As filed with the Securities and Exchange Commission on December 26, 1995
Registration No. 33-53095
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
Amendment No. 2 to
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
CONSECO, INC.
(Exact name of Registrant as specified in its charter)
Indiana 35-1468632
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
11825 N. Pennsylvania Street
Carmel, IN 46032
(317) 817-6100
(Address, including zip code, and telephone number,
including area code, of Registrant's principal
executive offices)
Mr. Lawrence W. Inlow
11825 N. Pennsylvania Street
Carmel, IN 46032
(317) 817-6163
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Approximate date of commencement of proposed sale to the public: From
time to time after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. ___
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [x]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. ____
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. ____
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. ___
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
Amount to be Maximum Maximum Amount of
Title of Each Class of Registered (1) Offering Price Aggregate Registration
Securities to be Registered Per Unit(2) Offering Price Fee(3)(4)
--------------------------- ------------- ---------- -------------- ---------
<S> <C> <C> <C> <C>
Debt Securities
Preferred Stock
Depositary Shares
Common Stock $400,000,000 100% $400,000,000 $137,932
Warrants
</TABLE>
(1) Such amount in U.S. dollars or the equivalent thereof in foreign
currencies as shall result in an aggregate initial offering price for
all securities of $400,000,000. The Prospectus included herein covers
$400,000,000 of securities. In addition, this Registration Statement
relates to such presently indeterminate number of securities as may be
issuable from time to time upon conversion or exchange of the securities
being registered hereunder.
(2) Estimated solely for the purpose of calculating the registration fee and
exclusive of accrued interest and dividends, if any.
(3) The registration fee has been calculated in accordance with Rule 457(o)
under the Securities Act of 1933, as amended, and reflects the offering
price rather than the principal amount of any Debt Securities issued at
a discount or the liquidation value of any Preferred Stock.
(4) The Registrant paid $68,966 of this amount on April 11, 1994 upon the
initial filing of this Registration Statement in respect of
$200,000,000 of Debt Securities and paid an additional $34,483 upon the
filing of Amendment No. 1 when the aggregate amount registered was
increased to $300,000,000. Accordingly, the additional registration fee
payable in connection with this Amendment No. 2 is $34,483.
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
<PAGE>
SUBJECT TO COMPLETION, DATED DECEMBER 26, 1995
PROSPECTUS
Conseco, inc.
Debt Securities
Preferred Stock
Depositary Shares
Common Stock
Warrants
Conseco, Inc., an Indiana corporation ("Conseco" or the "Company"), may
offer and sell from time to time, in one or more series, (i) its debt
securities, consisting of debentures, notes and/or other evidences of
indebtedness representing unsecured obligations of Conseco (the "Debt
Securities"), (ii) shares of its preferred stock, no par value per share
("Preferred Stock"), which may be represented by depositary shares (the
"Depositary Shares") as described herein, (iii) shares of its common stock, no
par value per share ("Common Stock"), and (iv) warrants to purchase Debt
Securities, Preferred Stock, Common Stock or other securities or rights
("Warrants"). The Debt Securities, Preferred Stock, Depositary Shares, Common
Stock and Warrants are herein collectively referred to as the "Securities."
Certain specific terms of the particular Securities in respect of which
this Prospectus is being delivered will be set forth in an accompanying
supplement to this Prospectus (the "Prospectus Supplement"), which will
describe, without limitation and where applicable, the following: (i) in the
case of Debt Securities, the specific designation, aggregate principal amount,
ranking as senior or subordinated Debt Securities, denomination, maturity,
premium, if any, interest rate (which may be fixed or variable), time and method
of calculating interest, if any, place or places where principal of, premium, if
any, and interest, if any, on such Debt Securities will be payable, the
currencies or currency units in which principal of, premium, if any, and
interest, if any, on such Debt Securities will be payable, any terms of
redemption or conversion, any sinking fund provisions, the purchase price, any
listing on a securities exchange and other special terms; (ii) in the case of
Preferred Stock and Depositary Shares, the specific designation, stated value
and liquidation preference per share and number of shares offered, the purchase
price, dividend rate (which may be fixed or variable), method of calculating
payment of dividends, place or places where dividends on such Preferred Stock
will be payable, any terms of redemption, dates on which dividends shall be
payable and dates from which dividends shall accrue, any listing on a securities
exchange, voting and other rights, including conversion or exchange rights, if
any, and other special terms, including whether interests in the Preferred Stock
will be represented by Depositary Shares and, if so, the fraction of a share of
Preferred Stock represented by each Depositary Share; (iii) in the case of
Common Stock, the number of shares offered, the initial offering price, market
price and dividend information; and (iv) in the case of Warrants, the specific
designation, the number, purchase price, exercise price and other terms thereof,
any listing of the Warrants or the underlying Securities on a securities
exchange or any other terms in connection with the offering, sale and exercise
of the Warrants, as well as the terms on which and the Securities for which such
Warrants may be exercised.
The offering price to the public of the Securities will be limited to
U.S. $400,000,000 in the aggregate (or its equivalent (based on the applicable
exchange rate at the time of issue), if Securities are offered for consideration
denominated in one or more foreign currencies or currency units as shall be
designated by Conseco). The Debt Securities may be denominated in United States
dollars or, at the option of Conseco if so specified in the applicable
Prospectus Supplement, in one or more foreign currencies or currency units. The
Debt Securities may be issued in registered form or bearer form, or both. If so
specified in the applicable Prospectus Supplement, Debt Securities of a series
may be issued in whole or in part in the form of one or more temporary or
permanent global securities.
<PAGE>
The Securities may be sold to or through underwriters, through dealers
or agents or directly to purchasers. See "Plan of Distribution." The names of
any underwriters, dealers or agents involved in the sale of the Securities in
respect of which this Prospectus is being delivered and any applicable fee,
commission or discount arrangements with them will be set forth in a Prospectus
Supplement. See "Plan of Distribution" for possible indemnification arrangements
for dealers, underwriters and agents.
This Prospectus may not be used to consummate sales of Securities
unless accompanied by a Prospectus Supplement.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is , 1995.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>2
AVAILABLE INFORMATION
Conseco is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by Conseco with the Commission can be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at
the following regional offices of the Commission: New York Regional Office, 7
World Trade Center, 13th Floor, New York, New York 10048; and Chicago Regional
Office, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of
such material can be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, upon payment of
the prescribed rates. Copies of such reports, proxy statements and other
information can also be inspected at the offices of the New York Stock Exchange,
20 Broad Street, New York, New York 10005.
Conseco has filed with the Commission a Registration Statement under
the Securities Act of 1933, as amended (the "Securities Act"), with respect to
the Securities offered hereby. This Prospectus, which constitutes part of the
Registration Statement, does not contain all of the information set forth in the
Registration Statement and the exhibits thereto, certain parts of which are
omitted in accordance with the rules and regulations of the Commission.
Statements contained herein concerning the provisions of any document do not
purport to be complete and, in each instance, are qualified in all respects by
reference to the copy of such document filed as an exhibit to the Registration
Statement or otherwise filed with the Commission. For further information with
respect to Conseco and the Securities, reference is hereby made to such
Registration Statement, including the exhibits thereto and the documents
incorporated herein by reference, which can be examined at the Commission's
principal office, 450 Fifth Street, N.W., Washington, D.C. 20549, or copies of
which can be obtained from the Commission at such office upon payment of the
fees prescribed by the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by Conseco with the Commission pursuant
to the Exchange Act are incorporated herein by reference: (i) Annual Report on
Form 10-K for the year ended December 31, 1994, (ii) Quarterly Reports on Form
10-Q for the quarterly periods ended March 31, 1995, June 30, 1995 and September
30, 1995 and (iii) Current Reports on Form 8-K dated December 23, 1994 and
August 31, 1995, as amended. All documents filed by Conseco pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus
and prior to the termination of the offering made hereby shall be deemed to be
incorporated by reference in this Prospectus and to be part hereof from the date
of filing of such documents.
Any statement contained herein, or in a document incorporated or deemed
to be incorporated by reference herein, shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus. To
the extent that any proxy statement is incorporated by reference herein, such
incorporation shall not include any information contained in such proxy
statement that is not, pursuant to the Commission's rules, deemed to be "filed"
with the Commission or subject to the liabilities of Section 18 of the Exchange
Act.
Conseco will provide without charge to each person to whom this
Prospectus is delivered, upon the written or oral request of such person, a copy
of any or all of the documents incorporated herein by reference (other than
exhibits to such documents unless such exhibits are specifically incorporated by
reference into such documents). Any such request should be directed to James W.
Rosensteele, Vice President, Investor Relations, Conseco, Inc., 11825 N.
Pennsylvania Street, Carmel, Indiana 46032 (telephone number: (317) 817-2893).
<PAGE>3
FOR NORTH CAROLINA RESIDENTS:
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE COMMISSIONER OF
INSURANCE FOR THE STATE OF NORTH CAROLINA, NOR HAS THE COMMISSIONER OF INSURANCE
RULED UPON THE ACCURACY OR THE ADEQUACY OF THIS DOCUMENT.
State insurance holding company laws and regulations applicable to the
Company generally provide that no person may acquire control of the Company, and
thus indirect control of its insurance subsidiaries, unless such person has
provided certain required information to, and such acquisition is approved (or
not disapproved) by, the appropriate insurance regulatory authorities.
Generally, any person acquiring beneficial ownership of 10% or more of the
Common Stock would be presumed to have acquired such control, unless the
appropriate insurance regulatory authorities upon advance application determine
otherwise.
No dealer, salesman or other individual has been authorized to give any
information or to make any representations not contained in this Prospectus in
connection with the offering covered by this Prospectus. If given or made, such
information or representations must not be relied upon as having been authorized
by the Company or any underwriter, dealer or agent. This Prospectus does not
constitute an offer to sell, or a solicitation of an offer to buy, any
securities other than the registered securities to which it relates, or an offer
to sell or a solicitation of an offer to buy those securities to which it
relates, in any jurisdiction where, or to any person to whom, it is unlawful to
make such offer or solicitation. Neither the delivery of this Prospectus nor any
sale made hereunder shall, under any circumstances, create any implication that
there has not been any change in the facts set forth in this Prospectus or in
the affairs of the Company since the date hereof.
THE COMPANY
Conseco is a financial services holding company. Conseco: (i) owns and
operates life insurance companies; (ii) provides investment management,
administrative and other services to affiliates and non-affiliates for fees; and
(iii) acquires and restructures life insurance companies in partnership with
other investors. Conseco's operating strategy for acquired businesses is to
consolidate and streamline management and administrative functions, to realize
superior investment returns through active asset management, to eliminate
unprofitable products and distribution channels and to focus resources on the
development and expansion of profitable products and strong distribution
channels. The companies Conseco targets for acquisition have profitable niche
products, strong distribution systems and progressive management teams who can
work with Conseco to implement Conseco's operating and growth strategies. The
insurance companies in which Conseco has made investments develop, market, issue
and administer primarily annuity, individual health insurance and life insurance
products.
The Company's principal executive offices are located at 11825 N.
Pennsylvania Street, Carmel, Indiana 46032. Its telephone number is
(317) 817-6100.
USE OF PROCEEDS
Unless otherwise specified in the applicable Prospectus Supplement, the
net proceeds from the sale of any Securities are expected to be used by Conseco
for general corporate purposes. Any specific allocation of the proceeds to a
particular purpose that has been made at the date of any Prospectus Supplement
will be described therein.
<PAGE>4
RATIO OF EARNINGS TO FIXED CHARGES AND EARNINGS TO FIXED
CHARGES AND PREFERRED STOCK DIVIDENDS
The following table sets forth Conseco's ratios of earnings to fixed
charges and earnings to fixed charges and preferred stock dividends for each of
the five years ended December 31, 1994, and for the nine-month periods ended
September 30, 1994 and 1995:
<TABLE>
<CAPTION>
Year Ended December 31, September 30,
---------------------------------------- ----------------
1990 1991 1992 1993 1994 1994 1995
---- ---- ---- ----- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to fixed charges (1)...... 1.17X 1.32X 1.54X 2.19X 2.26X 3.18X 1.53X
Ratio of earnings to fixed charges,
excluding interest on annuities and
financial products (1) (2)................ 1.97X 3.41X 6.24X 8.85X 4.55X 5.54X 3.62X
Ratio of earnings to fixed charges and
preferred stock dividends................. 1.14X 1.30X 1.50X 2.04X 1.99X 2.64X 1.47X
Ratio of earnings to fixed charges and
preferred stock dividends, excluding interest
on annuities and financial
products (2).............................. 1.74X 2.99X 5.09X 6.00X 3.30X 3.89X 3.01X
</TABLE>
(1) Excludes preferred stock dividends.
(2) Excludes interest credited to annuity and financial products of $314.7
million, $576.7 million, $506.8 million, $408.5 million and $134.7
million for the years ended December 31, 1990, 1991, 1992, 1993 and
1994, respectively, and $51.9 million and $432.8 million for the nine
months ended September 30, 1994 and 1995, respectively.
<PAGE>5
DESCRIPTION OF DEBT SECURITIES
The Debt Securities offered hereby, consisting of notes, debentures and
other evidences of indebtedness, are to be issued in one or more series
constituting either senior Debt Securities ("Senior Debt Securities") or
subordinated Debt Securities ("Subordinated Debt Securities"). The Debt
Securities will be issued pursuant to indentures described below (as applicable,
the "Senior Indenture" or the "Subordinated Indenture", each, an "Indenture"
and, together, the "Indentures"), in each case between Conseco and the trustee
identified therein (the "Trustee"), copies of which will be filed as exhibits to
the Registration Statement of which this Prospectus forms a part. Except for the
subordination provisions of the Subordinated Indenture, for which there are no
counterparts in the Senior Indenture, the provisions of the Subordinated
Indenture are substantially identical in substance to the provisions of the
Senior Indenture that bear the same section numbers.
The statements herein relating to the Debt Securities and the following
summaries of certain general provisions of the Indentures do not purport to be
complete and are subject to, and are qualified in their entirety by reference
to, all the provisions of the Indentures (as they may be amended or supplemented
from time to time), including the definitions therein of certain terms
capitalized in this Prospectus. All article and section references appearing
herein are to articles and sections of the applicable Indenture and whenever
particular Sections or defined terms of the Indentures (as they may be amended
or supplemented from time to time) are referred to herein or in a Prospectus
Supplement, such Sections or defined terms are incorporated herein or therein by
reference.
General
The Debt Securities will be unsecured obligations of Conseco. The
Indentures do not limit the aggregate amount of Debt Securities which may be
issued thereunder, nor do they limit the incurrence or issuance of other secured
or unsecured debt of Conseco. The Debt Securities issued under the Senior
Indenture will be unsecured and will rank pari passu with all other unsecured
and unsubordinated obligations of Conseco. The Debt Securities issued under the
Subordinated Indenture will be subordinate and junior in right of payment, to
the extent and in the manner set forth in the Subordinated Indenture, to all
Senior Indebtedness of Conseco. See "- Subordination under the Subordinated
Indenture."
Reference is made to the applicable Prospectus Supplement which will
accompany this Prospectus for a description of the specific series of Debt
Securities being offered thereby, including: (1) the title, designation and
purchase price, of such Debt Securities; (2) any limit upon the aggregate
principal amount of such Debt Securities; (3) the date or dates on which the
principal of and premium, if any, on such Debt Securities will mature or the
method of determining such date or dates; (4) the rate or rates (which may be
fixed or variable) at which such Debt Securities will bear interest, if any, or
the method of calculating such rate or rates; (5) the date or dates from which
interest, if any, will accrue or the method by which such date or dates will be
determined; (6) the date or dates on which interest, if any, will be payable and
the record date or dates therefor; (7) the place or places where principal of,
premium, if any, and interest, if any, on such Debt Securities will be payable;
(8) the period or periods within which, the price or prices at which, the
currency or currencies (including currency unit or units) in which, and the
terms and conditions upon which, such Debt Securities may be redeemed, in whole
or in part, at the option of Conseco; (9) the obligation, if any, of Conseco to
redeem or purchase such Debt Securities pursuant to any sinking fund or
analogous provisions or upon the happening of a specified event and the period
or periods within which, the price or prices at which and the other terms and
conditions upon which, such Debt Securities shall be redeemed or purchased, in
whole or in part, pursuant to such obligations; (10) the denominations in which
such Debt Securities are authorized to be issued; (11) the currency or currency
unit for which Debt Securities may be purchased or in which Debt Securities may
be denominated and/or the currency or currencies (including currency unit or
units) in which principal of, premium, if any, and interest, if any, on such
Debt Securities will be payable and whether Conseco or the holders of any such
Debt Securities may elect to receive payments in respect of such Debt Securities
in a currency or currency unit
<PAGE>6
other than that in which such Debt Securities are stated to be payable; (12) if
other than the principal amount thereof, the portion of the principal amount of
such Debt Securities which will be payable upon declaration of the acceleration
of the maturity thereof or the method by which such portion shall be determined;
(13) the person to whom any interest on any such Debt Security shall be payable
if other than the person in whose name such Debt Security is registered on the
applicable record date; (14) any addition to, or modification or deletion of,
any Event of Default or any covenant of Conseco specified in the Indenture with
respect to such Debt Securities; (15) the application, if any, of such means of
defeasance or covenant defeasance as may be specified for such Debt Securities;
(16) whether such Debt Securities are to be issued in whole or in part in the
form of one or more temporary or permanent global securities and, if so, the
identity of the depositary for such global security or securities; (17) any
United States Federal income tax considerations applicable to holders of the
Debt Securities; and (18) any other special terms pertaining to such Debt
Securities. Unless otherwise specified in the applicable Prospectus Supplement,
the Debt Securities will not be listed on any securities exchange. (Section
3.1.)
Unless otherwise specified in the applicable Prospectus Supplement,
Debt Securities will be issued in fully-registered form without coupons. Where
Debt Securities of any series are issued in bearer form, the special
restrictions and considerations, including special offering restrictions and
special Federal income tax considerations, applicable to any such Debt
Securities and to payment on and transfer and exchange of such Debt Securities
will be described in the applicable Prospectus Supplement. Bearer Debt
Securities will be transferable by delivery. (Section 3.5.)
Debt Securities may be sold at a substantial discount below their
stated principal amount, bearing no interest or interest at a rate which at the
time of issuance is below market rates. Certain Federal income tax consequences
and special considerations applicable to any such Debt Securities, or to Debt
Securities issued at par that are treated as having been issued at a discount,
will be described in the applicable Prospectus Supplement.
If the purchase price of any of the Debt Securities is payable in one
or more foreign currencies or currency units or if any Debt Securities are
denominated in one or more foreign currencies or currency units or if the
principal of, premium, if any, or interest, if any, on any Debt Securities is
payable in one or more foreign currencies or currency units, or by reference to
commodity prices, equity indices or other factors, the restrictions, elections,
certain U.S. Federal income tax considerations, specific terms and other
information with respect to such issue of Debt Securities and such foreign
currency or currency units or commodity prices, equity indices or other factors
will be set forth in the applicable Prospectus Supplement. In general, holders
of such series of Debt Securities may receive a principal amount on any
principal payment date, or a payment of premium, if any, on any premium interest
payment date or a payment of interest on any interest payment date, that is
greater than or less than the amount of principal, premium, if any, or interest
otherwise payable on such dates, depending on the value on such dates of the
applicable currency, commodity, equity index or other factor.
Payment, Registration, Transfer and Exchange
Unless otherwise provided in the applicable Prospectus Supplement,
payments in respect of the Debt Securities will be made in the designated
currency at the office or agency of Conseco maintained for that purpose as
Conseco may designate from time to time, except that, at the option of Conseco,
interest payments, if any, on Debt Securities in registered form may be made (i)
by checks mailed to the holders of Debt Securities entitled thereto at their
registered addresses or (ii) by wire transfer to an account maintained by the
person entitled thereto as specified in the Register. (Sections 3.7(a) and 9.2.)
Unless otherwise indicated in the applicable Prospectus Supplement, payment of
any installment of interest on Debt Securities in registered form will be made
to the person in whose name such Debt Security is registered at the close of
business on the regular record date for such interest. (Section 3.7(a).)
<PAGE>7
Payment in respect of Debt Securities in bearer form will be made in
the currency and in the manner designated in the Prospectus Supplement, subject
to any applicable laws and regulations, at such paying agencies outside the
United States as Conseco may appoint from time to time. The paying agents
outside the United States initially appointed by Conseco for a series of Debt
Securities will be named in the Prospectus Supplement. Conseco may at any time
designate additional paying agents or rescind the designation of any paying
agents, except that, if Debt Securities of a series are issuable as Registered
Securities, Conseco will be required to maintain at least one paying agent in
each Place of Payment for such series and, if Debt Securities of a series are
issuable as Bearer Securities, Conseco will be required to maintain a paying
agent in a Place of Payment outside the United States where Debt Securities of
such series and any coupons appertaining thereto may be presented and
surrendered for payment. (Section 9.2.)
Unless otherwise provided in the applicable Prospectus Supplement, Debt
Securities in registered form will be transferable or exchangeable at the agency
of Conseco maintained for such purpose as designated by Conseco from time to
time. (Sections 3.5 and 9.2.) Debt Securities may be transferred or exchanged
without service charge, other than any tax or other governmental charge imposed
in connection therewith. (Section 3.5.)
Global Debt Securities
The Debt Securities of a series may be issued in whole or in part in
the form of one or more fully registered global securities (a "Registered Global
Security") that will be deposited with a depository (the "Depositary") or with a
nominee for the depositary identified in the applicable Prospectus Supplement.
In such a case, one or more Registered Global Securities will be issued in a
denomination or aggregate denominations equal to the portion of the aggregate
principal amount of outstanding Debt Securities of the series to be represented
by such Registered Global Security or Securities. (Section [3.3] of each
Indenture.) Unless and until it is exchanged in whole or in part for Debt
Securities in definitive certificated form, a Registered Global Security may not
be registered for transfer or exchange except as a whole by the depositary for
such Registered Global Security to a nominee of such Depositary or by a nominee
of such Depositary to such Depositary or another nominee of such Depositary or
by such Depositary or any such nominee to a successor Depositary for such series
or a nominee of such successor Depositary and except in the circumstances
described in the applicable Prospectus Supplement. (Section 3.5.)
The specific terms of the depository arrangement with respect to any
portion of a series of Debt Securities to be represented by a Registered Global
Security will be described in the applicable Prospectus Supplement. Conseco
expects that the following provisions will apply to such depository
arrangements.
Ownership of beneficial interests in a Registered Global Security will
be limited to participants or persons that may hold interests through
participants (as such term is defined below). Upon the issuance of any
Registered Global Security, and the deposit of such Registered Global Security
with or on behalf of the Depositary for such Registered Global Security, the
Depositary will credit, on its book-entry registration and transfer system, the
respective principal amounts of the Debt Securities represented by such
Registered Global Security to the accounts of institutions ("participants") that
have accounts with the Depositary or its nominee. The accounts to be credited
will be designated by the underwriters or agents engaging in the distribution of
such Debt Securities or by Conseco, if such Debt Securities are offered and sold
directly by Conseco. Ownership of beneficial interests by participants in such
Registered Global Security will be shown on, and the transfer of such beneficial
interests will be effected only through, records maintained by the Depositary
for such Registered Global Security or by its nominee. Ownership of beneficial
interests in such Registered Global Security by persons that hold through
participants will be shown on, and the transfer of such beneficial interests
within such participants will be effected only through, records maintained by
such participants. The laws of some jurisdictions require that certain
purchasers of securities take physical delivery of such securities in
certificated form. The foregoing limitations and such laws may impair the
ability to transfer beneficial interests in such Registered Global Security.
<PAGE>8
So long as the Depositary for a Registered Global Security, or its
nominee, is the registered owner of such Registered Global Security, such
Depositary or such nominee, as the case may be, will be considered the sole
owner or holder of the Debt Securities represented by such Registered Global
Security for all purposes under the applicable Indenture. Unless otherwise
specified in the applicable Prospectus Supplement and except as specified below,
owners of beneficial interests in such Registered Global Security will not be
entitled to have Debt Securities of the series represented by such Registered
Global Security registered in their names, will not receive or be entitled to
receive physical delivery of Debt Securities of such series in certificated form
and will not be considered the holders thereof for any purposes under the
relevant Indenture. (Section 3.8.) Accordingly, each person owning a beneficial
interest in such Registered Global Security must rely on the procedures of the
Depositary and, if such person is not a participant, on the procedures of the
participant through which such person owns its interest, to exercise any rights
of a holder under the relevant Indenture. The Depositary may grant proxies and
otherwise authorize participants to give or take any request, demand,
authorization, direction, notice, consent, waiver or other action which a holder
is entitled to give or take under the relevant Indenture. Conseco understands
that, under existing industry practices, if Conseco requests any action of
holders or if any owner of a beneficial interest in such Registered Global
Security desires to give any notice or take any action which a holder is
entitled to give or take under the relevant Indenture, the Depositary would
authorize the participants to give such notice or take such action, and such
participants would authorize beneficial owners owning through such participants
to give such notice or take such action or would otherwise act upon the
instructions of beneficial owners owning through them.
Unless otherwise specified in the applicable Prospectus Supplement,
payments with respect to principal, premium, if any, and interest, if any, on
Debt Securities represented by a Registered Global Security registered in the
name of a Depositary or its nominee will be made to such Depositary or its
nominee, as the case may be, as the registered owner of such Registered Global
Security.
Conseco expects that the Depositary for any Debt Securities represented
by a Registered Global Security, upon receipt of any payment of principal,
premium or interest, will immediately credit participants' accounts with
payments in amounts proportionate to their respective beneficial interests in
the principal amount of such Registered Global Security as shown on the records
of such Depositary. Conseco also expects that payments by participants to owners
of beneficial interests in such Registered Global Security held through such
participants will be governed by standing instructions and customary practices,
as is now the case with the securities held for the accounts of customers
registered in "street names," and will be the responsibility of such
participants. None of Conseco, the respective Trustees or any agent of Conseco
or the respective Trustees shall have any responsibility or liability for any
aspect of the records relating to or payments made on account of beneficial
interests of a Registered Global Security, or for maintaining, supervising or
reviewing any records relating to such beneficial interests. (Section 3.8.)
Unless otherwise specified in the applicable Prospectus Supplement, if
the Depositary for any Debt Securities represented by a Registered Global
Security is at any time unwilling or unable to continue as Depositary or ceases
to be a clearing agency registered under the Exchange Act and a duly registered
successor Depositary is not appointed by Conseco within 90 days, Conseco will
issue such Debt Securities in definitive certificated form in exchange for such
Registered Global Security. In addition, Conseco may at any time and in its sole
discretion determine not to have any of the Debt Securities of a series
represented by one or more Registered Global Securities and, in such event, will
issue Debt Securities of such series in definitive certificated form in exchange
for all of the Registered Global Security or Securities representing such Debt
Securities. (Section 3.5.)
The Debt Securities of a series may also be issued in whole or in part
in the form of one or more bearer global securities (a "Bearer Global Security")
that will be deposited with a depository, or with a nominee for such depository,
identified in the applicable Prospectus Supplement. Any such Bearer Global
Security may be issued in temporary or permanent form. (Section 3.4.) The
specific terms and procedures, including the specific terms of the depository
arrangement, with respect to any portion of a series of Debt
<PAGE>9
Securities to be represented by one or more Bearer Global Securities will be
described in the applicable Prospectus Supplement.
Consolidation, Merger or Sale by Conseco
Conseco shall not consolidate with or merge into any other corporation
or sell its assets substantially as an entirety, unless: (i) the corporation
formed by such consolidation or into which Conseco is merged or the corporation
which acquires its assets is organized in the United States; (ii) the
corporation formed by such consolidation or into which Conseco is merged
expressly assumes all of the obligations of Conseco under each Indenture; and
(iii) immediately after giving effect to such transaction, no Default or Event
of Default shall have happened and be continuing. Upon any such consolidation,
merger or sale, the successor corporation formed by such consolidation, or into
which Conseco is merged or to which such sale is made, shall succeed to, and be
substituted for Conseco under each Indenture. (Section 7.1.)
Events of Default, Notice and Certain Rights on Default
Each Indenture provides that, if an Event of Default specified therein
occurs with respect to the Debt Securities of any series and is continuing, the
Trustee for such series or the holders of 25% in aggregate principal amount of
all of the outstanding Debt Securities of that series, by written notice to
Conseco (and to the Trustee for such series, if notice is given by such holders
of Debt Securities), may declare the principal of (or, if the Debt Securities of
that series are Original Issue Discount Securities or Indexed Securities, such
portion of the principal amount specified in the Prospectus Supplement) and
accrued interest on all the Debt Securities of that series to be due and payable
(provided, with respect to any Debt Securities issued under the Subordinated
Indenture, that the payment of principal and interest on such Debt Securities
shall remain subordinated to the extent provided in Article 12 of the
Subordinated Indenture). (Section 5.2.)
Events of Default with respect to Debt Securities of any series are
defined in each Indenture as being: (a) default for 30 days in payment of any
interest on any Debt Security of that series or any coupon appertaining thereto
or any additional amount payable with respect to Debt Securities of such series
as specified in the applicable Prospectus Supplement when due; (b) default in
payment of principal, or premium, if any, at maturity or on redemption or
otherwise, or in the making of a mandatory sinking fund payment of any Debt
Securities of that series when due; (c) default for 60 days after notice to
Conseco by the Trustee for such series, or by the holders of 25% in aggregate
principal amount of the Debt Securities of such series then outstanding, in the
performance of any other agreement in the Debt Securities of that series, in the
Indenture or in any supplemental indenture or board resolution referred to
therein under which the Debt Securities of that series may have been issued; (d)
default resulting in acceleration of other indebtedness of Conseco for borrowed
money where the aggregate principal amount so accelerated exceeds $25 million
and such acceleration is not rescinded or annulled within 30 days after the
written notice thereof to Conseco by the Trustee or to Conseco and the Trustee
by the holders of 25% in aggregate principal amount of the Debt Securities of
such series then outstanding, provided that such Event of Default will be
remedied, cured or waived if the default that resulted in the acceleration of
such other indebtedness is remedied, cured or waived; and (e) certain events of
bankruptcy, insolvency or reorganization of Conseco. (Section 5.1.) Events of
Default with respect to a specified series of Debt Securities may be added to
the Indenture and, if so added, will be described in the applicable Prospectus
Supplement. (Sections 3.1 and 5.1(7).)
Each Indenture provides that the Trustee will, within 90 days after the
occurrence of a Default with respect to the Debt Securities of any series, give
to the holders of the Debt Securities of that series notice of all Defaults
known to it unless such Default shall have been cured or waived; provided that
except in the case of a Default in payment on the Debt Securities of that
series, the Trustee may withhold the notice if and so long as a committee of its
Responsible Officers in good faith determines that withholding such notice is in
the interests of the holders of the Debt Securities of that series. (Section
6.6.) "Default" means
<PAGE>10
any event which is, or after notice or passage of time or both, would be, an
Event of Default. (Section 1.1.)
Each Indenture provides that the holders of a majority in aggregate
principal amount of the Debt Securities of each series affected (with each such
series voting as a class) may, subject to certain limited conditions, direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee for such series, or exercising any trust or power conferred on such
Trustee. (Section 5.8.)
Each Indenture includes a covenant that Conseco will file annually with
the Trustee a certificate as to Conseco's compliance with all conditions and
covenants of such Indenture. (Section 9.5.)
The holders of a majority in aggregate principal amount of any series
of Debt Securities by notice to the Trustee for such series may waive, on behalf
of the holders of all Debt Securities of such series, any past Default or Event
of Default with respect to that series and its consequences except a Default or
Event of Default in the payment of the principal of, premium, if any, or
interest, if any, on any Debt Security, and except in respect of an Event of
Default resulting from the breach of a covenant or provision of either Indenture
which, pursuant to the applicable Indenture, cannot be amended or modified
without the consent of the holders of each outstanding Debt Security of such
series affected. (Section 5.7.)
Modification of the Indentures
Each Indenture contains provisions permitting Conseco and the Trustee
to enter into one or more supplemental indentures without the consent of the
holders of any of the Debt Securities in order (i) to evidence the succession of
another corporation to Conseco and the assumption of the covenants of Conseco by
a successor to Conseco; (ii) to add to the covenants of Conseco or surrender any
right or power of Conseco; (iii) to add additional Events of Default with
respect to any series of Debt Securities; (iv) to add or change any provisions
to such extent as necessary to permit or facilitate the issuance of Debt
Securities in bearer form; (v) to change or eliminate any provision affecting
only Debt Securities not yet issued; (vi) to secure the Debt Securities; (vii)
to establish the form or terms of Debt Securities; (viii) to evidence and
provide for successor Trustees; (ix) if allowed without penalty under applicable
laws and regulations, to permit payment in respect of Debt Securities in bearer
form in the United States; (x) to correct any defect or supplement any
inconsistent provisions or to make any other provisions with respect to matters
or questions arising under such Indenture, provided that such action does not
adversely affect the interests of any holder of Debt Securities of any series;
or (xi) to cure any ambiguity or correct any mistake. (Section 8.1.)
Each Indenture also contains provisions permitting Conseco and the
Trustee, with the consent of the holders of a majority in aggregate principal
amount of the outstanding Debt Securities affected by such supplemental
indenture (with the Debt Securities of each series voting as a class), to
execute supplemental indentures adding any provisions to or changing or
eliminating any of the provisions of such Indenture or any supplemental
indenture or modifying the rights of the holders of Debt Securities of such
series, except that, without the consent of the holder of each Debt Security so
affected, no such supplemental indenture may: (i) change the time for payment of
principal or premium, if any, or interest on any Debt Security; (ii) reduce the
principal of, or any installment of principal of, or premium, if any, or
interest on any Debt Security, or change the manner in which the amount of any
of the foregoing is determined; (iii) reduce the amount of premium, if any,
payable upon the redemption of any Debt Security; (iv) reduce the amount of
principal payable upon acceleration of the maturity of any Original Issue
Discount or Index Security; (v) change the currency or currency unit in which
any Debt Security or any premium or interest thereon is payable; (vi) impair the
right to institute suit for the enforcement of any payment on or with respect to
any Debt Security; (vii) reduce the percentage in principal amount of the
outstanding Debt Securities affected thereby the consent of whose holders is
required for modification or amendment of such Indenture or for waiver of
compliance with certain provisions of the Indenture or for waiver of certain
defaults; (viii) change the obligation of Conseco to maintain an office or
agency in the places and for the purposes specified in
<PAGE>11
such Indenture; (ix) modify the provisions relating to the subordination of
outstanding Debt Securities of any series in a manner adverse to the holders
thereof; or (x) modify the provisions relating to waiver of certain defaults or
any of the foregoing provisions. (Section 8.2.)
Subordination under the Subordinated Indenture
In the Subordinated Indenture, Conseco will covenant and agree that any
Subordinated Debt Securities issued thereunder are subordinate and junior in
right of payment to all Senior Indebtedness to the extent provided in the
Subordinated Indenture. (Section 12.1 of the Subordinated Indenture.) The
Subordinated Indenture defines the term "Senior Indebtedness" as the principal,
premium, if any, and interest on: (i) all indebtedness of Conseco, whether
outstanding on the date of the issuance of Subordinated Debt Securities or
thereafter created, incurred or assumed, which is for money borrowed, or
evidenced by a note or similar instrument given in connection with the
acquisition of any business, properties or assets, including securities; (ii)
any indebtedness of others of the kinds described in the preceding clause (i)
for the payment of which Conseco is responsible or liable as guarantor or
otherwise; and (iii) amendments, renewals, extensions and refundings of any such
indebtedness, unless in any instrument or instruments evidencing or securing
such indebtedness or pursuant to which the same is outstanding, or in any such
amendment, renewal, extension or refunding, it is expressly provided that such
indebtedness is not superior in right of payment to Subordinated Debt
Securities. The Senior Indebtedness shall continue to be Senior Indebtedness and
entitled to the benefits of the subordination provisions irrespective of any
amendment, modification or waiver of any term of the Senior Indebtedness or
extension or renewal of the Senior Indebtedness. (Section 12.2 of the
Subordinated Indenture.)
If (i) Conseco defaults in the payment of any principal, or premium, if
any, or interest on any Senior Indebtedness when the same becomes due and
payable, whether at maturity or at a date fixed for prepayment or declaration or
otherwise or (ii) an event of default occurs with respect to any Senior
Indebtedness permitting the holders thereof to accelerate the maturity thereof
and written notice of such event of default (requesting that payments on
Subordinated Debt Securities cease) is given to Conseco by the holders of Senior
Indebtedness, then unless and until such default in payment or event of default
shall have been cured or waived or shall have ceased to exist, no direct or
indirect payment (in cash, property or securities, by set-off or otherwise)
shall be made or agreed to be made on account of the Subordinated Debt
Securities or interest thereon or in respect of any repayment, redemption,
retirement, purchase or other acquisition of Subordinated Debt Securities.
(Section 12.4 of the Subordinated Indenture.)
In the event of (i) any insolvency, bankruptcy, receivership,
liquidation, reorganization, readjustment, composition or other similar
proceeding relating to Conseco, its creditors or its property, (ii) any
proceeding for the liquidation, dissolution or other winding-up of Conseco,
voluntary or involuntary, whether or not involving insolvency or bankruptcy
proceedings, (iii) any assignment by Conseco for the benefit of creditors or
(iv) any other marshalling of the assets of Conseco, all Senior Indebtedness
(including, without limitation, interest accruing after the commencement of any
such proceeding, assignment or marshalling of assets) shall first be paid in
full before any payment or distribution, whether in cash, securities or other
property, shall be made by Conseco on account of Subordinated Debt Securities.
In any such event, any payment or distribution, whether in cash, securities or
other property (other than securities of Conseco or any other corporation
provided for by a plan of reorganization or readjustment, the payment of which
is subordinate, at least to the extent provided in the subordination provisions
of the Subordinated Indenture with respect to the indebtedness evidenced by
Subordinated Debt Securities, to the payment of all Senior Indebtedness at the
time outstanding and to any securities issued in respect thereof under any such
plan of reorganization or readjustment), which would otherwise (but for the
subordination provisions) be payable or deliverable in respect of Subordinated
Debt Securities (including any such payment or distribution which may be payable
or deliverable by reason of the payment of any other indebtedness of Conseco
being subordinated to the payment of Subordinated Debt Securities) shall be paid
or delivered directly to the holders of Senior Indebtedness, or to their
representative or trustee, in accordance with the priorities then existing among
such holders until all Senior Indebtedness shall have
<PAGE>12
been paid in full. (Section 12.3 of the Subordinated Indenture.) No present or
future holder of any Senior Indebtedness shall be prejudiced in the right to
enforce subordination of the indebtedness evidenced by Subordinated Debt
Securities by any act or failure to act on the part of Conseco. (Section 12.9 of
the Subordinated Indenture.)
Senior Indebtedness shall not be deemed to have been paid in full
unless the holders thereof shall have received cash, securities or other
property equal to the amount of such Senior Indebtedness then outstanding. Upon
the payment in full of all Senior Indebtedness, the holders of Subordinated Debt
Securities shall be subrogated to all the rights of any holders of Senior
Indebtedness to receive any further payments or distributions applicable to the
Senior Indebtedness until all Subordinated Debt Securities shall have been paid
in full, and such payments or distributions received by any holder of
Subordinated Debt Securities, by reason of such subrogation, of cash, securities
or other property which otherwise would be paid or distributed to the holders of
Senior Indebtedness, shall, as between Conseco and its creditors other than the
holders of Senior Indebtedness, on the one hand, and the holders of Subordinated
Debt Securities, on the other, be deemed to be a payment by Conseco on account
of Senior Indebtedness, and not on account of Subordinated Debt Securities.
(Section 12.7 of the Subordinated Indenture.)
The Subordinated Indenture provides that the foregoing subordination
provisions, insofar as they relate to any particular issue of Subordinated Debt
Securities, may be changed prior to such issuance. Any such change would be
described in the applicable Prospectus Supplement relating to such Subordinated
Debt Securities.
Defeasance and Covenant Defeasance
If indicated in the applicable Prospectus Supplement, Conseco may elect
either (i) to defease and be discharged from any and all obligations with
respect to the Debt Securities of or within any series (except as otherwise
provided in the relevant Indenture) ("defeasance") or (ii) to be released from
its obligations with respect to certain covenants applicable to the Debt
Securities of or within any series ("covenant defeasance"), upon the deposit
with the relevant Trustee (or other qualifying trustee), in trust for such
purpose, of money and/or Government Obligations which through the payment of
principal and interest in accordance with their terms will provide money in an
amount sufficient, without reinvestment, to pay the principal of and any premium
or interest on such Debt Securities to Maturity or redemption, as the case may
be, and any mandatory sinking fund or analogous payments thereon. As a condition
to defeasance or covenant defeasance, Conseco must deliver to the Trustee an
Opinion of Counsel to the effect that the Holders of such Debt Securities will
not recognize income, gain or loss for Federal income tax purposes as a result
of such defeasance or covenant defeasance and will be subject to Federal income
tax on the same amounts and in the same manner and at the same times as would
have been the case if such defeasance or covenant defeasance had not occurred.
Such Opinion of Counsel, in the case of defeasance under clause (i) above, must
refer to and be based upon a ruling of the Internal Revenue Service or a change
in applicable Federal income tax law occurring after the date of the relevant
Indenture. (Article 4.) If indicated in the applicable Prospectus Supplement, in
addition to obligations of the United States or an agency or instrumentality
thereof, Government Obligations may include obligations of the government or an
agency or instrumentality of the government issuing the currency or currency
unit in which Debt Securities of such series are payable. (Section 3.1.)
In addition, with respect to the Subordinated Indenture, in order to be
discharged no event or condition shall exist that, pursuant to certain
provisions described under "- Subordination under the Subordinated Indenture"
above, would prevent Conseco from making payments of principal of (and premium,
if any) and interest on Subordinated Debt Securities at the date of the
irrevocable deposit referred to above. (Section 4.6(j) of the Subordinated
Indenture.)
Conseco may exercise its defeasance option with respect to such Debt
Securities notwithstanding its prior exercise of its covenant defeasance option.
If Conseco exercises its defeasance option, payment
<PAGE>13
of such Debt Securities may not be accelerated because of a Default or an Event
of Default. (Section 4.4.) If Conseco exercises its covenant defeasance option,
payment of such Debt Securities may not be accelerated by reason of a Default or
an Event of Default with respect to the covenants to which such covenant
defeasance is applicable. However, if such acceleration were to occur by reason
of another Event of Default, the realizable value at the acceleration date of
the money and Government Obligations in the defeasance trust could be less than
the principal and interest then due on such Debt Securities, in that the
required deposit in the defeasance trust is based upon scheduled cash flow
rather than market value, which will vary depending upon interest rates and
other factors.
The Trustees
is the Trustee under the Senior Indenture. is the Trustee under the
Subordinated Indenture. Conseco may also maintain banking and other commercial
relationships with each of the Trustees and their affiliates in the ordinary
course of business.
DESCRIPTION OF CAPITAL STOCK
At November 1, 1995, the authorized capital stock of Conseco was
520,000,000 shares, consisting of:
(a) 20,000,000 shares of Preferred Stock, of which 5,750,000
shares were designated as Series D Cumulative Convertible Preferred
Stock (the "Series D Preferred Stock"), of which 5,669,725 shares were
outstanding; and
(b) 500,000,000 shares of Common Stock, of which 20,237,224
shares were outstanding.
In general, the classes of authorized capital stock are afforded
preferences with respect to dividends and liquidation rights in the order listed
above. The Board of Directors of Conseco is empowered, without approval of the
shareholders, to cause the Preferred Stock to be issued in one or more series,
with the numbers of shares of each series and the rights, preferences and
limitations of each series to be determined by it including, without limitation,
the dividend rights, conversion rights, redemption rights and liquidation
preferences, if any, of any wholly unissued series of Preferred Stock (or of the
entire class of Preferred Stock if none of such shares have been issued), the
number of shares constituting each such series and the terms and conditions of
the issue thereof. The descriptions set forth below do not purport to be
complete and are qualified in their entirety by reference to the Amended and
Restated Articles of Incorporation of Conseco, as amended (the "Articles of
Incorporation").
The Prospectus Supplement relating to an offering of Common Stock will
describe terms relevant thereto, including the number of shares offered, the
initial offering price, market price and dividend information.
The applicable Prospectus Supplement will describe the following terms
of any Preferred Stock in respect of which this Prospectus is being delivered
(to the extent applicable to such Preferred Stock): (i) the specific
designation, number of shares, seniority and purchase price; (ii) any
liquidation preference per share; (iii) any date of maturity; (iv) any
redemption, repayment or sinking fund provisions; (v) any dividend rate or rates
and the dates on which any such dividends will be payable (or the method by
which such rates or dates will be determined); (vi) any voting rights; (vii) if
other than the currency of the United States of America, the currency or
currencies, including composite currencies, in which such Preferred Stock is
denominated and/or in which payments will or may be payable; (viii) the method
by which amounts in respect of such Preferred Stock may be calculated and any
commodities, currencies or indices, or value, rate or price, relevant to such
calculation; (ix) whether the Preferred Stock is convertible or exchangeable
<PAGE>14
and, if so, the securities or rights into which such Preferred Stock is
convertible or exchangeable (which may include other Preferred Stock, Debt
Securities, Common Stock or other securities or rights of the Company (including
rights to receive payment in cash or securities based on the value, rate or
price of one or more specified commodities, currencies or indices) or a
combination of the foregoing), and the terms and conditions upon which such
conversions or exchanges will be effected, including the initial conversion or
exchange prices or rates, the conversion or exchange period and any other
related provisions; (x) the place or places where dividends and other payments
on the Preferred Stock will be payable; and (xi) any additional voting,
dividend, liquidation, redemption and other rights, preferences, privileges,
limitations and restrictions.
As described under "Description of Depositary Shares", the Company may,
at its option, elect to offer depositary shares ("Depositary Shares") evidenced
by depositary receipts ("Depositary Receipts"), each representing an interest
(to be specified in the applicable Prospectus Supplement relating to the
particular series of the Preferred Stock) in a share of the particular series of
the Preferred Stock issued and deposited with a Preferred Stock Depositary (as
defined herein).
All shares of Preferred Stock offered hereby, or issuable upon
conversion, exchange or exercise of Securities, will, when issued, be fully paid
and non-assessable.
Common Stock
Dividends. Except as provided below, holders of Common Stock are
entitled to receive dividends and other distributions in cash, stock or property
of the Company, when, as and if declared by the Board of Directors out of assets
or funds of the Company legally available therefor and shall share equally on a
per share basis in all such dividends and other distributions (subject to the
rights of holders of Preferred Stock).
Voting Rights. At every meeting of shareholders, every holder of Common
Stock is entitled to one vote per share. Subject to any voting rights which may
be granted to holders of Preferred Stock any action submitted to shareholders is
approved if the number of votes cast in favor of such action exceeds the number
of votes against, except where other provision is made by law and subject to
applicable quorum requirements.
Liquidation Rights. In the event of any liquidation, dissolution or
winding-up of the business of the Company, whether voluntary or involuntary (any
such event, a "Liquidation"), the holders of Common Stock are entitled to share
equally in the assets available for distribution after payment of all
liabilities and provision for the liquidation preference of any shares of
Preferred Stock then outstanding.
Miscellaneous. The holders of Common Stock have no preemptive rights,
cumulative voting rights, subscription rights, or conversion rights and the
Common Stock is not subject to redemption.
The transfer agent and registrar with respect to the Common Stock is
First Union National Bank of North Carolina.
All shares of Common Stock offered hereby, or issuable upon conversion,
exchange or exercise of Securities, will, when issued, be fully paid and
non-assessable.
Series D Preferred Stock
Dividends. Subject to the rights of holders of other classes of stock
ranking on a parity with or senior to the Series D Preferred Stock which may
from time to time be issued by the Company, the holders of Series D Preferred
Stock are entitled to receive, when, as and if the Board of Directors declares a
dividend on the Series D Preferred Stock, out of assets legally available for
dividends, cumulative
<PAGE>15
preferential cash dividends from the issue date of the Series D Preferred Stock
(January 26, 1993), accruing at the rate per share of $3.25 per annum or $.8125
per quarter, payable quarterly in arrears on the 15th day of each January,
April, July and October or, if any such date is not a business day, on the next
succeeding business day.
Dividends on the Series D Preferred Stock accrue whether or not the
Company has earnings, whether or not there are funds legally available for the
payment of such dividends and whether or not such dividends are declared, and
will accumulate to the extent they are not paid on the dividend payment date for
the quarter for which they accrue. Accumulated unpaid dividends do not bear
interest.
Voting Rights. Except as indicated below, or except as expressly
required by applicable law, the holders of the Series D Preferred Stock have no
voting rights.
If the equivalent of six quarterly dividends payable on the Series D
Preferred Stock is in arrears, the number of directors of the Company will be
increased by two and the holders of Series D Preferred Stock, voting separately
as a class with the holders of shares of any one or more other series of
preferred stock ranking on a parity with the Series D Preferred Stock, whether
as to payment of dividends or the distribution of assets and upon which like
voting rights have been conferred and are exercisable, will be entitled to
elect, within 120 days, two directors for one-year terms to fill such vacancies,
either at the Company's next annual meeting of shareholders or at a special
meeting. Such right to elect two additional directors shall continue at each
subsequent annual meeting until all dividends in arrears have been paid or
declared and set apart for payment. Upon payment or declaration and reservation
of funds for payment of all such dividends in arrear, the term of office of each
such director so elected shall immediately terminate and the number of directors
constituting the entire Board of Directors of the Company shall be reduced by
the number of directors elected by the holders of the Series D Preferred Stock
and any other series of preferred stock ranking on a parity with the Series D
Preferred Stock as discussed above.
Unless the vote or consent of the holders of a greater number of shares
shall then be required by law, the affirmative vote or consent of the holders of
at least 662/3% of the outstanding shares of Series D Preferred Stock and any
one or more other series of preferred stock of the Company similarly affected,
voting separately as a single class, without regard to series, will be required
for any amendment, alteration or repeal of the Articles of Incorporation which
would adversely affect the preferences, rights, powers or privileges of the
Series D Preferred Stock and any such other series of the Company's preferred
stock. Unless the vote or consent of the holders of a greater number of shares
shall then be required by law, the affirmative vote or consent of the holders of
at least 662/3% of the outstanding shares of the Series D Preferred Stock and
any other series of preferred stock of the Company ranking on a parity with the
Series D Preferred Stock either as to dividends or upon distribution of assets,
voting as a single class, without regard to series, will be required to create,
authorize or issue, or reclassify any authorized stock of the Company into, or
create, authorize or issue any obligation or security convertible into or
evidencing a right to purchase, any shares of any class of stock of the Company
ranking prior to the Series D Preferred Stock or ranking prior to any other
series of Preferred Stock of the Company which ranks on a parity with the Series
D Preferred Stock as to dividends or upon a distribution of assets. The Articles
of Incorporation may be amended to increase the number of authorized shares of
preferred stock of the Company without the vote of the holders of the
outstanding preferred stock, including the Series D Preferred Stock.
Liquidation Rights. Subject to the rights of holders of other classes
of stock ranking on a parity with or senior to the Series D Preferred Stock, in
the event of any Liquidation, the holders of the Series D Preferred Stock, after
payment or provision for payment of the debts and other liabilities of the
Company, will be entitled to receive for each share of Series D Preferred Stock,
an amount equal to the sum of $50.00 and all accrued and unpaid dividends
thereon, and no more. If, upon any Liquidation, there are insufficient assets to
permit full payment of holders of Series D Preferred Stock and shares of any
other class of outstanding Preferred Stock, the holders of Series D Preferred
Stock and such other shares shall
<PAGE>16
be paid ratably in proportion to the full distributable amounts to which holders
of Series D Preferred Stock and such other shares are respectively entitled upon
Liquidation.
Redemption. The Series D Preferred Stock is not redeemable prior to
January 22, 1996. On and after such date, the Series D Preferred Stock is
redeemable in cash at the option of the Company, in whole or in part, from time
to time, at redemption prices declining to $50.00 per share on and after January
15, 2003, plus accrued and unpaid dividends to the date fixed for redemption.
The Series D Preferred Stock is not entitled to the benefits of any
sinking fund.
Certain Provisions of the Articles of Incorporation and By-laws of Conseco
Certain provisions of the Articles of Incorporation and the Code of
By-laws of Conseco (the "Bylaws") may make it more difficult to effect a change
in control of Conseco if the Board of Directors determines that such action
would not be in the best interests of the shareholders. It could be argued,
contrary to the belief of the Board of Directors, that such provisions are not
in the best interests of the shareholders to the extent that they will have the
effect of tending to discourage possible takeover bids, which might be at prices
involving a premium over then recent market quotations for the Common Stock.
The most important of those provisions are described below.
The Articles of Incorporation authorize the establishment of a
classified Board of Directors pursuant to the By-laws. The By-laws, in turn,
provide that the Directors serve staggered three-year terms, with the members of
only one class being elected in any year.
A classified Board of Directors may increase the difficulty of removing
incumbent directors, providing such directors with enhanced ability to retain
their positions. A classified Board of Directors may also make the acquisition
of control of Conseco by a third party by means of a proxy contest more
difficult. In addition, the classification may make it more difficult to replace
a majority of directors for business reasons unrelated to a change in control.
The Articles of Incorporation provide that holders of Conseco's voting
stock shall not be entitled to vote on certain business transactions (defined to
include, among other things, certain mergers, consolidations, sales, leases,
transfers or other dispositions of a substantial part of Conseco's assets) with
certain related persons (which includes persons beneficially owning more than
10% of Conseco's outstanding voting stock), nor may such business combination
transactions be effected, unless (i) the relevant business combination shall
have been approved by two-thirds of the continuing directors or (ii) the
aggregate amount of the cash and the fair value of any consideration other than
cash to be received by any holder of Conseco's Common Stock or Preferred Stock
in the business combination for each such share of Common Stock or Preferred
Stock shall be at least equal to the highest per share price paid by the related
person in order to acquire any shares of Common Stock or Preferred Stock, as the
case may be, beneficially owned by such related person.
As discussed above, Preferred Stock may be issued from time to time in
one or more series with such rights, preferences, limitations and restrictions
as may be determined by the Board of Directors. The issuance of Preferred Stock
could be used, under certain circumstances, as a method of delaying or
preventing a change of control of Conseco and could have a detrimental effect on
the rights of holders of Common Stock, including loss of voting control.
The provisions of the Articles of Incorporation regarding the
classified Board of Directors and certain business combination transactions may
not be amended without the affirmative approval of holders of not less than 80%
of the outstanding voting stock of Conseco.
The By-laws may be amended by majority vote of the Board of Directors.
<PAGE>17
Certain Provisions of Corporate and Insurance Laws
In addition to Conseco's Articles of Incorporation and By-laws, certain
provisions of Indiana law may delay, deter or prevent a merger, tender offer or
other takeover attempt of Conseco.
Under the Indiana Business Corporation Law (the "IBCL"), a director
may, in considering the best interests of a corporation, consider the effects of
any action on shareholders, employees, suppliers and customers of the
corporation, on communities in which offices or other facilities of the
corporation are located, and any other factors the director considers pertinent.
The IBCL provides that no business combination (defined to include
certain mergers, sales of assets, sales of 5% or more of outstanding stock,
loans, recapitalizations or liquidations or dissolutions) involving a
corporation and an interested shareholder (defined to include any holder of 10%
or more of such corporation's voting stock) may be entered into unless (1) it
has been approved by the board of directors of the corporation or (2) (a) five
years have expired since the acquisition of shares of the corporation by the
interested shareholder, (b) all requirements of the Articles of Incorporation
relating to business combinations have been satisfied and (c) either (i) a
majority of shareholders of the corporation (excluding the interested
shareholder) approve the business combination or (ii) all shareholders are paid
fair value (as defined in the statute) for their stock. However, such law does
not restrict any offer to purchase all of a corporation's shares.
The IBCL also provides that when a target corporation (such as
Conseco), incorporated in Indiana and having its principal place of business,
principal office or substantial assets in Indiana, has a certain threshold of
ownership by Indiana residents, any acquisition which, together with its
previous holdings, gives the acquiror at least 20% of the target's voting stock
triggers a shareholder approval mechanism. If the acquiror files a statutorily
required disclosure statement, the target's management has 50 days within which
to hold a special meeting of shareholders at which all disinterested
shareholders of the target (those not affiliated with the acquiror or any
officer or inside director of the target) consider and vote upon whether the
acquiror shall have voting rights with respect to the shares of the target held
by it. Without shareholder approval, the shares acquired by the acquiror have no
voting rights. If the acquiror fails to file the statutorily required disclosure
statement, the target can redeem the acquiror's shares at a price to be
determined according to procedures devised by the target. In order for these
provisions of the IBCL not to apply to a particular Indiana company, the company
must affirmatively so provide in its articles of incorporation or bylaws.
In addition, the insurance laws and regulations of the jurisdictions in
which Conseco's insurance subsidiaries do business may impede or delay a
business combination involving Conseco.
DESCRIPTION OF DEPOSITARY SHARES
The description set forth below of certain provisions of the Deposit
Agreement (as defined below) and of the Depositary Shares and Depositary
Receipts summarizes the material terms of the Deposit Agreement and of the
Depositary Shares and Depositary Receipts and is qualified in its entirety by
reference to the form of Deposit Agreement and form of Depositary Receipts
relating to each series of the Preferred Stock, as well as the Company's
Articles of Incorporation or any required amendment thereto describing the
applicable series of Preferred Stock.
General
The Company may, as its option, elect to have shares of Preferred Stock
be represented by Depositary Shares. The shares of any series of the Preferred
Stock underlying the Depositary Shares will be deposited under a separate
deposit agreement (the "Deposit Agreement") to be entered into by the
<PAGE>18
Company and a bank or trust company selected by the Company (the "Preferred
Stock Depositary") a form of which will be filed as an exhibit to a Current
Report on Form 8-K. The Prospectus Supplement relating to a series of
Depositary Shares will set forth the name and address of the Preferred Stock
Depositary. Subject to the terms of the Deposit Agreement, each owner of a
Depositary Share will be entitled, proportionately, to all the rights,
preferences and privileges of the Preferred Stock represented thereby (including
dividend, voting, redemption, conversion, exchange and liquidation rights).
The Depositary Shares will be evidenced by Depositary Receipts issued
pursuant to the Deposit Agreement, each of which will represent the fractional
interest in the number of shares of a particular series of the Preferred Stock
described in the applicable Prospectus Supplement.
Dividends and Other Distributions
The Preferred Stock Depositary will distribute all cash dividends or
other cash distributions in respect of the series of Preferred Stock represented
by the Depositary Shares to the record holders of Depositary Receipts in
proportion, insofar as possible, to the number of Depositary Shares owned by
such holders. The Depositary, however, will distribute only such amount as can
be distributed without attributing to any Depositary Share a fraction of one
cent, and any balance not so distributed will be added to and treated as part of
the next sum received by the Depositary for distribution to record holders of
Depositary Receipts then outstanding.
In the event of a distribution other than in cash in respect of the
Preferred Stock, the Preferred Stock Depositary will distribute property
received by it to the record holders of Depositary Receipts in proportion,
insofar as possible, to the number of Depositary Shares owned by such holders,
unless the Preferred Stock Depositary determines (after consultation with the
Company) that it is not feasible to make such distribution, in which case the
Preferred Stock Depositary may, with the approval of the Company, adopt such
method as it deems equitable and practicable for the purpose of effecting such
distribution, including a public or private sale, of such property, and
distribution of the net proceeds from such sale to such holders.
The amount so distributed to record holders of Depositary Receipts in
any of the foregoing cases will be reduced by any amount required to be withheld
by the Company or the Preferred Stock Depositary on account of taxes.
Conversion and Exchange
If any series of Preferred Stock underlying the Depositary Shares is
subject to provisions relating to its conversion or exchange, as set forth in
the applicable Prospectus Supplement relating thereto, each record holder of
Depositary Receipts will have the right or obligation to convert or exchange the
Depositary Shares represented by such Depositary Receipts pursuant to the terms
thereof.
Redemption of Depositary Shares
If any series of Preferred Stock underlying the Depositary Shares is
subject to redemption, the Depositary Shares will be redeemed from the proceeds
received by the Preferred Stock Depositary resulting from the redemption, in
whole or in part, of the Preferred Stock held by the Preferred Stock Depositary.
Whenever the Company redeems Preferred Stock from the Preferred Stock
Depositary, the Preferred Stock Depositary will redeem as of the same redemption
date a proportionate number of Depositary Shares representing the shares of
Preferred Stock that were redeemed. If less than all the Depositary Shares are
to be redeemed, the Depositary Shares to be redeemed will be selected by lot or
pro rata as may be determined by the Company.
<PAGE>19
After the date fixed for redemption, the Depositary Shares so called
for redemption will no longer be deemed to be outstanding and all rights of the
holders of the Depositary Shares will cease, except the right to receive the
redemption price upon such redemption. Any funds deposited by the Company with
the Preferred Stock Depositary for any Depositary Shares which the holders
thereof fail to redeem shall be returned to the Company after a period of two
years from the date such funds are so deposited.
Voting
Upon receipt of notice of any meeting at which the holders of any
shares of Preferred Stock underlying the Depositary Shares are entitled to vote,
the Preferred Stock Depositary will mail the information contained in such
notice to the record holders of the Depositary Receipts. Each record holder of
such Depositary Receipts on the record date (which will be the same date as the
record date for the Preferred Stock) will be entitled to instruct the Preferred
Stock Depositary as to the exercise of the voting rights pertaining to the
number of shares of Preferred Stock underlying such holder's Depositary Shares.
The Preferred Stock Depositary will endeavor, insofar as practicable, to vote
the number of shares of Preferred Stock underlying such Depositary Shares in
accordance with such instructions, and the Company will agree to take all
reasonable action which may be deemed necessary by the Preferred Stock
Depositary in order to enable the Preferred Stock Depositary to do so. The
Preferred Stock Depositary will abstain from voting any of the Preferred Stock
to the extent it does not receive specific written instructions from holders of
Depositary Receipts representing such Preferred Stock.
Record Date
Whenever (i) any cash dividend or other cash distribution shall become
payable, any distribution other than cash shall be made, or any rights,
preferences or privileges shall be offered with respect to the Preferred Stock,
or (ii) the Preferred Stock Depositary shall receive notice of any meeting at
which holders of Preferred Stock are entitled to vote or of which holders of
Preferred Stock are entitled to notice, or of the mandatory conversion of, or
any election on the part of the Company to call for the redemption of, any
Preferred Stock, the Preferred Stock Depositary shall in each such instance fix
a record date (which shall be the same as the record date for the Preferred
Stock) for the determination of the holders of Depositary Receipts (x) that
shall be entitled to receive such dividend, distribution, rights, preferences or
privileges or the net proceeds of the sale thereof or (y) that shall be entitled
to give instructions for the exercise of voting rights at any such meeting or to
receive notice of such meeting or of such redemption or conversion, subject to
the provisions of the Deposit Agreement.
Withdrawal of Preferred Stock
Upon surrender of Depositary Receipts at the principal office of the
Preferred Stock Depositary, upon payment of any unpaid amount due the Preferred
Stock Depositary, and subject to the terms of the Deposit Agreement, the owner
of the Depositary Shares evidenced thereby is entitled to delivery of the number
of whole shares of Preferred Stock and all money and other property, if any,
represented by such Depositary Shares. Partial shares of Preferred Stock will
not be issued. If the Depositary Receipts delivered by the holder evidence a
number of Depositary Shares in excess of the number of Depositary Shares
representing the number of whole shares of Preferred Stock to be withdrawn, the
Preferred Stock Depositary will deliver to such holder at the same time a new
Depositary Receipt evidencing such excess number of Depositary Shares. Holders
of Preferred Stock thus withdrawn will not thereafter be entitled to deposit
such shares under the Deposit Agreement or to receive Depositary Receipts
evidencing Depositary Shares therefor.
Amendment and Termination of the Deposit Agreement
The Deposit Agreement will provide that the form of Depositary Receipt
and any provision of the Deposit Agreement may at any time be amended by
agreement between the Company and the Preferred
<PAGE>20
Stock Depositary. However, any amendment which imposes or increases any fees,
taxes or other charges payable by the holders of Depositary Receipts (other than
taxes and other governmental charges, fees and other expenses payable by such
holders as stated under "Charges of Preferred Stock Depositary"), or which
otherwise prejudices any substantial existing right of holders of Depositary
Receipts, will not take effect as to outstanding Depositary Receipts until the
expiration of 90 days after notice of such amendment has been mailed to the
record holders of outstanding Depositary Receipts.
Whenever so directed by the Company, the Preferred Stock Depositary
will terminate the Deposit Agreement by mailing notice of such termination to
the record holders of all Depositary Receipts then outstanding at least 30 days
prior to the date fixed in such notice for such termination. The Preferred Stock
Depositary may likewise terminate the Deposit Agreement if at any time 45 days
shall have expired after the Preferred Stock Depositary shall have delivered to
the Company a written notice of its election to resign and a successor
depositary shall not have been appointed and accepted its appointment. If any
Depositary Receipts remain outstanding after the date of termination, the
Preferred Stock Depositary thereafter will discontinue the transfer of
Depositary Receipts, will suspend the distribution of dividends to the holders
thereof, and will not give any further notices (other than notice of such
termination) or perform any further acts under the Deposit Agreement except as
provided below and except that the Preferred Stock Depositary will continue (i)
to collect dividends on the Preferred Stock and any other distributions with
respect thereto and (ii) to deliver the Preferred Stock together with such
dividends and distributions and the net proceeds of any sales of rights,
preferences, privileges or other property, without liability for interest
thereon, in exchange for Depositary Receipts surrendered. At any time after the
expiration of two years from the date of termination, the Preferred Stock
Depositary may sell the Preferred Stock then held by it at public or private
sales, at such place or places and upon such terms as it deems proper, and may
thereafter hold the net proceeds of any such sale, together with any money and
other property then held by it, without liability for interest thereon, for the
pro rata benefit of the holders of Depositary Receipts which have not been
surrendered.
Charges of Preferred Stock Depositary
The Company will pay all charges of the Preferred Stock Depositary
including charges in connection with the initial deposit of the Preferred Stock,
the initial issuance of the Depositary Receipts, the distribution of information
to the holders of Depositary Receipts with respect to matters on which Preferred
Stock is entitled to vote, withdrawals of the Preferred Stock by the holders of
Depositary Receipts or redemption or conversion of the Preferred Stock, except
for taxes (including transfer taxes, if any) and other governmental charges and
such other charges as are expressly provided in the Deposit Agreement to be at
the expense of holders of Depositary Receipts or persons depositing Preferred
Stock.
Miscellaneous
The Preferred Stock Depositary will make available for inspection by
holders of Depositary Receipts, at its Corporate Office and its New York Office,
all reports and communications from the Company which are delivered to the
Preferred Stock Depositary as the holder of Preferred Stock.
Neither the Preferred Stock Depositary nor the Company will be liable
if it is prevented or delayed by law or any circumstance beyond its control in
performing its obligations under the Deposit Agreement. The obligations of the
Preferred Stock Depositary under the Deposit Agreement are limited to performing
its duties thereunder without negligence or bad faith. The obligations of the
Company under the Deposit Agreement are limited to performing its duties
thereunder in good faith. Neither the Company nor the Preferred Stock Depositary
is obligated to prosecute or defend any legal proceeding in respect of any
Depositary Shares or Preferred Stock unless satisfactory indemnity is furnished.
The Company and the Preferred Stock Depositary are entitled to rely upon advice
of or information from counsel, accountants or other persons believed to be
competent and on documents believed to be genuine.
<PAGE>21
The Preferred Stock Depositary may resign at any time or be removed by
the Company, effective upon the acceptance by its successor of its appointment;
provided, that if a successor Preferred Stock Depositary has not been appointed
or accepted such appointment within 45 days after the Preferred Stock Depositary
has delivered a notice of election to resign to the Company, the Preferred Stock
Depositary may terminate the Deposit Agreement. See "Amendment and Termination
of the Deposit Agreement" above.
DESCRIPTION OF WARRANTS
General
The Company may issue Warrants to purchase Securities, and such
Warrants may be issued independently or together with any Securities and may be
attached to or separate from such Securities. Each series of Warrants will be
issued under a separate warrant agreement (each a "Warrant Agreement") to be
entered into between the Company and a warrant agent ("Warrant Agent") a form
of which will be filed as an exhibit to a Current Report on Form 8-K. The
Warrant Agent will act solely as an agent of the Company in connection with the
Warrants of each such series and will not assume any obligation or relationship
of agency for or with holders or beneficial owners of Warrants. The following
sets forth certain general terms and provisions of the Warrants offered hereby.
Further terms of the Warrants and the applicable Warrant Agreement will be set
forth in the applicable Prospectus Supplement.
The applicable Prospectus Supplement will describe the terms of any
Warrants in respect of which this Prospectus is being delivered, including the
following: (i) the title of such Warrants; (ii) the aggregate number of such
Warrants; (iii) the price or prices at which such Warrants will be issued; (iv)
the currency or currencies, including composite currencies, in which the price
of such Warrants may be payable; (v) the designation and terms of the Securities
purchasable upon exercise of such Warrants; (vi) the price at which and the
currency or currencies, including composite currencies, in which the Securities
purchasable upon exercise of such Warrants may be purchased; (vii) the date on
which the right to exercise such Warrants shall commence and the date on which
such right shall expire; (viii) whether such Warrants will be issued in
registered form or bearer form; (ix) if applicable, the minimum or maximum
amount of such Warrants which may be exercised at any one time; (x) if
applicable, the designation and terms of the Securities with which such Warrants
are issued and the number of such Warrants issued with each such Security; (xi)
if applicable, the date on and after which such Warrants and the related
Securities will be separately transferable; (xii) information with respect to
book-entry procedures, if any; (xiii) if applicable, a discussion of certain
United States federal income tax considerations; and (xiv) any other terms of
such Warrants, including terms, procedures and limitations relating to the
exchange and exercise of such Warrants.
PLAN OF DISTRIBUTION
Conseco may sell any of the Securities being offered hereby in any one
or more of the following ways from time to time: (i) through agents; (ii) to or
through underwriters; (iii) through dealers; or (iv) directly to purchasers.
The distribution of the Securities may be effected from time to time in
one or more transactions at a fixed price or prices, which may be changed, at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices.
Offers to purchase Securities may be solicited by agents designated by
Conseco from time to time. Any such agent involved in the offer or sale of the
Securities in respect of which this Prospectus is delivered will be named, and
any commissions payable by Conseco to such agent will be set forth, in the
applicable Prospectus Supplement. Unless otherwise indicated in such Prospectus
Supplement, any such agent will be acting on a reasonable best efforts basis for
the period of its appointment. Any such agent
<PAGE>22
may be deemed to be an underwriter, as that term is defined in the Securities
Act, of the Securities so offered and sold.
If Securities are sold by means of an underwritten offering, Conseco
will execute an underwriting agreement with an underwriter or underwriters at
the time an agreement for such sale is reached, and the names of the specific
managing underwriter or underwriters, as well as any other underwriters, and the
terms of the transaction, including commissions, discounts and any other
compensation of the underwriters and dealers, if any, will be set forth in the
Prospectus Supplement which will be used by the underwriters to make resales of
the Securities in respect of which this Prospectus is delivered to the public.
If underwriters are utilized in the sale of the Securities in respect of which
this Prospectus is delivered, the Securities will be acquired by the
underwriters for their own account and may be resold from time to time in one or
more transactions, including negotiated transactions, at fixed public offering
prices or at varying prices determined by the underwriter at the time of sale.
Securities may be offered to the public either through underwriting syndicates
represented by managing underwriters or directly by the managing underwriters.
If any underwriter or underwriters are utilized in the sale of the Securities,
unless otherwise indicated in the Prospectus Supplement, the underwriting
agreement will provide that the obligations of the underwriters are subject to
certain conditions precedent and that the underwriters with respect to a sale of
Securities will be obligated to purchase all such Securities of a series if any
are purchased.
If a dealer is utilized in the sales of the Securities in respect of
which this Prospectus is delivered, Conseco will sell such Securities to the
dealer as principal. The dealer may then resell such Securities to the public at
varying prices to be determined by such dealer at the time of resale. Any such
dealer may be deemed to be an underwriter, as such term is defined in the
Securities Act, of the Securities so offered and sold. The name of the dealer
and the terms of the transaction will be set forth in the Prospectus Supplement
relating thereto.
Offers to purchase Securities may be solicited directly by Conseco and
the sale thereof may be made by Conseco directly to institutional investors or
others, who may be deemed to be underwriters within the meaning of the
Securities Act with respect to any resale thereof. The terms of any such sales
will be described in the Prospectus Supplement relating thereto.
Agents, underwriters and dealers may be entitled under relevant
agreements to indemnification or contribution by Conseco against certain
liabilities, including liabilities under the Securities Act.
Agents, underwriters and dealers may be customers of, engage in
transactions with, or perform services for, Conseco and its subsidiaries in the
ordinary course of business.
Securities may also be offered and sold, if so indicated in the
applicable Prospectus Supplement, in connection with a remarketing upon their
purchase, in accordance with a redemption or repayment pursuant to their terms,
or otherwise, by one or more firms ("remarketing firms"), acting as principals
for their own accounts or as agents for Conseco. Any remarketing firm will be
identified and the terms of its agreement, if any, with its compensation will be
described in the applicable Prospectus Supplement. Remarketing firms may be
deemed to be underwriters, as such term is defined in the Securities Act, in
connection with the Securities remarketed thereby. Remarketing firms may be
entitled under agreements which may be entered into with Conseco to
indemnification or contribution by Conseco against certain civil liabilities,
including liabilities under the Securities Act, and may be customers of, engage
in transactions with or perform services for Conseco and its subsidiaries in the
ordinary course of business.
If so indicated in the applicable Prospectus Supplement, Conseco may
authorize agents, underwriters or dealers to solicit offers by certain types of
institutions to purchase Securities from Conseco at the public offering prices
set forth in the applicable Prospectus Supplement pursuant to delayed delivery
contracts ("Contracts") providing for payment and delivery on a specified date
or dates in the future. A
<PAGE>23
commission indicated in the applicable Prospectus Supplement will be paid to
underwriters, dealers and agents soliciting purchases of Securities pursuant to
Contracts accepted by Conseco.
LEGAL MATTERS
Unless otherwise indicated in the applicable Prospectus Supplement, the
legal validity of Securities will be passed upon for Conseco by Lawrence W.
Inlow, Executive Vice President, Secretary and General Counsel of Conseco. Mr.
Inlow is a full-time employee and an officer of Conseco and owns 245,876 shares
and holds options to purchase 762,000 shares of Conseco common stock.
EXPERTS
The consolidated financial statements and schedules of Conseco as of
December 31, 1994 and 1993, and for each of the three years in the period ended
December 31, 1994 incorporated by reference in this Prospectus, have been
audited by Coopers & Lybrand L.L.P., independent accountants, as set forth in
their reports thereon included therein and are incorporated herein by reference
in reliance upon such reports given upon the authority of such firm as experts
in accounting and auditing.
<PAGE>II-1
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The expenses in connection with the issuance and distribution of the
securities being registered, other than underwriting compensation, are:
<TABLE>
<CAPTION>
<S> <C>
SEC registration fee......................................... $ 103,449
NASD filing fee.............................................. *
Accounting fees and expenses................................. *
Blue sky fees and expenses................................... *
Legal fees and expenses...................................... *
Printing and engraving fees.................................. *
Rating agency fees........................................... *
Miscellaneous................................................ *
-------
TOTAL.............................................. $ *
=======
</TABLE>
* To be supplied by amendment.
All expenses except SEC registration fee are estimated.
Item 15. Indemnification of Directors and Officers.
The IBCL grants authorization to Indiana corporations to indemnify
officers and directors for their conduct if such conduct was in good faith and
was in the corporation's best interests or, in the case of directors, was not
opposed to such best interests, and permits the purchase of insurance in this
regard. In addition, the shareholders of a corporation may approve the inclusion
of other or additional indemnification provisions in the articles of
incorporation and by-laws.
The Code of By-laws of Conseco provides for the indemnification of any
person made a party to any action, suit or proceeding by reason of the fact that
he is a director, officer or employee of the Registrant, unless it is adjudged
in such action, suit or proceeding that such person is liable for negligence or
misconduct in the performance of his duties. Such indemnification shall be
against the reasonable expenses, including attorneys' fees, incurred by such
person in connection with the defense of such action, suit or proceeding. In
some circumstances, Conseco may reimburse any such person for the reasonable
costs of settlement of any such action, suit or proceeding if a majority of the
members of the Board of Directors not involved in the controversy shall
determine that it was in the interests of Conseco that such settlement be made
and that such person was not guilty of negligence or misconduct.
Reference is made to the proposed forms of underwriting agreements to
be filed as Exhibits 1.1 and 1.2 hereto, pursuant to which the underwriters will
agree to indemnify Conseco's directors and officers who sign the Registration
Statement against certain liabilities which might arise under the Securities Act
from information furnished to Conseco by such underwriters.
<PAGE>II-2
Item 16. Exhibits.
1.1 Form of Underwriting Agreement - Debt Securities. ((i) An
Underwriting Agreement relating to Securities to be distributed
outside the United States or for Securities denominated in foreign
currencies or foreign currency units or (ii) any Selling Agency or
Distribution Agreement with any Agent will be filed as an exhibit to a
Current Report of Form 8-K and incorporated herein by reference.)
* 1.2 Form of Underwriting Agreement - Equity
3.1 Amended and Restated Articles of Incorporation of Conseco were filed
with the Commission as Exhibit 3.1 to the Registration Statement on
Form S-2, No. 33-8498; Articles of Amendment thereto, as filed
September 9, 1988 with the Indiana Secretary of State, were filed with
the Commission as Exhibit 3.1.1 to Conseco's Annual Report on Form
10-K for 1988; Articles of Amendment thereto, as filed June 13, 1989
with the Indiana Secretary of State, were filed with the Commission as
Exhibit 3.1.2 to Conseco's Report on Form 10-Q for the quarter ended
June 30, 1989; and Articles of Amendment thereto, as filed June 29,
1993 with the Indiana Secretary of State, were filed with the
Commission as Exhibit 3.1.3 to Conseco's Report on Form 10-Q for the
quarter ended June 30, 1993, and are incorporated herein by this
reference.
3.2 Amended and Restated By-Laws of Conseco effective February 10, 1986
were filed with the Commission as Exhibit 3.2 to its Registration
Statement on Form S-1, No. 33-4367, and an Amendment thereto was filed
with the Commission as Exhibit 3.2.1 to Amendment No. 2 to its
Registration Statement on Form S-1, No. 33-4367; and are incorporated
herein by this reference.
4.1 Form of Senior Indenture, dated as of -----, 1995, between Conseco
and ----------, as Trustee.
4.2 Form of Subordinated Indenture, dated as of -----, 1995, between
Conseco and ---------, as Trustee.
The form or forms of such Debt Securities with respect to each
particular offering will be filed as an exhibit to a Current Report on
Form 8-K and incorporated herein by reference.
4.3 Form of Deposit Agreement.
The form of such Deposit Agreement will be filed as an exhibit to a
Current Report on Form 8-K and incorporated herein by reference.
4.4 Form of Warrant Agreement.
The form of such Warrant Agreement will be filed as an exhibit to a
Current Report on Form 8-K and incorporated herein by reference.
Any amendment to the Company's Articles of Incorporation authorizing
the creation of any series of Preferred Stock or Depositary Shares
representing such shares of Preferred Stock and setting forth the
rights, preferences and designations thereof will be filed as an
exhibit to a Current Report on Form 8-K and incorporated herein by
reference.
* 5.1 Opinion of Lawrence W. Inlow, Executive Vice President, Secretary and
General Counsel of Conseco.
** 12.1 Computation of Ratio of Earnings to Fixed Charges and Preferred
Stock Dividends.
23.1 Consent of Coopers & Lybrand L.L.P.
* 23.2 Consent of Lawrence W. Inlow (included in Exhibit 5.1).
<PAGE>II-3
**24.1.2 Power of Attorney of Donald F. Gongaware.
**24.1.3 Powers of Attorney of Stephen C. Hilbert, Rollin M. Dick, Louis
P. Ferrero and Dennis E. Murray, Sr.
* 24.1.4 Power of Attorney of Ngaire E. Cuneo.
* 25.1 Form T-1, Statement of Eligibility and Qualification under the
Trust Indenture Act of 1939, of the Trustee under the Senior
Indenture.
* 25.2 Form T-1, Statement of Eligibility and Qualification under the
Trust Indenture Act of 1939, of the Trustee under the Subordinated
Indenture.
* To be supplied by amendment.
** Previously filed.
Item 17. Undertakings.
(a) Rule 415 Offering
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10
(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar
value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form
of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement;
(iii) To include any material information with
respect to the plan of distribution not previously disclosed
in the registration statement or any material change to such
information in the registration statement;
Provided, however, that paragraphs (a)(1)(i) and
(a)(1)(ii) do not apply if the information required to be
included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the Company pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in the registration
statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
<PAGE>II-4
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold
at the termination of the offering.
(b) Filings Incorporating Subsequent Exchange Act Documents by
Reference.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) Acceleration of Effectiveness
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
(d) Qualification of Trust Indenture Act of 1939 for Delayed Offerings
The undersigned registrant hereby undertakes to file an application for
the purpose of determining the eligibility of the trustee to act under
subsection (a) of section 310 of the Trust Indenture Act, as amended (the "Trust
Indenture Act"), in accordance with the rules and regulations prescribed by the
Commission under section 305(b)(2) of the Trust Indenture Act.
<PAGE>II-5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Conseco,
Inc. certifies that it has reasonable grounds to believe that it meets all of
the requirements for filing on Form S-3 and has duly caused this Amendment to
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Carmel, State of Indiana, on the 26th day of
December, 1995.
CONSECO, INC.
By:/s/ Lawrence W. Inlow
---------------------
Lawrence W. Inlow, Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to Registration Statement has been signed below by the following
persons in the capacities on December 26, 1995.
Signature Title (Capacity)
--------- ---------------
*
- ------------------ Chairman of the Board, President and Chief
Stephen C. Hilbert Executive Officer (Principal Executive
Officer)
*
- ------------------ Executive Vice President and Chief Financial Officer and
Rollin M. Dick Director (Principal Financial Officer and Principal
Accounting Officer)
- ------------------ Director
Ngaire E. Cuneo
- ------------------ Director
David R. Decatur
* Director
- ------------------
Louis P. Ferrero
* Director
- -------------------
Donald F. Gongaware
Director
- -------------------
M. Phil Hathaway
Director
- -------------------
James D. Massey
<PAGE>II-6
* Director
- ---------------------
Dennis E. Murray, Sr.
*By:/s/ Karl W. Kindig
------------------
Karl W. Kindig, Attorney-in-fact
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
------------------------------------
We consent to the incorporation by reference in this registration statement on
Form S-3 (Registration No. 33-53095) of our reports dated March 6, 1995 on our
audits of the consolidated financial statements and financial statement
schedules of Conseco, Inc. and subsidiaries as of December 31, 1994 and 1993 and
for the years ended December 31, 1994, 1993 and 1992. We also consent to the
reference to our firm under the caption "Experts."
COOPERS & LYBRAND L.L.P.
Indianapolis, Indiana
December 22, 1995
