REGISTRATION NO. 333-32621
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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CONSECO, INC. INDIANA 35-1468632
(Exact name of the Registrants (State or other (I.R.S. Employer
as specified in their respective jurisdiction Identification No.)
charters) of incorporation or
organization)
11825 N. Pennsylvania St.
Carmel, Indiana 46032
(317) 817-6100
(Address, including zip code, and telephone number,
including area code, of each Registrant's principal
executive offices)
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Karl W. Kindig, Esquire
Conseco, Inc.
11825 N. Pennsylvania St.
Carmel, Indiana 46032
(317) 817-6708
(Name, address, including zip code, and telephone
number, including area code, of agent for service for
each Registrant)
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As
soon as practicable after the Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
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Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. this prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
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PRELIMINARY PROSPECTUS DATED
SEPTEMBER 17, 1997
PROSPECTUS
500,000 Shares
Common Stock
No Par Value
CONSECO, INC.
TO BE ISSUED UNDER THE CONSECO, INC. PRODUCER STOCK AWARD AND OPTION PLAN
Conseco, Inc., (the "Company") is hereby offering the right to purchase
shares of its common stock, no par value ("Common Stock"), pursuant to options
and stock awards granted under the Company's Producer Stock Award and Option
Plan (the "Plan"), to certain selected producers, agents and marketing
organizations ("Producers") who market and sell insurance and other products of
the Company's subsidiaries (the "Company's Subsidiaries"). The Company is an
Indiana corporation with its principal executive offices at 11825 North
Pennsylvania Street, Carmel, Indiana 46032, and its telephone number is (317)
817-6100.
An aggregate of 500,000 shares of Common Stock may be issued under the
Plan, subject to adjustments as described in the Plan and this Prospectus. The
shares of Common Stock are offered by the Company only to Producers pursuant to
(i) awards of shares of Common Stock under the Plan or (ii) valid exercises of
options to purchase shares of Common Stock granted under the Plan. No
underwriting discounts or commissions will be paid in connection with the
offering of such shares of Common Stock. The Company's Common Stock is traded on
the New York Stock Exchange under the symbol "CNC". On September 16, 1997, the
last reported sale price of the Common Stock on the New York Stock Exchange was
$46 7/8 per share.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
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The date of this Prospectus is September_______, 1997.
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FOR NORTH CAROLINA RESIDENTS: THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE COMMISSIONER OF INSURANCE FOR THE STATE OF NORTH CAROLINA,
NOR HAS THE COMMISSIONER OF INSURANCE RULED UPON THE ACCURACY OR THE ADEQUACY OF
THIS DOCUMENT.
State insurance holding company laws and regulations applicable to the
Company generally provide that no person may acquire control of the Company, and
thus indirect control of its insurance subsidiaries, unless such person has
provided certain required information to, and such acquisition is approved (or
not disapproved) by, the appropriate insurance regulatory authorities.
Generally, any person acquiring beneficial ownership of 10% or more of the
Common Stock would be presumed to have acquired such control, unless the
appropriate insurance regulatory authorities upon advance application determine
otherwise.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS OR THE DOCUMENTS INCORPORATED
OR DEEMED INCORPORATED BY REFERENCE HEREIN. IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION
OF AN OFFER TO BUY, ANY SECURITIES OTHER THAN THE REGISTERED SECURITIES TO WHICH
IT RELATES, OR AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY THE
SECURITIES TO WHICH IT RELATES, IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO
WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE FACTS SET FORTH
IN THIS PROSPECTUS OR IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company with the Commission can be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at
the following regional offices of the Commission: New York Regional Office, 7
World Trade Center, 13th Floor, New York, New York 10048; and Chicago Regional
Office, Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661. Copies of such material can be obtained from the Public Reference Section
of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, upon
payment of the prescribed rates. In addition, the Commission maintains a Web
site at http://www.sec.gov that contains reports, proxy and information
statements and other information regarding registrants, including the Company,
that file electronically with the Commission. Copies of such reports, proxy
statements and other information can also be inspected at the offices of the New
York Stock Exchange, 20 Broad Street, New York, New York 10005.
The Company has filed with the Commission a Registration Statement on
Form S-3 under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the Securities offered hereby. This Prospectus, which
constitutes part of the Registration Statement, does not contain all of the
information set forth in the Registration Statement and the exhibits thereto,
certain parts of which are omitted in accordance with the rules and regulations
of the Commission. Statements contained herein concerning the provisions of any
document do not purport to be complete and, in each instance, are qualified in
all respects by reference to the copy of such document filed as an exhibit to
the Registration Statement or otherwise filed with the Commission. For further
information with respect to the Company and the Common Stock, reference is
hereby made to such Registration Statement, including the exhibits thereto and
the documents incorporated herein by reference, which can be examined at the
Commission's principal office, 450 Fifth Street, N.W., Washington, D.C. 20549,
or copies of which can be obtained from the Commission at such office upon
payment of the fees prescribed by the Commission.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed by the Company with the
Commission pursuant to the Exchange Act are incorporated herein by this
reference:
1. Annual Report on Form 10-K for the fiscal year ended December 31,
1996 including Part III thereof which is incorporated by reference from the
Company's proxy statement dated April 10, 1997 for its annual meeting of
shareholders (the "Company's Annual Report");
2. Quarterly Reports on Form 10-Q for the quarters ended March 31,
1997 and June 30, 1997, respectively;
3. Current Reports on Form 8-K dated April 1, 1997 and April 30,
1997; and
4. The description of the Company's Common Stock in its Registration
Statements filed pursuant to Section 12 of the Exchange Act, and any amendment
or report filed for the purpose of updating any such description.
All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date hereof and prior to the
termination of the offering made hereby shall be deemed to be incorporated by
reference in this Prospectus or any Prospectus Supplement and to be part hereof
from the date of filing of such documents.
Any statement contained herein, or in a document incorporated or deemed
to be incorporated by reference herein, shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus or
any Prospectus Supplement. To the extent that any proxy statement is
incorporated by reference herein, such incorporation shall not include any
information contained in such proxy statement that is not, pursuant to the
Commission's rules, deemed to be "filed" with the Commission or subject to the
liabilities of Section 18 of the Exchange Act.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon the written or oral request of such person, a copy
of any or all of the documents incorporated herein by reference (other than
exhibits to such documents unless such exhibits are specifically incorporated by
reference into such documents). Any such request should be directed to James W.
Rosensteele, Senior Vice President, Corporate Communications, Conseco, Inc.,
11825 N. Pennsylvania Street, Carmel, Indiana 46032 (telephone number: (317)
817-2893).
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THE COMPANY
The Company is a financial services holding company. The Company
develops, markets and administers annuity, health insurance and individual life
insurance products. The Company's operating strategy is to grow the insurance
business within its subsidiaries by focusing its resources on the development
and expansion of profitable products and strong distribution channels. The
Company has supplemented such growth by acquiring companies that have profitable
niche products, strong distribution systems and progressive management teams who
can work with the Company to implement the Company's operating and growth
strategies. Once a company has been acquired, the Company's operating strategy
has been to consolidate and streamline management and administrative functions,
to realize superior investment returns through active asset management, to
eliminate unprofitable products and distribution channels, and to expand and
develop profitable distribution channels and products.
The Company's principal executive offices are located at 11825 N.
Pennsylvania Street, Carmel, Indiana 46032. Its telephone number is (317)
817-6100.
DESCRIPTION OF THE PLAN
Background. The Board of Directors of the Company (the "Board of
Directors") has adopted the Conseco, Inc. Producer Stock Award and Option Plan
(the "Plan"). The purpose of the Plan is to provide incentives to increase the
financial identification of Producers who market and sell the insurance and
other products of the Company's subsidiaries with the long-term growth of the
Company and the interests of the Company's shareholders through the ownership
and performance of the Company's Common Stock and to enhance the Company's
ability to retain Producers and to attract outstanding prospective Producers.
The summary of the Plan which appears below is qualified in its
entirety by reference to the full text of the Plan attached hereto as Annex 1.
Because the Plan is not offered to employees, the Plan is not a "qualified plan"
within the meaning of Section 401 of the Internal Revenue Code of 1986, as
amended (the "Code"), and is not subject to the protective provisions of the
Employee Retirement Income Security Act of 1974, as amended.
Types of Awards. The Plan provides for the grant of awards of stock
options and awards of restricted or unrestricted stock. Awards may be made to
the same person on more than one occasion and may be granted singly, in
combination, or in tandem as determined by the Stock Award Committee of the
Board of Directors (the "Stock Award Committee").
Term. The Plan became effective as of May 13, 1997. The Plan will
remain in effect until all awards have been satisfied or expired unless earlier
suspended or terminated. The Plan may be suspended or terminated at any time by
the Board of Directors, but any such suspension or termination will not affect
awards made prior to such suspension or termination.
Administration. The Plan is administered by the Stock Award Committee.
The members of the Stock Award Committee are (i) the Chief Executive Officer,
(ii) the Chief Financial Officer and (iii) the Chief Marketing Officer of the
Company if they are also directors of the Company. If any such officer is not a
director, the Board of Directors will elect a member of the Board of Directors
to serve on the Stock Award Committee instead of such officer. Subject to the
provisions of the Plan, the Stock Award Committee, consistent with the
provisions of the Plan, will have sole authority acting in its sole discretion
(i) to select Producers to receive awards, (ii) to determine the timing, form,
amount or value and terms of awards, and the conditions and restrictions, if
any, subject to which awards will be made and become vested or exercisable under
the Plan, (iii) to construe the Plan and to prescribe rules and regulations with
respect to the administration of the Plan and (iv) to make such other
determinations not inconsistent with the provisions of the Plan, as the Stock
Award Committee deems necessary or appropriate. All decisions made by the Stock
Award Committee shall be final, conclusive, and binding on all participants in
the Plan.
Participants in the Plan should contact the Secretary, Conseco, Inc.,
Legal Department, 11825 N. Pennsylvania Street, Carmel, Indiana 46032, (317)
817-6100 to obtain additional information with respect to the Plan or the
administrators of the Plan serving on the Stock Award Committee. The current
members of the Stock Award Committee are Messrs. Stephen C. Hilbert (Chairman),
Rollin M. Dick and Donald F. Gongaware and their address is Conseco, Inc., 11825
N. Pennsylvania Street, Carmel, Indiana 46032.
Eligibility. Producers who market and sell insurance and other
products of the Company's subsidiaries are eligible to participate in the Plan.
Awards under the Plan may be made or granted only to producers, agents or
marketing organizations who, at the time
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of grant, are Producers. The selection of participants from Producers is within
the sole discretion of the Stock Award Committee.
Shares Subject to the Plan. The number of shares of Common Stock which
may be issued pursuant to awards granted under the Plan may not exceed 500,000,
subject to adjustment as provided herein and in the Plan.
Shares of Common Stock shall be deemed to be issued under the Plan only
to the extent actually issued pursuant to the grant of a stock award or the
exercise of a stock option. To the extent that an award lapses or is forfeited,
any shares subject to such award shall again be made available for grant.
Stock Splits, Reorganizations and other Corporate Events. In the event
of any increases or decreases in the number of issued and outstanding shares of
Common Stock pursuant to stock splits, mergers, reorganizations,
recapitalizations, stock dividends or other events described under the terms of
the Plan, appropriate adjustments will be made to the aggregate number of shares
available for issuance under the Plan and the number of shares subject to
outstanding stock awards and stock options, in the exercise price per share of
outstanding stock options and in the number and kinds of shares which may be
distributed under the Plan. The terms of stock options and stock awards shall
also be subject to adjustments by the Stock Award Committee to reflect changes
in the Company's capitalization.
Stock Options. The Stock Award Committee may grant awards in the form
of options to purchase shares of Common Stock. The Stock Award Committee will,
in its sole discretion with regard to each stock option, determine the number of
shares subject to the option, the manner and time of the option's exercise, the
exercise price of the option and such other terms and conditions including any
circumstances under which options would be subject to forfeiture, not
inconsistent with the provisions of the Plan, as the Stock Award Committee may
prescribe. Upon exercise of an option, the exercise price may, at the discretion
of the Stock Award Committee, be paid by a participant in cash, shares of Common
Stock or a combination thereof. The Stock Award Committee will determine the
effect on the optionee's rights under an option in the event of the optionee's
termination as a Producer (by reason of death, retirement, disability, or
otherwise). An option may not be exercised if the holder is then in default of
the payment of any obligations, including, but not limited to, agent debit
balances, owed to the Company or any subsidiary of the Company.
Options and Rights in Substitution for Stock Options Granted by other
Corporations. Options may be granted under the Plan from time to time in
substitution for stock options held by individuals or entities who become
Producers as a result of the merger or consolidation of the corporation with
whom they had an agent relationship with the Company or any subsidiary of the
Company, or the acquisition by the Company or a subsidiary of the Company of the
assets of such corporation, or the acquisition by the Company or a subsidiary of
the Company of stock of such corporation with the result that such corporation
becomes a subsidiary of the Company.
Unrestricted Stock. The Plan provides that unrestricted shares of
Common Stock may be awarded to Producers from time to time as determined by the
Stock Award Committee upon such terms and conditions as the Stock Award
Committee may from time to time determine in its sole discretion.
Restricted Stock. The Plan provides that shares of Common Stock subject
to certain restrictions may be awarded to Producers from time to time as
determined by the Stock Award Committee. The Stock Award Committee will
determine the nature and extent of the restrictions on such shares, the duration
of such restrictions, and any circumstance under which restricted shares will be
forfeited. The Stock Award Committee will determine the effect on the
participant's rights under a stock award in the event of the termination of a
Producer's status as such (by reason of retirement, disability, death or
otherwise) prior to the lapse of any applicable restrictions.
Awards Subject to Performance Criteria. On such terms and subject to
such conditions as the Stock Award Committee, in its sole discretion may
determine, the Company may provide for options or stock awards to be granted in
the future to Producers within a marketing organization of the Company or any of
its subsidiaries or other Producers subject to the satisfaction of performance
or other criteria. For example, the Stock Award Committee may provide for stock
options to be granted to Producers within a marketing organization after a
calendar year in which the marketing organization met a certain level of sales
of insurance or other products of the Company's subsidiaries. Similarly, the
exact amount of shares of Common Stock subject to such an option and the
exercise price thereof could be based upon formulas determined by the Stock
Award Committee, in its sole discretion.
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Agreements, Programs, Rules, Other Arrangements. Each award under the
Plan may be evidenced, recorded or disseminated by an agreement, the
promulgation of programs or rules or in such other manner and in such form and
containing such provisions not inconsistent with the provisions of the Plan as
the Stock Award Committee from time to time approves. In applicable situations,
such agreements, programs, rules or other arrangements may include provisions
providing for the payment of the exercise price, in whole or in part, in cash or
by the delivery of Common Stock. Such agreements, programs, rules or other
arrangements may also include, without limitation, provisions relating to (i)
vesting, (ii) tax matters (including provisions prohibiting a holder from making
an election under Section 83(b) of the Code) and (iii) any other matters not
inconsistent with the provisions of the Plan that the Stock Award Committee, in
its sole discretion, determines. The terms and conditions of agreements need not
be similar or identical. The Company shall have the right to deduct in cash
(whether under the Plan or otherwise) in connection with all awards any taxes
required to be withheld and to require any payments required to enable it to
satisfy its withholding obligations.
Registration of Common Stock. The Company intends to make application
to the New York Stock Exchange for approval of the listing on the New York Stock
Exchange of the shares of Common Stock to be issued under the Plan; however, the
Company will not be obligated to issue any shares of Common Stock under the Plan
unless such shares have been registered under all applicable federal and state
securities and other laws and have been listed on the New York Stock Exchange.
Amendment. The Board of Directors may, in its sole discretion, at any
time or from time to time, terminate, suspend or amend the Plan in any respect.
No amendment, suspension or termination of the Plan shall, without the consent
of any optionee or participant in the Plan adversely affected by such
termination, suspension or amendment, alter or impair the rights of such person
under any options or other awards previously granted under the Plan.
Change of Control. The Stock Award Committee, in its sole discretion,
may determine that upon the occurrence of a Change of Control (as defined in the
Plan), an award outstanding shall be adjusted to effect such Change of Control,
including, but not limited to, (a) termination of each award within a specified
number of days after notice to the holder thereof, and the receipt by such
holder, with respect to each share of Common Stock subject to such award, cash
in an amount equal to the excess of (i) the higher of (x) the Fair Market Value
(as defined in the Plan) of such share of Common Stock immediately prior to the
occurrence of such transaction or (y) the value of the consideration to be
received in such transaction for one share of Common Stock over (ii) the price
per share, if applicable, of Common Stock set forth in such award or (b)
assumption of such award by the acquiring party. If the consideration offered to
shareholders of the Company in any transaction described in this paragraph
consists of anything other than cash, the Stock Award Committee may, in its sole
discretion, determine the fair cash equivalent of the portion of the
consideration offered which is other than cash. A "Change of Control" of the
Company is deemed to occur under the Plan if: (i) any "person," as such term is
used in Sections 13(d) and 14(d)(2) of the Exchange Act, becomes the beneficial
owner, directly or indirectly, of securities of the Company representing 25% or
more of the combined voting power of the Company's outstanding securities then
entitled to vote for the election of directors; or (ii) as the result of a
tender offer, merger, consolidation, sale of assets, or contest for election of
directors, or any combination of the foregoing transactions or events,
individuals who were members of the Board of Directors of the Company
immediately prior to any such transaction or event shall not constitute a
majority of the Board of Directors following such transaction or event. However,
no change of control shall be deemed to have occurred if and when either (A) any
such change is the result of a transaction which constitutes a "Rule 13e-3
transaction" as such term is defined in Rule 13e-3 promulgated under the
Exchange Act or (B) any such person becomes, with the approval of the Board of
Directors of the Company, the beneficial owner of securities of the Company
representing 25% or more but less than 50% of the combined voting power of the
Company's then outstanding securities entitled to vote with respect to the
election of its Board of Directors and in connection therewith represents, and
at all times continues to represent, in a filing, as amended, with the
Securities and Exchange Commission on Schedule 13D or Schedule 13G (or any
successor Schedule thereto) that "such person has acquired such securities for
investment and not with the purpose nor with the effect of changing or
influencing the control of the Company, nor in connection with or as a
participant in any transaction having such purpose or effect", or words of
comparable meaning and import.
TAXATION OF AWARDS.
Stock Options. Under current federal income tax law, the grant of a
non-qualified stock option has no tax effect on the Company or the option holder
to whom it is granted. Generally, the Company will be allowed to take a
deduction for federal income tax purposes
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in an amount equal to the excess of the fair market value of the shares at the
time of exercise by the option holder over the exercise price at the time the
option holder exercises his or her stock option. Generally, the exercise of the
option will result in ordinary income to the option holder equal to the amount
of the deduction allowed to be taken by the Company.
If the option holder pays cash to exercise the option, the option
holder's tax basis in the shares received will be the aggregate exercise price
paid by the option holder plus the amount of taxable income recognized upon
exercise. Upon any subsequent disposition of such shares, gain or loss will be
capital gain or loss and will be long term if such shares are held more than the
required time period after exercise.
If the option holder pays the exercise price by delivering existing
shares of Common Stock, the tax treatment of the income from the difference
between the exercise price and the fair market value of the stock received is
the same as described above. Generally, the option holder will not recognize a
gain on the transfer of the option holder's existing stock. The corresponding
number of shares received on exercise of the option will be treated as if they
are the same as the shares used to pay for the exercise of the option. Thus,
gain on the shares used to pay the exercise price will be deferred until the
substituted shares received are later sold. The optionee must recognize ordinary
income equal to the fair market value of the number of shares acquired in excess
of the number of shares used for the stock option exercise (the "excess
shares"). The excess shares would then have a tax basis equal to the ordinary
income recognized. The Company would also be entitled to a deduction equal to
the ordinary income recognized by the optionee.
Effect of Restrictions. Under general tax rules, if the shares received
on exercise of non-qualified options are subject to restrictions on transfer and
risk of forfeiture, taxation of the transaction (and the Company's deduction)
will be deferred until the restrictions lapse, unless the participant makes an
election to be taxed at the time of exercise in which case a corresponding
deduction will be allowed for the Company. Award agreements or other
arrangements may prohibit a holder from making an election to be taxed before
the lapse of the restrictions.
Restricted Shares. An individual receiving restricted shares generally
will recognize ordinary income when the restrictions lapse in an amount equal to
the excess of (i) the fair market value of the shares of Common Stock at the
time the restrictions lapse over (ii) any amount paid for the restricted shares.
However, the individual may elect, within 30 days after the date of receipt of
the restricted shares, to report ordinary income at the time of such receipt
equal to the excess of (i) the fair market value of the restricted shares of
Common Stock at the time the restrictions lapse over (ii) any amount paid for
the restricted shares. One risk in making such an election is that, if the
restrictions fail to lapse for any reason, the individual will not be entitled
to a deduction. Generally, the Company will be entitled to a deduction equal to
the amount of income recognized by the individual at the time income is
recognized. An individual disposing of restricted shares will recognize short
term or long term capital gain or loss, depending on whether their stock is held
for less or more than one year from (a) the date the restrictions lapse (if no
election has been made), or (b) from the date of receipt if an election has been
made.
Unrestricted Shares. A participant receiving any award of unrestricted
shares of Common Stock will recognize income, and the Company will generally be
allowed a deduction, when the award is paid. The amount of cash and the fair
market value of the shares of Common Stock received will be ordinary income to
the participant, and the Company will generally be entitled to a tax deduction
in an amount equal to the ordinary income recognized by the participant.
THE FOREGOING IS A GENERAL DISCUSSION OF CERTAIN POTENTIAL MATERIAL
INCOME TAX ASPECTS OF THE AWARDS AND IS INCLUDED FOR GENERAL INFORMATION ONLY.
THE FOREGOING DISCUSSION DOES NOT TAKE INTO ACCOUNT THE PARTICULAR FACTS AND
CIRCUMSTANCES OR TAX STATUS OR ATTRIBUTES OF EACH PARTICIPANT. AS A RESULT, THE
INCOME TAX CONSEQUENCES ADDRESSED IN THE FOREGOING DISCUSSION MAY NOT APPLY TO
EACH PARTICIPANT. ACCORDINGLY, EACH PARTICIPANT SHOULD CONSULT HIS OWN TAX
ADVISOR REGARDING THE SPECIFIC TAX CONSEQUENCES OF AWARDS, INCLUDING, BUT NOT
LIMITED TO, THE APPLICATION AND EFFECT OF FEDERAL, STATE, LOCAL AND OTHER TAX
LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN SUCH LAWS.
PURCHASE OF COMMON STOCK PURSUANT TO STOCK OPTIONS UNDER THE PLAN
Method of Exercise. Options granted under the Plan may only be
exercised by written notice to the Stock Award Committee or such other person
designated by the Stock Award Committee at Conseco, Inc., 11825 N. Pennsylvania
Street, Carmel, Indiana 46032. The notice
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must specify the exact name, address and social security number of the optionee
and list the options to be exercised. The Company may from time to time require
additional information in order to effectuate the exercise. The notice must also
state the method of payment of the exercise price and be accompanied by such
payment. The Company currently allows several methods of payment as discussed
below under "-Payment for Shares." The Stock Award Committee must approve any
payment of the exercise price by any method other than payment in cash.
Exercise Price. The Stock Award Committee determines the exercise price
per share in its sole discretion based upon such factors as it deems
appropriate.
Payment for Shares. The Plan provides that shares purchased through the
exercise of an option must be paid for in full either (i) in cash (checks made
payable to "Conseco, Inc." are acceptable); (ii) with a number of shares of the
Company's Common Stock having a fair market value equal to the exercise price;
(iii) pursuant to a "cashless" exercise program through a broker, bank, or other
financial intermediary acceptable to the Company, where the Company has received
adequate assurances that the exercise price and any required tax withholdings
will be paid to the Company; or (iv) any combination of (i),(ii) or (iii). The
certificates evidencing the shares to be used for payment must be endorsed in
blank as specified on the reverse side of such certificates.
Rights as a Stockholder. No stock will be issued until payment is
received, and as a holder of options, an optionee has no rights as a stockholder
of the Company until the option is exercised and the stock is issued. If an
optionee chooses to use shares of Common Stock to pay all or a portion of an
option exercise price, the shares of stock surrendered in payment will be valued
at the closing price on the date written notice of exercise is received by the
Company and, for dividend payment purposes, shall not be canceled and therefore
shall be deemed to be outstanding until new certificates for the option shares
so purchased are issued.
LIMITATIONS ON EXERCISE OF STOCK OPTIONS
Maximum Exercise Period. While the Plan contains certain specific
provisions pertaining to the exercise and lapse of options upon death,
termination of employment or retirement, the Plan does not specify the length of
time an option granted under the Plan may be exercisable from the date it was
granted. The Stock Award Committee establishes such a period for each grant of
options.
Death. If an optionee dies while a Producer, then vested options may be
exercised within twelve months of the date of death by the executor or
administrator of the optionee's estate or the optionee's legatees or heirs but
only within the original term of the option and only to the extent the deceased
optionee could have exercised the option on the date of death. Unvested options
may not be exercised.
Termination of Status as a Producer. Vested options may be exercisable
for up to three months following termination of status as a Producer for reasons
other than death, permanent and total disability, for cause or voluntarily
without the Company's written consent. Unvested options may not be exercised.
Disability. If an optionee's status as a Producer terminates due to
permanent and total disability, the optionee may exercise any outstanding vested
options, to the extent exercisable at the time of termination, within twelve
months of the date terminated. Unvested options may not be exercised.
ASSIGNMENT OF AWARDS
Pursuant to the tax laws and the provisions of the Plan, except for
unrestricted stock awards, awards granted under the Plan to a natural person are
not transferable other than by will or the laws of descent and distribution and
exercisable only by or on behalf of, the person to whom the option was granted
or by his or her estate or heirs as described above. However, the Stock Award
Committee may, in its sole discretion, provide for or permit the transfer of
awards by gift to any member of a holder's immediate family or to a trust for
the benefit of such immediate family member. Except for unrestricted stock
awards, awards granted to a corporation or other entity shall not be
transferrable and are exercisable only by such holder or, if permitted by the
Stock Award Committee in its sole discretion, by such holder's successors by
merger, consolidation, reorganization or liquidation.
Except for unrestricted stock awards and except as permitted under the
Plan, no awards or interest therein may be transferred, assigned, pledged or
hypothecated by the holder thereof, or be made subject to levy, execution,
attachment or similar process, by operation of law or otherwise.
9
<PAGE>
USE OF PROCEEDS
The purpose of the Plan is to provide an additional incentive for
eligible Participants to market and sell the insurance and other products of the
Company's Subsidiaries and to generally promote the success of the Company's
business, rather than to obtain proceeds for any particular purpose. The net
proceeds that become available to the Company through the exercise of options
and sales of Common Stock pursuant to the terms of the Plan are expected to be
used for general corporate purposes.
RATIOS OF EARNINGS TO FIXED CHARGES, EARNINGS TO FIXED
CHARGES AND PREFERRED STOCK DIVIDENDS
AND EARNINGS TO FIXED CHARGES, PREFERRED STOCK DIVIDENDS
AND DISTRIBUTIONS ON COMPANY-OBLIGATED MANDATORILY
REDEEMABLE PREFERRED SECURITIES OF SUBSIDIARY TRUSTS
The following table sets forth the Company's ratios of earnings to
fixed charges, earnings to fixed charges and preferred stock dividends and
earnings to fixed charges, preferred stock dividends and distributions on
Company-obligated mandatorily redeemable preferred securities of subsidiary
trusts for each of the five years ended December 31, 1996 and for the six months
ended June 30, 1996 and 1997.
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED JUNE 30,
----------------------- --------------
1992 1993 1994 1995 1996 1996 1997
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges:
As reported............................ 1.54X 2.19X 2.26X 1.57X 1.61X 1.62X 1.96X
Excluding interest on annuities and
financial products(1)(2)............ 6.24X 8.85X 4.55X 3.80X 4.55X 4.31X 7.66X
Ratio of earnings to fixed charges and
preferred dividends:
As reported......................... 1.50X 2.04X 1.95X 1.50X 1.50X 1.47X 1.83X
Excluding interest on annuities and
financial products(1)(2).......... 5.09X 6.00X 3.14X 3.06X 3.23X 2.80X 5.12X
Ratio of earnings to fixed charges,
preferred dividends and distributions
on Company-obligated mandatorily
redeemable preferred securities of
subsidiary trusts:
As reported......................... 1.50X 2.04X 1.95X 1.50X 1.50X 1.47X 1.71X
Excluding interest on annuities and
financial products(1)(2).......... 5.09X 6.00X 3.14X 3.06X 3.14X 2.80X 3.80X
<FN>
(1) These ratios are included to assist the reader in analyzing the impact of
interest on annuities and financial products (which is not generally
required to be paid in cash in the period it is recognized). Such ratios
are not intended to, and do not, represent the following ratios prepared
in accordance with generally accepted accounting principles ("GAAP"): the
ratio of earnings to fixed charges; the ratio of earnings to fixed charges
and preferred dividends; or the ratio of earnings to fixed charges,
preferred dividends and distributions on Company-obligated mandatorily
redeemable preferred securities of subsidiary trusts.
</FN>
<FN>
(2) Excludes interest credited to annuity and financial products of $506.8
million, $408.5 million, $134.7 million, $585.4 million and $668.6 million
for the years ended December 31, 1992, 1993, 1994, 1995 and 1996,
respectively, and $289.7 million and $379.8 million for the six months
ended June 30, 1996 and 1997, respectively.
</FN>
</TABLE>
10
<PAGE>
LEGAL MATTERS
The legal validity of the Common Stock has been passed upon for the
Company by Karl W. Kindig, Senior Vice President, Legal of Conseco Services,
LLC, a subsidiary of the Company. Mr. Kindig is a full-time employee of Conseco
Services, LLC and owns, directly and indirectly, 7,855 shares and holds options
to purchase 181,136 shares of Common Stock.
EXPERTS
The consolidated financial statements and schedules of the Company as of
December 31, 1996 and 1995, and for each of the three years in the period ended
December 31, 1996 incorporated by reference in this Prospectus, have been
audited by Coopers & Lybrand L.L.P., independent accountants, as set forth in
their reports thereon included therein and are incorporated herein by reference
in reliance upon such reports given upon the authority of such firm as experts
in accounting and auditing.
CONTINUOUS OFFERING PURSUANT TO RULE 415
The Common Stock offered hereby is being registered on a delayed or
continuous basis pursuant to Rule 415 of the Commission for purposes of allowing
the exercise of options by optionees in accordance with the terms of the Plan.
As set forth above under the caption "INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE," information concerning the Company and the Common Stock is available
from reports filed by the Company with the Commission in current reports on Form
8-K, quarterly reports on Form 10-Q, and annual reports on Form 10- K. All
optionees are encouraged to carefully review the current information before
making decisions concerning the exercise of options granted pursuant to the
Plan.
11
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
----
<S> <C>
Prospectus................................................................................................ 2
Available Information..................................................................................... 3
Incorporation of Certain Documents by Reference........................................................... 4
The Company............................................................................................... 5
Description of the Plan................................................................................... 5
Use of Proceeds........................................................................................... 10
Ratios of Earnings to Fixed Charges, Earnings to Fixed Charges and
Preferred Stock Dividends and Earnings to Fixed Charges, Preferred
Stock Dividends and Distributions on Company-obligated Mandatorily
Redeemable Preferred Securities of Subsidiary Trusts................................................. 10
Legal Matters............................................................................................. 11
Experts................................................................................................... 11
Continuous Offering Pursuant to Rule 415.................................................................. 11
Annex 1...................................................................................................A-1
</TABLE>
12
<PAGE>
ANNEX 1
CONSECO, INC.
PRODUCER STOCK AWARD AND OPTION PLAN
ARTICLE I.
Purpose
The purpose of the CONSECO, INC. PRODUCER STOCK AWARD AND OPTION PLAN
(the "Plan") is to provide a means through which CONSECO, INC., an Indiana
corporation (the "Company"), can provide incentives to increase the financial
identification of producers, agents or marketing organizations who market and
sell insurance and other products of the subsidiaries of the Company
("Producers") with the long-term growth of the Company and the interests of the
Company's shareholders through the ownership and performance of the Company's
Common Stock and to enhance the Company's ability to retain and to attract such
producers, agents or marketing organizations. Accordingly, the Plan provides for
the granting of Stock Options, Stock Awards or any combination of the foregoing,
as is best suited under the circumstances.
ARTICLE II.
Definitions
The following definitions shall be applicable throughout the Plan
unless specifically modified by any paragraph:
(a) "Award" means, individually or collectively, any Option or Stock
Award.
(b) "Board" means the Board of Directors of the Company.
(c) A "Change of Control" of the Company shall mean a change of control
of a nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the 1934 Act as revised
effective January 20, 1987, or, if Item 6(e) is no longer in effect, any
regulations issued by the Securities and Exchange Commission pursuant to the
1934 Act which serve similar purposes; provided, that, without limitation, (x)
such a change of control shall be deemed to have occurred if and when either (A)
except as provided in (y) below, any "person" (as such term is used in Sections
13(d) and 14(d) of the 1934 Act) is or becomes a "beneficial owner" (as such
term is defined in Rule 13d-3 promulgated under the 1934 Act), directly or
indirectly, of securities of the Company representing 25% or
<PAGE>
more of the combined voting power of the Company's then outstanding securities
entitled to vote with respect to the election of its Board of Directors or (B)
as the result of a tender offer, merger, consolidation, sale of assets, or
contest for election of directors, or any combination of the foregoing
transactions or events, individuals who were members of the Board of Directors
of the Company immediately prior to any such transaction or event shall not
constitute a majority of the Board of Directors following such transaction or
event, and (y) no such change of control shall be deemed to have occurred if and
when either (A) any such change is the result of a transaction which constitutes
a "Rule 13e-3 transaction" as such term is defined in Rule 13e-3 promulgated
under the 1934 Act or (B) any such person becomes, with the approval of the
Board of Directors of the Company, the beneficial owner of securities of the
Company representing 25% or more but less than 50% of the combined voting power
of the Company's then outstanding securities entitled to vote with respect to
the election of its Board of Directors and in connection therewith represents,
and at all times continues to represent, in a filing, as amended, with the
Securities and Exchange Commission on Schedule 13D or Schedule 13G (or any
successor Schedule thereto) that "such person has acquired such securities for
investment and not with the purpose nor with the effect of changing or
influencing the control of the Company, nor in connection with or as a
participant in any transaction having such purpose or effect," or words of
comparable meaning and import. The designation by any such person, with the
approval of the Board of Directors of the Company, of a single individual to
serve as a member of, or observer at meetings of, the Company's Board of
Directors, shall not be considered "changing or influencing the control of the
Company" within the meaning of the immediately preceding clause (B), so long as
such individual does not constitute at any time more than one-third of the total
number of directors serving on such Board.
(d) "Common Stock" means the common stock, no par value per share,
of the Company.
(e) "Company" means Conseco, Inc., an Indiana corporation, and any
successor thereto.
(f) "1934 Act" means the Securities Exchange Act of 1934, as
amended.
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<PAGE>
(g) "Exercise Price" means the price established by the Stock Award
Committee as the consideration that must be paid to purchase Common Stock
pursuant to the exercise of an Option.
(h) "Fair Market Value" means, as of any specified date, the mean of
the reported high and low sales prices of the Common Stock on the stock exchange
composite tape on that date, or if no prices are reported on that date, on the
last preceding date on which such prices of Common Stock are so reported. If the
Common Stock is traded over the counter at the time a determination of its fair
market value is required to be made hereunder, its fair market value shall be
deemed to be equal to the average of the closing bid and asked prices of Common
Stock for the time period and business days specified in an Award Agreement. In
the event Common Stock is not publicly traded at the time a determination of
this value is required to be made hereunder, the determination of its fair
market value shall be made by the Stock Award Committee in such manner as it
deems appropriate.
(i) "Holder" means a Producer who has been granted an Award.
(j) "Option" means an Award granted under Article VII of the Plan.
(k) "person" means an individual, corporation, partnership, limited
liability company, proprietorship or joint venture.
(l) "Plan" means Conseco, Inc. Producer Stock Award and Option Plan, as
amended from time to time.
(m) "Producer" means any person or marketing organization appointed or
contracted to sell insurance or any other products of the Company or its
subsidiaries in an agency, brokerage or similar relationship with the Company or
its subsidiaries or any entity or person who supervises or manages the
activities of such persons.
(n) "Stock Award" means an Award granted under Article VIII of the
Plan.
(o) "Stock Award Committee" means a committee consisting of three
members of the Board which shall include the Chief Executive Officer of the
Company, the Chief Marketing Officer of the Company and the Chief Financial
Officer of the Company, if such officers are members of the Board. If any such
officer is not a Director, the Board may elect a member of the Board to serve on
the Stock Award Committee instead of such officer. The Chief Marketing Officer
shall be the chairman of the Stock Award Committee.
A-3
<PAGE>
(p) "Total and Permanent Disability" means the inability of as a
Producer to provide meaningful service for the Company and its subsidiaries as a
Producer due to a medically determinable physical or mental impairment. Such
determination of total and permanent disability shall be made by the Stock Award
Committee.
ARTICLE III.
Effective Date and Duration of the Plan
The Plan shall be effective as of May 13, 1997, the date of its
adoption by the Board. The Plan shall remain in effect until all Awards granted
under the Plan have been satisfied or expired unless earlier suspended or
terminated as permitted herein.
ARTICLE IV.
Administration of the Plan
Section 4.01 Administration by the Stock Award Committee. The Plan
shall be administered by the Stock Award Committee.
Section 4.02 Powers. Subject to the provisions of the Plan, the Stock
Award Committee, consistent with the provisions of the Plan, shall have sole
authority, in its sole discretion (i) to select Producers to receive Awards,
(ii) to determine the timing, form, amount or value and terms of Awards, and the
conditions and restrictions, if any, subject to which Awards will be made and
become vested or exercisable under the Plan, (iii) to construe the Plan and to
prescribe rules and regulations with respect to the administration of the Plan
and (iv) to make such other determinations not inconsistent with the Plan, as
the Stock Award Committee deems necessary or appropriate. In making such
determinations the Stock Award Committee may take into account the nature of the
services rendered by the Producers, their present and potential contributions to
the Company's success, the recommendations of marketing organizations under whom
the Producers may be sub-agents and such other factors as the Stock Award
Committee in its sole discretion shall deem relevant.
Section 4.03 Additional Powers. The Stock Award Committee shall have
such additional powers as may be required to enable it to administer the Plan
and to carry out its duties hereunder. The Stock Award Committee may correct any
defect or supply any omission or reconcile any inconsistency in any agreement
relating to an Award in the manner and to the extent it shall deem expedient to
carry it into effect. The determinations of the Stock Award Committee on the
matters referred to in this Article IV shall be conclusive.
A-4
<PAGE>
ARTICLE V.
Grant of Options and Stock Awards;
Shares Subject to the Plan
Section 5.01 Stock Grant and Award Limits. The Stock Award Committee
may from time to time grant Awards to one or more Producers determined by it to
be eligible for participation in the Plan in accordance with the provisions of
Article VI. The Stock Award Committee may from time to time cause the Company to
enter into commitments to grant Awards in the future based upon the achievement
of performance and other criteria. Subject to Article X, the aggregate number of
shares of Common Stock that may be issued under the Plan shall not exceed
500,000 shares. Shares shall be deemed to have been issued under the Plan only
to the extent actually issued and delivered pursuant to an Award. To the extent
that an Award lapses or the rights of its Holder terminate, any shares of Common
Stock subject to such Award shall again be available for the grant of an Award.
Stock certificates shall be issued by the Company for those shares acquired
pursuant to a Stock Award or the exercise of an Option.
Section 5.02 Stock Offered. The stock to be offered pursuant to the
grant of an Award may be authorized but unissued Common Stock or Common Stock
previously issued and outstanding and reacquired by the Company.
ARTICLE VI.
Eligibility
Awards made pursuant to the Plan may be granted only to persons who, at
the time of grant, are Producers. An Award may be granted on more than one
occasion to the same person, and, subject to the limitations set forth in the
Plan, such Award may include Options, Stock Awards or any combination thereof.
A-5
<PAGE>
ARTICLE VII.
Stock Options
Section 7.01 Option Period. The term of each Option shall be as
specified by the Stock Award Committee at the date of grant.
Section 7.02 Limitations on Exercise of Option. An Option shall vest
and/or be exercisable in whole or in part and at such times as may be determined
by the Stock Award Committee, in its sole discretion, at the date of grant.
Section 7.03 Option Agreements, Programs, Rules, Other Arrangements.
Each Option may be evidenced, recorded or disseminated by an agreement, the
promulgation of programs or rules or in such other manner and in such form and
containing such provisions not inconsistent with the provisions of the Plan as
the Stock Award Committee from time to time, in its sole discretion, shall
approve. Such agreements, programs, rules or other arrangements may provide for
the payment of the Exercise Price, in whole or in part, in cash, by the delivery
of Common Stock or any combination thereof, or for a "cashless exercise" of the
Option. Moreover, such agreements, programs, rules or other arrangements may
also include provisions relating to vesting, tax matters and any other matters
not inconsistent with the terms and provisions of this Plan that the Stock Award
Committee, in its sole discretion, determines to be appropriate. The terms and
conditions relating to different grants of Options and the related agreements,
programs, rules or other arrangements need not be similar or identical.
Section 7.04 Exercise Price and Payment. The Exercise Price shall be
determined by the Stock Award Committee, but such Exercise Price shall be
subject to adjustment as provided in Article X. The Option may be exercised, in
whole or in part, as provided by the Stock Award Committee. An Option may not be
exercised if the Holder is then in default in the payment of any obligations,
including, but not limited to, agent debit balances owed to the Company or any
of its subsidiaries. The Exercise Price of an Option shall be paid in full in
the manner prescribed by the Stock Award Committee.
Section 7.05 Shareholder Rights and Privileges. The Holder of an Option
shall be entitled to the privileges and rights of a shareholder as to the Common
Stock which is the subject of an Option only with respect to such shares of
Common Stock as have been purchased under the Option and registered in the
Holder's name.
Section 7.06 Options and Rights in Substitution for Stock Options
Granted by Other Corporations. Options may be granted under the Plan from time
to time in substitution for stock options held by individuals who become
Producers as a result of a merger or consolidation of the corporation with whom
they had an agent relationship with the Company or any subsidiary of the
Company, or the acquisition by the Company or a subsidiary of the Company of
A-6
<PAGE>
the assets of such corporation, or the acquisition by the Company or a
subsidiary of the Company of stock of such corporation with the result that such
corporation becomes a subsidiary of the Company.
ARTICLE VIII.
Stock Awards
Section 8.01 Restriction Period To Be Established by the Stock Award
Committee. At the time a Stock Award is made, the Stock Award Committee may
establish a period of time for which restrictions (the "Restriction Period") are
applicable to such Award. Each Stock Award may have a different Restriction
Period, in the sole discretion of the Stock Award Committee. The Restriction
Period applicable to a particular Stock Award shall not be changed except as
permitted by Section 8.02.
Section 8.02 Other Terms and Conditions. Common Stock awarded pursuant
to a Stock Award shall be represented by a stock certificate registered in the
name of the Holder of such Stock Award. Such Common Stock shall be issued
subject to such terms and containing such provisions as the Stock Award
Committee, in its sole discretion consistent with the provisions of the Plan,
may prescribe by agreement, the promulgation of programs, rules or in such other
manner as the Stock Award Committee shall from time to time approve. If provided
for by the Stock Award Committee, in its sole discretion, the Holder shall have
the right to receive dividends during the Restriction Period, to vote Common
Stock subject thereto and to enjoy all other shareholder rights, except that (i)
the Holder may not sell, transfer, pledge, exchange, hypothecate or otherwise
dispose of the stock during the Restriction Period, and (ii) a breach of the
terms and conditions established by the Stock Award Committee, shall cause a
forfeiture of the Stock Award. At the time of such Award, the Stock Award
Committee may, in its sole discretion, prescribe additional terms, conditions or
restrictions relating to Stock Awards, including, but not limited to, rules
pertaining to the termination of service as a Producer (by retirement,
disability, death or otherwise) of a Holder prior to expiration of the
Restriction Period. Such additional terms, conditions or restrictions may also
include, without limitation, provisions relating to tax matters and any other
matters not inconsistent with the provisions of this Plan that the Stock Award
Committee, in its sole discretion determines, to be appropriate. The terms and
conditions of the respective agreements, programs, rules or other arrangement
relating to Stock Awards need not be similar or identical.
Section 8.03 Payment for Stock Award. The Stock Award Committee shall
determine the amount and form of any payment for Common Stock received pursuant
to a Stock Award, provided that in the absence of such a determination, a Holder
shall not be required to make any payment for Common Stock received pursuant to
a Stock Award, except to the extent otherwise required by law.
A-7
<PAGE>
Section 8.04 Agreements. The Stock Award Committee, in its sole
discretion, may require the Company and the Holder to enter into an agreement
with respect to Stock Awards granted hereunder setting forth each of the matters
contemplated hereby and such other matters as the Stock Award Committee may
determine to be appropriate. The terms and provisions of such agreements need
not be similar or identical.
ARTICLE IX.
Future Awards
The Company may grant future Awards to marketing organizations of the
Company or any of its subsidiaries and other Producers on such terms as the
Stock Award Committee may determine. Any such grant shall be evidenced, recorded
or disseminated by an agreement by the promulgation of programs or rules or in
such other manner and in such form and containing such provisions not
inconsistent with the provisions of the Plan as the Stock Award Committee from
time to time approves.
ARTICLE X.
Recapitalization or Reorganization
Section 10.01 The shares with respect to which Awards may be granted
are shares of Common Stock as presently constituted, but if, and whenever, prior
to the expiration or satisfaction in full of an Award theretofore granted, the
Company shall effect a subdivision or consolidation of shares of Common Stock or
the payment of a stock dividend on Common Stock without receipt of consideration
by the Company, the number of shares of Common Stock with respect to which such
Award may thereafter be exercised or satisfied, as applicable, (i) in the event
of an increase in the number of outstanding shares shall be proportionately
increased, and the purchase price per share shall be proportionately reduced,
and (ii) in the event of a reduction in the number of outstanding shares shall
be proportionately reduced, and the purchase price per share shall be
proportionately increased.
Section 10.02 If the Company recapitalizes or otherwise changes its
capital structure, thereafter upon any exercise of an Option or purchase under a
Stock Award, as applicable, of an Award theretofore granted the Holder shall be
entitled to (or entitled to purchase, if applicable) under such Award, in lieu
of the number of shares of Common Stock then covered by such Award, the number
and class of shares of stock and securities to which the Holder would have been
entitled pursuant to the terms of the recapitalization if, immediately prior to
such recapitalization, the Holder had been the holder of record of the number of
shares of Common Stock then covered by such Award.
A-8
<PAGE>
Section 10.03 The Stock Award Committee, in its sole discretion, may
determine that, upon the occurrence of a Change of Control, each Award
outstanding hereunder shall be adjusted to effect such Change of Control,
including, but not limited to (a) termination of each Award within a specified
number of days after notice to the Holder, and such Holder shall receive, with
respect to each share of Common Stock subject to such Award, cash in an amount
equal to the excess of (i) the higher of (x) the Fair Market Value of such share
of Common Stock immediately prior to the occurrence of such Change of Control or
(y) the value of the consideration to be received in connection with such Change
of Control for one share of Common Stock over (ii) the Exercise Price per share,
if applicable, of Common Stock set forth in such Award or (b) assumption of each
Award by the acquiring party. If the consideration offered to shareholders of
the Company in any transaction described in this paragraph consists of anything
other than cash, the Stock Award Committee shall determine the fair cash
equivalent of the portion of the consideration offered which is other than cash.
Section 10.04 In the event of changes in the outstanding Common Stock
by reason of recapitalization, reorganizations, mergers, consolidations,
combinations, exchanges or other relevant changes in capitalization occurring
after the date of the grant of any Award and not otherwise provided for by this
Article X, any outstanding Awards and any agreements or other arrangements
relating to such Awards shall be subject to adjustment by the Stock Award
Committee at its discretion as to the number and price of shares of Common Stock
or other consideration subject to such Awards. In the event of any such change
in the outstanding Common Stock, the aggregate number of shares available under
the Plan may be appropriately adjusted by the Stock Award Committee, whose
determination shall be conclusive.
Section 10.05 The existence of the Plan and the Awards granted
hereunder shall not affect in any way the right or power of the Board or the
shareholders of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company's capital
structure or its business, any merger or consolidation of the Company, any issue
of debt or equity securities ahead of or affecting Common Stock or the rights
thereof, the dissolution or liquidation of the Company or any sale, lease,
exchange or other disposition of all or any part of its assets or business or
any other corporate act or proceeding.
Section 10.06 Any adjustment provided for in Sections 10.01, 10.02,
10.03 and 10.04 above shall be subject to any required shareholder action.
Section 10.07 Except as hereinbefore expressly provided, the issuance
by the Company of shares of stock of any class or securities convertible into
shares of stock of any class, for cash, property, labor or services, upon direct
sale, upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares of obligations of the Company convertible into such shares
A-9
<PAGE>
or other securities, and in any case whether or not for fair value, shall not
affect, and no adjustment by reason thereof shall be made with respect to the
number of shares of Common Stock subject to Awards theretofore granted or the
purchase price per share, if applicable.
ARTICLE XI.
Amendment, Suspension and Termination of the Plan
The Board may, at any time and from time to time in its sole
discretion, terminate, suspend or amend the Plan in any respect. No amendment,
suspension or termination of the Plan shall, without the consent of any optionee
or participant in the Plan adversely affected by such termination, suspension or
amendment, alter or impair the rights of such person under any options or other
awards previously granted under the Plan.
ARTICLE XII.
Miscellaneous
Section 12.01 No Right To An Award. Neither the adoption of the Plan by
the Company nor any action of the Board or the Stock Award Committee shall be
deemed to give a Producer any right to be granted an Award to purchase Common
Stock or a Stock Award or any of the rights hereunder except as may be evidenced
by an Award and the agreement, program, rule or other arrangement promulgated or
established by the Stock Award Committee with respect to such Award, and then
only to the extent and on the terms and conditions expressly set forth therein.
The Plan shall be unfunded. The Company shall not be required to establish any
special or separate fund or to make any other segregation of funds or assets to
assure the payment of any Award.
Section 12.02 No Right to Continued Status as Producer or Employment
Conferred. Nothing contained in the Plan shall (i) confer upon any Producer any
right with respect to continuation of such status with the Company or any
subsidiary, (ii) interfere in any way with the right of the Company or any
subsidiary to terminate his or her service as a Producer at any time or (iii)
result in the establishment of any employer-employee relationship.
Section 12.03. Non-exclusivity of the Plan. The adoption of the Plan by
the Board of Directors of the Company shall not be construed as creating any
limitations on the power of the Board of Directors to adopt such other incentive
arrangements as it may deem desirable, including without limitation, the
granting of stock awards or stock options otherwise than under the Plan.
Section 12.04. Notices. All notices or other communications by an
Eligible Participant to the Company under or in connection with the Plan shall
be deemed to have been given when received by the Company in the form specified
by the Company (if applicable) at
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<PAGE>
the location, and by the person, specified by the Company for the receipt
thereof. All notices to Eligible Participants under or in connection with the
Plan shall be deemed to have been given when mailed or otherwise given in the
manner specified by the Stock Award Committee to the Eligible Participant at the
address provided by the Eligible Participant to the Company for the receipt
thereof.
Section 12.05 Other Laws; Fractional Shares; Withholding. The Company
shall not be obligated to issue any Common Stock pursuant to any Award granted
under the Plan at any time when the shares covered by such Award have not been
registered under the Securities Act of 1933 and such other state and federal
laws, rules or regulations as the Company or the Stock Award Committee deems
applicable and, in the opinion of legal counsel for the Company, there is no
exemption from the registration requirements of such laws, rules or regulations
available for the issuance and sale of such shares. In addition, the Company
shall not be obligated to issue any Common Stock pursuant to any Award granted
under the Plan prior to the acceptance of a supplemental listing application
with respect to such Common Stock by a national securities exchange or the
filing of a notification of listing of additional shares with an interdealer
quotation system, all as deemed necessary or appropriate by counsel for the
Company. No fractional shares of Common Stock shall be delivered, nor shall any
cash in lieu of fractional shares be paid. The Company shall have the right to
deduct in cash (whether under this Plan or otherwise) in connection with all
Awards any taxes required by law to be withheld and to require any payments
required to enable it to satisfy its withholding obligations. In the case of any
Award satisfied in the form of Common Stock, no shares shall be issued unless
and until arrangements satisfactory to the Company shall have been made to
satisfy any withholding tax obligations applicable with respect to such Award.
Subject to such terms and conditions as the Stock Award Committee may impose,
the Company shall have the right to retain, or the Stock Award Committee may,
subject to such terms and conditions as it may establish from time to time,
permit Holders to elect to tender Common Stock (including Common Stock issuable
in respect of an Award) to satisfy, in whole or in part, the amount required to
be withheld.
Section 12.06 No Restriction on Corporate Action. Nothing contained in
the Plan shall be construed to prevent the Company or any of its subsidiaries
from taking any corporate action which is deemed by the Company or such
subsidiary to be appropriate or in its best interest, whether or not such action
would have an adverse effect on the Plan or any Award made under the Plan. No
Producer, beneficiary or other person shall have any claim against the Company
or any subsidiary as a result of any such action.
Section 12.07 Restrictions on Transfer of Awards Held by a Natural
Person. Except for unrestricted Stock Awards, an Award shall not be transferable
except (i) by will or the laws of descent and distribution, or (ii) by gift to
any member of the Holder's
A-11
<PAGE>
immediate family or to a trust for the benefit of such immediate family member,
if permitted in the applicable Award Agreement. Except as may be provided in an
Award Agreement, an award may be exercisable during the lifetime of the Holder
only by such Holder or the Holder's guardian or legal representative.
Section 12.08 Restrictions on Transfer of Awards Held by a Corporation
or Entity. Except for unrestricted Stock Awards, Awards granted to a Holder that
is not a natural person shall not be transferrable, and may be exercised only by
such Holder, or by such Holder's successor by merger, consolidation,
reorganization, or liquidation, if the Board or the Stock Award Committee
determines in its sole discretion, to permit the transfer of such Award in
connection with such merger, consolidation, reorganization, or liquidation, but
in no event may any Award be exercised after the expiration of the term of the
Award provided by the Stock Award Committee.
Section 12.09 Other Restrictions on Transfer. Except for unrestricted
Stock Awards and except as permitted under the Plan, no Awards or interest
therein may be transferred, assigned, pledged or hypothecated by the Holder, by
operation of law or otherwise, and any attempt to do so shall be void. No award
or interest therein shall be made subject to levy, execution, attachment or
similar process, and any attempt to levy, execute, attach, or otherwise transfer
the Award or any interest therein or to place a lien upon the same shall be
void.
Section 12.10 Governing Law. This Plan shall be construed in accordance
with the laws of the State of Indiana.
A-12
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
<TABLE>
<CAPTION>
<S> <C>
Securities and Exchange Commission registration fee.....................................$ 6,145.83
Legal fees and expenses................................................................. 1,000.00
Accounting fees and expenses............................................................ 5,000.00
Printing and engraving expenses......................................................... 50,000.00
Blue sky fees and expenses.............................................................. 5,000.00
Miscellaneous........................................................................... 1,000.00
----------
Total ..........................................................................$68,145.83
==========
</TABLE>
Except for the SEC registration fee, all of the foregoing are estimates.
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS
The Indiana Business Corporation Law grants authorization to Indiana
corporations to indemnify officers and directors for their conduct if such
conduct was in good faith and was in the corporation's best interests or, in the
case of directors, was not opposed to such best interests, and permits the
purchase of insurance in this regard. In addition, the shareholders of a
corporation may approve the inclusion of other or additional indemnification
provisions in the articles of incorporation and by-laws.
The By-laws of Conseco provide for the indemnification of any person made
a party to any action, suit or proceeding by reason of the fact that he is a
director, officer or employee of Conseco, unless it is adjudged in such action,
suit or proceeding that such person is liable for negligence or misconduct in
the performance of his duties. Such indemnification shall be against the
reasonable expenses, including attorneys' fees, incurred by such person in
connection with the defense of such action, suit or proceeding. In some
circumstances, Conseco may reimburse any such person for the reasonable costs of
settlement of any such action, suit or proceeding if a majority of the members
of the Board of Directors not involved in the controversy shall determine that
it was in the interests of Conseco that such settlement be made and that such
person was not guilty of negligence or misconduct.
The above discussion of Conseco's By-laws and the Indiana Business
Corporation Law is not intended to be exhaustive and is qualified in its
entirety by such By-laws and the Indiana Business Corporation Law.
ITEM 16. EXHIBITS
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT
3.1 Amended and Restated Articles of Incorporation of
Conseco, Inc. were filed with the Commission as
Exhibit 3.1 to the Registration Statement on Form
S-2, No. 33-8498; Articles of Amendment thereto, as
filed September 9, 1988 with the Indiana Secretary of
State, were filed with the Commission as Exhibit
3.1.1 to Conseco's Annual Report on Form 10-K for
1988; Articles of Amendment thereto, as filed June
13, 1989 with the Indiana Secretary of State, were
filed with the Commission as Exhibit 3.1.2 to
Conseco's Report on Form 10-Q for the quarter ended
June 30, 1989; and Articles of Amendment thereto, as
filed June 29, 1993 with the Indiana Secretary of
State, were filed with the Commission as 3.1.3 to
Conseco's Report on Form 10-Q for the quarter ended
June 30, 1993, and Articles of Amendment thereto
relating to the PRIDES were filed with the Commission
as Exhibit 3.(i).3 to the Registrant's Report on Form
8-K dated January 17, 1996, and are incorporated
herein by this reference.
3.2 Amended and Restated Bylaws of Conseco, Inc. effective
February 10, 1986 were filed with the Commission as
Exhibit 3.2 to its Registration Statement of Form S-1,
No. 33-4367, and an Amendment thereto was filed with
the Commission as Exhibit 3.2.1 to Amendment No.2 to
its Registration Statement of Form S-1, No. 33-4367;
and are incorporated herein by this reference.
II-1
<PAGE>
4.1 Conseco, Inc. Producer Stock Award and Option Plan
incorporated by reference to Annex I of the
Prospectus contained in this Registration Statement
on Form S-3, Registration No. 333-32621.
5.1 Opinion of Karl W. Kindig, Esquire.*
12.1 Computation of Ratios of Earnings to Fixed Charges,
Preferred Dividends and Distributions on
Company-obligated Mandatorily Redeemable Preferred
Securities of Subsidiary Trusts.
23.1 Consent of Karl W. Kindig, Esquire (included in
Exhibit 5.1 hereto).*
23.2 Consent of Coopers & Lybrand L.L.P. with respect to
the financial statements of Conseco, Inc.
incorporated by reference herein.
24.1 Powers of Attorney of Stephen C. Hilbert, Rollin M.
Dick, James S. Adams, Ngaire E. Cuneo, Donald F.
Gongaware, David R. Decatur, M. Phil Hathaway, James
D. Massey, Dennis E. Murray, Sr. and John M. Mutz are
included on the signature page of this Registration
Statement and are incorporated herein by reference.*
*previously filed
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration
Statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration
Statement (or the most recent post-effective
amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the
information set forth in the Registration Statement.
Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the
total dollar value of securities offered would not
exceed that which was registered) and any deviation
from the low or high end of the estimated maximum
offering range may be reflected in the form of
prospectus filed with the Commission pursuant to
Rule 424(b) under the Securities Act if, in the
aggregate, the changes in volume and price represent
no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of
Registration Fee" table in the effective
Registration Statement.
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in
the Registration Statement or any material change to
such information in the Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)
(1) (ii) above do not apply if the information
required to be included in a post-effective
amendment by those paragraphs is contained in
periodic reports filed by the Registrant pursuant to
Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by
reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which
remain unsold at the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each
filing of the Registrant's annual report pursuant to Section 13(a)
or Section 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in the Registration Statement shall be
deemed to be a new registration statement relating to the
securities offered therein, and
II-2
<PAGE>
the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer
or controlling person of the Registrant in the successful defense
of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed
in the Act and will be governed by the final adjudication of such
issue.
(d) The undersigned Registrant hereby undertakes that (1) for purposes
of determining any liability under the Securities Act of 1933, the
information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained
in a form of prospectus filed by the Registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed
to be part of this Registration Statement as of the time it was
declared effective; and (2) for the purpose of determining any
liability under the Securities Act of 1933, each post- effective
amendment that contains a form of prospectus shall be deemed to be a
new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(e) The undersigned Registrant hereby undertakes to deliver or cause to
be delivered with the prospectus, to each person to whom the
prospectus is sent or given, the latest annual report to security
holders that is incorporated by reference in the prospectus and
furnished pursuant to and meeting the requirements of Rule 14a-3 or
Rule 14c-3 under the Securities Exchange Act of 1934; and, where
interim financial information required to be presented by Article 3
of Regulation S-X are not set forth in the prospectus, to deliver,
or cause to be delivered to each person to whom the prospectus is
sent or given, the latest quarterly report that is specifically
incorporated by reference in the prospectus to provide such interim
financial information.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Conseco, Inc.
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Carmel, State of Indiana, on September 17, 1997.
CONSECO, INC.
By: /S/ROLLIN M. DICK
---------------------
Rollin M. Dick,
Executive Vice President and
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
* Director, Chairman of the Board, Sept. 17, 1997
- -----------------------------------
Stephen C. Hilbert President and Chief Executive Officer
(Principal Executive Officer)
* Director, Executive Vice President Sept. 17, 1997
- -----------------------------------
Rollin M. Dick and Chief Financial Officer
(Principal Financial Officer)
* Senior Vice President, Chief Sept. 17, 1997
- -----------------------------------
James S. Adams Accounting Officer and Treasurer
(Principal Accounting Officer)
* Director Sept.17, 1997
- -----------------------------------
Ngaire E. Cuneo
* Director Sept. 17, 1997
- -----------------------------------
David R. Decatur
* Director Sept. 17, 1997
- -----------------------------------
M. Phil Hathaway
* Director Sept. 17, 1997
- -----------------------------------
Donald F. Gongaware
* Director Sept. 17, 1997
- -----------------------------------
James D. Massey
* Director Sept. 17, 1997
- -----------------------------------
Dennis E. Murray, Sr.
* Director Sept. 17, 1997
- -----------------------------------
John M. Mutz
*By: /S/KARL W. KINDIG
---------------------------------
Karl W. Kindig, Attorney-in-Fact
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
TO REGISTRATION STATEMENT
ON FORM S-3
CONSECO, INC.
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT
3.1 Amended and Restated Articles of Incorporation of
Conseco, Inc. were filed with the Commission as
Exhibit 3.1 to the Registration Statement on Form S-2,
No. 33-8498; Articles of Amendment thereto, as filed
September 9, 1988 with the Indiana Secretary of State,
were filed with the Commission as Exhibit 3.1.1 to
Conseco's Annual Report on Form 10-K for 1988;
Articles of Amendment thereto, as filed June 13, 1989
with the Indiana Secretary of State, were filed with
the Commission as Exhibit 3.1.2 to Conseco's Report on
Form 10-Q for the quarter ended June 30, 1989; and
Articles of Amendment thereto, as filed June 29, 1993
with the Indiana Secretary of State, were filed with
the Commission as 3.1.3 to Conseco's Report on Form
10-Q for the quarter ended June 30, 1993, and Articles
of Amendment thereto relating to the PRIDES were filed
with the Commission as Exhibit 3.(i).3 to the
Registrant's Report on Form 8-K dated January 17,
1996, and are incorporated herein by this reference.
3.2 Amended and Restated Bylaws of Conseco, Inc. effective
February 10, 1986 were filed with the Commission as
Exhibit 3.2 to its Registration Statement of Form S-1,
No. 33-4367, and an Amendment thereto was filed with
the Commission as Exhibit 3.2.1 to Amendment No. 2 to
its Registration Statement of Form S-1, No. 33-4367;
and are incorporated herein by this reference.
4.1 Conseco, Inc. Producer Stock Award and Option Plan
incorporated by reference to Annex I of the
Prospectus contained in this Registration Statement
on Form S-3, Registration No. 333-32621.
5.1 Opinion of Karl W. Kindig, Esquire*
12.1 Computation of Ratios of Earnings to Fixed Charges,
Preferred Dividends and Distributions on
Company-obligated Mandatorily Redeemable Preferred
Securities of Subsidiary Trusts
23.1 Consent of Karl W. Kindig, Esquire (included in
Exhibit 5.1 hereto)*
23.2 Consent of Coopers & Lybrand L.L.P. with respect to
the financial statements of Conseco, Inc. incorporated
by reference herein.
24.1 Powers of Attorney of Stephen C. Hilbert, Rollin M.
Dick, James S. Adams, Ngaire E. Cuneo, Donald F.
Gongaware, David R. Decatur, M. Phil Hathaway, James
D. Massey, Dennis E. Murray, Sr. and John M. Mutz are
included on the signature page of this Registration
Statement and are incorporated herein by reference.*
- -----------------------
*previously filed.
G:\LEGAL\RRD\CLIENT.COS\CNCS-3.DOC
II-5
<TABLE>
<CAPTION>
CONSECO, INC. AND SUBSIDIARIES
Exhibit 12.1
Computation of Ratio of Earnings to Fixed Charges,
Preferred Dividends and Distributions on Company-Obligated Mandatorily
Redeemable Preferred Securities of Subsidiary Trusts
(Dollars in millions)
Six Months Ended
Year Ended December 31, June 30,
---------------------------------------------------- ---------------------
1992 1993 1994 1995 1996 1996 1997
-------- -------- -------- -------- -------- -------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Pretax income from operations:
Net income.................................... $169.5 $ 297.0 $150.4 $ 220.4 $ 252.4 $ 96.4 $242.1
Add income tax expense........................ 124.6 223.1 111.0 87.0 179.8 84.3 154.9
Add extraordinary charge on
extinguishment of debt...................... 5.3 11.9 4.0 2.1 26.5 17.4 5.5
Add minority interest......................... 30.6 78.2 59.0 109.0 34.9 23.4 24.1
Less equity in undistributed
earnings of CCP Insurance, Inc.............. (15.8) (36.6) (23.8) - - - -
Less equity in undistributed
earnings of Western National Corp........... - - (37.2) - - - -
Less equity in undistributed
earnings of Life Re......................... (11.3) - - - - - -
------ -------- ------ -------- -------- ------- ------
Pretax income........................... 302.9 573.6 263.4 418.5 493.6 221.5 426.6
------ -------- ------ -------- -------- ------- ------
Add fixed charges:
Interest expense on annuities and financial
products................................... 506.8 408.5 134.7 585.4 668.6 289.7 379.8
Interest expense on long-term debt,
including amortization...................... 46.2 58.0 59.3 119.4 108.1 54.2 51.3
Interest expense on investment borrowings..... 8.8 10.6 7.7 22.2 22.0 8.6 8.3
Other ....................................... .8 .6 .9 1.0 .9 .5 .4
Portion of rental(1).......................... 2.0 3.9 6.2 6.9 8.0 3.6 4.1
------ -------- ------ -------- -------- ------ ------
Fixed charges............................. 564.6 481.6 208.8 734.9 807.6 356.6 443.9
------ -------- ------ -------- -------- ------ ------
Adjusted earnings......................... $867.5 $1,055.2 $472.2 $1,153.4 $1,301.2 $578.1 $870.5
====== ======== ====== ======== ======== ====== ======
Ratio of earnings to fixed charges........ 1.54X 2.19X 2.26X 1.57X 1.61X 1.62X 1.96X
===== ===== ===== ===== ===== ===== =====
Ratio of earnings to fixed charges,
excluding interest on annuities and
financial products .................... 6.24X 8.85X 4.55X 3.80X 4.55X 4.31X 7.66X
===== ===== ===== ===== ===== ===== =====
Fixed charges................................. $564.6 $481.6 $208.8 $ 734.9 $ 807.6 $356.6 $443.9
Add dividends on preferred stock (multiplied
by the rate of pretax income to income
before minority interest and extraordinary
charge)..................................... 13.1 34.6 33.2 36.0 57.1 36.0 31.7
------ -------- ------ -------- -------- ------ ------
Adjusted fixed charges.................... $577.7 $ 516.2 $242.0 $ 770.9 $ 864.7 $392.6 $475.6
====== ======== ====== ======== ======== ====== ======
Adjusted earnings......................... $867.5 $1,055.2 $472.2 $1,153.4 $1,301.2 $578.1 $870.5
====== ======== ====== ======== ======== ====== ======
Ratio of earnings to fixed
charges and preferred dividends........ 1.50X 2.04X 1.95X 1.50X 1.50X 1.47X 1.83X
===== ===== ===== ===== ===== ===== =====
Ratio of earnings to fixed charges
and preferred dividends, excluding
interest on annuities and financial
products............................... 5.09X 6.00X 3.14X 3.06X 3.23X 2.80X 5.12X
===== ===== ===== ===== ===== ===== =====
(continued on following page)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONSECO, INC. AND SUBSIDIARIES
Computation of Ratio of Earnings to Fixed Charges,
Preferred Dividends and Distributions on Company-Obligated Mandatorily
Redeemable Preferred Securities of Subsidiary Trusts, continued
(Dollars in millions)
Six Months Ended
Year Ended December 31, June 30,
---------------------------------------------------- ---------------------
1992 1993 1994 1995 1996 1996 1997
-------- -------- -------- -------- -------- -------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Adjusted fixed charges........................ $577.7 $ 516.2 $242.0 $ 770.9 $ 864.7 $392.6 $475.6
Add distributions on Company-obligated
mandatorily redeemable preferred securities
of subsidiary trusts........................ - - - - 5.6 - 33.3
------ -------- ------ -------- -------- ------ ------
Fixed charges............................. $577.7 $ 516.2 $242.0 $ 770.9 $ 870.3 $392.6 $508.9
====== ======== ====== ======== ======== ====== ======
Adjusted earnings......................... $867.5 $1,055.2 $472.2 $1,153.4 $1,301.2 $578.1 $870.5
====== ======== ====== ======== ======== ====== ======
Ratio of earnings to fixed charges,
preferred dividends and distributions
on Company-obligated mandatorily
redeemable preferred securities
of subsidiary trusts................... 1.50X 2.04X 1.95X 1.50X 1.50X 1.47X 1.71X
===== ===== ===== ===== ===== ===== =====
Ratio of earnings to fixed charges,
preferred dividends and distributions
on Company-obligated mandatorily
redeemable preferred securities of
subsidiary trusts, excluding interest
on annuities and financial products.... 5.09X 6.00X 3.14X 3.06X 3.14X 2.80X 3.80X
===== ===== ===== ===== ===== ===== =====
<FN>
(1) Interest portion of rental is assumed to be 33 percent.
</FN>
</TABLE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration
statement of Conseco, Inc. on Amendment No. 1 to Form S-3 (File No. 333-32621),
of our reports dated March 14, 1997 on our audits of the consolidated financial
statements and financial statement schedules of Conseco, Inc. and subsidiaries
as of December 31, 1996 and 1995, and for the years ended December 31, 1996,
1995 and 1994, included in the Annual Report on Form 10-K. We also consent to
the reference to our firm under caption "Experts".
/S/COOPERS & LYBRAND L.L.P.
---------------------------
COOPERS & LYBRAND L.L.P.
Indianapolis, Indiana
September 15, 1997
