and hold harmless the
Company, its directors, each of its officers who signed the Registration
Statement, and each person, if any, who controls the Company within the meaning
of Section 15 of the 1933 Act or Section 20 of the 1934 Act against any and all
loss, liability, claim, damage and expense described in the indemnity contained
in Section 8(c), as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Registration
Statement (or any amendment thereto), or any Preliminary Prospectus or the
Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Company by the Selling
Stockholder expressly for use in the Registration Statement (or any amendment
thereto) or such preliminary prospectus or the Prospectus (or any amendment or
supplement thereto).
(e) Each indemnified party shall give notice as promptly as reasonably
practicable to each indemnifying party of any action commenced against it in
respect of which indemnity may be sought hereunder, but failure to so notify an
indemnifying party shall not relieve such indemnifying party from any liability
hereunder to the extent it is not materially prejudiced as a result thereof and
in any event shall not relieve it from any liability which it may have otherwise
than on account of this indemnity agreement. In the case of parties indemnified
pursuant to Section 6(a) of this Section, counsel to the indemnified parties
shall be selected by the Purchaser, in the case of parties indemnified pursuant
to Section 6(c) of this Section, counsel to the indemnified parties shall be
selected by the Selling Stockholder, and in the case of parties indemnified
pursuant to Section 6(b) and Section 6(d) of this Section, counsel to the
indemnified parties shall be selected by the Company; provided, however, that in
the event that the Company is obligated to indemnify parties
22
pursuant to both Section 6(a) and Section 6(c) in connection with any one action
or separate but similar or related actions in the same jurisdiction arising out
of the same general allegations or circumstances, one and the same counsel (in
addition to any local counsel) to such indemnified parties shall be selected by
the Selling Stockholder. An indemnifying party may participate at its own
expense in the defense of any such action; provided, however, that counsel to
the indemnifying party shall not (except with the consent of the indemnified
party) also be counsel to the indemnified party. In no event shall the
indemnifying parties be liable for fees and expenses of more than one counsel
(in addition to any local counsel) separate from their own counsel for all
indemnified parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances. No indemnifying party shall, without the prior
written consent of the indemnified parties, settle or compromise or consent to
the entry of any judgment with respect to any litigation, or any investigation
or proceeding by any governmental agency or body, commenced or threatened, or
any claim whatsoever in respect of which indemnification or contribution could
be sought under this Section 8 or Section 9 (whether or not the indemnified
parties are actual or potential parties thereto), unless such settlement,
compromise or consent (i) includes an unconditional release of each indemnified
party from all liability arising out of such litigation, investigation,
proceeding or claim and (ii) does not include a statement as to or an admission
of fault, culpability or a failure to act by or on behalf of any indemnified
party.
(f) If at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel, such indemnifying party agrees that it shall be liable for any
settlement of the nature contemplated by Section 6(a)(ii) and Section 6(c)(ii)
effected without its written consent if (i) such settlement is entered into more
than 45 days after receipt by such indemnifying party of the aforesaid request,
(ii) such indemnifying party shall have received notice of the terms of such
settlement at least 30 days prior to such settlement being entered into and
(iii) such indemnifying party shall not have reimbursed such indemnified party
in accordance with such request prior to the date of such settlement.
Notwithstanding the immediately preceding sentence, if at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, an indemnifying party shall
not be liable for any settlement of the nature contemplated by Section 6(a)(ii)
or Section 6(c)(ii) effected without its consent if such indemnifying party (i)
reimburses such indemnified party in accordance with such request to the extent
it considers such request to be reasonable and (ii) provides written notice to
the indemnified party substantiating the unpaid balance as unreasonable, in each
case prior to the date of such settlement.
9. Contribution.
(a) If the indemnification provided for in Section 8 is for any reason
unavailable to or insufficient to hold harmless an indemnified party in respect
of any losses, liabilities, claims, damages or expenses referred to therein,
then each indemnifying party shall contribute to the aggregate amount of such
losses, liabilities, claims, damages and expenses incurred by such indemnified
party, as incurred, (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company, the Purchaser, and the Selling
Stockholder from the offering of the Purchased Shares pursuant to this Agreement
or (ii) if the allocation provided by clause (i) is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the
Company, the Purchaser, and the Selling Stockholder in connection with the
statements or omissions which resulted in such
23
losses, liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.
The relative benefits received by Company, the Purchaser, and the
Selling Stockholder in connection with the offering of the Shares pursuant to
this Agreement shall be deemed to be in the same respective proportions as (i)
the total proceeds from the sale to the Purchaser of the Purchased Shares (less
the Advisory Fee, the Commission (as defined in the Forward Purchase Agreement),
and the aggregate Floating Amounts (as defined in the Forward Purchase
Agreement) received by the Selling Stockholder less the Selling Stockholder's
cost of funding the Total Forward Price (as defined in the Forward Purchase
Agreement), but before deducting expenses) received by the Company, (ii) the
Advisory Fee and the Commission received by the Purchaser, and (iii) the
aggregate Floating Amounts (as defined in the Forward Purchase Agreement)
received by the Selling Stockholder less the Selling Stockholder's cost of
funding the Total Forward Price (as defined in the Forward Purchase Agreement).
The relative fault of the Company, the Purchaser, and the Selling
Stockholder shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Company, the Purchaser or the Selling Stockholder and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Company, the Purchaser and the Selling Stockholder agree that it
would not be just and equitable if contribution pursuant to this Section 9 were
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to above in this
Section 9. The aggregate amount of losses, liabilities, claims, damages and
expenses incurred by an indemnified party and referred to above in this Section
9 shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the ▇▇▇▇ ▇▇▇) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 9, each person, if any, who controls the
Purchaser or Selling Stockholder within the meaning of Section 15 of the 1933
Act or Section 20 of the 1934 Act shall have the same rights to contribution as
the Purchaser or the Selling Stockholder, respectively, and each director of the
Company, each officer of the Company who signed the Registration Statement, and
each person, if any, who controls the Company within the meaning of section 15
of the 1933 Act or Section 20 of the 1934 Act shall have the same rights to
contribution as the Company.
10. Notices. All notices hereunder shall be in writing and delivered by
hand, overnight courier, mail or facsimile, and (i) if to the Purchaser, shall
be sufficient in all respects if delivered to Warburg Dillon Read LLC, ▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Equity Risk
Management Department, Facsimile No. 203-719-7031, with a copy at that same
address to the attention of Legal & External Affairs, Facsimile No.
▇▇▇-▇▇▇-▇▇▇▇, (ii) if to the Selling
24
Stockholder, shall be sufficient in all respects if delivered to UBS AG, London
Branch, c/o Warburg Dillon Read LLC, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Equity Risk Management Department, Facsimile No.
203-719-7031, with a copy at that same address to the attention of Legal &
External Affairs, Facsimile No. ▇▇▇-▇▇▇-▇▇▇▇, and (iii) if to the Company, shall
be sufficient in all respects if delivered or sent to the Company at the offices
of the Company at ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇ ▇. ▇▇▇▇, Executive Vice President, General Counsel and
Secretary, Facsimile No. ▇▇▇-▇▇▇-▇▇▇▇.
11. Governing Law; Construction. This Agreement and any claim,
counterclaim or dispute of any kind or nature whatsoever arising out of or in
any way relating to this Agreement ("Claim"), directly or indirectly, shall be
governed by, and construed in accordance with, the laws of the State of New
York, other than rules governing choice of applicable law. The Section headings
in this Agreement have been inserted as a matter of convenience of reference and
are not a part of this Agreement.
12. Parties in Interest. The Agreement herein set forth has been and is
made solely for the benefit of the Purchaser, the Selling Stockholder and the
Company and to the extent provided in Section 8 and Section 9 hereof the
controlling persons, directors and officers referred to in such sections, and
their respective successors, assigns, heirs, personal representatives and
executors and administrators. No other person, partnership, association or
corporation (including a purchaser, as such purchaser, from the Selling
Stockholder or the Purchaser (other than the Selling Stockholder)) shall acquire
or have any right under or by virtue of this Agreement.
13. Counterparts. This Agreement may be signed by the parties in one or
more counterparts, which together shall constitute one and the same agreement
among the parties.
14. Successors and Assigns. This Agreement shall be binding upon the
Purchaser, the Selling Stockholder and the Company and their successors and
assigns and any successor or assign of any substantial portion of the Company's,
the Purchaser's and the Selling Stockholder's respective businesses and/or
assets.
15. Relationship between the Purchaser and the Selling Stockholder.
Warburg Dillon Read LLC, an indirect, wholly owned subsidiary of UBS AG, is not
a bank and is separate from any affiliated bank, including the London Branch of
UBS AG or any U.S. branch or agency of UBS AG. Because Warburg Dillon Read LLC
is a separately incorporated entity, it is solely responsible for its own
contractual obligations and commitments, including obligations with respect to
sales and purchases of securities. Purchased Shares offered and sold by the
Purchaser, as agent for the Selling Stockholder, are not deposits, are not
insured by the Federal Deposit Insurance Corporation, are not guaranteed by the
Selling Stockholder or any other branch or agency of UBS AG, and are not
otherwise an obligation or responsibility of a branch or agency of UBS AG.
25
If the foregoing correctly sets forth the understanding among the
Company, the Purchaser and the Selling Stockholder, please so indicate in the
space provided below for the purpose, whereupon this letter and your acceptance
shall constitute a binding agreement between the Company, the Purchaser and the
Selling Stockholder.
Very truly yours,
CONSECO, INC.
By: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Executive Vice President
and Chief Financial Officer
Accepted and agreed to as of the
date first above written:
WARBURG DILLON READ LLC
By: /S/ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Managing Director
By: /S/ ▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Director
UBS AG, LONDON BRANCH
By: /S/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Associate Director
By: /S/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ SOTGUI
----------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Sotgui
Title: Associate Director
26
SCHEDULE A
Significant Subsidiaries of
Conseco, Inc.
CIHC, Incorporated
Jefferson National Life Insurance Company of Texas
Bankers Life and Casualty Company
Conseco Senior Health Insurance Company
Conseco Annuity Assurance Company
Conseco Life Insurance Company
Pioneer Financial Services, Inc.
Pioneer Life Insurance Company
Capitol American Financial Corporation
Conseco Health Insurance Company
Green Tree Financial Corporation
27
Exhibit A
Form of Accountant's Letter
pursuant to Section 4(f)
The comfort letter shall have been prepared in accordance with
Statement on Auditing Standards No. 72 and shall be to the effect that:
(i) the accountants furnishing such letter are independent
certified public accountants with respect to the Company within the
meaning of the 1933 Act and the 1933 Act Regulations;
(ii) in their opinion, the audited consolidated financial
statements and financial statement schedules included or incorporated
by reference in the Registration Statement and the Prospectus comply as
to form in all material respects with the applicable accounting
requirements of the 1933 Act and the 1933 Act Regulations and the 1934
Act and the 1934 Act Regulations;
(iii) on the basis of (A) the performance of procedures
specified by the American Institute of Public Accountants for a review
of interim financial information as described in Statement on Auditing
Standards No. 71, Interim Financial Information, on the unaudited
consolidated financial statements of the Company and its subsidiaries
included in the Company's quarterly reports on Form 10-Q as of dates
subsequent to the date of the most recent audited consolidated
financial statements incorporated by reference in the Registration
Statement and Prospectus, (B) a reading of the latest available
unaudited financial statements of the Company, (C) a reading of the
minutes of the meetings of the stockholders, board of directors and
appropriate committees of the Company and its subsidiaries, and (D)
inquiries of certain officials of the Company who have responsibility
for financial and accounting matters of the Company and its
subsidiaries (it being understood that the foregoing procedures do not
constitute an audit made in accordance with generally applicable
accounting principles and would not necessarily reveal matters of
significance with respect to the comments made in such letter), nothing
came to their attention which caused them to believe that:
(1) any material modifications should be made to the
unaudited consolidated financial statements included in the
Form 10-Qs and incorporated by reference in the Registration
Statement and the Prospectus for them to be in conformity with
generally accepted accounting principles, or
(2) the unaudited consolidated financial statements
included in the Form 10-Qs and incorporated by reference in
the Registration Statement and the Prospectus do not comply as
to form in all material respects with the applicable
accounting requirements of the 1934 Act and the 1934 Act
Regulations, as they apply to Form 10-Q; or
(3) as of the date of the latest available unaudited
financial statements and as of a specified date not more than
five business days prior to the date of the
28
letter, there were any increases in the consolidated long-term
debt of the Company or decreases in consolidated assets or
stockholders' equity of the Company, in each case as compared
with the amounts shown in the most recent consolidated balance
sheet of the Company incorporated by reference in the
Registration Statement and the Prospectus, or for the period
from the date of such balance sheet to the date of the most
recent available financial statements and such specified date,
there were any decreases, as compared with the corresponding
periods in the preceding year, in consolidated revenues
excluding realized gains, net income, earnings applicable to
common stock or net income per diluted common share, except in
all instances for changes, increases or decreases that the
Registration Statement and Prospectus disclose have occurred
or may occur or (solely in the case of the letter delivered at
the Closing) except for such exceptions enumerated in such
letter as shall have been agreed to by the Purchaser and the
Company.
(iv) In the event that pro forma financial statements are
included or incorporated by reference in the Registration Statement and
the Prospectus, on the basis of (A) a reading of the pro forma
financial statements, (B) the performance of procedures specified by
the American Institute of Public Accountants for a review of interim
financial information as described in Statement on Auditing Standards
No. 71, Interim Financial Information, on the financial statements to
which the pro forma adjustments were applied, (C) inquiries of certain
officials of the Company and the acquired company who have
responsibility for financial and accounting matters, and (D) the
proving of the arithmetic accuracy of the application of the pro forma
adjustments to the historical amounts in the pro forma financial
statements, nothing came to their attention that led them to believe
that the pro forma financial statements included or incorporated by
reference in the Registration Statement and the Prospectus do not
comply in all material respects with the applicable requirements of
Rule 11-02 of Regulation S-X or that the pro forma adjustments have not
been properly applied to the historical amounts in the compilation of
those statements.
29
