As filed with the Securities and Exchange Commission on August 1, 1997
REGISTRATION NO. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
---------------------
CONSECO, INC. INDIANA 35-1468632
(Exact name of the Registrants (State or other (I.R.S. Employer
as specified in their respective jurisdiction
charters) Identification No.)
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)
---------------------
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)
---------------------
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. [ ]
(Continued on next page)
<PAGE>
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
===================================================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING REGISTRATION
TO BE REGISTERED REGISTERED PER SHARE(2) PRICE(2) FEE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock of Conseco, Inc.,
no par value.................. 500,000(1) $40.5625 $20,281,250 $6,145.83
===================================================================================================================================
<FN>
(1) Subject to increase (or decrease) in accordance with Rule 416 of Regulation C to reflect a merger, consolidation,
reorganization, recapitalization, stock dividend, stock split or other change in the number of shares under the Conseco,
Inc. Producer Stock Award and Option Plan.
(2) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(c), based upon a price of
$40.5625 per share, being the average of the high and low prices per share as reported in the consolidated reporting
system on July 25, 1997.
</FN>
</TABLE>
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY
DETERMINE.
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. this prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
<PAGE>
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS
DATED JULY 31, 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) an award of shares of Common Stock under the Plan or (ii) valid exercises of
their respective options granted under the terms of the Plan. No underwriting
discounts or commissions will be paid in connection with the offering of these
shares of Common Stock. The Company's Common Stock is traded on the New York
Stock Exchange under the symbol "CNC". On July 30, 1997, the last reported sale
price of the Common Stock on the New York Stock Exchange was $42 per share.
----------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
----------------------------------------
The date of this Prospectus is _______, 1997.
1
<PAGE>
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, ANY ACCOMPANYING PROSPECTUS
SUPPLEMENT 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 THOSE SECURITIES TO WHICH IT
RELATES, IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS OR ANY
PROSPECTUS SUPPLEMENT 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.
2
<PAGE>
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 Report on Form 10-Q for the quarter ended March 31, 1997;
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).
3
<PAGE>
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, 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.
Types of Awards. The Plan provides for the grant of awards of stock
options and 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
terms of the Plan, the Stock Award Committee, consistent with the terms of the
Plan, will have authority (i) to select Producers to receive awards, (ii) to
determine the timing, form, amount or value and terms of grants and awards, and
the conditions and restrictions, if any, subject to which grants and awards will
be made and become payable 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. All decisions made by
the Stock Award Committee shall be final, conclusive, and binding on all
participants in the Plan.
Optionees should contact the Secretary, Conseco, Inc., Legal
Department, 11825 N. Pennsylvania Street, Carmel, Indiana 46032, (317) 817-6120
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. The selection of participants from Producers who market
and sell insurance and other products of the Company's Subsidiaries is within
the discretion of the Stock Award Committee.
4
<PAGE>
Shares Subject to the Plan. The number of shares of Common Stock which
may be issued under the Plan may not exceed 500,000.
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. 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 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 of an 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 owed to the Company or its subsidiaries.
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 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.
Unrestricted Stock. The Plan provides that unrestricted shares of
Common Stock may be awarded to selected 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.
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 satisfaction of performance or
other criteria. For example, the Company 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. The exact amount of shares of
Common Stock subject to such an option and the exercise price could be
determined by reference to formulas determined by the Stock Award Committee, in
its sole discretion.
Agreements. Each award under the Plan will be evidenced by an agreement
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 may include provisions providing for the
payment of the exercise price, in whole or in part, by the delivery of a number
of shares of Common Stock (plus cash if necessary) having a fair market value
equal to any option price. Such agreements 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 terms and 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.
Amendment. The Board of Directors may at any 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 efect 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 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
(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 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
5
<PAGE>
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.
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 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 one
year 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 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
6
<PAGE>
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.
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 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."
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 cancelled 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. The exercise period is then reflected in each optionee's stock option
agreement.
Death. If an optionee dies while a Producer, then the option 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.
Other Terminations of Employment. 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.
Disability. If an optionee's status as a producer terminates due to
permanent and total disability, the optionee may exercise any outstanding
options, to the extent exercisable at the time of termination, within twelve
months of the date terminated.
7
<PAGE>
ASSIGNMENT OF OPTIONS
Pursuant to the tax laws and the provisions of the Plan, options
granted under the Plan are not transferable other than by will or the laws of
descent and distribution and are exercisable only by 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.
8
<PAGE>
USE OF PROCEEDS
The purpose of the Plan is to provide an additional incentive for
Eligible Participants to promote 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 will 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 three
months ended March 31, 1996 and 1997.
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
----------------------- ---------------
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 1.69X 1.89X
Excluding interest on annuities and
financial products(1)(2)............ 6.24X 8.85X 4.55X 3.80X 4.55X 4.51X 7.36X
Ratio of earnings to fixed charges and
preferred dividends:
As reported......................... 1.50X 2.04X 1.95X 1.50X 1.50X 1.54X 1.84X
Excluding interest on annuities and
financial products(1)(2).......... 5.09X 6.00X 3.14X 3.06X 3.14X 3.01X 6.21X
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 1.49X 1.54X 1.74X
Excluding interest on annuities and
financial products(1)(2).......... 5.09X 6.00X 3.14X 3.06X 3.06X 3.01X 4.54X
<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.
(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 $139.1 million and $189.9 million for the three months
ended March 31, 1996 and 1997, respectively.
</FN>
</TABLE>
9
<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 the
Company and owns shares and holds options to purchase 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.
10
<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"), and its subsidiaries may attract and retain able
persons and organizations to become or continue as producers, agents or
marketing organizations who market and sell insurance and other products of the
subsidiaries of the Company and to provide a means whereby such persons and
organizations, whose present and potential contributions to the welfare of the
Company are of importance, can obtain and maintain stock ownership in the
Company, thereby strengthening their concern for the welfare of the Company and
their relationship with the Company. The Plan is also intended to provide such
persons with additional incentives designed to enhance the profitable growth of
the Company. 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) "Award Agreement" means an Option Agreement or a Stock Award
Agreement.
(c) "Board" means the Board of Directors of the Company.
(d) 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
<PAGE>
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 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.
(e) "Common Stock" means the common stock, no par value per share,
of the Company.
(f) "Company" means Conseco, Inc., an Indiana corporation, and any
successor thereto.
(g) "1934 Act" means the Securities Exchange Act of 1934, as
amended.
A-2
<PAGE>
(h) "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.
(i) "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.
(j) "Holder" means a Producer who has been granted an Award.
(k) "Option" means an Award granted under Article VII of the Plan.
(l) "Option Agreement" means a written agreement between the
Company and a Holder with respect to an Option.
(m) A "person" means an individual, corporation, partnership,
limited liability company, proprietorship or joint venture.
(n) "Plan" means Conseco, Inc. Producer Stock Award and Option Plan, as
amended from time to time.
(o) A "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.
(p) "Stock Award" means an Award granted under Article VIII of the
Plan.
(q) "Stock Award Agreement" means a written agreement between the
Company and a Holder with respect to a Stock Award.
A-3
<PAGE>
(r) "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.
(s) "Total and Permanent Disability" means the inability of a Producer
to provide meaningful service for the Company and its subsidiaries due to a
medically determinable physical or mental impairment. Such determination of
total and permanent disability shall be made by the Company.
ARTICLE III.
Effective Date and Duration of the Plan
The Plan shall be effective as of November 22, 1996, 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 shall have sole authority, in its sole discretion, to select
Producers to receive Awards, to determine commitments to issue Awards to
Producers and the terms and conditions of such Awards including, but not limited
to, the criteria for the granting of Awards, type of Award to be granted, the
number of shares of Common Stock which may be issued under each Option and Stock
Award and any restrictions applicable to an Award. 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. Subject to the express provisions of the
Plan, the Stock Award Committee is authorized to construe the Plan and any Award
Agreements issued thereunder, to prescribe such rules and regulations relating
to the Plan as it may deem advisable to carry out the Plan, and to determine the
terms, restrictions and
A-4
<PAGE>
provisions of each Award or commitment to make Awards and to make all other
determinations necessary or advisable for administering the Plan. 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.
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.
Separate stock certificates shall be issued by the Company for those shares
acquired pursuant to the exercise of any 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.
Section 7.03 Option Agreement. Each Option shall be evidenced by an
Option Agreement in such form and containing such provisions not inconsistent
with the provisions of the Plan as the Stock Award Committee from time to time
shall approve. An Option Agreement 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. Moreover, an Option Agreement may provide for a "cashless
exercise" of the Option. Such Option Agreement 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 shall, in its
sole discretion, determine to be appropriate. The terms and conditions relating
to different grants of Options and the related Option Agreements 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 or in the Option
Agreement. An Option may not be exercised if the Holder is then in default in
the payment of any obligations 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 or in the Option Agreement.
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 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.
A-6
<PAGE>
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 Article VIII, 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. If provided for by the Award Agreement,
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 pursuant to the Stock Award Agreement, 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 shall be set forth in a Stock Award
Agreement made in conjunction with the Award. Such Stock Award Agreement 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 shall in its sole discretion determine. The terms and conditions
of the respective Stock Award Agreements 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.
Section 8.04 Agreements. At the time any Award is made under this
Article VIII, the Company and the Holder shall enter into a Stock Award
Agreement 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 the respective Stock Award Agreements need not be similar or
identical.
A-7
<PAGE>
ARTICLE IX.
Future Awards
The Company may agree to 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 agreement shall be evidenced
by a written agreement in such form and containing such provisions not
inconsistent with the provisions of the Plan as the Stock Award Committee from
time to time shall approve.
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 distribution to the Holder 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.
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
A-8
<PAGE>
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 evidencing 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
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 in its 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.
A-9
<PAGE>
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 or by an Award Agreement duly executed on behalf of the Company, 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 Employment Rights 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 Other Laws; 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. 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
A-10
<PAGE>
or in part, the amount required to be withheld.
Section 12.04 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 12.05 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 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 12.06 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 by
causing the Company and such Holder's successor to execute a new Award
Agreement, but in no event may any Award be exercised after the expiration of
the term of the Award as set forth in the Award Agreement.
Section 12.07 Other Restrictions on Transfer. Except for unrestricted
Stock Awards, 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 12.08 Governing Law. This Plan shall be construed in accordance
with the laws of the State of Indiana.
A-11
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
<S> <C>
PROSPECTUS
Available Information..................................................................................... 2
Incorporation of Certain Documents by Reference........................................................... 3
The Company............................................................................................... 4
Description of the Plan................................................................................... 4
Use of Proceeds........................................................................................... 9
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................................................. 9
Legal Matters.............................................................................................10
Experts...................................................................................................10
Continuous Offering Pursuant to Rule 415..................................................................10
Annex 1...................................................................................................A-1
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
<S> <C>
Securities and Exchange Commission registration fee.....................................$ 6,146
Legal fees and expenses................................................................. 1,000
Accounting fees and expenses............................................................ 5,000
Printing and engraving expenses......................................................... 50,000
Blue sky fees and expenses.............................................................. 5,000
Miscellaneous........................................................................... 1,000
-------
Total.............................................................................$68,146
=======
</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 provides for the indemnification of any person made
a party to any action, suit or proceeding by reason of the fact that he is a
director, officer or employee of 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 is
included as Annex A to this Registration Statement
and is incorporated herein by reference.
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.
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 the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
II-2
<PAGE>
(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 Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Carmel, State of Indiana, on July 30, 1997.
CONSECO, INC.
By: /S/ROLLIN M. DICK
-------------------------------
Rollin M. Dick,
Executive Vice President and
Chief Financial Officer
POWER OF ATTORNEY
Each of the undersigned hereby appoints Karl W. Kindig and Richard R.
Dykhouse, and each of them, either of whom may act without the joinder of the
other, as his or her attorney-in-fact to sign on behalf of the undersigned, in
any and all capacities, the Registration Statement to which this Power of
Attorney is an exhibit and to file the Registration Statement and all amendments
and post-effective amendments to the Registration Statement with the Securities
and Exchange Commission, hereby ratifying and confirming all that each said
attorney-in-fact lawfully does or causes to be done by virtue hereof.
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>
/S/STEPHEN C. HILBERT Director, Chairman of the Board, July 30, 1997
- ----------------------------------- President and Chief Executive Officer
Stephen C. Hilbert (Principal Executive Officer)
/S/ROLLIN M. DICK Director, Executive Vice President July 30, 1997
- ----------------------------------- and Chief Financial Officer
Rollin M. Dick (Principal Financial Officer)
/S/JAMES S. ADAMS Senior Vice President, Chief July 30, 1997
- ----------------------------------- Accounting Officer and Treasurer
James S. Adams (Principal Accounting Officer)
/S/NGAIRE E. CUNEO Director July 30, 1997
- -----------------------------------
Ngaire E. Cuneo
/S/DAVID R. DECATUR
- ----------------------------------- Director July 30, 1997
David R. Decatur
/S/M. PHIL HATHAWAY
- ----------------------------------- Director July 30, 1997
M. Phil Hathaway
/S/DONALD F. GONGAWARE
- ----------------------------------- Director July 30, 1997
Donald F. Gongaware
/S/JAMES D. MASSEY Director July 30 1997
- -----------------------------------
James D. Massey
/S/DENNIS E. MURRAY, SR.
- ----------------------------------- Director July 30, 1997
Dennis E. Murray, Sr.
/S/JOHN M. MUTZ
- ----------------------------------- Director July 30, 1997
John M. Mutz
</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 is
included as Annex A to this Registration Statement
and is incorporated herein by reference.
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.
II-5
Board of Directors
Conseco, Inc.
11825 N. Pennsylvania Street
Carmel, Indiana 46032
Re: Conseco, Inc.
Registration Statement on Form S-3
Gentlemen and Madam:
I am Senior Vice President, Legal for Conseco Services, LLC, an Indiana
limited liability company and a wholly owned subsidiary of Conseco, Inc., an
Indiana corporation (the "Company"). I and lawyers over whom I exercise general
supervision ("we") have acted as counsel to the Company in connection with the
Registration Statement on Form S-3 concerning shares of common stock, no par
value, of the Company ("Common Stock") to be issued in connection with the
Conseco, Inc. Producer Stock Award and Option Plan (the "Plan"). In connection
with our representation, we have examined the corporate records of the Company,
including its Amended and Restated Articles of Incorporation, as amended,
By-Laws and other corporate records and documents and have made such other
examinations as we consider necessary to render this opinion. Based upon the
foregoing, I am of the opinion that:
1. The Company is a corporation duly organized and validly
existing under the laws of the State of Indiana.
2. The Plan and the shares of Common Stock covered by
the Plan have been duly authorized by all requisite
corporate action.
3. With respect to the authorized but unissued shares of Common
Stock covered by the Plan, such shares, when issued in
accordance with the terms and provisions for their issuance,
will be validly issued, fully paid and non-assessable.
I consent to the filing of this opinion as an exhibit to the
registration statement referred to above and to all references to me in such
registration statement.
Very truly yours,
/S/ KARL W. KINDIG
------------------
Karl W. Kindig
<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)
Three Months Ended
Year Ended December 31, March 31,
---------------------------------------------------- ---------------------
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 $ 46.3 $111.5
Add income tax expense........................ 124.6 223.1 111.0 87.0 179.8 44.9 70.6
Add extraordinary charge on
extinguishment of debt...................... 5.3 11.9 4.0 2.1 26.5 17.4 3.3
Add minority interest......................... 30.6 78.2 59.0 109.0 34.9 11.6 10.0
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........................... 302.9 573.6 263.4 418.5 493.6 120.2 195.4
------ -------- ------ -------- -------- ------- ------
Add fixed charges:
Interest expense on annuities and financial
products................................... 506.8 408.5 134.7 585.4 668.6 139.1 189.9
Interest expense on long-term debt,
including amortization...................... 46.2 58.0 59.3 119.4 108.1 28.4 25.8
Interest expense on investment borrowings..... 8.8 10.6 7.7 22.2 22.0 3.7 2.8
Other ....................................... .8 .6 .9 1.0 .9 .3 .2
Portion of rental(1).......................... 2.0 3.9 6.2 6.9 8.0 1.8 1.9
------ -------- ------ -------- -------- ------ ------
Fixed charges............................. 564.6 481.6 208.8 734.9 807.6 173.3 220.6
------ -------- ------ -------- -------- ------ ------
Adjusted earnings......................... $867.5 $1,055.2 $472.2 $1,153.4 $1,301.2 $293.5 $416.0
====== ======== ====== ======== ======== ====== ======
Ratio of earnings to fixed charges........ 1.54X 2.19X 2.26X 1.57X 1.61X 1.69X 1.89X
===== ===== ===== ===== ===== ===== =====
Ratio of earnings to fixed charges,
excluding interest on annuities and
financial products .................... 6.24X 8.85X 4.55X 3.80X 4.55X 4.51X 7.36X
===== ===== ===== ===== ===== ===== =====
Fixed charges................................. $564.6 $481.6 $208.8 $ 734.9 $ 807.6 $173.3 $220.6
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 62.3 17.1 5.7
------ -------- ------ -------- -------- ------ ------
Adjusted fixed charges.................... $577.7 $ 516.2 $242.0 $ 770.9 $ 869.9 $190.4 $226.3
====== ======== ====== ======== ======== ====== ======
Adjusted earnings......................... $867.5 $1,055.2 $472.2 $1,153.4 $1,301.2 $293.5 $416.0
====== ======== ====== ======== ======== ====== ======
Ratio of earnings to fixed
charges and preferred dividends........ 1.50X 2.04X 1.95X 1.50X 1.50X 1.54X 1.84X
===== ===== ===== ===== ===== ===== =====
Ratio of earnings to fixed charges
and preferred dividends, excluding
interest on annuities and financial
products............................... 5.09X 6.00X 3.14X 3.06X 3.14X 3.01X 6.21X
===== ===== ===== ===== ===== ===== =====
(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)
Three Months Ended
Year Ended December 31, March 31,
---------------------------------------------------- ---------------------
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 $ 869.9 $190.4 $226.3
Add distributions on Company-obligated
mandatorily redeemable preferred securities
of subsidiary trusts........................ - - - - 5.6 - 13.4
------ -------- ------ -------- -------- ------ ------
Fixed charges............................. $577.7 $ 516.2 $242.0 $ 770.9 $ 875.5 $190.4 $239.7
====== ======== ====== ======== ======== ====== ======
Adjusted earnings......................... $867.5 $1,055.2 $472.2 $1,153.4 $1,301.2 $293.5 $416.0
====== ======== ====== ======== ======== ====== ======
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 1.49X 1.54X 1.74X
===== ===== ===== ===== ===== ===== =====
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 3.06X 3.01X 4.54X
===== ===== ===== ===== ===== ===== =====
<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 Form S-3 (File No. 333-00000), 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 the caption "Experts".
/S/COOPERS & LYBRAND L.L.P.
---------------------------
COOPERS & LYBRAND L.L.P.
Indianapolis, Indiana
July 31, 1997
