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: November 27, 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 November 27, 1996, Conseco, Inc. ("Conseco")announced the closing of the
public offering by Conseco Financing Trust II, a subsidiary of Conseco, of
325,000 of 8.70 percent Capital Trust Pass-through Securities SM ("TruPS SM")*
of Conseco Financing Trust II at $1,000 per security. Each TruPS security will
pay cumulative cash distributions at the annual rate of 8.70 percent of the
stated $1,000 liquidiation amount per security, payable semi-annually commencing
May 15, 1997. The TruPS are fully and unconditionally guaranteed as to
distributions and other payments by Conseco. Proceeds from the offering of
approximately $321.3 million (after underwriting and other associated costs)
will be used to repay bank debt.
* - Salomon Brothers has filed applications with the United States Patent and
Trademark Office for the registration of the Capital Trust Pass-through
Securities and TruPS service marks.
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CONSECO, INC. AND SUBSIDIARIES
ITEM 7(c). EXHIBITS.
1.1 Underwriting Agreement for 325,000 Preferred Securities of Conseco
Financing Trust II, dated November 22, 1996.
1.2 Pricing Agreement for 325,000 Preferred Securities of Conseco
Financing Trust II, dated November 22, 1996
4.17.1 Second Supplemental Indenture, dated as of November 22, 1996, between
Conseco, Inc. and Fleet National Bank, as Trustee.
4.17.4 8.70% Subordinated Deferrable Interest Debenture due 2026.
4.19.1 Amended and Restated Declaration of Trust of Conseco Financing Trust
II, dated as of November 22, 1996, among Conseco, Inc.,as sponsor, the
Trustees named therein and the holders from time to time of undivided
beneficial interests in the assets of Conseco Financing Trust II.
4.19.2 Global Certificate for Preferred Security of Conseco Financing
Trust II.
4.19.3 Preferred Securities Guarantee Agreement, dated as of November 27,
1996, between Conseco, Inc. and Fleet National Bank.
5.3 Opinion of Richards, Layton & Finger, P.A.
8.0 Opinion of Locke Reynolds Boyd & Weisell as to certain federal income
taxation matters.
12.2 Pro forma Computation of Ratio of Earnings to Fixed Charges and
Preferred Dividends at September 30, 1996.
23.9 Consent of Richards, Layton & Finger, P.A.
23.10 Consent of Locke Reynolds Boyd & Weisell (included in Exhibit 8).
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CONSECO, INC. AND SUBSIDIARIES
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: November 27, 1996
CONSECO, INC.
By: /s/ ROLLIN M. DICK
----------------------
Rollin M. Dick
Executive Vice President
and Chief Financial Officer
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325,000 Preferred Securities
CONSECO FINANCING TRUST II
(a Delaware Trust)
8.70% Capital Trust Pass-through Securities(sm) (TruPS(sm))
(Liquidation Amount of $1,000 per Security)
UNDERWRITING AGREEMENT
November 22, 1996
Salomon Brothers Inc
Seven World Trade Center
New York, New York 10048
Ladies and Gentlemen:
Conseco Financing Trust II (the "Trust"), a statutory business trust
organized under the Business Trust Act (the "Delaware Act") of the State of
Delaware (Chapter 38, Title 12, of the Delaware Code, 12 Del. C. Sections 3801
et seq.), and Conseco, Inc., an Indiana corporation (the "Company" and, together
with the Trust, the "Offerors"), confirm their agreement (the "Agreement") with
Salomon Brothers Inc ("Salomon Brothers" or the "Underwriter") with respect to
the sale by the Trust and the purchase by the Underwriter of 325,000 Preferred
Securities of 8.70% Capital Trust Pass-through Securities of the Trust ("Capital
Securities"), except as may otherwise be provided in the Pricing Agreement, as
hereinafter defined. The Capital Securities will be guaranteed by the Company
with respect to distributions and payments upon liquidation, redemption and
otherwise (the "Capital Securities Guarantee") pursuant to the Capital
Securities Guarantee Agreement (the "Capital Securities Guarantee Agreement"),
dated as of November 27, 1996, between the Company and Fleet National Bank, as
trustee (the "Guarantee Trustee"), and in certain circumstances described in the
Prospectus, the Trust will distribute Subordinated Debentures (as defined
herein) to holders of Capital Securities. The 325,000
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(sm) Salomon Brothers Inc has filed applications with the United States
Patent and Trademark Office for the registration of the TruPS service
mark.
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Capital Securities to be purchased by the Underwriter, together with the related
Capital Securities Guarantee and the Subordinated Debentures, are collectively
referred to herein as the "Securities".
Prior to the purchase and public offering of the Capital Securities by
the Underwriter, the Offerors and the Underwriter, 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 Offerors and the Underwriter and shall
specify such applicable information as is indicated in Exhibit A hereto. The
offering of the Capital 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, the Trust, Conseco Financing Trust I and Conseco Financing
Trust III (collectively, the "Conseco Trusts") have filed with the Securities
and Exchange Commission (the "Commission") a registration statement on Form S-3
(No. 333- 14991) and pre-effective amendment nos. 1 and 2 thereto covering the
registration of securities of the Company and the Conseco Trusts, including 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 Underwriter 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 Offerors file a
registration statement with the Commission pursuant to
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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,
further, that if the Offerors elect 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 Underwriter by the Company in reliance upon Rule 434 of the 1933 Act
Regulations, and all references in this Underwriting 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.
The Offerors understand that the Underwriter proposes to make a public
offering of the Securities as soon as the Underwriter deems advisable after the
Pricing Agreement has been executed and delivered and the Declaration (as
defined herein), the Indenture (as defined herein), and the Capital Securities
Guarantee Agreement have been qualified under the Trust Indenture Act of 1939,
as amended (the "1939 Act"). The entire proceeds from the sale of the Capital
Securities will be combined with the entire proceeds from the sale by the Trust
to the Company of its
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common securities (the "Common Securities," and together with the Capital
Securities, the "Trust Securities"), as guaranteed by the Company, to the extent
set forth in the Prospectus, with respect to distributions and payments upon
liquidation and redemption (the "Common Securities Guarantee" and together with
the Capital Securities Guarantee, the "Guarantees") pursuant to the Common
Securities Guarantee Agreement (the "Common Securities Guarantee Agreement" and,
together with the Capital Securities Guarantee Agreement, the "Guarantee
Agreements"), dated as of November 27, 1996, between the Company and the
Guarantee Trustee, as Trustee, and will be used by the Trust to purchase
$325,000,000 of 8.70% subordinated deferrable interest debentures (the
"Subordinated Debentures") issued by the Company. The Capital Securities and the
Common Securities will be issued pursuant to the amended and restated
declaration of trust of the Trust, dated as of November 22, 1996 (the
"Declaration"), among the Company, as Sponsor, Stephen C. Hilbert, Rollin M.
Dick and Lawrence W. Inlow (the "Regular Trustees"), Fleet National Bank, as
Property Trustee (the "Property Trustee"), and First Union Bank of Delaware (the
"Delaware Trustee," and, together with the Property Trustee and the Regular
Trustees, the "Trustees"), and the holders from time to time of undivided
beneficial interests in the assets of the Trust. The Subordinated Debentures
will be issued pursuant to an indenture, dated as of November 14, 1996 (the
"Base Indenture"), between the Company and Fleet National Bank as trustee (the
"Debt Trustee"), as supplemented by the Second Supplemental Indenture dated as
of November 22, 1996 (the "Supplemental Indenture," and together with any other
amendments or supplements thereto, the "Indenture"), between the Company and the
Debt Trustee.
SECTION 1. Representations and Warranties.
(a) The Offerors jointly and severally represent and warrant to the
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) No stop order suspending the effectiveness of the
Registration Statement has been issued and no proceeding for that purpose has
been initiated or, to the knowledge and information of the Offerors after due
and diligent inquiry, threatened by the Commission.
(ii) The Company and the Conseco Trusts meet, and at the
respective times of the commencement and consummation of the Offering of the
Securities will meet, the requirements for the 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. At the respective times the
Registration Statement, any Rule 462(b) Registration Statement and any
post-effective amendments thereto (including the filing
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of the Company's most recent Annual Report on Form 10-K with the Commission)
became effective and at each Representation Date, the Registration Statement,
any Rule 462 Registration Statement and any amendments and supplements thereto
complied and will comply in all material respects with the requirements of the
1933 Act and the 1933 Act Regulations and the 1939 Act and the rules and
regulations of the Commission under the 1939 Act (the "1939 Act Regulations")
and did not and will not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading. At the date of the Prospectus and at the
Closing Time (as defined herein), the Prospectus and any amendments and
supplements thereto 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. If the Offerors elect to rely upon Rule 434 of the 1933
Act Regulations, the Offerors will comply with the requirements of Rule 434.
Notwithstanding the foregoing, the representations and warranties in this
subsection shall not apply to (A) statements in or omissions from the
Registration Statement or the Prospectus made in reliance upon and in conformity
with information furnished to the Offerors in writing by the Underwriter
expressly for use in the Registration Statement or the Prospectus or (B) that
part of the Registration Statement which shall constitute the Statement of
Eligibility (Form T-1) under the 1939 Act.
Each preliminary prospectus and prospectus filed as part of
the Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the 1933 Act, complied when so
filed in all material respects with the 1933 Act Regulations and, if applicable,
each preliminary prospectus and the Prospectus delivered to the Underwriter for
use in connection with the offering of Securities will, at the time of such
delivery, be identical to the electronically transmitted copies thereof filed
with the Commission pursuant to EDGAR, except to the extent permitted by
Regulation S-T.
(iii) The documents incorporated or deemed to be incorporated
by reference in the Registration Statement or the Prospectus, at the time they
were or hereafter are filed 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
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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, that this representation and warranty 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 the Underwriter expressly for use in the
Registration Statement or the Prospectus.
(iv) Coopers & Lybrand, L.L.P., 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.
(v) 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.
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(vi) 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 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.
(vii) 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, or
American Travellers Corporation ("American Travellers"), Capitol American
Financial Corporation ("Capitol American") and Transport Holdings Inc.
("Transport Holdings") (each, an "Acquired Company" and collectively, the
"Acquired Companies") and their respective subsidiaries, in each case,
considered as one enterprise, (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, or any of the Acquired Companies
or their respective subsidiaries, in each case, 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
or by any of the Acquired Companies on any class of their capital stock.
(viii) 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, 1995;
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
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or business affairs of the Company and its subsidiaries,
considered as one enterprise.
(ix) 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, 1995; 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
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, except as described in the Prospectus, all such shares are
owned by the Company or by a subsidiary of the Company.
(x) 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.
(xi) The authorized, issued and outstanding capital stock of
the Company is as set forth in the Prospectus; since the date indicated in the
Prospectus there has been no change in the consolidated capitalization of the
Company and its subsidiaries (except for subsequent issuances, if any, pursuant
to stock option agreements or employee benefit plans); and all of the issued and
outstanding capital stock of the Company has been duly authorized and validly
issued, is fully paid and nonassessable and conforms to the descriptions thereof
contained in the Prospectus and the Registration Statement.
(xii) The Trust has been duly created and is validly existing
in good standing as a business trust under the Delaware Act with the power and
authority to own property and to conduct
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its business as described in the Registration Statement and Prospectus and to
enter into and perform its obligations under this Agreement, the Pricing
Agreement, the Capital Securities, the Common Securities and the Declaration;
the Trust is duly qualified to transact business as a foreign company and is in
good standing in each jurisdiction in which such qualification is necessary,
except where the failure to so qualify or be in good standing would not have a
material adverse effect on the Trust; the Trust is not a party to or otherwise
bound by any agreement other than those described in the Prospectus; the Trust
is and will, under current law, be classified for United States federal income
tax purposes as a grantor trust and not as an association taxable as a
corporation.
(xiii) The Common Securities have been duly authorized by the
Declaration and, when issued and delivered by the Trust to the Company against
payment therefor as described in the Registration Statement and Prospectus, will
be validly issued and will represent undivided beneficial interests in the
assets of the Trust and will conform in all material respects to the description
thereof contained in the Prospectus; the issuance of the Common Securities is
not subject to preemptive or other similar rights; and at the Closing Time all
of the issued and outstanding Common Securities of the Trust will be directly
owned by the Company free and clear of any security interest, mortgage, pledge,
lien, encumbrance, claim or equitable right.
(xiv) This Agreement and the Pricing Agreement have been duly
authorized, executed and delivered by each of the Offerors.
(xv) The Declaration has been duly authorized by the Company
and, at the Closing Time, will have been duly executed and delivered by the
Company and the Trustees, and assuming due authorization, execution and delivery
of the Declaration by the Property Trustee and the Delaware Trustee, the
Declaration will, at the Closing Time, be a valid and binding obligation of the
Company and the Regular Trustees, enforceable against the Company and the
Regular Trustees in accordance with its terms, except to the extent that
enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally or by
general principles of equity (regardless of whether enforcement is considered in
a proceeding at law or in equity) (the "Bankruptcy Exceptions") and will conform
in all material respects to the description thereof contained in the Prospectus.
(xvi) Each of the Guarantee Agreements has been duly
authorized by the Company and, when validly executed and delivered by the
Company, and, in the case of the Capital Securities Guarantee Agreement,
assuming due authorization,
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execution and delivery of the Capital Securities Guarantee by the Guarantee
Trustee, will constitute a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms except to the
extent that enforcement thereof may be limited by the Bankruptcy Exceptions, and
each of the Guarantees and the Guarantee Agreements will conform in all material
respects to the description thereof contained in the Prospectus.
(xvii) The Capital Securities have been duly authorized for
issuance and sale to the Underwriter and, when issued and delivered against
payment therefor as provided herein, will be validly issued and fully paid and
non-assessable undivided beneficial interests in the assets of the Trust and
will conform in all material respects to the description thereof contained in
the Prospectus; the issuance of the Capital Securities is not subject to
preemptive or other similar rights.
(xviii) The Indenture has been duly authorized and qualified
under the 1939 Act and, at the Closing Time, will have been duly executed and
delivered and will constitute a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms except to the
extent that enforcement thereof may be limited by the Bankruptcy Exceptions; the
Indenture will conform in all material respects to the description thereof
contained in the Prospectus.
(xix) The Subordinated Debentures have been duly authorized by
the Company and, at the Closing Time, will have been duly executed by the
Company and, when authenticated in the manner provided for in the Indenture and
delivered against payment therefor as described in the Prospectus, will
constitute valid and binding obligations of the Company, enforceable against the
Company in accordance with their terms except to the extent that enforcement
thereof may be limited by the Bankruptcy Exceptions, and will be in the form
contemplated by, and entitled to the benefits of, the Indenture and will conform
in all material respects to the description thereof in the Prospectus.
(xx) Each of the Regular Trustees of the Trust is an employee
of the Company and has been duly authorized by the Company to execute and
deliver the Declaration.
(xxi) Each of (A) the Agreement and Plan of Merger, dated as
of August 25, 1996 (the "American Travellers Merger Agreement"), by and between
the Company and American Travellers, (B) the Agreement and Plan of Merger, dated
as of August 25, 1996 (the "Capitol American Merger Agreement"), by and among
the Company, CAF Acquisition Company ("CAF") and Capitol American, and (C) the
Agreement and Plan of Merger, dated as September 25, 1996 (the "Transport
Holdings Merger Agreement" and together with
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the American Travellers Merger Agreement and the Capitol American Merger
Agreement, the "Merger Agreements") by and between the Company and Transport
Holdings, has been duly authorized, executed and delivered by the Company and,
in the case of the Capitol American Merger Agreement, CAF and constitute valid
and binding obligations of the Company and, in the case of the Capitol American
Merger Agreement, CAF enforceable against the Company and, in the case of the
Capitol American Merger Agreement, CAF in accordance with their terms, except as
enforcement thereof may be limited by the Bankruptcy Exceptions, and neither the
Company nor CAF, nor, to the knowledge and information of the Company after due
and diligent inquiry, any of the Acquired Companies is in default in the
observance of the terms and conditions thereof.
(xxii) 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 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; the Trust is not in violation of the
Declaration or its certificate of trust filed with the State of Delaware on
October 28, 1996 (the "Certificate of Trust"); the execution, delivery and
performance of this Agreement, the Pricing Agreement, the Declaration, the
Capital Securities, the Common Securities, the Indenture, the Subordinated
Debentures, the Guarantee Agreements and the Guarantees and the consummation of
the transactions contemplated herein and therein, and compliance by the Offerors
with their respective obligations hereunder and thereunder 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
Trust, the Company or any of its subsidiaries pursuant to, any contract,
indenture, mortgage, loan agreement, note, lease or other instrument to which
the Trust, 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
Trust, 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
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<PAGE>
considered as one enterprise, nor will such action result in any violation of
the provisions of the Certificate of Trust, the charter or by-laws of the
Company or any of its subsidiaries or any applicable law, administrative
regulation or administrative or court decree.
(xxiii) 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 knowledge and information of the Company
after due and diligent inquiry, threatened, against or affecting the Company or
any of its subsidiaries or any of the Acquired Companies or any of their
respective 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 any of the Acquired Companies and their respective
subsidiaries, in each case, 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, the Pricing Agreement, the
Guarantee Agreements, the Indenture or the transactions contemplated herein or
therein; all pending legal or governmental proceedings to which the Company or
any of its subsidiaries or any of the Acquired Companies or their respective
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, or any of the Acquired Companies or
their respective subsidiaries, are, considered in the aggregate, not material;
and there are no contracts or documents of the Company or any of its
subsidiaries or any of the Acquired Companies or their respective 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.
(xxiv) No authorization, approval or consent of any court or
governmental authority or agency is necessary in connection with the issuance
and sale of the Common Securities or the offering, issuance and sale of the
Capital Securities, the Subordinated Debentures or the Guarantees hereunder, or
the consummation by the Offerors 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.
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<PAGE>
(xxv) The Securities conform in all material respects to the
statements relating therein contained in the Prospectus and the Registration
Statement.
(xxvi) 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.
(xxvii) 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 and
information of the Offerors after due and diligent inquiry, contemplated by the
Commission; to the knowledge and information of the Offerors after due and
diligent inquiry, no order suspending the offering of the Securities in any
jurisdiction designated by the Underwriter pursuant to Section 3(f) of this
Agreement has been issued and, to the knowledge and information of the Offerors
after due and diligent inquiry, 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.
(xxviii) Each of the Offerors has full power and authority to
execute, deliver and perform its obligations under this Agreement, the Pricing
Agreement, the Declaration, the Guarantee Agreements and the Indenture and the
Offerors have full corporate power and authority to issue, sell and deliver the
Securities.
(xxix) The Offerors have 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 any of the capital stock of
the Company.
(xxx) None of the Trust or the Company or any of its
subsidiaries is, 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").
(xxxi) The Company is in compliance with all provisions of
Section 1 of the Laws of Florida, Chapter 92-198, An Act Relating to Disclosure
of Doing Business with Cuba.
(xxxii) No "forward looking statement" (as defined in
Rule 175 under the 1933 Act) contained in the Registration
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<PAGE>
Statement, any preliminary prospectus or the Prospectus was made or reaffirmed
without a reasonable basis or was disclosed other than in good faith.
(b) The Offerors jointly and severally represent and warrant to the
Underwriter as of the date hereof and as of the date of the Representation Date,
with respect to each of the Acquired Companies that:
(i) Such Acquired Company meets, and at the respective times
of the commencement and consummation of the Offering of the Securities will
meet, the requirements for the use of Form S-3 under the 1933 Act.
(ii) With respect to such Acquired Company, the documents
incorporated or deemed to be incorporated by reference in the Registration
Statement or the Prospectus, at the time they were or hereafter are filed 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 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, with respect to such Acquired Company, 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.
(iii) The accountants who certified the financial statements
and supporting schedules of such Acquired 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 such Acquired 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 such Acquired 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
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<PAGE>
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 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.
(v) The statutory financial statements of each of such
Acquired 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 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) With respect to such Acquired Company, 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 such Acquired
Company and its subsidiaries, considered as one enterprise, (B) there have been
no transactions entered into by such Acquired Company or any of its subsidiaries
which are material to such Acquired 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 such Acquired
Company on any class of its capital stock.
(vii) Such Acquired Company has been duly incorporated and is
validly existing as a corporation under the laws of the State of its
incorporation, 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 such Acquired Company's Annual Report filed on Form 10-K
for the year ended December 31, 1995; and such Acquired 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,
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<PAGE>
financial or otherwise, or the earnings or business affairs of such Acquired
Company and its subsidiaries, considered as one enterprise.
(viii) Such Acquired Company and each of its subsidiaries hold
all material licenses, certificates and permits from governmental authorities
(including, without limitation, Insurance Licenses) which are necessary to the
conduct of their businesses; such Acquired 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.
(ix) The authorized, issued and outstanding capital stock of
such Acquired Company is as set forth in the Prospectus; since the date
indicated in the Prospectus there has been no change in the consolidated
capitalization of such Acquired Company and its subsidiaries (except for
subsequent issuances, if any, pursuant to stock option agreements or employee
benefit plans); and all of the issued and outstanding capital stock of such
Acquired Company has been duly authorized and validly issued, is fully paid and
nonassessable and conforms to the descriptions thereof contained in the
Prospectus and the Registration Statement.
(x) The Merger Agreement between such Acquired Company and the
Company has been duly authorized, executed and delivered by such Acquired
Company, constitutes a valid and binding obligation of such Acquired Company,
enforceable against such Acquired Company in accordance with its terms except to
the extent that enforcement thereof may be limited by the Bankruptcy Exceptions,
and such Acquired Company is not in default in the observance of the terms and
conditions thereof.
(xi) 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 knowledge and information of such Acquired Company after
due and diligent inquiry, threatened, against or affecting such Acquired Company
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 such Acquired 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.
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<PAGE>
(c) Any certificate signed by any officer of the Company, any of the
Acquired Companies or a Trustee of the Trust and delivered to the Underwriter or
to counsel for the Underwriter shall be deemed a representation and warranty by
the Company or the Trust, as the case may be, to the Underwriter as to the
matters covered thereby.
SECTION 2. Sale and Delivery to Underwriter; Closing.
(a) On the basis of the representations and warranties herein contained
and subject to the terms and conditions herein set forth, the Trust agrees to
sell to the Underwriter and the Underwriter agrees to purchase from the Trust,
at the price per security set forth in the Pricing Agreement, 325,000 Capital
Securities.
(1) If the Offerors have elected not to rely upon Rule 430A of
the 1933 Act Regulations, the initial public offering price per Security and the
purchase price per Security to be paid by the Underwriter for the Securities
have each been determined and set forth in the Pricing Agreement, dated the date
hereof, and any necessary amendments to the Registration Statement and the
Prospectus will be filed before the Registration Statement becomes effective.
(2) If the Offerors have elected to rely upon Rule 430A of the
1933 Act Regulations, the purchase price per Security to be paid by the
Underwriter shall be an amount equal to the initial public offering price per
Capital Security, less an amount per Capital Security to be determined by
agreement between the Underwriter and the Offerors. The initial public offering
price per Capital Security shall be a fixed price to be determined by agreement
between the Underwriter and the Offerors. The initial public offering price and
the purchase price, when so determined, shall be set forth in the Pricing
Agreement. In the event that such prices have not been agreed upon and the
Pricing Agreement has not been executed and delivered by all 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 Offerors and the
Underwriter.
(b) Delivery of certificates for the Securities shall be made at the
offices of Salomon Brothers in New York, and payment of the purchase price for
the 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 Underwriter and the Offerors, at 10:00 a.m. (New
York time) on the third business day after the date the Registration Statement
becomes effective (or, if the Offerors
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<PAGE>
have 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 Underwriter and the Offerors (such time and date of payment and delivery
being herein called the "Closing Time"). Payment for the Capital Securities
purchased by the Underwriter shall be made to the Trust by wire transfer of
immediately available funds, payable to the order of the Trust, against delivery
to the respective accounts of the Underwriter of certificates for the Capital
Securities to be purchased by it. Certificates for the Capital Securities shall
be in such denominations and registered in such names as the Underwriter may
request in writing at least two full business days before the Closing Time. The
certificates for the Capital Securities will be made available for examination
and packaging by the Underwriter no later than 10:00 a.m. (New York City time)
on the last business day prior to the Closing Time.
SECTION 3. Covenants of the Offerors. The Offerors agree
with the Underwriter as follows:
(a) Promptly following the execution of this Agreement, the Offerors
will cause the Prospectus, including as a part thereof a prospectus supplement
relating to the Securities to be filed with the Commission pursuant to Rule 424
of the 1933 Act Regulations and the Offerors will promptly advise the
Underwriter when such filing has been made. Prior to the filing, the Offerors
will cooperate with the Underwriter in the preparation of such prospectus
supplement to assure that the Underwriter has no reasonable objection to the
form or content thereof when filed or mailed.
(b) The Offerors, subject to Section 3(b), 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 Underwriter
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) 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 under state
securities or Blue Sky laws or the initiation or threatening of
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<PAGE>
any proceeding for such purpose. The Offerors will make every reasonable effort
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.
(c) The Company will give the Underwriter 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, whether pursuant to the 1933 Act, the 1934 Act
or otherwise; will furnish the Underwriter 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 the case may
be; and will not file any such Rule 462(b) Registration Statement, Term Sheet,
amendment, supplement or revision to which the Underwriter or counsel for the
Underwriter shall object.
(d) The Company will deliver to the Underwriter and counsel for the
Underwriter, 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. If applicable, the copies of the
Registration Statement and each amendment thereto furnished to the Underwriter
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) The Company will deliver to the Underwriter, without charge, as
many copies of each preliminary prospectus as the 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 the Underwriter, 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 the Underwriter may reasonably request. If
applicable, the Prospectus and any amendments or supplements thereto furnished
to the Underwriter 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.
(f) The Offerors will comply with the 1933 Act and the 1933 Act
Regulations and the 1934 Act and the 1934 Act Regulations so as to permit the
completion of the distribution of the Securities as contemplated in this
Agreement and in the
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<PAGE>
Registration Statement and the Prospectus. If at any time when the Prospectus is
required by the 1933 Act or the 1934 Act to be delivered in connection with
sales of the Securities, any event shall occur or condition shall exist as a
result of which it is necessary, in the reasonable opinion of counsel for the
Underwriter or for the Offerors, to amend the Registration Statement in order
that the Registration Statement 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 or to amend or
supplement the Prospectus in order that 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 not misleading in the light of the
circumstances existing at the time it is delivered to a purchaser, or if it
shall be necessary, in the reasonable opinion of such counsel, at any such time
to amend the Registration Statement or amend or supplement the Prospectus in
order to comply with the requirements of the 1933 Act or the 1933 Act
Regulations, the Offerors will promptly prepare and file with the Commission,
subject to Section 3(b), such amendment or supplement as may be necessary to
correct such statement or omission or to make the Registration Statement or the
Prospectus comply with such requirements, and the Offerors will furnish to the
Underwriter, without charge, such number of copies of such amendment or
supplement as the Underwriter may reasonably request.
(g) The Offerors will use their best efforts, in cooperation with the
Underwriter, to qualify the Securities for offering and sale under the
applicable securities laws of such states and other jurisdictions (domestic or
foreign) as the Underwriter may designate; provided, however, that the Company
shall not be obligated to qualify as a foreign corporation in any jurisdiction
in which it is not so qualified or subject itself to taxation in respect of
doing business in any jurisdiction in which it is not otherwise so subject. In
each jurisdiction in which the Securities 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 distribution of the Securities.
(h) The Company will make generally available to its securityholders as
soon as practicable, but not later than 45 days (or 90 days, in the case of a
period that is also the Company's fiscal year) after the close of the period
covered thereby, an earnings statement of the Company (in form complying with
the provisions of Rule 158 of 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
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<PAGE>
date" (as defined in said Rule 158) of the Registration
Statement.
(i) The Trust 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".
(j) If, at the time that the Registration Statement became (or in the
case of a post-effective amendment becomes) effective, any information shall
have been omitted therefrom in reliance upon Rule 430A or Rule 434 of the 1933
Act Regulations, then immediately 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) of 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.
(k) If Offerors elect to rely upon Rule 462(b), the Offerors 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 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).
(l) The Company, during the period when the Prospectus is required to
be delivered under the 1933 Act, will 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 within the time periods required by the 1934 Act and the 1934 Act
Regulations.
(m) During a period of 90 days from the date of the Pricing Agreement,
neither the Trust nor the Company will, without the prior written consent of the
Underwriter, 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
Capital Securities, any security convertible into or exchangeable or exercisable
for Capital Securities, or the Subordinated Debentures or any debt securities
substantially similar to the Subordinated Debentures or any equity securities
substantially similar to the Capital Securities (except the Subordinated
Debentures and the Capital Securities issued pursuant to this Agreement).
(n) During a period of one year from the Closing Time, to make
generally available to the Underwriter copies of all reports and other
communications (financial or other) mailed to stockholders, and to deliver to
the Underwriter promptly after they are available, copies of any reports and
financial
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<PAGE>
statements furnished to or filed with the Commission or any national securities
exchange on which any class of securities of the Company is listed (such
financial statements to be on a consolidated basis to the extent the accounts of
the Company and its subsidiaries are consolidated in reports furnished to its
stockholders generally or to the Commission).
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 Underwriter of this Agreement, the Pricing
Agreement and such other documents as may be required in connection with
offering, purchase, sale and delivery of the Securities, (iii) the preparation,
issuance and delivery of the certificates for the Capital Securities, (iv) the
fees and disbursements of the Company's counsel, accountants and other advisors
or agents (including the transfer agents and registrars) as well as fees and
disbursements of the Trustees and any Depositary, and their respective counsel,
(v) the qualification of the Securities under securities laws in accordance with
the provisions of Section 3(g), including filing fees and the fees and
disbursements of counsel for the Underwriter in connection therewith and in
connection with the preparation of the Blue Sky Survey and any Legal Investment
Survey, (vi) the printing and delivery to the Underwriter 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
Underwriter of copies of the Blue Sky Survey and any Legal Investment Survey,
(viii) any fees payable in connection with the rating of the Capital Securities
by nationally recognized statistical rating organizations; (ix) the filing fees
incident to, and the fees and disbursements of counsel to the Underwriter 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 Capital Securities;
and (x) any fees payable to the Commission.
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<PAGE>
If this Agreement is terminated by the Underwriter in accordance with
the provisions of Section 5 or Section 9(a)(i) hereof, the Company shall
reimburse Salomon Brothers for all of its out-of-pocket expenses, including the
reasonable fees and disbursements of LeBoeuf, Lamb, Greene & MacRae, L.L.P.,
counsel for the Underwriter.
SECTION 5. Conditions of Underwriter's Obligations. The obligations of
the Underwriter to purchase and pay for the Capital Securities pursuant to this
Agreement are subject to the accuracy of the representations and warranties of
the Offerors herein contained or in certificates of any officer of the Company
or any subsidiary or the trustees of the Trust delivered pursuant to the
provisions hereof, to the performance by the Offerors of their obligations
hereunder, and to the following further conditions:
(a) The Registration Statement, including any Rule 462(b) Registration
Statement, shall have become effective under the 1933 Act 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, no stop order suspending the effectiveness of the Registration
Statement or any part thereof shall have been issued under the 1933 Act or
proceedings therefor 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 Underwriter. 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 Underwriter shall have
received:
(1) The favorable opinion, dated as of the Closing Time, of
Lawrence W. Inlow, Executive Vice President, Secretary and General Counsel of
the Company, in form and substance satisfactory to counsel for the Underwriter,
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 and authority under
the laws of the State of Indiana and
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<PAGE>
under its charter 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, 1995.
(ii) To the knowledge and information of such counsel
after due and diligent inquiry, 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.
(iii) The authorized, issued and outstanding capital
stock of the Company is as set forth in the Prospectus (except for
subsequent issuances, if any, pursuant to stock option agreements or
employee benefit plans), and the shares of issued and outstanding
capital stock of the Company have been duly authorized and validly
issued and are fully paid and non-assessable.
(iv) Each subsidiary of the Company 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 Registration Statement and the Prospectus or in the Company's
Annual Report filed on Form 10-K for the year ended December 31, 1995.
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 shares of
issued and outstanding capital stock of each subsidiary of the Company
have been duly authorized and validly issued, are fully paid and
nonassessable, and, except as set forth in the Prospectus, all such
shares are owned by the Company or by a subsidiary of the Company.
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<PAGE>
(v) The forms of certificates used to evidence the
Securities comply with all applicable statutory requirements and with
any applicable requirements of the Company's Amended Articles of
Incorporation and Code of ByLaws.
(vi) The Trust is not required to be qualified and in
good standing as a foreign company in Indiana, except to the extent
that the failure to so qualify or be in good standing would not have a
material adverse effect on the Trust; and the Trust is not a party to
or otherwise bound by any agreement other than those described in the
Prospectus.
(vii) The Declaration has been duly authorized,
executed and delivered by the Company and the Trustees and is a valid
and binding obligation of the Company, enforceable against the Company
and each of the Regular Trustees in accordance with its terms, except
as enforcement thereof may be limited by the Bankruptcy Exceptions; and
the Declaration has been duly qualified under the 1939 Act.
(viii) All legally required proceedings in connection
with the authorization, issuance and validity of the Securities and the
sale of the Securities in accordance with this Agreement (other than
the filing of post-issuance reports, the non-filing of which would not
render the Securities invalid) have been taken and all legally required
orders, consents or other authorizations or approvals of any other
public boards or bodies in connection with the authorization, issuance
and validity of the Securities and the sale of the Securities in
accordance with this Agreement (other than in connection with or in
compliance with the provisions of the securities or Blue Sky laws of
any jurisdictions, as to which no opinion need be expressed) have been
obtained and are in full force and effect.
(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, or, to such counsel's knowledge and information after due
and diligent inquiry, threatened by the Commission.
(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
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<PAGE>
therein and the Statements of Eligibility on Forms T-1 with respect to
each of the Property Trustee, the Debt Trustee and the Guarantee
Trustee, 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;
and the Declaration, the Indenture and the Capital Securities Guarantee
Agreement filed with the Commission as part of the Registration
Statement complied as to form in all material respects with the
requirements of the 1939 Act and the 1939 Act Regulations.
(xi) Each of the documents incorporated by reference
in the Registration Statement or the Prospectus at the time they were
filed or last amended (other than the financial statements or other
financial or statistical data included therein, as to which such
counsel need express no belief) complied as to form in all material
respects with the requirements of the 1934 Act, and the 1934 Act
Regulations, as applicable.
(xii) The Company and each of the Conseco Trusts meet
the registrant requirements for use of Form S-3 under the 1933 Act
Regulations.
(xiii) The Common Securities, the Capital Securities,
the Subordinated Debentures, each of the Guarantees, the Declaration,
the Indenture and each of the Guarantee Agreements conform in all
material respects to the descriptions thereof contained in the
Prospectus.
(xiv) The information in the Prospectus under the
captions "The Company", "Pending Acquisitions By The Company", "Conseco
Financing Trust II", "Risk Factors", "Use of Proceeds",
"Capitalization", "Description of the Capital Securities", "Description
of the Trust Guarantee", "Description of the Subordinated Debentures"
and "Effect of Obligations under the Subordinated Debentures and the
Trust Guarantee", to the extent that they involve matters of law,
summaries of legal matters, the Company's Charter and bylaws or legal
proceedings, or legal conclusions, has been reviewed by such counsel
and is correct in all material respects.
(xv) All of the issued and outstanding Common
Securities of the Trust are directly owned by the Company free and
clear of any security interest, mortgage, pledge, lien, encumbrance,
claim or equitable right.
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<PAGE>
(xvi) This Agreement and the Pricing Agreement have
been duly authorized, executed and delivered by each of the Trust and
the Company and constitute valid and binding obligations of the Company
and the Trust, enforceable against the Company and the Trust in
accordance with their terms, except (1) to the extent that enforcement
thereof may be limited by Bankruptcy Exceptions and (2) that no opinion
is given as to the enforceability of the indemnity and contribution
provisions under this Agreement and the Pricing Agreement.
(xvii) Each of the Guarantee Agreements has been duly
authorized, executed and delivered by the Company; the Capital
Securities Guarantee Agreement, assuming it is duly authorized,
executed, and delivered by the Guarantee Trustee, constitutes a valid
and binding obligation of the Company, enforceable against the Company
in accordance with its terms, except to the extent that enforcement
thereof may be limited by Bankruptcy Exceptions; and the Capital
Securities Guarantee Agreement has been duly qualified under the 1939
Act.
(xviii) The Indenture has been duly executed and
delivered by the Company and, assuming due authorization, execution,
and delivery thereof by the Debt Trustee, is a valid and binding
obligation of the Company, enforceable against the Company in
accordance with its terms, except to the extent that enforcement
thereof may be limited by the Bankruptcy Exceptions; and the Indenture
has been duly qualified under the 1939 Act.
(xix) The Subordinated Debentures are in the form
contemplated by the Indenture, have been duly authorized, executed and
delivered by the Company and, when authenticated by the Debt Trustee in
the manner provided for in the Indenture and delivered against payment
therefor as provided in this Agreement, will constitute valid and
binding obligations of the Company, enforceable against the Company in
accordance with their terms, except to the extent that enforcement
thereof may be limited by the Bankruptcy Exceptions.
(xx) The issuance and delivery of the Securities, the
execution and delivery of this Agreement, the Pricing Agreement, the
Declaration, the Capital Securities, the Common Securities, the
Indenture, the Subordinated Debentures, the Guarantee Agreements and
the Guarantees and the consummation of the transactions contemplated
herein and therein, and the compliance by each of the Offerors with
their respective obligations hereunder and thereunder will not conflict
with or constitute a breach of, or default
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<PAGE>
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Trust, the Company or
any of its subsidiaries pursuant to, any material contract, indenture,
mortgage, loan agreement (except as described in the Prospectus, as to
which a waiver has been obtained), note, lease or other instrument to
which the Trust, 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 Trust, 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 Trust, the Company and its
subsidiaries considered as one enterprise nor will such action result
in any violation of the provisions of the Certificate of Trust of the
Trust, the charter or by-laws of the Company, or any material
applicable law, administrative regulation or administrative or court
decree.
(xxi) To the knowledge and information of such
counsel after due and diligent inquiry, 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.
(xxii) To the knowledge and information of such
counsel after due and diligent inquiry, 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.
(xxiii) No authorization, approval or consent of
any court or governmental authority or agency is necessary
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<PAGE>
in connection with the issuance and sale of the Capital Securities by
the Trust to the Underwriter or the performance by the Trust and the
Company of their respective obligations in this Agreement, the Pricing
Agreement, the Indenture, the Subordinated Debentures, the Guarantee
Agreements, the Declaration and the Capital Securities, 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.
(xxiv) No authorization, approval, consent, order,
registration or qualification of or with any court or federal or New
York or Delaware state governmental authority or agency is required for
the issuance and sale of the Capital Securities by the Trust to the
Underwriter or the performance by the Trust and the Company of their
respective obligations in this Agreement, the Pricing Agreement, the
Indenture, the Subordinated Debentures, the Capital Securities
Guarantee Agreement, the Capital Securities Guarantee, the Declaration
and the Capital Securities except such as has been obtained and made
under the federal securities laws or such as may be required under
state or foreign securities or Blue Sky laws.
(xxv) The Company and each of 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.
(xxvi) None of the Trust or the Company or any of its
subsidiaries is an "investment company" or an entity "controlled" by an
"investment company," as such terms are defined in the 1940 Act.
(xxvii) All consents and waivers required in
connection with the issuance and delivery of the Securities, the
execution and delivery of the Underwriting Agreement, the Pricing
Agreement, the Declaration, the Capital Securities, the Common
Securities, the Indenture, the Subordinated Debt Securities, the
Guarantee Agreement and the Guarantees and the consummation of the
transactions contemplated therein have been obtained.
Moreover, such counsel shall confirm that nothing has come to such counsel's
attention that would lead such counsel to believe
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<PAGE>
that the Registration Statement, including any information provided pursuant to
Rule 430A and related schedules and 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 or at the Representation Date, contained an untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading or that the
Prospectus (except for financial statements and 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 Underwriter by the Company for use in
connection with the offering of the Capital 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
Underwriter for such use) or at Closing Time, included (or includes) an untrue
statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(2) The favorable opinion, dated as of the Closing Time, of
Locke Reynolds Boyd & Weisell, special counsel to the Company, in form and
substance satisfactory to counsel for the Underwriter, to the effect that the
statements in the Prospectus under the caption "United States Federal Income
Taxation" 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 or at the
Representation Date, contained an untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading or that the Prospectus (except for financial
statements and 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 Underwriter 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
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<PAGE>
Underwriter 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.
(3) The favorable opinion, dated as of Closing Time, of
Richards, Layton & Finger, P.A., special Delaware counsel to the Offerors, in
form and substance satisfactory to counsel for the Underwriter, to the effect
that:
(i) The Trust has been duly created and is validly
existing in good standing as a business trust under the Delaware Act,
and all filings required under the laws of the State of Delaware with
respect to the creation and valid existence of the Trust as a business
trust have been made.
(ii) Under the Delaware Act and the Declaration, the
Trust has the business trust power and authority to own property and
conduct its business, all as described in the Prospectus.
(iii) The Declaration constitutes a valid and binding
obligation of the Company and the Trustees and is enforceable against
the Company and the Trustees in accordance with its terms, subject, as
to enforcement, to (i) bankruptcy, insolvency, moratorium,
receivership, reorganization, liquidation, fraudulent conveyance and
other similar laws relating to or affecting the rights and remedies of
creditors generally, (ii) principles of equity, including applicable
law relating to fiduciary duties (regardless of whether considered and
applied in a proceeding in equity or at law), and (iii) the effect of
applicable public policy on the enforceability of provisions relating
to indemnification or contribution.
(iv) Under the Delaware Act and the Declaration, the
Trust has the business trust power and authority to (i) execute and
deliver, and to perform its obligations under, this Agreement and the
Pricing Agreement and (ii) issue, and perform its obligations under,
the Trust Securities.
(v) Under the Delaware Act and the Declaration, the
execution and delivery by the Trust of this Agreement and the Pricing
Agreement, and the performance by the Trust of its obligations
hereunder and under the Pricing Agreement, have been duly authorized by
all necessary action on the part of the Trust.
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<PAGE>
(vi) Under the Delaware Act, the certificate attached
to the Declaration as Exhibit A-1 is an appropriate form of certificate
to evidence ownership of the Capital Securities; the Capital Securities
have been duly authorized by the Declaration and are duly and validly
issued and, subject to qualifications hereinafter expressed in this
paragraph (vi), fully paid and nonassessable undivided beneficial
interests in the assets of the Trust; the holders of the Capital
Securities, as beneficial owners of the Trust, will be entitled to the
same limitation of personal liability extended to stockholders of
private corporations for profit organized under the General Corporation
Law of the State of Delaware; said counsel may note that the holders of
the Capital Securities may be obligated to make payments as set forth
in the Declaration.
(vii) The Common Securities have been duly authorized
by the Declaration and are duly and validly issued and represent
undivided beneficial interests in the assets of the Trust.
(viii) Under the Delaware Act and the Declaration,
the issuance of the Trust Securities is not subject to preemptive
rights.
(ix) The issuance and sale by the Trust of the Trust
Securities, the purchase by the Trust of the Subordinated Debentures,
the execution, delivery and performance by the Trust of this Agreement
and the Pricing Agreement, the consummation by the Trust of the
transactions contemplated hereby and by the Pricing Agreement and
compliance by the Trust with its obligations hereunder and thereunder
will not violate (i) any of the provisions of the Certificate of Trust
or the Declaration or (ii) any applicable Delaware law or
administrative regulation.
(4) The favorable opinion, dated as of Closing Time, of Reid &
Riege, P.C., counsel to Fleet National Bank, as Property Trustee under the
Declaration, and Guarantee Trustee under the Capital Securities Guarantee
Agreements, in form and substance satisfactory to counsel for the Underwriter,
to the effect that:
(i) Fleet National Bank is a national banking
association with trust powers, formed and authorized to transact the
business of banking under the laws of the United States with all
necessary power and authority to execute and deliver, and to carry out
and perform its obligations under the terms of the Declaration and the
Capital Securities Guarantee Agreement.
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<PAGE>
(ii) The execution, delivery and performance by the
Property Trustee of the Declaration and the execution, delivery and
performance by the Guarantee Trustee of the Capital Securities
Guarantee Agreement have been duly authorized by all necessary
corporate action on the part of the Property Trustee and the Guarantee
Trustee, respectively. The Declaration and the Capital Securities
Guarantee Agreement have been duly executed and delivered by the
Property Trustee and the Guarantee Trustee, respectively, and
constitute the legal, valid and binding obligations of the Property
Trustee and the Guarantee Trustee, respectively, enforceable against
the Property Trustee and the Guarantee Trustee, respectively, in
accordance with their terms, except to the extent the enforcement
thereof may be limited by the Bankruptcy Exceptions.
(iii) The execution, delivery and performance of the
Declaration and the Capital Securities Guarantee Agreement by the
Property Trustee and the Guarantee Trustee, respectively, do not
conflict with or constitute a breach of the Articles of Organization or
Bylaws of the Property Trustee and the Guarantee Trustee, respectively.
(iv) No consent, approval or authorization of, or
registration with or notice to, any federal banking authority is
required for the execution, delivery or performance by the Property
Trustee and the Guarantee Trustee of the Declaration and the Capital
Securities Guarantee Agreement.
(5) With respect to each Acquired Company, the favorable
opinions, dated as of the Closing Time, of Lawrence W. Inlow, Executive
Vice President, Secretary and General Counsel of the Company, in form
and substance satisfactory to counsel for the Underwriter, to the
effect that:
(i) Such Acquired Company has been duly incorporated
and is validly existing as a corporation in good standing under the
laws of the State of its incorporation; and such Acquired Company has
the corporate power and authority under the laws of the State of its
incorporation 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 such Acquired Company's Annual
Report filed on Form 10-K for the year ended December 31, 1995.
(ii) To the knowledge and information of such counsel
after due and diligent inquiry, such Acquired Company is duly qualified
as a foreign Corporation to
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<PAGE>
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 such Acquired
Company and its subsidiaries, considered as one enterprise.
(iii) The authorized, issued and outstanding capital
stock of such Acquired Company is as set forth in the Prospectus
(except for subsequent issuances, if any, pursuant to stock option
agreements or employee benefit plans), and the shares of issued and
outstanding capital stock of such Acquired Company have been duly
authorized and validly issued and are fully paid and non-assessable.
(iv) Each subsidiary of such Acquired Company 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 Registration Statement and the Prospectus or in such
Acquired Company's Annual Report filed on Form 10-K for the year ended
December 31, 1995. 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 such Acquired Company and its subsidiaries considered as one
enterprise. All of the shares of issued and outstanding capital stock
of each subsidiary of such Acquired Company has been duly authorized
and validly issued, is fully paid and nonassessable, and all such
shares are owned by such Acquired Company or by a subsidiary of such
Acquired Company.
(v) Each of the documents of such Acquired Company
incorporated by reference in the Registration Statement or the
Prospectus at the time they were filed or last amended (other than the
financial statements or other financial or statistical data included
therein, as to which such counsel need express no belief) complied as
to form in all material respects with the requirements of the 1934 Act,
and the 1934 Act Regulations, as applicable.
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<PAGE>
(vi) The statements made in the Joint Proxy
Statement-Prospectus of the Company and such Acquired Company, as
applicable, and under the relevant captions in the Registration
Statement and the Prospectus with respect to such Acquired Company and
any corresponding statements in any similar documents of later date
which are incorporated by reference in the Registration Statement and
Prospectus, to the extent that they involve matters of law, summaries
of legal matters, such Acquired Company's charter and bylaws or legal
proceedings, or legal conclusions, have been reviewed by such counsel
and are correct in all material respects.
(vii) The Merger Agreement between such Acquired
Company and the Company (and any of its affiliates) has been duly
authorized, executed and delivered by such Acquired Company and
constitutes a valid and binding obligation of such Acquired Company,
enforceable against such Acquired Company in accordance with its terms,
except to the extent that enforcement thereof may be limited by
Bankruptcy Exceptions, and to the knowledge and information of such
counsel after due and diligent inquiry such Acquired Company is not in
default in the observance of the terms and conditions thereof.
(viii) To the knowledge and information of such
counsel after due and diligent inquiry, with respect to such Acquired
Company, 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.
(ix) Such Acquired 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; such Acquired
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.
Moreover, such counsel shall confirm that nothing has come to such counsel's
attention with respect to such Acquired Company that would lead such counsel to
believe that the Registration Statement, including any information provided
pursuant to
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<PAGE>
Rule 430A and related schedules and 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 or at the Representation Date, contained an untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading or that the
Prospectus (except for financial statements and 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 Underwriter by the Company for use in
connection with the offering of the Capital 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
Underwriter for such use) or at Closing Time, included (or includes) an untrue
statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(6) The favorable opinion, dated as of Closing Time, of
LeBoeuf, Lamb, Greene & MacRae, L.L.P., counsel for the Underwriter, with
respect to the Capital Securities, the Indenture, the Capital Securities
Guarantee Agreement, this Agreement, the Pricing Agreement, 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 Indiana and Delaware upon the opinions referred to in Sections
5(b)(1) and 5(b)(3) hereto.
(c) Between the date of this Agreement and prior to the Closing Time,
no material adverse change shall have occurred in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of the
Trust or the Company and its subsidiaries considered as one enterprise, or any
of the Acquired Companies and their respective subsidiaries, in each case,
considered as one enterprise, whether or not in the ordinary course of business.
(d) At Closing Time, the Underwriter shall have received a certificate
of an executive officer of the Company and a certificate of a Regular Trustee of
the Trust, and dated as of Closing Time, to the effect that:
(i) There has been no material adverse change in
the condition, financial or otherwise, or in the earnings,
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business affairs or business prospects of the Trust, the Company and
its subsidiaries considered as one enterprise, or any of the Acquired
Companies and their respective subsidiaries, in each case, considered
as one enterprise, whether or not in the ordinary course of business.
(ii) The representations and warranties in Section 1
hereof are true and correct as though expressly made at and as of
Closing Time.
(iii) The Trust and the Company have complied with
all agreements and satisfied all conditions on their part to be
performed or satisfied at or prior to Closing Time.
(iv) No stop order suspending the effectiveness of
the Registration Statement has been issued and no proceedings for that
purpose have been initiated or threatened by the Commission.
(e) At the time of the execution of this Agreement, the Underwriter
shall have received from Coopers & Lybrand, L.L.P., with respect to the Company
and Life Partners Group, Inc. ("LPG"), from Arthur Andersen L.L.P., with respect
to American Travellers, and from KPMG Peat Marwick L.L.P., with respect to each
of Capitol American and Transport Holdings, a letter, in each case, dated such
date, in form and substance satisfactory to the Underwriter, to the effect that
(i) they are independent public accountants with respect to the Company, LPG,
American Travellers, Capitol American and Transport Holdings and their
respective subsidiaries, as applicable, 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 financial statements and supporting schedules included or
incorporated by reference in the Registration Statement and the Prospectus 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, LPG,
American Travellers, Capitol American and Transport Holdings and their
respective subsidiaries, as applicable, included or incorporated by reference in
the Registration Statement and the Prospectus do not comply as to form in all
material respects with the applicable accounting requirements of the 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) any unaudited pro forma
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<PAGE>
consolidated financial statements or any unaudited pro forma consolidating
financial statements included or incorporated by reference in the Registration
Statement and the Prospectus do not comply as to form in all material respects
with the applicable accounting requirements of the 1933 Act and the 1933 Act
Regulations and the 1934 Act and the 1934 Act Regulations or the pro forma
adjustments have not been properly applied to the historical amounts in the
compilation of those statements, or (C) as of a specified date not more than
five days prior to the date of this Agreement with respect to the Company,
American Travellers, Capitol American and Transport Holdings, there was any
increase in consolidated long-term debt (consolidated notes payable with respect
to Capitol American) 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 Registration Statement and the Prospectus, or (D) for the period
from the closing date of the latest income statement included in the
Registration Statement and 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 Registration Statement and the Prospectus, in consolidated
premiums (including annuity deposits, if applicable) collected (earned with
respect to Capitol American), 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 Registration Statement and 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, LPG's, American
Traveller's, Capitol American's and Transport Holdings' insurance subsidiaries
required to have such an audit, as applicable, 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 Company, LPG, American
Travellers, Capitol American and Transport Holdings that are subject to internal
accounting controls which are included or incorporated by reference in the
Registration Statement and Prospectus and
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<PAGE>
which are specified by the Underwriter, and has found such amounts, percentages,
ratios and financial information to be in agreement with the relevant accounting
and financial records of the Company, LPG, American Travellers, Capitol American
and Transport Holdings and their subsidiaries identified in such
letter, as applicable.
(f) At the Closing Time, the Underwriter shall have received from
Coopers & Lybrand, L.L.P., with respect to the Company and LPG, from Arthur
Andersen L.L.P., with respect to American Travellers, and from KPMG Peat Marwick
L.L.P., with respect to each of Capitol American and Transport Holdings, a
letter, in each case, dated as of the Closing Time, to the effect that they
reaffirm the statements made in the letter furnished pursuant to subsection (e)
of this Section, except that (i) such statements shall include any financial
statements and pro forma financial information incorporated by reference in the
Registration Statement and the Prospectus which are filed subsequent to the date
of this Agreement and prior to the Closing Date and (ii) 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 (e) of this Section with respect to
certain amounts, percentages and financial information specified by the
Underwriter and deemed to be a part of the Registration Statement pursuant to
Rule 430(A)(b) and has found such amounts, percentages and financial information
to be in agreement with the records specified in such clause (iv).
(g) At Closing Time, counsel for the Underwriter shall have been
furnished with such documents and opinions as they may require for the purpose
of enabling it to pass upon the issuance and sale of the Securities as herein
contemplated and related proceedings, or in order to evidence the accuracy of
any of the representations or warranties, or the fulfillment of any of the
conditions herein contained; and all proceedings taken by the Company in
connection with the issuance and sale of the Securities as herein contemplated
shall be satisfactory in form and substance to the Underwriter and counsel for
the Underwriter.
(h) At Closing Time, the Capital Securities shall be rated in one of
the four highest rating categories for long term debt ("Investment Grade") by
any nationally recognized statistical rating agency, and the Trust shall have
delivered to the Underwriter a letter, dated the Closing Time, from such
nationally recognized statistical rating agency, or other evidence satisfactory
to the Underwriter, confirming that the Capital Securities have Investment Grade
ratings; and there shall not have occurred any decrease in the ratings of any of
the debt securities of the Company or any of the Acquired Companies or of
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<PAGE>
the Capital Securities by any "nationally recognized statistical rating
organization" (as defined for purposes of Rule 436(g) under the 1933 Act
Regulations) and such organization shall not have publicly announced that it has
under surveillance or review, with possible negative implications, its rating of
any of the debt securities of the Company or of the Capital Securities.
(i) The NASD shall not have raised any objection with
respect to the fairness and reasonableness of the underwriting
terms and arrangements.
If any condition specified in this Section 5 shall not have been
fulfilled when and as required to be fulfilled, this Agree ment may be
terminated by the Underwriter by notice to the Company at any time at or prior
to Closing Time, and such termi nation shall be without liability of any party
to any other party except as provided in Section 4.
SECTION 6. Indemnification.
(a) The Offerors agree to jointly and severally indemnify and hold
harmless the Underwriter and each person, if any, who controls the Underwriter
within the meaning of Section 15 of the 1933 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 amend ment thereto), including the Rule
430A Information and the Rule 434 Information deemed to be a part
thereof, if applicable, or the omission or alleged omission therefrom
of a material fact required to be stated therein or necessary to make
the statements therein not misleading or arising out of any untrue
statement or alleged untrue statement of a material fact included in
any preliminary prospectus or the Prospectus (or any amendment or
supplement thereto), or the omission or alleged omission therefrom of a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened,
or of any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, provided
that (subject to Section 6(d) below) any such settlement is effected
with the written consent of the Offerors; and
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<PAGE>
(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by the
Underwriter), 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 the foregoing indemnity agreement 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
Offerors by the Underwriter expressly for use in the Registration Statement (or
any amendment thereto), including the Rule 430(A) Information and the Rule 434
Information deemed to be a part thereof, if applicable, or any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto). The
foregoing indemnity with respect to any untrue statement contained in or
omission from a preliminary prospectus shall not inure to the benefit of the
Underwriter (or any person controlling the Underwriter) from whom the person
asserting any such loss, liability, claim, damage or expense purchased any of
the Securities that are the subject thereof if such person was not sent or given
a copy of the Prospectus (or the Prospectus as amended or supplemented) (in each
case exclusive of the documents from which information is incorporated by
reference) at or prior to the written confirmation of the sale of such
Securities to such person and the untrue statement contained in or omission from
such preliminary prospectus was corrected in the Prospectus (or the Prospectus
as amended or supplemented).
(b) The Underwriter agrees to indemnify and hold harmless the Company,
its directors, each of its officers who signed the Registration Statement, the
Trust and each of its Trustees who signed the Registration Statement, and each
person, if any, who controls the Company within the meaning of Section 15 of the
1933 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 state ments or omissions, or alleged
untrue statements or omissions, made in the Registration Statement (or any
amendment thereto), including the Rule 430(A) Information and the Rule 434
Information deemed to be a part thereof, if applicable, 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
Offerors by the Underwriter expressly for use in the Registration Statement (or
any amendment
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<PAGE>
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
hereunder to the extent it is not materially prejudiced as a result thereof and
in any event shall not relieve it from any liability which it may have otherwise
than on account of this indemnity agreement. In the case of parties indemnified
pursuant to Section 6(a) above, counsel to the indemnified parties shall be
selected by Salomon Brothers, and, in the case of parties indemnified pursuant
to Section 6(b) above, counsel to the indemnified parties shall be selected by
the Offerors. An indemnifying party may participate at its own expense in the
defense of any such action; provided, however, that counsel to the indemnifying
party shall not (except with the consent of the indemnified party) also be
counsel to the indemnified party. In no event shall the indemnifying parties be
liable for fees and expenses of more than one counsel (in addition to any local
counsel) separate from their own counsel for all indemnified parties in
connection with any one action or separate but similar or related actions in the
same jurisdiction arising out of the same general allegations or circumstances.
No indemnifying party shall, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be sought
under this Section 6 or Section 7 hereof (whether or not the indemnified parties
are actual or potential parties thereto), unless such settlement, compromise or
consent (i) includes an unconditional release of each indemnified party from all
liability arising out of such litigation investigation, proceeding or claim and
(ii) does not include a statement as to or an admission of fault, culpability or
a failure to act by or on behalf of any indemnified party.
(d) If at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel, such indemnifying party agrees that it shall be liable for any
settlement of the nature contemplated by Section 6(a)(ii) effected without its
written consent if (i) such settlement is entered into more than 45 days after
receipt by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall have received notice of the terms of such settlement at
least 30 days prior to such settlement being entered into and (iii) such
indemnifying party
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<PAGE>
shall not have reimbursed such indemnified party in accordance with such request
prior to the date of such settlement.
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 Offerors on the one
hand, and the Underwriter, 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 Offerors on the one hand, and the
Underwriter, 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 Offerors on the one hand, and the
Underwriter, 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 such
Securities (before deducting expenses) received by the Offerors and the total
underwriting compensation received by the Underwriter, 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 price
of such Securities as set forth on such cover.
The relative fault of the Offerors, on the one hand, and the
Underwriter, 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 Offerors or by the Underwriter and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Offerors and the Underwriter agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to above in this Section 7. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above
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<PAGE>
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, the Underwriter shall
not 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 the
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 the
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 the Underwriter, and
each director of the Company, each officer of the Company and each Trustee of
the Trust who signed the Registration Statement, and each person, if any, who
controls the Company or the Trust 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 Offerors.
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement and the Pricing Agreement, or con tained in certificates of officers
of the Company, the Trust and the Acquired Companies submitted pursuant hereto,
shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of the Underwriter or controlling person, or
by or on behalf of the Company, and shall survive delivery of and payment for
the Capital Securities to the Underwriter.
SECTION 9. Termination of Agreement.
(a) The Underwriter may terminate this Agreement, by notice to the
Company at any time at or prior to Closing Time, if (i) there has been, since
the date of this Agreement or since the respective dates as of which information
is given in the Registration Statement, any material adverse change or any
development which could reasonably be expected to result in a
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<PAGE>
prospective material adverse change, financial or otherwise, or in the earnings,
business affairs or business prospects of the Company and its subsidiaries
considered as one enterprise, or any of the Acquired Companies and their
respective subsidiaries, in each case, considered as one enterprise, whether or
not arising in the ordinary course of business, or (ii) there has occurred (A)
any material adverse change in the financial markets in the United States or, if
the Capital Securities or any related underlying Securities include Debt
Securities denominated or payable in, or indexed to, one or more foreign or
composite currencies, in the international financial markets or (B) any outbreak
of hostilities or escalation of hostilities or other calamity or crisis, or (C)
any change or development involving a prospective change in national or
international political, financial or economic conditions the effect of which is
such as to make it, in the judgment of the Underwriter, impracticable to market
the Capital Securities or to enforce contracts for the sale of the Capital
Securities, or (iii) trading in securities of the Company or any of the Acquired
Companies has been suspended or limited by the Commission, NASD, the American
Stock Exchange or the New York Stock Exchange, or if trading generally on either
the American Stock Exchange, the New York Stock Exchange or in the
over-the-counter market has been suspended or limited, or minimum or maximum
prices for trading have been fixed, or maximum ranges for prices for securities
have been required, by either of said exchanges or by such system or by order of
the Commission, NASD or any other governmental authority, or (iv) a banking
moratorium has been declared by either Federal, New York or Indiana authorities
or, if the Capital Securities or any related Underlying Securities include Debt
Securities denominated or payable in, or indexed to, one or more foreign or
composite currencies, by the relevant authorities in the related foreign country
or countries.
(b) If this Agreement and the Pricing Agreement are terminated pursuant
to this Section 9, 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, 7 and 8 shall survive such termination and remain in full force
and effect.
SECTION 10. 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
Underwriter shall be directed to Salomon Brothers at Seven World Trade Center,
New York, New York 10048, Attention of George C. Johns, 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
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<PAGE>
W. Inlow, Esq., with a copy to Locke Reynolds Boyd & Weisell,
1000 Capital Center South, 201 North Illinois Street,
Indianapolis, Indiana 46204, Attention: Stephen J. Dutton, Esq.
SECTION 11. Parties. This Agreement and the Pricing Agree ment shall
each inure to the benefit of and be binding upon the Offerors and the
Underwriter 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 Underwriter and the
Offerors 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 parties hereto and thereto and their respective successors and
legal representatives, 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 the Underwriter
shall be deemed to be a successor by reason merely of such purchase.
SECTION 12. GOVERNING LAW AND TIME. THIS AGREEMENT AND THE PRICING
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORD ANCE WITH THE LAWS OF THE
STATE OF NEW YORK APPLICABLE TO AGREE MENTS MADE AND TO BE PERFORMED IN SAID
STATE. SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME UNLESS OTHERWISE
INDICATED.
SECTION 13. Effect of Headings. The Article and Section
headings herein are for convenience only and shall not affect the
construction hereof.
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<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Trust a counterpart hereof, whereupon
this instrument, along with all counterparts, shall become a binding agreement
among the Underwriter and the Offerors in accordance with its terms.
Very truly yours,
CONSECO, INC.
By: /s/ ROLLIN M. DICK
------------------
Name: Rollin M. Dick
Title: Executive Vice President
CONSECO FINANCING TRUST II
By: /s/ ROLLIN M. DICK
------------------
Name: Rollin M. Dick
Title: Regular Trustee
CONFIRMED AND ACCEPTED, as of the date first above written:
SALOMON BROTHERS INC
By:/s/ GEORGE C. JOHNS
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<PAGE>
EXHIBIT A
325,000 Preferred Securities
CONSECO FINANCING TRUST II
(a Delaware business trust)
8.70% Capital Trust Pass-through Securitiessm (TruPSSM)
(Liquidation Amount of $1,000 per Security)
PRICING AGREEMENT
November 22, 1996
Salomon Brothers Inc
Seven World Trade Center
New York, New York 10048
Ladies and Gentlemen:
Reference is made to the Underwriting Agreement, dated November 22,
1996 (the "Underwriting Agreement"), relating to the purchase by Salomon
Brothers Inc of the above 8.70% Capital Trust Pass-through Securities (the
"Capital Securities"), of Conseco Financing Trust II, a Delaware business trust
(the "Trust").
Pursuant to Section 2 of the Underwriting Agreement, the Trust
and Conseco, Inc. (the "Company"), an Indiana corporation, agree
with the Underwriter as follows:
1. The initial public offering price per security for the Capital
Securities, determined as provided in said Section 2, shall be $1,000.
2. The purchase price per security for the Capital Securities to be
paid by Salomon Brothers Inc shall be $1,000, being an amount equal to the
initial public offering price set forth above.
3. The compensation to be paid by the Company to Salomon Brothers Inc
in respect of its commitments hereunder shall be an amount in same day funds of
$10 per Capital Security.
SM Salomon Brothers Inc has filed applications with the United States Patent and
Trademark Office for the registration of the TruPS service mark.
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<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Trust a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
among the Underwriter and the Offerors in accordance with its terms.
Very truly yours,
CONSECO, INC.
By:
Name: Rollin M. Dick
Title: Executive Vice President
CONSECO FINANCING TRUST II
By:
Name: Rollin M. Dick
Title: Regular Trustee
CONFIRMED AND ACCEPTED, as of the date first above written:
SALOMON BROTHERS INC
By:
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325,000 Preferred Securities
CONSECO FINANCING TRUST II
(a Delaware business trust)
8.70% Capital Trust Pass-through Securitiessm (TruPSSM)
(Liquidation Amount of $1,000 per Security)
PRICING AGREEMENT
November 22, 1996
Salomon Brothers Inc
Seven World Trade Center
New York, New York 10048
Ladies and Gentlemen:
Reference is made to the Underwriting Agreement, dated November 22,
1996 (the "Underwriting Agreement"), relating to the purchase by Salomon
Brothers Inc of the above 8.70% Capital Trust Pass-through Securities (the
"Capital Securities"), of Conseco Financing Trust II, a Delaware business trust
(the "Trust").
Pursuant to Section 2 of the Underwriting Agreement, the Trust
and Conseco, Inc. (the "Company"), an Indiana corporation, agree
with the Underwriter as follows:
1. The initial public offering price per security for the Capital
Securities, determined as provided in said Section 2, shall be $1,000.
2. The purchase price per security for the Capital Securities to be
paid by Salomon Brothers Inc shall be $1,000, being an amount equal to the
initial public offering price set forth above.
3. The compensation to be paid by the Company to Salomon Brothers Inc
in respect of its commitments hereunder shall be an amount in same day funds of
$10 per Capital Security.
SM Salomon Brothers Inc has filed applications with the United States Patent and
Trademark Office for the registration of the TruPS service mark.
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<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Trust a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
among the Underwriter and the Offerors in accordance with its terms.
Very truly yours,
CONSECO, INC.
By: /s/ ROLLIN M. DICK
------------------------------
Name: Rollin M. Dick
Title: Executive Vice President
CONSECO FINANCING TRUST II
By: /s/ ROLLIN M. DICK
-----------------------------
Name: Rollin M. Dick
Title: Regular Trustee
CONFIRMED AND ACCEPTED, as of the date first above written:
SALOMON BROTHERS INC
By: /s/ GEORGE C. JOHNS
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SECOND SUPPLEMENTAL INDENTURE
between
CONSECO, INC.
and
FLEET NATIONAL BANK, AS TRUSTEE
Dated as of November 22, 1996
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<TABLE>
<CAPTION>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
<S> <C> <C>
SECTION 1.1 Definition of Terms....................................................................2
ARTICLE II
GENERAL TERMS AND CONDITIONS OF THE DEBENTURES
SECTION 2.1 Designation and Principal Amount; Purchase Price; Payment
of Principal; Global Securities........................................................4
SECTION 2.2 Maturity...............................................................................4
SECTION 2.3 Form and Payment.......................................................................4
SECTION 2.4 Global Debenture.......................................................................5
SECTION 2.5 Interest...............................................................................6
SECTION 2.6 Authorized Denominations...............................................................7
SECTION 2.7 Redemption.............................................................................7
SECTION 2.8 Defeasance.............................................................................8
SECTION 2.9 No Sinking Fund........................................................................8
SECTION 2.10 Depository.............................................................................8
ARTICLE III
REDEMPTION OF THE DEBENTURES
SECTION 3.1 Tax Event Redemption...................................................................8
SECTION 3.2 Optional Redemption....................................................................9
SECTION 3.3 Partial Redemption....................................................................10
ARTICLE IV
EXTENSION OF INTEREST PAYMENT PERIOD
SECTION 4.1 Extension of Interest Payment Period..................................................10
SECTION 4.2 Notice of Extension...................................................................11
SECTION 4.3 Limitation of Transactions. ..........................................................11
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</TABLE>
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ARTICLE V
EXPENSES
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SECTION 5.1 Payment of Expenses...................................................................12
SECTION 5.2 Payment Upon Resignation or Removal...................................................13
ARTICLE VI
FORM OF DEBENTURE
SECTION 6.1 Form of Debenture.....................................................................13
ARTICLE VII
ORIGINAL ISSUE OF DEBENTURES
SECTION 7.1 Original Issue of Debentures..........................................................22
SECTION 7.2 Reports by the Trustee................................................................22
ARTICLE VIII
COVENANTS
SECTION 8.1 Covenants as to Trust.................................................................22
ARTICLE IX
DEFAULT
SECTION 9.1 Additional Event of Default...........................................................23
SECTION 9.2 Limitations on Waivers and Consents...................................................23
SECTION 9.3 Acknowledgment of Rights..............................................................24
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ARTICLE X
MISCELLANEOUS
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SECTION 10.1 Ratification of Indenture.............................................................24
SECTION 10.2 Trustee Not Responsible for Recitals..................................................24
SECTION 10.3 Governing Law.........................................................................24
SECTION 10.4 Separability..........................................................................25
SECTION 10.5 Counterparts..........................................................................25
SECTION 10.6 Effect of Headings....................................................................25
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SECOND SUPPLEMENTAL INDENTURE dated as of November 22, 1996 (the
"Second Supplemental Indenture") between Conseco, Inc., an Indiana corporation
(the "Issuer"), and Fleet National Bank, as trustee (the "Trustee") under the
Indenture dated as of November 14, 1996 between the Issuer and the Trustee (the
"Base Indenture") as supplemented by a First Supplemental Indenture dated as of
November 14, 1996 (the Base Indenture as so supplemented, the "Indenture").
WHEREAS, the Issuer executed and delivered the Indenture to the Trustee
to provide for the future issuance of the Issuer's unsecured subordinated
debentures, notes or other evidence of indebtedness (the "Securities") to be
issued from time to time in one or more series as might be determined by the
Issuer under the Indenture, in an unlimited aggregate principal amount which may
be authenticated and delivered as provided in the Indenture;
WHEREAS, pursuant to the terms of the Indenture, the Issuer desires to
provide for the establishment of a new series of its Securities to be known as
its 8.70% Subordinated Deferrable Interest Debentures due 2026 (the
"Debentures"), the form and substance of such Debentures and the terms,
provisions and conditions thereof to be set forth as provided in the Indenture
and this Second Supplemental Indenture;
WHEREAS, Conseco Financing Trust II, a Delaware statutory business
trust (the "Trust"), is offering to the public $325 million aggregate
liquidation amount of its 8.70% Capital Trust Pass-through Securities (the
"Capital Securities"), representing preferred undivided beneficial interests in
the assets of the Trust and proposes to invest the proceeds from such offering,
together with the proceeds of the issuance and sale by the Trust to the Issuer
of $10,100,000 aggregate liquidation amount of its 8.70% Trust Common Securities
(the "Common Securities"), in $335,100,000 aggregate principal amount of the
Debentures;
WHEREAS, the Issuer has requested that the Trustee execute and deliver
this Second Supplemental Indenture; and
WHEREAS, all requirements necessary to make this Second Supplemental
Indenture a valid instrument in accordance with its terms and to make the
Debentures, when executed by the Issuer and authenticated and delivered by the
Trustee as provided in the Indenture, the valid obligations of the Issuer have
been performed, and the execution and delivery of this Second Supplemental
Indenture has been duly authorized in all respects.
NOW, THEREFORE, in consideration of the purchase and acceptance of the
Debentures by the Holders thereof, and for the purpose of setting forth, as
provided in the Indenture, the form and substance of the Debentures and the
terms, provisions and conditions thereof, the Issuer covenants and agrees with
the Trustee as follows:
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ARTICLE I
DEFINITIONS
SECTION 1.1 Definition of Terms.
Unless the context otherwise requires:
(a) a term defined in the Indenture (including as set forth in the
first paragraph of Section 1.1 of the Indenture) has the same meaning when used
in this Second Supplemental Indenture unless otherwise defined herein;
(b) a term defined anywhere in this Second Supplemental Indenture has
the same meaning throughout;
(c) the singular includes the plural and vice versa;
(d) a reference to a Section or Article is to a Section or Article of
this Second Supplemental Indenture unless otherwise specified herein;
(e) headings are for convenience of reference only and do not affect
interpretation;
(f) the following terms have the meanings given to them in the
Declaration (as defined herein) or in the terms of the Trust Securities (as
defined herein) as established in accordance with the Declaration:
(i) Affiliate;
(ii) Business Day;
(iii) Debenture Issuer;
(iv) Delaware Trustee;
(v) Dissolution Opinion;
(vi) Distribution;
(vii) No Recognition Opinion;
(viii) Capital Security Certificate;
(ix) Pricing Agreement;
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(x) Pro Rata;
(xi) Property Trustee;
(xii) Redemption Tax Opinion;
(xiii) Regular Trustees;
(xiv) Securities;
(xv) Securities Guarantees;
(xvi) Sponsor;
(xvii) Tax Event; and
(xviii) Underwriting Agreement;
(g) The following terms have the meanings given to them in this Section
1.1(g):
"Additional Interest" shall have the meaning set forth in Section 2.5(c).
"Compounded Interest" shall have the meaning set forth in Section 4.1.
"Coupon Rate" shall have the meaning set forth in Section 2.5(a).
"Declaration" means the Amended and Restated Declaration of Trust of
Conseco Financing Trust II, a Delaware statutory business trust, dated as of
November 22, 1996.
"Deferred Interest" shall have the meaning set forth in Section 4.1.
"Dissolution Event" means that as a result of an election by the
Issuer, the Trust is to be dissolved in accordance with the Declaration, and the
Debentures held by the Property Trustee are to be distributed to the holders of
the Trust Securities Pro Rata in accordance with the Declaration.
"Extended Interest Payment Period" shall have the meaning set forth in
Section 4.1.
"Global Debenture" shall have the meaning set forth in Section 2.4(a)(i).
"Interest Payment Date" shall have the meaning set forth in Section 2.5
(a).
"Make-Whole Premium" shall have the meaning set forth in Section 3.2.
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"Maturity Date" means the date on which the Debentures mature and on
which the principal shall be due and payable together with all accrued and
unpaid interest thereon (including Compounded Interest, if any).
"Ministerial Action" shall have the meaning set forth in Section 3.
"Non Book-Entry Capital Securities" shall have the meaning set forth in
Section 2.4(a)(ii).
"Optional Redemption Price" shall have the meaning set forth in Section
3.2.
"Redemption Price" shall have the meaning set forth in Section 3.1.
"Trust Securities" shall mean the Securities.
ARTICLE II
GENERAL TERMS AND CONDITIONS OF THE DEBENTURES
SECTION 2.1 Designation and Principal Amount; Purchase Price; Payment of
Principal; Global Securities.
(a) There is hereby authorized a series of Securities designated the
"8.70% Subordinated Deferrable Interest Debentures due 2026," limited in
aggregate principal amount to $335,100,000 (not including Debentures
authenticated and delivered upon registration of transfer of, or in exchange
for, or in lieu of, other Debentures pursuant to Sections 3.4, 3.5, 3.6, 8.6 or
10.7 of the Indenture), which amount shall be as set forth in a Company Order
for the authentication and delivery of Debentures pursuant to Section 3.3 of the
Indenture.
(b) The Debentures shall be issued for a purchase price equal to 100%
of the principal amount of such Debentures.
(c) The principal of the Debentures shall be due and payable in full
on the Maturity Date.
(d) The Debentures shall initially be issued in fully registered
non-book entry certificated form in the aggregate principal amount of
$335,100,000.
SECTION 2.2 Maturity. The Maturity Date will be November 15, 2026.
SECTION 2.3 Form and Payment.
Except as provided in Section 2.4, the Debentures shall be issued as
Registered Securities in fully registered certificated form without interest
coupons. The place where principal of and interest (including the Compounded
Interest, if any) on the Debentures will be payable, the Debentures may be
surrendered for registration of transfer or exchange, and where notices and
demands to or upon
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the Issuer in respect of the Debentures and the Indenture may be served shall be
the Corporate Trust Office of the Trustee, provided, however, that payment of
interest may be made at the option of the Issuer by wire transfer to an account
maintained by a Holder (upon appropriate instructions from such Holder) or by
check mailed to the Holder at such address as shall appear in the Register.
Notwithstanding the foregoing, so long as the Holder of any Debentures is the
Property Trustee, the payment of the principal of and interest (including
Compounded Interest, if any) on such Debentures held by the Property Trustee
will be made by wire transfer of immediately available funds at such place and
to such account as may be designated by the Property Trustee. Payment of
principal of the Debentures will only be made upon surrender of the Debentures
to the Trustee. The Debentures will be denominated in Dollars and payment of
principal and interest on the Debentures shall be made in Dollars.
SECTION 2.4 Global Debenture.
(a) In connection with a distribution of the Debentures to the holders
of the Trust Securities pursuant to the Declaration:
(i) The Debentures in certificated form to be distributed to
the holders of Capital Securities may be presented to the Trustee by the
Property Trustee in exchange for a global Debenture in an aggregate principal
amount equal to the aggregate principal amount of all Outstanding Debentures of
such series (a "Global Debenture"), to be registered in the name of the
Depository, or its nominee, and delivered by the Trustee to the Depository for
crediting to the accounts of its participants pursuant to the instructions of
the Regular Trustees. The Issuer upon any such presentation shall execute a
Global Debenture in such aggregate principal amount and deliver the same to the
Trustee for authentication and delivery in accordance with the Indenture and
this Second Supplemental Indenture. Payments on the Debentures issued as a
Global Debenture will be made to the Depository.
(ii) If any Capital Securities are held in non book-entry
certificated form, the Debentures in certificated form may be presented to the
Trustee by the Property Trustee and any Capital Security Certificate which
represents Capital Securities other than Capital Securities held by the
Depository or its nominee ("Non Book-Entry Capital Securities") will be deemed
to represent beneficial interests in Debentures presented to the Trustee by the
Property Trustee having an aggregate principal amount equal to the aggregate
liquidation amount of the Non Book-Entry Capital Securities until such Capital
Security Certificates are presented to the Registrar for transfer or reissuance
at which time such Capital Security Certificates will be canceled and a
Debenture, registered in the name of the holder of the Capital Security
Certificate or the transferee of the holder of such Capital Security
Certificate, as the case may be, with an aggregate principal amount equal to the
aggregate liquidation amount of the Capital Security Certificate canceled, will
be executed by the Issuer and delivered to the Trustee for authentication and
delivery in accordance with the Indenture and this Second Supplemental
Indenture. On issue of such Debentures, Debentures with an equivalent aggregate
principal amount that were presented by the Property Trustee to the Trustee will
be deemed to have been canceled.
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(b) Unless and until it is exchanged for Debentures in registered
certificated form, a Global Debenture may be transferred, in whole but not in
part, only by the Depository to a nominee of the Depository or by a nominee of
the Depository to the Depository or another nominee of the Depository or by the
Depository or any such nominee to a successor Depository selected or approved by
the Issuer or a nominee of such successor Depository.
(c) If at any time the Depository for the Debentures notifies the
Issuer that it is unwilling or unable to continue as Depository for the
Debentures or if at any time the Depository for the Debentures shall no longer
be registered or in good standing as a clearing agency under the Securities
Exchange Act of 1934, as amended, or other applicable statute or regulation, at
a time at which the Depository is required to be so registered to act as
Depository for the Debentures, and a successor Depository for such series is not
appointed by the Issuer within 90 days after the Issuer receives such notice or
becomes aware of such condition, as the case may be, the Issuer will execute,
and, subject to Article 3 of the Indenture, the Trustee, upon written notice
from the Issuer, will authenticate and deliver the Debentures in definitive
registered form without coupons, in authorized denominations, and in an
aggregate principal amount equal to the principal amount of the Global Debenture
in exchange for such Global Debenture. In addition, the Issuer, in its sole
discretion, may at any time determine that the Debentures shall no longer be
represented by a Global Debenture. In such event the Issuer will execute, and
subject to Article 3 of the Indenture, the Trustee, upon receipt of an Officers'
Certificate evidencing such determination by the Issuer, will authenticate and
deliver the Debentures in definitive registered form without coupons, in
authorized denominations, and in an aggregate principal amount equal to the
principal amount of the Global Debenture in exchange for such Global Debenture.
Upon the exchange of the Global Debenture for such Debentures in definitive
registered form without coupons, in authorized denominations, the Global
Debenture shall be canceled by the Trustee. Such Debentures in definitive
registered form issued in exchange for the Global Debenture shall be registered
in such names and in such authorized denominations as the Depository, pursuant
to instructions from its direct or indirect participants or otherwise, shall
instruct the Trustee in writing. The Trustee shall deliver such registered
certificated Debentures in definitive form in exchange for the Global Debenture
to the Depository for delivery to the Persons in whose names such Debentures are
so registered.
SECTION 2.5 Interest.
(a) The Debentures will bear interest at the fixed rate of 8.70% per
annum (the "Coupon Rate") from the original date of issuance or from the most
recent Interest Payment Date to which interest has been paid or duly provided
for until the principal thereof becomes due and payable, and on any overdue
principal and (to the extent that payment of such interest is enforceable under
applicable law) on any overdue installment of interest at the Coupon Rate,
compounded semiannually, payable (subject to the provisions of Article IV)
semiannually in arrears on May 15 and November 15 of each year (each, an
"Interest Payment Date"), commencing on May 15, 1997. Interest on the Debentures
(except defaulted interest) shall be paid to the Persons in whose name the
Debentures are registered, at the close of business on the regular Record Date
for such interest installment (including Debentures that are cancelled after the
Record
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Date and before the Interest Payment Date), which, with respect to any
Debentures of which the Property Trustee is the Holder or with respect to a
Global Debenture, shall be the close of business on the Business Day next
preceding that Interest Payment Date. Notwithstanding the foregoing sentence, if
the Capital Securities are no longer in book-entry only form or if, pursuant to
the Indenture and this Second Supplemental Indenture the Debentures are not
represented by a Global Debenture, the Issuer may select a regular Record Date
for such interest installment which shall conform to the rules of any securities
exchange, interdealer quotation system or other organization on which the
Debentures are listed and which shall be at least one Business Day but less than
60 Business Days before the applicable Interest Payment Date. Notwithstanding
the foregoing, any interest that is payable at maturity shall be payable to the
Person to whom principal payable at maturity shall be payable.
(b) The amount of interest payable for any period will be computed on
the basis of a 360-day year of twelve 30-day months, and for any period shorter
than a full semiannual period on the basis of the actual number of days elapsed
per 30-day month. In the event that any date on which interest is payable on the
Debentures is not a Business Day, then payment of the interest payable on such
date will be made on the next succeeding day which is a Business Day (and
without any interest or other payment in respect of any such delay), except
that, notwithstanding any provision of the Indenture to the contrary, if such
Business Day is in the next succeeding calendar year, such payment shall be made
on the immediately preceding Business Day, in each case with the same force and
effect as if made on such date.
(c) If, at any time while the Property Trustee is the Holder of any
Debentures, the Trust or the Property Trustee is required to pay any taxes,
duties, assessment or governmental charges of whatever nature (other than
withholding taxes) imposed by the United States, or any other taxing authority,
then, in any case, the Company will pay as additional interest ("Additional
Interest") on the Debentures held by the Property Trustee, such additional
amounts as shall be required so that the net amounts received and retained by
the Trust and the Property Trustee after paying such taxes, duties, assessments
or other governmental charges will be equal to the amounts the Trust and the
Property Trustee would have received had no such taxes, duties, assessments or
other government charges been imposed.
SECTION 2.6 Authorized Denominations.
The Debentures shall be issuable in denominations of $1,000 and
integral multiples of $1,000 in excess thereof.
SECTION 2.7 Redemption.
The Debentures are not subject to conversion at the option of the
Holder. The Debentures are not subject to redemption at the option of the Holder
and are subject to redemption at the option of the Issuer or otherwise as
provided in Article III hereof.
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SECTION 2.8 Defeasance.
The Debentures shall not be subject to the provisions of Article 4 of
the Indenture concerning the satisfaction and discharge of the Issuer's
indebtedness and obligations under the Indenture and the termination of certain
covenants of the Issuer under the Indenture.
SECTION 2.9 No Sinking Fund.
The Debentures shall not be entitled to the benefit of any sinking fund
or analogous provision.
SECTION 2.10 Depository.
The Depository Trust Company (or its nominee) shall act as the initial
Depository for any Global Debenture which may be issued pursuant to this Second
Supplemental Indenture.
ARTICLE III
REDEMPTION OF THE DEBENTURES
SECTION 3.1 Tax Event Redemption.
If a Tax Event has occurred and is continuing and:
(a) the Issuer has received a Redemption Tax Opinion; or
(b) after receiving a Dissolution Tax Opinion, the Regular Trustees
shall have been informed by tax counsel rendering the Dissolution Tax Opinion
that a No Recognition Opinion cannot be delivered to the Trust, the Issuer shall
have the right upon not less than 30 days nor more than 60 days notice to the
Holders of the Debentures to redeem the Debentures, in whole or in part, for
cash within 90 days following the occurrence of such Tax Event (the "90 Day
Period") at a redemption price equal to 100% of the principal amount to be
redeemed plus any accrued and unpaid interest thereon (including Compounded
Interest, if any) to the date of such redemption (the "Redemption Price"),
provided that if at the time there is available to the Issuer the opportunity to
eliminate, within the 90 Day Period, the Tax Event by taking some ministerial
action ("Ministerial Action"), such as filing a form or making an election, or
pursuing some other similar reasonable measure which has no adverse effect on
the Issuer, the Trust or the Holders of the Trust Securities issued by the
Trust, the Issuer shall pursue such Ministerial Action in lieu of redemption,
and, provided, further, that the Issuer shall have no right to redeem the
Debentures while the Trust is pursuing any Ministerial Action pursuant to its
obligations under the Declaration. The Redemption Price shall be paid prior to
12:00 noon, New York time, on the date of such redemption or such earlier time
as the Issuer determines; provided, that, the Issuer
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shall deposit with the Trustee an amount sufficient to pay the Redemption Price
by 10:00 a.m., New York time, on the date such Redemption Price is to be paid.
SECTION 3.2 Otional Redemption.
Subject to the provisions of Section 3.3 and Article 10 of the
Indenture, the Issuer shall have the right to redeem the Debentures, in whole or
in part, at any time or from time to time, after the issuance of the Capital
Securities, at a redemption price equal to 100% of the principal amount to be
redeemed plus the Make-Whole Premium, if any, plus any accrued and unpaid
interest thereon, (including Compounded Interest, if any), to the date of such
redemption (collectively the "Optional Redemption Price"). The Make-Whole
Premium means the excess, if any of (i) the sum of the present values of the
remaining scheduled payments of principal and interest thereon discounted to the
redemption date on a semiannual basis at the Treasury Rate plus 50 basis points
over (ii) 100% of the principal amount of Debentures to be redeemed. Any
redemption pursuant to this paragraph will be made upon not less than 30 days
nor more than 60 days notice to the Holder of the Debentures, at the Optional
Redemption Price. The Optional Redemption Price shall be paid prior to 12:00
noon, New York time, on the date of such redemption or at such earlier time as
the Issuer determines and specifies in the notice of redemption; provided, that,
the Issuer shall deposit with the Trustee an amount sufficient to pay the
Optional Redemption Price by 10:00 a.m., New York time, on the date such
Optional Redemption Price is to be paid.
For purposes of this Section 3.2:
"Treasury Rate" means, with respect to any redemption date, the rate
per annum equal to the semiannual equivalent yield to maturity of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as
a percentage of its principal amount) equal to the Comparable Treasury Price for
such redemption date.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term of the Debentures to be redeemed that would be utilized, at
the time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of such Debentures. "Independent Investment Banker" means one of
the Reference Treasury Dealers appointed by the Trustee after consultation with
the Issuer.
"Comparable Treasury Price" means, with respect to any redemption date,
(i) the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount ) on the third
business day preceding such redemption date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (ii) if such release (or any successor release) is not
published or does not contain such prices on such business day, (A) the average
of the Reference Treasury Dealer Quotations for such redemption date, after
excluding the highest and lowest such Reference Treasury Dealer
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quotations, or (B) if the Trustee obtains fewer than four such Reference
Treasury Dealer Quotations, the average of all such Quotations. "Reference
Treasury Dealer Quotations" means, with respect to each Reference Treasury
Dealer and any redemption date, the average, as determined by the Trustee, of
the bid and asked prices for the Comparable Treasury Issue (expressed in each
case as a percentage of its principal amount) quoted in writing to the Trustee
by such Reference Treasury Dealer at 5:00 p.m. on the third business day
preceding such redemption date.
"Reference Treasury Dealer" means each of Salomon Brothers Inc, Goldman,
Sachs & Co., J.P. Morgan Securities Inc. and UBS Securities Inc. and their
respective successors; provided, however, that if any of the foregoing shall
cease to be a primary U.S. Government Securities dealer in New York City (a
"Primary Treasury Dealer"), the Issuer shall substitute therefor another Primary
Treasury Dealer.
SECTION 3.3 Partial Redemption.
(a) The Issuer may not redeem fewer than all of the Outstanding
Debentures unless all accrued and unpaid interest on the Debentures has been
paid as of the Interest Payment Date next preceding the Redemption Date.
(b) If the Debentures are only partially redeemed pursuant to Section
3.1 or Section 3.2, the Debentures will be redeemed pro rata or by lot or by any
other method utilized by the Trustee; provided that if at the time of redemption
the Debentures are registered as a Global Debenture, the Depository shall
determine, in accordance with its procedures, the principal amount of such
Debentures credited to each of its participant accounts to be redeemed.
ARTICLE IV
EXTENSION OF INTEREST PAYMENT PERIOD
SECTION 4.1 Extension of Interest Payment Period.
The Issuer shall have the right, at any time and from time to time
during the term of the Debentures, to defer payments of interest on the
Debentures by extending the interest payment period of the Debentures for a
period not exceeding 10 consecutive semiannual periods (the "Extended Interest
Payment Period"), during which Extended Interest Payment Period no interest
shall be due and payable; provided that no Extended Interest Payment Period may
extend beyond the Maturity Date. To the extent permitted by applicable law,
interest, the payment of which has been deferred because of the extension of the
interest payment period pursuant to this Section 4.1, will bear interest thereon
at the Coupon Rate compounded semiannually for each semiannual period of the
Extended Interest Payment Period ("Compounded Interest"). At the end of the
Extended Interest Payment Period, the Issuer shall pay all interest accrued and
unpaid on the Debentures, including any Compounded Interest (all such interest
the "Deferred Interest") that
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shall be payable to the Holders of the Debentures in whose names the
Subordinated Debentures are registered in the Register as of the Record Date
relating to the Interest Payment Date that corresponds to the end of such
Extended Interest Payment Period. Before the termination of any Extended
Interest Payment Period, the Issuer may further extend such period, provided
that such period together with all such previous and further extensions thereof
shall not exceed 10 consecutive semiannual periods or extend beyond the Maturity
Date. Upon the termination of any Extended Interest Payment Period and upon the
payment of all Deferred Interest then due, the Issuer may commence a new
Extended Interest Payment Period, subject to the foregoing requirements. No
interest shall be due and payable during an Extended Interest Payment Period,
except at the end thereof, but the Issuer may prepay at any time all or any
portion of the Deferred Interest accrued during an Extended Interest Payment
Period.
SECTION 4.2 Notice of Extension.
(a) If the Property Trustee is the only registered Holder of the
Debentures at the time the Issuer selects an Extended Interest Payment Period,
the Issuer shall give written notice to the Trustee, the Regular Trustees and
the Property Trustee of its selection of such Extended Interest Payment Period
one Business Day before the earlier of (i) the next succeeding date on which
Distributions on the Trust Securities are payable, or (ii) the date the Regular
Trustees, on behalf of the Trust, are required to give notice of the record
date, or the date such Distributions are payable, to the holders of the Capital
Securities (or any national securities exchange or other self regulatory
organization on which the Capital Securities are listed).
(b) If the Property Trustee is not the only Holder of the Debentures at
the time the Issuer selects an Extended Interest Payment Period, the Issuer
shall give the Trustee, the Property Trustee and the Holders of the Debentures
written notice of its selection of such Extended Interest Payment Period 10
Business Days before the earlier of (i) the next succeeding Interest Payment
Date, or (ii) the date the Issuer is required to give notice of the record or
payment date of such interest payment to Holders of the Debentures (or any
national securities exchange or other self regulatory organization on which the
Debentures are listed).
(c) The semiannual period in which any notice is given pursuant to
paragraphs (a) or (b) of this Section 4.2 shall be counted as one of the 10
semiannual periods permitted in the maximum Extended Interest Payment Period
permitted under Section 4.1.
SECTION 4.3 Limitation of Transactions.
If the Issuer shall exercise its right to defer payment of interest as
provided in Section 4.1, during any Extended Interest Payment Period (a) the
Issuer shall not declare or pay any dividends on, make any distributions with
respect to, or redeem, purchase, acquire or make a liquidation payment with
respect to, any of its capital stock, (b) the Issuer shall not make any payment
of interest, principal or premium, if any, on or repay, repurchase or redeem any
debt securities issued by the Issuer that rank pari passu with or junior to the
Debentures and (c) the Issuer shall not make guarantee payments with respect to
the foregoing (other than pursuant to the Securities
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Guarantees); provided, however, that notwithstanding the restriction in clause
(a) above, the Issuer may (i) declare and pay a stock dividend where the
dividend stock is the same stock as that on which the dividend is being paid and
(ii) purchase or acquire shares of its common stock in connection with the
satisfaction by the Issuer of its obligations under any employee benefit plans.
ARTICLE V
EXPENSES
SECTION 5.1 Payment of Expenses.
In connection with the offering, sale and issuance of the Debentures to
the Property Trustee in connection with the sale of the Trust Securities by the
Trust and during the existence of the Trust, the Issuer, in its capacity as
borrower with respect to the Debentures, shall:
(a) pay all costs and expenses relating to the offering, sale and
issuance of the Debentures, including commissions to the underwriters payable
pursuant to the Underwriting Agreement and compensation of the Trustee under the
Indenture in accordance with the provisions of Section 6.9 of the Indenture;
(b) pay other debts and obligations of the Trust (other than with
respect to the Trust Securities) and all costs and expenses of the Trust
(including, but not limited to, costs and expenses relating to the organization,
maintenance and dissolution of the Trust, the offering, sale and issuance of the
Trust Securities (including commissions to the underwriter payable pursuant to
the Pricing Agreement), the retention of the Regular Trustees, reimbursement of
the Regular Trustees as provided in the Declaration, the fees and expenses of
the Property Trustee and the Delaware Trustee, the trustee under the Capital
Securities Guarantee and the Common Securities Guarantee, the costs and expenses
relating to the operation of the Trust, including without limitation, costs and
expenses of accountants, attorneys, statistical or bookkeeping services,
expenses for printing and engraving and computing or accounting equipment,
paying agent(s), registrar(s), transfer agent(s), duplicating, travel and
telephone and other telecommunications expenses and costs and expenses incurred
in connection with the acquisition, financing and disposition of Trust assets,
and the fees and expenses related to the enforcement by the Property Trustee of
the rights of the holders of the Capital Securities) and all other amounts
payable by the Issuer pursuant to the Declaration;
(c) be primarily liable for any indemnification obligations arising
with respect to the Declaration; and
(d) pay any and all taxes, duties, assessments or governmental charges
of whatever nature (other than withholding taxes) imposed on the Trust or its
assets and all liabilities, costs and expenses of the Trust with respect to such
taxes, duties, assessments or governmental charges.
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<PAGE>
SECTION 5.2 Payment Upon Resignation or Removal.
Upon termination of this Second Supplemental Indenture or the Indenture
or the removal or resignation of the Trustee pursuant to Section 6.10 of the
Indenture, the Issuer shall pay to the Trustee all amounts due to the Trustee
accrued to the date of such termination, removal or resignation. Upon
termination of the Declaration or the removal or resignation of the Delaware
Trustee or the Property Trustee, as the case may be, pursuant to Section 5.7 of
the Declaration, the Issuer shall pay to the Delaware Trustee or the Property
Trustee, as the case may be, all amounts due to such trustee accrued to the date
of such termination, removal or resignation.
ARTICLE VI
FORM OF DEBENTURE
SECTION 6.1 Form of Debenture.
The Debentures and the Trustee's Certificate of Authentication to be
endorsed thereon are to be substantially in the following forms:
(IF THE DEBENTURE IS TO BE A GLOBAL DEBENTURE, INSERT - This Debenture
is in Global form within the meaning of the Indenture hereinafter referred to
and is registered in the name of a Depository or a nominee of a Depository.
Unless and until it is exchanged in whole or in part for securities in
certificated form in the limited circumstances described in the indenture, this
security may not be transferred except as a whole by the depository to a nominee
of the Depository or by a nominee of the Depository to the Depository or another
nominee of the Depository or by the Depository or any such nominee to a
successor Depository or a nominee of such successor Depository.
Unless this Debenture is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the issuer or
its agent for registration of transfer, exchange or payment, and any Debenture
issued is registered in the name of Cede & Co. or such other name as requested
by an authorized representative of DTC (and any payment hereon is made to Cede &
Co. or to such other entity as is requested by an authorized representative of
DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an
interest herein.)
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<PAGE>
CONSECO, INC.
8.70% SUBORDINATED DEFERRABLE INTEREST DEBENTURE
No. DUE NOVEMBER 15, 2026 REGISTERED
$
Conseco, Inc., an Indiana corporation (the "Company", which term
includes any successor corporation under the Indenture hereinafter referred to),
for value received, hereby promises to pay to , or registered assigns, the
principal sum of Dollars on November 15, 2026 and to pay interest on said
principal sum from November 27, 1996, or from the most recent interest payment
date (each such date, an "Interest Payment Date") to which interest has been
paid or duly provided for, semiannually (subject to deferral as set forth
herein) in arrears on May 15 and November 15 of each year commencing May 15,
1997, at the rate of 8.70% per annum until the principal hereof shall have
become due and payable, and on any overdue principal and (without duplication
and to the extent that payment of such interest is enforceable under applicable
law) on any overdue installment of interest at the same rate per annum
compounded semiannually. The amount of interest payable on any Interest Payment
Date shall be computed on the basis of a 360-day year of twelve 30-day months,
and for any period shorter than a full semiannual period on the basis of the
actual number of days elapsed per 30-day month. In the event that any date on
which interest is payable on this Debenture is not a Business Day, then payment
of interest payable on such date will be made on the next succeeding day that is
a Business Day (and without any interest or other payment in respect of any such
delay), except that, if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date. The interest
installment so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in the Indenture, be paid to the person
in whose name this Debenture is registered at the close of business on the
regular record date for such interest installment, which shall be the close of
business on the Business Day next preceding such Interest Payment Date. [If the
Capital Securities are no longer represented by a global certificate or if the
Debentures are not represented by a global debenture - which shall be the close
of business on the Business Day next preceding such Interest payment.]
Notwithstanding the foregoing, any interest that is payable on the Maturity Date
shall be payable to the Person to whom principal payable at the Maturity Date
shall be payable. Any such interest installment not punctually paid or duly
provided for shall forthwith cease to be payable to the registered Holders on
such regular record date and may be paid to the Person in whose name this
Debenture (or one or more Predecessor Security) is registered at the close of
business on a special record date to be fixed in accordance with the provisions
of Section 3.7(b) of the Indenture. The principal of and the interest on this
Debenture shall be payable at the office or agency of the Trustee maintained for
that purpose in any coin or currency of the United States of America that at the
time of payment is legal tender for payment of public and private debts;
provided, however, that payment of interest may be made at the option of the
Company by check mailed to the registered Holder at such address as shall appear
in the Register. Notwithstanding the foregoing, so long as the Holder of this
Debenture is the Property Trustee, the payment of the principal of and interest
on this
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<PAGE>
Debenture will be made by wire transfer in immediately available funds at such
place and to such account as may be designated by the Property Trustee. Payment
of principal of the Debentures will only be made upon surrender of the
Debentures to the Trustee or Paying Agent.
The indebtedness evidenced by this Debenture is, to the extent provided
in the Indenture, subordinate and junior in right of payment to the prior
payment in full of all Senior Indebtedness, and this Debenture is issued subject
to the provisions of the Indenture with respect thereto. Each Holder of this
Debenture, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his or her behalf to take
such action as may be necessary or appropriate to acknowledge or effectuate the
subordination so provided and (c) appoints the Trustee his or her
attorney-in-fact for any and all such purposes. Each Holder hereof, by his or
her acceptance hereof, hereby waives all notice of the acceptance of the
subordination provisions contained herein and in the Indenture by each holder of
Senior Indebtedness, whether now outstanding or hereafter incurred, and waives
reliance by each such holder upon said provisions.
This Debenture shall not be entitled to any benefit under the Indenture
hereinafter referred to, be valid or become obligatory for any purpose until the
Certificate of Authentication hereon shall have been signed by or on behalf of
the Trustee.
The provisions of this Debenture are continued on the reverse side
hereof and such continued provisions shall for all purposes have the same effect
as though fully set forth at this place.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated: _________________, 1996.
CONSECO, INC.
By: _________________________________
By: _________________________________
SEAL
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<PAGE>
(FORM OF CERTIFICATE OF AUTHENTICATION)
CERTIFICATE OF AUTHENTICATION
This is one of the Debentures referred to in the within-mentioned
Indenture.
FLEET NATIONAL BANK, as Trustee
By: ______________________________
Authorized Signatory
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<PAGE>
(FORM OF REVERSE OF DEBENTURE)
This Debenture is one of a duly authorized series of Debentures of the
Company (herein sometimes referred to as the "Debentures"), specified in the
Indenture, all issued or to be issued in one or more series under and pursuant
to an Indenture dated as of November 14, 1996, duly executed and delivered
between the Company and Fleet National Bank, as Trustee (the "Trustee"), (as
supplemented by the First Supplemental Indenture dated as of November 14, 1996,
the "Base Indenture") as supplemented by the Second Supplemental Indenture dated
as of November 22, 1996 between the Company and the Trustee (the Base Indenture
as so supplemented, the "Indenture"), to which a description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the
Trustee, the Company and the Holders of the Debentures, and to all of which
provisions the Holder of this Debenture by acceptance hereof, assents and
agrees. By the terms of the Indenture, the Debentures are issuable in series
that may vary as to amount, date of maturity, rate of interest and in other
respects as provided in the Indenture. This series of Debentures is limited in
aggregate principal amount as specified in said Second Supplemental Indenture.
The Company shall have the right to redeem this Debenture at the option
of the Company, at any time and from time to time (an "Optional Redemption"), at
a redemption price equal to 100% of the principal amount plus the Make-Whole
Premium, if any, plus any accrued and unpaid interest, including any Compounded
Interest, if any, to the date of such redemption (collectively the "Optional
Redemption Price"). The Make-Whole Premium shall mean the excess, if any, of (i)
the sum of the present values of the remaining scheduled payments of principal
and interest thereon discounted to the redemption date on a semiannual basis at
the Treasury Rate (as defined in the Indenture) plus 50 basis points over (ii)
100% of the principal amount of Debentures to be redeemed. Any redemption
pursuant to this paragraph will be made upon not less than 30 nor more than 60
days' notice at the Optional Redemption Price.
If, at any time, a Tax Event (as defined below) shall occur or be
continuing after receipt of a Dissolution Tax Opinion (as defined below) and
either (a) the Regular Trustees and the Issuer shall have received an opinion (a
"Redemption Tax Opinion") of a nationally recognized independent tax counsel
experienced in such matters that, as a result of a Tax Event, there is more than
an insubstantial risk that the Issuer would be precluded from deducting the
interest on the Debentures for United States federal income tax purposes even
after the Debentures were distributed to the Holders of Capital Securities and
Common Securities in liquidation of such holder's interest in the Trust as set
forth in the Declaration of Trust or (b) the Regular Trustees shall have been
informed by such tax counsel that a No Recognition Opinion (as defined below)
cannot be delivered, the Issuer shall have the right at any time, upon not less
than 30 nor more than 60 days' notice, to redeem the Debentures in whole or in
part for cash at the Redemption Price within 90 days following the occurrence of
such Tax Event; provided, however, that, if at that time there is available to
the Issuer or the Trust the opportunity to eliminate, within such 90 day period
the Tax Event by taking some ministerial action ("Ministerial Action"), such as
filing a form or making an election, or pursuing some other similar reasonable
measure, which has no adverse effect on the Trust, the Issuer or the Holders of
the Capital Securities, the Issuer or the
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<PAGE>
Trust will pursue such measure in lieu of redemption and provided further that
the Issuer shall have no right to redeem the Debentures while the Trust is
pursuing any such Ministerial Action.
"Tax Event" means that the Regular Trustees shall have received an
opinion of independent tax counsel experienced in such matters (a "Dissolution
Opinion") to the effect that, as a result of (a) any amendment to, or change
(including any announced prospective change) in, the laws (or any regulations
thereunder) of the United States or any political subdivision or taxing
authority thereof or therein, or (b) any official administrative pronouncement
or judicial decision interpreting or applying such laws or regulations, which
amendment, or change is effective or such pronouncement or decision is announced
on or after the date of original issuance of the Preferred Securities, there is
more than an insubstantial risk that (i) the Trust is, or will be within 90 days
after the date thereof, subject to United States federal income tax with respect
to interest accrued or received on the Debentures, (ii) the Trust is, or will be
within 90 days after the date thereof, subject to more than a de minimis amount
of taxes, duties or other governmental charges, or (iii) interest payable to the
Trust on the Debentures is not, or within 90 days of the date thereof, will not
be deductible, in whole or in part, by the Company for United States federal
income tax purposes.
A "No Recognition Opinion" means an opinion of nationally recognized
independent tax counsel experienced in such matters, which may rely on published
revenue rulings of the Internal Revenue Service, to the effect that all holders
of the Trust Securities will not recognize gain of loss for United States
federal income tax purposes as a result of the dissolution of the Trust and
distribution of the Debentures.
If the Debentures are only partially redeemed by the Company pursuant
to an Optional Redemption or a redemption pursuant to a Tax Event, the
Debentures will be redeemed pro rata or by lot or in some other equitable manner
determined by the Trustee.
In the event of redemption of this Debenture in part only, a new
Debenture or Debentures of this series (for the unredeemed portion hereof) will
be issued in the name of the Holder hereof upon the cancellation hereof.
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of all of the Debentures may be
declared, and upon such declaration shall become, due and payable, in the
manner, with the effect and subject to the conditions and limitations provided
in the Indenture.
The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the Holders of not less than a majority in
aggregate principal amount of the Debentures of each series affected at the time
outstanding, as defined in the Indenture, to execute supplemental indentures for
the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of the Indenture or of any supplemental indenture or of
modifying in any manner the rights of the Holders of the Debentures; provided,
however, that no such supplemental indentures shall (i) change the Stated
Maturity of the principal or any
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<PAGE>
installment of principal or any installment of interest (other than as
contemplated herein), or reduce the amount or principal or interest thereon or
any premium payable upon redemption or repayment thereof, or change the Place of
Payment or currency in which principal or any interest is payable, or impair the
right to institute suit for the enforcement of any payment of the principal and
any premium and interest without the consent of the Holder of each Debenture so
affected; (ii) reduce the aforesaid percentage of Debentures, the Holders of
which are required to consent to any such supplemental indenture, without the
consent of the Holders of each Debenture then outstanding and affected thereby;
(iii) change any obligation of the Company to maintain an office or agency in
the Place of Payment; or (iv) modify any of the above provisions. The Indenture
also contains provisions permitting the Holders of a majority in aggregate
principal amount of the Debentures of any series at the time outstanding
affected thereby, on behalf of all of the Holders of the Debentures of such
series, to waive any past default in the performance of any of the covenants
contained in the Indenture, or established pursuant to the Indenture with
respect to such series, and its consequences, except a default in the payment of
the principal or interest on the Debentures or a default in respect of a
covenant or provision of the Indenture or the Debentures of such series which
cannot be modified or amended without the consent of each Holder of Debentures
of such series. Any such consent or waiver by the registered Holder of this
Debenture (unless revoked as provided in the Indenture) shall be conclusive and
binding upon such Holder and upon all future Holders and owners of this
Debenture and of any Debentures issued in exchange herefor or in place hereof
(whether by registration of transfer or otherwise), irrespective of whether or
not any notation of such consent or waiver is made upon this Debenture.
No reference herein to the Indenture and no provision of this Debenture
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of and interest on this
Debenture at the time and place and at the rate and in the money herein
prescribed.
The Company shall have the right at any time during the term of the
Debentures from time to time to extend the interest payment period of such
Debentures for up to 10 consecutive semiannual periods not to extend beyond the
Maturity Date of the Debentures (an "Extended Interest Payment Period"), at the
end of which period the Company shall pay all interest then accrued and unpaid
(together with interest thereon at the rate specified for the Debentures to the
extent that payment of such interest is enforceable under applicable law). In
the event that the Company exercises the right to defer interest payments, then,
prior to the payment of all accrued interest on outstanding Debentures, (a) the
Company shall not declare or pay dividends on, or make a distribution with
respect to, or redeem, purchase or acquire, or make a liquidation payment with
respect to, any of its capital stock, (b) the Company shall not make any payment
of interest, principal or premium, if any, on or repay, repurchase or redeem any
debt securities issued by the Company that rank pari passu with or junior to the
Debentures and (c) the Company shall not make any guarantee payments with
respect to the foregoing (other than pursuant to the Securities Guarantees);
provided, however, that restriction (a) above does not apply to (i) any stock
dividends paid by the Company where the dividend stock is the same stock as that
on which the dividend is being paid and (ii) purchases or acquisitions of shares
of Company Common Stock in connection with the satisfaction by the Company of
its obligation under any
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<PAGE>
employee benefit plans. Before the termination of any such Extended Interest
Payment Period, the Company may further extend such Extended Interest Payment
Period, provided that such Extended Interest Payment Period together with all
such previous and further extensions thereof shall not exceed 10 consecutive
semiannual periods and shall not extend beyond the Maturity Date of the
Debentures. At the termination of any such Extended Interest Payment Period and
upon the payment of all accrued and unpaid interest and any additional amounts
then due, the Company may commence a new Extended Interest Payment Period.
At any time the Company will have the right to dissolve the Trust and
cause the Debentures to be distributed to the holders of the Trust Securities in
liquidation of the Trust.
As provided in the Indenture and subject to certain limitations therein
set forth, this Debenture is transferable by the registered Holder hereof on the
Register of the Company, upon surrender of this Debenture for registration of
transfer at the Corporate Trust Office of the Trustee accompanied by a written
instrument or instruments of transfer in form satisfactory to the Company or the
Trustee duly executed by the registered Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Debentures of authorized
denominations and for the same aggregate principal amount and series will be
issued to the designated transferee or transferees. No service charge will be
made for any such transfer, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in relation
thereto.
Prior to due presentment for registration of transfer of this
Debenture, the Company, the Trustee, any paying agent and any Registrar may deem
and treat the registered holder hereof as the absolute owner hereof (whether or
not this Debenture shall be overdue and notwithstanding any notice of ownership
or writing hereon made by anyone other than the Registrar) for the purpose of
receiving payment of or on account of the principal hereof and interest due
hereon and for all other purposes, and neither the Company nor the Trustee nor
any paying agent nor any Registrar shall be affected by any notice to the
contrary.
No recourse shall be had for the payment of the principal of or the
interest on this Debenture or for any claim based hereon, or otherwise in
respect hereof, or based on or in respect of the Indenture, against any
incorporator, stockholder, officer or director, past, present of future, as
such, of the Company or of any predecessor or successor corporation, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issuance hereof, expressly
waived and released.
[The Debentures of this series are issuable only in registered form
without coupons in denominations of $1,000 and any integral multiple thereof,
provided that this Global Debenture is exchangeable for Debentures in definitive
form only under certain limited circumstances set forth in the Indenture.] As
provided in the Indenture and subject to certain limitations herein and therein
set forth, Debentures of this series so issued are exchangeable for a like
aggregate principal amount of Debentures of this series of a different
authorized denomination, as requested by the
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<PAGE>
Holder surrendering the same. All terms used in this Debenture that are defined
in the Indenture shall have the meanings assigned to them in the Indenture.
The Company and the Holder agree (i) that for United States federal,
state and local tax purposes it is intended that the Debenture constitute
indebtedness and (ii) to file all United States federal, state and local tax
returns and reports on such basis (unless the Company or the Holder, as the case
may be, shall have received an opinion of independent nationally recognized tax
counsel to the effect that as a result of a change in law after the date of the
issuance of the Debenture the Company or the Holder, as the case may be, is
prohibited from filing on such basis).
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ARTICLE VII
ORIGINAL ISSUE OF DEBENTURES
SECTION 7.1 Original Issue of Debentures.
Debentures in the aggregate principal amount of $335,100,000 may, upon
execution of this Second Supplemental Indenture, be executed by the Issuer and
delivered to the Trustee for authentication, and the Trustee shall thereupon
authenticate and deliver such Debentures to or upon the written order of the
Issuer, signed by its Chairman, its President, or any Vice President and its
Treasurer or an Assistant Treasurer or its Secretary or an Assistant Secretary,
without any further action by the Issuer.
SECTION 7.2 Reports by the Trustee.
Up until and including the Maturity Date, the Trustee shall, in respect
of each applicable date, make such reports within such time periods as are
required to be made by the Trustee under the Trust Indenture Act and the
Indenture.
ARTICLE VIII
COVENANTS
SECTION 8.1 Covenants as to Trust.
In the event Debentures are issued and sold to the Property Trustee in
connection with the issuance of Trust Securities by the Trust, for so long as
the Trust Securities remain outstanding, the Issuer will (i) maintain 100%
direct or indirect ownership of the Common Securities of the Trust; provided,
however, that any permitted successor of the Issuer under the Indenture may
succeed to the Issuer's ownership of the Common Securities, (ii) not voluntary
dissolve, windup or terminate the Trust, except in connection with the
distribution of Debentures upon a Dissolution Event or otherwise, and in
connection with certain mergers, consolidations or amalgamations permitted by
the Declaration, (iii) timely perform its duties as sponsor of the Trust, (iv)
use its reasonable efforts to cause the Trust (a) to remain a business trust,
except in connection with the distribution of Debentures as provided in the
Declaration, the redemption of the Trust Securities or in connection with
certain mergers, consolidations or amalgamations as permitted by the
Declaration, and (b) otherwise continue not to be treated as an association
taxable as a corporation or partnership for United States federal income tax
purposes, and (v) use its reasonable efforts to cause each holder of Trust
Securities to be treated as owning an individual beneficial interest in the
Debentures. This covenant is intended solely for the benefit of the Holders of
the Debentures issued pursuant to this Second Supplemental Indenture and shall
not be applicable to the Securities of any other series issued pursuant to the
Indenture.
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ARTICLE IX
DEFAULT
SECTION 9.1 Additional Event of Default.
There is hereby established as an additional Event of Default (as
contemplated by Section 5.1(7) of the Indenture) the following:
In the event the Debentures are issued and sold to the Property
Trustee in connection with the issuance of Trust Securities by the Trust, the
Trust shall have voluntarily or involuntarily dissolved, wound-up its business
or otherwise terminated its existence except in connection with (i) the
distribution of the Debentures to holders of Trust Securities in liquidation or
redemption of their interests in the Trust, (ii) the redemption of all or part
of the outstanding Trust Securities of the Trust or (iii) certain mergers,
consolidations or amalgamations of the Trust, each as permitted by the
Declaration of the Trust.
The foregoing Event of Default is intended solely for the benefit of
the Holders of the Debentures issued pursuant to this Second Supplemental
Indenture and shall not be applicable to any other series of Securities
heretofore or hereafter issued pursuant to the Indenture.
SECTION 9.2 Limitations on Waivers and Consents.
(a) Notwithstanding anything to the contrary contained in Section 5.7
of the Indenture, if the Debentures are held by the Trust or by the Property
Trustee, a waiver of a past default or any modification to a waiver of a past
default shall not be effective until the holders of a majority in liquidation
amount of Trust Securities shall have consented to such waiver or modification;
provided, however, that if the consent of the Holder of each Outstanding
Debenture is required in connection with such waiver or modification, such
waiver or modification shall not be effective until each holder of the Trust
Securities shall have consented to such waiver or modification.
(b) Except for any supplemental indenture provided under Section 8.1 of
the Indenture and notwithstanding anything to the contrary contained in Section
3.8 of the Indenture, if the Debentures are held by the Trust or by the Property
Trustee, a supplemental indenture shall not be effective until the holders of a
majority in liquidation amount of Trust Securities shall have consented to such
supplemental indenture; provided, however, that if the consent of the Holder of
each Outstanding Debenture is required in connection with a supplemental
indenture, such supplemental indenture shall not be effective until each holder
of the Trust Securities shall have consented to such supplemental indenture.
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SECTION 9.3 Acknowledgment of Rights.
The Issuer acknowledges that, with respect to any Debentures held
either by the Trust or by the Property Trustee, if the Property Trustee fails to
enforce its rights under the Indenture, this Second Supplemental Indenture or
the Debentures as the Holder of the Debentures held as the assets of the Trust,
any record holder of Capital Securities may institute legal proceedings directly
against the Issuer to enforce the Property Trustee's rights under the Indenture,
this Second Supplemental Indenture or the Debentures without first instituting
any legal proceedings against such Property Trustee or any other person or
entity. Notwithstanding the foregoing, if an Event of Default under the
Declaration has occurred and is continuing and such event is attributable to the
failure of the Issuer to pay interest or principal on the Debentures on the date
such interest or principal is otherwise payable (or in the case of redemption,
on the applicable redemption date), the Issuer acknowledges that a record holder
of Capital Securities may institute a proceeding directly against the Issuer for
enforcement of payment to the record holder of the Preferred Securities of the
principal of or interest on the Debentures on or after the respective due date
specified in the Debentures, and the amount of payment will be based on the
holder's pro rata share of the amount due and owing on all the Capital
Securities.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 Ratification of Indenture.
The Indenture, as supplemented by this Second Supplemental Indenture,
is in all respects ratified and confirmed, and this Second Supplemental
Indenture shall be deemed part of the Indenture in the manner and to the extent
herein and therein provided.
SECTION 10.2 Trustee Not Responsible for Recitals.
The recitals contained herein and in the Debentures, except for the
Trustee's certificate of authentication, shall be taken as the statements of the
Issuer and not of the Trustee, and the Trustee assumes no responsibility for the
correctness of the same. The Trustee makes no representation as to the validity
or sufficiency of this Second Supplemental Indenture or of the Debentures.
SECTION 10.3 Governing Law.
This Second Supplemental Indenture and each Debenture shall be deemed
to be a contract made under the laws of the State of New York, and for all
purposes shall be construed in accordance with the laws of said State, except as
may otherwise be required by mandatory provisions of law.
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SECTION 10.4 Separability.
In case any one or more of the provisions contained in this Second
Supplemental Indenture or in the Debentures shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Second
Supplemental Indenture or of the Debentures, but this Second Supplemental
Indenture and the Debentures shall be construed as if such invalid or illegal or
unenforceable provision had never been contained herein or therein.
SECTION 10.5 Counterparts.
This Second Supplemental Indenture may be executed in any number of
counterparts each of which shall be an original; but such counterparts shall
together constitute but one and the same instrument.
SECTION 10.6 Effect of Headings.
The Article and Section headings herein and the Table of Contents
hereto are for convenience only and shall not affect the construction hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Second
Supplemental Indenture to be duly executed as of the day and year first above
written.
CONSECO, INC.
By:/s/ ROLLIN M. DICK
----------------------------
Name: Rollin M. Dick
Title: Executive Vice President
FLEET NATIONAL BANK, as Trustee
By: /s/ MICHAEL M. HOPKINS
---------------------------
Name: Michael M. Hopkins
Title: Vice President
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CONSECO, INC.
8.70% SUBORDINATED DEFERRABLE INTEREST DEBENTURE
No. 1 DUE NOVEMBER 15, 2026 REGISTERED
$335,100,000
Conseco, Inc., an Indiana corporation (the "Company", which term
includes any successor corporation under the Indenture hereinafter referred to),
for value received, hereby promises to pay to FLEET NATIONAL BANK, as Property
Trustee under that certain Amended and Restated Declaration of Trust dated as of
November 22, 1996, among the Trustees of Conseco Financing Trust II named
therein, the Company and the holders from time to time of undivided beneficial
interests in the assets of Conseco Financing Trust II, or registered assigns,
the principal sum of Three Hundred Thirty-Five Million One Hundred Thousand
Dollars on November 15, 2026 and to pay interest on said principal sum from
November 27, 1996, or from the most recent interest payment date (each such
date, an "Interest Payment Date") to which interest has been paid or duly
provided for, semiannually (subject to deferral as set forth herein) in arrears
on May 15 and November 15 of each year commencing May 15, 1997, at the rate of
8.70% per annum until the principal hereof shall have become due and payable,
and on any overdue principal and (without duplication and to the extent that
payment of such interest is enforceable under applicable law) on any overdue
installment of interest at the same rate per annum compounded semiannually. The
amount of interest payable on any Interest Payment Date shall be computed on the
basis of a 360-day year of twelve 30-day months, and for any period shorter than
a full semiannual period on the basis of the actual number of days elapsed per
30-day month. In the event that any date on which interest is payable on this
Debenture is not a Business Day, then payment of interest payable on such date
will be made on the next succeeding day that is a Business Day (and without any
interest or other payment in respect of any such delay), except that, if such
Business Day is in the next succeeding calendar year, such payment shall be made
on the immediately preceding Business Day, in each case with the same force and
effect as if made on such date. The interest installment so payable, and
punctually paid or duly provided for, on any Interest Payment Date will, as
provided in the Indenture, be paid to the person in whose name this Debenture is
registered at the close of business on the regular record date for such interest
installment, which shall be the close of business on the Business Day next
preceding such Interest Payment Date. Notwithstanding the foregoing, any
interest that is payable on the Maturity Date shall be payable to the Person to
whom principal payable at the Maturity Date shall be payable. Any such interest
installment not punctually paid or duly provided for shall forthwith cease to be
payable to the registered Holders on such regular record date and may be paid to
the Person in whose name this Debenture (or one or more Predecessor Security) is
registered at the close of business on a special record date to be fixed in
accordance with the provisions of Section 3.7(b) of the Indenture. The principal
of and the interest on this Debenture shall be payable at the office or agency
of the Trustee maintained for that purpose in any coin or currency of the United
States of America that at the time of payment is legal tender for payment of
public and private debts; provided, however, that payment of interest may be
made at the option of the Company by check mailed to the registered Holder at
such address as shall appear in the Register. Notwithstanding the foregoing, so
long as the Holder of this Debenture is the Property Trustee, the payment of the
principal of and interest on this
-1-
<PAGE>
Debenture will be made by wire transfer in immediately available funds at such
place and to such account as may be designated by the Property Trustee. Payment
of principal of the Debentures will only be made upon surrender of the
Debentures to the Trustee or Paying Agent.
The indebtedness evidenced by this Debenture is, to the extent provided
in the Indenture, subordinate and junior in right of payment to the prior
payment in full of all Senior Indebtedness, and this Debenture is issued subject
to the provisions of the Indenture with respect thereto. Each Holder of this
Debenture, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his or her behalf to take
such action as may be necessary or appropriate to acknowledge or effectuate the
subordination so provided and (c) appoints the Trustee his or her
attorney-in-fact for any and all such purposes. Each Holder hereof, by his or
her acceptance hereof, hereby waives all notice of the acceptance of the
subordination provisions contained herein and in the Indenture by each holder of
Senior Indebtedness, whether now outstanding or hereafter incurred, and waives
reliance by each such holder upon said provisions.
This Debenture shall not be entitled to any benefit under the Indenture
hereinafter referred to, be valid or become obligatory for any purpose until the
Certificate of Authentication hereon shall have been signed by or on behalf of
the Trustee.
The provisions of this Debenture are continued on the reverse side
hereof and such continued provisions shall for all purposes have the same effect
as though fully set forth at this place.
-2-
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated: November 27, 1996.
CONSECO, INC.
By: /s/ STEPHEN C. HILBERT
-----------------------
Stephen C. Hilbert,
Chairman of the Board, President and
Chief Executive Officer
SEAL
Attest:
By: /s/ LAWRENCE W. INLOW
---------------------------
Lawrence W. Inlow, Secretary
CERTIFICATE OF AUTHENTICATION
This is one of the Debentures referred to in the within-mentioned
Indenture.
FLEET NATIONAL BANK, as Trustee
By: /s/ MICHAEL M. HOPKINS
-------------------------
Authorized Signatory
-3-
<PAGE>
This Debenture is one of a duly authorized series of Debentures of the
Company (herein sometimes referred to as the "Debentures"), specified in the
Indenture, all issued or to be issued in one or more series under and pursuant
to an Indenture dated as of November 14, 1996, duly executed and delivered
between the Company and Fleet National Bank, as Trustee (the "Trustee"), (as
supplemented by the First Supplemental Indenture dated as of November 14, 1996,
the "Base Indenture") as supplemented by the Second Supplemental Indenture dated
as of November 22, 1996 between the Company and the Trustee (the Base Indenture
as so supplemented, the "Indenture"), to which a description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the
Trustee, the Company and the Holders of the Debentures, and to all of which
provisions the Holder of this Debenture by acceptance hereof, assents and
agrees. By the terms of the Indenture, the Debentures are issuable in series
that may vary as to amount, date of maturity, rate of interest and in other
respects as provided in the Indenture. This series of Debentures is limited in
aggregate principal amount as specified in said Second Supplemental Indenture.
The Company shall have the right to redeem this Debenture at the option
of the Company, at any time and from time to time (an "Optional Redemption"), at
a redemption price equal to 100% of the principal amount plus the Make-Whole
Premium, if any, plus any accrued and unpaid interest, including any Compounded
Interest, if any, to the date of such redemption (collectively the "Optional
Redemption Price"). The Make-Whole Premium shall mean the excess, if any, of (i)
the sum of the present values of the remaining scheduled payments of principal
and interest thereon discounted to the redemption date on a semiannual basis at
the Treasury Rate (as defined in the Indenture) plus 50 basis points over (ii)
100% of the principal amount of Debentures to be redeemed. Any redemption
pursuant to this paragraph will be made upon not less than 30 nor more than 60
days' notice at the Optional Redemption Price.
If, at any time, a Tax Event (as defined below) shall occur or be
continuing after receipt of a Dissolution Tax Opinion (as defined below) and
either (a) the Regular Trustees and the Issuer shall have received an opinion (a
"Redemption Tax Opinion") of a nationally recognized independent tax counsel
experienced in such matters that, as a result of a Tax Event, there is more than
an insubstantial risk that the Issuer would be precluded from deducting the
interest on the Debentures for United States federal income tax purposes even
after the Debentures were distributed to the Holders of Capital Securities and
Common Securities in liquidation of such holder's interest in the Trust as set
forth in the Declaration of Trust or (b) the Regular Trustees shall have been
informed by such tax counsel that a No Recognition Opinion (as defined below)
cannot be delivered, the Issuer shall have the right at any time, upon not less
than 30 nor more than 60 days' notice, to redeem the Debentures in whole or in
part for cash at the Redemption Price within 90 days following the occurrence of
such Tax Event; provided, however, that, if at that time there is available to
the Issuer or the Trust the opportunity to eliminate, within such 90 day period
the Tax Event by taking some ministerial action ("Ministerial Action"), such as
filing a form or making an election, or pursuing some other similar reasonable
measure, which has no adverse effect on the Trust, the Issuer or the Holders of
the Capital Securities, the Issuer or the Trust will pursue such measure in lieu
of redemption and provided further that the Issuer shall have no right to redeem
the Debentures while the Trust is pursuing any such Ministerial Action.
-4-
<PAGE>
"Tax Event" means that the Regular Trustees shall have received an
opinion of independent tax counsel experienced in such matters (a "Dissolution
Tax Opinion") to the effect that, as a result of (a) any amendment to, or change
(including any announced prospective change) in, the laws (or any regulations
thereunder) of the United States or any political subdivision or taxing
authority thereof or therein, or (b) any official administrative pronouncement
or judicial decision interpreting or applying such laws or regulations, which
amendment, or change is effective or such pronouncement or decision is announced
on or after the date of original issuance of the Preferred Securities, there is
more than an insubstantial risk that (i) the Trust is, or will be within 90 days
after the date thereof, subject to United States federal income tax with respect
to interest accrued or received on the Debentures, (ii) the Trust is, or will be
within 90 days after the date thereof, subject to more than a de minimis amount
of taxes, duties or other governmental charges, or (iii) interest payable to the
Trust on the Debentures is not, or within 90 days of the date thereof, will not
be deductible, in whole or in part, by the Company for United States federal
income tax purposes.
A "No Recognition Opinion" means an opinion of nationally recognized
independent tax counsel experienced in such matters, which may rely on published
revenue rulings of the Internal Revenue Service, to the effect that all holders
of the Trust Securities will not recognize gain of loss for United States
federal income tax purposes as a result of the dissolution of the Trust and
distribution of the Debentures.
If the Debentures are only partially redeemed by the Company pursuant
to an Optional Redemption or a redemption pursuant to a Tax Event, the
Debentures will be redeemed pro rata or by lot or in some other equitable manner
determined by the Trustee.
In the event of redemption of this Debenture in part only, a new
Debenture or Debentures of this series (for the unredeemed portion hereof) will
be issued in the name of the Holder hereof upon the cancellation hereof.
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of all of the Debentures may be
declared, and upon such declaration shall become, due and payable, in the
manner, with the effect and subject to the conditions and limitations provided
in the Indenture.
The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the Holders of not less than a majority in
aggregate principal amount of the Debentures of each series affected at the time
outstanding, as defined in the Indenture, to execute supplemental indentures for
the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of the Indenture or of any supplemental indenture or of
modifying in any manner the rights of the Holders of the Debentures; provided,
however, that no such supplemental indentures shall (i) change the Stated
Maturity of the principal or any installment of principal or any installment of
interest (other than as contemplated herein), or reduce the amount or principal
or interest thereon or any premium payable upon redemption or repayment thereof,
or change the Place of Payment or currency in which principal or any interest
-5-
<PAGE>
is payable, or impair the right to institute suit for the enforcement of any
payment of the principal and any premium and interest without the consent of the
Holder of each Debenture so affected; (ii) reduce the aforesaid percentage of
Debentures, the Holders of which are required to consent to any such
supplemental indenture, without the consent of the Holders of each Debenture
then outstanding and affected thereby; (iii) change any obligation of the
Company to maintain an office or agency in the Place of Payment; or (iv) modify
any of the above provisions. The Indenture also contains provisions permitting
the Holders of a majority in aggregate principal amount of the Debentures of any
series at the time outstanding affected thereby, on behalf of all of the Holders
of the Debentures of such series, to waive any past default in the performance
of any of the covenants contained in the Indenture, or established pursuant to
the Indenture with respect to such series, and its consequences, except a
default in the payment of the principal or interest on the Debentures or a
default in respect of a covenant or provision of the Indenture or the Debentures
of such series which cannot be modified or amended without the consent of each
Holder of Debentures of such series. Any such consent or waiver by the
registered Holder of this Debenture (unless revoked as provided in the
Indenture) shall be conclusive and binding upon such Holder and upon all future
Holders and owners of this Debenture and of any Debentures issued in exchange
herefor or in place hereof (whether by registration of transfer or otherwise),
irrespective of whether or not any notation of such consent or waiver is made
upon this Debenture.
No reference herein to the Indenture and no provision of this Debenture
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of and interest on this
Debenture at the time and place and at the rate and in the money herein
prescribed.
The Company shall have the right at any time during the term of the
Debentures from time to time to extend the interest payment period of such
Debentures for up to 10 consecutive semiannual periods not to extend beyond the
Maturity Date of the Debentures (an "Extended Interest Payment Period"), at the
end of which period the Company shall pay all interest then accrued and unpaid
(together with interest thereon at the rate specified for the Debentures to the
extent that payment of such interest is enforceable under applicable law). In
the event that the Company exercises the right to defer interest payments, then,
prior to the payment of all accrued interest on outstanding Debentures, (a) the
Company shall not declare or pay dividends on, or make a distribution with
respect to, or redeem, purchase or acquire, or make a liquidation payment with
respect to, any of its capital stock, (b) the Company shall not make any payment
of interest, principal or premium, if any, on or repay, repurchase or redeem any
debt securities issued by the Company that rank pari passu with or junior to the
Debentures and (c) the Company shall not make any guarantee payments with
respect to the foregoing (other than pursuant to the Securities Guarantees);
provided, however, that restriction (a) above does not apply to (i) any stock
dividends paid by the Company where the dividend stock is the same stock as that
on which the dividend is being paid and (ii) purchases or acquisitions of shares
of Company Common Stock in connection with the satisfaction by the Company of
its obligation under any employee benefit plans. Before the termination of any
such Extended Interest Payment Period, the Company may further extend such
Extended Interest Payment Period, provided that such Extended Interest Payment
Period together with all such previous and further extensions thereof
-6-
<PAGE>
shall not exceed 10 consecutive semiannual periods and shall not extend beyond
the Maturity Date of the Debentures. At the termination of any such Extended
Interest Payment Period and upon the payment of all accrued and unpaid interest
and any additional amounts then due, the Company may commence a new Extended
Interest Payment Period.
At any time the Company will have the right to dissolve the Trust and
cause the Debentures to be distributed to the holders of the Trust Securities in
liquidation of the Trust.
As provided in the Indenture and subject to certain limitations therein
set forth, this Debenture is transferable by the registered Holder hereof on the
Register of the Company, upon surrender of this Debenture for registration of
transfer at the Corporate Trust Office of the Trustee accompanied by a written
instrument or instruments of transfer in form satisfactory to the Company or the
Trustee duly executed by the registered Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Debentures of authorized
denominations and for the same aggregate principal amount and series will be
issued to the designated transferee or transferees. No service charge will be
made for any such transfer, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in relation
thereto.
Prior to due presentment for registration of transfer of this
Debenture, the Company, the Trustee, any paying agent and any Registrar may deem
and treat the registered holder hereof as the absolute owner hereof (whether or
not this Debenture shall be overdue and notwithstanding any notice of ownership
or writing hereon made by anyone other than the Registrar) for the purpose of
receiving payment of or on account of the principal hereof and interest due
hereon and for all other purposes, and neither the Company nor the Trustee nor
any paying agent nor any Registrar shall be affected by any notice to the
contrary.
No recourse shall be had for the payment of the principal of or the
interest on this Debenture or for any claim based hereon, or otherwise in
respect hereof, or based on or in respect of the Indenture, against any
incorporator, stockholder, officer or director, past, present of future, as
such, of the Company or of any predecessor or successor corporation, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issuance hereof, expressly
waived and released.
As provided in the Indenture and subject to certain limitations herein
and therein set forth, Debentures of this series so issued are exchangeable for
a like aggregate principal amount of Debentures of this series of a different
authorized denomination, as requested by the Holder surrendering the same. All
terms used in this Debenture that are defined in the Indenture shall have the
meanings assigned to them in the Indenture.
-7-
<PAGE>
The Company and the Holder agree (i) that for United States federal,
state and local tax purposes it is intended that the Debenture constitute
indebtedness and (ii) to file all United States federal, state and local tax
returns and reports on such basis (unless the Company or the Holder, as the case
may be, shall have received an opinion of independent nationally recognized tax
counsel to the effect that as a result of a change in law after the date of the
issuance of the Debenture the Company or the Holder, as the case may be, is
prohibited from filing on such basis).
-8-
AMENDED AND RESTATED
DECLARATION OF TRUST
CONSECO FINANCING TRUST II
Dated as of November 22, 1996
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C> <C> <C>
ARTICLE I INTERPRETATION AND DEFINITIONS.............................................................1
SECTION 1.1 Interpretation and Definitions.............................................................1
ARTICLE II TRUST INDENTURE ACT........................................................................7
SECTION 2.1 Trust Indenture Act; Application...........................................................7
SECTION 2.2 Lists of Holders of Securities.............................................................8
SECTION 2.3 Reports by the Property Trustee............................................................8
SECTION 2.4 Periodic Reports to the Property Trustee...................................................8
SECTION 2.5 Evidence of Compliance with Conditions Precedent...........................................9
SECTION 2.6 Events of Default; Waiver..................................................................9
SECTION 2.7 Event of Default; Notice..................................................................10
ARTICLE III ORGANIZATION..............................................................................11
SECTION 3.1 Name and Organization.....................................................................11
SECTION 3.2 Office....................................................................................11
SECTION 3.3 Purpose...................................................................................11
SECTION 3.4 Authority.................................................................................12
SECTION 3.5 Title to Property of the Trust............................................................12
SECTION 3.6 Powers and Duties of the Regular Trustees.................................................12
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees......................................15
SECTION 3.8 Powers and Duties of the Property Trustee.................................................16
SECTION 3.9 Certain Duties and Responsibilities of the Property Trustee...............................18
SECTION 3.10 Certain Rights of Property Trustee........................................................19
SECTION 3.11 Delaware Trustee..........................................................................21
SECTION 3.12 Execution of Documents....................................................................22
SECTION 3.13 Not Responsible for Recitals or Issuance of Securities....................................22
SECTION 3.14 Duration of Trust.........................................................................22
SECTION 3.15 Mergers...................................................................................22
SECTION 3.16 Property Trustee May File Proofs of Claim.................................................24
ARTICLE IV SPONSOR...................................................................................25
SECTION 4.1 Sponsor's Purchase of Common Securities...................................................25
SECTION 4.2 Responsibilities of the Sponsor...........................................................25
SECTION 4.3 Right to Dissolve Trust...................................................................25
SECTION 4.4 Direct Right of Action....................................................................26
i
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ARTICLE V TRUSTEES..................................................................................26
SECTION 5.1 Number of Trustees........................................................................26
SECTION 5.2 Delaware Trustee..........................................................................26
SECTION 5.3 Property Trustee; Eligibility.............................................................26
SECTION 5.4 Regular Trustees..........................................................................27
SECTION 5.5 Certain Qualifications of Regular Trustees and Delaware
Trustee Generally............................................................28
SECTION 5.6 Initial Trustees..........................................................................28
SECTION 5.7 Appointment, Removal and Resignation of Trustees..........................................28
SECTION 5.8 Vacancies among Trustees..................................................................30
SECTION 5.9 Effect of Vacancies.......................................................................30
SECTION 5.10 Meetings..................................................................................30
SECTION 5.11 Delegation of Power.......................................................................30
SECTION 5.12 Merger, Conversion, Consolidation or Succession to Business...............................31
ARTICLE VI DISTRIBUTIONS.............................................................................31
SECTION 6.1 Distributions.............................................................................31
ARTICLE VII ISSUANCE OF SECURITIES....................................................................31
SECTION 7.1 General Provisions Regarding Securities...................................................31
ARTICLE VIII TERMINATION OF TRUST......................................................................32
SECTION 8.1 Termination of Trust......................................................................32
ARTICLE IX TRANSFER OF INTERESTS.....................................................................33
SECTION 9.1 Transfer of Securities....................................................................33
SECTION 9.2 Transfer and Exchange of Certificates.....................................................34
SECTION 9.3 Deemed Security Holders...................................................................34
SECTION 9.4 Book Entry Interests......................................................................34
SECTION 9.5 Notices to Clearing Agency................................................................35
SECTION 9.6 Appointment of Successor Clearing Agency..................................................35
SECTION 9.7 Definitive Preferred Security Certificates................................................36
SECTION 9.8 Mutilated, Destroyed, Lost or Stolen Certificates.........................................36
ARTICLE X LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES,
TRUSTEES OR OTHERS......................................................................................37
SECTION 10.1 Liability.................................................................................37
SECTION 10.2 Exculpation...............................................................................37
SECTION 10.3 Fiduciary Duty............................................................................38
SECTION 10.4 Indemnification and Compensation..........................................................39
SECTION 10.5 Outside Businesses........................................................................42
ARTICLE XI ACCOUNTING................................................................................42
SECTION 11.1 Fiscal Year...............................................................................42
SECTION 11.2 Certain Accounting Matters................................................................42
SECTION 11.3 Banking...................................................................................43
ii
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
SECTION 11.4 Withholding...............................................................................43
ARTICLE XII AMENDMENTS AND MEETINGS...................................................................44
SECTION 12.1 Amendments................................................................................44
SECTION 12.2 Meetings of the Holders of Securities; Action by Written Consent..........................45
ARTICLE XIII REPRESENTATIONS OF PROPERTY TRUSTEE
AND DELAWARE TRUSTEE.........................................................47
SECTION 13.1 Representations and Warranties of the Property Trustee....................................47
SECTION 13.2 Representations and Warranties of the Delaware Trustee....................................48
ARTICLE XIV MISCELLANEOUS.............................................................................48
SECTION 14.1 Notices...................................................................................48
SECTION 14.2 Governing Law.............................................................................50
SECTION 14.3 Intention of the Parties..................................................................50
SECTION 14.4 Headings..................................................................................50
SECTION 14.5 Successors and Assigns....................................................................50
SECTION 14.6 Partial Enforceability....................................................................50
SECTION 14.7 Counterparts..............................................................................50
ANNEX I..........................................................................................................52
EXHIBIT A-1....................................................................................................A1-1
EXHIBIT A-2....................................................................................................A2-1
iii
</TABLE>
<PAGE>
CROSS - REFERENCE TABLE *
<TABLE>
<CAPTION>
Section of Trust Section of
Indenture Act of 1939, Declaration
as amended
<S> <C>
310 (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3 (a)
310 (c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
311 (c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
312 (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2 (a)
312 (b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2 (b)
313. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
314 (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4
314 (b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
314 (c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5
314 (d). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
314 (f). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
315 (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.9 (b)
315 (c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.9 (a)
315 (d). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.9 (a)
316 (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Annex I
316 (c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.6 (e)
<FN>
* This Cross - Reference Table does not constitute part of the
Declaration and shall not affect the interpretation of any of
its terms or provisions.
</FN>
</TABLE>
iv
<PAGE>
AMENDED AND RESTATED DECLARATION OF TRUST
AMENDED AND RESTATED DECLARATION OF TRUST, including Annex I and all
exhibits attached hereto ("Declaration"), dated and effective as of November 22,
1996, by the Trustees (as defined herein), the Sponsor (as defined herein) and
by the holders, from time to time, of undivided beneficial interests in the
assets of the Trust to be issued pursuant to this Declaration;
WHEREAS, four of the Trustees and the Sponsor established Conseco
Financing Trust II (the "Trust"), a trust under the Delaware Business Trust Act
pursuant to a Declaration of Trust dated as of October 28, 1996 (the "Original
Declaration") and a Certificate of Trust filed with the Secretary of State of
the State of Delaware on October 28, 1996 (the "Certificate of Trust"), for the
sole purpose of issuing and selling certain securities representing undivided
beneficial interests in the assets of the Trust and investing the proceeds
thereof in certain Debentures (as defined herein) of the Debenture Issuer (as
defined herein);
WHEREAS, as of the date hereof, no beneficial interests in the Trust
have been issued;
WHEREAS, all of the Trustees and the Sponsor, by this Declaration,
amend and restate each and every term and provision of the Original Declaration;
and
NOW, THEREFORE, it being the intention of the parties hereto to
continue the Trust as a business trust under the Business Trust Act and that
this Declaration constitutes the governing instrument of such business trust,
the Trustees declare that all assets contributed to the Trust will be held in
trust for the benefit of the holders, from time to time, of the securities
representing undivided beneficial interests in the assets of the Trust issued
hereunder, subject to the provisions of this Declaration.
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Interpretation and Definitions.
Unless the context otherwise requires:
(a) capitalized terms used in this Declaration but not defined in
the preamble above have the respective meanings assigned to
them in this Section 1.1;
(b) a term defined anywhere in this Declaration has the same
meaning throughout;
(c) all references to "the Declaration" or "this Declaration" are
to this Declaration as modified, supplemented or amended from
time to time;
(d) all references in this Declaration to Articles and Sections
are to Articles and Sections of this Declaration unless
otherwise specified;
1
<PAGE>
(e) a term defined in the Trust Indenture Act has the same meaning
when used in this Declaration unless otherwise defined in this
Declaration or unless the context otherwise requires; and
(f) a reference to the singular includes the plural and vice versa.
"Affiliate" has the same meaning as given to that term in Rule 405 of
the Securities Act or any successor rule thereunder.
"Authorized Officer" of a Person means any Person that is authorized to
bind such Person.
"Base Indenture" means the Indenture dated as of November 14, 1996
among the Debenture Issuer and the Debenture Trustee as supplemented by the
First Supplemental Indenture dated as of November 14, 1996.
"Book Entry Interest" means a beneficial interest in a Global
Certificate, ownership and transfers of which shall be maintained and made
through book entries by a Clearing Agency as described in Section 9.4.
"Business Day" means any day other than a day on which banking
institutions in New York, New York or in the city of the principal Corporate
Trust Office of either the Property Trustee or the Debenture Trustee are
authorized or required by law to close.
"Business Trust Act" means Chapter 38 of Title 12 of the Delaware Code,
12 Del. Code Section 3801 et seq., as it may be amended from time to time, or
any successor legislation.
"Capital Securities Guarantee" means the guarantee agreement of the
Sponsor in respect of the Capital Securities.
"Capital Security" has the meaning specified in Section 7.1.
"Capital Security Beneficial Owner" means, with respect to a Book Entry
Interest, a Person who is the beneficial owner of such Book Entry Interest, as
reflected on the books of the Clearing Agency, or on the books of a Person
maintaining an account with such Clearing Agency (directly as a Clearing Agency
Participant or as an indirect participant, in each case in accordance with the
rules of such Clearing Agency).
"Capital Security Certificate" means a certificate representing a
Capital Security.
"Certificate" means a Common Security Certificate or a Capital Security
Certificate.
"Clearing Agency" means an organization registered as a "Clearing
Agency" pursuant to Section 17A of the Exchange Act that is acting as depository
for the Capital Securities and in whose name or in the name of a nominee of that
organization shall be registered a Global Certificate and which shall undertake
to effect book entry transfers and pledges of the Capital Securities.
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"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time the Clearing
Agency effects book entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Date" means the date on which the Capital Securities are sold
pursuant to the terms of the Underwriting Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, or any successor legislation. A reference to a specific section of the
Code refers not only to such specific section but also to any corresponding
provision of any federal tax statute enacted after the date of this Declaration,
as such specific section or corresponding provision is in effect on the date of
application of the provisions of this Declaration containing such reference.
"Commission" means the Securities and Exchange Commission.
"Common Securities Guarantee" means the guarantee agreement of the
Sponsor in respect of the Common Securities.
"Common Security" has the meaning specified in Section 7.1.
"Common Security Certificate" means a definitive certificate in fully
registered form representing a Common Security.
"Company Indemnified Person" means (a) any Regular Trustee; (b) any
Affiliate of any Regular Trustee; (c) any officers, directors, shareholders,
members, partners, employees, representatives or agents of any Regular Trustee
or any Affiliate thereof; or (d) any officer, employee or agent of the Trust or
its Affiliates.
"Corporate Trust Office" means the office of the Property Trustee at
which the corporate trust business of the Property Trustee shall, at any
particular time, be principally administered, which office at the date of
execution of this Declaration is located at 777 Main Street, Hartford, CT 06115,
Attention: Corporate Trust Administration.
"Covered Person" means (a) any officer, director, shareholder, partner,
member, representative, employee or agent of (i) the Trust or (ii) the Trust's
Affiliates; and (b) any Holder of Securities.
"Debenture Issuer" means Conseco, Inc. in its capacity as issuer of the
Debentures under the Indenture.
"Debenture Trustee" means Fleet National Bank, as trustee under the
Indenture until a successor is appointed thereunder, and thereafter means such
successor trustee.
"Debentures" means the series of subordinated deferrable interest
debentures to be issued by the Debenture Issuer under the Indenture to be held
by the Property Trustee.
"Definitive Capital Security Certificates" has the meaning set forth in
Section 9.4.
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"Delaware Trustee" has the meaning set forth in Section 5.2.
"Direction" by a Person means a written direction signed:
(a) if the Person is a natural person, by that Person; or
(b) in any other case, in the name of such Person by one
or more Authorized Officers of that Person.
"Distribution" means a distribution payable to Holders of Securities in
accordance with Section 6.1.
"DTC" means The Depository Trust Company, the initial Clearing Agency.
"Event of Default" in respect of the Securities means an Event of
Default (as defined in the Indenture) has occurred and is continuing in respect
of the Debentures.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor legislation.
"Fiduciary Indemnified Person" has the meaning set forth in Section
10.4(b).
"Fiscal Year" has the meaning set forth in Section 11.1.
"Global Certificate" has the meaning set forth in Section 9.4.
"Holder" means a Person in whose name a Certificate representing a
Security is registered, such Person being a beneficial owner within the meaning
of the Business Trust Act, PROVIDED, HOWEVER, that in determining whether the
Holders of the requisite liquidation amount of Preferred Securities have voted
on any matter provided for in this Declaration, then for the purpose of such
determination only (and not for any other purpose hereunder), if the Capital
Securities remain in the form of one or more Global Certificates, the term
"Holders" shall mean the holder of the Global Certificate acting at the
direction of the Capital Security Beneficial Owners.
"Indemnified Person" means a Company Indemnified Person or a Fiduciary
Indemnified Person.
"Indenture" means the Base Indenture and any indenture supplemental
thereto pursuant to which the Debentures are to be issued.
"Investment Company" means an investment company as defined in the
Investment Company Act and the regulations promulgated thereunder.
"Investment Company Act" means the Investment Company Act of 1940, as
amended from time to time, or any successor legislation.
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"Investment Company Event" has the meaning set forth in Annex I.
"Legal Action" has the meaning set forth in Section 3.6(g).
"List of Holders" has the meaning specified in Section 2.2(a).
"Majority in Liquidation Amount" means, except as provided in the terms
of the Preferred Securities or by the Trust Indenture Act, Holder(s) of
outstanding Securities, voting together as a single class, or, as the context
may require, Holders of outstanding Preferred Securities or Holders of
outstanding Common Securities, voting separately as a class, who are the record
owners of more than 50% of the aggregate liquidation amount (including the
stated amount that would be paid on redemption, liquidation or otherwise, plus
accrued and unpaid Distributions to the date upon which the voting percentages
are determined) of all outstanding Securities of the relevant class.
"Officers' Certificate" means, with respect to any Person (other than
Regular Trustees who are natural persons), a certificate signed by two
Authorized Officers of such Person. Any Officers' Certificate delivered with
respect to compliance with a condition or covenant provided for in this
Declaration shall include:
(a) a statement that each officer signing the Officers' Certificate
has read the covenant or condition and the definitions relating
thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the
Officers' Certificate;
(c) a statement that each such officer has made such examination
or investigation as, in such officer's opinion, is necessary
to enable such officer to express an informed opinion as to
whether or not such covenant or condition has been complied
with; and
(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with ;
provided, that the term "Officers' Certificate" when used with reference to
Regular Trustees who are natural persons shall mean a certificate signed by two
of the Regular Trustees which otherwise satisfies the foregoing requirements.
"Paying Agent" has the meaning specified in Section 3.8(h).
"Payment Amount" has the meaning specified in Section 6.1.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
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"Pricing Agreement" means the pricing agreement between the Trust, the
Debenture Issuer and the underwriter designated by the Regular Trustees with
respect to the offer and sale of the Capital Securities.
"Property Trustee" means the Truste e meeting the eligibility
requirements set forth in Section 5.3
"Property Trustee Account" has the meaning set forth in Section 3.8(c).
"Quorum" means a majority of the Regular Trustees or, if there are only
two Regular Trustees, both of them.
"Regular Trustee" means any Trustee other than the Property Trustee and
the Delaware Trustee.
"Related Party" means, with respect to the Sponsor, any direct or
indirect wholly owned subsidiary of the Sponsor or any Person that owns,
directly or indirectly, 100% of the outstanding voting securities of the
Sponsor.
"Responsible Officer" means, with respect to the Property Trustee, any
officer within the Corporate Trust Office of the Property Trustee, including any
vice-president, any assistant vice-president, the secretary, any assistant
secretary, the treasurer, any assistant treasurer or other officer of the
Corporate Trust Office of the Property Trustee customarily performing functions
similar to those performed by any of the above designated officers and also
means, with respect to a particular corporate trust matter, any other officer to
whom such matter is referred because of that officer's knowledge of and
familiarity with the particular subject.
"Rule 3a-5" means Rule 3a-5 under the Investment Company Act or any
successor rule thereunder.
"Securities" means the Common Securities and the Preferred Securities.
"Securities Act" means the Securities Act of 1933, as amended from time
to time, or any successor legislation.
"Securities Guarantees" means the Common Securities Guarantee and the
Capital Securities Guarantee.
"Sponsor" means Conseco, Inc., an Indiana corporation, or any successor
entity in a merger, consolidation or amalgamation, in its capacity as sponsor of
the Trust.
"Successor Delaware Trustee" has the meaning specified in Section
5.7(b).
"Successor Entity" has the meaning specified in Section 3.15(b)(i).
"Successor Property Trustee" has the meaning specified in Section
5.7(b).
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"Successor Securities" has the meaning specified in Section 3.15(b)
(i)(B).
"Super Majority" has the meaning set forth in Section 2.6(a) (ii).
"Tax Event" has the meaning set forth in Annex I.
"10% in Liquidation Amount" means, except as provided in the terms of
the Capital Securities or by the Trust Indenture Act, Holder(s) of outstanding
Securities, voting together as a single class, or, as the context may require,
Holders of outstanding Capital Securities or Holders of outstanding Common
Securities, voting separately as a class, who are the record owners of 10% or
more of the aggregate liquidation amount (including the stated amount that would
be paid on redemption, liquidation or otherwise, plus accrued and unpaid
Distributions to the date upon which the voting percentages are determined) of
all outstanding Securities of the relevant class.
"Treasury Regulations" means the income tax regulations, including
temporary and proposed regulations, promulgated under the Code by the United
States Treasury, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended
from time to time, or any successor legislation.
"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as Trustees in accordance with the
provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.
"Underwriting Agreement" means the Underwriting Agreement for the
offering and sale of Capital Securities between the Trust, the Debenture Issuer
and the underwriter designated by the Regular Trustees.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application.
(a) This Declaration is subject to the provisions of the Trust
Indenture Act that are required to be part of this Declaration and shall, to the
extent applicable, be governed by such provisions.
(b) The Property Trustee shall be the only Trustee which is a Trustee
for the purposes of the Trust Indenture Act.
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(c) If and to the extent that any provision of this Declaration limits,
qualifies or conflicts with the duties imposed by Sections 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.
(d) The application of the Trust Indenture Act to this Declaration
shall not affect the nature of the Securities as equity securities representing
undivided beneficial interests in the assets of the Trust.
SECTION 2.2 Lists of Holders of Securities.
(a) Each of the Sponsor and the Regular Trustees on behalf of the Trust
shall provide the Property Trustee with a list, in such form as the Property
Trustee may reasonably require, of the names and addresses of the Holders of the
Securities ("List of Holders"), (i) within one Business Day after January 1 and
June 30 of each year and current as of such date, and (ii) at any other time,
within 30 days of receipt by the Trust of a written request from the Property
Trustee for a List of Holders as of a date no more than 14 days before such List
of Holders is given to the Property Trustee; PROVIDED THAT neither the Sponsor
nor the Regular Trustees on behalf of the Trust shall be obligated to provide
such List of Holders at any time the List of Holders does not differ from the
most recent List of Holders given to the Property Trustee by the Sponsor and the
Regular Trustees on behalf of the Trust. The Property Trustee shall preserve, in
as current a form as is reasonably practicable, all information contained in
Lists of Holders given to it or which it receives in the capacity as Paying
Agent (if acting in such capacity) provided that the Property Trustee may
destroy any List of Holders previously given to it on receipt of a new List of
Holders.
(b) The Property Trustee shall comply with its obligations under, and
shall be entitled to the benefits of, Sections 311(a), 311(b) and 312(b) of the
Trust Indenture Act.
SECTION 2.3 Reports by the Property Trustee.
Within 60 days after May 15 of each year (commencing with the year of
the first anniversary of the issuance of the Capital Securities), the Property
Trustee shall provide to the Holders of the Capital Securities such reports as
are required by Section 313 of the Trust Indenture Act, if any, in the form and
in the manner provided by Section 313 of the Trust Indenture Act. The Property
Trustee shall also comply with the requirements of Section 313(d) of the Trust
Indenture Act.
SECTION 2.4 Periodic Reports to the Property Trustee.
Each of the Sponsor and the Regular Trustees on behalf of the Trust
shall provide to the Property Trustee such documents, reports and information as
required by Section 314 (if any) of the Trust Indenture Act and the compliance
certificate required by Section 314 of the Trust Indenture Act in the form, in
the manner and at the times required by Section 314 of the Trust Indenture Act.
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SECTION 2.5 Evidence of Compliance with Conditions Precedent.
Each of the Sponsor and the Regular Trustees on behalf of the Trust
shall provide to the Property Trustee such evidence of compliance with any
conditions precedent, if any, provided for in this Declaration that relate to
any of the matters set forth in Section 314(c) of the Trust Indenture Act. Any
certificate or opinion required to be given by an officer pursuant to Section
314(c)(1) may be given in the form of an Officers' Certificate.
SECTION 2.6 Events of Default; Waiver.
(a) The Holders of a Majority in Liquidation Amount of the Capital
Securities may, by vote, on behalf of the Holders of all of the Capital
Securities, waive any past Event of Default in respect of the Capital Securities
and its consequences, provided that, if the underlying Event of Default under
the Indenture:
(i) is not waivable under the Indenture, the Event of Default
under the Declaration shall also not be waivable; or
(ii) requires the consent or vote of greater than a majority in
principal amount of the holders of the Debentures (a "Super
Majority") to be waived under the Indenture, the Event of
Default under the Declaration may only be waived by the vote
of the Holders of at least the proportion in liquidation
amount of the Capital Securities that the relevant Super
Majority represents of the aggregate principal amount of the
Debentures outstanding.
The foregoing provisions of this Section 2.6(a) shall be in lieu of
Section 316(a)(1)(B) of the Trust Indenture Act and such Section 316(a)(1)(B) of
the Trust Indenture Act is hereby expressly excluded from this Declaration and
the Securities, as permitted by the Trust Indenture Act. Upon such waiver, any
such default shall cease to exist, and any Event of Default with respect to the
Capital Securities arising therefrom shall be deemed to have been cured, for
every purpose of this Declaration and the Capital Securities, but no such waiver
shall extend to any subsequent or other default or Event of Default with respect
to the Capital Securities or impair any right consequent thereon.
(b) The Holders of a Majority in Liquidation Amount of the Common
Securities may, by vote, on behalf of the Holders of all of the Common
Securities, waive any past Event of Default in respect of the Common Securities
and its consequences, provided that, if the underlying Event of Default under
the Indenture:
(i) is not waivable under the Indenture, except where the Holders
of the Common Securities are deemed to have waived such Event
of Default under the Declaration as provided below in this
Section 2.6(b), the Event of Default under the Declaration
shall also not be waivable; or
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(ii) requires the consent or vote of a Super Majority to be waived
under the Indenture, except where the Holders of the Common
Securities are deemed to have waived such Event of Default
under the Declaration as provided below in this Section
2.6(b), the Event of Default under the Declaration may only be
waived by the vote of the Holders of at least the proportion
in liquidation amount of the Common Securities that the
relevant Super Majority represents of the aggregate principal
amount of the Debentures outstanding;
provided further, each Holder of Common Securities will be deemed to have waived
any such Event of Default and all Events of Default with respect to the Common
Securities and the consequences thereof until all Events of Default with respect
to the Capital Securities have been cured, waived or otherwise eliminated, and
until such Events of Default with respect to the Capital Securities have been so
cured, waived or otherwise eliminated, the Property Trustee will be deemed to be
acting solely on behalf of the Holders of the Capital Securities and only the
Holders of the Capital Securities will have the right to direct the Property
Trustee in accordance with the terms of the Securities. The foregoing provisions
of this Section 2.6(b) shall be in lieu of Sections 316(a)(1)(A) and
316(a)(1)(B) of the Trust Indenture Act and such Sections 316(a)(1)(A) and
316(a)(1)(B) of the Trust Indenture Act are hereby expressly excluded from this
Declaration and the Securities, as permitted by the Trust Indenture Act. Subject
to the foregoing provisions of this Section 2.6(b), upon such waiver, any such
default shall cease to exist and any Event of Default with respect to the Common
Securities arising therefrom shall be deemed to have been cured for every
purpose of this Declaration, but no such waiver shall extend to any subsequent
or other default or Event of Default with respect to the Common Securities or
impair any right consequent thereon.
(c) A waiver of an Event of Default under the Indenture by the Property
Trustee at the direction of the Holders of the Capital Securities constitutes a
waiver of the corresponding Event of Default with respect to the Capital
Securities under this Declaration. The foregoing provisions of this Section
2.6(c) shall be in lieu of Section 316(a)(1)(B) of the Trust Indenture Act and
such Section 316(a)(1)(B) of the Trust Indenture Act is hereby expressly
excluded from this Declaration and the Securities, as permitted by the Trust
Indenture Act.
SECTION 2.7 Event of Default; Notice.
(a) The Property Trustee shall, within 90 days after the occurrence of
an Event of Default, transmit by mail, first class postage prepaid, to the
Holders of the Securities, notices of all defaults with respect to the
Securities actually known to a Responsible Officer of the Property Trustee,
unless such defaults have been cured before the giving of such notice (the term
"defaults" for the purposes of this Section 2.7(a) being hereby defined to be an
Event of Default as defined in the Indenture, not including any periods of grace
provided for therein and irrespective of the giving of any notice provided
therein); provided that, except for a default in the payment of principal of (or
premium, if any) or interest on any of the Debentures or in the payment of any
sinking fund installment established for the Debentures, the Property Trustee
shall be protected in withholding such notice if and so long as a Responsible
Officer of the Property Trustee in good faith determines that the withholding of
such notice is in the interests of the Holders of the Securities.
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(b) The Property Trustee shall not be deemed to have knowledge of
any default except:
(i) a default under Sections 5.1(1) and 5.1(2) of the Indenture; or
(ii) any default as to which the Property Trustee shall have
received written notice or of which a Responsible Officer of
the Property Trustee charged with the administration of this
Declaration shall have actual knowledge.
ARTICLE III
ORGANIZATION
SECTION 3.1 Name and Organization.
The Trust hereby created is named "Conseco Financing Trust II" as such
name may be modified from time to time by the Regular Trustees following written
notice to the Holders of Securities. The Trust's activities may be conducted
under the name of the Trust or any other name deemed advisable by the Regular
Trustees.
SECTION 3.2 Office.
The address of the principal office of the Trust is 11825 North
Pennsylvania Street, Carmel, Indiana 46032. On ten Business Days written notice
to the Holders of Securities, the Regular Trustees may designate another
principal office.
SECTION 3.3 Purpose.
The exclusive purposes and functions of the Trust are (a) to issue and
sell Securities and use the gross proceeds from such sale to acquire the
Debentures, and (b) except as otherwise limited herein, to engage in only those
other activities necessary, appropriate, convenient or incidental thereto. The
Trust shall not borrow money, issue debt or reinvest proceeds derived from
investments, pledge any of its assets or otherwise undertake (or permit to be
undertaken) any activity that would cause the Trust not to be classified for
United States federal income tax purposes as a grantor trust.
The Trust will be classified as a grantor trust for United States
federal income tax purposes under Subpart E of Subchapter J of the Code,
pursuant to which the owners of the Capital Securities and the Common Securities
will be the owners of the Trust for United States federal income tax purposes,
and such owners will include directly in their gross income the income, gain,
deduction or loss of the Trust as if the Trust did not exist. By the acceptance
of this Trust, none of the Trustees, the Sponsor, the Holders of the Capital
Securities or Common Securities or the Capital Securities Beneficial Owners will
take any position for United States federal income tax purposes which is
contrary to the classification of the Trust as a grantor trust.
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SECTION 3.4 Authority.
Subject to the limitations provided in this Declaration and to the
specific duties of the Property Trustee, the Regular Trustees shall have
exclusive and complete authority to carry out the purposes of the Trust. An
action taken by the Regular Trustees in accordance with their powers shall
constitute the act of and serve to bind the Trust and an action taken by the
Property Trustee on behalf of the Trust in accordance with its powers shall
constitute the act of and serve to bind the Trust. In dealing with the Trustees
acting on behalf of the Trust, no person shall be required to inquire into the
authority of the Trustees to bind the Trust. Persons dealing with the Trust are
entitled to rely conclusively on the power and authority of the Trustees as set
forth in this Declaration.
SECTION 3.5 Title to Property of the Trust.
Except as provided in Section 3.8 with respect to the Debentures and
the Property Trustee Account or as otherwise provided in this Declaration, legal
title to all assets of the Trust shall be vested in the Trust. The Holders shall
not have legal title to any part of the assets of the Trust, but shall have an
undivided beneficial interest in the assets of the Trust.
SECTION 3.6 Powers and Duties of the Regular Trustees.
The Regular Trustees shall have the exclusive power, duty and authority
to cause the Trust to engage in the following activities:
(a) to issue and sell the Capital Securities and the Common
Securities in accordance with this Declaration; provided,
however, that the Trust may issue no more than one series of
Capital Securities and no more than one series of Common
Securities, and, provided further, that there shall be no
interests in the Trust other than the Securities, and the
issuance of Securities shall be limited to a one-time,
simultaneous issuance of both Capital Securities and Common
Securities on the Closing Date;
(b) in connection with the issue and sale of the Capital Securities,
at the direction of the Sponsor, to:
(i) execute and file with the Commission a registration
statement on Form S-3 prepared by the Sponsor,
including any amendments thereto, pertaining to the
Capital Securities (and any other securities of the
Sponsor which the Sponsor may desire to include in
such registration statement);
(ii) execute and file any documents prepared by the
Sponsor, or take any acts as determined by the
Sponsor to be necessary, in order to qualify or
register all or part of the Capital Securities in any
State in which the Sponsor has determined to qualify
or register such Capital Securities for sale;
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(iii) execute and file an application, prepared by the
Sponsor, to the New York Stock Exchange, Inc. or any
other national stock exchange or the Nasdaq Stock
Market's National Market System for listing upon
notice of issuance of any Capital Securities;
(iv) execute and file with the Commission a registration
statement on Form 8-A, including any amendments
thereto, prepared by the Sponsor, relating to the
registration of the Capital Securities under Section
12(b) of the Exchange Act; and
(v) execute and enter into the Underwriting Agreement and
Pricing Agreement providing for the sale of the
Capital Securities;
(c) to acquire the Debentures with the proceeds of the sale of the
Capital Securities and the Common Securities; provided,
however, that the Regular Trustees shall cause legal title to
the Debentures to be held of record in the name of the
Property Trustee for the benefit of the Holders of the Capital
Securities and the Holders of the Common Securities;
(d) to give the Sponsor and the Property Trustee prompt written
notice of the occurrence of a Tax Event; provided that the
Regular Trustees shall consult with the Sponsor and the
Property Trustee before taking or refraining from taking any
action in relation to a Tax Event;
(e) to establish a record date with respect to all actions to be
taken hereunder that require a record date be established,
including and with respect to, for the purposes of Section
316(c) of the Trust Indenture Act, Distributions, voting
rights, redemptions and exchanges, and to issue relevant
notices to the Holders of Capital Securities and Holders of
Common Securities as to such actions and applicable record
dates;
(f) to take all actions and perform such duties as may be required
of the Regular Trustees pursuant to the terms of this
Declaration and the Securities;
(g) to bring or defend, pay, collect, compromise, arbitrate,
resort to legal action or otherwise adjust claims or demands
of or against the Trust ("Legal Action"), unless pursuant to
Section 3.8(e), the Property Trustee has the exclusive power
to bring such Legal Action;
(h) to employ or otherwise engage employees and agents (who may be
designated as officers with titles) and managers, contractors,
advisors and consultants and pay reasonable compensation for
such services;
(i) to cause the Trust to comply with the Trust's obligations
under the Trust Indenture Act;
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(j) to give the certificate required by Section 314(a)(4) of the
Trust Indenture Act to the Property Trustee, which certificate
may be executed by any Regular Trustee;
(k) to incur expenses that are necessary, incidental or desirable
to carry out any of the purposes of the Trust;
(l) to act as, or appoint another Person to act as, registrar and
transfer agent for the Securities;
(m) to give prompt written notice to the Holders of the Securities
of any notice received from the Debenture Issuer of its
election to defer payments of interest on the Debentures by
extending the interest payment period under the Debentures as
authorized by the Indenture;
(n) to take all action that may be necessary or appropriate for
the preservation and the continuation of the Trust's valid
existence, rights, franchises and privileges as a statutory
business trust under the laws of the State of Delaware and of
each other jurisdiction in which such existence is necessary
to protect the limited liability of the Holders of the Capital
Securities or to enable the Trust to effect the purposes for
which the Trust was created;
(o) to take any action, not inconsistent with this Declaration or
with applicable law, that the Regular Trustees determine in
their discretion to be necessary or desirable in carrying out
the purposes and functions of the Trust as set out in Section
3.3 or the activities of the Trust as set out in this Section
3.6, including, but not limited to:
(i) causing the Trust not to be deemed to be an Investment
Company required to be registered under the Investment
Company Act;
(ii) causing the Trust to be classified for United States
federal income tax purposes as a grantor trust; and
(iii) cooperating with the Debenture Issuer to ensure that
the Debentures will be treated as indebtedness of
the Debenture Issuer for United States federal income
tax purposes, provided that such action does not
adversely affect the interests of Holders;
(p) to take all action necessary to cause all applicable tax
returns and tax information reports that are required to be
filed with respect to the Trust to be duly prepared and filed
by the Regular Trustees, on behalf of the Trust;
(q) to execute all documents or instruments, perform all duties
and powers, and do all things for and on behalf of the Trust
in all matters necessary, incidental or desirable to the
foregoing;
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(r) to give written notice to the Property Trustee of the rating
assigned to the Capital Securities, from time to time, by a "nationally
recognized statistical rating organization", as that term is defined for
purposes of Rule 436(g)(2) under the Securities Act promptly after such
assignment and after any change thereof.
The Regular Trustees must exercise the powers set forth in this Section
3.6 in a manner that is consistent with the purposes and functions of the Trust
set out in Section 3.3, and the Regular Trustees shall not take any action that
is inconsistent with the purposes and functions of the Trust set forth in
Section 3.3.
Subject to this Section 3.6, the Regular Trustees shall have none of
the powers or the authority of the Property Trustee set forth in Section 3.8.
Any expenses incurred by the Regular Trustees pursuant to this Section
3.6 shall be reimbursed by the Debenture Issuer.
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees.
(a) The Trust shall not, and the Regular Trustees and the Property
Trustee shall cause the Trust not to, engage in any activity other than as
required or authorized by this Declaration. In particular, the Trust shall not
and the Regular Trustees and the Property Trustee shall cause the Trust not to:
(i) invest any proceeds received by the Trust from holding the
Debentures, but shall distribute all such proceeds to Holders
of Securities pursuant to the terms of this Declaration and of
the Securities;
(ii) acquire any assets other than as expressly provided herein;
(iii) possess Trust property for other than a Trust purpose;
(iv) make any loans or incur any indebtedness other than loans
represented by the Debentures;
(v) possess any power or otherwise act in such a way as to vary
the Trust assets or the terms of the Securities in any way
whatsoever (except to the extent expressly authorized in this
Declaration or by the terms of the Securities);
(vi) issue any securities or other evidences of beneficial
ownership of, or beneficial interest in, the Trust other than
the Securities; or
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(vii) other than as provided in this Declaration or by the terms of
the Securities, (A) direct the time, method and place of
exercising any trust or power conferred upon the Debenture
Trustee with respect to the Debentures, (B) waive any past
default that is waivable under the Indenture, (C) exercise any
right to rescind or annul any declaration that the principal
of all the Debentures shall be due and payable, or (D) consent
to any amendment, modification or termination of the Indenture
or the Debentures where such consent shall be required unless
the Trust shall have received an opinion of counsel to the
effect that such modification will not cause more than an
insubstantial risk that for United States federal income tax
purposes the Trust will not be classified as a grantor trust.
SECTION 3.8 Powers and Duties of the Property Trustee.
(a) The legal title to the Debentures shall be owned by and held of
record in the name of the Property Trustee in trust for the benefit of the Trust
and the Holders of the Securities. The right, title and interest of the Property
Trustee to the Debentures shall vest automatically in each Person who may
hereafter be appointed as Property Trustee in accordance with Section 5.7. Such
vesting and cessation of title shall be effective whether or not conveyancing
documents with regard to the Debentures have been executed and delivered.
(b) The Property Trustee shall not transfer its right, title and
interest in the Debentures to the Regular Trustees or to the Delaware Trustee
(if the Property Trustee does not also act as Delaware Trustee).
(c) The Property Trustee shall:
(i) establish and maintain a segregated non-interest bearing trust
account (the "Property Trustee Account") in the name of and
under the exclusive control of the Property Trustee on behalf
of the Holders of the Securities and, upon the receipt of
payments of funds made in respect of the Debentures held by
the Property Trustee, deposit such funds into the Property
Trustee Account and make payments to the Holders of the
Capital Securities and Holders of the Common Securities from
the Property Trustee Account in accordance with Section 6.1.
Funds in the Property Trustee Account shall be held uninvested
until disbursed in accordance with this Declaration. The
Property Trustee Account shall be an account that is
maintained with a banking institution the rating on whose long
-term unsecured indebtedness is at least equal to the rating
assigned to the Capital Securities by a "nationally recognized
statistical rating organization", as that term is defined for
purposes of Rule 436(g)(2) under the Securities Act;
(ii) engage in such ministerial activities as shall be necessary or
appropriate to effect the redemption of the Capital Securities
and the Common Securities to the extent the Debentures are
redeemed or mature; and
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(iii) upon written notice of distribution issued by the
Regular Trustees in accordance with the terms of the
Securities, engage in such ministerial activities as
shall be necessary or appropriate to effect the
distribution of the Debentures to Holders of
Securities upon the occurrence of certain special
events (as may be defined in the terms of the
Securities) arising from a change in law or a change
in legal interpretation or other specified
circumstances pursuant to the terms of the
Securities.
(d) The Property Trustee shall take all actions and perform such duties
as may be specifically required of the Property Trustee pursuant to the terms of
this Declaration and the Securities.
(e) To the extent consistent with and not in contravention of the terms
and provisions of this Declaration and the Indenture, with respect to any
compromise, arbitration, or adjustment of claims or demands, the Property
Trustee shall take any Legal Action which arises out of or in connection with an
Event of Default of which a Responsible Officer of the Property Trustee has
actual knowledge or the Property Trustee's duties and obligations under this
Declaration or the Trust Indenture Act.
(f) The Property Trustee shall continue to serve as a Trustee
until either:
(i) the Trust has been completely liquidated and the proceeds of
the liquidation distributed to the Holders of Securities
pursuant to the terms of the Securities; or
(ii) a Successor Property Trustee has been appointed and has
accepted that appointment in accordance with Section 5.7.
(g) The Property Trustee shall have the legal power to exercise all of
the rights, powers and privileges of a holder of Debentures under the Indenture
and, if an Event of Default actually known to a Responsible Officer of the
Property Trustee occurs and is continuing, the Property Trustee shall, for the
benefit of Holders of the Securities, enforce its rights as holder of the
Debentures subject to the rights of the Holders pursuant to the terms of such
Securities.
(h) The Property Trustee may authorize one or more Persons (each, a
"Paying Agent") to pay Distributions, redemption payments or liquidation
payments on behalf of the Trust with respect to all Securities and any such
Paying Agent shall comply with Section 317(b) of the Trust Indenture Act. Any
Paying Agent may be removed by the Property Trustee at any time and a successor
Paying Agent or additional Paying Agents may be appointed at any time by the
Property Trustee. In the event the Preferred Securities do not remain in the
form of one or more Global Certificates, the Property Trustee will act as Paying
Agent and may designate an additional or substitute Paying Agent at any time.
(i) Subject to this Section 3.8, the Property Trustee shall have none
of the duties, liabilities, powers or the authority of the Regular Trustees set
forth in Section 3.6.
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The Property Trustee must exercise the powers set forth in this Section
3.8 in a manner that is consistent with the purposes and functions of the Trust
set out in Section 3.3, and the Property Trustee shall not take any action that
is inconsistent with the purposes and functions of the Trust set out in Section
3.3.
SECTION 3.9 Certain Duties and Responsibilities of the Property Trustee.
(a) The Property Trustee, before the occurrence of any Event of Default
and after the curing of all Events of Default that may have occurred, shall
undertake to perform only such duties as are specifically set forth in this
Declaration and no implied covenants shall be read into this Declaration against
the Property Trustee. In case an Event of Default has occurred (that has not
been cured or waived pursuant to Section 2.6) of which a Responsible Officer of
the Property Trustee has actual knowledge, the Property Trustee shall exercise
such of the rights and powers vested in it by this Declaration, and use the same
degree of care and skill in their exercise, as a prudent person would exercise
or use under the circumstances in the conduct of his or her own affairs.
(b) No provision of this Declaration shall be construed to relieve the
Property Trustee from liability for its own negligent action, its own negligent
failure to act or its own willful misconduct, except that:
(i) prior to the occurrence of an Event of Default and after the
curing or waiving of all such Events of Default that may have
occurred:
(A) the duties and obligations of the Property Trustee
shall be determined solely by the express provisions
of this Declaration and the Securities and the
Property Trustee shall not be liable except for the
performance of such duties and obligations as are
specifically set forth in this Declaration, and no
implied covenants or obligations shall be read into
this Declaration against the Property Trustee; and
(B) in the absence of bad faith on the part of the
Property Trustee, the Property Trustee may
conclusively rely, as to the truth of the statements
and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished
to the Property Trustee and conforming to the
requirements of this Declaration; but in the case of
any such certificates or opinions that by any
provision hereof are specifically required to be
furnished to the Property Trustee, the Property
Trustee shall be under a duty to examine the same to
determine whether or not they conform to the
requirements of this Declaration;
(ii) the Property Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the
Property Trustee, unless it shall be proved that the Property
Trustee was negligent in ascertaining the pertinent facts;
(iii) the Property Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in
accordance with the direction of the
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Holders of not less than a Majority in Liquidation Amount of
the Securities relating to the time, method and place of
conducting any proceeding for any remedy available to the
Property Trustee, or exercising any trust or power conferred
upon the Property Trustee under this Declaration;
(iv) no provision of this Declaration shall require the Property
Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its
duties or in the exercise of any of its rights or powers, if
it shall have reasonable grounds for believing that the
repayment of such funds or liability is not reasonably assured
to it under the terms of this Declaration or indemnity
reasonably satisfactory to the Property Trustee against such
risk or liability is not reasonably assured to it;
(v) the Property Trustee's sole duty with respect to the custody,
safe keeping and physical preservation of the Debentures and
the Property Trustee Account shall be to deal with such
property in a similar manner as the Property Trustee deals
with similar property for its own account, subject to the
protections and limitations on liability afforded to the
Property Trustee under this Declaration and the Trust
Indenture Act;
(vi) the Property Trustee shall have no duty or liability for or
with respect to the value, genuineness, existence or
sufficiency of the Debentures or the payment of any taxes or
assessments levied thereon or in connection therewith;
(vii) the Property Trustee shall not be liable for any interest on
any money received by it except as it may otherwise agree in
writing with the Sponsor. Money held by the Property Trustee
need not be segregated from other funds held by it except in
relation to the Property Trustee Account maintained by the
Property Trustee pursuant to Section 3.8(c)(i) and except to
the extent otherwise required by law; and
(viii) the Property Trustee shall not be responsible for monitoring
the compliance by the Regular Trustees or the Sponsor with
their respective duties under this Declaration, nor shall the
Property Trustee be liable for any default or misconduct of
the Regular Trustees or the Sponsor.
SECTION 3.10 Certain Rights of Property Trustee.
(a) Subject to the provisions of Section 3.9:
(i) the Property Trustee may conclusively rely and shall be fully
protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper
or document believed by it to be genuine and to have been
signed, sent or presented by the proper party or parties;
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(ii) any direction or act of the Sponsor or the Regular Trustees
contemplated by this Declaration shall be sufficiently
evidenced by a Direction or an Officers' Certificate;
(iii) whenever in the administration of this Declaration, the
Property Trustee shall deem it desirable that a matter be
proved or established before taking, suffering or omitting any
action hereunder, the Property Trustee (unless other evidence
is herein specifically prescribed) may, in the absence of bad
faith on its part, request and conclusively rely upon an
Officers' Certificate which, upon receipt of such request,
shall be promptly delivered by the Sponsor or the Regular
Trustees;
(iv) the Property Trustee shall have no duty to see to any
recording, filing or registration of any instrument (including
any financing or continuation statement or any filing under
tax or securities laws) or any rerecording, refiling or
registration thereof;
(v) the Property Trustee may consult with counsel or other experts
and the advice or opinion of such counsel and experts with
respect to legal matters or advice within the scope of such
experts' area of expertise shall be full and complete
authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in
accordance with such advice or opinion, such counsel may be
counsel to the Sponsor or any of its Affiliates, and may
include any of its employees. The Property Trustee shall have
the right at any time to seek instructions concerning the
administration of this Declaration from any court of competent
jurisdiction;
(vi) the Property Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Declaration
at the request or direction of any Holder, unless such Holder
shall have provided to the Property Trustee security and
indemnity, reasonably satisfactory to the Property Trustee,
against the costs, expenses (including attorneys' fees and
expenses and the expenses of the Property Trustee's agents,
nominees or custodians) and liabilities that might be incurred
by it in complying with such request or direction, including
such reasonable advances as may be requested by the Property
Trustee; provided that, nothing contained in this Section
3.10(a)(vi) shall be taken to relieve the Property Trustee,
upon the occurrence of an Event of Default, of its obligation
to exercise the rights and powers vested in it by this
Declaration;
(vii) the Property Trustee shall not be bound to make any
investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper
or document, but the Property Trustee, in its discretion, may
make such further inquiry or investigation into such facts or
matters as it may see fit;
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(viii) the Property Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or
by or through agents, custodians, nominees or attorneys and
the Property Trustee shall not be responsible for any
misconduct or negligence on the part of any agent or attorney
appointed with due care by it hereunder;
(ix) any action taken by the Property Trustee or its agents
hereunder shall bind the Trust and the Holders of the
Securities, and the signature of the Property Trustee or its
agents alone shall be sufficient and effective to perform any
such action and no third party shall be required to inquire as
to the authority of the Property Trustee to so act or as to
its compliance with any of the terms and provisions of this
Declaration, both of which shall be conclusively evidenced by
the Property Trustee's or its agent's taking such action;
(x) whenever in the administration of this Declaration the
Property Trustee shall deem it desirable to receive
instructions with respect to enforcing any remedy or right or
taking any other action hereunder, the Property Trustee (i)
may request instructions from the Holders of the Securities
which instructions may only be given by the Holders of the
same proportion in liquidation amount of the Securities as
would be entitled to direct the Property Trustee under the
terms of the Securities in respect of such remedy, right or
action, (ii) may refrain from enforcing such remedy or right
or taking such other action until such instructions are
received, and (iii) shall be protected in conclusively relying
on or acting in or accordance with such instructions; and
(xi) except as otherwise expressly provided by this Declaration,
the Property Trustee shall not be under any obligation to take
any action that is discretionary under the provisions of this
Declaration.
(b) No provision of this Declaration shall be deemed to impose any duty
or obligation on the Property Trustee to perform any act or acts or exercise any
right, power, duty or obligation conferred or imposed on it, in any jurisdiction
in which it shall be illegal, or in which the Property Trustee shall be
unqualified or incompetent in accordance with applicable law, to perform any
such act or acts, or to exercise any such right, power, duty or obligation. No
permissive power or authority available to the Property Trustee shall be
construed to be a duty.
SECTION 3.11 Delaware Trustee.
Notwithstanding any other provision of this Declaration other than
Section 5.2, the Delaware Trustee shall not be entitled to exercise any powers,
nor shall the Delaware Trustee have any of the duties and responsibilities of
the Regular Trustees or the Property Trustee described in this Declaration.
Except as set forth in Section 5.2, the Delaware Trustee shall be a Trustee for
the sole and limited purpose of fulfilling the requirements of Section 3807 of
the Business Trust Act.
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SECTION 3.12 Execution of Documents.
Unless otherwise determined by the Regular Trustees, and except as
otherwise required by the Business Trust Act, any one Regular Trustee is
authorized to execute on behalf of the Trust any documents that the Regular
Trustees have the power and authority to execute pursuant to Section 3.6;
provided, that, the registration statement referred to in Section 3.6(b)(i),
including any amendments thereto, shall be signed by a majority of the Regular
Trustees.
SECTION 3.13 Not Responsible for Recitals or Issuance of Securities.
The recitals contained in this Declaration and the Securities shall be
taken as the statements of the Sponsor, and the Trustees do not assume any
responsibility for their correctness. The Trustees make no representations as to
the value or condition of the property of the Trust or any part thereof. The
Trustees make no representations as to the validity or sufficiency of this
Declaration or the Securities.
SECTION 3.14 Duration of Trust.
The Trust, unless terminated pursuant to the provisions of Article VIII
hereof, shall have existence for fifty-five (55) years from the date hereof.
SECTION 3.15 Mergers.
(a) The Trust may not consolidate, amalgamate, merge with or into, or
be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other body, except as
described in Section 3.15(b) and (c).
(b) The Trust may, with the consent of the Regular Trustees or, if
there are more than two, a majority of the Regular Trustees and without the
consent of the Holders of the Securities, the Delaware Trustee or the Property
Trustee, consolidate, amalgamate, merge with or into, or be replaced by a trust
organized as such under the laws of any State; provided that:
(i) such successor entity (the "Successor Entity") either:
(A) expressly assumes all of the obligations of the Trust
under the Securities; or
(B) substitutes for the Capital Securities and Common
Securities other securities having substantially the
same terms as the Capital Securities and Common
Securities, respectively (the "Successor Securities")
so long as the Successor Securities rank the same as
the Capital Securities and the Common Securities,
respectively, rank with respect to Distributions and
payments upon liquidation, redemption and otherwise;
(ii) the Debenture Issuer expressly accepts a trustee of the
Successor Entity that possesses the same powers and duties as
the Property Trustee as the holder of the Debentures;
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(iii) the Capital Securities or any Successor Securities (with
respect to the Capital Securities) are listed, or any
Successor Securities (with respect to the Capital Securities)
will be listed upon notification of issuance, on any national
securities exchange or with any other organization on which
the Capital Securities are then listed or quoted;
(iv) such merger, consolidation, amalgamation or replacement does
not cause the Capital Securities (including any Successor
Securities of the Capital Securities) to be downgraded by any
nationally recognized statistical rating organization then
rating the Capital Securities at the request of the Sponsor;
(v) such merger, consolidation, amalgamation or replacement does
not adversely affect the rights, preferences and privileges of
the Holders of the Securities (including any Successor
Securities) in any material respect (other than with respect
to any dilution of such Holders' interests in the Capital
Securities as a result of such merger, consolidation,
amalgamation or replacement);
(vi) such Successor Entity has a purpose identical to that of the
Trust;
(vii) prior to such merger, consolidation, amalgamation or
replacement, the Sponsor has received an opinion of qualified
independent counsel to the Trust experienced in such matters
to the effect that:
(A) such merger, consolidation, amalgamation or
replacement does not adversely affect the rights,
preferences and privileges of the Holders of the
Securities (including any Successor Securities) in
any material respect (other than with respect to any
dilution of such Holders' interests in the Capital
Securities as a result of such merger, consolidation,
amalgamation or replacement);
(B) following such merger, consolidation, amalgamation or
replacement, neither the Trust nor the Successor
Entity will be required to register as an Investment
Company; and
(C) following such merger, consolidation, amalgamation or
replacement, the Trust (or the Successor Entity) will
continue to be classified as a grantor trust for
United States federal income tax purposes;
(viii) the Sponsor guarantees the obligations of such Successor
Entity under the Successor Securities at least to the extent
provided by the Capital Securities Guarantee and the Common
Securities Guarantee, respectively; and
(ix) the Regular Trustees shall have furnished the Delaware Trustee
and the Property Trustee at least 5 Business Days prior
written notice of the consummation of such merger,
consolidation, amalgamation or replacement; provided that
failure to provide such notice shall not affect the validity
of any such transaction.
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(c) Notwithstanding Section 3.15(b), the Trust shall not, except with
the consent of Holders of 100% in liquidation amount of the Securities,
consolidate, amalgamate, merge with or into, or be replaced by any other entity
or permit any other entity to consolidate, amalgamate, merge with or into, or
replace it if such consolidation, amalgamation, merger or replacement would
cause the Trust or Successor Entity to be classified as other than a grantor
trust for United States federal income tax purposes.
SECTION 3.16 Property Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
similar judicial proceeding relative to the Trust or any other obligor upon the
Securities or the property of the Trust or of such other obligor or their
creditors, the Property Trustee (irrespective of whether any Distributions on
the Securities shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Property Trustee shall
have made any demand on the Trust for the payment of any past due Distributions)
shall be entitled and empowered, to the fullest extent permitted by law, by
intervention in such proceeding or otherwise:
(a) to file and prove a claim for the whole amount of any
Distributions owing and unpaid in respect of the Securities
(or, if the Securities are original issue discount Securities,
such portion of the liquidation amount as may be specified in
the terms of such Securities) and to file such other papers or
documents as may be necessary or advisable in order to have
the claims of the Property Trustee (including any claim for
the reasonable compensation, expenses, disbursements and
advances of the Property Trustee, its agents and counsel) and
of the Holders allowed in such judicial proceeding; and
(b) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Property Trustee and, in the event the
Property Trustee shall consent to the making of such payments directly to the
Holders, to pay to the Property Trustee any amount due it for the reasonable
compensation, expenses, disbursements and advances of the Property Trustee, its
agents and counsel, and any other amounts due the Property Trustee.
Nothing herein contained shall be deemed to authorize the Property
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement adjustment or compensation affecting the
Securities or the rights of any Holder thereof or to authorize the Property
Trustee to vote in respect of the claim of any Holder in any such proceeding.
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ARTICLE IV
SPONSOR
SECTION 4.1 Sponsor's Purchase of Common Securities.
On the Closing Date the Sponsor will purchase all of the Common
Securities issued by the Trust, in an amount at least equal to 3% of the capital
of the Trust, at the same time as the Capital Securities are sold.
SECTION 4.2 Responsibilities of the Sponsor.
In connection with the issue and sale of the Capital Securities, the
Sponsor shall have the exclusive right and responsibility to engage in the
following activities:
(a) to prepare for filing by the Trust with the Commission a
registration statement on Form S-3 pertaining to the Capital
Securities, including any amendments thereto (which
registration statement may also include other securities of
the Sponsor);
(b) to determine the States in which to take appropriate action to
qualify or register for sale all or part of the Capital
Securities and to do any and all such acts, other than actions
which must be taken by the Trust, and advise the Trust of
actions it must take, and prepare for execution and filing any
documents to be executed and filed by the Trust, as the
Sponsor deems necessary or advisable in order to comply with
the applicable laws of any such States;
(c) to prepare for filing by the Trust an application to the New
York Stock Exchange, Inc. or any other national stock exchange
or the Nasdaq Stock Market's National Market System for
listing upon notice of issuance of any Capital Securities;
(d) to prepare for filing by the Trust with the Commission a
registration statement on Form 8-A relating to the
registration of the Capital Securities under Section 12(b) of
the Exchange Act, including any amendments thereto; and
(e) to negotiate the terms of the Underwriting Agreement and
Pricing Agreement providing for the sale of the Capital
Securities.
SECTION 4.3 Right to Dissolve Trust.
The Sponsor shall have the right at any time after the Closing Date to
elect to dissolve the Trust in accordance with the terms of the Securities and
to direct the Property Trustee to take such action as shall be necessary to
distribute the Debentures to the Holders of the Securities in exchange for all
of the Securities.
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SECTION 4.4 Direct Right of Action.
Notwithstanding any provision of this Declaration to the contrary, to
the extent permitted by applicable law, any Holder of Securities may enforce
directly against the Sponsor the obligation of the Sponsor under the Indenture
to duly and punctually pay the principal and interest when due under the
Debentures and the Sponsor irrevocably waives any right or remedy to require
that any such Holder take any action against the Trust or any other Person
before proceeding against the Sponsor.
ARTICLE V
TRUSTEES
SECTION 5.1 Number of Trustees.
The number of Trustees initially shall be five (5), and:
(a) at any time before the issuance of any Securities, the Sponsor
may, by written instrument, increase or decrease the number of
Trustees; and
(b) after the issuance of any Securities, the number of Trustees
may be increased or decreased by vote of the Holders of a
Majority in Liquidation Amount of the Common Securities voting
as a class at a meeting of the Holders of the Common
Securities or by written consent in lieu of such meeting.
provided that, if the Property Trustee does not also act as Delaware Trustee,
the number of Trustees shall be at least three (3).
SECTION 5.2 Delaware Trustee.
If required by the Business Trust Act, one Trustee (the "Delaware
Trustee") shall be:
(a) a natural person who is a resident of the State of Delaware;
or
(b) if not a natural person, an entity which has its principal
place of business in the State of Delaware, and otherwise
meets the requirements of applicable law,
provided that, if the Property Trustee has its principal place of business in
the State of Delaware and otherwise meets the requirements of applicable law,
then the Property Trustee shall also be the Delaware Trustee and Section 3.11
shall have no application.
SECTION 5.3 Property Trustee; Eligibility.
(a) There shall at all times be one Trustee which shall act as
Property Trustee which shall:
(i) not be an Affiliate of the Sponsor; and
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(ii) be a corporation organized and doing business under the laws
of the United States of America or any State or Territory
thereof or of the District of Columbia, or a corporation or
other Person permitted by the Commission to act as an
institutional trustee under the Trust Indenture Act,
authorized under such laws to exercise corporate trust powers,
having a combined capital and surplus of at least 50 million
U.S. dollars ($50,000,000), and subject to supervision or
examination by Federal, State, Territorial or District of
Columbia authority. If such corporation publishes reports of
condition at least annually, pursuant to law or to the
requirements of the supervising or examining authority
referred to above, then for the purposes of this Section
5.3(a)(ii), the combined capital and surplus of such
corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so
published.
(b) If at any time the Property Trustee shall cease to be eligible to
so act under Section 5.3(a), the Property Trustee shall immediately resign in
the manner and with the effect set forth in Section 5.7(c).
(c) If the Property Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act, the
Property Trustee and the Holder of the Common Securities (as if it were the
Obliger referred to in Section 310(b) of the Trust Indenture Act) shall in all
respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.
(d) The Capital Securities Guarantee shall be deemed to be specifically
described in this Declaration for purposes of clause (i) of the first provision
contained in Section 310(b) of the Trust Indenture Act.
SECTION 5.4 Regular Trustees.
(a) Except as expressly set forth in this Declaration and except if a
meeting of the Regular Trustees is called with respect to any matter over which
the Regular Trustees have power to act, any power of the Regular Trustees may be
exercised by, or with the consent of, any one such Regular Trustee.
(b) Unless otherwise determined by the Regular Trustees, and except as
otherwise required by the Business Trust Act or applicable law, any one Regular
Trustee is authorized to execute on behalf of the Trust any documents which the
Regular Trustees have the power and authority to cause the Trust to execute
pursuant to Section 3.6, provided, that, the registration statement referred to
in Section 3.6, including any amendments thereto, shall be signed by a majority
of the Regular Trustees; and
(c) a Regular Trustee may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 his or
her power for the purposes of signing any documents which the Regular Trustees
have power and authority to cause the Trust to execute pursuant to Section 3.6.
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SECTION 5.5 Certain Qualifications of Regular Trustees and Delaware Trustee
Generally.
Each Regular Trustee and the Delaware Trustee (unless the Property
Trustee also acts as Delaware Trustee) shall be either a natural person who is
at least 21 years of age or a legal entity that shall act through one or more
Authorized Officers.
SECTION 5.6 Initial Trustees.
The initial Regular Trustees shall be: Rollin M. Dick, Stephen C. Hilbert
and Lawrence W. Inlow.
The initial Property Trustee shall be: Fleet National Bank.
The initial Delaware Trustee shall be: First Union Bank of Delaware.
In the event that a national banking association, with the name "First
Union Trust Company, National Association" or any other name, succeeds, as
contemplated, to all or substantially all the corporate trust business of First
Union Bank of Delaware, such successor entity shall automatically be deemed to
be the Delaware Trustee, effective as of the consummation of such succession,
with the same effect as if it had executed this Declaration on the Closing Date,
upon delivery to the Sponsor and the Regular Trustees of an instrument, in form
and substance reasonably satisfactory to the Sponsor and the Regular Trustees
accepting the responsibilities hereunder as Delaware Trustee and agreeing to be
bound by all of the provisions hereof applicable to the Delaware Trustee.
SECTION 5.7 Appointment, Removal and Resignation of Trustees.
(a) Subject to Section 5.7(b), Trustees may be appointed or
removed without cause at any time:
(i) until the issuance of any Securities, by written instrument
executed by the Sponsor; and
(ii) after the issuance of any Securities, by vote of the Holders
of a Majority in Liquidation Amount of the Common Securities
voting as a class at a meeting of the Holders of the Common
Securities.
(b) The Trustee that acts as Property Trustee shall not be removed in
accordance with Section 5.7(a) until a successor Trustee possessing the
qualifications to act as Property Trustee under Section 5.3 (a "Successor
Property Trustee") has been appointed and has accepted such appointment by
written instrument executed by such Successor Property Trustee and delivered to
the Regular Trustees and the Sponsor. The Trustee that acts as Delaware Trustee
shall not be removed in accordance with Section 5.7(a) until a successor Trustee
possessing the qualifications to act as Delaware Trustee under Sections 5.2 and
5.5 (a "Successor Delaware Trustee") has been appointed and has accepted such
appointment by written instrument executed by such Successor Delaware Trustee
and delivered to the Regular Trustees and the Sponsor.
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(c) A Trustee appointed to office shall hold office until his or its
successor shall have been appointed, until his death or its dissolution or until
his or its removal or resignation. Any Trustee may resign from office (without
need for prior or subsequent accounting) by an instrument in writing signed by
the Trustee and delivered to the Sponsor and the Trust, which resignation shall
take effect upon such delivery or upon such later date as is specified therein;
provided, however, that:
(i) No such resignation of the Trustee that acts as the Property
Trustee shall be effective:
(A) until a Successor Property Trustee has been appointed
and has accepted such appointment by instrument
executed by such Successor Property Trustee and
delivered to the Trust, the Sponsor and the resigning
Property Trustee; or
(B) until the assets of the Trust have been completely
liquidated and the proceeds thereof distributed to
the holders of the Securities; and
(ii) no such resignation of the Trustee that acts as the Delaware
Trustee shall be effective until a Successor Delaware Trustee
has been appointed and has accepted such appointment by
instrument executed by such Successor Delaware Trustee and
delivered to the Trust, the Sponsor and the resigning Delaware
Trustee.
(d) The Holders of the Common Securities shall use their best efforts
to promptly appoint a Successor Delaware Trustee or Successor Property Trustee,
as the case may be, if the Property Trustee or the Delaware Trustee delivers an
instrument of resignation in accordance with this Section 5.7.
(e) If no Successor Property Trustee or Successor Delaware Trustee, as
the case may be, shall have been appointed and accepted appointment as provided
in this Section 5.7 within 60 days after delivery to the Sponsor and the Trust
of an instrument of resignation, the resigning Property Trustee or Delaware
Trustee, as applicable, may petition any court of competent jurisdiction for
appointment of a Successor Property Trustee or Successor Delaware Trustee, as
applicable. Such court may thereupon, after prescribing such notice, if any, as
it may deem proper, appoint a Successor Property Trustee or Successor Delaware
Trustee, as the case may be.
(f) No Property Trustee or Delaware Trustee shall be liable for the
acts or omissions to act of any Successor Property Trustee or Successor Delaware
Trustee, as the case may be.
(g) Any successor to a Regular Trustee shall be an officer, director,
employer or affiliate of the Sponsor.
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SECTION 5.8 Vacancies among Trustees.
If a Trustee ceases to hold office for any reason and the number of
Trustees is not reduced pursuant to Section 5.1, or if the number of Trustees is
increased pursuant to Section 5.1, a vacancy shall occur. A resolution
certifying the existence of such vacancy by the Regular Trustees or, if there
are more than two, a majority of the Regular Trustees shall be conclusive
evidence of the existence of such vacancy. The vacancy shall be filled with a
Trustee appointed in accordance with Section 5.7.
SECTION 5.9 Effect of Vacancies.
The death, resignation, retirement, removal, bankruptcy, dissolution,
liquidation, incompetence or incapacity to perform the duties of a Trustee shall
not operate to annul the Trust. Whenever a vacancy in the number of Regular
Trustees shall occur, until such vacancy is filled by the appointment of a
Regular Trustee in accordance with Section 5.7, the Regular Trustees in office,
regardless of their number, shall have all the powers granted to the Regular
Trustees and shall discharge all the duties imposed upon the Regular Trustees by
this Declaration.
SECTION 5.10 Meetings.
If there is more than one Regular Trustee, meetings of the Regular
Trustees shall be held from time to time upon the call of any Regular Trustee.
Regular meetings of the Regular Trustees may be held at a time and place fixed
by resolution of the Regular Trustees. Notice of any in-person meetings of the
Regular Trustees shall be hand delivered or otherwise delivered in writing
(including by facsimile, with a hard copy by overnight courier) not less than 48
hours before such meeting. Notice of any telephonic meetings of the Regular
Trustees shall be hand delivered or otherwise delivered in writing (including by
facsimile, with a hard copy by overnight courier) not less than 24 hours before
a meeting. Notices shall contain a brief statement of the time, place and
anticipated purposes of the meeting. The presence (whether in person or by
telephone) of a Regular Trustee at a meeting shall constitute a waiver of notice
of such meeting except where a Regular Trustee attends a meeting for the express
purpose of objecting to the transaction of any activity on the ground that the
meeting has not been lawfully called or convened. Unless provided otherwise in
this Declaration, any action of the Regular Trustees may be taken at a meeting
by vote of a majority of the Regular Trustees present (whether in person or by
telephone) and eligible to vote with respect to such matter, provided that a
Quorum is present, or without a meeting by the unanimous written consent of the
Regular Trustees. In the event there is only one Regular Trustee, any and all
action of such Regular Trustee shall be evidenced by a written consent of such
Regular Trustee.
SECTION 5.11 Delegation of Power.
(a) Any Regular Trustee may, by power of attorney consistent with
applicable law, delegate to any natural person over the age of 21 his, her or
its power for the purpose of executing any documents contemplated in Section
3.6, including any registration statement or amendment thereto filed with the
Commission, or making any other governmental filing.
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(b) The Regular Trustees shall have power to delegate from time to time
to such of their number or to officers of the Trust the doing of such things and
the execution of such instruments either in the name of the Trust or the names
of the Regular Trustees or otherwise as the Regular Trustees may deem expedient,
to the extent such delegation is not prohibited by applicable law or contrary to
the provisions of the Trust, as set forth herein.
SECTION 5.12 Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Property Trustee or the Delaware
Trustee, as the case may be, may be merged or converted or with which either may
be consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Property Trustee or the Delaware Trustee, as the case
may be, shall be a party, or any corporation succeeding to all or substantially
all the corporate trust business of the Property Trustee or the Delaware
Trustee, as the case may be, shall be the successor of the Property Trustee or
the Delaware Trustee, as the case may be, hereunder, provided such corporation
shall be otherwise qualified and eligible under this Article without the
execution or filing of any paper or any further act on the part of any of the
parties hereto.
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions.
Holders shall receive Distributions (as defined herein) in accordance
with the applicable terms of the relevant Holder's Securities. Distributions
shall be made on the Capital Securities and the Common Securities in accordance
with the preferences set forth in their respective terms. If and to the extent
that the Debenture Issuer makes a payment of interest (including Compounded
Interest (as defined in the Indenture) and Additional Interest (as defined in
the Indenture)), premium and/or principal on the Debentures held by the Property
Trustee (the amount of any such payment being a "Payment Amount"), the Property
Trustee shall and is directed, to the extent funds are available for that
purpose, to make a distribution (a "Distribution") of the Payment Amount to
Holders.
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities.
(a) The Regular Trustees shall on behalf of the Trust issue one class
of preferred securities (the "Capital Securities") representing undivided
beneficial interests in the assets of the Trust having such terms as are set
forth in Annex I, as such Annex I may be amended from time to time in accordance
with the provisions of this Declaration and one class of common securities (the
"Common Securities") representing undivided beneficial interests in the assets
of
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the Trust having such terms as are set forth in Annex I, as such Annex I may be
amended from time to time in accordance with the provisions of this Declaration.
The Trust shall issue no securities or other interests in the assets of the
Trust other than the Capital Securities and the Common Securities.
(b) The Certificates shall be signed on behalf of the Trust by a
Regular Trustee. Such signature shall be the manual or facsimile signature of
any present or any future Regular Trustee. In case any Regular Trustee of the
Trust who shall have signed any of the Certificates shall cease to be such
Regular Trustee before the Certificates so signed shall be delivered by the
Trust, such Certificates nevertheless may be delivered as though the person who
signed such Certificates had not ceased to be such Regular Trustee; and any
Certificate may be signed on behalf of the Trust by such persons who, at the
actual date of execution of such Certificate, shall be the Regular Trustees of
the Trust, although at the date of the execution and delivery of the Declaration
any such person was not such a Regular Trustee. Certificates shall be printed,
lithographed or engraved or may be produced in any other manner as is reasonably
acceptable to the Regular Trustees, as evidenced by their execution thereof, and
may have such letters, numbers or other marks of identification or designation
and such legends or endorsements as the Regular Trustees may deem appropriate,
or as may be required to comply with any law or with any rule or regulation of
any stock exchange on which Securities may be listed, or to conform to usage.
(c) The consideration received by the Trust for the issuance of the
Securities shall constitute a contribution to the capital of the Trust and shall
not constitute a loan to the Trust.
(d) Upon issuance of the Securities as provided in this Declaration,
the Securities so issued shall be deemed to be validly issued, fully paid and
non-assessable.
(e) Every Person, by virtue of having become a Holder or a Capital
Security Beneficial Owner in accordance with the terms of this Declaration,
shall be deemed to have expressly assented and agreed to the terms of, and shall
be bound by, this Declaration and the terms of the Securities, the Securities
Guarantees, the Indenture and the Debentures.
ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1 Termination of Trust.
(a) The Trust shall dissolve upon the earlier of:
(i) the bankruptcy of the Holder of the Common Securities or the
Sponsor;
(ii) the filing of a certificate of dissolution or its equivalent
with respect to the Holder of the Common Securities or the
Sponsor; the revocation of the Holder of the Common
Securities' or the Sponsor's charter and the expiration of 90
days after the date of revocation without a reinstatement
thereof;
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(iii) upon the entry of a decree of judicial dissolution of the
Holder of the Common Securities, the Sponsor or the Trust;
(iv) when all of the Securities shall have been called for
redemption and the amounts necessary for redemption thereof
shall have been paid to the Holders in accordance with the
terms of the Securities;
(v) the occurrence and continuation of a Tax Event pursuant to
which the Trust shall have been dissolved in accordance with
the terms of the Securities and all of the Debentures shall
have been distributed to the Holders of Securities in exchange
for all of the Securities;
(vi) before the issuance of any Securities, when all of the Regular
Trustees and the Sponsor shall have consented to dissolution
of the Trust;
(vii) the distribution of the Debentures from the Trust to the
Holders of Securities in exchange for all of the Securities
and in liquidation of the Trust; or
(viii) the expiration of the term of the Trust as set forth in
Section 3.14.
(b) As soon as is practicable after the occurrence of an event referred
to in Section 8.1(a) and upon completion of the winding up of the Trust, the
Trustees shall file a certificate of cancellation with the Secretary of State of
the State of Delaware and thereupon the Trust shall terminate.
(c) The provisions of Section 3.9 and Article X shall survive the
termination of the Trust.
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 Transfer of Securities.
(a) Securities may only be transferred, in whole or in part, in
accordance with the terms and conditions set forth in this Declaration and in
the terms of the Securities. Any transfer or purported transfer of any Security
not made in accordance with this Declaration shall be null and void.
(b) Subject to this Article IX, Capital Securities shall be freely
transferable.
(c) Subject to this Article IX, the Sponsor and any Related Party may
only transfer Common Securities to the Sponsor or a Related Party of the
Sponsor; provided that, any such transfer is subject to the condition precedent
that the transferor obtain the written opinion of qualified independent counsel
experienced in such matters that such transfer would not cause more than an
insubstantial risk that:
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(i) the Trust would not be classified for United States federal
income tax purposes as a grantor trust; and
(ii) the Trust would be an Investment Company or the transferee
would become an Investment Company.
SECTION 9.2 Transfer and Exchange of Certificates.
The Regular Trustees shall provide for the registration of Certificates
and of transfers or exchanges of Certificates, which will be effected without
charge but only upon payment (with such indemnity as the Regular Trustees may
require) in respect of any tax or other government charges that may be imposed
in relation to it. Upon surrender for registration of transfer of any
Certificate, the Regular Trustees shall cause one or more new Certificates to be
issued in the name of the designated transferee or transferees. Upon surrender
for exchange of any Certificate, the Regular Trustees shall cause one or more
new Certificates in the same aggregate liquidation amount as the Certificate
surrendered for exchange to be issued in the name of the Holder of the
Certificate so surrendered. Every Certificate surrendered for registration of
transfer or for exchange shall be accompanied by a written instrument of
transfer in form satisfactory to the Regular Trustees duly executed by the
Holder or such Holder's attorney duly authorized in writing. Each Certificate
surrendered for registration of transfer or for exchange shall be canceled by
the Regular Trustees. A transferee of a Certificate shall be entitled to the
rights and subject to the obligations of a Holder hereunder upon the receipt by
such transferee of a Certificate. By acceptance of a Certificate, each
transferee shall be deemed to have agreed to be bound by this Declaration.
SECTION 9.3 Deemed Security Holders.
The Trustees may treat the Person in whose name any Certificate shall
be registered on the books and records of the Trust as the sole holder of such
Certificate and of the Securities represented by such Certificate for purposes
of receiving Distributions and for all other purposes whatsoever and,
accordingly, shall not be bound to recognize any equitable or other claim to or
interest in such Certificate or in the Securities represented by such
Certificate on the part of any Person, whether or not the Trust shall have
actual or other notice thereof.
SECTION 9.4 Book Entry Interests.
Unless otherwise specified in the terms of the Capital Securities, the
Capital Securities Certificates, on original issuance, will be issued in the
form of one or more fully registered, global Preferred Security Certificates
(each a "Global Certificate"), to be delivered to DTC, the initial Clearing
Agency, by, or on behalf of, the Trust. Such Global Certificates shall initially
be registered on the books and records of the Trust in the name of Cede & Co.,
the nominee of DTC, and no Capital Security Beneficial Owner will receive a
definitive Capital Security
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Certificate representing such Capital Security Beneficial Owner's interests in
such Global Certificates, except as provided in Section 9.7. Unless and until
definitive, fully registered Capital Security Certificates (the "Definitive
Capital Security Certificates") have been issued to the Capital Security
Beneficial Owners pursuant to Section 9.7:
(a) the provisions of this Section 9.4 shall be in full force and
effect;
(b) the Trust and the Trustees shall be entitled to deal with the
Clearing Agency for all purposes of this Declaration (including the
payment of Distributions on the Global Certificates and receiving
approvals, votes or consents hereunder) as the Holder of the Capital
Securities and the sole holder of the Global Certificates and shall
have no obligation to the Capital Security Beneficial Owners;
(c) to the extent that the provisions of this Section 9.4 conflict with
any other provisions of this Declaration, the provisions of this
Section 9.4 shall control; and (d) the rights of the Capital Security
Beneficial Owners shall be exercised only through the Clearing Agency
and shall be limited to those established by law and agreements between
such Capital Security Beneficial Owners and the Clearing Agency and/or
the Clearing Agency Participants. DTC will make book entry transfers
among the Clearing Agency Participants and receive and transmit
payments of Distributions on the Global Certificates to such Clearing
Agency Participants.
SECTION 9.5 Notices to Clearing Agency.
Whenever a notice or other communication to the Capital Security
Holders is required under this Declaration, unless and until Definitive Capital
Security Certificates shall have been issued to the Capital Security Beneficial
Owners pursuant to Section 9.7, the Regular Trustees or the Property Trustee, if
the Property Trustee is specifically required to give such notice, shall give
all such notices and communications specified herein to be given to the Capital
Security Holders to the Clearing Agency, and shall have no notice obligations to
the Capital Security Beneficial Owners.
SECTION 9.6 Appointment of Successor Clearing Agency.
If any Clearing Agency elects to discontinue its services as securities
depository with respect to the Preferred Securities or if the Regular Trustees
elect to have another Clearing Agency serve as securities depository with
respect to the Capital Securities, the Regular Trustees may, in their sole
discretion, appoint a successor Clearing Agency with respect to such Capital
Securities.
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SECTION 9.7 Definitive Capital Security Certificates.
If:
(a) a Clearing Agency elects to discontinue its services as securities
depository with respect to the Capital Securities and a successor
Clearing Agency is not appointed within 90 days after such
discontinuance pursuant to Section 9.6; or
(b) the Regular Trustees elect after consultation with the Sponsor to
terminate the book entry system through the Clearing Agency with
respect to the Capital Securities, then:
(i) Definitive Preferred Security Certificates shall be
prepared by the Regular Trustees on behalf of the Trust with
respect to such Capital Securities; and
(ii) upon surrender of the Global Certificates by the Clearing
Agency, accompanied by registration instructions, the Regular
Trustees shall cause Definitive Capital Security Certificates
to be delivered to the Capital Security Beneficial Owners in
accordance with the instructions of the Clearing Agency.
Neither the Trustees nor the Trust shall be liable for any
delay in delivery of such instructions and each of them may
conclusively rely on, and shall be protected in relying on,
said instructions of the Clearing Agency. The Definitive
Capital Security Certificates shall be printed, lithographed
or engraved or may be produced in any other manner as is
reasonably acceptable to the Regular Trustees, as evidenced by
their execution thereof, and may have such letters, numbers or
other marks of identification or designation and such legends
or endorsements as the Regular Trustees may deem appropriate,
or as may be required to comply with any law or with any rule
or regulation made pursuant thereto or with any rule or
regulation of any stock exchange on which Capital Securities
may be listed, or to conform to usage.
SECTION 9.8 Mutilated, Destroyed, Lost or Stolen Certificates.
If:
(a) any mutilated Certificates should be surrendered to the Regular
Trustees, or if the Regular Trustees shall receive evidence to their
satisfaction of the destruction, loss or theft of any Certificate; and
(b) there shall be delivered to the Regular Trustees such security or
indemnity as may be re quired by them to keep each of them, the Sponsor
and the Trust harmless,
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then, in the absence of notice that such Certificate shall have been acquired by
a bona fide purchaser, any Regular Trustee on behalf of the Trust shall execute
and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost
or stolen Certificate, a new Certificate of like denomination. In connection
with the issuance of any new Certificate under this Section 9.8, the Regular
Trustees may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection therewith. Any duplicate
Certificate issued pursuant to this Section shall constitute conclusive evidence
of an ownership interest in the relevant Securities, as if originally issued,
whether or not the lost, stolen or destroyed Certificate shall be found at any
time.
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 Liability.
(a) Except as expressly set forth in this Declaration, the Securities
Guarantees and the terms of the Securities, the Sponsor shall not be:
(i) personally liable for the return of any portion of the capital
contributions (or any return thereon) of the Holders of the Securities
which shall be made solely from assets of the Trust; and
(ii) be required to pay to the Trust or to any Holder of Securities
any deficit upon dissolution of the Trust or otherwise.
(b) The Holder of the Common Securities shall be liable for all of the
debts and obligations of the Trust (other than with respect to the Securities)
to the extent not satisfied out of the Trust's assets.
(c) Pursuant to Section 3803(a) of the Business Trust Act, the Holders
of the Capital Securities shall be entitled to the same limitation of personal
liability extended to stockholders of private corporations for profit organized
under the General Corporation Law of the State of Delaware.
SECTION 10.2 Exculpation.
(a) No Indemnified Person shall be liable, responsible or accountable
in damages or otherwise to the Trust or any Covered Person for any loss, damage
or claim incurred by reason of any act or omission performed or omitted by such
Indemnified Person in good faith on behalf of the Trust and in a manner such
Indemnified Person reasonably believed to be within the scope of the authority
conferred on such Indemnified Person by this Declaration or by law, except that
an Indemnified Person shall be liable for any such loss, damage or claim
incurred by reason of such Indemnified Person's gross negligence or willful
misconduct with respect to such acts or omissions.
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(b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Trust and upon such information, opinions, reports
or statements presented to the Trust by any Person as to matters the Indemnified
Person reasonably believes are within such other Person's professional or expert
competence and who has been selected with reasonable care by or on behalf of the
Trust, including information, opinions, reports or statements as to the value
and amount of the assets, liabilities, profits, losses or any other facts
pertinent to the existence and amount of assets from which Distributions to
Holders of Securities might properly be paid.
SECTION 10.3 Fiduciary Duty.
(a) To the extent that, at law or in equity, an Indemnified Person has
duties (including fiduciary duties) and liabilities relating thereto to the
Trust or to any other Covered Person, an Indemnified Person acting under this
Declaration shall not be liable to the Trust or to any other Covered Person for
its good faith reliance on the provisions of this Declaration. The provisions of
this Declaration, to the extent that they restrict the duties and liabilities of
an Indemnified Person otherwise existing at law or in equity (other than the
duties imposed on the Property Trustee under the Trust Indenture Act), are
agreed by the parties hereto to replace such other duties and liabilities of
such Indemnified Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises between any
Covered Persons; or
(ii) whenever this Declaration or any other agreement
contemplated herein or therein provides that an Indemnified Person
shall act in a manner that is, or provides terms that are, fair and
reasonable to the Trust or any Holder of Securities,
the Indemnified Person shall resolve such conflict of interest, take such action
or provide such terms, considering in each case the relative interest of each
party (including its own interest) to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such interests, any customary
or accepted industry practices and any applicable generally accepted accounting
practices or principles. In the absence of bad faith by the Indemnified Person,
the resolution, action or term so made, taken or provided by the Indemnified
Person shall not constitute a breach of this Declaration or any other agreement
contemplated herein or of any duty or obligation of the Indemnified Person at
law or in equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person is permitted
or required to make a decision:
(i) in its "discretion" or under a grant of similar authority, the
Indemnified Person shall be entitled to consider such interests and
factors as it desires, including its own interests, and shall have no
duty or obligation to give any consideration to any interest of or
factors affecting the Trust or any other Person; or
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(ii) in its "good faith" or under another express standard, the
Indemnified Person shall act under such express standard and shall not
be subject to any other or different standard imposed by this
Declaration or by applicable law.
SECTION 10.4 Indemnification and Compensation.
(a) (i) The Sponsor shall indemnify, to the full extent permitted by
law, any Company Indemnified Person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of the Trust) by reason of the fact that he is or was a
Company Indemnified Person against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with such action, suit or proceeding if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the Trust, and, with respect to any criminal action or proceeding,
had no reasonable cause to believe his conduct was unlawful. The termination of
any action, suit or proceeding by judgment, order, settlement, conviction or
upon a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the Company Indemnified Person did not act in good faith and in
a manner which he reasonably believed to be in or not opposed to the best
interests of the Trust, and, with respect to any criminal action or proceeding,
had reasonable cause to believe that his conduct was unlawful.
(ii) The Sponsor shall indemnify, to the full extent permitted by law,
any Company Indemnified Person who was or is a party or is threatened to be made
a party to any threatened, pending or completed action or suit by or in the
right of the Trust to procure a judgment in its favor by reason of the fact that
he is or was a Company Indemnified Person against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the Trust
and except that no such indemnification shall be made in respect of any claim,
issue or matter as to which such Company Indemnified Person shall have been
adjudged to be liable to the Trust unless and only to the extent that the Court
of Chancery of Delaware or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which such Court of Chancery
or such other court shall deem proper.
(iii) Any indemnification under paragraphs (i) and (ii) of this Section
10.4(a) (unless ordered by a court) shall be made by the Sponsor only as
authorized in the specific case upon a determination that indemnification of the
Company Indemnified Person is proper in the circumstances because he has met the
applicable standard of conduct set forth in paragraphs (i) and (ii). Such
determination shall be made (1) by the Regular Trustees by a majority vote of a
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quorum consisting of such Regular Trustees who were not parties to such action,
suit or proceeding, (2) if such a quorum is not obtainable, or, even if
obtainable, if a quorum of disinterested Regular Trustees so directs, by
independent legal counsel in a written opinion, or (3) by the Common Security
Holder of the Trust.
(iv) Expenses (including attorneys' fees) incurred by a Company
Indemnified Person in defending a civil, criminal, administrative or
investigative action, suit or proceeding referred to in paragraphs (i) and (ii)
of this Section 10.4(a) shall be paid by the Sponsor in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking by
or on behalf of such Company Indemnified Person to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified by the
Sponsor as authorized in this Section 10.4(a). Notwithstanding the foregoing, no
advance shall be made by the Sponsor if a determination is reasonably and
promptly made (i) by the Regular Trustees by a majority vote of a quorum of
disinterested Regular Trustees, (ii) if such a quorum is not obtainable, or,
even if obtainable, if a quorum of disinterested Regular Trustees so directs, by
independent legal counsel in a written opinion or (iii) the Common Security
Holder of the Trust, that, based upon the facts known to the Regular Trustees,
counsel or the Common Security Holder at the time such determination is made,
such Company Indemnified Person acted in bad faith or in a manner that such
person did not believe to be in or not opposed to the best interests of the
Trust, or, with respect to any criminal proceeding, that such Company
Indemnified Person believed or had reasonable cause to believe his conduct was
unlawful. In no event shall any advance be made in instances where the Regular
Trustees, independent legal counsel or Common Security Holder reasonably
determine that such person deliberately breached his duty to the Trust or its
Common or Capital Security Holders.
(v) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other paragraphs of this Section 10.4(a) shall not be
deemed exclusive of any other rights to which those seeking indemnification and
advancement of expenses may be entitled under any agreement, vote of
stockholders or disinterested directors of the Debenture Issuer or Capital
Security Holders of the Trust or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office. All
rights to indemnification under this Section 10.4(a) shall be deemed to be
provided by a contract between the Debenture Issuer and each Company Indemnified
Person who serves in such capacity at any time while this Section 10.4(a) is in
effect. Any repeal or modification of this Section 10.4(a) shall not affect any
rights or obligations then existing.
(vi) The Debenture Issuer or the Trust may purchase and maintain
insurance on behalf of any person who is or was a Company Indemnified Person
against any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the Debenture
Issuer would have the power to indemnify him against such liability under the
provisions of this Section 10.4(a).
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(vii) For purposes of this Section 10.4(a), references to "the Trust"
shall include, in addition to the resulting or surviving entity, any constituent
entity (including any constituent of a constituent) absorbed in a consolidation
or merger, so that any person who is or was a director, trustee, officer or
employee of such constituent entity, or is or was serving at the request of such
constituent entity as a director, trustee, member, partner, officer, employee or
agent of another entity, shall stand in the same position under the provisions
of this Section 10.4(a) with respect to the resulting or surviving entity as he
would have with respect to such constituent entity if its separate existence had
continued.
(viii) The indemnification and advancement of expenses provided by, or
granted pursuant to, this Section 10.4(a) shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a Company
Indemnified Person and shall inure to the benefit of the heirs, executors and
administrators of such a person. The obligation to indemnify as set forth in
this Section 10.4(a) shall survive the satisfaction and discharge of this
Declaration.
(b) The Debenture Issuer agrees to indemnify the (i) Property Trustee,
(ii) the Delaware Trustee, (iii) any Affiliate of the Property Trustee and the
Delaware Trustee, and (iv) any officers, directors, shareholders, members,
partners, employees, representatives, custodians, nominees or agents of the
Property Trustee and the Delaware Trustee (each of the Persons in (i) through
(iv) being referred to as a "Fiduciary Indemnified Person") for, and to hold
each Fiduciary Indemnified Person harmless against, any loss, liability or
expense incurred without negligence (or in the case of the Delaware Trustee,
gross negligence) or bad faith on its part, arising out of or in connection with
the acceptance or administration of the trust or trusts hereunder, including the
costs and expenses (including reasonable legal fees and expenses) of defending
itself against or investigating any claim or liability in connection with the
exercise or performance of any of its powers or duties hereunder. The obligation
to indemnify as set forth in this Section 10.4(b) shall survive the satisfaction
and discharge of this Declaration.
(c) The Debenture Issuer shall pay to the Property Trustee from time to
time such reasonable compensation for its services as the Company and the
Property Trustee shall agree in writing from time to time. The Property
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Debenture Issuer Shall reimburse the Property
Trustee upon request for all reasonable out-of-pocket expenses incurred by it in
connection with the performance of its duties under this Declaration except any
such expense as may be attributed to its negligence or bad faith. Such expenses
shall include the reasonable compensation and expenses of the Property Trustee's
agents and counsel. The Debenture Issuer need not reimburse any expense incurred
by the Property Trustee through negligence or bad faith.
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SECTION 10.5 Outside Businesses.
Any Covered Person, the Sponsor, the Delaware Trustee and the Property
Trustee may engage in or possess an interest in other business ventures of any
nature or description, independently or with others, similar or dissimilar to
the business of the Trust, and the Trust and the Holders of Securities shall
have no rights by virtue of this Declaration in and to such independent ventures
or the income or profits derived therefrom, and the pursuit of any such venture,
even if competitive with the business of the Trust, shall not be deemed wrongful
or improper. No Covered Person, the Sponsor, the Delaware Trustee or the
Property Trustee shall be obligated to present any particular investment or
other opportunity to the Trust even if such opportunity is of a character that,
if presented to the Trust, could be taken by the Trust, and any Covered Person,
the Sponsor, the Delaware Trustee and the Property Trustee shall have the right
to take for its own account (individually or as a partner or fiduciary) or to
recommend to others any such particular investment or other opportunity. Any
Covered Person, the Delaware Trustee and the Property Trustee may engage or be
interested in any financial or other transaction with the Sponsor or any
Affiliate of the Sponsor, or may act as depository for, trustee or agent for, or
act on any committee or body of holders of, securities or other obligations of
the Sponsor or its Affiliates.
ARTICLE XI
ACCOUNTING
SECTION 11.1 Fiscal Year.
The fiscal year ("Fiscal Year") of the Trust shall be the calendar
year, or such other year as is required by the Code.
SECTION 11.2 Certain Accounting Matters.
(a) At all times during the existence of the Trust, the Regular
Trustees shall keep, or cause to be kept, full books of account, records and
supporting documents, which shall reflect in reasonable detail, each transaction
of the Trust. The books of account shall be maintained on the accrual method of
accounting, in accordance with generally accepted accounting principles. The
Trust shall use the accrual method of accounting for United States federal
income tax purposes. The books of account and the records of the Trust shall be
examined by and reported upon as of the end of each Fiscal Year of the Trust by
a firm of independent certified public accountants selected by the Regular
Trustees.
(b) The Regular Trustees shall cause to be duly prepared and delivered
to each of the Holders of Securities, any annual United States federal income
tax information statement, required by the Code, containing such information
with regard to the Securities held by each
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Holder as is required by the Code and the Treasury Regulations. Notwithstanding
any right under the Code to deliver any such statement at a later date, the
Regular Trustees shall endeavor to deliver all such statements within 30 days
after the end of each Fiscal Year of the Trust.
(c) The Regular Trustees shall cause to be duly prepared and filed with
the appropriate taxing authority, an annual United States federal income tax
return, on a Form 1041 or such other form required by United States federal
income tax law, and any other annual income tax returns required to be filed by
the Regular Trustees on behalf of the Trust with any state or local taxing
authority.
SECTION 11.3 Banking.
The Trust shall maintain one or more bank accounts in the name and for
the sole benefit of the Trust; provided, however, that all payments of funds in
respect of the Debentures held by the Property Trustee shall be made directly to
the Property Trustee Account and no other funds of the Trust shall be deposited
in the Property Trustee Account. The sole signatories for such accounts shall be
designated by the Regular Trustees; provided, however, that the Property Trustee
shall designate the signatories for the Property Trustee Account.
SECTION 11.4 Withholding.
The Trust and the Regular Trustees shall comply with all withholding
requirements under United States federal, state and local law. The Trust shall
request, and the Holders shall provide to the Trust, such forms or certificates
as are necessary to establish an exemption from withholding with respect to each
Holder, and any representations and forms as shall reasonably be requested by
the Trust to assist it in determining the extent of, and in fulfilling, its
withholding obligations. The Regular Trustees shall file required forms with
applicable jurisdictions and, unless an exemption from withholding is properly
established by a Holder, shall remit amounts withheld with respect to the Holder
to applicable jurisdictions. To the extent that the Trust is required to
withhold and pay over any amounts to any authority with respect to distributions
or allocations to any Holder, the amount withheld shall be deemed to be a
distribution in the amount of the withholding to the Holder. In the event of any
claim over withholding, Holders shall be limited to an action against the
applicable jurisdiction. If the amount required to be withheld was not withheld
from actual Distributions made, the Trust may reduce subsequent Distributions by
the amount of such withholding. To the extent the Property Trustee performs the
functions provided for in this section, the Regular Trustees shall direct the
Property Trustee in carrying out such functions.
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ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments.
(a) Except as otherwise provided in this Declaration or by any
applicable terms of the Securities, this Declaration may only be
amended by:
(i) a written instrument approved and executed by the Regular Trustees
(or, if there are more than two Regular Trustees, a majority of the
Regular Trustees);
(ii) the Property Trustee if the amendment affects the rights, powers,
duties, obligations or immunities of the Property Trustee; and
(iii) the Delaware Trustee if the amendment affects the rights, powers,
duties, obligations or immunities of the Delaware Trustee;
(b) no amendment shall be made, and any such purported amendment shall
be void and ineffective:
(i) unless, in the case of any proposed amendment, the Property Trustee
shall have first received an Officers' Certificate from each of the
Trust and the Sponsor that such amendment is permitted by, and conforms
to, the terms of this Declaration (including the terms of the
Securities);
(ii) unless, in the case of any proposed amendment which affects the
rights, powers, duties, obligations or immunities of the Property
Trustee, the Property Trustee shall have first received:
(A) an Officers' Certificate from each of the Trust and the
Sponsor that such amendment is permitted by, and conforms to,
the terms of this Declaration (including the terms of the
Securities); and
(B) an opinion of counsel (who may be counsel to the Sponsor
or the Trust) that such amendment is permitted by, and
conforms to, the terms of this Declaration (including the
terms of the Securities); and
(iii) to the extent the result of such amendment would be to:
(A) cause the Trust to fail to continue to be classified for
purposes of United States federal income taxation as a grantor
trust;
(B) reduce or otherwise adversely affect the powers of the
Property Trustee in contravention of the Trust Indenture Act;
or
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(C) cause the Trust to be deemed to be an Investment Company
required to be registered under the Investment Company Act;
(c) at such time after the Trust has issued any Securities that remain
outstanding, any amendment that would adversely affect the rights, privileges or
preferences of any Holder of Securities may be effected only with such
additional requirements as may be set forth in the terms of such Securities;
(d) Section 9.1(c) and this Section 12.1 shall not be amended without
the consent of all of the Holders of the Securities;
(e) Article IV shall not be amended without the consent of the Holders
of a Majority in Liquidation Amount of the Common Securities;
(f) the rights of the Holders of the Common Securities under Article V
to increase or decrease the number of, and appoint and remove Trustees shall not
be amended without the consent of the Holders of a Majority in Liquidation
Amount of the Common Securities; and
(g) notwithstanding Section 12.1(c), this Declaration may be amended
without the consent of the Holders of the Securities to:
(i) cure any ambiguity;
(ii) correct or supplement any provision in this Declaration that may
be defective or inconsistent with any other provision of this
Declaration;
(iii) add to the covenants, restrictions or obligations of the Sponsor;
(iv) to conform to any change in Rule 3a-5 or written change in
interpretation or application of Rule 3a-5 by any legislative body,
court, government agency or regulatory authority which amendment does
not have a material adverse effect on the rights, preferences or
privileges of the Holders; and
(v) to modify, eliminate and add to any provision of this Declaration,
provided such modification, elimination or addition would not adversely
affect the rights, privileges or preferences of any Holder of the
Securities.
SECTION 12.2 Meetings of the Holders of Securities; Action by Written Consent.
(a) Meetings of the Holders of any class of Securities may be called at
any time by the Regular Trustees (or as provided in the terms of the Securities)
to consider and act on any matter on which Holders of such class of Securities
are entitled to act under the terms of this Declaration, the terms of the
Securities or the rules of any stock exchange on which the Capital Securities
are listed or admitted for trading. The Regular Trustees shall call a meeting of
the
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Holders of such class if directed to do so by the Holders of at least 10% in
Liquidation Amount of such class of Securities. Such direction shall be given by
delivering to the Regular Trustees one or more calls in a writing stating that
the signing Holders of Securities wish to call a meeting and indicating the
general or specific purpose for which the meeting is to be called. Any Holders
of Securities calling a meeting shall specify in writing the Certificates held
by the Holders of Securities exercising the right to call a meeting and only
those Securities specified shall be counted for purposes of determining whether
the required percentage set forth in the second sentence of this paragraph has
been met.
(b) Except to the extent otherwise provided in the terms of the
Securities, the following provisions shall apply to meetings of Holders of
Securities:
(i) notice of any such meeting shall be given to all the Holders of
Securities having a right to vote thereat at least 7 days and not more
than 60 days before the date of such meeting. Whenever a vote, consent
or approval of the Holders of Securities is permitted or required under
this Declaration or the rules of any stock exchange on which the
Capital Securities are listed or admitted for trading, such vote,
consent or approval may be given at a meeting of the Holders of
Securities. Any action that may be taken at a meeting of the Holders of
Securities may be taken without a meeting if a consent in writing
setting forth the action so taken is signed by the Holders of
Securities owning not less than the minimum amount of Securities in
liquidation amount that would be necessary to authorize or take such
action at a meeting at which all Holders of Securities having a right
to vote thereon were present and voting. Prompt notice of the taking of
action without a meeting shall be given to the Holders of Securities
entitled to vote who have not consented in writing. The Regular
Trustees may specify that any written ballot submitted to the Security
Holders for the purpose of taking any action without a meeting shall be
returned to the Trust within the time specified by the Regular
Trustees;
(ii) each Holder of a Security may authorize any Person to act for it
by proxy on all matters in which a Holder of Securities is entitled to
participate, including waiving notice of any meeting, or voting or
participating at a meeting. No proxy shall be valid after the
expiration of 11 months from the date thereof unless otherwise provided
in the proxy. Every proxy shall be revocable at the pleasure of the
Holder of Securities executing such proxy. Except as otherwise provided
herein, all matters relating to the giving, voting or validity of
proxies shall be governed by the General Corporation Law of the State
of Delaware relating to proxies, and judicial interpretations
thereunder, as if the Trust were a Delaware corporation and the Holders
of the Securities were stockholders of a Delaware corporation;
(iii) each meeting of the Holders of the Securities shall be conducted
by the Regular Trustees or by such other Person that the Regular
Trustees may designate; and
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(iv) unless the Business Trust Act, this Declaration, the terms of the
Securities, the Trust Indenture Act or the listing rules of any stock
exchange on which the Capital Securities are then listed for trading,
otherwise provides, the Regular Trustees, in their sole discretion,
shall establish all other provisions relating to meetings of Holders of
Securities, including notice of the time, place or purpose of any
meeting at which any matter is to be voted on by any Holders of
Securities, waiver of any such notice, action by consent without a
meeting, the establishment of a record date, quorum requirements,
voting in person or by proxy or any other matter with respect to the
exercise of any such right to vote.
ARTICLE XIII
REPRESENTATIONS OF PROPERTY TRUSTEE
AND DELAWARE TRUSTEE
SECTION 13.1 Representations and Warranties of the Property Trustee.
The Trustee that acts as initial Property Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Property Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Property Trustee's acceptance of its
appointment as Property Trustee that:
(a) the Property Trustee is a corporation or national banking
association, duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or
organization, with trust power and authority to execute and deliver,
and to carry out and perform its obligations under the terms of, this
Declaration;
(b) the Property Trustee satisfies the requirements set forth in
Section 5.3(a);
(c) the execution, delivery and performance by the Property Trustee of
this Declaration has been duly authorized by all necessary corporate
action on the part of the Property Trustee. This Declaration has been
duly executed and delivered by the Property Trustee, and it constitutes
a legal, valid and binding obligation of the Property Trustee,
enforceable against it in accordance with its terms, subject to
applicable bankruptcy, reorganization, moratorium, insolvency and other
similar laws affecting creditors' rights generally and to general
principles of equity and the discretion of the court (regardless of
whether the enforcement of such remedies is considered in a proceeding
in equity or at law);
(d) the execution, delivery and performance of this Declaration by the
Property Trustee does not conflict with or constitute a breach of the
articles of association or incorporation, as the case may be, or the
by-laws (or other similar organizational documents) of the Property
Trustee;
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(e) no consent, approval or authorization of, or registration with or
notice to, any Federal banking authority is required for the execution,
delivery or performance by the Property Trustee of this Declaration;
and
(f) the Property Trustee, pursuant to this Declaration, shall hold
legal title in the Debentures which are registered in the name of the
Property Trustee for the benefit of the Trust.
SECTION 13.2 Representations and Warranties of the Delaware Trustee.
The Trustee that acts as initial Delaware Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Delaware Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Delaware Trustee's acceptance of its
appointment as Delaware Trustee that:
(a) the Delaware Trustee satisfies the requirements set forth in
Section 5.2 and has the power and authority to execute and deliver, and
to carry out and perform its obligations under the terms of, this
Declaration and, if it is not a natural person, is duly organized,
validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization;
(b) the Delaware Trustee has been authorized to perform its obligations
under the Certificate of Trust and this Declaration. This Declaration
under Delaware law constitutes a legal, valid and binding obligation of
the Delaware Trustee, enforceable against it in accordance with its
terms, subject to applicable bankruptcy, reorganization, moratorium,
insolvency and other similar laws affecting creditors' rights generally
and to general principles of equity and the discretion of the court
(regardless of whether the enforcement of such remedies is considered
in a proceeding in equity or at law); and
(c) no consent, approval or authorization of, or registration with or
notice to, any State or Federal banking authority is required for the
execution, delivery or performance by the Delaware Trustee of this
Declaration.
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1 Notices.
All notices provided for in this Declaration shall be in writing, duly
signed by the party giving such notice, and shall be delivered, telecopied or
mailed by registered or certified mail, as follows:
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(a) if given to the Trust, in care of the Regular Trustees at the
Trust's mailing address set forth below (or such other address as the
Trust may give notice of to the Property Trustee, the Delaware Trustee
and the Holders of the Securities):
11825 North Pennsylvania Street
Carmel, Indiana 46032
Attention: Lawrence W. Inlow, Esq.
(b) if given to the Delaware Trustee, at the mailing address set forth
below (or such other address as Delaware Trustee may give notice of to
the Regular Trustees, the Property Trustee and the Holders of the
Securities):
First Union Bank of Delaware
One Rodney Square
1st Floor
920 King Street
Wilmington, Delaware 19801
Attention: Corporate Trust Administration
(c) if given to the Property Trustee, at its Corporate Trust Office (or
such other address as the Property Trustee may give notice of to the
Regular Trustees, the Delaware Trustee and the Holders of the
Securities):
Fleet National Bank
Corporate Trust Administration
777 Main Street
Hartford, Connecticut 06115
Attention: Michael Hopkins
(d) if given to the Holder of the Common Securities, at the mailing
address of the Sponsor set forth below (or such other address as the
Holder of the Common Securities may give notice of to the Property
Trustee, the Delaware Trustee and the Trust):
Conseco, Inc.
11825 North Pennsylvania Street
Carmel, Indiana 46032
Attention: Lawrence W. Inlow, Esq.
(e) if given to any other Holder, at the address set forth on the books
and records of the Trust.
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All such notices shall be deemed to have been given when received in person,
telecopied with receipt confirmed or mailed by first class mail, postage prepaid
except that if a notice or other document is refused delivery or cannot be
delivered because of a changed address of which no notice was given, such notice
or other document shall be deemed to have been delivered on the date of such
refusal or inability to deliver.
SECTION 14.2 Governing Law.
This Declaration and the rights of the parties hereunder shall be
governed by and interpreted in accordance with the laws of the State of Delaware
and all rights and remedies shall be governed by such laws without regard to
principles of conflict of laws.
SECTION 14.3 Intention of the Parties.
It is the intention of the parties hereto that the Trust be classified
for United States federal income tax purposes as a grantor trust. The provisions
of this Declaration shall be interpreted to further this intention of the
parties.
SECTION 14.4 Headings.
Headings contained in this Declaration are inserted for convenience of
reference only and do not affect the interpretation of this Declaration or any
provision hereof.
SECTION 14.5 Successors and Assigns.
Whenever in this Declaration any of the parties hereto is named or
referred to, the successors and assigns of such party shall be deemed to be
included, and all covenants and agreements in this Declaration by the Sponsor
and the Trustees shall bind and inure to the benefit of their respective
successors and assigns, whether so expressed.
SECTION 14.6 Partial Enforceability.
If any provision of this Declaration, or the application of such
provision to any Person or circumstance, shall be held invalid, the remainder of
this Declaration, or the application of such provision to persons or
circumstances other than those to which it is held invalid, shall not be
affected thereby.
SECTION 14.7 Counterparts.
This Declaration may contain more than one counterpart of the signature
page and this Declaration may be executed by the affixing of the signature of
each of the Trustees to one of such counterpart signature pages. All of such
counterpart signature pages shall be read as though one, and they shall have the
same force and effect as though all of the signers had signed a single signature
page.
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IN WITNESS WHEREOF, the undersigned have caused these presents to be
executed as of the day and year first above written.
CONSECO INC, as Sponsor and Debenture Issuer
By: /s/ ROLLIN M. DICK
-----------------------------------
Name: Rollin M. Dick
Title: Executive Vice President and Chief
Financial Officer
FLEET NATIONAL BANK, as Property Trustee
By: /s/ MICHAEL M. HOPKINS
--------------------------
Name: Michael M. Hopkins
Title: Vice President
FIRST UNION BANK OF DELAWARE, as
Delaware Trustee
By: /s/ STEPHEN J. KABA
-----------------------------
Name: Stephen J. Kaba
Title: Vice President
/s/ ROLLIN M. DICK
---------------------------------
Rollin M. Dick, as Regular Trustee
/s/ STEPHEN C. HILBERT
--------------------------------------
Stephen C. Hilbert, as Regular Trustee
/s/ LAWRENCE W. INLOW
--------------------------------------
Lawrence W. Inlow, as Regular Trustee
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ANNEX I
TERMS OF
8.70% CAPITAL TRUST PASS-THROUGH SECURITIES
8.70% TRUST COMMON SECURITIES
Pursuant to Section 7.1 of the Amended and Restated
Declaration of Trust, dated as of November 22, 1996 (as amended from time to
time, the "Declaration"), the designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Capital Securities are set
forth below (each capitalized term used but not defined herein having the
meaning set forth in the Declaration or, if not defined in the Declaration, as
defined in the Prospectus referred to below):
1. Designation and Number.
(a) PREFERRED SECURITIES. 325,000 Preferred Securities of the Trust
with an aggregate liquidation amount with respect to the assets of the Trust of
Three Hundred Twenty-Five Million Dollars ($325,000,000) and a liquidation
amount with respect to the assets of the Trust of $1,000 per Capital Security,
are hereby designated for the purposes of identification only as "8.70% Capital
Trust Pass-through Securities(sm) (TruPS(sm))" (the "Capital Securities"). The
Capital Security Certificates evidencing the Capital Securities shall be
substantially in the form of Exhibit A-1 to the Declaration, with such changes
and additions thereto or deletions therefrom as may be required by ordinary
usage, custom or practice or to conform to the rules of any stock exchange on
which the Capital Securities are listed.
(b) COMMON SECURITIES. Common Securities of the Trust with an aggregate
liquidation amount with respect to the assets of the Trust of Ten Million One
Hundred Thousand Dollars ($10,100,000) and a liquidation amount with respect to
the assets of the Trust of $1,000 per Common Security, are hereby designated for
the purposes of identification only as "8.70% Trust Common Securities" (the
"Common Securities"). The Common Security Certificates evidencing the Common
Securities shall be substantially in the form of Exhibit A-2 to the Declaration,
with such changes and additions thereto or deletions therefrom as may be
required by ordinary usage, custom or practice.
2. Distributions.
(a) Distributions payable on each Security will be fixed at a rate per
annum of 8.70% (the "Coupon Rate") of the stated liquidation amount of $1,000
per Security, such rate being the rate of interest payable on the Debentures to
be held by the Property Trustee. Distributions in arrears for more than one
semiannual period will bear interest thereon from and including the last day of
such semiannual period at the Coupon Rate compounded semiannually (to the extent
permitted by applicable law). The term "Distributions" as used herein includes
such cash distributions and any such interest payable unless otherwise stated. A
Distribution is payable only to the extent that payments are made in respect of
the Debentures held by the Property Trustee and to the extent the Property
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Trustee has funds available therefor. The amount of Distributions payable for
any period will be computed for any full semiannual Distribution period on the
basis of a 360-day year of twelve 30-day months, and for any period shorter than
a full semiannual Distribution period for which Distributions are computed,
Distributions will be computed on the basis of the actual number of days elapsed
per 30-day month.
(b) Distributions on the Securities will be cumulative, will accrue
from November 27, 1996, and will be payable semiannually in arrears, on May 15
and November 15 of each year, commencing on May 15, 1997, except as otherwise
described below. The Debenture Issuer has the right under the Indenture to defer
payments of interest on the Debentures by extending the interest payment period
at any time and from time to time for a period not exceeding 10 consecutive
semiannual payments (each an "Extension Period"), during which Extension Period
no interest shall be due and payable on the Debentures, provided that no
Extension Period shall last beyond the date of maturity of the Debentures. As a
consequence of such deferral, Distributions will also be deferred. Despite such
deferral, semiannual Distributions will continue to accrue with interest thereon
(to the extent permitted by applicable law) at the Coupon Rate compounded
semiannually during any such Extension Period. Prior to the termination of any
such Extension Period, the Debenture Issuer may further extend such Extension
Period, provided that such Extension Period together with all such previous and
further extensions thereof may not exceed 10 consecutive semiannual periods and
may not extend beyond the date of maturity of the Debentures. Payments of
deferred Distributions will be payable to Holders of record of the Securities as
they appear on the books and records of the Trust on the record date for
Distributions due at the end of such Extension Period. Upon the termination of
any Extension Period and the payment of all amounts then due, the Debenture
Issuer may commence a new Extension Period, subject to the above requirements.
(c) Distributions on the Securities will be payable to the Holders
thereof as they appear on the books and records of the Trust on the relevant
record dates. While the Capital Securities remain in global form, the relevant
record dates shall be one Business Day prior to the relevant payment dates which
payment dates correspond to the interest payment dates on the Debentures.
Subject to any applicable laws and regulations and the provisions of the
Declaration, each such payment in respect of the Capital Securities will be made
as described under the heading "Description of the Capital Securities --
Book-Entry Issuance -- The Depository Trust Company" in the Prospectus
Supplement dated November 22, 1996, to the Prospectus dated November 12, 1996
(together, the "Prospectus") included in the Registration Statement on Form S-3
of the Sponsor and the Trust. The relevant record dates for the Common
Securities shall be the same record date as for the Capital Securities. If the
Capital Securities shall not continue to remain in global form, the relevant
record dates for the Capital Securities shall conform to the rules of any
securities exchange on which the Capital Securities are listed and, if none,
shall be selected by the Regular Trustees, which dates shall be at least one
Business Day but less than 60 Business Days before the relevant payment dates,
which payment dates correspond to the interest payment dates on the Debentures.
Distributions payable on any Securities that are not punctually paid on any
Distribution payment date, as a result of the Debenture Issuer having failed to
make a payment under the Debentures, will cease to be payable to the Person in
whose name such Securities are registered on the relevant record date, and such
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defaulted Distribution will instead be payable to the Person in whose name such
Securities are registered on the special record date or other specified date
determined in accordance with the Indenture. If any date on which Distributions
are payable on the Securities is not a Business Day, then payment of the
Distribution payable on such date will be made on the next succeeding day that
is a Business Day (and without any interest or other payment in respect of any
such delay) except that, if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date.
(d) In the event that there is any money or other property held by or
for the Trust that is not accounted for hereunder, such property shall be
distributed Pro Rata (as defined herein) among the Holders of the Securities.
3. Liquidation Distribution Upon Dissolution.
(a) In the event of any voluntary or involuntary liquidation,
dissolution, winding-up or termination of the Trust, the Holders of the
Securities on the date of the liquidation, dissolution, winding-up or
termination, as the case may be, will be entitled to receive solely out of the
assets of the Trust available for distribution to Holders of Securities, after
satisfaction of liabilities of creditors, an amount equal to the aggregate of
the stated liquidation amount of $1,000 per Security plus any additional amount
payable upon redemption of the Debentures as a result of the Make-Whole Premium,
as provided for in the Indenture, and in all cases accrued and unpaid
Distributions thereon to the date of payment (such amount being the "Liquidation
Distribution"), unless, in connection with such liquidation, dissolution,
winding-up or termination, Debentures in an aggregate principal amount equal to
the aggregate stated liquidation amount of such Securities, with an interest
rate equal to the Coupon Rate of, and bearing accrued and unpaid interest in an
amount equal to the accrued and unpaid Distributions on, such Securities, shall
be distributed on a Pro Rata basis to the Holders of the Securities in exchange
for such Securities in accordance with Section 4(e) hereof.
(b) If, upon any such dissolution, the Liquidation Distribution can be
paid only in part because the Trust has insufficient assets available to pay in
full the aggregate Liquidation Distribution, then the amounts payable directly
by the Trust on the Securities shall be paid on a Pro Rata basis.
4. Redemption and Distribution.
(a) Upon the repayment of the Debentures in whole or in part, whether
at maturity or upon redemption (such redemption being either at any time and
from time to time at the option of the Debenture Issuer or at the option of the
Debenture Issuer in connection with the occurrence of a Tax Event as described
below), the proceeds from such repayment or redemption shall be simultaneously
applied to redeem Securities having an aggregate liquidation amount equal to the
aggregate principal amount of the Debentures so repaid or redeemed at a
redemption price per Security of $1,000 plus any additional amount payable upon
redemption of the Debentures as a result of the Make-Whole Premium as provided
for in the Indenture and in all cases an amount equal to accrued and unpaid
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Distributions thereon at the date of the redemption, payable in cash (the
"Redemption Price"). Holders will be given not less than 30 nor more than 60
days notice of such redemption.
(b) If fewer than all the outstanding Securities are to be so redeemed,
the Common Securities and the Capital Securities will be redeemed Pro Rata and
the Capital Securities to be redeemed will be as described in Section 4(f)(ii)
below.
(c) If, at any time, a Tax Event (as defined below) shall occur and be
continuing the Regular Trustees shall, except in certain limited circumstances
described in this Section 4(c), dissolve the Trust and, after satisfaction of
creditors, cause Debentures held by the Property Trustee, having an aggregate
principal amount equal to the aggregate stated liquidation amount of, with an
interest rate identical to the Coupon Rate of, and accrued and unpaid interest
equal to accrued and unpaid Distributions on, and having the same record date
for payment as the Securities, to be distributed to the Holders of the
Securities in liquidation of such Holders' interests in the Trust on a Pro Rata
basis, within 90 days following the occurrence of a Tax Event (the "90 Day
Period"); provided, however, that, as a condition of such dissolution and
distribution, the Regular Trustees shall have received an opinion of a
nationally recognized independent tax counsel experienced in such matters (a "No
Recognition Opinion"), which opinion may rely on published revenue rulings of
the Internal Revenue Service, to the effect that the Holders of the Securities
will not recognize any gain or loss for United States federal income tax
purposes as a result of the dissolution of the Trust and the distribution of
Debentures, and provided, further, that if at the time there is available to the
Trust the opportunity to eliminate, within the 90 Day Period, the Tax Event by
taking some ministerial action, such as filing a form or making an election, or
pursuing some other similar reasonable measure that has no adverse effect on the
Trust, the Debenture Issuer, the Sponsor or the Holders of the Securities
("Ministerial Action"), the Trust will pursue such Ministerial Action in lieu of
dissolution.
If, however, a Tax Event shall occur and be continuing after receipt of
a Dissolution Opinion (as defined herein) by the Regular Trustees and the
Debenture Issuer has received an opinion (a "Redemption Tax Opinion") of a
nationally recognized independent tax counsel experienced in such matters that,
as a result of the Tax Event, there is more than an insubstantial risk that the
Debenture Issuer would be precluded from deducting the interest on the
Debentures for United States federal income tax purposes even if the Debentures
were distributed to the Holders of Securities in liquidation of such Holders'
interests in the Trust as described in this Section 4(c), or the Regular
Trustees shall have been informed by such tax counsel that a No Recognition
Opinion cannot be delivered to the Trust, the Debenture Issuer shall have the
right at any time, upon not less than 30 nor more than 60 days notice, to redeem
the Debentures in whole or in part for cash within 90 days following the
occurrence of such Tax Event, and, following such redemption, Securities with an
aggregate liquidation amount equal to the aggregate principal amount of the
Debentures so redeemed shall be redeemed by the Trust at the Redemption Price on
a Pro Rata basis; provided, however, that, if at the time there is available to
the Trust the opportunity to eliminate, within such 90 day period, the Tax Event
by taking some Ministerial Action, the Trust or the Debenture Issuer will pursue
such Ministerial Action in lieu of redemption.
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"Tax Event" means that the Regular Trustees shall have received an
opinion of an independent tax counsel experienced in such matters (a
"Dissolution Opinion") to the effect that, as a result of (i) any amendment to,
or change (including any announced prospective change) in, the laws (or any
regulations thereunder) of the United States or any political subdivision or
taxing authority thereof or therein, or (ii) any official administrative
pronouncement or judicial decision interpreting or applying such laws or
regulations, which amendment or change is effective or such pronouncement or
decision is announced on or after the date of original issuance of the Capital
Securities, there is more than an insubstantial risk that (A) the Trust is, or
will be within 90 days after the date thereof, subject to United States federal
income tax with respect to interest accrued or received on the Debentures, (B)
the Trust is, or will be within 90 days after the date thereof, subject to more
than a de minimis amount of taxes, duties or other governmental charges, or (C)
interest payable by the Debenture Issuer to the Trust on the Debentures is not,
or within 90 days of the date thereof, will not be deductible, in whole or in
part, by the Debenture Issuer for United States federal income tax purposes.
(d) The Trust may not redeem fewer than all the outstanding Securities
unless all accrued and unpaid Distributions have been paid on all Securities for
all semiannual Distribution periods terminating on or before the date of
redemption.
(e) In the event that the Sponsor makes the election referred to in
Section 8.1(a)(v) of the Declaration, the Regular Trustees shall dissolve the
Trust and, after satisfaction of creditors, cause Debentures, held by the
Property Trustee, having an aggregate principal amount equal to the aggregate
stated liquidation amount of, with an interest rate identical to the Coupon Rate
of, and accrued and unpaid interest equal to accrued and unpaid Distributions on
and having the same record date for payment, as the Securities, to be
distributed to the Holders of the Securities in liquidation of such Holders'
interests in the Trust on a Pro Rata basis in accordance with Section 8 hereof.
On and from the date fixed by the Regular Trustees for any distribution of
Debentures and dissolution of the Trust: (i) the Securities will no longer be
deemed to be outstanding, and (ii) the Clearing Agency or its nominee (or any
successor Clearing Agency or its nominee) will receive one or more global
certificate or certificates representing the Debentures to be delivered upon
such distribution, and having an aggregate principal amount equal to the
aggregated stated liquidation amount of, with an interest rate identical to the
Coupon Rate of, and accrued and unpaid interest equal to accrued and unpaid
Distributions on such Securities. Any certificates representing Securities,
except for certificates representing Capital Securities held by the Clearing
Agency or its nominee (or any successor Clearing Agency or its nominee), will be
deemed to represent beneficial interests in the Debentures having an aggregate
principal amount equal to the aggregated stated liquidation amount of, with an
interest rate identical to the Coupon Rate of, and accrued and unpaid interest
equal to accrued and unpaid Distributions on such Securities until such
certificates are presented to the Debenture Issuer or its agent for transfer or
reissue.
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(f) Redemption or Distribution Procedures.
(i) Notice of any redemption of, or notice of distribution of
Debentures in exchange for the Securities (a "Redemption/Distribution Notice")
will be given by the Trust by mail to each Holder of Securities to be redeemed
or exchanged not fewer than 30 nor more than 60 days before the date fixed for
redemption or exchange thereof which, in the case of a redemption, will be the
date fixed for redemption of the Debentures. For purposes of the calculation of
the date of redemption or exchange and the dates on which notices are given
pursuant to this Section 4(f)(i), a Redemption/Distribution Notice shall be
deemed to be given on the day such notice is first mailed by first-class mail,
postage prepaid, to Holders of Securities. Each Redemption/Distribution Notice
shall be addressed to the Holders of Securities at the address of each such
Holder appearing in the books and records of the Trust. No defect in the
Redemption/Distribution Notice or in the mailing of either thereof with respect
to any Holder shall affect the validity of the redemption or exchange
proceedings with respect to any other Holder.
(ii) In the event that fewer than all the outstanding Securities are to
be redeemed, the Securities to be redeemed shall be redeemed Pro Rata from each
Holder of Capital Securities, it being understood that, in respect of Capital
Securities registered in the name of and held of record by the Clearing Agency
or its nominee (or any successor Clearing Agency or its nominee), the
distribution of the proceeds of such redemption will be made to each Clearing
Agency Participant (or Person on whose behalf such nominee holds such
securities) in accordance with the procedures applied by such agency or nominee.
(iii) If Securities are to be redeemed and the Trust gives a
Redemption/Distribution Notice (which notice will be irrevocable), then (A)
while the Capital Securities are in global form, with respect to the Capital
Securities, by 12:00 noon, New York City time, on the redemption date, provided
that the Debenture Issuer has paid the Property Trustee a sufficient amount of
cash in connection with the related redemption or maturity of the Debentures,
the Property Trustee will deposit irrevocably with the Clearing Agency or its
nominee (or successor Clearing Agency or its nominee) funds sufficient to pay
the applicable Redemption Price with respect to the Capital Securities and will
give the Clearing Agency irrevocable instructions and authority to pay the
Redemption Price to the Holders of the Capital Securities, and (B) with respect
to Capital Securities issued in definitive form and Common Securities, provided
that the Debenture Issuer has paid the Property Trustee a sufficient amount of
cash in connection with the related redemption or maturity of the Debentures,
the Property Trustee will pay the relevant Redemption Price to the Holders of
such Securities by check mailed to the address of the relevant Holder appearing
on the books and records of the Trust on the redemption date. If a
Redemption/Distribution Notice shall have been given and funds deposited as
required, then immediately prior to the close of business on the date of such
deposit, Distributions will cease to accrue on the Securities so called for
redemption and all rights of Holders of such Securities so called for redemption
will cease, except the right of the Holders of such Securities to receive the
Redemption Price, but without interest on such Redemption Price. Neither the
Regular Trustees nor the Trust shall be required to register or cause to be
registered the transfer of any Securities that have been so called for
redemption. If any date fixed for
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redemption of Securities is not a Business Day, then payment of the Redemption
Price payable on such date will be made on the next succeeding day that is a
Business Day (and without any interest or other payment in respect of any such
delay) except that, if such Business Day falls in the next calendar year, such
payment will be made on the immediately preceding Business Day, in each case
with the same force and effect as if made on such date fixed for redemption. If
the Debenture Issuer fails to repay the Debentures on the date of redemption or
on maturity or if payment of the Redemption Price in respect of any Securities
is improperly withheld or refused and not paid either by the Property Trustee or
by the Sponsor as guarantor pursuant to the relevant Securities Guarantee,
Distributions on such Securities will continue to accrue at the then applicable
rate from the original redemption date to the actual date of payment, in which
case the actual payment date will be considered the date fixed for redemption
for purposes of calculating the Redemption Price.
(iv) Redemption/Distribution Notices shall be sent by the Regular
Trustees on behalf of the Trust to (A) in respect of the Capital Securities, the
Clearing Agency or its nominee (or any successor Clearing Agency or its nominee)
if the Global Certificates have been issued or, if Definitive Capital Security
Certificates have been issued, to the Holder thereof, and (B) in respect of the
Common Securities to the Holder thereof.
(v) Subject to the foregoing and applicable law (including, without
limitation, United States federal securities laws), the Sponsor or any of its
subsidiaries may at any time and from time to time purchase outstanding Capital
Securities by tender, in the open market or by private agreement.
5. Voting Rights - Capital Securities.
(a) Except as provided under Sections 5(b) and 7 and as otherwise
required by law and the Declaration, the Holders of the Capital Securities will
have no voting rights.
(b) Subject to the requirements set forth in this paragraph, the
Holders of a Majority in Liquidation Amount of the Capital Securities, voting
separately as a class, may direct the time, method and place of conducting any
proceeding for any remedy available to the Property Trustee, or direct the
exercise of any trust or power conferred upon the Property Trustee under the
Declaration, including the right to direct the Property Trustee, as Holder of
the Debentures, to (i) exercise the remedies available under the Indenture with
respect to the Debentures, (ii) waive any past default and its consequences that
is waivable under the Indenture, or (iii) exercise any right to rescind or annul
a declaration that the principal of all the Debentures shall be due and payable,
or consent to any amendment, modification or termination of the Indenture or the
Debentures, where such consent would be required; provided that where a consent
or action under the Indenture would require the consent or act of the Holders of
greater than a majority in principal amount of Debentures affected thereby (a
"Super Majority"), the Property Trustee may only give such consent or take such
action at the written direction of the Holders of at least the proportion in
liquidation amount of the Capital Securities which the relevant Super Majority
represents of the aggregate principal amount of the Debentures outstanding. The
Property Trustee shall not revoke any action previously authorized or approved
by a vote of the Holders of the Capital Securities. Other than with respect to
directing the
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time, method and place of conducting a proceeding for any remedy available to
the Property Trustee or the Debenture Trustee as set forth above, the Property
Trustee shall not take any action in accordance with the directions of the
Holders of the Capital Securities under this paragraph unless the Property
Trustee has obtained an opinion of tax counsel to the effect that for the
purposes of United States federal income tax the Trust will not be classified as
other than a grantor trust on account of such action. If the Property Trustee
fails to enforce its rights with respect to the Debentures held by the Trust,
any Holder of Capital Securities may, to the extent permitted by applicable law,
institute legal proceedings directly against the Debenture Issuer to enforce the
Property Trustee's rights under the Debentures without first instituting any
legal proceedings against the Property Trustee or any other person or entity.
Notwithstanding the foregoing, if an Event of Default under the Declaration has
occurred and is continuing and such event is attributable to the failure of the
Debenture Issuer to pay interest or principal on the Debentures issued to the
Trust on the date such interest or principal is otherwise payable, then a Holder
of Capital Securities may institute a proceeding directly against the Debenture
Issuer for enforcement of payment to the Holder of the Capital Securities of the
principal of or interest on the Debentures on or after the respective due dates
specified in the Debentures, and the amount of the payment will be based on the
Holder's pro rata share of the amount due and owing on all of the Capital
Securities.
Any approval or direction of Holders of Capital Securities may be given
at a separate meeting of Holders of Capital Securities convened for such
purpose, at a meeting of all of the Holders of Securities in the Trust or
pursuant to written consent. The Regular Trustees will cause a notice of any
meeting at which Holders of Capital Securities are entitled to vote, or of any
matter upon which action by written consent of such Holders is to be taken, to
be mailed to each Holder of Capital Securities. Each such notice will include a
statement setting forth (i) the date of such meeting or the date by which such
action is to be taken, (ii) a description of any resolution proposed for
adoption at such meeting on which such Holders are entitled to vote or of such
matter upon which written consent is sought and (iii) instructions for the
delivery of proxies or consents.
No vote or consent of the Holders of the Capital Securities will be
required for the Trust to redeem and cancel Capital Securities or to distribute
the Debentures in accordance with the Declaration and the terms of the
Securities.
Notwithstanding that Holders of Capital Securities are entitled to vote
or consent under any of the circumstances described above, any of the Capital
Securities that are owned by the Sponsor or any Affiliate of the Sponsor shall
not be entitled to vote or consent and shall, for purposes of such vote or
consent, be treated as if they were not outstanding.
6. Voting Rights - Common Securities.
(a) Except as provided under Sections 6(b) and (c) and as otherwise
required by law and the Declaration, the Holders of the Common Securities will
have no voting rights.
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(b) The Holders of the Common Securities are entitled, in accordance
with Article V of the Declaration, to vote to appoint, remove or replace any
Trustee or to increase or decrease the number of Trustees.
(c) Subject to Section 2.6 of the Declaration and only after the Event
of Default with respect to the Capital Securities has been cured, waived or
otherwise eliminated and subject to the requirements set forth in this
paragraph, the Holders of a Majority in Liquidation Amount of the Common
Securities, voting separately as a class, may direct the time, method and place
of conducting any proceeding for any remedy available to the Property Trustee,
or direct the exercise of any trust or power conferred upon the Property Trustee
under the Declaration, including the right to direct the Property Trustee, as
Holder of the Debentures, to (i) exercise the remedies available under the
Indenture with respect to the Debentures, (ii) waive any past default and its
consequences that is waivable under the Indenture, or (iii) exercise any right
to rescind or annul a declaration that the principal of all the Debentures shall
be due and payable, or consent to any amendment, modification or termination of
the Indenture or the Debentures, where such consent would be required; provided
that, where a consent or action under the Indenture would require the consent or
act of a Super Majority of the Holders of the Debentures affected thereby, the
Property Trustee may only give such consent or take such action at the written
direction of the Holders of at least the proportion in liquidation amount of the
Common Securities which the relevant Super Majority represents of the aggregate
principal amount of the Debentures outstanding. The Property Trustee shall not
revoke any action previously authorized or approved by a vote of the Holders of
the Common Securities. Other than with respect to directing the time, method and
place of conducting a proceeding for any remedy available to the Property
Trustee or the Debenture Trustee as set forth above, the Property Trustee shall
not take any action in accordance with the directions of the Holders of the
Common Securities under this paragraph unless the Property Trustee has obtained
an opinion of tax counsel to the effect that for the purposes of United States
federal income tax the Trust will not be classified as other than a grantor
trust on account of such action. If the Property Trustee fails to enforce its
rights with respect to the Debentures held by the Trust, any Holder of Common
Securities may, to the extent permitted by applicable law, institute legal
proceedings directly against the Debenture Issuer to enforce the Property
Trustee's rights under the Debentures without first instituting any legal
proceedings against the Property Trustee or any other person or entity.
Notwithstanding the foregoing, if an Event of Default under the Declaration has
occurred and is continuing and such event is attributable to the failure of the
Debenture Issuer to pay interest or principal on the Debentures issued to the
Trust on the date such interest or principal is otherwise payable, then a Holder
of Common Securities may institute a proceeding directly against the Debenture
Issuer for enforcement of payment to the Holder of the Common Securities of the
principal of or interest on the Debentures on or after the respective due dates
specified in the Debentures, and the amount of the payment will be based on the
Holder's pro rata share of the amount due and owing on all of the Common
Securities.
Any approval or direction of Holders of Common Securities may be given at
a separate meeting of Holders of Common Securities convened for such purpose, at
a meeting of all of the Holders of Securities in the Trust or pursuant to
written consent. The Regular Trustees will cause
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a notice of any meeting at which Holders of Common Securities are entitled to
vote, or of any matter upon which action by written consent of such Holders is
to be taken, to be mailed to each Holder of Common Securities. Each such notice
will include a statement setting forth (i) the date of such meeting or the date
by which such action is to be taken, (ii) a description of any resolution
proposed for adoption at such meeting on which such Holders are entitled to vote
or of such matter upon which written consent is sought and (iii) instructions
for the delivery of proxies or consents.
No vote or consent of the Holders of the Common Securities will be
required for the Trust to redeem and cancel Common Securities or to distribute
the Debentures in accordance with the Declaration and the terms of the
Securities.
7. Amendments to Declaration and Indenture.
(a) In addition to any requirements under Section 12.1 of the
Declaration, if any proposed amendment to the Declaration provides for, or the
Regular Trustees otherwise propose to effect, (i) any action that would
adversely affect the powers, preferences or special rights of the Securities,
whether by way of amendment to the Declaration or otherwise, or (ii) the
dissolution, winding-up or termination of the Trust, other than as described in
Section 8.1 of the Declaration, then the Holders of outstanding Securities
voting together as a single class, will be entitled to vote on such amendment or
proposal (but not on any other amendment or proposal) and such amendment or
proposal shall not be effective except with the approval of the Holders of at
least a Majority in Liquidation Amount of the Securities affected thereby,
voting together as a single class; provided, however, if any amendment or
proposal referred to in clause (i) above would adversely affect only the
Preferred Securities or only the Common Securities, then only the affected class
will be entitled to vote on such amendment or proposal and such amendment or
proposal shall not be effective except with the approval of a Majority in
Liquidation Amount of such class of Securities.
(b) In the event the consent of the Property Trustee as the holder of
the Debentures is required under the Indenture with respect to any amendment,
modification or termination of the Indenture or the Debentures, the Property
Trustee shall request the written direction of the Holders of the Securities
with respect to such amendment, modification or termination and shall vote with
respect to such amendment, modification or termination as directed by a Majority
in Liquidation Amount of the Securities voting together as a single class;
provided, however, that where a consent under the Indenture would require the
consent of a Super Majority of the Holders of the Debentures, the Property
Trustee may only give such consent at the direction of the Holders of at least
the proportion in liquidation amount of the Securities which the relevant Super
Majority represents of the aggregate principal amount of the Debentures
outstanding; provided, further, that the Property Trustee shall not take any
action in accordance with the directions of the Holders of the Securities under
this Section 7(b) unless the Property Trustee has obtained an opinion of tax
counsel to the effect that for the purposes of United States federal income tax
the Trust will not be classified as other than a grantor trust on account of
such action.
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8. Pro Rata.
A reference in these terms of the Securities to any payment,
distribution or treatment as being "Pro Rata" shall mean pro rata to each Holder
of Securities according to the aggregate liquidation amount of the Securities
held by the relevant Holder in relation to the aggregate liquidation amount of
all Securities outstanding unless, in relation to a payment, an Event of Default
under the Declaration has occurred and is continuing, in which case any funds
available to make such payment shall be paid first to each Holder of the Capital
Securities pro rata according to the aggregate liquidation amount of Capital
Securities held by the relevant Holder relative to the aggregate liquidation
amount of all Capital Securities outstanding, and only after satisfaction of all
amounts owed to the Holders of the Capital Securities, to each Holder of Common
Securities pro rata according to the aggregate liquidation amount of Common
Securities held by the relevant Holder relative to the aggregate liquidation
amount of all Common Securities outstanding. When the Property Trustee is making
payments on the Securities, it is entitled to assume that no Event of Default
has occurred and is continuing unless the Event of Default is actually known to
a Responsible Officer of the Property Trustee.
9. Ranking.
The Capital Securities rank pari passu and payment thereon shall be
made Pro Rata with the Common Securities except that, where an Event of Default
occurs and is continuing under the Indenture in respect of the Debentures held
by the Property Trustee, the rights of Holders of the Common Securities to
payment in respect of Distributions and payments upon liquidation, redemption
and otherwise are subordinated to the rights to payment of the Holders of the
Capital Securities.
10. Acceptance of Securities Guarantee and Indenture.
Each Holder of Capital Securities and Common Securities, by the
acceptance thereof, agrees to the provisions of the Capital Securities Guarantee
and the Common Securities Guarantee, respectively, including the subordination
provisions therein and to the provisions of the Indenture and the Debentures.
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11. No Preemptive Rights.
The Holders of the Securities shall have no preemptive rights to
subscribe for any additional securities.
12. Miscellaneous.
These terms constitute a part of the Declaration.
The Sponsor will provide a copy of the Declaration, the Capital
Securities Guarantee or the Common Securities Guarantee (as may be appropriate)
and the Indenture to a Holder without charge on written request to the Sponsor
at its principal place of business.
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EXHIBIT A-1
FORM OF PREFERRED SECURITY CERTIFICATE
[IF THE PREFERRED SECURITY IS TO BE A GLOBAL CERTIFICATE
INSERT - This Preferred Security is a Global Certificate within the meaning of
the Declaration hereinafter referred to and is registered in the name of The
Depository Trust Company (the "Depository") or a nominee of the Depository. This
Preferred Security is exchangeable for Preferred Securities registered in the
name of a person other than the Depository or its nominee only in the limited
circumstances described in the Declaration and no transfer of this Preferred
Security (other than a transfer of this Preferred Security as a whole by the
Depository to a nominee of the Depository or by a nominee of the Depository to
the Depository or another nominee of the Depository) may be registered except in
limited circumstances.
Unless this Preferred Security Certificate is presented by an
authorized representative of the Depository to the Trust or its agent for
registration of transfer, exchange or payment, and any Preferred Security
Certificate issued is registered in the name of Cede & Co. or such other name as
requested by an authorized representative of the Depository (and any payment
hereon is made to Cede & Co. or to such other entity as is requested by an
authorized representative of the Depository), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the
registered owner hereof, Cede & Co., has an interest herein.]
Certificate Number Number of Preferred Securities
CUSIP NO.
Certificate Evidencing Preferred Securities
of
CONSECO FINANCING TRUST II
8.70% Capital Trust Pass-through Securities (TruPSSM)
(liquidation amount $1,000 per Security)
CONSECO FINANCING TRUST II, a statutory business trust formed under the
laws of the State of Delaware (the "Trust"), hereby certifies that
_______________________________ (the "Holder") is the registered owner of
preferred securities of the Trust representing undivided beneficial interests in
the assets of the Trust designated the 8.70% Capital Trust Pass-through
Securities (liquidation amount $1,000 per Security) (the "Capital Securities").
The Capital Securities are transferable on the books and records of the Trust,
in person or by a duly authorized attorney, upon surrender of this certificate
duly endorsed and in proper form for transfer. The designation, rights,
privileges, restrictions, preferences and other terms and provisions of the
Capital Securities
A1-1
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represented hereby are issued and shall in all respects be subject to the
provisions of the Amended and Restated Declaration of Trust of the Trust dated
as of November 22, 1996, as the same may be amended from time to time (the
"Declaration"), including the designation of the terms of the Capital Securities
as set forth in Annex I to the Declaration. Capitalized terms used herein but
not defined shall have the meaning given them in the Declaration. The Holder is
entitled to the benefits of the Capital Securities Guarantee to the extent
provided therein. The Sponsor will provide a copy of the Declaration, the
Capital Securities Guarantee and the Indenture to a Holder without charge upon
written request to the Sponsor at its principal place of business.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat, for United States federal
income tax purposes, the Debentures as indebtedness and the Capital Securities
as evidence of indirect beneficial ownership in the Debentures.
IN WITNESS WHEREOF, the Trust has executed this certificate this _____
day of ___________________, 199___.
CONSECO FINANCING TRUST II
By: _________________________________________
Name: ______________________________________
Title: Regular Trustee
A1-2
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[FORM OF REVERSE OF SECURITY]
Distributions payable on each Capital Security will be fixed
at a rate per annum of 8.70% (the "Coupon Rate") of the stated liquidation
amount of $1,000 per Security, such rate being the rate of interest payable on
the Debentures to be held by the Property Trustee. Distributions in arrears for
more than one semiannual period will bear interest thereon compounded
semiannually at the Coupon Rate (to the extent permitted by applicable law). The
term "Distributions" as used herein includes such cash distributions and any
such interest payable unless otherwise stated. A Distribution is payable only to
the extent that payments are made in respect of the Debentures held by the
Property Trustee and to the extent the Property Trustee has funds available
therefor. The amount of Distributions payable for any period will be computed
for any full semiannual Distribution period on the basis of a 360-day year of
twelve 30-day months, and for any period shorter than a full semiannual
Distribution period for which Distributions are computed, Distributions will be
computed on the basis of the actual number of days elapsed per 30-day month.
Except as otherwise described below, distributions on the
Capital Securities will be cumulative, will accrue from the date of original
issuance and will be payable semiannually in arrears, on May 15 and November 15
of each year, commencing on May 15, 1997, which payment dates shall correspond
to the interest payment dates on the Debentures. The Debenture Issuer has the
right under the Indenture to defer payments of interest by extending the
interest payment period from time to time on the Debentures for a period not
exceeding 10 consecutive semiannual periods (each an "Extension Period") and, as
a consequence of such deferral, Distributions will also be deferred. Despite
such deferral, semiannual Distributions will continue to accrue with interest
thereon (to the extent permitted by applicable law) at the Coupon Rate
compounded semiannually during any such Extension Period. Prior to the
termination of any such Extension Period, the Debenture Issuer may further
extend such Extension Period; provided that such Extension Period together with
all such previous and further extensions thereof may not exceed 10 consecutive
semiannual periods. Payments of accrued Distributions will be payable to Holders
as they appear on the books and records of the Trust on the first record date
after the end of the Extension Period. Upon the termination of any Extension
Period and the payment of all amounts then due, the Debenture Issuer may
commence a new Extension Period, subject to the above requirements.
The Capital Securities shall be redeemable as provided in the
Declaration.
A1-3
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred
Security Certificate to:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert assignee's social security or tax identification number)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints
________________________________________________________________________________
________________________________________________________________________________
___________________________________________ agent to transfer this Preferred
Security Certificate on the books of the Trust. The agent may substitute another
to act for him or her.
Date: __________________
Signature: _____________________________
(Sign exactly as your name appears on the other side of this Preferred Security
Certificate)
A1-4
<PAGE>
EXHIBIT A-2
FORM OF COMMON SECURITY CERTIFICATE
Certificate Number Number of Common Securities
Certificate Evidencing Common Securities
of
CONSECO FINANCING TRUST II
8.70% Trust Common Securities
(liquidation amount $1,000 per Common Security)
CONSECO FINANCING TRUST II, a statutory business trust formed
under the laws of the State of Delaware (the "Trust"), hereby certifies that
___________________ (the "Holder") is the registered owner of common securities
of the Trust representing common undivided beneficial interests in the assets of
the Trust designated the 8.70% Trust Common Securities (liquidation amount
$1,000 per Common Security) (the "Common Securities"). The Common Securities are
transferable on the books and records of the Trust, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer. The designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Common Securities represented
hereby are issued and shall in all respects be subject to the provisions of the
Amended and Restated Declaration of Trust of the Trust dated as of November 22,
1996, as the same may be amended from time to time (the "Declaration"),
including the designation of the terms of the Common Securities as set forth in
Annex I to the Declaration. Capitalized terms used herein but not defined shall
have the meaning given them in the Declaration. The Holder is entitled to the
benefits of the Common Securities Guarantee to the extent provided therein. The
Sponsor will provide a copy of the Declaration, the Common Securities Guarantee
and the Indenture to a Holder without charge upon written request to the Sponsor
at its principal place of business.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat, for United States
federal income tax purposes, the Debentures as indebtedness and the Common
Securities as evidence of indirect beneficial ownership in the Debentures.
A2-1
G:\LEGAL\RRD\PUBLOFF\CFTII2AM.DEC
<PAGE>
IN WITNESS WHEREOF, the Trust has executed this certificate this _____
day of ________________, 199___.
CONSECO FINANCING TRUST II
By:_______________________________
Name:_____________________________
Title: Regular Trustee
A2-2
G:\LEGAL\RRD\PUBLOFF\CFTII2AM.DEC
<PAGE>
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Common Security will be fixed at
a rate per annum of 8.70% (the "Coupon Rate") of the stated liquidation amount
of $1,000 per Common Security, such rate being the rate of interest payable on
the Debentures to be held by the Property Trustee. Distributions in arrears for
more than one semiannual period will bear interest thereon compounded
semiannually at the Coupon Rate (to the extent permitted by applicable law). The
term "Distributions" as used herein includes such cash distributions and any
such interest payable unless otherwise stated. A Distribution is payable only to
the extent that payments are made in respect of the Debentures held by the
Property Trustee and to the extent the Property Trustee has funds available
therefor. The amount of Distributions payable for any period will be computed
for any full quarterly Distribution period on the basis of a 360-day year of
twelve 30-day months, and for any period shorter than a full semiannual
Distribution period for which Distributions are computed, Distributions will be
computed on the basis of the actual number of days elapsed per 30-day month.
Except as otherwise described below, distributions on the
Common Securities will be cumulative, will accrue from the date of original
issuance and will be payable semiannually in arrears, on May 15 and November 15
of each year, commencing on May 15, 1997, to Holders of record on a date to be
selected by the Regular Trustees, which dates shall be at least one Business Day
but less than 60 Business Days before the relevant payment dates, which payment
dates shall correspond to the interest payment dates on the Debentures. The
Debentures Issuer has the right under the Indenture to defer payments of
interest by extending the interest payment period from time to time on the
Debentures for a period not exceeding 10 consecutive semiannual periods (each an
"Extension Period") and, as a consequence of such deferral, Distributions will
also be deferred. Despite such deferral, semiannual Distributions will continue
to accrue with interest thereon (to the extent permitted by applicable law) at
the Coupon Rate compounded semiannually during any such Extension Period. Prior
to the termination of any such Extension Period, the Debenture Issuer may
further extend such Extension Period; provided that such Extension Period
together with all such previous and further extensions thereof may not exceed 10
consecutive semiannual periods. Payments of accrued Distributions will be
payable to Holders as they appear on the books and records of the Trust on the
first record date after the end of the Extension Period. Upon the termination of
any Extension Period and the Payment of all amounts then due, the Debenture
Issuer may commence a new Extension Period, subject to the above requirements.
The Common Securities shall be redeemable as provided in the
Declaration.
A2-3
G:\LEGAL\RRD\PUBLOFF\CFTII2AM.DEC
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Common Security
Certificate to:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert assignee's social security or tax identification number)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints
________________________________________________________________________________
________________________________________________________________________________
______________________________________________________________agent to transfer
this Common Security Certificate on the books of the Trust. The agent may
substitute another to act for
him or her.
Date: ________________________
Signature: ______________________
(Sign exactly as your name appears on the other side of this Common Security
Certificate)
A2-4
G:\LEGAL\RRD\PUBLOFF\CFTII2AM.DEC
This Preferred Security is a Global Certificate within the meaning of
the Declaration hereinafter referred to and is registered in the name of The
Depository Trust Company (the "Depository") or a nominee of the Depository. This
Preferred Security is exchangeable for Preferred Securities registered in the
name of a person other than the Depository or its nominee only in the limited
circumstances described in the Declaration and no transfer of this Preferred
Security (other than a transfer of this Preferred Security as a whole by the
Depository to a nominee of the Depository or by a nominee of the Depository to
the Depository or another nominee of the Depository) may be registered except in
limited circumstances.
Unless this Preferred Security Certificate is presented by an
authorized representative of the Depository to the Trust or its agent for
registration of transfer, exchange or payment, and any Preferred Security
Certificate issued is registered in the name of Cede & Co. or such other name as
requested by an authorized representative of the Depository (and any payment
hereon is made to Cede & Co. or to such other entity as is requested by an
authorized representative of the Depository), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the
registered owner hereof, Cede & Co., has an interest herein.
Certificate Number Number of Preferred Securities
1 325,000
CUSIP NO. 20846G AA 8
Certificate Evidencing Preferred Securities
of
CONSECO FINANCING TRUST II
8.70% Capital Trust Pass-through Securities (TruPSSM)
(liquidation amount $1,000 per Security)
CONSECO FINANCING TRUST II, a statutory business trust formed under the
laws of the State of Delaware (the "Trust"), hereby certifies that Cede & Co.
(the "Holder") is the registered owner of preferred securities of the Trust
representing undivided beneficial interests in the assets of the Trust
designated the 8.70% Capital Trust Pass-through Securities (liquidation amount
$1,000 per Security) (the "Capital Securities"). The Capital Securities are
transferable on the books and records of the Trust, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer. The designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Capital Securities represented
hereby are issued and shall in all respects be subject to the provisions of the
Amended and Restated Declaration of Trust of the Trust dated as of November 22,
1996, as the same may be amended from time to time (the "Declaration"),
including the designation of the terms of the Capital Securities as set forth in
Annex I to the Declaration. Capitalized terms used herein but not defined shall
have the meaning given them in the Declaration. The
bi 271635.1 99980 00100
11/27/96 9:04 am
1
<PAGE>
Holder is entitled to the benefits of the Capital Securities Guarantee to the
extent provided therein. The Sponsor will provide a copy of the Declaration, the
Capital Securities Guarantee and the Indenture to a Holder without charge upon
written request to the Sponsor at its principal place of business.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat, for United States federal
income tax purposes, the Debentures as indebtedness and the Capital Securities
as evidence of indirect beneficial ownership in the Debentures.
IN WITNESS WHEREOF, the Trust has executed this certificate this 27th
day of November, 1996.
CONSECO FINANCING TRUST II
By: /s/ ROLLIN M. DICK
------------------------
Name: Rollin M. Dick
Title: Regular Trustee
bi 271635.1 99980 00100
11/27/96 9:04 am
2
<PAGE>
Distributions payable on each Capital Security will be fixed
at a rate per annum of 8.70% (the "Coupon Rate") of the stated liquidation
amount of $1,000 per Security, such rate being the rate of interest payable on
the Debentures to be held by the Property Trustee. Distributions in arrears for
more than one semiannual period will bear interest thereon compounded
semiannually at the Coupon Rate (to the extent permitted by applicable law). The
term "Distributions" as used herein includes such cash distributions and any
such interest payable unless otherwise stated. A Distribution is payable only to
the extent that payments are made in respect of the Debentures held by the
Property Trustee and to the extent the Property Trustee has funds available
therefor. The amount of Distributions payable for any period will be computed
for any full semiannual Distribution period on the basis of a 360-day year of
twelve 30-day months, and for any period shorter than a full semiannual
Distribution period for which Distributions are computed, Distributions will be
computed on the basis of the actual number of days elapsed per 30-day month.
Except as otherwise described below, distributions on the
Capital Securities will be cumulative, will accrue from the date of original
issuance and will be payable semiannually in arrears, on May 15 and November 15
of each year, commencing on May 15, 1997, which payment dates shall correspond
to the interest payment dates on the Debentures. The Debenture Issuer has the
right under the Indenture to defer payments of interest by extending the
interest payment period from time to time on the Debentures for a period not
exceeding 10 consecutive semiannual periods (each an "Extension Period") and, as
a consequence of such deferral, Distributions will also be deferred. Despite
such deferral, semiannual Distributions will continue to accrue with interest
thereon (to the extent permitted by applicable law) at the Coupon Rate
compounded semiannually during any such Extension Period. Prior to the
termination of any such Extension Period, the Debenture Issuer may further
extend such Extension Period; provided that such Extension Period together with
all such previous and further extensions thereof may not exceed 10 consecutive
semiannual periods. Payments of accrued Distributions will be payable to Holders
as they appear on the books and records of the Trust on the first record date
after the end of the Extension Period. Upon the termination of any Extension
Period and the payment of all amounts then due, the Debenture Issuer may
commence a new Extension Period, subject to the above requirements.
The Capital Securities shall be redeemable as provided in the
Declaration.
bi 271635.1 99980 00100
11/27/96 9:04 am
3
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred
Security Certificate to:
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
(Insert assignee's social security or tax identification number)
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
(Insert address and zip code of assignee)
and irrevocably appoints
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
___________________________________________ agent to transfer this Preferred
Security Certificate on the books of the Trust. The agent may substitute another
to act for him or her.
Date: __________________
Signature: _____________________________
(Sign exactly as your name appears on the other side of this Preferred Security
Certificate)
bi 271635.1 99980 00100
11/27/96 9:04 am
4
----------------------------------------------------------------
CAPITAL SECURITIES GUARANTEE AGREEMENT
CONSECO FINANCING TRUST II
Dated as of November 27, 1996
----------------------------------------------------------------
<PAGE>
CROSS REFERENCE TABLE*
<TABLE>
<CAPTION>
Section of Trust Section of
Indenture Act of Guarantee
1939, as amended Agreement
- ---------------- ---------
<S> <C>
310(a) ......................................................................................................4.1(a)
310(b) ......................................................................................................4.1(c)
310(c) ................................................................................................Inapplicable
311(a) ......................................................................................................2.2(b)
311(b) ......................................................................................................2.2(b)
311(c) ................................................................................................Inapplicable
312(a) ......................................................................................................2.2(a)
312(b) ......................................................................................................2.2(b)
312(c) ......................................................................................................2.9
313(a) ......................................................................................................2.3
313(b) ......................................................................................................2.3
313(c) ......................................................................................................2.3
313(d) ......................................................................................................2.3
314(a) ......................................................................................................2.4
314(b) ................................................................................................Inapplicable
314(c) ......................................................................................................2.5
314(d) ................................................................................................Inapplicable
314(e) .........................................................................................................2.5
314(f) ................................................................................................Inapplicable
315(a) ..............................................................................................3.1(d); 3.2(a)
315(b) ......................................................................................................2.7(a)
315(c) ......................................................................................................3.1(c)
315(d) ......................................................................................................3.1(d)
316(a) .................................................................................................2.6; 5.4(a)
317(a) ...................................................................................................2.10; 5.4
318(a) ......................................................................................................2.1(b)
- ----------------------
<FN>
* This Cross-Reference Table does not constitute part of the Guarantee Agreement
and shall not have any bearing upon the interpretation of any of its terms or
provisions.
</FN>
</TABLE>
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE I INTERPRETATION AND DEFINITIONS
<S> <C> <C>
SECTION 1.1 Interpretation and Definitions.........................................................1
ARTICLE II TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application.......................................................4
SECTION 2.2 Lists of Holders of Securities.........................................................4
SECTION 2.3 Reports by Capital Guarantee Trustee...................................................5
SECTION 2.4 Periodic Reports to Capital Guarantee Trustee..........................................5
SECTION 2.5 Evidence of Compliance with Conditions Precedent.......................................5
SECTION 2.6 Guarantee Event of Default; Waiver.....................................................5
SECTION 2.7 Guarantee Event of Default; Notice.....................................................5
SECTION 2.8 Conflicting Interests..................................................................5
ARTICLE III POWERS, DUTIES AND RIGHTS OF CAPITAL GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of Capital Guarantee Trustee.........................................6
SECTION 3.2 Certain Rights of Capital Guarantee Trustee............................................7
SECTION 3.3 Not Responsible for Recitals or Issuance of Guarantee..................................8
ARTICLE IV CAPITAL GUARANTEE TRUSTEE
SECTION 4.1 Capital Guarantee Trustee; Eligibility.................................................9
SECTION 4.2 Appointment, Removal and Resignation of Capital Guarantee Trustee......................9
ARTICLE V GUARANTEE
SECTION 5.1 Guarantee.............................................................................10
SECTION 5.2 Waiver of Notice and Demand...........................................................10
SECTION 5.3 Obligations Not Affected..............................................................10
SECTION 5.4 Rights of Holders.....................................................................11
SECTION 5.5 Guarantee of Payment..................................................................12
SECTION 5.6 Subrogation...........................................................................12
SECTION 5.7 Independent Obligations...............................................................12
ARTICLE VI LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions............................................................12
SECTION 6.2 Ranking...............................................................................13
ARTICLE VII TERMINATION
SECTION 7.1 Termination...........................................................................13
ARTICLE VIII INDEMNIFICATION
SECTION 8.1 Exculpation...........................................................................13
SECTION 8.2 Indemnification.......................................................................14
i
<PAGE>
ARTICLE IX MISCELLANEOUS
SECTION 9.1 Successors and Assigns................................................................14
SECTION 9.2 Amendments............................................................................14
SECTION 9.3 Notices...............................................................................14
SECTION 9.4 Benefit...............................................................................15
SECTION 9.5 Governing Law.........................................................................15
ii
</TABLE>
<PAGE>
CAPITAL SECURITIES GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT (the "Capital Securities Guarantee"), dated as
of November 27, 1996, is executed and delivered by Conseco, Inc., an Indiana
corporation (the "Guarantor"), and Fleet National Bank, as trustee (the "Capital
Guarantee Trustee"), for the benefit of the Holders (as defined herein) from
time to time of the Capital Securities (as defined herein) of Conseco Financing
Trust II, a Delaware statutory business trust (the "Issuer").
WHEREAS, pursuant to the Declaration (as defined herein), the Issuer is
issuing on the date hereof 325,000 preferred securities, having an aggregate
liquidation amount of $325,000,000, designated the 8.70% Capital Trust
Pass-through Securities (the "Capital Securities");
WHEREAS, as incentive for the Holders to purchase the Capital
Securities, the Guarantor desires irrevocably and unconditionally to agree, to
the extent set forth in this Capital Securities Guarantee, to pay to the Holders
of the Capital Securities the Guarantee Payments (as defined herein) and to make
certain other payments on the terms and conditions set forth herein; and
WHEREAS, the Guarantor is also executing and delivering a guarantee
agreement (as amended, modified or supplemented from time to time, the "Common
Securities Guarantee") in substantially identical terms to this Capital
Securities Guarantee for the benefit of the holders of the Common Securities (as
defined herein), except that if an Event of Default (as defined in the
Declaration), has occurred and is continuing, the rights of holders of the
Common Securities to receive payments under the Common Securities Guarantee are
subordinated to the rights of Holders of Capital Securities to receive Guarantee
Payments under this Capital Securities Guarantee.
NOW, THEREFORE, in consideration of the purchase by each Holder of
Capital Securities, which purchase the Guarantor hereby agrees shall benefit the
Guarantor, the Guarantor executes and delivers this Capital Securities Guarantee
for the benefit of the Holders.
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Interpretation and Definitions.
In this Capital Securities Guarantee, unless the context otherwise
requires:
(a) capitalized terms used in this Capital Securities Guarantee but not
defined in the preamble above have the respective meanings assigned to them in
this Section 1.1;
(b) a term defined anywhere in this Capital Securities Guarantee
has the same meaning throughout;
(c) all references to "the Capital Securities Guarantee" or "this
Capital Securities Guarantee" are to this Capital Securities Guarantee as
modified, supplemented or amended from time to time;
(d) all references in this Capital Securities Guarantee to Articles
and Sections are to Articles and Sections of this Capital Securities Guarantee,
unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning when
used in this Capital Securities Guarantee, unless otherwise defined in this
Capital Securities Guarantee or unless the context otherwise requires; and
(f) a reference to the singular includes the plural and vice versa.
1
<PAGE>
"Affiliate" has the same meaning as given to that term in Rule 405 of
the Securities Act of 1933, as amended, or any successor rule thereunder.
"Base Indenture" means the Indenture dated November 14, 1996 among the
Guarantor (the "Debenture Issuer") and Fleet National Bank, as trustee, as
supplemented by the First Supplemental Indenture dated as of November 14, 1996.
"Business Day" means any day other than a day on which banking
institutions in New York, New York or in the city of the Corporate Trust Office
are authorized or required by law to close.
"Common Securities" means the securities representing common undivided
beneficial interests in the assets of the Issuer.
"Corporate Trust Office" means the office of the Capital Guarantee
Trustee at which the corporate trust business of the Capital Guarantee Trustee
shall, at any particular time, be principally administered, which office at the
date of execution of this Capital Securities Guarantee is located at 777 Main
Street, Hartford, Connecticut 06115, Attention: Corporate Trust Administration.
"Covered Person" means any Holder or beneficial owner of Capital
Securities.
"Debentures" means the series of subordinated deferrable interest
debentures to be issued by the Guarantor designated the 8.70% Subordinated
Deferrable Interest Debentures due 2026 held by the Property Trustee (as defined
in the Declaration) of the Issuer.
"Declaration" means the Amended and Restated Declaration of Trust,
dated as of November 22, 1996, as amended, modified or supplemented from time to
time, among the trustees of the Issuer named therein, the Guarantor, as sponsor,
and the Holders from time to time of undivided beneficial interests in the
assets of the Issuer.
"Guarantee Event of Default" means a default by the Guarantor on any of
its payment or other obligations under this Capital Securities Guarantee.
"Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Capital Securities, to the extent not
paid or made by the Issuer: (i) any accrued and unpaid Distributions (as defined
in the Declaration) that are required to be paid on such Capital Securities to
the extent the Issuer shall have funds available therefor, (ii) the redemption
price, including all accrued and unpaid Distributions to the date of redemption
and the Make-Whole Premium (as defined in the Declaration) (the "Redemption
Price") to the extent the Issuer has funds available therefor, with respect to
any Capital Securities called for redemption by the Issuer, and (iii) upon a
voluntary or involuntary dissolution, winding-up or termination of the Issuer
(other than in connection with the distribution of Debentures to the Holders in
exchange for Capital Securities as provided in the Declaration or the redemption
of all the Capital Securities upon maturity or redemption of the Debentures as
provided in the Declaration), the lesser of (a) the aggregate of the liquidation
amount plus any amount payable as a result of the Make-Whole Premium and all
accrued and unpaid Distributions on the Capital Securities to the date of
payment, to the extent the Issuer shall have funds available therefor, and (b)
the amount of assets of the Issuer remaining available for distribution to
Holders in liquidation of the Issuer (in either case, the "Liquidation
Distribution"). If an Event of Default (as defined in the Declaration) has
occurred and is continuing, the rights of holders of the Common Securities to
receive payments under the Common Securities Guarantee are subordinated to the
rights of Holders of Capital Securities to receive Guarantee Payments under this
Capital Securities Guarantee.
2
<PAGE>
"Holder" shall mean any holder, as registered on the books and records
of the Issuer of any Capital Securities; provided, however, that, in determining
whether the holders of the requisite percentage of Capital Securities have given
any request, notice, consent or waiver hereunder, "Holder" shall not include the
Guarantor or any Affiliate of the Guarantor; and provided further, that in
determining whether the Holders of the requisite liquidation amount of Capital
Securities have voted on any matter provided for in this Capital Securities
Guarantee, then for the purpose of such determination only (and not for any
other purpose hereunder), if the Capital Securities remain in the form of one or
more Global Certificates (as defined in the Declaration), the term "Holders"
shall mean the holder of the Global Certificate acting at the direction of the
Capital Security Beneficial Owners (as defined in the Declaration).
"Indemnified Person" means the Capital Guarantee Trustee, any Affiliate
of the Capital Guarantee Trustee, or any officers, directors, shareholders,
members, partners, employees, representatives, nominees, custodians or agents of
the Capital Guarantee Trustee.
"Indenture" means the Base Indenture and any indenture supplemental
thereto pursuant to which the Debentures are to be issued to the Property
Trustee (as defined in the Declaration) of the Issuer.
"Majority in Liquidation Amount of the Capital Securities" means,
except as provided in the terms of the Capital Securities or by the Trust
Indenture Act, Holder(s) of outstanding Capital Securities, voting separately as
a class, who are the record holders of more than 50% of the aggregate
liquidation amount (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accrued and unpaid Distributions to
the date upon which the voting percentages are determined) of all outstanding
Capital Securities. In determining whether the Holders of the requisite amount
of Capital Securities have voted, Capital Securities which are owned by the
Guarantor or any Affiliate of the Guarantor or any other obligor on the Capital
Securities shall be disregarded (to the extent known to be so owned by the
Capital Guarantee Trustee) for the purpose of any such determination.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two Authorized Officers (as defined in the Declaration) of
such Person. Any Officers' Certificate delivered with respect to compliance with
a condition or covenant provided for in this Capital Securities Guarantee shall
include:
(a) a statement that each officer signing the Officers' Certificate
has read the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers' Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such officer
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
3
<PAGE>
"Capital Guarantee Trustee" means Fleet National Bank, until a
Successor Capital Guarantee Trustee has been appointed and has accepted such
appointment pursuant to the terms of this Capital Securities Guarantee and
thereafter means each such Successor Capital Guarantee Trustee.
"Responsible Officer" means, with respect to the Capital Guarantee
Trustee, any officer within the Corporate Trust Office of the Capital Guarantee
Trustee, including any vice-president, any assistant vice-president, the
secretary, any assistant secretary, the treasurer, any assistant treasurer or
other officer of the Corporate Trust Office of the Capital Guarantee Trustee
customarily performing functions similar to those performed by any of the above
designated officers and also means, with respect to a particular corporate trust
matter, any other officer to whom such matter is referred because of that
officer's knowledge of and familiarity with the particular subject.
"Successor Capital Guarantee Trustee" means a successor Capital
Guarantee Trustee possessing the qualifications to act as Capital Guarantee
Trustee under Section 4.1.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended
from time to time, or any successor legislation.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application.
(a) This Capital Securities Guarantee is subject to the provisions of
the Trust Indenture Act that are required to be part of this Capital Securities
Guarantee and shall, to the extent applicable, be governed by such provisions.
(b) If and to the extent that any provision of this Capital Securities
Guarantee limits, qualifies or conflicts with the duties imposed by Sections 310
to 317, inclusive, of the Trust Indenture Act, such imposed duties shall
control.
SECTION 2.2 Lists of Holders of Securities.
(a) The Guarantor shall provide the Capital Guarantee Trustee with a
list, in such form as the Capital Guarantee Trustee may reasonably require, of
the names and addresses of the Holders of the Capital Securities ("List of
Holders"), (i) within one Business Day after January 1 and June 30 of each year
and current as of such date, and (ii) at any other time, within 30 days of
receipt by the Guarantor of a written request from the Capital Guarantee Trustee
for a List of Holders as of a date no more than 14 days before such List of
Holders is given to the Capital Guarantee Trustee; provided, that the Guarantor
shall not be obligated to provide such List of Holders at any time the List of
Holders does not differ from the most recent List of Holders given to the
Capital Guarantee Trustee by the Guarantor. The Capital Guarantee Trustee shall
preserve, in as current a form as is reasonably practicable, all information
contained in Lists of Holders given to it, provided that it may destroy any List
of Holders previously given to it on receipt of a new List of Holders.
(b) The Capital Guarantee Trustee shall comply with its obligations
under Section 311(a), 311(b) and Section 312(b) of the Trust Indenture Act.
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SECTION 2.3 Reports by Capital Guarantee Trustee.
Within 60 days after May 15 of each year (commencing with the year of
the first anniversary of the issuance of the Capital Securities), the Capital
Guarantee Trustee shall provide to the Holders of the Capital Securities such
reports as are required by Section 313 of the Trust Indenture Act, if any, in
the form and in the manner provided by Section 313 of the Trust Indenture Act.
The Capital Guarantee Trustee shall also comply with the requirements of Section
313(d) of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Capital Guarantee Trustee.
The Guarantor shall provide to the Capital Guarantee Trustee such
documents, reports and information as required by Section 314 (if any) of the
Trust Indenture Act and the compliance certificate required by Section 314 of
the Trust Indenture Act in the form, in the manner and at the times required by
Section 314 of the Trust Indenture Act.
SECTION 2.5 Evidence of Compliance with Conditions Precedent.
The Guarantor shall provide to the Capital Guarantee Trustee such
evidence of compliance with any conditions precedent provided for in this
Capital Securities Guarantee that relate to any of the matters set forth in
Section 314(c) of the Trust Indenture Act. Any certificate or opinion required
to be given by an officer pursuant to Section 314(c)(1) may be given in the form
of an Officers' Certificate.
SECTION 2.6 Guarantee Event of Default; Waiver.
The Holders of a Majority in Liquidation Amount of the Capital
Securities may, by vote, on behalf of the Holders of all of the Capital
Securities, waive any past Guarantee Event of Default and its consequences. Upon
such waiver, any such Guarantee Event of Default shall cease to exist, and any
Guarantee Event of Default arising therefrom shall be deemed to have been cured,
for every purpose of this Capital Securities Guarantee, but no such waiver shall
extend to any subsequent or other default or Guarantee Event of Default or
impair any right consequent thereon.
SECTION 2.7 Guarantee Event of Default; Notice.
(a) The Capital Guarantee Trustee shall, within 90 days after the
occurrence of a Guarantee Event of Default, transmit by mail, first class
postage prepaid, to the Holders of the Capital Securities, notices of all
Guarantee Events of Default actually known to a Responsible Officer of the
Capital Guarantee Trustee, unless such defaults have been cured before the
giving of such notice; provided, that the Capital Guarantee Trustee shall be
protected in withholding such notice if and so long as a Responsible Officer of
the Capital Guarantee Trustee in good faith determines that the withholding of
such notice is in the interests of the Holders of the Capital Securities.
(b) The Capital Guarantee Trustee shall not be deemed to have knowledge
of any Guarantee Event of Default unless the Capital Guarantee Trustee shall
have received written notice thereof, or a Responsible Officer of the Capital
Guarantee Trustee charged with the administration of the Declaration shall have
obtained actual knowledge thereof.
SECTION 2.8 Conflicting Interests
The Declaration shall be deemed to be specifically described in this
Capital Securities Guarantee for the purposes of clause (i) of the first proviso
contained in Section 310(b) of the Trust Indenture Act.
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ARTICLE III
POWERS, DUTIES AND RIGHTS OF
CAPITAL GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of Capital Guarantee Trustee.
(a) This Capital Securities Guarantee shall be held by the Capital
Guarantee Trustee on behalf of the Issuer for the benefit of the Holders of the
Capital Securities, and the Capital Guarantee Trustee shall not transfer this
Capital Securities Guarantee to any Person except a Holder of Capital Securities
exercising his or her rights pursuant to Section 5.4(b) or to a Successor
Capital Guarantee Trustee on acceptance by such Successor Capital Guarantee
Trustee of its appointment to act as Successor Capital Guarantee Trustee. The
right, title and interest of the Capital Guarantee Trustee in and to this
Capital Securities Guarantee shall automatically vest in any Successor Capital
Guarantee Trustee, and such vesting and cessation of title shall be effective
whether or not conveyancing documents have been executed and delivered pursuant
to the appointment of such Successor Capital Guarantee Trustee.
(b) If a Guarantee Event of Default actually known to a Responsible
Officer of the Capital Guarantee Trustee has occurred and is continuing, the
Capital Guarantee Trustee shall enforce this Capital Securities Guarantee for
the benefit of the Holders of the Capital Securities.
(c) The Capital Guarantee Trustee, before the occurrence of any
Guarantee Event of Default and after the curing of all Guarantee Events of
Default that may have occurred, shall undertake to perform only such duties as
are specifically set forth in this Capital Securities Guarantee, and no implied
covenants shall be read into this Capital Securities Guarantee against the
Capital Guarantee Trustee. In case a Guarantee Event of Default has occurred
(that has not been cured or waived pursuant to Section 2.6) and is actually
known to a Responsible Officer of the Capital Guarantee Trustee, the Capital
Guarantee Trustee shall exercise such of the rights and powers vested in it by
this Capital Securities Guarantee, and use the same degree of care and skill in
its exercise thereof, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
(d) No provision of this Capital Securities Guarantee shall be
construed to relieve the Capital Guarantee Trustee from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) prior to the occurrence of any Guarantee Event of Default
and after the curing or waiving of all such Guarantee Events of Default that may
have occurred:
(A) the duties and obligations of the Capital
Guarantee Trustee shall be determined solely by the express provisions of this
Capital Securities Guarantee, and the Capital Guarantee Trustee shall not be
liable except for the performance of such duties and obligations as are
specifically set forth in this Capital Securities Guarantee, and no implied
covenants or obligations shall be read into this Capital Securities Guarantee
against the Capital Guarantee Trustee; and
(B) in the absence of bad faith on the part of
the Capital Guarantee Trustee, the Capital Guarantee Trustee may conclusively
rely, as to the truth of the statements and the correctness of the opinions
expressed therein, upon any certificates or opinions furnished to the Capital
Guarantee Trustee and conforming to the requirements of this Capital Securities
Guarantee; but in the case of any such certificates or opinions that by any
provision hereof are specifically required to be furnished to the Capital
Guarantee Trustee, the Capital Guarantee Trustee shall be under a duty to
examine the same to determine whether or not they conform to the requirements of
this Capital Securities Guarantee;
(ii) the Capital Guarantee Trustee shall not be liable for any
error of judgment made in good faith by a Responsible Officer of the Capital
Guarantee Trustee, unless it shall be proved
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that the Capital Guarantee Trustee was negligent in ascertaining the pertinent
facts upon which such judgment was made;
(iii) the Capital Guarantee Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than a Majority in
Liquidation Amount of the Capital Securities relating to the time, method and
place of conducting any proceeding for any remedy available to the Capital
Guarantee Trustee, or exercising any trust or power conferred upon the Capital
Guarantee Trustee under this Capital Securities Guarantee; and
(iv) no provision of this Capital Securities Guarantee shall
require the Capital Guarantee Trustee to expend or risk its own funds or
otherwise incur personal financial liability in the performance of any of its
duties or in the exercise of any of its rights or powers, if the Capital
Guarantee Trustee shall have reasonable grounds for believing that the repayment
of such funds or liability is not reasonably assured to it under the terms of
this Capital Securities Guarantee or indemnity, reasonably satisfactory to the
Capital Guarantee Trustee, against such risk or liability is not reasonably
assured to it.
SECTION 3.2 Certain Rights of Capital Guarantee Trustee.
(a) Subject to the provisions of Section 3.1:
(i) The Capital Guarantee Trustee may conclusively rely, and
shall be fully protected in acting or refraining from acting upon, any
resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document believed by it to be genuine and to have
been signed, sent or presented by the proper party or parties.
(ii) Any direction or act of the Guarantor contemplated by
this Capital Securities Guarantee shall be sufficiently evidenced by an
Officers' Certificate.
(iii) Whenever, in the administration of this Capital
Securities Guarantee, the Capital Guarantee Trustee shall deem it desirable that
a matter be proved or established before taking, suffering or omitting any
action hereunder, the Capital Guarantee Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of bad faith on its part, request
and conclusively rely upon an Officers' Certificate which, upon receipt of such
request, shall be promptly delivered by the Guarantor.
(iv) The Capital Guarantee Trustee shall have no duty to see
to any recording, filing or registration of any instrument (or any rerecording,
refiling or registration thereof).
(v) The Capital Guarantee Trustee may consult with counsel,
and the written advice or opinion of such counsel with respect to legal matters
shall be full and complete authorization and protection in respect of any action
taken, suffered or omitted by it hereunder in good faith and in accordance with
such advice or opinion. Such counsel may be counsel to the Guarantor or any of
its Affiliates and may include any of its employees. The Capital Guarantee
Trustee shall have the right at any time to seek instructions concerning the
administration of this Capital Securities Guarantee from any court of competent
jurisdiction.
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(vi) The Capital Guarantee Trustee shall be under no
obligation to exercise any of the rights or powers vested in it by this Capital
Securities Guarantee at the request or direction of any Holder, unless such
Holder shall have provided to the Capital Guarantee Trustee such security and
indemnity, reasonably satisfactory to the Capital Guarantee Trustee, against the
costs, expenses (including attorneys' fees and expenses and the expenses of the
Capital Guarantee Trustee's agents, nominees or custodians) and liabilities that
might be incurred by it in complying with such request or direction, including
such reasonable advances as may be requested by the Capital Guarantee Trustee;
provided, that nothing contained in this Section 3.2(a)(vi) shall be taken to
relieve the Capital Guarantee Trustee, upon the occurrence of a Guarantee Event
of Default, of its obligation to exercise the rights and powers vested in it by
this Capital Securities Guarantee.
(vii) The Capital Guarantee Trustee shall not be bound to make
any investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness or other
paper or document, but the Capital Guarantee Trustee, in its discretion, may
make such further inquiry or investigation into such facts or matters as it may
see fit.
(viii) The Capital Guarantee Trustee may execute any of the
trusts or powers hereunder or perform any duties hereunder either directly or by
or through agents, nominees, custodians or attorneys, and the Capital Guarantee
Trustee shall not be responsible for any misconduct or negligence on the part of
any agent or attorney appointed with due care by it hereunder.
(ix) Any action taken by the Capital Guarantee Trustee or its
agents hereunder shall bind the Holders of the Capital Securities, and the
signature of the Capital Guarantee Trustee or its agents alone shall be
sufficient and effective to perform any such action. No third party shall be
required to inquire as to the authority of the Capital Guarantee Trustee to so
act or as to its compliance with any of the terms and provisions of this Capital
Securities Guarantee, both of which shall be conclusively evidenced by the
Capital Guarantee Trustee's or its agent's taking such action.
(x) Whenever in the administration of this Capital Securities
Guarantee the Capital Guarantee Trustee shall deem it desirable to receive
instructions with respect to enforcing any remedy or right or taking any other
action hereunder, the Capital Guarantee Trustee (i) may request instructions
from the Holders of a Majority in Liquidation Amount of the Capital Securities,
(ii) may refrain from enforcing such remedy or right or taking such other action
until such instructions are received, and (iii) shall be protected in
conclusively relying on or acting in accordance with such instructions.
(b) No provision of this Capital Securities Guarantee shall be deemed
to impose any duty or obligation on the Capital Guarantee Trustee to perform any
act or acts or exercise any right, power, duty or obligation conferred or
imposed on it in any jurisdiction in which it shall be illegal, or in which the
Capital Guarantee Trustee shall be unqualified or incompetent in accordance with
applicable law, to perform any such act or acts or to exercise any such right,
power, duty or obligation. No permissive power or authority available to the
Capital Guarantee Trustee shall be construed to be a duty.
SECTION 3.3 Not Responsible for Recitals or Issuance of Guarantee.
The recitals contained in this Capital Securities Guarantee shall be
taken as the statements of the Guarantor, and the Capital Guarantee Trustee does
not assume any responsibility for their correctness. The Capital Guarantee
Trustee makes no representation as to the validity or sufficiency of this
Capital Securities Guarantee.
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ARTICLE IV
CAPITAL GUARANTEE TRUSTEE
SECTION 4.1 Capital Guarantee Trustee; Eligibility.
(a)There shall at all times be a Capital Guarantee Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under the
laws of the United States of America or any State or Territory thereof or of the
District of Columbia, or a corporation or Person permitted by the Securities and
Exchange Commission to act as an institutional trustee under the Trust Indenture
Act, authorized under such laws to exercise corporate trust powers, having a
combined capital and surplus of at least 50 million U.S. dollars ($50,000,000),
and subject to supervision or examination by Federal, State, Territorial or
District of Columbia authority. If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of the
supervising or examining authority referred to above, then, for the purposes of
this Section 4.1(a)(ii), the combined capital and surplus of such corporation
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published.
(b) If at any time the Capital Guarantee Trustee shall cease to be
eligible to so act under Section 4.1(a), the Capital Guarantee Trustee shall
immediately resign in the manner and with the effect set out in Section 4.2(c).
(c) If the Capital Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Capital Guarantee Trustee and Guarantor shall in all respects
comply with the provisions of Section 310(b) of the Trust Indenture Act.
(d) Any corporation into which the Capital Guarantee Trustee may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Capital
Guarantee Trustee shall be a party, or any corporation succeeding to all or
substantially all the corporate trust business of the Capital Guarantee Trustee,
shall be the successor of the Capital Guarantee Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto.
SECTION 4.2 Appointment, Removal and Resignation of Capital Guarantee Trustee.
(a) Subject to Section 4.2(b), the Capital Guarantee Trustee may be
appointed or removed without cause at any time by the Guarantor.
(b) The Capital Guarantee Trustee shall not be removed in accordance
with Section 4.2(a) until a Successor Capital Guarantee Trustee has been
appointed and has accepted such appointment by written instrument executed by
such Successor Capital Guarantee Trustee and delivered to the Guarantor.
(c) The Capital Guarantee Trustee appointed to office shall hold office
until a Successor Capital Guarantee Trustee shall have been appointed or until
its removal or resignation. The Capital Guarantee Trustee may resign from office
(without need for prior or subsequent accounting) by an instrument in writing
executed by the Capital Guarantee Trustee and delivered to the Guarantor,
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which resignation shall not take effect until a Successor Capital Guarantee
Trustee has been appointed and has accepted such appointment by instrument in
writing executed by such Successor Capital Guarantee Trustee and delivered to
the Guarantor and the resigning Capital Guarantee Trustee.
(d) If no Successor Capital Guarantee Trustee shall have been appointed
and accepted appointment as provided in this Section 4.2 within 60 days after
delivery to the Guarantor of an instrument of resignation, the resigning Capital
Guarantee Trustee may petition any court of competent jurisdiction for
appointment of a Successor Capital Guarantee Trustee. Such court may thereupon,
after prescribing such notice, if any, as it may deem proper, appoint a
Successor Capital Guarantee Trustee.
(e) No Capital Guarantee Trustee shall be liable for the acts or
omissions to act of any Successor Capital Guarantee Trustee.
(f) Upon termination of this Capital Securities Guarantee or removal or
resignation of the Capital Guarantee Trustee pursuant to this Section 4.2, the
Guarantor shall pay to the Capital Guarantee Trustee all amounts owing for fees
and reimbursement of expenses which have accrued to the date of such
termination, removal or resignation.
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee.
The Guarantor irrevocably and unconditionally agrees to pay in full to
the Holders the Guarantee Payments (without duplication of amounts theretofore
paid by the Issuer), as and when due, regardless of any defense, right of
set-off or counterclaim that the Issuer may have or assert. The Guarantor's
obligation to make a Guarantee Payment may be satisfied by direct payment of the
required amounts by the Guarantor to the Holders or by causing the Issuer to pay
such amounts to the Holders.
SECTION 5.2 Waiver of Notice and Demand.
The Guarantor hereby waives notice of acceptance of this Capital
Securities Guarantee and of any liability to which it applies or may apply,
presentment, demand for payment, any right to require a proceeding first against
the Issuer or any other Person before proceeding against the Guarantor, protest,
notice of nonpayment, notice of dishonor, notice of redemption and all other
notices and demands. Notwithstanding anything to the contrary herein, the
Guarantor retains all of its rights under the Indenture to extend the interest
payment period on the Debentures and the Guarantor shall not be obligated
hereunder to make any Guarantee Payments during any Extended Interest Payment
Period (as defined in the Indenture) with respect to the Distributions (as
defined in the Declaration) on the Capital Securities.
SECTION 5.3 Obligations Not Affected.
The obligations, covenants, agreements and duties of the Guarantor
under this Capital Securities Guarantee shall be absolute and unconditional and
shall remain in full force and effect until the entire liquidation amount of all
outstanding Capital Securities shall have been paid and such obligation shall in
no way be affected or impaired by reason of the happening from time to time of
any event, including without limitation, the following, whether or not with
notice to, or the consent of, the Guarantor:
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(a) The release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied agreement,
covenant, term or condition relating to the Capital Securities to be performed
or observed by the Issuer;
(b) The extension of time for the payment by the Issuer of all or any
portion of the Distributions, Redemption Price, Liquidation Distribution or any
other sums payable under the terms of the Capital Securities or the extension of
time for the performance of any other obligation under, arising out of, or in
connection with, the Capital Securities (other than an extension of time for
payment of Distributions, Redemption Price, Liquidation Distribution or other
sum payable that results from the extension of any interest payment period on
the Debentures permitted by the Indenture);
(c) Any failure, omission, delay or lack of diligence on the part of
the Property Trustee or the Holders to enforce, assert or exercise any right,
privilege, power or remedy conferred on the Property Trustee or the Holders
pursuant to the terms of the Capital Securities, or any action on the part of
the Issuer granting indulgence or extension of any kind;
(d) The voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition or readjustment of debt of,
or other similar proceedings affecting, the Issuer or any of the assets of the
Issuer;
(e) Any invalidity of, or defect or deficiency in, the Capital
Securities;
(f) The settlement or compromise of any obligation guaranteed hereby o
hereby incurred; or
(g) Any other circumstance whatsoever that might otherwise constitute a
legal or equitable discharge or defense of a guarantor, it being the intent of
this Section 5.3 that the obligations of the Guarantor hereunder shall be
absolute and unconditional under any and all circumstances. There shall be no
obligation of the Capital Guarantee Trustee or the Holders to give notice to, or
obtain consent of, the Guarantor or any other Person with respect to the
happening of any of the foregoing. No setoff, counterclaim, reduction or
diminution of any obligation, or any defense of any kind or nature that the
Guarantor has or may have against any Holder shall be available hereunder to the
Guarantor against such Holder to reduce the payments to it under this Capital
Securities Guarantee.
SECTION 5.4 Rights of Holders.
(a) The Holders of a Majority in Liquidation Amount of the Capital
Securities have the right to direct the time, method and place of conducting of
any proceeding for any remedy available to the Capital Guarantee Trustee in
respect of this Capital Securities Guarantee or exercising any trust or power
conferred upon the Capital Guarantee Trustee under this Capital Securities
Guarantee.
(b) If the Capital Guarantee Trustee fails to enforce this Capital
Securities Guarantee, then any Holder of Capital Securities may institute a
legal proceeding directly against the Guarantor to enforce the Capital Guarantee
Trustee's rights under this Capital Securities Guarantee without first
instituting a legal proceeding against the Issuer, the Capital Guarantee Trustee
or any other person or entity. Notwithstanding the foregoing, if the Guarantor
has failed to make a Guarantee Payment, a Holder of Capital Securities may
directly institute a proceeding against the Guarantor for enforcement of the
Capital Securities Guarantee for such payment to the Holder of the Capital
Securities of the principal of or interest on the Debentures on or after the
respective due dates
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specified in the Debentures, and the amount of the payment will be based on the
Holder's pro rata share of the amount due and owing on all of the Capital
Securities. The Guarantor hereby waives any right or remedy to require that any
action on this Capital Securities Guarantee be brought first against the Issuer
or any other person or entity before proceeding directly against the Guarantor.
SECTION 5.5 Guarantee of Payment.
This Capital Securities Guarantee creates a guarantee of payment and
not of collection.
SECTION 5.6 Subrogation.
The Guarantor shall be subrogated to all (if any) rights of the Holders
of Capital Securities against the Issuer in respect of any amounts paid to such
Holders by the Guarantor under this Capital Securities Guarantee; provided,
however, that the Guarantor shall not (except to the extent required by
mandatory provisions of law) be entitled to enforce or exercise any right that
it may acquire by way of subrogation or any indemnity, reimbursement or other
agreement, in all cases as a result of payment under this Capital Securities
Guarantee, if, at the time of any such payment, any amounts are due and unpaid
under this Capital Securities Guarantee. If any amount shall be paid to the
Guarantor in violation of the preceding sentence, the Guarantor agrees to hold
such amount in trust for the Holders and to pay over such amount to the Capital
Guarantee Trustee for the benefit of the Holders.
SECTION 5.7 Independent Obligations.
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Capital
Securities, and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Capital
Securities Guarantee notwithstanding the occurrence of any event referred to in
subsections (a) through (g), inclusive, of Section 5.3 hereof.
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions.
So long as any Capital Securities remain outstanding, if there shall
have occurred a Guarantee Event of Default or an event of default under the
Declaration, then (a) the Guarantor shall not declare or pay any dividend on,
make any distributions with respect to, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of its capital stock, (b) the Guarantor
shall not make any payment of interest, principal or premium, if any, on or
repay, repurchase or redeem any debt securities (including guarantees) issued by
the Guarantor which rank pari passu with or junior to the Debentures and (c) the
Guarantor shall not make any guarantee payments with respect to the foregoing
(other than pursuant to this Capital Securities Guarantee); provided, however,
the Guarantor may (i) declare and pay a stock dividend where the dividend stock
is the same stock as that on which the dividend is being paid or (ii) purchase
or acquire shares of its common stock in connection with the satisfaction by the
Guarantor of its obligations under any employee benefit plans.
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SECTION 6.2 Ranking.
This Capital Securities Guarantee will constitute an unsecured
obligation of the Guarantor and will rank (i) subordinate and junior in right of
payment to all other liabilities of the Guarantor, except those liabilities of
the Guarantor made pari passu or subordinate by their terms, (ii) pari passu
with the most senior preferred or preference stock now or hereafter issued by
the Guarantor and with any guarantee now or hereafter entered into by the
Guarantor in respect of any preferred or preference stock of any Affiliate of
the Guarantor, and (iii) senior to the Guarantor's common stock.
If an Event of Default has occurred and is continuing under the
Declaration, the rights of the holders of the Common Securities to receive any
payments under the Common Securities Guarantee Agreement shall be subordinated
to the rights of the Holders of Capital Securities to receive Guarantee Payments
hereunder.
ARTICLE VII
TERMINATION
SECTION 7.1 Termination.
This Capital Securities Guarantee shall terminate upon (i) full payment
of the Redemption Price of all Capital Securities, (ii) upon the distribution of
the Debentures to the Holders of all of the Capital Securities or (iii) upon
full payment of the amounts payable in accordance with the Declaration upon
liquidation of the Issuer. Notwithstanding the foregoing, this Capital
Securities Guarantee will continue to be effective or will be reinstated, as the
case may be, if at any time any Holder of Capital Securities must restore
payment of any sums paid under the Capital Securities or under this Capital
Securities Guarantee.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation.
(a) No Indemnified Person shall be liable, responsible or accountable
in damages or otherwise to the Guarantor or any Covered Person for any loss,
damage or claim incurred by reason of any act or omission performed or omitted
by such Indemnified Person in good faith in accordance with this Capital
Securities Guarantee and in a manner that such Indemnified Person reasonably
believed to be within the scope of the authority conferred on such Indemnified
Person by this Capital Securities Guarantee or by law, except that an
Indemnified Person shall be liable for any such loss, damage or claim incurred
by reason of such Indemnified Person's negligence or willful misconduct with
respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Guarantor and upon such information, opinions,
reports or statements presented to the Guarantor by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Guarantor, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets from
which Distributions to Holders of Capital Securities might properly be paid.
SECTION 8.2 Indemnification.
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The Guarantor agrees to indemnify each Indemnified Person for, and to
hold each Indemnified Person harmless against, any loss, liability or expense
incurred without negligence or bad faith on its part, arising out of or in
connection with the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses (including reasonable legal fees and
expenses) of defending itself against, or investigating, any claim or liability
in connection with the exercise or performance of any of its powers or duties
hereunder. The obligation to indemnify as set forth in this Section 8.2 shall
survive the termination of this Capital Securities Guarantee.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns.
All guarantees and agreements contained in this Capital Securities
Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders
of the Capital Securities then outstanding.
SECTION 9.2 Amendments.
Except with respect to any changes that do not adversely affect the
rights of the Holders (in which case no consent of the Holders will be
required), this Capital Securities Guarantee may only be amended with the prior
approval of the Holders of at least a Majority in Liquidation Amount of the
Capital Securities. The provisions of Section 12.2 of the Declaration with
respect to meetings of, and action by written consent of, the Holders of the
Securities apply to the giving of such approval.
SECTION 9.3 Notices.
All notices provided for in this Capital Securities Guarantee shall be
in writing, duly signed by the party giving such notice, and shall be delivered,
telecopied or mailed by registered or certified mail, as follows:
(a) If given to the Capital Guarantee Trustee, at the Capital Guarantee
Trustee's mailing address set forth below (or such other address as the Capital
Guarantee Trustee may give notice of to the Guarantor and the Holders of the
Capital Securities):
Fleet National Bank
777 Main Street
Hartford, Connecticut 06115
Attention: Corporate Trust Administration
(b) If given to the Guarantor, at the Guarantor's mailing address set
forth below (or such other address as the Guarantor may give notice of to the
Capital Guarantee Trustee and the Holders of the Capital Securities):
Conseco, Inc.
11825 North Pennsylvania Street
Carmel, Indiana 46032
Attention: Lawrence W. Inlow, Esq.
14
<PAGE>
(c) If given to any Holder of Capital Securities, at the address set
forth on the books and records of the Issuer.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid, except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.
SECTION 9.4 Benefit.
This Capital Securities Guarantee is solely for the benefit of the
Holders of the Capital Securities and, subject to Section 3.1(a), is not
separately transferable from the Capital Securities.
SECTION 9.5 Governing Law.
THIS CAPITAL SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
G:\LEGAL\RRD\PUBLOFF\TRUPSGUA.RAN
15
<PAGE>
IN WITNESS WHEREOF, this Capital Securities Guarantee is executed as of
the day and year first above written.
CONSECO, INC., as Guarantor
By: /s/ ROLLIN M. DICK
---------------------------------
Name: Rollin M. Dick
Title: Executive Vice President and Chief
Financial Officer
FLEET NATIONAL BANK,
as Capital Guarantee Trustee
By: /s/ MICHAEL M. HOPKINS
----------------------
Name:Michael M. Hopkins
Title:Vice President
G:\LEGAL\RRD\PUBLOFF\2TOPRSGU.RNT
16
EXHIBIT 5.3
RICHARDS, LAYTON & FINGER
One Rodney Square
P.O. Box 551
Wilmington, DE 19899
November 27, 1996
Conseco Financing Trust II
c/o Conseco, Inc.
11825 N. Pennsylvania Street
Carmel, IN 46032
Re: Conseco Financing Trust II
Ladies and Gentlemen:
We have acted as special Delaware counsel for Conseco, Inc., an Indiana
corporation (the "Company"), and Conseco Financing Trust II, a Delaware business
trust (the "Trust"), in connection with the matters set forth herein. At your
request, this opinion is being furnished to you.
For purposes of giving the opinions hereinafter set forth, our
examination of documents has been limited to the examination of originals or
copies of the following:
(a) The Certificate of Trust of the Trust, dated October 28, 1996, as
filed with the office of the Secretary of State of the State of Delaware (the
"Secretary of State") on October 28, 1996;
(b) The Declaration of Trust of the Trust, dated as of October 28, 1996
between the Company and the trustees of the Trust named therein;
(c) The Registration Statement (the "Registration Statement") on Form
S-3, including a preliminary prospectus with respect to the Trust and certain
other subsidiary trusts of the Company filed by the Company and the Trust with
the Securities and Exchange Commission on October 29, 1996, and the Prospectus
Supplement, dated November 22, 1996, with respect to the Trust (together with
the Prospectus included in the Registration Statement, the "Prospectus"),
G:\LEGAL\RRD\CFT_II.DRF
<PAGE>
Conseco Financing Trust II
November 27, 1996
Page 2
relating to the Capital Trust Pass-through Securities of the Trust representing
preferred undivided beneficial interests in the assets of such Trust (each, a
"Capital Security" and collectively, the "Capital Securities");
(d) A form of Amended and Restated Declaration of Trust for the Trust,
to be entered into between the Company, the trustees of the Trust named therein,
and the holders, from time to time, of the undivided beneficial interests in the
assets of such Trust (including the exhibits and Annex I thereto) (the
"Declaration"), attached as an exhibit to the Registration Statement; and
(e) A Certificate of Good Standing for the Trust, dated November 27,
1996, obtained from the Secretary of State.
Initially capitalized terms used herein and not otherwise defined are
used as defined in the Declaration.
For purposes of this opinion, we have not reviewed any documents other
than the documents listed in paragraphs (a) through (e) above. In particular, we
have not reviewed any document (other than the documents listed in paragraphs
(a) through (e) above) that is referred to in or incorporated by reference into
the documents reviewed by us. We have assumed that there exists no provision in
any document that we have not reviewed that is inconsistent with the opinions
stated herein. We have conducted no independent factual investigation of our own
but rather have relied solely upon the foregoing documents, the statements and
information set forth therein and the additional matters recited or assumed
herein, all of which we have assumed to be true, complete and accurate in all
material respects.
With respect to all documents examined by us, we have assumed (i) the
authenticity of all documents submitted to us as authentic originals, (ii) the
conformity with the originals of all documents submitted to us as copies or
forms, and (iii) the genuineness of all signatures.
For purposes of this opinion, we have assumed (i) that the Declaration
constitutes the entire agreement among the parties thereto with respect to the
subject matter thereof, including with respect to the creation, operation and
termination of the Trust, and that the Declaration and the Certificate of Trust
are in full force and effect and have not been amended, (ii) except to the
extent provided in paragraph 1 below, the due organization or due formation, as
the case may be, and valid existence in good standing of each party to the
documents examined by us under the laws of the jurisdiction governing its
organizations or formation, (iii) the legal capacity of natural persons who are
parties to the documents examined by us, (iv) that each of the parties to the
documents examined by us has the power and authority to execute and deliver, and
to perform its obligations under, such documents, (v) the due authorization,
execution and delivery by all parties thereto of all documents examined by us,
(vi) the receipt by each Person to whom a Capital Security is to be issued by
the Trust (collectively, the "Capital Security Holders") of a Capital Security
Certificate for such Capital Security and the payment for such Capital Security,
in accordance with the Declaration and the Registration Statement, and (vii)
that the Capital
G:\LEGAL\RRD\CFT_II.DRF
<PAGE>
Conseco Financing Trust II
November 27, 1996
Page 3
Securities are issued and sold to the Capital Security Holders in accordance
with the Declaration and the Registration Statement. We have not participated in
the preparation of the Registration Statement and assume no responsibility for
its contents.
This opinion is limited to the laws of the State of Delaware (excluding
the securities laws of the State of Delaware), and we have not considered and
express no opinion on the laws of any other jurisdiction, including federal laws
and rules and regulations relating thereto. Our opinions are rendered only with
respect to Delaware laws and rules, regulations and orders thereunder which are
currently in effect.
Based upon the foregoing, and upon our examination of such questions of
law and statutes of the State of Delaware as we have considered necessary or
appropriate, and subject to the assumptions, qualifications, limitations and
exceptions set forth herein, we are of the opinion that:
1. The Trust has been duly created and is validly existing in good
standing as a business trust under the Business Trust Act.
2. The Capital Securities of the Trust will represent valid and,
subject to the qualifications set forth in paragraph 3 below, fully paid and
nonassessable undivided beneficial interests in the assets of the Trust.
3. The Capital Security Holders, as beneficial owners of the Trust,
will be entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware. We note that the Capital Security
Holders may be obligated to make payments as set forth in the Declaration.
We consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement. We hereby
consent to the use of our name under the heading "Legal Matters" in the
Prospectus. In giving the foregoing consents, we do not thereby admit that we
come within the category of persons whose consent is required under Section 7 of
the Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder. Except as stated above, without
our prior written consent, this opinion may not be furnished or quoted to, or
relied upon by, any other person for any purpose.
Very truly yours,
/s/ Richards, Layton & Finger
------------------------------
RICHARDS, LAYTON & FINGER
CDK
G:\LEGAL\RRD\CFT_II.DRF
November 22, 1996
Conseco, Inc.
Conseco Financing Trust II
11825 North Pennsylvania Street
Carmel, Indiana 46032
Ladies and Gentlemen:
We have acted as special tax counsel for Conseco, Inc. ("Conseco"), an
Indiana corporation, and Conseco Financing Trust II (the "Trust"), a Delaware
business trust, in connection with a Registration Statement on Form S-3 filed
with the Securities and Exchange Commission on or about October 29, 1996 (as
amended through the date hereof, the "Registration Statement") which registered,
among other things, Capital Trust Pass-through Securities (the "Capital
Securities") of the Trust (liquidation amount of $1,000 per Security). In
connection therewith, we have participated in the preparation of, and have
reviewed, the Registration Statement, including the prospectus (the
"Prospectus") and the form of prospectus supplement (the "Prospectus
Supplement") included therewith with respect to the Trust.
We have examined and relied upon the Registration Statement and, in
each case as filed with the Registration Statement, (i) the form of indenture
(the "Indenture") between Conseco and Fleet National Bank, as trustee; (ii) the
form of Second Supplemental Indenture to be used in connection with the issuance
of the Subordinated Deferrable Interest Debentures of Conseco due 2026 (the
"Subordinated Debentures") (the "Supplemental Indenture"), which Supplemental
Indenture includes the form of the Subordinated Debentures; (iii) the form of
declaration of trust for the Trust (the "Declaration"), which Declaration
includes the form of the Capital Securities; (iv) the form of guarantee by
Conseco with respect to the Capital Securities (the "Guarantee"); and (v)
certain other relevant documents used in connection with the issuance of the
Subordinated Debentures, the Capital Securities and the Guarantee (collectively
the "Operative Documents"). As to certain questions
<PAGE>
Conseco, Inc.
November 22, 1996
Page 2
of fact material or relevant to the opinion expressed herein, we have relied
upon a certificate obtained from an officer of Conseco and have assumed the
accuracy of the facts certified or stated to us and have made no independent
investigation of such facts.
Based on the foregoing and assuming that the Operative Documents are
executed and delivered in substantially the form filed as exhibits to the
Registration Statement and that the transactions contemplated to occur under the
Operative Documents in fact occur in accordance with the terms thereof, we
hereby confirm, in all material respects, that the discussion set forth in the
Prospectus Supplement with respect to the Trust under the heading "United States
Federal Income Taxation" is a fair and accurate summary of the matters addressed
therein, based upon current law and the assumptions stated or referred to
therein. There can be no assurance that contrary positions may not be taken by
the Internal Revenue Service.
We hereby consent to the use of our name in the above-captioned
Registration Statement and to the filing of this opinion as Exhibit 8 to the
Registration Statement. In giving such consent, we do not thereby admit that we
are in the category of persons whose consent is required under Section 7 of the
Securities Act of 1933. This opinion is expressed as of the date hereof, unless
otherwise expressly stated, and we disclaim any undertaking to advise you of any
subsequent changes of the facts stated or assumed herein or any subsequent
changes in applicable law.
Very truly yours,
/s/ LOCKE REYNOLDS BOYD & WEISELL
---------------------------------
LOCKE REYNOLDS BOYD & WEISELL
conseco\trups\taxopin3.ltr1126961613
<TABLE>
<CAPTION>
CONSECO, INC. AND SUBSIDIARIES
Exhibit 12.2
Pro Forma Computation of Ratio of Earnings to Fixed Charges
and Preferred Dividends
(Dollars in millions)
Year Ended December 31, 1995 Nine Months Ended September 30, 1996
------------------------------------- ------------------------------------
Pro forma for Pro forma for
Pro forma the Offering Pro forma the Offering
Conseco Pro forma and other Conseco Pro forma and other
before the for the planned before the for the planned
Offering Offering transactions Offering Offering transactions
-------- -------- ------------ -------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Pretax income from operations:
Income before extraordinary charge.......... $ 277.9 $ 273.1 $ 324.6 $ 216.0 $ 212.4 $ 267.9
Add income tax expense...................... 198.4 205.7 235.6 152.4 157.8 187.5
Add minority interest....................... 37.7 56.1 43.5 32.6 46.4 32.5
-------- -------- -------- -------- -------- --------
Pretax income........................... 514.0 534.9 603.7 401.0 416.6 487.9
-------- -------- -------- -------- -------- --------
Add fixed charges:
Interest expense on annuities and financial
products................................. 758.5 758.5 758.8 549.5 549.5 549.5
Interest expense on long-term debt,
including amortization.................... 126.2 105.3 145.2 87.8 72.2 104.6
Interest expense on investment borrowings... 30.2 30.2 30.2 17.2 17.2 17.2
Other ..................................... 1.0 1.0 1.0 .7 .7 .7
Portion of rental(1)........................ 6.9 6.9 6.9 5.8 5.8 5.8
-------- -------- -------- -------- -------- --------
Fixed charges........................... 922.8 901.9 942.1 661.0 645.4 677.8
-------- -------- -------- -------- -------- --------
Adjusted earnings....................... $1,436.8 $1,436.8 $1,545.8 $1,062.0 $1,062.0 $1,165.7
======== ======== ======== ======== ======== ========
Ratio of earnings to fixed charges...... 1.56X 1.59X 1.64X 1.61X 1.65X 1.72X
===== ===== ===== ===== ===== =====
Ratio of earnings to fixed charges,
excluding interest on annuities and
financial products .................. 4.13X 4.73X 4.29X 4.60X 5.34X 4.80X
===== ===== ===== ===== ===== =====
Fixed charges............................... $ 922.8 $ 901.9 $ 942.1 $ 661.0 $ 645.4 $ 677.8
Add dividends on preferred stock (multiplied
by the rate of pretax income to income
before minority interest and extraordinary
charge)................................... 69.8 98.0 98.4 51.8 72.9 73.2
-------- -------- -------- -------- -------- --------
Adjusted fixed charges.................. $ 992.6 $ 999.9 $1,040.5 $ 712.8 $ 718.3 $ 751.0
======== ======== ======== ======== ======== ========
Adjusted earnings....................... $1,436.8 $1,436.8 $1,545.8 $1,062.0 $1,062.0 $1,165.7
======== ======== ======== ======== ======== ========
Ratio of earnings to fixed
charges and preferred dividends...... 1.45X 1.44X 1.49X 1.49X 1.48X 1.55X
===== ===== ===== ===== ===== =====
Ratio of earnings to fixed charges
and preferred dividends, excluding
interest on annuities and financial
products............................. 2.90X 2.81X 2.79X 3.14X 3.04X 3.06X
===== ===== ===== ===== ===== =====
<FN>
(1) Interest portion of rental is assumed to be 33 percent.
</FN>
</TABLE>
S:\ACCTING\SECRPT\TOPRS\PFEXH12.WPD
EXHIBIT 23.9
RICHARDS, LAYTON & FINGER
One Rodney Square
P.O. Box 551
Wilmington, DE 19899
November 27, 1996
Conseco Financing Trust II
c/o Conseco, Inc.
11825 N. Pennsylvania Street
Carmel, IN 46032
Re: Conseco Financing Trust II
Ladies and Gentlemen:
We have acted as special Delaware counsel for Conseco, Inc., an Indiana
corporation (the "Company"), and Conseco Financing Trust II, a Delaware business
trust (the "Trust"), in connection with the matters set forth herein. Reference
is hereby made to the Registration Statement (the "Registration Statement") on
Form S-3, including a preliminary prospectus with respect to the Trust and
certain other subsidiary trusts of the Company filed by the Company and the
Trust with the Securities and Exchange Commission on October 29, 1996, and the
Propectus Supplement, dated November 22, 1996, with respect to the Trust
(together with the Prospectus included in the Registration Statement, the
"Prospectus"), relating to the Capital Trust Pass- through Securities of the
Trust representing preferred undivided beneficial interests in the assets of the
Trust.
We hereby consent to the use of our name under the heading "Legal
Matters" in the Prospectus. In giving the foregoing consent, we do not thereby
admit that we come within the category of persons whose consent is required
under Section 7 of the Securities Act of 1933, as amended, or the rules and
regulations of the Securities and Exchange Commission thereunder.
Very truly yours,
/s/ Richards, Layton & Finger
--------------------------------
RICHARDS, LAYTON & FINGER
CDK
G:\LEGAL\RRD\CFT_II2.DRF
