SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (date of earliest event
reported):
January 17, 1996
CONSECO, INC.
State of Incorporation:
Indiana
Commission File Number IRS Employer Id. Number
No. 1-9250 No. 35-1468632
Address of Principal Executive Offices:
11825 North Pennsylvania Street
Carmel, Indiana 46032
Telephone No.
(317) 817-6100
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CONSECO, INC. AND SUBSIDIARIES
ITEM 5. OTHER EVENTS.
On January 18, 1996, Conseco, Inc. ("Conseco") announced the offering of
3.8 million shares of Preferred Redeemable Increased Dividend Equity Securities
("PRIDES") Convertible Preferred Stock at $61.125 per share. Conseco has granted
the underwriters an option to purchase up to an additional 570,000 shares of
PRIDES to cover over-allotments, if any.
Each share of PRIDES will pay dividends at the annual rate of 7 percent of
the stated $61.125 liquidation preference per share (equivalent to an annual
amount of $4.279 per share), payable quarterly commencing February 1, 1996. The
initial dividend of $.106975 per share for the period from January 23, 1996,
through January 31, 1996, will be payable to PRIDES holders of record at the
close of business on January 23, 1996. On February 1, 2000, unless either
previously redeemed by Conseco or converted at the option of the holder, each
share of PRIDES will mandatorily convert into one share of Conseco common stock,
subject to adjustment in certain events. Shares of PRIDES are not redeemable
prior to February 1, 1999. During the period February 1, 1999 through February
1, 2000, the Company may redeem any or all of the outstanding shares of PRIDES.
Upon such redemption, each holder will receive, in exchange for each share of
PRIDES, the number of shares of Conseco common stock equal to (A) the sum of (i)
$62.195, declining to $61.125 after February 1, 1999, and (ii) accrued and
unpaid dividends divided by (B) the market price of Conseco common stock at such
date, but in no event less than .855 of a share of Conseco common stock.
Proceeds from the offering of approximately $224.6 million (after
underwriting and other associated costs and assuming no exercise of the
over-allotment option) will be used to repay amounts outstanding under the
Credit Agreement entered into on August 31, 1995.
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CONSECO, INC. AND SUBSIDIARIES
ITEM 7(c). EXHIBITS.
1.1 Purchase Agreement and Pricing Agreement relating to Preferred
Redeemable Increased Dividend Equity Securities, 7% PRIDES,
Convertible Preferred Stock.
3.(i).3 Articles of Amendment to the Articles of Incorporation of
Conseco, Inc. relating to the PRIDES.
5.2 Opinion of Lawrence W. Inlow with respect to the PRIDES.
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CONSECO, INC. AND SUBSIDIARIES
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CONSECO, INC.
Date: January 19, 1996 By: /s/ ROLLIN M. DICK
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Rollin M. Dick
Executive Vice President
and Chief Financial Officer
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3,800,000 Shares
CONSECO, INC.
(an Indiana corporation)
Preferred Redeemable Increased Dividend Equity
Securities(SM), 7% PRIDES(SM), Convertible Preferred Stock
(Stated Liquidation Value $61.125 Per Share)
PURCHASE AGREEMENT
January 17, 1996
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
DEAN WITTER REYNOLDS INC.
SALOMON BROTHERS INC
As Representatives of the several Underwriters
c/o Merrill Lynch & Co.
5500 Sears Tower
Chicago, Illinois 60606
Dear Sirs:
Conseco, Inc., an Indiana corporation (the "Company"), confirms its
agreement with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("Merrill Lynch"), Dean Witter Reynolds Inc. ("Dean Witter") and
Salomon Brothers Inc, as representatives (in such capacity, collectively, the
"Representatives") of the several Underwriters named in Schedule A hereto
(collectively, the "Underwriters", which term shall also include any underwriter
substituted as hereinafter provided in Section 10), with respect to the sale by
the Company and the purchase by the Underwriters, acting severally and not
jointly, of the respective numbers of shares of Preferred Redeemable Increased
Dividend Equity Securities, 7% PRIDES, Convertible Preferred Stock, stated
liquidation value $61.125 per share (the "PRIDES"), set forth in Schedule A, and
with respect to the grant by the Company to the Underwriters, acting severally
and not jointly, of the option described in Section 2(b) hereof to purchase all
or any part of 570,000 additional shares of PRIDES to cover over-allotments, in
each case except as may otherwise be provided in the Pricing Agreement, as
hereinafter defined. The aforesaid 3,800,000 shares of PRIDES (the "Initial
Securities") to be purchased by the Underwriters and all or any part of the
570,000 shares of PRIDES
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subject to the over-allotment option described in
Section 2(b) hereof (the "Option Securities") are collectively referred to
herein as the "Securities".
Prior to the purchase and public offering of the Securities by the
several Underwriters, the Company and the Representatives, acting on behalf of
the several Underwriters, shall enter into an agreement substantially in the
form of Exhibit A hereto (the "Pricing Agreement"). The Pricing Agreement may
take the form of an exchange of any standard form of written telecommunication
between the Company and the Representatives and shall specify such applicable
information as is indicated in Exhibit A hereto. The offering of the Securities
will be governed by this Agreement, as supplemented by the Pricing Agreement.
From and after the date of the execution and delivery of the Pricing Agreement,
this Agreement shall be deemed to incorporate the Pricing Agreement.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 33-53095) and
pre-effective amendment nos. 1, 2, 3 and 4 thereto covering the registration of
the Securities under the Securities Act of 1933, as amended (the "1933 Act"),
including the related preliminary prospectus or prospectuses, and the offering
thereof from time to time in accordance with Rule 415 of the rules and
regulations of the Commission under the 1933 Act (the "1933 Act Regulations")
and the Company has filed such post-effective amendments thereto as may be
required prior to the execution of the Pricing Agreement. Such registration
statement, as so amended, has been declared effective by the Commission. Such
registration statement, as so amended, including the exhibits and schedules
thereto, if any, and the information, if any, deemed to be a part thereof
pursuant to Rule 430A(b) of the 1933 Act Regulations (the "Rule 430A
Information") or Rule 434(d) of the 1933 Act Regulations (the "Rule 434
Information"), is referred to herein as the "Registration Statement"; and the
final prospectus and the prospectus supplement relating to the offering of the
Securities, in the form first furnished to the Underwriters by the Company for
use in connection with the offering of the Securities, are collectively referred
to herein as the "Prospectus"; provided, however, that all references to the
"Registration Statement" and the "Prospectus" shall be deemed to include all
documents incorporated therein by reference pursuant to the Securities Exchange
Act of 1934, as amended (the "1934 Act"), prior to the execution of the
applicable Pricing Agreement; provided, further, that if the Company files a
registration statement with the Commission pursuant to Section 462(b) of the
1933 Act Regulations (the "Rule 462(b) Registration Statement"), then after such
filing, all references to "Registration Statement" shall be deemed to include
the Rule 462(b) Registration Statement; and provided,
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further, that if the Company elects to rely upon Rule 434 of the 1933 Act
Regulations, then all references to "Prospectus" shall be deemed to include the
final or preliminary prospectus and the applicable term sheet or abbreviated
term sheet (the "Term Sheet"), as the case may be, in the form first furnished
to the Underwriters by the Company in reliance upon Rule 434 of the 1933 Act
Regulations, and all references in this Purchase Agreement to the date of the
Prospectus shall mean the date of the Term Sheet. A "preliminary prospectus"
shall be deemed to refer to any prospectus used before the registration
statement became effective and any prospectus that omitted, as applicable, the
Rule 430A Information, the Rule 434 Information or other information to be
included upon pricing in a form of prospectus filed with the Commission pursuant
to Rule 424(b) of the 1933 Act Regulations, that was used after such
effectiveness and prior to the execution and delivery of the applicable Pricing
Agreement. For purposes of this Agreement, all references to the Registration
Statement, any preliminary prospectus, the Prospectus or any Term Sheet or any
amendment or supplement to any of the foregoing shall be deemed to include the
copy filed with the Commission pursuant to its Electronic Data Gathering,
Analysis and Retrieval system ("EDGAR").
All references in this Agreement to financial statements and schedules
and other information which is "contained," "included" or "stated" in the
Registration Statement, any preliminary prospectus or the Prospectus (or other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is incorporated
by reference in the Registration Statement, any preliminary prospectus or the
Prospectus, as the case may be; and all references in this Agreement to
amendments or supplements to the Registration Statement, any preliminary
prospectus or the Prospectus shall be deemed to mean and include the filing of
any document under the 1934 Act which is incorporated by reference in the
Registration Statement, such preliminary prospectus or the Prospectus, as the
case may be.
Section 1. Representations and Warranties of the Company.
(a) The Company represents and warrants to each Underwriter, as of the
date hereof and as of the date of the Pricing Agreement (such later date being
hereinafter referred to as the "Representation Date"), that:
(i) The Company meets the requirements for use of Form S- 3
under the 1933 Act. Each of the Registration Statement and any Rule 462(b)
Registration Statement has become effective under the 1933 Act, and at the time
of effectiveness and at the Representation Date, the Registration Statement and
any Rule 462(b)
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Registration Statement and the Prospectus conformed and will conform in all
material respects to the requirements of the 1933 Act and the 1933 Act
Regulations and did not and will not contain an untrue statement of a material
fact and did not and will not omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading; and
the Prospectus, at the time the Registration Statement became effective (unless
the term "Prospectus" refers to a prospectus which has been provided to the
Underwriters by the Company for use in connection with the offering of the
Securities which differs from the Prospectus on file at the Commission at the
time the Registration Statement became effective, in which case at the time it
is first provided to the Underwriters for such use) and at the Representation
Date and at the Closing Time referred to in Section 2, did not and will not
include an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that the representations and warranties in this subsection shall not apply to
statements contained in or omitted from the Registration Statement or the
Prospectus in reliance upon, and in conformity with, information furnished to
the Company in writing by any Underwriter through Merrill Lynch expressly for
use in the Registration Statement or the Prospectus.
(ii) The documents incorporated or deemed to be incorporated
by reference in the Registration Statement or the Prospectus pursuant to Item 12
of Form S-3 under the 1933 Act, at the time they were or hereafter are filed or
last amended, as the case may be, with the Commission, complied and will comply
in all material respects with the requirements of the 1934 Act, and the rules
and regulations of the Commission thereunder (the "1934 Act Regulations"), and
at the time of filing or as of the time of any subsequent amendment, did not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were or are made, not
misleading; and any additional documents deemed to be incorporated by reference
in the Registration Statement or the Prospectus will, if and when they are filed
with the Commission, or when amended, as appropriate, comply in all material
respects with the requirements of the 1934 Act and the 1934 Act Regulations and
will not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading after the date hereof; provided, however, (x) that the
representations and warranties in this subsection shall not apply to statements
contained in or omitted from the Registration Statement or the Prospectus in
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reliance upon, and in conformity with, information furnished to the Company in
writing by any Underwriter through Merrill Lynch expressly for use in the
Registration Statement or the Prospectus and (y) for purposes of this
subsection, there shall be excluded any statements in such documents
incorporated or to be incorporated by reference deemed not to be incorporated by
reference as provided in Rule 412 under the 1933 Act.
(iii) Coopers & Lybrand, the accountants who certified the
financial statements and supporting schedules of the Company included or
incorporated by reference in the Registration Statement, are independent public
accountants with respect to the Company and its subsidiaries as required by the
1933 Act and the 1933 Act Regulations.
(iv) The financial statements of the Company included or
incorporated by reference in the Registration Statement and the Prospectus,
together with the related schedules and notes, present fairly the financial
position of the Company and its subsidiaries as of the dates indicated and the
results of their operations for the periods specified. Except as otherwise
stated in the Registration Statement, said financial statements have been
prepared in conformity with generally accepted accounting principles applied on
a consistent basis. The supporting schedules included or incorporated by
reference in the Registration Statement present fairly the information required
to be included therein. The ratios of earnings to fixed charges (including
preferred stock dividends) included in the Prospectus have been calculated in
compliance, in all material respects, with Item 503(d) of Regulation S-K of the
Commission. The selected financial data and the summary financial information
included in the Prospectus present fairly the information shown therein and have
been compiled on a basis consistent with that of the audited financial
statements included in the Registration Statement. The pro forma financial
statements of the Company and its subsidiaries and the related notes thereto
included in the Registration Statement and the Prospectus present fairly the
information shown therein, have been prepared in accordance with the
Commission's rules and guidelines with respect to pro forma financial statements
and have been properly compiled on the bases described therein, and the
assumptions used in the preparation thereof are reasonable and the adjustments
used therein are appropriate to give effect to the transactions and
circumstances referred to therein.
(v) The statutory financial statements of each of the
Company's insurance subsidiaries, from which certain ratios and other
statistical data contained in the Registration Statement have been derived, have
for each relevant period been prepared in accordance with accounting practices
prescribed or permitted by the National Association of Insurance Commissioners,
and with respect
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to each insurance subsidiary, the appropriate Insurance Department of the state
of domicile of such insurance subsidiary, and such accounting practices have
been applied on a consistent basis throughout the periods involved, except as
disclosed therein.
(vi) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, and except as otherwise
stated or contemplated therein, (A) there has been no material adverse change
and no development which would reasonably be expected to result in a material
adverse change in the condition, financial or otherwise, or in the earnings or
business affairs of the Company and its subsidiaries, considered as one
enterprise, whether or not arising in the ordinary course of business, (B) there
have been no transactions entered into by the Company or any of its subsidiaries
which are material to the Company and its subsidiaries, considered as one
enterprise, other than those entered into in the ordinary course of business,
and (C) except for regular quarterly dividends, there has been no dividend or
distribution of any kind declared, paid or made by the Company on any class of
its capital stock.
(vii) The Company has been duly incorporated and is validly
existing as a corporation under the laws of the State of Indiana, with corporate
power and authority to own, lease and operate its properties and to conduct its
business as presently conducted and as described in the Prospectus or in the
Company's Annual Report filed on Form 10-K for the year ended December 31, 1994;
and the Company is duly qualified as a foreign corporation to transact business
and is in good standing in each jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure to so qualify or be in good
standing would not reasonably be expected to have a material adverse effect on
the condition, financial or otherwise, or the earnings or business affairs of
the Company and its subsidiaries, considered as one enterprise.
(viii) Each of the subsidiaries has been duly incorporated and
is validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and authority to own,
lease and operate its properties and to conduct its business as presently
conducted and as described in the Prospectus or in the Company's Annual Report
filed on Form 10-K for the year ended December 31, 1994; and is duly qualified
as a foreign corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except where the
failure to so qualify or be in good standing would not reasonably be expected to
have a material adverse effect on the condition, financial or otherwise, or the
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earnings or business affairs of the Company and its subsidiaries, considered as
one enterprise; and the outstanding shares of capital stock of each subsidiary
of the Company have been duly authorized and validly issued, are fully paid and
nonassessable and all such shares are owned by the Company or by a subsidiary of
the Company, except as set forth in a letter previously delivered by the Company
to you.
(ix) The Company and each of its subsidiaries hold all
material licenses, certificates and permits from governmental authorities
(including, without limitation, insurance licenses from the insurance
departments of the various states where the subsidiaries write insurance
business (the "Insurance Licenses")) which are necessary to the conduct of their
businesses; the Company and its subsidiaries have fulfilled and performed all
material obligations necessary to maintain their respective Insurance Licenses,
and no event or events have occurred which could reasonably be expected to
result in the impairment, modification, termination or revocation of such
Insurance Licenses.
(x) The authorized, issued and outstanding capital stock of
the Company is as set forth in the Prospectus under "Capitalization" (except for
subsequent issuances, if any, pursuant to stock option agreements or employee
benefit plans); all of the issued and outstanding shares of the common stock, no
par value, of the Company (the "Common Stock") have been duly authorized and
validly issued, and are fully paid and nonassessable; the Securities have been
duly authorized for issuance and sale to the Underwriters pursuant to this
Agreement and, when issued and delivered by the Company pursuant to this
Agreement against payment of the consideration set forth in the Pricing
Agreement, will be validly issued and fully paid and nonassessable; the
Securities will conform to the provisions of the Articles of Incorporation of
the Company, as amended on the Closing Date (the "Amended Articles of
Incorporation") related thereto; the relative rights, preferences, interests and
powers of the Securities will be as set forth in the Amended Articles of
Incorporation, and all such provisions will be valid under the Indiana Business
Corporation Law; the Securities and the Common Stock into which the Securities
are convertible or for which the Securities may be redeemed conform to all
statements relating thereto contained in the Prospectus; and the issuance of the
Securities is not subject to preemptive or other similar rights.
(xi) Neither the Company nor any of its subsidiaries is in
violation of its charter or by-laws or in default in the performance or
observance of any obligation, agreement, covenant or condition contained in any
material contract, indenture, mortgage, loan agreement, note, lease or other
instrument to which the
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Company or any of its subsidiaries is a party or by which it or any of them may
be bound, or to which any of the property or assets of the Company or any of its
subsidiaries is subject, or in violation of any applicable law, administrative
regulation or administrative or court order or decree, which violation or
default would, singly or in the aggregate, reasonably be expected to have a
material adverse effect on the condition, financial or otherwise, or the
earnings or business affairs of the Company and its subsidiaries, considered as
one enterprise; and the execution, delivery and performance of this Agreement
and the Pricing Agreement, and the consummation of the transactions contemplated
herein and therein, will not conflict with or constitute a breach of, or a
default under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any of its
subsidiaries pursuant to, any contract, indenture, mortgage, loan agreement,
note, lease or other instrument to which the Company or any of its subsidiaries
is a party or by which it or any of them may be bound, or to which any of the
property or assets of the Company or any of its subsidiaries is subject, except
for a conflict, breach, default, lien, charge or encumbrance which would not
reasonably be expected to have a material adverse effect on the condition,
financial or otherwise, or the earnings or business affairs of the Company and
its subsidiaries considered as one enterprise, nor will such action result in
any violation of the provisions of the charter or by-laws of the Company or any
of its subsidiaries or any applicable law, administrative regulation or
administrative or court decree.
(xii) There is no action, suit or proceeding before or by any
court or governmental agency or body, domestic or foreign (including, without
limitation, any proceeding to revoke or deny renewal of any Insurance Licenses),
now pending, or, to the best knowledge of the Company, threatened, against or
affecting the Company or any of its subsidiaries which is required to be
disclosed in the Registration Statement or the Prospectus, or which is
reasonably likely to result in any material adverse change in the condition,
financial or otherwise, or in the earnings or business affairs of the Company
and its subsidiaries, considered as one enterprise, or which could be reasonably
likely to materially and adversely affect a material portion of the properties
or assets thereof or which is reasonably likely to materially and adversely
affect the consummation of this Agreement; all pending legal or governmental
proceedings to which the Company or any of its subsidiaries is a party or of
which any of their respective property or assets is the subject which are not
described in the Registration Statement or the Prospectus, including ordinary
routine litigation incidental to the business of the Company or any of its
subsidiaries, are, considered in the aggregate, not material; and there are no
contracts or documents of the Company or
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any of its subsidiaries which are required to be filed as exhibits to the
Registration Statement, or to be incorporated by reference therein, by the 1933
Act, the 1933 Act Regulations, the 1934 Act or the 1934 Act Regulations, which
have not been so filed or incorporated by reference.
(xiii) No authorization, approval or consent of any court or
governmental authority or agency is necessary in connection with the issuance
and sale of the Securities hereunder, or the issuance of the Common Stock upon
conversion or redemption of the Securities, or the consummation by the Company
of any other transactions contemplated hereby, except such as have been obtained
and made under the federal securities laws or state insurance laws and such as
may be required under state or foreign securities laws.
(xiv) The shares of Common Stock issuable upon conversion or at
redemption of the Securities have been duly and validly authorized and reserved
for issuance upon such conversion or redemption; such shares, when issued and
delivered upon such conversion or redemption in the manner provided for in the
Amended Articles of Incorporation governing the Securities, will be duly
authorized, validly issued, fully paid and nonassessable and free of any lien or
adverse claim; and the issuance of such shares upon such conversion or
redemption will not be subject to preemptive or other similar rights.
(xv) The Securities and the Common Stock issuable upon
conversion or at redemption of the Securities conform in all material respects
to the respective statements relating thereto contained in the Prospectus and
the Registration Statement.
(xvi) There are no holders of securities of the Company with
currently exercisable registration rights to have any securities registered as
part of the Registration Statement or included in the offering contemplated by
this Agreement.
(xvii) No order preventing or suspending the use of any
preliminary prospectus with respect to the Securities has been issued and no
proceedings for that purpose are pending, threatened, or, to the knowledge of
the Company, contemplated by the Commission; to the knowledge of the Company, no
order suspending the offering of the Securities in any jurisdiction designated
by the Underwriters pursuant to Section 3(f) of this Agreement has been issued
and, to the knowledge of the Company, no proceedings for that purpose have been
instituted or threatened or are contemplated, and any request of the Commission
for additional information (to be included in the Registration Statement or
Prospectus or otherwise) has been complied with.
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(xviii) The Company has full corporate power and authority to
execute, deliver and perform its obligations under this Agreement and the
Pricing Agreement and the Company has full corporate power and authority to
issue, sell and deliver the Securities.
(xix) The Company has not taken, directly or indirectly, any
action designed to, or that might be reasonably expected to, cause or result in
manipulation of the price of the Securities or the Common Stock.
(xx) The Company is not, and upon the issuance and sale of the
Securities as herein contemplated and the application of the net proceeds
therefrom as described in the Prospectus will not be, an "investment company" or
an entity "controlled" by an "investment company" as such terms are defined in
the Investment Company Act of 1940, as amended (the "1940 Act").
(b) Any certificate signed by an officer of the Company and delivered
to the Underwriters or to counsel for the Underwriters shall be deemed a
representation and warranty by the Company to each Underwriter as to the matters
covered thereby.
Section 2. Sale and Delivery to Underwriters; Closing.
(a) On the basis of the representations and warranties herein
contained, and subject to the terms and conditions herein set forth, the Company
agrees to sell to each Underwriter severally, and not jointly, and each
Underwriter agrees to purchase from the Company, at the price per share set
forth in the Pricing Agreement, the number of Initial Securities set forth in
Schedule A opposite the name of such Underwriter (except as otherwise provided
in the Pricing Agreement), plus any additional number of Initial Securities
which such Underwriter may become obligated to purchase pursuant to the
provisions of Section 10 hereof.
(1) If the Company has elected not to rely upon Rule 430A
under the 1933 Act Regulations, the initial public offering price per
Security, the dividend rate, the call price (including related premium)
payable upon redemption, in each case, in respect of each Security, and
the purchase price per Security to be paid by the several Underwriters
for the Securities (collectively, the "Pricing Terms") have each been
determined and set forth in the Pricing Agreement, dated the date
hereof, and an amendment to the Registration Statement and the
Prospectus will be filed before the Registration Statement becomes
effective.
(2) If the Company has elected to rely upon Rule 430A under
the 1933 Act Regulations, the purchase price per
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Security to be paid by the several Underwriters shall be an amount
equal to the initial public offering price per Security, less an
amount per Security to be determined by agreement between the
Underwriters and the Company. The Pricing Terms likewise shall
be determined by agreement between the Underwriters and the Company.
The Pricing Terms, when so determined, shall be set forth in the
Pricing Agreement. In the event that such Pricing Terms have not
been agreed upon and the Pricing Agreement has not been executed
and delivered by the parties thereto by the close of business on the
fourth business day following the date of this Agreement, this
Agreement shall terminate forthwith, without liability of any party
to any other party, unless otherwise agreed to by the Company and
the Underwriters.
(b) In addition, on the basis of the representations
and warranties herein contained and subject to the terms and conditions
herein set forth, the Company hereby grants an option to the Underwriters,
severally and not jointly, to purchase from it up to an additional 570,000
shares of the Securities at the price per share set forth in the Pricing
Agreement. The option hereby granted will expire automatically at the close of
business on the 30th calendar day after (i) later of the date the Registration
Statement and any Rule 462(b) Registration Statement becomes effective, if the
Company has elected not to rely upon Rule 430A under the 1933 Act Regulations,
or (ii) the Representation Date, if the Company has elected to rely upon Rule
430A under the 1933 Act Regulations, and may be exercised in whole or in part
from time to time only for the purpose of covering over-allotments which may be
made in connection with the offering and distribution of the Initial Securities
upon notice by the Underwriters to the Company setting forth the number of
Option Securities as to which the several Underwriters are then exercising the
option and the time and date of payment and delivery for such Option Securities.
Any such time and date of delivery (a "Date of Delivery") shall be determined by
the Underwriters but shall not be later than seven full business days after the
exercise of such option, nor in any event before the Closing Time, as
hereinafter defined, unless otherwise agreed upon by the Underwriters and the
Company. If the option is exercised as to all or any portion of the Option
Securities, each of the Underwriters, acting severally and not jointly, will
purchase that proportion of the total number of Option Securities then being
purchased which the number of Initial Securities set forth in Schedule A
opposite the name of such Underwriter bears to the total number of Initial
Securities (except as otherwise provided in the Pricing Agreement), subject in
each case to such adjustments as the Underwriters in their discretion shall make
to eliminate any sales or purchases of fractional shares.
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(c) Delivery of certificates for the Initial Securities shall be made
at the offices of the Underwriters in New York, and payment of the purchase
price for the Initial Securities shall be made at the offices of LeBoeuf, Lamb,
Greene & MacRae, L.L.P., 125 West 55th Street, New York, New York 10019 or at
such other place as shall be agreed upon by the Underwriters and the Company, at
10:00 a.m. (New York time) on the third business day after the date the
Registration Statement becomes effective (or, if the Company has elected to rely
upon Rule 430A, the third full business day after execution of the Pricing
Agreement (or, if pricing of the Securities occurs after 4:30 p.m. Eastern time,
on the fourth full business day thereafter)), or such other time not later than
ten business days after such date as shall be agreed upon by the Underwriters
and the Company (such time and date of payment and delivery being herein called
the "Closing Time"). In addition, if the Underwriters purchase any or all of the
Option Securities, payment of the purchase price and delivery of certificates
for such Option Securities shall be made at the offices of LeBoeuf, Lamb, Greene
& MacRae, L.L.P. set forth above, or at such other place as shall be agreed upon
by the Underwriters and the Company, on each Date of Delivery as specified in
the relevant notice from the Underwriters to the Company. Payment for the
Securities purchased by the Underwriters shall be made to the Company by
certified or official bank check or checks, drawn in New York Clearing House
funds or similar next day funds, payable to the order of the Company, against
delivery to the respective accounts of the Underwriters of certificates for the
Securities to be purchased by it. Certificates for the Initial Securities and
the Option Securities shall be in such denominations and registered in such
names as the Underwriters may request in writing at least two full business days
before the Closing Time or any Date of Delivery, as the case may be. Merrill
Lynch, individually and not as representative of the Underwriters, may (but
shall not be obligated to) make payment of the purchase price for the Initial
Securities or the Option Securities, if any, to be purchased by any Underwriter
whose check has not been received by the Closing Time or the relevant Date of
Delivery, as the case may be, but such payment shall not relieve such
Underwriter from its obligations hereunder. The certificates for the Initial
Securities and the Option Securities, if any, will be made available for
examination and packaging by the Underwriters no later than 10:00 a.m. (New York
City time) on the last business day prior to the Closing Time or the Date of
Delivery, as the case may be.
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Section 3. Covenants of the Company.
The Company covenants with each Underwriter as follows:
(a) The Company will comply with the requirements of Rule 430A of the
1933 Act Regulations and/or Rule 434 of the 1933 Act Regulations if and as
applicable, and will notify the Underwriters immediately, and confirm the notice
in writing, (i) of the effectiveness of any post-effective amendment to the
Registration Statement or the filing of any supplement or amendment to the
Prospectus, (ii) of the receipt of any comments from the Commission, (iii) of
any request by the Commission for any amendment to the Registration Statement or
any amendment or supplement to the Prospectus or for additional information,
(iv) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any proceedings
for that purpose and (v) of the issuance by any state securities commission or
other regulatory authority of any order suspending the qualification or the
exemption from qualification of the Securities or the Common Stock issuable upon
conversion or redemption of the Securities under state securities or Blue Sky
laws or the initiation of any proceedings for that purpose. The Company will
promptly effect the filings necessary pursuant to Rule 424 and will take such
steps as it deems necessary to ascertain promptly whether the Prospectus
transmitted for filing under Rule 424 was received for filing by the Commission
and, in the event that it was not, it will promptly file the Prospectus. The
Company will use its best efforts to prevent the issuance of any stop order and,
if any stop order is issued, to obtain the lifting thereof at the earliest
possible moment.
(b) The Company will give the Underwriters notice of its intention to
file or prepare any amendment to the Registration Statement (including any
post-effective amendment and any filing under Rule 462(b) of the 1933 Act
Regulations), any Term Sheet or any amendment, supplement or revision to either
the prospectus included in the Registration Statement at the time it became
effective or to the Prospectus (including any revised prospectus or Term Sheet
and preliminary prospectus which the Company proposes for use by the
Underwriters in connection with the offering of the Securities which differs
from the prospectus on file at the Commission at the time the Registration
Statement becomes effective, whether or not such revised prospectus or Term
Sheet and preliminary prospectus is required to be filed pursuant to Rule 424(b)
under the 1933 Act Regulations), whether pursuant to the 1933 Act, the 1934 Act
or otherwise; will furnish the Underwriters with copies of any such Rule 462(b)
Registration Statement, Term Sheet, amendment, supplement or revision a
reasonable amount of time prior to such proposed filing or use, as
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the case may be; and will not file or use any such Rule 462(b) Registration
Statement, Term Sheet, amendment, supplement or revision to which the
Underwriters or counsel for the Underwriters shall object.
(c) The Company will deliver to the Underwriters and to counsel to the
Underwriters, without charge, signed copies of the Registration Statement as
originally filed and of each amendment thereto (including exhibits filed
therewith or incorporated by reference therein and documents incorporated or
deemed to be incorporated by reference therein) and signed copies of all
consents and certificates of experts, and will also deliver to the Underwriters,
without charge, as many conformed copies of the Registration Statement as
originally filed and of each amendment thereto (without exhibits) as the
Underwriters reasonably may request. If applicable, the copies of the
Registration Statement and each amendment thereto furnished to the Underwriters
will be identical to the electronically transmitted copies thereof filed with
the Commission pursuant to EDGAR, except to the extent permitted by Regulation
S-T.
(d) The Company will deliver to each Underwriter, without charge, as
many copies of each preliminary prospectus as such Underwriter may reasonably
request, and the Company hereby consents to the use of such copies for purposes
permitted by the 1933 Act. The Company will furnish to each Underwriter, from
time to time without charge during the period when the Prospectus is required to
be delivered under the 1933 Act or the 1934 Act, such number of copies of the
Prospectus (as amended or supplemented) as such Underwriter reasonably may
request. If applicable, the Prospectus and any amendments or supplements thereto
furnished to the Underwriters will be identical to the electronically
transmitted copies thereof filed with the Commission pursuant to EDGAR, except
to the extent permitted by Regulation S-T.
(e) If any event shall occur as a result of which it is necessary, in
the reasonable opinion of counsel for the Underwriters, to amend or supplement
the Prospectus in order to make the Prospectus not misleading in the light of
the circumstances existing at the time it is delivered to a purchaser, the
Company will forthwith amend or supplement the Prospectus (in form and substance
reasonably satisfactory to counsel for the Underwriters) so that, as so amended
or supplemented, the Prospectus will not include an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances existing at the time it is
delivered to a purchaser, not misleading, and the Company will furnish to the
Underwriters as many copies of such amendment or supplement as the Underwriters
may request.
(f) The Company will endeavor, in cooperation with the
Underwriters, to qualify the Securities and the Common Stock issuable upon
conversion and redemption of the Securities for offering and sale under the
applicable securities laws of such states and other jurisdictions of the United
States as the Underwriters may designate (with a good faith intent at that time
to offer or sell any such securities in such jurisdiction); provided, however,
that the Company shall not be obligated to qualify as a foreign corporation or
to execute a general consent as to service of process in any jurisdiction in
which it is not so qualified or to make any undertakings with respect to the
conduct of its business therein. In each jurisdiction in which the Securities or
such shares of Common Stock have been so qualified, the Company will file such
statements and reports as may be required by the laws of such jurisdiction to
continue such qualification in effect for so long as may be required in
connection with the distribution of the Securities and such Common Stock.
(g) The Company will make generally available to its security holders
as soon as practicable, but not later than 45 days after the close of the period
covered thereby, an earnings statement for the purposes of, and to provide the
benefits contemplated by, the last paragraph of Section 11(a) of the 1933 Act
(in form and in a manner complying with the provisions of Rule 158 under the
1933 Act Regulations) covering a twelve-month period beginning not later than
the first day of the Company's fiscal quarter next following the "effective
date" (as defined in said Rule 158) of the Registration Statement.
(h) The Company will use the net proceeds received by it from
the sale of the Securities in the manner specified in the Prospectus under "Use
of Proceeds."
(i) If, at the time that the Registration Statement becomes effective,
any information shall have been omitted therefrom in reliance upon Rule 430A or
Rule 434 under the 1933 Act Regulations, then promptly following the execution
of the Pricing Agreement, the Company will prepare, and file or transmit for
filing with the Commission in accordance with such Rule 430A or Rule 434 and
Rule 424(b) under the 1933 Act Regulations, copies of an amended Prospectus, or
Term Sheet, or, if required by such Rule 430A, a post-effective amendment to the
Registration Statement (including an amended Prospectus), containing all
information so omitted.
(j) If the Company elects to rely upon Rule 462(b), the Company shall
both file a Rule 462(b) Registration Statement with the Commission in compliance
with Rule 462(b) and pay the applicable fees in accordance with Rule 111 of the
1933 Act
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Regulations by the earlier of (i) 10:00 p.m. Eastern time on the date of the
Pricing Agreement and (ii) the time confirmations are sent or given, as
specified by Rule 462(b)(2).
(k) The Company, during the period when the Prospectus is required to
be delivered under the 1933 Act, will promptly file all documents required to be
filed with the Commission pursuant to
Section 13(a), 13(c), 14 or 15(d) of the 1934 Act of which the Underwriters
shall have previously been advised and previously furnished a copy, and with
respect to which the Company shall endeavor in good faith to provide the
Underwriters or the Underwriters' counsel with an opportunity to comment.
(l) For a period of one year after the Closing Time, the Company will
furnish to the Underwriters copies of all reports and communications delivered
to the Company's stockholders or to holders of the Securities as a class and
will also furnish copies of all reports (including exhibits) filed with the
Commission on Forms 8-K, 10-Q and 10-K, and all other reports and information
furnished to its stockholders generally, not later than the time such reports
are first furnished to such holders generally.
(m) During a period commencing on the date hereof and ending 90 days
from the date of the Prospectus, the Company will not, without the prior written
consent of the Underwriters, directly or indirectly, sell, offer to sell, grant
any option for the sale of, or otherwise dispose of, or enter into any agreement
to sell, any Common Stock or any securities similar to the Securities or any
security convertible into or exchangeable or exercisable for any Common Stock or
any such similar securities; provided, however, that such restriction shall not
affect the ability of the Company to take any such action (i) as a consequence
of obligations under securities outstanding prior to the date of the Prospectus,
(ii) in connection with any employee benefit or incentive plan of the Company or
its subsidiaries, or (iii) in connection with the offering of the Securities
made in connection with the Prospectus.
(n) The Company will use its best efforts to effect the listing of the
Securities and the shares of Common Stock issuable upon conversion or redemption
on the New York Stock Exchange and to cause the Securities to be registered
under the 1934 Act.
(o) The Company will reserve and keep available at all times, free of
preemptive or other similar rights and liens and adverse claims, sufficient
shares of Common Stock to satisfy any obligations to issue shares of Common
Stock upon conversion or redemption of all of the Securities outstanding from
time to time.
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(p) The Company will supply the Underwriters with copies of all
correspondence to and from, and all documents delivered to and by, the
Commission in connection with the registration of the Securities under the 1933
Act.
(q) Prior to the Closing Date, the Company will issue no press release
or other communications directly or indirectly and hold no press conference with
respect to the Company or any of its subsidiaries, the condition, financial or
otherwise, or the earnings, business affairs or business prospects of any of
them, or the offering of the Securities, without the prior written consent
of the Underwriters unless in the judgment of the Company and its counsel, and
after notification to the Underwriters, such press release or communication is
required by law.
(r) The Company will not take, directly or indirectly, any action
designed to, or that might reasonably be expected to, cause or result in
manipulation of the price of the Securities or the Common Stock.
Section 4. Payment of Expenses.
The Company will pay all expenses incident to the performance of its
obligations under this Agreement and the Pricing Agreement, including, without
limitation, expenses related to the following, if incurred: (i) the preparation,
delivery, printing and filing of the Registration Statement and Prospectus as
originally filed (including financial statements and exhibits) and of each
amendment thereto; (ii) the printing and delivery to the Underwriters of this
Agreement, the Pricing Agreement, any Agreement among Underwriters and such
other documents as may be required in connection with the offering, purchase,
sale and delivery of the Securities; (iii) the preparation, issuance and
delivery of the certificates for the Securities to the Underwriters; (iv) the
fees and disbursements of the Company's counsel, accountants and other advisors
or agents (including transfer agents and registrars); (v) the qualification of
the Securities and the shares of Common Stock issuable upon conversion or
redemption of the Securities under securities laws in accordance with the
provisions of Section 3(f), including filing fees and the fees and disbursements
of counsel for the Underwriters in connection therewith and in connection with
the preparation of the Blue Sky Survey and any amendment thereto; (vi) the
printing and delivery to the Underwriters of copies of the Registration
Statement as originally filed and of each amendment thereto, of each preliminary
prospectus, any Term Sheet and of the Prospectus and any amendments or
supplements thereto; (vii) the printing and delivery to the Underwriters of
copies of the Blue Sky Survey; (viii) any fees payable in connection with the
rating of the Securities by nationally recognized statistical rating
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organizations; (ix) the filing fees incident to, and the fees and disbursements
of counsel to the Underwriters in connection with, the review, if any, by the
National Association of Securities Dealers, Inc. (the "NASD") of the terms of
the sale of the Securities; (x) any fees payable to the Commission; and (xi) the
fees and expenses incurred in connection with the listing on the New York Stock
Exchange of the Securities and the shares of Common Stock issuable upon
conversion or redemption of the Securities.
If this Agreement is terminated by the Representatives in accordance
with the provisions of Section 5 or Section 9(a)(i) hereof, the Company shall
reimburse the Underwriters for all of their out-of-pocket expenses, including
the fees and disbursements of LeBoeuf, Lamb, Greene & MacRae, L.L.P., counsel
for the Underwriters.
Section 5. Conditions of Underwriters' Obligations.
The obligations of the Underwriters hereunder are subject to the
accuracy of the representations and warranties of the Company herein contained
or in certificates of any officer of the Company or any subsidiary delivered
pursuant to the provisions hereof, to the performance by the Company of its
obligations hereunder, and to the following further conditions:
(a) The Registration Statement, including any Rule 462(b) Registration
Statement, shall have become effective not later than 5:30 p.m., New York City
time, on the date hereof, and on the date hereof and at the Closing Time and any
Date of Delivery no stop order suspending the effectiveness of the Registration
Statement shall have been issued under the 1933 Act or proceedings therefor
initiated or threatened by the Commission and any request on the part of the
Commission for additional information shall have been complied with to the
satisfaction of counsel to the Underwriters. A prospectus containing information
relating to the description of the Securities, the specific method of
distribution and similar matters shall have been filed with the Commission in
accordance with Rule 424(b)(1), (2), (3), (4) or (5), as applicable (or any
required post-effective amendment providing such information shall have been
filed and declared effective in accordance with the requirements of Rule 430A),
or, if the Company has elected to rely upon Rule 434 of the 1933 Act
Regulations, a Term Sheet including the Rule 434 Information shall have been
filed with the Commission in accordance with Rule 424(b)(7).
(b) At the Closing Time the Underwriters shall have received:
(1) The favorable opinion, dated as of the Closing Time, of
Lawrence W. Inlow, Executive Vice President, Secretary and
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General Counsel of the Company, in form and substance satisfactory
to counsel for the Underwriters, to the effect that:
(i) The Company has been duly incorporated and is
validly existing as a corporation under the laws of the State
of Indiana; and the Company has the corporate power under the
laws of the State of Indiana and under its charter to own,
lease and operate its properties and to conduct its business
as described in the Registration Statement and the Prospectus
or in the Company's Annual Report filed on Form 10-K for the
year ended December 31, 1994.
(ii) The Securities delivered at the Closing Time,
and all other outstanding securities of the Company have been
duly authorized and validly issued, are fully paid and
nonassessable; the Common Stock and the Securities are each
registered under the 1934 Act, and the
Securities and the Common Stock issuable upon conversion or
redemption of the Securities at the Closing Time have been
authorized for listing on the NYSE, upon official notice of
issuance.
(iii) The issuance of the Securities is not subject
to preemptive or other similar rights arising by law.
(iv) The shares of Common Stock issuable upon
conversion or redemption of the Securities have been duly
authorized and validly reserved for issuance upon such
conversion or redemption, and such shares, when issued and
delivered upon such conversion or redemption in the manner
provided in the Amended Articles of Incorporation, will be
validly issued, fully paid and nonassessable and the issuance
of such shares upon such conversion or redemption will not be
subject to preemptive or other similar rights arising by law.
(v) The Purchase Agreement and the Pricing
Agreement have been duly authorized, executed and delivered by
the Company and constitute valid and binding obligations of
the Company enforceable in accordance with their terms (except
(1) as may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization or similar laws affecting
creditors' rights generally and except that the remedies of
specific performance and injunctive and other forms of
equitable relief are subject to certain equitable defenses and
to the discretion of the court before which any proceeding
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therefor may be brought and (2) that no opinion is given as to
the enforceability of the indemnity and contribution
provisions under the Purchase Agreement and the Pricing
Agreement).
(vi) The Securities and the Common Stock conform in
all material respects to the descriptions thereof contained in
the Prospectus and the Registration Statement.
(vii) The forms of certificates used to evidence the
Securities and the Common Stock comply with all applicable
statutory requirements, with any applicable requirements of
the Company's Amended Articles of Incorporation and by-laws,
and with the requirements of the New York Stock Exchange.
(viii) Each subsidiary has been duly incorporated and
is validly existing as a corporation in good standing under
the laws of the jurisdiction of its incorporation and has the
corporate power and authority to own, lease and operate its
properties and to conduct its business as presently conducted
and as described in the Registration
Statement and the Prospectus or in the Company's Annual Report
filed on Form 10-K for the year ended December 31, 1994.
Nothing has come to the attention of such counsel to lead such
counsel to believe that any subsidiary is not duly qualified
as a foreign corporation to transact business or is not in
good standing in each jurisdiction in which such qualification
is required, except where the failure to so qualify or be in
good standing would not reasonably be expected to have a
material adverse effect on the condition, financial or
otherwise, or the earnings or business affairs of the Company
and its subsidiaries considered as one enterprise. All of the
issued and outstanding capital stock of each subsidiary of the
Company has been duly authorized and validly issued, is fully
paid and nonassessable, and all such shares are owned by the
Company or by a subsidiary of the Company, except as set forth
in a letter previously delivered by the Company to you.
(ix) The Registration Statement, including any Rule
462(b) Registration Statement, is effective under the 1933
Act; any required filing of the Prospectus pursuant to Rule
424(b) has been made in the manner and within the time period
required by Rule 424(b); and no stop order suspending the
effectiveness of the Registration Statement has been issued
under the 1933 Act or proceedings therefor initiated, to such
counsel's best knowledge, or threatened by the Commission.
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(x) The Registration Statement, including any Rule
462(b) Registration Statement, each of the incorporated
documents and the Prospectus, and each amendment or supplement
thereto (other than the financial statements or other
financial information or statistical data included therein and
each Trustee's Statement of Eligibility on Form T-1, as to
which no opinion need be rendered), as of their respective
effective or issue dates, or when amended, as appropriate,
complied as to form in all material respects with the
requirements of the 1933 Act or the 1934 Act and the Rules and
Regulations thereunder.
(xi) Each document filed pursuant to the 1934 Act
and incorporated by reference in the Prospectus, at the time
it was filed or last amended (other than financial statements
or other financial information or statistical data included
therein, as to which no opinion need be rendered), complied as
to form in all material respects to the requirements of the
1934 Act and the 1934 Regulations.
(xii) The information in the Prospectus under the
caption "Description of PRIDES", to the extent that such
information involves matters of law, summaries of legal
matters, the Company's charter and bylaws or legal
proceedings, or legal conclusions, is correct in all material
respects.
(xiii) No authorization, approval or consent of any
court or governmental authority or agency is necessary in
connection with the issuance and sale of the Securities
hereunder or the issuance of the Common Stock upon conversion
or redemption of the Securities or the consummation by the
Company of any other transactions contemplated hereby, except
such as have been obtained and made under the federal
securities laws or state insurance laws and such as may be
required under the state or foreign securities laws.
(xiv) To the best knowledge of such counsel, there
are no statutes or regulations required to be described or
incorporated by reference in the Registration Statement which
are not described or incorporated by reference as required and
there are no legal or governmental proceedings pending or
threatened which are required to be disclosed or incorporated
by reference in the Registration Statement, other than those
disclosed or incorporated by reference therein.
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(xv) To the best knowledge of such counsel, there
are no contracts, indentures, mortgages, loan agreements,
notes, leases or other instruments required to be described or
referred to or incorporated by reference in the Registration
Statement or to be filed as exhibits thereto other than those
described or referred to or incorporated by reference therein
or filed as exhibits thereto; the descriptions thereof or
references thereto are true and correct in all material
respects and no default exists in the due performance or
observance of any material obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, loan
agreement, note, lease or other instrument so described,
referred to or incorporated by reference or filed, which
default would reasonably be expected to have a material
adverse effect on the Company and its subsidiaries considered
as one enterprise.
(xvi) The issuance and delivery of the Securities and
the Common Stock issuable upon conversion or redemption of the
Securities, the execution and delivery of the Purchase
Agreement and the Pricing Agreement and the consummation of
the transactions contemplated therein, will not conflict with
or constitute a breach of, or default under, or result in the
creation or imposition of any lien, charge or encumbrance upon
any property or assets of the Company or any of its
subsidiaries pursuant
to, any material contract, indenture, mortgage, loan agreement
(except the Credit Agreement, dated as of August 31, 1995 by
and among the Company, the financial institutions who are or
from time to time become party thereto, The Chase Manhattan
Bank, N.A., First Union National Bank of North Carolina, the
Managing Bank named therein and the Bank of America National
Trust and Savings Association, as to which a waiver has been
obtained), note, lease or other instrument to which the
Company or any of its subsidiaries is a party or by which it
or any of them may be bound, or to which any of the property
or assets of the Company or any of its subsidiaries is
subject, except for a conflict, breach, default, lien, charge
or encumbrance which would not reasonably be expected to have
a material adverse effect on the condition, financial or
otherwise, or the earnings or business affairs of the Company
and its subsidiaries considered as one enterprise nor will
such action result in any violation of the provisions of the
charter or by-laws of the Company, or any material applicable
law, administrative regulation or administrative or court
decree.
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(xvii) The Company and its subsidiaries hold all
material licenses, certificates and permits from all
governmental authorities (including, without limitation, the
Insurance Licenses) which are necessary to the conduct of
their businesses; the Company and its subsidiaries have
fulfilled and performed all material obligations necessary to
maintain their respective Insurance Licenses, and no event or
events have occurred which could reasonably be expected to
result in the material impairment, modification, termination
or revocation of such Insurance Licenses.
(xviii) The Company is not an "investment company" or
an entity "controlled" by an "investment company," as such
terms are defined in the 1940 Act.
Moreover, such counsel shall confirm that nothing has come to such
counsel's attention that would lead such counsel to believe that the
Registration Statement, including any information provided pursuant to
Rule 430A or Rule 434 (except for financial statements or other
financial information or statistical data included or incorporated by
reference therein, as to which such counsel need express no belief), at
the time it became effective, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading or
that the Prospectus at the Representation Date (except for financial
statements and other financial data included or incorporated by
reference therein as to which such counsel need express no belief),
at the Representation Date (unless the term "Prospectus"
refers to a prospectus which has been provided to the Underwriters by
the Company for use in connection with the offering of the Securities
which differs from the Prospectus on file at the Commission at the time
the Registration Statement becomes effective, in which case at the time
it is first provided to the Underwriters for such use) or at the
Closing Time, included an untrue statement of a material fact or
omitted to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading.
(2) The favorable opinion, dated as of the Closing Time, of
Krieg, DeVault, Alexander & Capehart, special counsel to the Company,
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in form and substance satisfactory to counsel for the Underwriters, to
the effect that:
(i) All consents and waivers required in connection
with the issuance and delivery of the Securities and the
Common Stock issuable upon conversion or redemption of the
Securities, the execution and delivery of the Purchase
Agreement and the Pricing Agreement and the consummation of
the transactions contemplated therein under the Credit
Agreement, dated as of August 31, 1995, by and among the
Company, the financial institutions who are or from time to
time become party thereto, The Chase Manhattan Bank, N.A.,
First Union National Bank of North Carolina, the Managing Bank
named therein and the Bank of America National Trust and
Savings Association, have been obtained.
(ii) The statements in the Prospectus under the
caption "Certain Federal Income Tax Considerations" have been
reviewed by such counsel and, insofar as they constitute legal
conclusions or matters of law, fairly summarize the matters
referred to therein.
Moreover, such counsel shall confirm that nothing has come to such
counsel's attention that would lead such counsel to believe that the
Registration Statement, including any information provided pursuant to
Rule 430A or Rule 434 (except for financial statements or other
financial information or statistical data included or incorporated by
reference therein, as to which such counsel need express no belief), at
the time it became effective, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading or
that the Prospectus at the Representation Date (except for financial
statements and other financial data included or incorporated by
reference therein as to which such counsel need express no belief),
at the Representation Date (unless the term
"Prospectus" refers to a prospectus which has been provided to the
Underwriters by the Company for use in connection with the offering of
the Securities which differs from the Prospectus
on file at the Commission at the time the Registration Statement
becomes effective, in which case at the time it is first provided to
the Underwriters for such use) or at the Closing Time, included an
untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
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(3) The favorable opinion, dated as of the Closing Time, of
LeBoeuf, Lamb, Greene & MacRae, L.L.P., counsel for the Underwriters,
with respect to the validity of the Securities, the Registration
Statement, the Prospectus and other related matters as you may require,
and the Company shall have furnished to such counsel such documents as
they request for the purpose of enabling them to pass upon such
matters. In rendering such opinion, LeBoeuf, Lamb, Greene & MacRae,
L.L.P., may rely as to matters governed by the laws of the State of
Indiana upon the opinion referred to in subsection (b)(1) above.
(c) At the Closing Time, there shall not have been, since the date
hereof or since the respective dates as of which information is given in the
Registration Statement and the Prospectus, other than as stated or contemplated
in the Registration Statement or the Prospectus, any material adverse change or
any development which would reasonably be expected to result in any prospective
material adverse change in the condition, financial or otherwise, or in the
earnings or business affairs of the Company and its subsidiaries, considered as
one enterprise, whether or not arising in the ordinary course of business, and
the Underwriters shall have received a certificate of the president or a vice
president of the Company and of the chief financial or chief accounting officer
of the Company, dated as of the Closing Time, to the effect that (i) there has
been no such material adverse change, (ii) there has been no downgrading in the
rating assigned to any outstanding securities of the Company by any nationally
recognized securities rating agency, and no such securities rating agency has
publicly announced that it has under surveillance or review, with possible
negative implications, its rating of any of the Company's outstanding
securities, (iii) the representations and warranties in Section 1 are true and
correct with the same force and effect as though expressly made at and as of the
Closing Time, (iv) the Company has complied with all agreements and satisfied
all conditions on its part to be performed or satisfied at or prior to the
Closing Time, and (v) no stop order suspending the effectiveness of the
Registration Statement has been issued and, to the best of each such officer's
knowledge and information, no proceedings for that purpose have been initiated
or threatened by the Commission.
(d) At the time of the execution of this Agreement, the Representatives
shall have received from Coopers & Lybrand a letter, dated such date, in form
and substance satisfactory to the Representatives, to the effect that (i) they
are independent public accountants with respect to the Company and its
subsidiaries within the meaning of the 1933 Act, the 1933 Act Regulations, the
1934 Act and the 1934 Act Regulations; (ii) it is their opinion that the
-25-
<PAGE>
financial statements and supporting schedules included or incorporated by
reference in the Registration Statement and covered by their opinions therein
comply with the applicable accounting requirements of the 1933 Act and the 1933
Act Regulations and the 1934 Act and the 1934 Act Regulations; (iii) based upon
limited procedures set forth in detail in such letter, nothing has come to their
attention which causes them to believe that (A) the unaudited financial
information of the Company and its subsidiaries included or incorporated by
reference in the Registration Statement do not comply as to form in all material
respects with the applicable accounting requirements of the 1933 Act, the 1933
Act Regulations, the 1934 Act and the 1934 Act Regulations or are not presented
in conformity with generally accepted accounting principles applied on a basis
substantially consistent with that of the audited financial statements included
in the Registration Statement, or (B) at the date of the latest available
balance sheet read by such accountants, or at a subsequent specified date not
more than five days prior to the date of this Agreement, there was any increase
in consolidated long-term debt or, at the date of the latest available balance
sheet read by such accountants, there was any decrease in consolidated total
assets or shareholders' equity, as compared with amounts shown on the latest
balance sheet included in the Prospectus, or (C) for the period from the closing
date of the latest income statement included in the Prospectus to the closing
date of the latest available income statement read by such accountants, there
were any decreases, as compared with the corresponding period of the previous
year and with the period of corresponding length ended the date of the latest
income statement included in the Prospectus, in consolidated premiums (including
annuity deposits) collected, net investment income, total revenues, earnings
applicable to common stock or net income per fully diluted common share except,
in all cases set forth in this clause (iii), for changes, increases or decreases
which the Prospectus discloses have occurred or may occur or which are described
in such letter; (iv) they have examined the statutory financial statements of
each of the Company's insurance subsidiaries, from which certain ratios and
other statistical data contained in the Registration Statement have been
derived, and in their opinion such statements, with respect to each insurance
subsidiary, have for each relevant period been prepared in accordance with
accounting practices prescribed or permitted by the appropriate Insurance
Department of the state of domicile of such subsidiary, and such accounting
practices have been applied on a consistent basis throughout the periods
involved, except as disclosed therein; and (v) in addition to the examination
referred to in their opinions and the limited procedures referred to in clause
(iii) above, they have carried out certain specified procedures, not
constituting an audit, with respect to certain amounts, percentages, ratios and
financial information that has been derived from the accounting and financial
records of the
-26-
<PAGE>
Company that are subject to internal accounting controls which
are included or incorporated by reference in the Registration Statement and
Prospectus and which are specified by the Underwriters, and have found such
amounts, percentages, ratios and financial information to be in agreement with
the relevant accounting and financial records of the Company and its
subsidiaries identified in such letter.
(e) At the Closing Time, the Underwriters shall have received from
Coopers & Lybrand a letter, dated as of the Closing Time, to the effect that
they reaffirm the statements made in the letter furnished pursuant to subsection
(d) of this Section, except that the specified date referred to shall be a date
not more than five days prior to the Closing Time and, if the Company has
elected to rely on Rule 430A under the 1933 Act Regulations, to the further
effect that they have carried out procedures as specified in clause (iv) of
subsection (d) of this Section with respect to certain amounts, percentages and
financial information specified by the Underwriters and deemed to be a part of
the Registration Statement pursuant to Rule 430(A)(b) and have found such
amounts, percentages and financial information to be in agreement with the
records specified in such clause (iv).
(f) At the Closing Time, the Securities and the Common Stock issuable
upon conversion or redemption of the Securities shall have been approved for
listing on the New York Stock Exchange upon notice of issuance.
(g) At the Closing Time, and at each Date of Delivery, if any, counsel
for the Underwriters shall have been furnished with such documents and opinions
as they may reasonably require with respect to unforeseen materially changed
circumstances since the date of this Agreement for the purpose of enabling them
to pass upon the issuance and sale of the Securities as herein contemplated; and
all proceedings taken by the Company in connection with the issuance and sale of
the Securities as herein contemplated shall be reasonably satisfactory in form
and substance to the Underwriters and counsel for the Underwriters.
(h) The NASD shall not have raised any objection with respect to the
fairness and reasonableness of the underwriting terms and arrangements.
(i) In the event that the Underwriters exercise their option provided
in Section 2(b) hereof to purchase all or any portion of the Option Securities,
the representations and warranties of the Company contained herein and the
statements in any certificates furnished by the Company hereunder shall be true
and correct as of,
-27-
<PAGE>
and as if made on, each Date of Delivery, and at the relevant
Date of Delivery, the Underwriters shall have received:
(1) A certificate, dated such Date of Delivery, of the
president or a vice president of the Company and the chief
financial or chief accounting officer of the Company confirming that
the certificate delivered at the Closing Time pursuant to Section 5(c)
hereof is true and correct as of, and as if made on, such Date of
Delivery.
(2) The favorable opinion of Lawrence W. Inlow, Executive Vice
President, Secretary and General Counsel for the Company, in form and
substance satisfactory to counsel for the Underwriters, dated such Date
of Delivery, relating to the Option Securities and otherwise to the
same effect as the opinion required by Section 5(b)(1) hereof.
(3) The favorable opinion of Krieg DeVault Alexander &
Capehart, special counsel for the Company, in form and substance
satisfactory to counsel for the Underwriters, dated such Date of
Delivery, relating to the Option Securities and otherwise to the same
effect as the opinion required by Section 5(b)(2) hereof.
(4) The favorable opinion of LeBoeuf, Lamb, Greene & MacRae,
L.L.P., counsel for the Underwriters, dated such Date of Delivery,
relating to the Option Securities and otherwise to the same effect as
the opinion required by Section 5(b)(3) hereof.
(5) A letter from Coopers & Lybrand in form and substance
satisfactory to the Underwriters and dated such Date of Delivery,
substantially the same in form and substance as the letter furnished to
the Underwriters pursuant to Section 5(d) hereof, except that the
"specified date" in the letter furnished pursuant to this Section
5(i)(5) shall be a date not more than five days prior to such Date of
Delivery.
If any condition specified in this Section 5 shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be terminated
by the Underwriters by notice to the Company at any time at or prior to the
Closing Time, and such termination shall be without liability of any party to
any other party except as provided in Section 4.
Section 6. Indemnification.
(a) The Company agrees to indemnify and hold harmless each Underwriter
-28-
<PAGE>
and each person, if any, who controls any Underwriter within the meaning of
Section 15 of the 1933 Act or Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), including any Rule
430(A) Information or Rule 434 Information, or the omission or alleged
omission therefrom of
a material fact required to be stated therein or necessary to make the
statements therein not misleading or arising out of any untrue
statement or alleged untrue statement of a material fact contained in
any preliminary prospectus or the Prospectus (or any amendment or
supplement thereto) or the omission or alleged omission therefrom of a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened,
or of any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, if such
settlement is effected with the written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred
(including, subject to Section 6(c) hereof, the reasonable fees and
disbursements of counsel chosen by Merrill Lynch), reasonably incurred
in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under (i) or
(ii) above;
provided, however, that (A) the foregoing indemnity shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Underwriter through Merrill Lynch expressly for use in the Registration
Statement (or any amendment thereto) or any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto); and (B) the foregoing
indemnity agreement with respect to any preliminary prospectus shall not inure
to the benefit of the Underwriter from whom the person asserting any such
losses, claims,
-29-
<PAGE>
damages or liabilities purchased Securities, or any person controlling any
Underwriter, if the Company shall sustain the burden of proving that a copy of
the Prospectus (as then amended or supplemented, if the Company shall have
furnished any amendments or supplements thereto) was not sent or given by or on
behalf of the Underwriters to such person if such is required by law at or prior
to the written confirmation of the sale of such Securities to such person and if
the Prospectus (as so amended or supplemented) would have cured the defect
giving rise to such loss, claim, damage or liability, and the Company has
complied with its obligations under Section 3(d) hereof.
(b) Each Underwriter severally agrees to indemnify and hold
harmless the Company, its directors, each of its officers who signed the
Registration Statement, and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act against
any and all loss, liability, claim, damage and expense described in the
indemnity contained in subsection (a) of this Section, as incurred, but only
with respect to untrue statements or omissions, or alleged untrue statements or
omissions, made in the Registration Statement (or any amendment thereto) or any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto) in reliance upon and in conformity with written information furnished
to the Company by such Underwriter through Merrill Lynch expressly for use in
the Registration Statement (or any amendment thereto) or such preliminary
prospectus or the Prospectus (or any amendment or supplement thereto).
(c) Each indemnified party shall give notice as promptly as reasonably
practicable to each indemnifying party of any action commenced against it in
respect of which indemnity may be sought hereunder, but failure to so notify an
indemnifying party shall not relieve such indemnifying party from any liability
which it may have otherwise than on account of this indemnity agreement. An
indemnifying party may participate at its own expense in the defense of any such
action. If it so elects within a reasonable time after receipt of such notice,
an indemnifying party, jointly with any other indemnifying parties receiving
such notice, may assume the defense of such action with counsel chosen by it and
approved by the indemnified parties defendant in such action (which approval
shall not be unreasonably withheld), unless such indemnified parties reasonably
object to such assumption on the ground that there may be legal defenses
available to them which are different from or in addition to those available to
such indemnifying party. If an indemnifying party assumes the defense of such
action, the indemnifying parties shall not be liable for any fees and expenses
of counsel for the indemnified parties incurred thereafter in connection with
such action. In no event
-30-
<PAGE>
shall the indemnifying parties be liable for reasonable fees and expenses of
more than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. An indemnifying party shall not
be liable for any settlement or any action or claim effected without its
consent, which consent shall not be unreasonably withheld.
Section 7. Contribution.
If the indemnification provided for in Section 6 hereof is for any
reason unavailable to or insufficient to hold harmless an indemnified party in
respect of any losses, liabilities, claims, damages or expenses referred to
therein, then each indemnifying party shall contribute to the aggregate amount
of such losses, liabilities, claims, damages and expenses incurred by such
indemnified party, as incurred, (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company on the one hand and the
Underwriters on the other hand from the offering of the Securities pursuant to
this Agreement or (ii) if the allocation provided by clause (i) is not permitted
by applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company on the one hand and of the Underwriters on the other hand in
connection with the statements or omissions which resulted in such losses,
liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.
The relative benefits received by the Company on the one hand
and the Underwriters on the other hand in connection with the offering of the
Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the
Securities pursuant to this Agreement (before deducting expenses) received by
the Company and the total underwriting discount received by the Underwriters, in
each case as set forth on the cover of the Prospectus or, if Rule 434 is used,
the corresponding location on the Term Sheet, bear to the aggregate initial
public offering of the Securities as set forth on such cover.
The relative fault of the Company on the one hand and the
Underwriters on the other hand shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
-31-
<PAGE>
The Company and the Underwriters agree that it would not be
just and equitable if contribution pursuant to this Section 7 were determined by
pro rata allocation (even if the Underwriters were treated as one for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 7. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 7 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Securities
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages which such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission.
No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who
controls an Underwriter within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act shall have the same rights to contribution as such
Underwriter, and each director of the Company, each officer of the Company who
signed the Registration Statement, and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act or Section 20 of the
1934 Act shall have the same rights to contribution as the Company. The
Underwriters' respective obligations to contribute pursuant to this Section 7
are several in proportion to the number of Initial Securities set forth opposite
their respective names in Schedule A hereto and not joint.
Section 8. Representations, Warranties and Agreements to
Survive Delivery.
All representations, warranties and agreements contained in
-32-
<PAGE>
this Agreement and the Pricing Agreement, or contained in certificates of
officers of the Company submitted pursuant hereto, shall remain operative and in
full force and effect, regardless of any investigation made by or on behalf of
any Underwriter or controlling person, or by or on behalf of the Company, and
shall survive delivery of and payment for the Securities to the Underwriters.
Section 9. Termination of Agreement.
(a) The Representatives may terminate this Agreement and the Pricing
Agreement, by notice to the Company, at any time at or prior to the Closing Time
(i) if there has been, since the date of this Agreement or since the respective
dates as of which information is given in the Registration Statement (except as
otherwise stated or contemplated therein at the date of the Pricing Agreement),
any material adverse change or any development which could reasonably be
expected to result in a prospective material adverse change in the condition,
financial or otherwise, or in the earnings or business affairs of the Company
and its subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business, or (ii) if there has occurred any outbreak of
hostilities or other calamity or crisis, or any material worsening thereof, or
any change or development involving a prospective change in national or
international political, financial or economic conditions, the effect of which
on the financial markets of the United States is such as to make it, in the
judgment of the Underwriters, impracticable to market the Securities or to
enforce contracts for the sale of the Securities, or (iii) if trading in the
Common Stock or any other security of the Company has been suspended or limited
by the Commission or the New York Stock Exchange, or if trading generally on
either the American Stock Exchange or the New York Stock Exchange has been
suspended or limited, or minimum or maximum prices for trading have been fixed,
or maximum ranges of prices for securities have been required, by either of said
Exchanges or by order of the Commission, the NASD or any other governmental
authority, or (iv) if a banking moratorium has been declared by Federal, Indiana
or New York authorities.
(b) If this Agreement and the Pricing Agreement are terminated pursuant
to this Section, such termination shall be without liability of any party to any
other party except as provided in Section 4, and provided, further, that
Sections 1, 6 and 7 shall survive such termination and remain in full force and
effect.
Section 10. Default by One or More of the Underwriters.
-33-
<PAGE>
If one or more of the Underwriters shall fail at Closing Time to
purchase the Initial Securities which it or they are obligated to purchase under
this Agreement and the Pricing Agreement (the "Defaulted Securities"), the
Representatives shall have the right, within 24 hours thereafter, to make
arrangements for one or more of the non-defaulting Underwriters, or any other
underwriters, to purchase all, but not less than all, of the Defaulted
Securities in such amounts as may be agreed upon and upon the terms herein set
forth; if, however, the Representatives shall not have completed such
arrangements within such 24-hour period, then:
(a) if the number of Defaulted Securities does not exceed 10%
of the number of Initial Securities, the non-defaulting Underwriters
shall be obligated to purchase the full amount thereof in the
proportions that their respective underwriting obligations hereunder
bear to the underwriting obligations of all non-defaulting
Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the
number of Initial Securities, this Agreement shall terminate without
liability on the part of any non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination
of this Agreement, either the Representatives or the Company shall have the
right to postpone the Closing Time for a period not exceeding seven days in
order to effect any required changes in the Registration Statement or Prospectus
or in any other documents or arrangements.
Section 11. Notices.
All notices and other communications hereunder shall be in writing and
shall be deemed to have been duly given if mailed or transmitted by any standard
form of telecommunication. Notices to the Underwriters shall be directed to the
Representatives c/o Merrill Lynch & Co., 5500 Sears Tower, Chicago, Illinois
60606, Attention: Robert S. Whitelaw, Managing Director, with a copy to LeBoeuf,
Lamb, Greene & MacRae, L.L.P., 125 West 55th Street, New York, New York
10019-5389, Attention: Michael Groll, Esq.; notices to the Company shall be
directed to it at 11825 North Pennsylvania Street, Carmel, Indiana 46032,
Attention: Lawrence W. Inlow, Esq., with a copy to Krieg, Devault, Alexander &
Capehart, special counsel to the Company, at 2800 One Indiana Square,
Indianapolis, Indiana 46204, Attention: Timothy M. Harden, Esq.
-34-
<PAGE>
Section 12. Parties.
This Agreement and the Pricing Agreement shall each inure to the
benefit of and be binding upon the Underwriters and the Company and their
respective successors. Nothing expressed or mentioned in this Agreement or the
Pricing Agreement is intended or shall be construed to give any person, firm or
corporation, other than the Underwriters and the Company and their respective
successors and the controlling persons and officers and directors referred to in
Sections 6 and 7 and their heirs and legal representatives, any legal or
equitable right, remedy or claim under or in respect of this Agreement or the
Pricing Agreement or any provision herein or therein contained. This Agreement
and the Pricing Agreement and all conditions and provisions hereof and thereof
are intended to be for the sole and exclusive benefit of the Underwriters and
the Company and their respective successors, and said controlling persons and
officers and directors and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation. No purchaser of Securities from
any Underwriter shall be deemed to be a successor by reason merely of such
purchase.
Section 13. Governing Law and Time.
This Agreement and the Pricing Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed in said State. Unless otherwise set forth
herein, specified times of day refer to New York City time.
-35-
<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, shall become a binding agreement
between the Underwriters and the Company in accordance with its terms.
Very truly yours,
CONSECO, INC.
By /s/ Lawrence W. Inlow
---------------------
Name: Lawrence W. Inlow
Title:Executive Vice President
and General Counsel
CONFIRMED AND ACCEPTED, as of the date first above written:
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
DEAN WITTER REYNOLDS INC.
SALOMON BROTHERS INC
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: /s/ Ethan Stanbler
-------------------
Name: Ethan Stanbler
Title:Attorney-in-fact
For themselves and as Representatives
of the other Underwriters named in
Schedule A hereto
-36-
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE A
Number of
Shares of
PRIDES to be
Name Purchased
---- ------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated . . . . . . . . . 1,220,000
Dean Witter Reynolds Inc. . . . . . . . . 1,220,000
Salomon Brothers Inc . . . . . . . . . . . 1,220,000
Fox-Pitt, Kelton Inc. . . . . . . . . . . 50,000
Ladenburg, Thalmann & Co. Inc. . . . . . . 50,000
Forum Capital Markets L.P. . . . . . . . . 20,000
Parallax Group, Inc. . . . . . . . . . . . 20,000
---------
Total.............................. 3,800,000
=========
</TABLE>
-37-
<PAGE>
EXHIBIT A
3,800,000 Shares
CONSECO, INC.
(an Indiana corporation)
Preferred Redeemable Increased Dividend Equity
Securities (SM), 7% PRIDES (SM), Convertible Preferred Stock
(Stated Liquidation Value $61.125 Per Share)
PRICING AGREEMENT
January 17, 1996
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
DEAN WITTER REYNOLDS INC.
SALOMON BROTHERS INC
As Representatives of the
Underwriters named in the
within-mentioned
Purchase Agreement
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
5500 Sears Tower
Chicago, Illinois 60606
Dear Sirs:
Reference is made to the Purchase Agreement dated January 17,
1996 (the "Purchase Agreement") relating to the purchase by Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated, Dean Witter Reynolds Inc.
and Salomon Brothers Inc, as representatives of the Underwriters named in
Schedule A thereto (the "Underwriters"), of the above shares of Preferred
Redeemable Increased Dividend Equity Securities (SM), 7% PRIDES (SM),
Convertible Preferred Stock (the "Securities"), of Conseco, Inc., an Indiana
corporation (the "Company").
Pursuant to Section 2 of the Purchase Agreement, the Company
agrees with each Underwriter as follows:
<PAGE>
1. The initial public offering price per share for the
Securities, determined as provided in Section 2, shall be $61.125 per
share, plus all accrued and unpaid dividends, if any, from the date of
original issue of such Securities;
provided that the purchase price per share for any Option Securities
(as defined in the Purchase Agreement) purchased upon exercise of the
over-allotment option described in Section 2(b) of the Purchase
Agreement shall be reduced by an amount per share equal to any
dividends declared by the Company and payable on the Initial Securities
(as defined in the Purchase Agreement) but not payable on the Option
Securities.
2. The annual dividend payable in respect of the
Securities shall be $4.279 per share.
3. The purchase price per share for the Securities to be paid
by the several Underwriters shall be $59.295, being an amount equal to
the initial public offering price set forth above less $1.83 per share.
4. The Mandatory Conversion Date shall be February 1,
2000.
5. The Call Price per share for the Securities shall be the
sum of (i) $62.195 on and after February 1, 1999, to and including
April 30, 1999, $61.928 on and after May 1, 1999, to and including July
31, 1999, $61.660 on and after August 1, 1999, to and including October
31, 1999, and $61.393 on and after November 1, 1999, to and including
December 31, 1999, and $61.125 on and after January 1, 2000, to and
including February 1, 2000, and (ii) all accrued and unpaid dividends
thereon to but not including the date fixed for redemption (other than
previously paid dividends payable to a holder of record as of a prior
date).
6. The Optional Conversion Rate shall be .855.
7. The redemption rate per share of the Securities shall be
the greater of (i) the number of share(s) of Common Stock equal to the
applicable Call Price in effect on the redemption date divided by the
Current Market Price, as defined in the Prospectus (as defined in the
Purchase Agreement), of the Common Stock, determined as of the second
trading day immediately preceding the Notice Date (as defined in the
Prospectus) or (ii) .855 of a share of Common Stock, subject to
adjustment as described in the Prospectus.
A-2
<PAGE>
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to the Company a counterpart hereof,
whereupon this instrument, along with all counterparts, will become a binding
agreement between the Underwriters and the Company in accordance with its terms.
Very truly yours,
CONSECO, INC.
By /s/ Lawrence W. Inlow
---------------------
Name: Lawrence W. Inlow
Title:Executive Vice President
and General Counsel
CONFIRMED AND ACCEPTED, as of the date first above written:
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
DEAN WITTER REYNOLDS INC.
SALOMON BROTHERS INC
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: /s/ Ethan Stanbler
-------------------
Name: Ethan Stanbler
Title:Attorney-in-fact
For themselves and as Representatives
of the other Underwriters named in
the Purchase Agreement
A-3
ARTICLES OF AMENDMENT TO THE
ARTICLES OF INCORPORATION OF
CONSECO, INC.
CONSECO, INC. (hereinafter referred to as the "Corporation"), an
Indiana corporation governed by the provisions of the Indiana Business
Corporation Law, as amended, desiring to give notice of corporate action
effectuating amendment of its Articles of Incorporation, as previously restated
and amended (the "Articles of Incorporation"), sets forth the following:
ARTICLE I
THE AMENDMENT
Section 1. Creation of New Article XIV. There is hereby
created a new Article XIV of the Articles of Incorporation the
exact text of which is as follows:
"ARTICLE XIV
Designations, Rights and Preferences of 7%
PRIDES (SM), Convertible Preferred Stock
The designations, rights, preferences, limitations and restrictions of
the shares of Preferred Stock, without par value, to be designated as 7% PRIDES
(SM), Convertible Preferred Stock are hereby fixed as follows;
Section 1. Designation and Amount.
The designation of the series of Preferred Stock created by this
Article XIV shall be " 7% PRIDES (SM), Convertible Preferred Stock, no par value
per share" (the "PRIDES"). The PRIDES are Preferred Redeemable Increased
Dividend Equity Securities (SM). The authorized number of shares constituting
the PRIDES shall be 4,370,000.
(SM)Service mark of Merrill Lynch & Co., Inc.
Section 2. Dividends.
(a) The holders of outstanding shares of PRIDES shall be entitled to
receive, when, as and if declared by the Board of Directors out of funds legally
available therefor, cumulative preferential dividends from January 23, 1996, at
the rate per share of $4.279 per annum, and no more, payable quarterly for each
share of PRIDES, payable in arrears on the 1st day of each February, May, August
and November, respectively (each such date being hereinafter referred to as a
"Dividend Payment Date"), or, if any Dividend Payment Date is not a business
day, then the Dividend Payment Date shall be the next succeeding business day;
provided, however, that, with respect to any dividend period during which a
redemption occurs, the Corporation may, at its option, declare accrued
<PAGE>
dividends to, and pay such dividends on, the redemption date, in which case such
dividends would be payable on the redemption date in cash to the holders of the
shares of PRIDES as of the record date for such dividend payment and such
accrued dividends would not be included in the calculation of the related Call
Price (as hereinafter defined). Each dividend on the shares of PRIDES shall be
payable to holders of record as they appear on the stock register of the
Corporation on such record date, not less than 10 (except as otherwise provided
with respect to the first dividend payment) nor more than 60 days preceding the
payment dates thereof, as shall be fixed by the Board of Directors. The first
dividend payment shall be for the period from January 23, 1996 to but excluding
February 1, 1996 and the first dividend will be payable on February 1, 1996 to
holders of record at the close of business on January 23, 1996. Dividends (or
amounts equal to accrued and unpaid dividends) payable on shares of PRIDES for
any period less than a full quarterly dividend period will be computed on the
basis of a 360-day year of twelve 30-day months and the actual number of days
elapsed in any period less than one month.
Dividends on the shares of PRIDES will accrue whether or not there are
funds legally available for the payment of such dividends and whether or not
such dividends are declared on a daily basis from the previous Dividend Payment
Date. Accumulated unpaid dividends shall not bear interest. Dividends will cease
to accrue in respect of shares of PRIDES on the Mandatory Conversion Date (as
hereinafter defined) or on the date of their earlier conversion or redemption.
The shares of PRIDES will rank on a parity, both as to payment of
dividends and distribution of assets upon liquidation, with the Cumulative
Convertible Preferred Stock and with any future preferred stock issued by the
Corporation (the "Preferred Stock") that by its terms ranks on a parity with the
shares of PRIDES.
(b) As long as any shares of PRIDES are outstanding, no dividends for
any dividend period (other than dividends payable in shares of, or warrants,
rights or options exercisable for or convertible into shares of, Common Stock
(as defined below) or any other capital stock of the Corporation ranking junior
to the shares of PRIDES as to the payment of dividends and the distribution of
assets upon liquidation ("Junior Stock") and cash in lieu of fractional shares
of such Junior Stock in connection with any such dividend) will be paid in cash
or otherwise, nor will any other distribution be made (other than a distribution
payable in Junior Stock and cash in lieu of fractional shares of such Junior
Stock in connection with any such distribution), on any Junior Stock unless: (i)
full dividends on all outstanding shares of Preferred Stock (including the
shares of PRIDES), that does not constitute Junior Stock ("Parity Preferred
Stock") have been paid, or declared and set aside for payment, for all dividend
periods terminating on or prior to the date of such Junior Stock dividend or
distribution
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<PAGE>
payment to the extent such dividends are cumulative; (ii) dividends in full, in
the case of a dividend payment with respect to Junior Stock, for any Parity
Preferred Stock dividend period commencing on or prior to the date of such
Junior Stock dividend payment or, in the case of any other distribution with
respect to Junior Stock, for the current quarterly dividend period, have been
paid, or declared and set aside for payment, on all outstanding shares of Parity
Preferred Stock to the extent such dividends are cumulative; (iii) the
Corporation has paid or set aside all amounts, if any, then or theretofore
required to be paid or set aside for all purchase, retirement, and sinking
funds, if any, for any outstanding shares of Parity Preferred Stock; and (iv)
the Corporation is not in default on any of its obligations to redeem any
outstanding shares of Parity Preferred Stock.
In addition, as long as any shares of PRIDES are outstanding, no shares
of any Junior Stock may be purchased, redeemed, or otherwise acquired by the
Corporation or any of its subsidiaries (except in connection with a
reclassification or exchange of any Junior Stock through the issuance of other
Junior Stock (and cash in lieu of fractional shares of such Junior Stock in
connection therewith) or the purchase, redemption, or other acquisition of any
Junior Stock with any Junior Stock (and cash in lieu of fractional shares of
such Junior Stock in connection therewith)) nor may any funds be set aside or
made available for any sinking fund for the purchase or redemption of any Junior
Stock unless: (i) full dividends on all outstanding shares of Parity Preferred
Stock have been paid, or declared and set aside for payment, for all dividend
periods terminating on or prior to the date of such purchase, redemption or
acquisition to the extent such dividends are cumulative; (ii) the Corporation
has paid or set aside all amounts, if any, then or theretofore required to be
paid or set aside for all purchase, retirement, and sinking funds, if any, for
any outstanding shares of Parity Preferred Stock; and (iii) the Corporation is
not in default on any of its obligations to redeem any outstanding shares of
Parity Preferred Stock.
Subject to the provisions described above, such dividends or other
distributions (payable in cash, property, or Junior Stock) as may be determined
by the Board of Directors may be declared and paid on the shares of any Junior
Stock from time to time and Junior Stock may be purchased, redeemed or otherwise
acquired by the Corporation or any of its subsidiaries from time to time. In the
event of the declaration and payment of any such dividends or other
distributions, the holders of such Junior Stock will be entitled, to the
exclusion of holders of any outstanding Parity Preferred Stock, to share therein
according to their respective interests.
As long as any shares of PRIDES are outstanding, dividends for any
dividend period or other distributions may not be paid on any outstanding shares
of Parity Preferred Stock (other than dividends distributions payable in Junior
Stock and cash in lieu of
3
<PAGE>
fractional shares of such Junior Stock in connection therewith), unless
either: (a) (i) full dividends on all outstanding shares of Parity Preferred
Stock have been paid, or declared and set aside for payment, for all dividend
periods terminating on or prior to the date of such Parity Preferred Stock
dividend or distribution payment to the extent such dividends are cumulative;
(ii) dividends in full, in the case of a dividend payment, for any Parity
Preferred Stock dividend period commencing on or prior to the date of such
dividend payment or, in the case of any other distribution, for the current
quarterly dividend period, have been paid, or declared and set aside for
payment, on all outstanding shares of Parity Preferred Stock to the extent such
dividends are cumulative; (iii) the Corporation has paid or set aside all
amounts, if any, then or theretofore required to be paid or set aside for all
purchase, retirement and sinking funds, if any, for any outstanding shares of
Parity Preferred Stock; and (iv) the Corporation is not in default on any of its
obligations to redeem any outstanding shares of Parity Preferred Stock; or (b)
any such dividends are declared and paid pro rata so that the amounts of any
dividends declared and paid per share on outstanding shares of PRIDES and each
other share of such Parity Preferred Stock will in all cases bear to each other
the same ratio that accrued and unpaid dividends (including any accumulation
with respect to unpaid dividends for prior dividend periods, if such dividends
are cumulative) per share of outstanding shares of PRIDES and such other
outstanding shares of Parity Preferred Stock bear to each other.
In addition, as long as any shares of PRIDES are outstanding, the
Corporation may not purchase, redeem or otherwise acquire any Parity Preferred
Stock (except with any Junior Stock and cash in lieu of fractional shares of
such Junior Stock in connection therewith) unless: (i) full dividends on Parity
Preferred Stock have been paid, or declared and set aside for payment, for all
dividend periods terminating on or prior to the date of such Parity Preferred
Stock purchase, redemption or other acquisition payment to the extent such
dividends are cumulative; (ii) the Corporation has paid or set aside all
amounts, if any, then or theretofore required to be paid or set aside for all
purchase, retirement, and sinking funds, if any, for any Parity Preferred Stock;
and (iii) the Corporation is not in default of any of its obligations to redeem
any Parity Preferred Stock.
(c) Any dividend payment made on the shares of PRIDES shall first be
credited against the earliest accrued but unpaid dividend due with respect to
the shares of PRIDES.
(d) All dividends paid with respect to the shares of PRIDES shall be
paid pro rata to the holders entitled thereto.
(e) Holders of the shares of PRIDES shall be entitled to
receive dividends in preference to and in priority over any dividends upon any
shares of the Corporation ranking junior to the
4
<PAGE>
shares of PRIDES as to dividends, but subject to the rights of holders of shares
of the Corporation having a preference and a priority over the payment of
dividends on the shares of PRIDES.
Section 3. Redemption and Conversion.
(a) Mandatory Conversion. On February 1, 2000 (the "Mandatory
Conversion Date"), each outstanding share of PRIDES shall convert automatically
(the "Mandatory Conversion") into shares of Common Stock at the Common
Equivalent Rate (as hereinafter defined) in effect on the Mandatory Conversion
Date and the right to receive an amount in cash equal to all accrued and unpaid
dividends on such share of PRIDES (other than previously declared dividends
payable to a holder of record on a prior date) to the Mandatory Conversion Date,
whether or not declared, out of funds legally available for the payment of
dividends, subject to the right of the Corporation to redeem the shares of
PRIDES on or after February 1, 1999 (the "Initial Redemption Date") and prior to
the Mandatory Conversion Date, as described below, and subject to the conversion
of the shares of PRIDES at the option of the holder at any time prior to the
Mandatory Conversion Date. The Common Equivalent Rate is initially one share of
Common Stock for each share of PRIDES and is subject to adjustment as set forth
below. Dividends on the shares of PRIDES shall cease to accrue and such shares
shall cease to be outstanding on the Mandatory Conversion Date. The Corporation
shall make such arrangements as it deems appropriate for the issuance of
certificates representing shares of Common Stock and for the payment of cash in
respect of such accrued and unpaid dividends, if any, or cash in lieu of
fractional shares, if any, in exchange for and contingent upon surrender of
certificates representing the shares of PRIDES, and the Corporation may defer
the payment of dividends on such shares of Common Stock and the voting thereof
until, and make such payment and voting contingent upon, the surrender of such
certificates representing the shares of PRIDES, provided that the Corporation
shall give the holders of the shares of PRIDES such notice of any such actions
as the Corporation deems appropriate and upon such surrender such holders shall
be entitled to receive such dividends declared and paid on such shares of Common
Stock subsequent to the Mandatory Conversion Date. Amounts payable in cash in
respect of the shares of PRIDES or in respect of such shares of Common Stock
shall not bear interest.
(b) Redemption by the Corporation.
(i) Right to Redeem. Shares of PRIDES are not
redeemable by the Corporation prior to the Initial
Redemption Date. At any time and from time to time on
or after the Initial Redemption Date and prior to the
Mandatory Conversion Date, the Corporation shall have
the right to redeem, in whole or in
part, the outstanding shares of PRIDES. Upon any such
5
<PAGE>
redemption, the Corporation shall deliver to the
holders of shares of PRIDES, in accordance with the
provisions of this Article XIV, in exchange for each
share so redeemed, the greater of (A) a number of
shares of Common Stock equal to the Call Price in
effect on the redemption date, divided by the Current
Market Price (as hereinafter defined) of the Common
Stock determined as of the second trading day
immediately preceding the Notice Date (as hereinafter
defined) or (B) .855 of a share of Common Stock
(subject to adjustment in the same manner as the
Optional Conversion Rate (as hereinafter defined) is
adjusted). The public announcement of any call for
redemption shall be made prior to, or at the time of,
the mailing of the notice of such call to holders of
shares of PRIDES as described below. If fewer than
all the outstanding shares of PRIDES are to be
redeemed, shares of PRIDES to be redeemed shall be
selected by the Corporation from outstanding shares
of PRIDES not previously redeemed by lot or pro rata
(as nearly as may be practicable) or by any other
method determined by the Board of Directors in its
sole discretion to be equitable. As used in this
subparagraph (b), the term "Notice Date" with respect
to any notice given by the Corporation in connection
with a redemption of shares of PRIDES means the date
on which first occurs either the public announcement
of such redemption or the commencement of mailing of
such notice to the holders of shares of PRIDES.
(ii) Notice of Redemption. The Corporation shall
provide notice of any redemption of the shares of
PRIDES to holders of record of PRIDES to be called
for redemption not less than 15 nor more than 60
days prior to the date fixed for such redemption.
Such notice shall be provided by mailing notice of
such redemption, first class postage prepaid, to
each holder of record of shares of PRIDES to be
redeemed, at such holder's address as it appears on
the stock register of the Corporation; provided,
however, that neither failure to give such notice
nor any defect therein shall affect the validity of
the proceeding for the redemption of any shares of
PRIDES to be redeemed except as to the holders to
whom the Corporation has failed to give said notice
or whose notice was defective.
Each such notice shall state, as appropriate, the
following and may contain such other information as
the Corporation deems advisable:
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<PAGE>
(A) the redemption date;
(B) that all outstanding shares of PRIDES are to be
redeemed or, in the case of a call for redemption of
fewer than all outstanding shares of PRIDES, the
number of such shares held by such holder to be
redeemed;
(C) the number of shares of Common Stock deliverable
upon redemption of each share of PRIDES to be
redeemed and, if applicable, the Call Price and the
Current Market Price used to calculate such number of
shares of Common Stock;
(D) the place or places where certificates for
such shares are to be surrendered for redemption;
and
(E) that dividends on the shares of PRIDES to be
redeemed shall cease to accrue on such redemption
date (except as otherwise provided herein).
(iii) Deposit of Shares and Funds. The Corporation's
obligation to deliver shares of Common Stock and
provide funds upon redemption in accordance with
this Section 3 shall be deemed fulfilled if, on or
before a redemption date, the Corporation shall
irrevocably deposit, with a bank or trust company,
or an affiliate of a bank or trust company, having
an office or agency in New York City and having a
capital and surplus of at least $50,000,000, or
shall set aside or make other reasonable provision
for the issuance of such number of shares of Common
Stock as are required to be delivered by the
Corporation pursuant to this Section 3 upon the
occurrence of the related redemption (and for the
payment of cash in lieu of the issuance of
fractional share amounts and accrued and unpaid
dividends payable in cash on the shares to be
redeemed as and to the extent provided by this
Section 3). Any interest accrued on such funds
shall be paid to the Corporation from time to time.
Any shares of Common Stock or funds so deposited
and unclaimed at the end of two years from such
redemption date shall be repaid and released to the
Corporation, after which the holder or holders of
such shares of PRIDES so called for redemption
shall look only to the Corporation for delivery of
such shares of Common Stock or funds.
7
<PAGE>
(iv) Surrender of Certificates; Status. Each holder of
shares of PRIDES to be redeemed shall surrender the
certificates evidencing such shares (properly
endorsed or assigned for transfer, if the Board of
Directors shall so require and the notice shall so
state) to the Corporation at the place designated
in the notice of such redemption and shall
thereupon be entitled to receive certificates
evidencing shares of Common Stock and to receive
any funds payable pursuant to this Section 3
following such surrender and following the date of
such redemption. In case fewer than all the shares
represented by any such surrendered certificate are
called for redemption, a new certificate shall be
issued at the expense of the Corporation
representing the unredeemed shares. If such notice
of redemption shall have been given, and if on the
date fixed for redemption, shares of Common Stock
and funds necessary for the redemption shall have
been irrevocably either set aside by the
Corporation separate and apart from its other funds
or assets in trust for the account of the holders
of the shares to be redeemed or converted (and so
as to be and continue to be available therefor) or
deposited with a bank or a trust company or an
affiliate thereof as provided herein or the
Corporation shall have made other reasonable
provision therefor, then, notwithstanding that the
certificates evidencing any shares of PRIDES so
called for redemption or subject to conversion
shall not have been surrendered, the shares
represented thereby so called for redemption shall
be deemed no longer outstanding, dividends with
respect to the shares so called for redemption
shall cease to accrue on the date fixed for
redemption (except that holders of shares of PRIDES
at the close of business on a record date for any
payment of dividends shall be entitled to receive
the dividend payable on such shares on the
corresponding Dividend Payment Date notwithstanding
the redemption of such shares following such record
date and prior to such Dividend Payment Date) and
all rights with respect to the shares so called for
redemption shall forthwith after such date cease
and terminate, except for the rights of the holders
to receive the shares of Common Stock and funds, if
any, payable pursuant to this Section 3 without
interest upon surrender of their certificates
therefor (unless the Corporation defaults on the
delivery of such shares or the payment of such
funds). Holders of shares of PRIDES that are
redeemed shall not be entitled to receive dividends
8
<PAGE>
declared and paid on such shares of Common Stock, and
such shares of Common Stock shall not be entitled to
vote, until such shares of Common Stock are issued
upon the surrender of the certificates representing
such shares of PRIDES and upon such surrender such
holders shall be entitled to receive such dividends
declared and paid on such shares of Common Stock
subsequent to such redemption date without interest
thereon.
(c) Conversion at Option of Holder. Shares of PRIDES are convertible,
in whole or in part, at the option of the holders thereof, at any time prior to
the Mandatory Conversion Date, unless previously redeemed, into shares of Common
Stock at a rate of .855 of a share of Common Stock for each share of PRIDES (the
"Optional Conversion Rate") (equivalent to a conversion price of $71.49 per
share of Common Stock), subject to adjustment as set forth below. The right to
convert shares of PRIDES called for redemption shall terminate immediately prior
to the close of business on the redemption date.
Conversion of shares of PRIDES at the option of the holder may be
effected by delivering certificates evidencing such shares, together with
written notice of conversion and a proper assignment of such certificates to the
Corporation or in blank, to the office or agency to be maintained by the
Corporation for that purpose (and, if applicable, cash payment of an amount
equal to the dividend payable on such shares), and otherwise in accordance with
conversion procedures established by the Corporation. Each optional conversion
shall be deemed to have been effected immediately prior to the close of business
on the date on which the foregoing requirements shall have been satisfied. The
conversion shall be at the Optional Conversion Rate in effect at such time and
on such date.
Holders of shares of PRIDES at the close of business on a record date
for any payment of declared dividends shall be entitled to receive the dividend
payable on such shares on the corresponding Dividend Payment Date
notwithstanding the conversion of such shares following such record date and
prior to the corresponding Dividend Payment Date. However, shares of PRIDES
surrendered for conversion after the close of business on a record date for any
payment of dividends and before the opening of business on the next succeeding
Dividend Payment Date must be accompanied by payment in cash of an amount equal
to the dividend thereon which is to be paid on such Dividend Payment Date
(unless such shares have been called for redemption on a redemption date between
such record date and such Dividend Payment Date). A holder of shares of PRIDES
called for redemption on February 1, 1999 or any other Dividend Payment Date
thereafter will receive the dividend on such shares payable on that date without
paying an amount equal to such dividend to the Corporation upon conversion.
Except as provided above, upon any
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<PAGE>
optional conversion of shares of PRIDES, the Corporation shall make no payment
or allowance for unpaid dividends, whether or not in arrears, on converted
shares of PRIDES or for previously declared dividends or distributions on the
shares of Common Stock issued upon such conversion.
(d) Common Equivalent Rate and Optional Conversion Rate Adjustments.
The Common Equivalent Rate and the Optional Conversion Rate shall be each
subject to adjustment from time to time as provided below in this section (d).
(i) If the Corporation shall, after January 23,
1996:
(A) pay a stock dividend or make a distribution
with respect to its Common Stock in shares
of such Common Stock,
(B) subdivide or split its outstanding Common
Stock into a greater number of shares,
(C) combine its outstanding shares of Common
Stock into a smaller number of shares, or
(D) issue by reclassification of its shares
of Common Stock any shares of common
stock of the Corporation,
then, in any such event, the Common Equivalent Rate
and the Optional Conversion Rate in effect
immediately prior to such event shall each be
adjusted so that the holder of any shares of PRIDES
shall thereafter be entitled to receive, upon
Mandatory Conversion or upon conversion at the option
of the holder, the number of shares of Common Stock
of the Corporation which such holder would have owned
or been entitled to receive immediately following any
event described above had such shares of PRIDES been
converted immediately prior to such event or any
record date with respect thereto. Such adjustment
shall become effective at the opening of business on
the business day next following the record date for
determination of stockholders entitled to receive
such dividend or distribution, in the case of a
dividend or distribution, and shall become effective
immediately after the effective date, in the case of
a subdivision, split, combination or
reclassification. Such adjustment shall be made
successively.
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(ii) If the Corporation shall, after January 23, 1996,
issue rights or warrants to all holders of its
Common Stock entitling them (for a period not
exceeding 45 days from the date of such issuance)
to subscribe for or purchase shares of Common Stock
at a price per share less than the Current Market
Price of the Common Stock, then, in any such event
unless such rights or warrants are issued to
holders of shares of PRIDES on a pro rata basis
with the shares of Common Stock based on the Common
Equivalent Rate on the date immediately preceding
such issuance, the Common Equivalent Rate and
Optional Conversion Rate shall each be adjusted by
multiplying the Common Equivalent Rate and the
Optional Conversion Rate, in effect immediately
prior to the date of issuance of such rights or
warrants, by a fraction, of which the numerator
shall be the number of shares of Common Stock
outstanding on the date of issuance of such rights
or warrants, immediately prior to such issuance,
plus the number of additional shares of Common
Stock offered for subscription or purchase pursuant
to such rights or warrants, and of which the
denominator shall be the number of shares of Common
Stock outstanding on the date of issuance of such
rights or warrants, immediately prior to such
issuance, plus the number of additional shares of
Common Stock which the aggregate offering price of
the total number of shares of Common Stock so
offered for subscription or purchase pursuant to
such rights or warrants would purchase at such
Current Market Price (determined by multiplying
such total number of shares by the exercise price
of such rights or warrants and dividing the product
so obtained by such Current Market Price). Such
adjustment shall become effective at the opening of
business on the business day next following the
record date for the determination of stockholders
entitled to receive such rights or warrants. To
the extent that shares of Common Stock are not
delivered after the expiration of such rights or
warrants, the Common Equivalent Rate and the
Optional Conversion Rate shall each be readjusted
to the Common Equivalent Rate and the Optional
Conversion Rate which would then be in effect had
the adjustments been made upon the issuance of such
rights or warrants upon the basis of delivery of
only the number of shares of Common Stock actually
delivered. Such adjustment shall be made
successively.
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<PAGE>
(iii) If the Corporation shall, after January 23, 1996,
pay a dividend or make a distribution to all
holders of its Common Stock of evidences of its
indebtedness, cash or other assets (including
capital stock of the Corporation but excluding any
cash dividends or distributions, other than
Extraordinary Cash Distributions (as hereinafter
defined) and dividends referred to in subparagraph
(i) above) or shall issue to all holders of its
Common Stock rights or warrants to subscribe for or
purchase any of its securities (other than Rights
issued pursuant to the Rights Plan and those
referred to in subparagraph (ii) above), then
unless such dividend is paid or distribution is
made to each holder of shares of PRIDES on a pro
rata basis with the shares of Common Stock based on
the Common Equivalent Rate on the date immediately
preceding such payment or distribution, in any such
event, the Common Equivalent Rate and the Optional
Conversion Rate shall each be adjusted by
multiplying the Common Equivalent Rate and the
Optional Conversion Rate in effect on the record
date mentioned below, by a fraction of which the
numerator shall be the Current Market Price per
share of the Common Stock on the record date for
the determination of stockholders entitled to
receive such dividend or distribution, and of which
the denominator shall be such Current Market Price
per share of Common Stock less the fair market
value (as determined by the Board of Directors,
whose determination shall be conclusive, and
described in a resolution adopted with respect
thereto) as of such record date of the portion of
the assets or evidences of indebtedness so
distributed or of such subscription rights or
warrants applicable to one share of Common Stock.
Such adjustment shall become effective on the
opening of business on the business day next
following the record date for the determination of
stockholders entitled to receive such dividend or
distribution. Such adjustment shall be made
successively. As used in this section (d), the
term "Extraordinary Cash Distributions" means, with
respect to any cash dividend or distribution paid
on any date, the amount, if any, by which all cash
dividends and cash distributions on the Common
Stock paid during the consecutive 12-month period
ending on and including such date (other than cash
dividends and cash distributions for which an
adjustment to the Common Equivalent Rate and the
Optional Conversion Rate was previously made)
exceeds, on a per share of Common Stock basis, 10%
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<PAGE>
of the aver of the daily Closing Prices of the Common
Stock over such consecutive 12-month period.
(iv) Any shares of Common Stock issuable in payment of a
dividend shall be deemed to have been issued
immediately prior to the close of business on the
record date for such dividend for purposes of
calculating the number of outstanding shares of
Common Stock under subsection (ii) above.
(v) The Corporation shall also be entitled to make
upward adjustments in the Common Equivalent Rate,
the Optional Conversion Rate and the Call Price, as
it in its sole discretion shall determine to be
advisable, in order that any stock dividends,
subdivisions of shares, distribution of rights to
purchase stock or securities, or distribution of
securities convertible into or exchangeable for
stock (or any transaction which could be treated as
any of the foregoing transactions pursuant to
Section 305 of the Internal Revenue Code of 1986,
as amended) made by the Corporation to its
stockholders after January 23, 1996 shall not be
taxable.
(vi) In any case in which subsection 3(d) shall require
that an adjustment as a result of any event become
effective at the opening of business on the
business day next following a record date and the
date fixed for conversion pursuant to subsection
3(a) or redemption pursuant to subsection 3(b)
occurs after such record date, but before the
occurrence of such event, the Corporation may, in
its sole discretion, elect to defer the following
until after the occurrence of such event: (A)
issuing to the holder of any converted or redeemed
shares of PRIDES the additional shares of Common
Stock issuable upon such conversion or redemption
over the shares of Common Stock issuable before
giving effect to such adjustments and (B) paying to
such holder any amount in cash in lieu of a
fractional share of Common Stock pursuant to
subsection 3(g).
(vii) All adjustments to the Common Equivalent Rate and
the Optional Conversion Rate shall be calculated to
the nearest 1/100th of a share of Common Stock. No
adjustment in the Common Equivalent Rate or the
Optional Conversion Rate shall be required unless
such adjustment would require an increase or
decrease of at least one percent therein; provided,
however, that any adjustment which by reason of
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this subsection (vii) is not required to be made
shall be carried forward and taken into account in
any subsequent adjustment.
(e) Adjustment for Consolidation or Merger. In case of any
consolidation or merger to which the Corporation is a party (other than a merger
or consolidation in which the Corporation is the surviving or continuing
corporation and in which the Common Stock outstanding immediately prior to the
merger or consolidation remains unchanged), or in case of any sale or transfer
to another corporation of the property of the Corporation as an entirety or
substantially as an entirety, or in case of any statutory exchange of securities
with another corporation (other than in connection with a merger or
acquisition), proper provision shall be made so that each share of PRIDES shall,
after consummation of such transaction, be subject to (i) conversion at the
option of the holder into the kind and amount of securities, cash or other
property receivable upon consummation of such transaction by a holder of the
number of shares of Common Stock into which such share of PRIDES might have been
converted immediately prior to consummation of such transaction, (ii) conversion
on the Mandatory Conversion Date into the kind and amount of securities, cash or
other property receivable upon consummation of such securities, cash or other
property receivable upon consummation of such transaction by a holder of the
number of shares of Common Stock into which such share of PRIDES would have
converted if the conversion on the Mandatory Conversion Date had occurred
immediately prior to the date of consummation of such transaction, plus the
right to receive cash in an amount equal to all accrued and unpaid dividends on
such shares of PRIDES (other than previously declared dividends payable to a
holder of record as of a prior date), (iii) redemption on any redemption date in
exchange for the kind and amount of securities, cash or other property
receivable upon consummation of such transaction by a holder of the number of
shares of Common Stock that would have been issuable at the Call Price in effect
on such redemption date upon a redemption of such share immediately prior to
consummation of such transaction, assuming that, if the Notice Date for such
redemption is not prior to such transaction, the Notice Date had been the date
of such transaction and assuming in each case that such holder of Common Stock
failed to exercise rights of election, if any, as to the kind or amount of
securities, cash or other property receivable upon consummation of such
transaction (provided that if the kind or amount of securities, cash or other
property receivable upon consummation of such transaction is not the same for
each non-electing share, then the kind and amount of securities, cash or other
property receivable upon consummation of such transaction for each non-electing
share shall be deemed to be the kind and amount so receivable per share by a
plurality of the non-electing shares). The kind and amount of securities into or
for which the shares of PRIDES shall be convertible or redeemable after
consummation of such transaction shall be subject to adjustment as described in
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the immediately preceding paragraph following the date of consummation of such
transaction. The Corporation may not become a party to any such transaction
unless the terms thereof are consistent with the foregoing or consistent with
clause (iii) of Section 7(c).
For purposes of the immediately preceding paragraph and subsection 3(g)
(iii), any sale or transfer to another corporation of property of the
Corporation which did not account for at least 50% of the consolidated net
income of the Corporation for its most recent fiscal year ending prior to the
consummation of such transaction shall not in any event be deemed to be a sale
or transfer of the property of the Corporation as an entirety or substantially
as an entirety.
(f) Notice of Adjustments. Whenever the Common Equivalent Rate and
Optional Conversion Rate are adjusted as herein provided, the Corporation shall:
(i) forthwith compute the adjusted Common Equivalent Rate and Optional
Conversion Rate in accordance herewith and prepare a certificate signed by an
officer of the Corporation setting forth the adjusted Common Equivalent Rate and
the Optional Conversion Rate, the method of calculation thereof in reasonable
detail and the facts requiring such adjustment and upon which such adjustment is
based, which certificate shall be conclusive, final and binding evidence of the
correctness of the adjustment, and file such certificate forthwith with the
transfer agent for the shares of PRIDES and the Common Stock; and
(ii) make a prompt public announcement and mail a notice to the holders
of the outstanding shares of PRIDES stating that the Common Equivalent Rate and
the Optional Conversion Rate have been adjusted, the facts requiring such
adjustment and upon which such adjustment is based and setting forth the
adjusted Common Equivalent Rate and Optional Conversion Rate, such notice to be
mailed at or prior to the time the Corporation mails an interim statement to its
stockholders covering the fiscal quarter during which the facts requiring such
adjustment occurred, but in any event within 45 days of the end of such fiscal
quarter.
(g) Notices. In case, at any time while any of the shares of
PRIDES are outstanding,
(i) the Corporation shall declare a dividend (or any other
distribution) on its Common Stock, excluding any cash dividends; or
(ii) the Corporation shall authorize the issuance to all holders of its
Common Stock of rights or warrants to subscribe for or purchase shares or its
Common Stock or of any other subscription rights or warrants; or
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(iii) the Corporation shall authorize any reclassification of its
Common Stock (other than a subdivision or combination thereof) or any
consolidation or merger to which the Corporation is a party and for which
approval of any stockholders of the Corporation is required (except for a merger
of the Corporation into one of its subsidiaries solely for the purpose of
changing the corporate domicile of the Corporation to another state of the
United States and in connection with which there is no substantive change in the
rights or privileges of any securities of the Corporation other than changes
resulting from differences in the corporate statutes of the then existing and
the new state of domicile), or the sale or transfer to another corporation of
the property of the Corporation as an entirety or substantially as an entirety;
or
(iv) the Corporation shall authorize the voluntary or
involuntary dissolution, liquidation or winding up of the Corporation;
then the Corporation shall cause to be filed at each office or agency maintained
for the purpose of conversion of the shares of PRIDES, and shall cause to be
mailed to the holders of shares of PRIDES at their last addresses as they shall
appear on the stock register, at least 10 days before the date hereinafter
specified (or the earlier of the dates hereinafter specified, in the event that
more than one date is specified), a notice stating (A) the date on which a
record is to be taken for the purpose of such dividend, distribution, rights or
warrants, or, if a record is not to be taken, the date as of which the holders
of Common Stock of record to be entitled to such dividend, distribution, rights
or warrants are to be determined, or (B) the date on which any such
reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding up is expected to become effective, and the date as of
which it is expected that holders of Common Stock of record shall be entitled to
exchange their Common Stock for securities or other property (including cash),
if any, deliverable upon such reclassification, consolidation, merger, sale,
transfer, dissolution, liquidation or winding up. The failure to give or receive
the notice required by this subsection (g) or any defect therein shall not
affect the legality or validity of such dividend, distribution, right or warrant
or other action.
(h) Effect of Conversions and Redemptions. The person or persons in
whose name or names any certificate or certificates for shares of Common Stock
shall be issuable upon any conversion or redemption shall be deemed to have
become on the date of any such conversion or redemption the holder or holders of
record of the shares represented thereby; provided, however, that any such
surrender on any date when the stock transfer books of the Corporation shall be
closed shall constitute the person or persons in whose name or names the
certificate or certificates for such shares are to be issued as the record
holder or holders thereof for
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all purposes at the opening of business on the next succeeding day on which such
stock transfer books are open.
(i) No Fractional Shares. No fractional shares or script representing
fractional shares of Common Stock shall be issued upon the redemption or
conversion of any shares of PRIDES. In lieu of any fractional share otherwise
issuable in respect of the aggregate number of shares of PRIDES of any holder
which are redeemed or converted on any redemption date or upon Mandatory
Conversion or any optional conversion, such holder shall be entitled to receive
an amount in cash (computed to the nearest cent) equal to the same fraction of
the (i) Current Market Price as of the second trading day immediately preceding
the Notice Date, in the case of redemption, or (ii) Closing Price of the Common
Stock determined (A) as of the fifth Trading Date immediately preceding the
Mandatory Conversion Date, in the case of Mandatory Conversion, or (B) as of the
second Trading Date immediately preceding the effective date of conversion, in
the case of an optional conversion by a holder. If more than one share shall be
surrendered for conversion or redemption at one time by or for the same holder,
the number of full shares of Common Stock issuable upon conversion thereof shall
be computed on the basis of the aggregate number of shares of PRIDES so
surrendered or redeemed.
(j) Reissuance. Shares of PRIDES that have been issued and reacquired
in any manner, including shares purchased, exchanged, redeemed or converted,
shall not be reissued as part of PRIDES and shall (upon compliance with any
applicable provisions of the laws of the State of Indiana) have the status of
authorized and unissued shares of the Preferred Stock undesignated as to series
and may be redesignated and reissued as part of any series of Preferred Stock.
(k) Definitions. As used in this Article XIV:
(i) the term "business day" shall mean any day other than a
Saturday, Sunday, or a day on which banking institutions in the State of Indiana
are authorized or obligated by law or executive order to close or are closed
because of a banking moratorium or otherwise;
(ii) the term "Call Price" of each share of PRIDES shall be
the sum of (x) $62.195 on and after February 1, 1999, to and including April 30,
1999, $61.928 on and after May 1, 1999, to and including July 31, 1999, $61.660
on and after August 1, 1999, to and including October 31, 1999, $61.393 on and
after November 1, 1999, to and including December 31, 1999, and $61.125 on and
after January 1, 2000 to and including February 1, 2000 and (y) all accrued and
unpaid dividends thereon to but not including the redemption date (other than
previously declared dividends payable to a holder of record as of a prior date);
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(iii) the term "Closing Price" on any day shall mean the last
reported sales price on such day or, in case no such sale takes place on such
day, the average of the reported closing high and low quotations, in each case
on the New York Stock Exchange or, if the Common Stock is not listed on the New
York Stock Exchange, on the Nasdaq National Market, or, if the Common Stock is
not listed on the Nasdaq National Market, the average of the high bid and
low-asked quotations of the Common Stock in the over-the-counter market on the
day in question as reported by the National Quotation Bureau Incorporated, or a
similarly generally accepted reporting service, or, if no such quotations are
available, the fair market value of the Common Stock as determined by any New
York Stock Exchange member firm selected from time to time by the Board of
Directors for such purpose;
(iv) the term "Current Market Price" per share of Common Stock
at any date shall be deemed to be the lesser of (x) the average of the daily
Closing Prices for the fifteen consecutive Trading Dates ending on and including
the date in question or (y) the Closing Price of the Common Stock for such date
of determination; provided, however, if any event that results in an adjustment
of the Common Equivalent Rate occurs during such fifteen-day period, the Current
Market Price as determined pursuant to the foregoing shall be appropriately
adjusted to reflect the occurrence of such event; and
(v) the term "Trading Date" shall mean a date on which the New
York Stock Exchange (or any successor thereto) is open for the transaction of
business.
(l) Payment of Taxes. The Corporation shall pay any and all
documentary, stamp or similar issue or transfer taxes payable in respect of the
issue or delivery of shares of Common Stock on the redemption or conversion of
shares of PRIDES pursuant to this Section 3; provided, however, that the
Corporation shall not be required to pay any tax which may be payable in respect
of any registration of transfer involved in the issue or delivery of shares of
Common Stock in a name other than that of the registered holder of shares of
PRIDES redeemed or converted or to be redeemed or converted, and no such issue
or delivery shall be made unless and until the person requesting such issue has
paid to the Corporation the amount of any such tax or has established, to the
satisfaction of the Corporation, that such tax has been paid.
(m) Reservation of Common Stock. The Corporation shall at all times
reserve and keep available, free from preemptive rights, out of the aggregate of
its authorized but unissued Common Stock and/or its issued Common Stock held in
its treasury, for the purpose of effecting any Mandatory Conversion of the
shares of PRIDES or any conversion of the shares of PRIDES at the option of
the holder, the full number of shares of Common Stock then
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deliverable upon any such conversion of all outstanding shares of PRIDES.
Section 4. Liquidation Rights.
(a) In the event of the liquidation, dissolution, or winding up of the
business of the Corporation, whether voluntary or involuntary, the holders of
shares of PRIDES then outstanding, after payment or provision for payment of the
debts and other liabilities of the Corporation and the payment or provision for
payment of any distribution on any shares of the Corporation having a preference
and a priority over the shares of PRIDES on liquidation, and before any
distribution to the holders of Junior Stock, shall be entitled to be paid out of
the assets of the Corporation available for distribution to its stockholders an
amount per share of PRIDES in cash equal to the sum of (i) $61.125 plus (ii) all
accrued and unpaid dividends thereon. In the event the assets of the Corporation
available for distribution to the holders of the shares of PRIDES upon any
dissolution, liquidation or winding up of the Corporation shall be insufficient
to pay in full the liquidation payments payable to the holders of outstanding
shares of PRIDES and of all other series of Parity Preferred Stock, the holders
of shares of PRIDES and of all other series of Parity Preferred Stock shall
share ratably in such distribution of assets in proportion to the amount which
would be payable on such distribution if the amounts to which the holders of
outstanding shares of PRIDES and the holders of outstanding shares of such
Parity Preferred Stock were paid in full. Except as provided in this Section 4,
holders of PRIDES shall not be entitled to any distribution in the event of
liquidation, dissolution or winding up of the affairs of the Corporation.
(b) For the purposes of this Section 4, none of the following shall be
deemed to be a voluntary or involuntary liquidation, dissolution or winding up
of the Corporation:
(i) the sale, lease, transfer or exchange of all
or substantially all of the assets of the
Corporation; or
(ii) the consolidation or merger of the
Corporation with one or more other
corporations (whether or not the Corporation
is the corporation surviving such
consolidation or merger).
Section 5. Definition. As used in this Article XIV, the
term "Common Stock" shall mean any stock of any class of the Corporation which
has no preference in respect of dividends or of amounts payable in the event of
any voluntary or involuntary liquidation, dissolution or winding up of the
Corporation and which is not subject to redemption by the Corporation. However,
shares of Common Stock issuable upon conversion of shares of PRIDES shall
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include only shares of the class designated as Common stock as of January 23,
1996, or shares of the Corporation of any class or classes resulting from any
reclassification or reclassification thereof and which have no preference in
respect of dividends or of amounts payable in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Corporation and which
are not subject to redemption by the Corporation; provided, however, that, if at
any time there shall be more than one such resulting class, the shares of each
such class then so issuable shall be substantially in the proportion which the
total number of shares of such class resulting from such reclassification bears
to the total number of shares of all classes resulting from all such
reclassification.
Section 6. No Preemptive Rights. The holders of shares of PRIDES shall
have no preemptive rights, including preemptive rights with respect to any
shares of capital stock or other securities of the Corporation convertible into
or carrying rights or options to purchase any such shares.
Section 7. Voting Rights.
(a) The holders of shares of PRIDES shall have the right with the
holders of Common Stock to vote in the election of directors and upon each other
matter coming before any meeting of the stockholders on the basis of 4/5 of a
vote for each share held. The holders of shares of PRIDES and the holders of
Common stock shall vote together as one class except as otherwise set forth
herein or as otherwise provided by law or elsewhere in the Articles of
Incorporation.
(b) If at any time dividends payable on the shares of PRIDES or any
other series of Preferred Stock are in arrears and unpaid in an aggregate amount
equal to or exceeding the aggregate amount of dividends payable thereon for six
quarterly dividend periods, or if any other series of Preferred Stock shall be
entitled for any other reason to exercise voting rights, separate from the
Common Stock, to elect any Directors of the Corporation ("Preferred Stock
Directors"), the holders of the shares of PRIDES, voting separately as a class
with the holders of all other series of Preferred Stock upon which like voting
rights have been conferred and are exercisable, with each share of PRIDES
entitled to vote on this and other matters upon which Preferred Stock votes as a
group, shall have the right to vote for the election of two Preferred Stock
Directors of the Corporation, such Directors to be in addition to the number of
Directors constituting the Board of Directors immediately prior to the accrual
of such right. Such right of the holders of shares of PRIDES to elect two
Preferred Stock Directors shall, when vested, continue until all dividends in
arrears on the shares of PRIDES and such other series of Preferred Stock shall
have been paid in full and the right of any other series of Preferred Stock to
exercise voting rights, separate from the Common
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Stock, to elect Preferred Stock Directors shall terminate or have terminated
and, when so paid, and any such termination occurs or has occurred, such right
of the holders of shares of PRIDES to elect two Preferred Stock Directors
separately as a class shall cease, subject always to the same provisions for the
vesting of such right of the holders of the shares of PRIDES to elect two
Preferred Stock Directors in the case of future dividend defaults.
The term of office of each Director elected pursuant to the preceding
paragraph shall terminate on the earlier of (i) the next annual meeting of
stockholders at which a successor shall have been elected and qualified or (ii)
the termination of the right of the holders of shares of PRIDES and such other
series of Preferred Stock to vote for Directors pursuant to the preceding
paragraph. Vacancies on the Board of Directors resulting from the death,
resignation or other cause of any such Director shall be filled exclusively by
no less than two-thirds of the remaining Directors and the Director so elected
shall hold office until a successor is elected and qualified.
(c) For as long as any shares of PRIDES remain outstanding, the
affirmative consent of the holders of at least two-thirds thereof actually
voting (voting separately as a class) given in person or by proxy, at any annual
meeting or special meeting of the shareholders called for such purpose, shall be
necessary to (i) amend, alter or repeal any of the provisions of the Articles of
Incorporation of the Corporation which would adversely affect the powers,
preferences or rights of the holders of the shares of PRIDES then outstanding or
reduce the minimum time required for any notice to which holders of shares of
PRIDES then outstanding may be entitled; provided, however, that any such
amendment, alteration or repeal that would authorize, create or increase the
authorized amount of any additional shares of Junior Stock or any other shares
of stock (whether or not already authorized) ranking on a parity with the shares
of PRIDES shall be deemed not to adversely affect such powers, preferences or
rights and shall not be subject to approval by the holders of shares of PRIDES;
and provided further that clause (i) shall not be applicable to the amendment,
alteration or repeal of any provisions of the Articles of Incorporation of the
Corporation approved at a meeting of the shareholders the record date of which
is prior to the issuance of any shares of PRIDES; (ii) authorize or create, or
increase the authorized amount of, any capital stock, or any security
convertible into capital stock, of any class ranking senior to PRIDES as to
payment of dividends or the distribution of assets upon liquidation, dissolution
or winding up of the Corporation; or (iii) merge or consolidate with or into any
other corporation, unless each holder of the shares of PRIDES immediately
preceding such merger or consolidation shall have the right either to (A)
receive or continue to hold in the resulting corporation the same number of
shares, with substantially the same rights and preferences, as correspond to the
shares of PRIDES so held or (B)
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convert into shares of Common Stock at the Common Equivalent Rate in effect on
the date immediately preceding the announcement of any such merger or
consolidation.
There is no limitation on the issuance by the Corporation of Parity
Preferred Stock or of any class ranking junior to the shares of PRIDES.
Notwithstanding the provisions summarized in the preceding two
paragraphs, however, no such approval described therein of the holders of the
shares of PRIDES shall be required to authorize an increase in the number of
authorized shares of Preferred Stock or if, at or prior to the time when such
amendment, alteration, or repeal is to take effect or when the authorization,
creation or increase of any such senior stock or security is to be made, or when
such consolidation or merger, liquidation, dissolution or winding up is to take
effect, as the case may be, provision is made for the redemption of all shares
of PRIDES at the time outstanding."
ARTICLE II
MANNER OF ADOPTION AND VOTE
Section 1. Action by Directors. The Board of Directors of the
Corporation, on January 17, 1996, duly adopted a resolution that the provisions
and terms of the Articles of Incorporation be amended as set forth in Article I
above.
Section 2. Shareholder Vote Not Required. The Amendments set forth in
Article I above were adopted by the Board of Directors without shareholder
action and shareholder action was not required.
ARTICLE III
STATEMENT OF CHANGES WITH RESPECT TO AUTHORIZED SHARES
Section 1. Authorized Stock Before The Amendments. Prior to these
Articles of Amendment, the authorized capital stock of the corporation consisted
of 520,000,000 shares divided into two classes: 500,000,000 shares of Common
stock, without par value, and 20,000,000 shares of Preferred Stock, without par
value.
Section 2. Changes Made By The Amendments. These Articles of
Amendment do not increase or decrease the number of authorized shares of capital
stock of the Corporation.
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IN WITNESS WHEREOF, the undersigned officer executes these Articles of
Amendment to the Articles of Incorporation of Conseco, Inc., this 19th day of
January, 1996.
CONSECO, INC.
By: /s/ Lawrence W. Inlow
-------------------------
Lawrence W. Inlow
Executive Vice President
and General Counsel
This instrument was prepared by Karl W. Kindig, Attorney at Law,
11825 N. Pennsylvania Street, Carmel, Indiana 46032.
23
Exhibit 5.2
January 17, 1996
Board of Directors
Conseco, Inc.
11825 N. Pennsylvania Street
Carmel, IN 46032
Gentlemen and Madam:
I am Executive Vice President and General Counsel of Conseco, Inc. (the
"Corporation"). At your request, I have examined or caused to be examined the
Registration Statement on Form S-3 (Registration No. 33-53095), as amended (the
"Registration Statement"), the Prospectus Supplement dated January 17, 1996,
with respect to 7% PRIDES, Convertible Preferred Stock of the Corporation (the
"PRIDES") and the Prospectus dated January 17, 1996.
I have examined, or caused to be examined, instruments, documents and
records which I have deemed relevant and necessary for the basis of my opinions
hereafter expressed. Based on such examination, I am of the opinion that:
1. The Corporation is a corporation duly organized and
validly existing under the laws of the state of Indiana.
2. When certificates for the shares of PRIDES have been duly executed,
countersigned, sold and delivered in the manner described in the Registration
Statement, the Prospectus and the Prospectus Supplement, such PRIDES will be
duly authorized, validly issued, fully paid and non-assessable.
I consent to the filing of this opinion as an Exhibit to the
Corporation's filings with the Securities and Exchange Commission.
Very truly yours,
/s/ Lawrence W. Inlow
-------------------------
Lawrence W. Inlow
Executive Vice President
and General Counsel
LWI/sb
