<PAGE> 1
As filed with the Securities and Exchange Commission on May 23, 1997.
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
---------------------
<TABLE>
<S> <C> <C>
CONSECO, INC. INDIANA 35-1468632
CONSECO FINANCING TRUST IV DELAWARE APPLIED FOR
CONSECO FINANCING TRUST V DELAWARE APPLIED FOR
CONSECO FINANCING TRUST VI DELAWARE APPLIED FOR
CONSECO FINANCING TRUST VII DELAWARE APPLIED FOR
(Exact name of the Registrants (State or other (I.R.S. Employer
as specified in their respective charters) jurisdiction Identification No.)
of incorporation or
organization)
</TABLE>
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, Esq.
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: From time
to time after the Registration Statement becomes effective, as determined by
market conditions.
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> 2
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
======================================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING REGISTRATION
TO BE REGISTERED REGISTERED(1) PER UNIT(3)(4) PRICE(3)(4) FEE(2)(4)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Debt Securities of Conseco,
Inc. ............................
Preferred Stock of Conseco, Inc.,
no par value(5)..................
Depositary Shares of Conseco,
Inc.(5)..........................
Common Stock of Conseco, Inc.,
no par value(5)..................
Warrants of Conseco, Inc. .........
- ----------------------------------------------------------------------------------------------------------------------
Preferred Securities of Conseco
Financing Trust IV...............
- ----------------------------------------------------------------------------------------------------------------------
Preferred Securities of Conseco
Financing Trust V................
- ----------------------------------------------------------------------------------------------------------------------
Preferred Securities of Conseco
Financing Trust VI...............
- ----------------------------------------------------------------------------------------------------------------------
Preferred Securities of Conseco
Financing Trust VII..............
- ----------------------------------------------------------------------------------------------------------------------
Guarantees of Preferred Securities
of Conseco Financing Trust IV,
Conseco Financing Trust V,
Conseco Financing Trust VI and
Conseco Financing Trust VII by
Conseco, Inc.(6).................
- ----------------------------------------------------------------------------------------------------------------------
Total.............................. $1,500,000,000 100% $1,500,000,000 $424,242.42
======================================================================================================================
</TABLE>
(1) Such indeterminate number or amount of Debt Securities, Preferred Stock,
Depository Shares, Common Stock and Warrants of Conseco, Inc. and Preferred
Securities of Conseco Financing Trust IV, Conseco Financing Trust V, Conseco
Financing Trust VI and Conseco Financing Trust VII (the "Conseco Trusts") as
may from time to time be issued at indeterminate prices. Debt Securities of
Conseco, Inc. may be issued and sold to the Conseco Trusts, in which event
such Debt Securities may later be distributed to the holders of Preferred
Securities of the Conseco Trusts upon a dissolution of any such Conseco
Trust and the distribution of the assets thereof. The amount registered is
in United States dollars or the equivalent thereof in any other currency,
currency unit or units, or composite currency or currencies.
(2) Does not include the filing fee of $30,303.03 associated with certain
securities which has been previously paid, being carried forward pursuant to
Rule 429 under the Securities Act of 1933, as described in the last
paragraph of this cover page.
(3) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457. The aggregate offering price of the Debt Securities,
Preferred Stock, Depositary Shares, Common Stock, Warrants and Preferred
Securities, and the exercise price of any securities issuable upon exercise
of Warrants registered hereby; will not exceed $1,500,000,000.
(4) Exclusive of accrued interest and distributions, if any.
(5) Also includes such indeterminate number of shares of Preferred Stock and
Common Stock as may be issued upon conversion of or exchange for any Debt
Securities or Preferred Stock that provide for conversion or exchange into
other securities. No separate consideration will be received for the
Preferred Stock or Common Stock issuable upon conversion of or in exchange
for Debt Securities or Preferred Stock.
(6) Includes the rights of holders of the Preferred Securities under the
Guarantees of Preferred Securities and back-up undertakings, consisting of
obligations of Conseco, Inc. to provide certain indemnities in respect of,
and pay and be responsible for, certain expenses, costs, liabilities and
debts of, as applicable, the Conseco Trusts as set forth in the Declaration
of Trust (including the obligation to pay expenses of the Conseco Trusts);
the Indenture and any applicable supplemental indentures thereto, and the
Debt Securities issued to the Conseco Trusts, in each case as further
described in the Registration Statement. No separate consideration will be
received for the Guarantees or any back-up undertakings.
---------------------
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.
PURSUANT TO RULE 429 UNDER THE SECURITIES ACT OF 1933, THE PROSPECTUS
CONTAINED HEREIN CONSTITUTES A COMBINED PROSPECTUS THAT ALSO RELATES TO
$100,000,000 UNSOLD PRINCIPAL AMOUNT OF THE SECURITIES PREVIOUSLY REGISTERED
PURSUANT TO THE REGISTRATION STATEMENT ON FORM S-3 OF CONSECO, INC. (FILE NO.
333-14991).
<PAGE> 3
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.
PROSPECTUS
$1,500,000,000
CONSECO, INC.
DEBT SECURITIES, PREFERRED STOCK, DEPOSITARY SHARES, COMMON STOCK AND WARRANTS
CONSECO FINANCING TRUST IV
CONSECO FINANCING TRUST V
CONSECO FINANCING TRUST VI
CONSECO FINANCING TRUST VII
PREFERRED SECURITIES FULLY AND UNCONDITIONALLY GUARANTEED
BY CONSECO, INC.
------------------------
Conseco, Inc., an Indiana corporation ("Conseco" or the "Company"), may
offer and sell from time to time, in one or more series, (i) its debt
securities, consisting of debentures, notes and/or other evidences of
indebtedness representing unsecured obligations of Conseco (the "Debt
Securities"), (ii) shares of its preferred stock, no par value per share
("Preferred Stock"), which may be represented by depositary shares (the
"Depositary Shares") as described herein, (iii) shares of its common stock, no
par value per share ("Common Stock"), and (iv) warrants to purchase Debt
Securities, Preferred Stock, Common Stock or other securities or rights
("Warrants").
Conseco Financing Trust IV, Conseco Financing Trust V, Conseco Financing
Trust VI and Conseco Financing Trust VII (each, a "Conseco Trust"), statutory
business trusts formed under the laws of the State of Delaware, may offer, from
time to time, preferred securities, representing preferred undivided beneficial
interests in the assets of the respective Conseco Trusts ("Preferred
Securities"). The payment of periodic cash distributions ("Distributions") with
respect to Preferred Securities out of moneys held by each of the Conseco
Trusts, and payments on liquidation, redemption or otherwise with respect to
such Preferred Securities, will be guaranteed by the Company to the extent
described herein (each, a "Trust Guarantee"). See "Description of Preferred
Securities" and "Description of Trust Guarantees." The Company's obligations
under the Trust Guarantees will rank junior and subordinate in right of payment
to all other liabilities of the Company and pari passu with its obligations
under the senior most preferred or preference stock of the Company. See
"Description of Trust Guarantees -- Status of the Trust Guarantees."
Subordinated Debt Securities (as defined herein) may be issued and sold by the
Company in one or more series to a Conseco Trust or a trustee of such Conseco
Trust in connection with the investment of the proceeds from the offering of
Preferred Securities and Common Securities (as defined herein) of such Conseco
Trust. The Subordinated Debt Securities purchased by a Conseco Trust may be
subsequently distributed pro rata to holders of Preferred Securities and Common
Securities in connection with the dissolution of such Conseco Trust. The Debt
Securities, Preferred Stock, Depositary Shares, Common Stock, Warrants and
Preferred Securities are herein collectively referred to as the "Securities."
Certain specific terms of the particular Securities in respect of which
this Prospectus is being delivered will be set forth in an accompanying
supplement to this Prospectus (the "Prospectus Supplement"), which will
describe, without limitation and where applicable, the following: (i) in the
case of Debt Securities, the specific designation, aggregate principal amount,
ranking as senior or subordinated Debt Securities, denomination, maturity,
premium, if any, interest rate (which may be fixed or variable), time and method
of calculating interest, if any, place or places where principal of, premium, if
any, and interest, if any, on such Debt Securities will be payable, the
currencies or currency units in which principal of, premium, if any, and
interest, if any, on such Debt Securities will be payable, any terms of
redemption or conversion, any sinking fund provisions, the purchase price, any
listing on a securities exchange, any right of the Company to defer payment of
interest on the Debt Securities and the maximum length of such deferral period
and other special terms; (ii) in the case of Preferred Stock and Depositary
Shares, the specific designation, stated value and
<PAGE> 4
liquidation preference per share and number of shares offered, the purchase
price, dividend rate (which may be fixed or variable), method of calculating
payment of dividends, place or places where dividends on such Preferred Stock
will be payable, any terms of redemption, dates on which dividends shall be
payable and dates from which dividends shall accrue, any listing on a securities
exchange, voting and other rights, including conversion or exchange rights, if
any, and other special terms, including whether interests in the Preferred Stock
will be represented by Depositary Shares and, if so, the fraction of a share of
Preferred Stock represented by each Depositary Share; (iii) in the case of
Common Stock, the number of shares offered, the initial offering price, market
price and dividend information; (iv) in the case of Warrants, the specific
designation, the number, purchase price, exercise price and other terms thereof,
any listing of the Warrants or the underlying Securities on a securities
exchange or any other terms in connection with the offering, sale and exercise
of the Warrants, as well as the terms on which and the Securities for which such
Warrants may be exercised; and (v) in the case of Preferred Securities, the
specific designation, number of securities, liquidation amount per security, the
purchase price, any listing on a securities exchange, distribution rate (or
method of calculation thereof), dates on which distributions shall be payable
and dates from which distributions shall accrue, any voting rights, terms for
any conversion or exchange into other securities, any redemption, exchange or
sinking fund provisions, any other rights, preferences, privileges, limitations
or restrictions relating to the Preferred Securities and the terms upon which
the proceeds of the sale of the Preferred Securities shall be used to purchase a
specific series of Subordinated Debt Securities of the Company.
The offering price to the public of the Securities will be limited to U.S.
$1,500,000,000 in the aggregate (or its equivalent (based on the applicable
exchange rate at the time of issue), if Securities are offered for consideration
denominated in one or more foreign currencies or currency units as shall be
designated by the Company). The Debt Securities may be denominated in United
States dollars or, at the option of the Company if so specified in the
applicable Prospectus Supplement, in one or more foreign currencies or currency
units. The Debt Securities may be issued in registered form or bearer form, or
both. If so specified in the applicable Prospectus Supplement, Debt Securities
of a series may be issued in whole or in part in the form of one or more
temporary or permanent global securities.
The Securities may be sold to or through underwriters, through dealers or
agents or directly to purchasers. See "Plan of Distribution." The names of any
underwriters, dealers or agents involved in the sale of the Securities in
respect of which this Prospectus is being delivered and any applicable fee,
commission or discount arrangements with them will be set forth in a Prospectus
Supplement. See "Plan of Distribution" for possible indemnification arrangements
for dealers, underwriters and agents.
This Prospectus may not be used to consummate sales of Securities unless
accompanied by a Prospectus Supplement.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is , 1997.
2
<PAGE> 5
FOR NORTH CAROLINA RESIDENTS: THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE COMMISSIONER OF INSURANCE FOR THE STATE OF NORTH CAROLINA,
NOR HAS THE COMMISSIONER OF INSURANCE RULED UPON THE ACCURACY OR THE ADEQUACY OF
THIS DOCUMENT.
State insurance holding company laws and regulations applicable to the
Company generally provide that no person may acquire control of the Company, and
thus indirect control of its insurance subsidiaries, unless such person has
provided certain required information to, and such acquisition is approved (or
not disapproved) by, the appropriate insurance regulatory authorities.
Generally, any person acquiring beneficial ownership of 10% or more of the
Common Stock would be presumed to have acquired such control, unless the
appropriate insurance regulatory authorities upon advance application determine
otherwise.
NO DEALER, SALESMAN OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, 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
OR ANY UNDERWRITER, DEALER OR AGENT. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY SECURITIES OTHER THAN
THE REGISTERED SECURITIES TO WHICH IT RELATES, OR AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY THOSE SECURITIES TO WHICH IT RELATES, IN ANY
JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS 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 Conseco with the Commission can be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at
the following regional offices of the Commission: New York Regional Office, 7
World Trade Center, 13th Floor, New York, New York 10048; and Chicago Regional
Office, 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 and the Conseco Trusts have 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 or in any
Prospectus Supplement 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, the Conseco Trusts and the Securities, reference is hereby made to
such Registration Statement, including the exhibits thereto and the documents
incorporated herein by reference, which can be examined at the Commission's
principal office, 450 Fifth Street, N.W., Washington, D.C. 20549, or copies of
which can be obtained from the Commission at such office upon payment of the
fees prescribed by the Commission.
No separate financial statements of the Conseco Trusts have been included
or incorporated by reference herein. The Company does not consider that such
financial statements would be material to holders of the
3
<PAGE> 6
Preferred Securities because (i) all of the voting securities of the Conseco
Trusts will be owned, directly or indirectly, by the Company, a reporting
company under the Exchange Act, (ii) the Conseco Trusts have and will have no
independent operations but exist for the sole purpose of issuing securities
representing undivided beneficial interests in their assets and investing the
proceeds thereof in Subordinated Debt Securities issued by the Company, and
(iii) the Company's obligations described herein and in any accompanying
prospectus supplement, under the Declaration (including the obligation to pay
expenses of the Conseco Trusts), the Subordinated Indenture and any supplemental
indentures thereto, the Subordinated Debt Securities issued to the Conseco Trust
and the Trust Guarantees taken together, constitute a full and unconditional
guarantee by the Company of payments due on the Preferred Securities. See
"Description of Preferred Securities of the Conseco Trusts" and "Description of
Trust Guarantees."
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).
4
<PAGE> 7
THE COMPANY
The Company is a financial services holding company. The Company develops,
markets and administers annuity, individual 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 the 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.
THE CONSECO TRUSTS
Each of the Conseco Trusts is a statutory business trust formed under
Delaware law pursuant to (i) a declaration of trust (each a "Declaration")
executed by the Company as sponsor for such trust (the "Sponsor"), and the
Conseco Trustees (as defined herein) of such trust and (ii) the filing of a
certificate of trust with the Secretary of State of the State of Delaware on May
23, 1997. Each Conseco Trust exists for the exclusive purposes of (i) issuing
and selling the Preferred Securities and common securities representing common
undivided beneficial interests in the assets of such Conseco Trust (the "Common
Securities" and, together with the Preferred Securities, the "Trust
Securities"), (ii) using the gross proceeds from the sale of the Trust
Securities to acquire the Subordinated Debt Securities and (iii) engaging in
only those other activities necessary, appropriate, convenient or incidental
thereto. All of the Common Securities will be directly or indirectly owned by
the Company. The Common Securities will rank pari passu, and payments will be
made thereon pro rata, with the Preferred Securities, except that, if an event
of default under the Declaration has occurred and is continuing, the rights of
the holders of the Common Securities to payment in respect of distributions and
payments upon liquidation, redemption and otherwise will be subordinated to the
rights of the holders of the Preferred Securities. The Company will directly or
indirectly acquire Common Securities, in an aggregate liquidation amount equal
to at least 3% of the total capital of each Conseco Trust.
Each Conseco Trust has a term of approximately 55 years but may terminate
earlier, as provided in the Declaration. Each Conseco Trust's business and
affairs will be conducted by the trustees (the "Conseco Trustees") appointed by
the Company as the direct or indirect holder of all of the Common Securities.
The holder of the Common Securities will be entitled to appoint, remove or
replace any of, or increase or reduce the number of, the Conseco Trustees of
each Conseco Trust. The duties and obligations of the Conseco Trustees shall be
governed by the Declaration of such Conseco Trust. A majority of the Conseco
Trustees (the "Regular Trustees") of each Conseco Trust will be persons who are
employees or officers of or who are affiliated with the Company. One Conseco
Trustee of each Conseco Trust will be a financial institution that is not
affiliated with the Company and has a minimum amount of combined capital and
surplus of not less than $50,000,000, which shall act as property trustee and as
indenture trustee for the purposes of compliance with the provisions of Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"), pursuant to the
terms set forth in the applicable Prospectus Supplement (the "Property
Trustee"). In addition, unless the Property Trustee maintains a principal place
of business in the State of Delaware and otherwise meets the requirements of
applicable law, one Conseco Trustee of each Conseco Trust will be an entity
having a principal place of business in, or a natural person resident of, the
State of Delaware (the "Delaware Trustee"). The Company will pay all fees and
expenses related to the Conseco Trusts and the offering of the Trust Securities.
The Property Trustee for each Conseco Trust is Fleet National Bank, 777
Main Street, Hartford, Connecticut 06115. The Delaware Trustee for each Conseco
Trust is First Union Trust Company, National Association, and its address in the
State of Delaware is One Rodney Square, 920 King Street, Wilmington, Delaware
19801. The principal place of business of each Conseco Trust shall be c/o
Conseco, Inc., 11825 N. Pennsylvania Street, Carmel, Indiana 46032; telephone
(317) 817-6100.
5
<PAGE> 8
USE OF PROCEEDS
Unless otherwise indicated in the accompanying Prospectus Supplement, the
net proceeds received by the Company from the sale of any Debt Securities,
Common Stock, Preferred Stock, Depositary Shares or Warrants offered hereby are
expected to be used for general corporate purposes. The proceeds from the sale
of Preferred Securities by the Conseco Trusts will be invested in the
Subordinated Debt Securities of the Company. Except as may otherwise be
described in the Prospectus Supplement relating to such Preferred Securities,
the Company expects to use the net proceeds from the sale of such Subordinated
Debt Securities to the Conseco Trusts for general corporate purposes. Any
specific allocation of the proceeds to a particular purpose that has been made
at the date of any Prospectus Supplement will be described therein.
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
</TABLE>
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(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.
6
<PAGE> 9
DESCRIPTION OF DEBT SECURITIES
The Debt Securities offered hereby, consisting of notes, debentures and
other evidences of indebtedness, are to be issued in one or more series
constituting either senior Debt Securities ("Senior Debt Securities") or
subordinated Debt Securities ("Subordinated Debt Securities"). The Debt
Securities will be issued pursuant to indentures described below (as applicable,
the "Senior Indenture" or the "Subordinated Indenture", each, an "Indenture"
and, together, the "Indentures"), in each case between the Company and the
trustee identified therein (the "Trustee"), the forms of which have been filed
as exhibits to the Registration Statement of which this Prospectus forms a part.
Except for the subordination provisions of the Subordinated Indenture, for which
there are no counterparts in the Senior Indenture, the provisions of the
Subordinated Indenture are substantially identical in substance to the
provisions of the Senior Indenture that bear the same section numbers.
The statements herein relating to the Debt Securities and the following
summaries of certain general provisions of the Indentures do not purport to be
complete and are subject to, and are qualified in their entirety by reference
to, all the provisions of the Indentures (as they may be amended or supplemented
from time to time), including the definitions therein of certain terms
capitalized in this Prospectus. All article and section references appearing
herein are to articles and sections of the applicable Indenture and whenever
particular Sections or defined terms of the Indentures (as they may be amended
or supplemented from time to time) are referred to herein or in a Prospectus
Supplement, such Sections or defined terms are incorporated herein or therein by
reference.
GENERAL
The Debt Securities will be unsecured obligations of the Company. The
Indentures do not limit the aggregate amount of Debt Securities which may be
issued thereunder, nor do they limit the incurrence or issuance of other secured
or unsecured debt of the Company. The Debt Securities issued under the Senior
Indenture will be unsecured and will rank pari passu with all other unsecured
and unsubordinated obligations of the Company. The Debt Securities issued under
the Subordinated Indenture will be subordinate and junior in right of payment,
to the extent and in the manner set forth in the Subordinated Indenture, to all
Senior Indebtedness of the Company. See "-- Subordination under the Subordinated
Indenture."
Reference is made to the applicable Prospectus Supplement which will
accompany this Prospectus for a description of the specific series of Debt
Securities being offered thereby, including: (1) the title, designation and
purchase price, of such Debt Securities; (2) any limit upon the aggregate
principal amount of such Debt Securities; (3) the date or dates on which the
principal of and premium, if any, on such Debt Securities will mature or the
method of determining such date or dates; (4) the rate or rates (which may be
fixed or variable) at which such Debt Securities will bear interest, if any, or
the method of calculating such rate or rates; (5) the date or dates from which
interest, if any, will accrue or the method by which such date or dates will be
determined; (6) the date or dates on which interest, if any, will be payable and
the record date or dates therefor; (7) the place or places where principal of,
premium, if any, and interest, if any, on such Debt Securities will be payable;
(8) the right, if any, of the Company to defer payment of interest on Debt
Securities and the maximum length of any such deferral period; (9) the period or
periods within which, the price or prices at which, the currency or currencies
(including currency unit or units) in which, and the terms and conditions upon
which, such Debt Securities may be redeemed, in whole or in part, at the option
of the Company; (10) the obligation, if any, of the Company to redeem or
purchase such Debt Securities pursuant to any sinking fund or analogous
provisions or upon the happening of a specified event and the period or periods
within which, the price or prices at which and the other terms and conditions
upon which, such Debt Securities shall be redeemed or purchased, in whole or in
part, pursuant to such obligations; (11) the denominations in which such Debt
Securities are authorized to be issued; (12) the currency or currency unit for
which Debt Securities may be purchased or in which Debt Securities may be
denominated and/or the currency or currencies (including currency unit or units)
in which principal of, premium, if any, and interest, if any, on such Debt
Securities will be payable and whether the Company or the holders of any such
Debt Securities may elect to receive payments in respect of such Debt Securities
in a currency or currency unit other than that in which such Debt Securities are
stated to be payable; (13) if other than the principal amount
7
<PAGE> 10
thereof, the portion of the principal amount of such Debt Securities which will
be payable upon declaration of the acceleration of the maturity thereof or the
method by which such portion shall be determined; (14) the person to whom any
interest on any such Debt Security shall be payable if other than the person in
whose name such Debt Security is registered on the applicable record date; (15)
any addition to, or modification or deletion of, any Event of Default or any
covenant of the Company specified in the Indenture with respect to such Debt
Securities; (16) the application, if any, of such means of defeasance or
covenant defeasance as may be specified for such Debt Securities; (17) whether
such Debt Securities are to be issued in whole or in part in the form of one or
more temporary or permanent global securities and, if so, the identity of the
depositary for such global security or securities; (18) any United States
Federal income tax considerations applicable to holders of the Debt Securities;
and (19) any other special terms pertaining to such Debt Securities. Unless
otherwise specified in the applicable Prospectus Supplement, the Debt Securities
will not be listed on any securities exchange. (Section 3.1.)
Unless otherwise specified in the applicable Prospectus Supplement, Debt
Securities will be issued in fully-registered form without coupons. Where Debt
Securities of any series are issued in bearer form, the special restrictions and
considerations, including special offering restrictions and special Federal
income tax considerations, applicable to any such Debt Securities and to payment
on and transfer and exchange of such Debt Securities will be described in the
applicable Prospectus Supplement. Bearer Debt Securities will be transferable by
delivery. (Section 3.5.)
Debt Securities may be sold at a substantial discount below their stated
principal amount, bearing no interest or interest at a rate which at the time of
issuance is below market rates. Certain Federal income tax consequences and
special considerations applicable to any such Debt Securities, or to Debt
Securities issued at par that are treated as having been issued at a discount,
will be described in the applicable Prospectus Supplement.
If the purchase price of any of the Debt Securities is payable in one or
more foreign currencies or currency units or if any Debt Securities are
denominated in one or more foreign currencies or currency units or if the
principal of, premium, if any, or interest, if any, on any Debt Securities is
payable in one or more foreign currencies or currency units, or by reference to
commodity prices, equity indices or other factors, the restrictions, elections,
certain U.S. Federal income tax considerations, specific terms and other
information with respect to such issue of Debt Securities and such foreign
currency or currency units or commodity prices, equity indices or other factors
will be set forth in the applicable Prospectus Supplement. In general, holders
of such series of Debt Securities may receive a principal amount on any
principal payment date, or a payment of premium, if any, on any premium interest
payment date or a payment of interest on any interest payment date, that is
greater than or less than the amount of principal, premium, if any, or interest
otherwise payable on such dates, depending on the value on such dates of the
applicable currency, commodity, equity index or other factor.
PAYMENT, REGISTRATION, TRANSFER AND EXCHANGE
Unless otherwise provided in the applicable Prospectus Supplement, payments
in respect of the Debt Securities will be made in the designated currency at the
office or agency of the Company maintained for that purpose as the Company may
designate from time to time, except that, at the option of the Company, interest
payments, if any, on Debt Securities in registered form may be made (i) by
checks mailed to the holders of Debt Securities entitled thereto at their
registered addresses or (ii) by wire transfer to an account maintained by the
person entitled thereto as specified in the Register. (Sections 3.7(a) and 9.2.)
Unless otherwise indicated in the applicable Prospectus Supplement, payment of
any installment of interest on Debt Securities in registered form will be made
to the person in whose name such Debt Security is registered at the close of
business on the regular record date for such interest. (Section 3.7(a).)
Payment in respect of Debt Securities in bearer form will be made in the
currency and in the manner designated in the Prospectus Supplement, subject to
any applicable laws and regulations, at such paying agencies outside the United
States as the Company may appoint from time to time. The paying agents outside
the United States initially appointed by the Company for a series of Debt
Securities will be named in the
8
<PAGE> 11
Prospectus Supplement. The Company may at any time designate additional paying
agents or rescind the designation of any paying agents, except that, if Debt
Securities of a series are issuable as Registered Securities, the Company will
be required to maintain at least one paying agent in each Place of Payment for
such series and, if Debt Securities of a series are issuable as Bearer
Securities, the Company will be required to maintain a paying agent in a Place
of Payment outside the United States where Debt Securities of such series and
any coupons appertaining thereto may be presented and surrendered for payment.
(Section 9.2.)
Unless otherwise provided in the applicable Prospectus Supplement, Debt
Securities in registered form will be transferable or exchangeable at the agency
of the Company maintained for such purpose as designated by the Company from
time to time. (Sections 3.5 and 9.2.) Debt Securities may be transferred or
exchanged without service charge, other than any tax or other governmental
charge imposed in connection therewith. (Section 3.5.)
GLOBAL DEBT SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more fully registered global securities (a "Registered Global
Security") that will be deposited with a depository (the "Depository") or with a
nominee for the Depository identified in the applicable Prospectus Supplement.
In such a case, one or more Registered Global Securities will be issued in a
denomination or aggregate denominations equal to the portion of the aggregate
principal amount of outstanding Debt Securities of the series to be represented
by such Registered Global Security or Securities. (Section 3.3 of each
Indenture.) Unless and until it is exchanged in whole or in part for Debt
Securities in definitive certificated form, a Registered Global Security may not
be registered for transfer or exchange except as a whole by the Depository for
such Registered Global Security to a nominee of such Depository or by a nominee
of such Depository to such Depository or another nominee of such Depository or
by such Depository or any such nominee to a successor Depository for such series
or a nominee of such successor Depository and except in the circumstances
described in the applicable Prospectus Supplement. (Section 3.5.)
The specific terms of the depository arrangement with respect to any
portion of a series of Debt Securities to be represented by a Registered Global
Security will be described in the applicable Prospectus Supplement. The Company
expects that the following provisions will apply to such depository
arrangements.
Ownership of beneficial interests in a Registered Global Security will be
limited to participants or persons that may hold interests through participants
(as such term is defined below). Upon the issuance of any Registered Global
Security, and the deposit of such Registered Global Security with or on behalf
of the Depository for such Registered Global Security, the Depository will
credit, on its book-entry registration and transfer system, the respective
principal amounts of the Debt Securities represented by such Registered Global
Security to the accounts of institutions ("participants") that have accounts
with the Depository or its nominee. The accounts to be credited will be
designated by the underwriters or agents engaging in the distribution of such
Debt Securities or by the Company, if such Debt Securities are offered and sold
directly by the Company. Ownership of beneficial interests by participants in
such Registered Global Security will be shown on, and the transfer of such
beneficial interests will be effected only through, records maintained by the
Depository for such Registered Global Security or by its nominee. Ownership of
beneficial interests in such Registered Global Security by persons that hold
through participants will be shown on, and the transfer of such beneficial
interests within such participants will be effected only through, records
maintained by such participants. The laws of some jurisdictions require that
certain purchasers of securities take physical delivery of such securities in
certificated form. The foregoing limitations and such laws may impair the
ability to transfer beneficial interests in such Registered Global Security.
So long as the Depository for a Registered Global Security, or its nominee,
is the registered owner of such Registered Global Security, such Depository or
such nominee, as the case may be, will be considered the sole owner or holder of
the Debt Securities represented by such Registered Global Security for all
purposes under the applicable Indenture. Unless otherwise specified in the
applicable Prospectus Supplement and except as specified below, owners of
beneficial interests in such Registered Global Security will not be entitled to
have Debt Securities of the series represented by such Registered Global
Security registered in their names, will not
9
<PAGE> 12
receive or be entitled to receive physical delivery of Debt Securities of such
series in certificated form and will not be considered the holders thereof for
any purposes under the relevant Indenture. (Section 3.8.) Accordingly, each
person owning a beneficial interest in such Registered Global Security must rely
on the procedures of the Depository and, if such person is not a participant, on
the procedures of the participant through which such person owns its interest,
to exercise any rights of a holder under the relevant Indenture. The Depository
may grant proxies and otherwise authorize participants to give or take any
request, demand, authorization, direction, notice, consent, waiver or other
action which a holder is entitled to give or take under the relevant Indenture.
The Company understands that, under existing industry practices, if the Company
requests any action of holders or if any owner of a beneficial interest in such
Registered Global Security desires to give any notice or take any action which a
holder is entitled to give or take under the relevant Indenture, the Depository
would authorize the participants to give such notice or take such action, and
such participants would authorize beneficial owners owning through such
participants to give such notice or take such action or would otherwise act upon
the instructions of beneficial owners owning through them.
Unless otherwise specified in the applicable Prospectus Supplement,
payments with respect to principal, premium, if any, and interest, if any, on
Debt Securities represented by a Registered Global Security registered in the
name of a Depository or its nominee will be made to such Depository or its
nominee, as the case may be, as the registered owner of such Registered Global
Security.
The Company expects that the Depositary for any Debt Securities represented
by a Registered Global Security, upon receipt of any payment of principal,
premium or interest, will immediately credit participants' accounts with
payments in amounts proportionate to their respective beneficial interests in
the principal amount of such Registered Global Security as shown on the records
of such Depositary. The Company also expects that payments by participants to
owners of beneficial interests in such Registered Global Security held through
such participants will be governed by standing instructions and customary
practices, as is now the case with the securities held for the accounts of
customers registered in "street names," and will be the responsibility of such
participants. None of the Company, the respective Trustees or any agent of the
Company or the respective Trustees shall have any responsibility or liability
for any aspect of the records relating to or payments made on account of
beneficial interests of a Registered Global Security, or for maintaining,
supervising or reviewing any records relating to such beneficial interests.
(Section 3.8.)
Unless otherwise specified in the applicable Prospectus Supplement, if the
Depository for any Debt Securities represented by a Registered Global Security
is at any time unwilling or unable to continue as Depository or ceases to be a
clearing agency registered under the Exchange Act and a duly registered
successor Depository is not appointed by the Company within 90 days, the Company
will issue such Debt Securities in definitive certificated form in exchange for
such Registered Global Security. In addition, the Company may at any time and in
its sole discretion determine not to have any of the Debt Securities of a series
represented by one or more Registered Global Securities and, in such event, will
issue Debt Securities of such series in definitive certificated form in exchange
for all of the Registered Global Security or Securities representing such Debt
Securities. (Section 3.5.)
The Debt Securities of a series may also be issued in whole or in part in
the form of one or more bearer global securities (a "Bearer Global Security")
that will be deposited with a depository, or with a nominee for such depository,
identified in the applicable Prospectus Supplement. Any such Bearer Global
Security may be issued in temporary or permanent form. (Section 3.4.) The
specific terms and procedures, including the specific terms of the depository
arrangement, with respect to any portion of a series of Debt Securities to be
represented by one or more Bearer Global Securities will be described in the
applicable Prospectus Supplement.
10
<PAGE> 13
CONSOLIDATION, MERGER OR SALE BY THE COMPANY
The Company shall not consolidate with or merge into any other corporation
or sell its assets substantially as an entirety, unless: (i) the corporation
formed by such consolidation or into which the Company is merged or the
corporation which acquires its assets is organized in the United States; (ii)
the corporation formed by such consolidation or into which the Company is merged
or which acquires the Company's assets substantially as an entirety expressly
assumes all of the obligations of the Company under each Indenture; (iii)
immediately after giving effect to such transaction, no Default or Event of
Default shall have happened and be continuing, and (iv) if, as a result of such
transaction, properties or assets of the Company would become subject to an
encumbrance which would not be permitted by the terms of any series of Debt
Securities, the Company or the successor corporation, as the case may be, shall
take such steps as are necessary to secure such Debt Securities equally and
ratably with all indebtedness secured thereunder. Upon any such consolidation,
merger or sale, the successor corporation formed by such consolidation, or into
which the Company is merged or to which such sale is made, shall succeed to, and
be substituted for the Company under each Indenture. (Section 7.1.)
EVENTS OF DEFAULT, NOTICE AND CERTAIN RIGHTS ON DEFAULT
Each Indenture provides that, if an Event of Default specified therein
occurs with respect to the Debt Securities of any series and is continuing, the
Trustee for such series or the holders of 25% in aggregate principal amount of
all of the outstanding Debt Securities of that series, by written notice to the
Company (and to the Trustee for such series, if notice is given by such holders
of Debt Securities), may declare the principal of (or, if the Debt Securities of
that series are Original Issue Discount Securities or Indexed Securities, such
portion of the principal amount specified in the Prospectus Supplement) and
accrued interest on all the Debt Securities of that series to be due and payable
(provided, with respect to any Debt Securities issued under the Subordinated
Indenture, that the payment of principal and interest on such Debt Securities
shall remain subordinated to the extent provided in Article 12 of the
Subordinated Indenture). (Section 5.2.)
Events of Default with respect to Debt Securities of any series are defined
in each Indenture as being: (a) default for 30 days in payment of any interest
on any Debt Security of that series or any coupon appertaining thereto or any
additional amount payable with respect to Debt Securities of such series as
specified in the applicable Prospectus Supplement when due; (b) default in
payment of principal, or premium, if any, at maturity or on redemption or
otherwise, or in the making of a mandatory sinking fund payment of any Debt
Securities of that series when due; (c) default for 60 days after notice to the
Company by the Trustee for such series, or by the holders of 25% in aggregate
principal amount of the Debt Securities of such series then outstanding, in the
performance of any other agreement in the Debt Securities of that series, in the
Indenture or in any supplemental indenture or board resolution referred to
therein under which the Debt Securities of that series may have been issued; (d)
default resulting in acceleration of other indebtedness of the Company for
borrowed money where the aggregate principal amount so accelerated exceeds $25
million and such acceleration is not rescinded or annulled within 30 days after
the written notice thereof to the Company by the Trustee or to the Company and
the Trustee by the holders of 25% in aggregate principal amount of the Debt
Securities of such series then outstanding, provided that such Event of Default
will be remedied, cured or waived if the default that resulted in the
acceleration of such other indebtedness is remedied, cured or waived; and (e)
certain events of bankruptcy, insolvency or reorganization of the Company.
(Section 5.1.) The definition of "Event of Default" in each Indenture
specifically excludes a default under a secured debt under which the obligee has
recourse (exclusive of recourse for ancillary matters such as environmental
indemnities, misapplication of funds, costs of enforcement, etc.) only to the
collateral pledged for repayment, and where the fair market value of such
collateral does not exceed two percent of Total Assets (as defined in the
Indenture) at the time of the default. Events of Default with respect to a
specified series of Debt Securities may be added to the Indenture and, if so
added, will be described in the applicable Prospectus Supplement. (Sections 3.1
and 5.1(7).)
Each Indenture provides that the Trustee will, within 90 days after the
occurrence of a Default with respect to the Debt Securities of any series, give
to the holders of the Debt Securities of that series notice of all Defaults
known to it unless such Default shall have been cured or waived; provided that
except in the case of a Default in payment on the Debt Securities of that
series, the Trustee may withhold the notice if and so long
11
<PAGE> 14
as a committee of its Responsible Officers in good faith determines that
withholding such notice is in the interests of the holders of the Debt
Securities of that series. (Section 6.6.) "Default" means any event which is, or
after notice or passage of time or both, would be, an Event of Default. (Section
1.1.)
Each Indenture provides that the holders of a majority in aggregate
principal amount of the Debt Securities of each series affected (with each such
series voting as a class) may, subject to certain limited conditions, direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee for such series, or exercising any trust or power conferred on such
Trustee. (Section 5.8.)
Each Indenture includes a covenant that the Company will file annually with
the Trustee a certificate as to the Company's compliance with all conditions and
covenants of such Indenture. (Section 9.5.)
The holders of a majority in aggregate principal amount of any series of
Debt Securities by notice to the Trustee for such series may waive, on behalf of
the holders of all Debt Securities of such series, any past Default or Event of
Default with respect to that series and its consequences except a Default or
Event of Default in the payment of the principal of, premium, if any, or
interest, if any, on any Debt Security, and except in respect of an Event of
Default resulting from the breach of a covenant or provision of either Indenture
which, pursuant to the applicable Indenture, cannot be amended or modified
without the consent of the holders of each outstanding Debt Security of such
series affected. (Section 5.7.)
MODIFICATION OF THE INDENTURES
Each Indenture contains provisions permitting the Company and the Trustee
to enter into one or more supplemental indentures without the consent of the
holders of any of the Debt Securities in order (i) to evidence the succession of
another corporation to the Company and the assumption of the covenants of the
Company by a successor to the Company; (ii) to add to the covenants of the
Company or surrender any right or power of the Company; (iii) to add additional
Events of Default with respect to any series of Debt Securities; (iv) to add or
change any provisions to such extent as necessary to permit or facilitate the
issuance of Debt Securities in bearer form; (v) to change or eliminate any
provision affecting only Debt Securities not yet issued; (vi) to secure the Debt
Securities; (vii) to establish the form or terms of Debt Securities; (viii) to
evidence and provide for successor Trustees; (ix) if allowed without penalty
under applicable laws and regulations, to permit payment in respect of Debt
Securities in bearer form in the United States; (x) to correct any defect or
supplement any inconsistent provisions or to make any other provisions with
respect to matters or questions arising under such Indenture, provided that such
action does not adversely affect the interests of any holder of Debt Securities
of any series; or (xi) to cure any ambiguity or correct any mistake. The
Subordinated Indenture also permits the Company and the Trustee thereunder to
enter into such supplemental indentures to modify the subordination provisions
contained in the Subordinated Debenture except in a manner adverse to any
outstanding Debt Securities. (Section 8.1.)
Each Indenture also contains provisions permitting the Company and the
Trustee, with the consent of the holders of a majority in aggregate principal
amount of the outstanding Debt Securities affected by such supplemental
indenture (with the Debt Securities of each series voting as a class), to
execute supplemental indentures adding any provisions to or changing or
eliminating any of the provisions of such Indenture or any supplemental
indenture or modifying the rights of the holders of Debt Securities of such
series, except that, without the consent of the holder of each Debt Security so
affected, no such supplemental indenture may: (i) change the time for payment of
principal or premium, if any, or interest on any Debt Security; (ii) reduce the
principal of, or any installment of principal of, or premium, if any, or
interest on any Debt Security, or change the manner in which the amount of any
of the foregoing is determined; (iii) reduce the amount of premium, if any,
payable upon the redemption of any Debt Security; (iv) reduce the amount of
principal payable upon acceleration of the maturity of any Original Issue
Discount or Index Security; (v) change the currency or currency unit in which
any Debt Security or any premium or interest thereon is payable; (vi) impair the
right to institute suit for the enforcement of any payment on or with respect to
any Debt Security; (vii) reduce the percentage in principal amount of the
outstanding Debt Securities affected thereby the consent of whose holders is
required for modification or amendment of such Indenture or for waiver of
compliance with certain provisions of the Indenture or for waiver of certain
defaults; (viii) change the
12
<PAGE> 15
obligation of the Company to maintain an office or agency in the places and for
the purposes specified in such Indenture; (ix) modify the provisions relating to
the subordination of outstanding Debt Securities of any series in a manner
adverse to the holders thereof; or (x) modify the provisions relating to waiver
of certain defaults or any of the foregoing provisions. (Section 8.2.)
SUBORDINATION UNDER THE SUBORDINATED INDENTURE
In the Subordinated Indenture, the Company will covenant and agree that any
Subordinated Debt Securities issued thereunder are subordinate and junior in
right of payment to all Senior Indebtedness to the extent provided in the
Subordinated Indenture. (Section 12.1 of the Subordinated Indenture.) The
Subordinated Indenture defines the term "Senior Indebtedness" as the principal,
premium, if any, and interest on: (i) all indebtedness of the Company, whether
outstanding on the date of the issuance of Subordinated Debt Securities or
thereafter created, incurred or assumed, which is for money borrowed, or
evidenced by a note or similar instrument given in connection with the
acquisition of any business, properties or assets, including securities; (ii)
any indebtedness of others of the kinds described in the preceding clause (i)
for the payment of which the Company is responsible or liable as guarantor or
otherwise; and (iii) amendments, renewals, extensions and refundings of any such
indebtedness, unless in any instrument or instruments evidencing or securing
such indebtedness or pursuant to which the same is outstanding, or in any such
amendment, renewal, extension or refunding, it is expressly provided that such
indebtedness is not superior in right of payment to Subordinated Debt
Securities. The Senior Indebtedness shall continue to be Senior Indebtedness and
entitled to the benefits of the subordination provisions irrespective of any
amendment, modification or waiver of any term of the Senior Indebtedness or
extension or renewal of the Senior Indebtedness. (Section 12.2 of the
Subordinated Indenture.)
If (i) the Company defaults in the payment of any principal, or premium, if
any, or interest on any Senior Indebtedness when the same becomes due and
payable, whether at maturity or at a date fixed for prepayment or declaration or
otherwise or (ii) an event of default occurs with respect to any Senior
Indebtedness permitting the holders thereof to accelerate the maturity thereof
and written notice of such event of default (requesting that payments on
Subordinated Debt Securities cease) is given to the Company by the holders of
Senior Indebtedness, then unless and until such default in payment or event of
default shall have been cured or waived or shall have ceased to exist, no direct
or indirect payment (in cash, property or securities, by set-off or otherwise)
shall be made or agreed to be made on account of the Subordinated Debt
Securities or interest thereon or in respect of any repayment, redemption,
retirement, purchase or other acquisition of Subordinated Debt Securities.
(Section 12.4 of the Subordinated Indenture.)
In the event of (i) any insolvency, bankruptcy, receivership, liquidation,
reorganization, readjustment, composition or other similar proceeding relating
to the Company, its creditors or its property, (ii) any proceeding for the
liquidation, dissolution or other winding-up of the Company, voluntary or
involuntary, whether or not involving insolvency or bankruptcy proceedings,
(iii) any assignment by the Company for the benefit of creditors or (iv) any
other marshalling of the assets of the Company, all Senior Indebtedness
(including, without limitation, interest accruing after the commencement of any
such proceeding, assignment or marshalling of assets) shall first be paid in
full before any payment or distribution, whether in cash, securities or other
property, shall be made by the Company on account of Subordinated Debt
Securities. In any such event, any payment or distribution, whether in cash,
securities or other property (other than securities of the Company or any other
corporation provided for by a plan of reorganization or readjustment, the
payment of which is subordinate, at least to the extent provided in the
subordination provisions of the Subordinated Indenture with respect to the
indebtedness evidenced by Subordinated Debt Securities, to the payment of all
Senior Indebtedness at the time outstanding and to any securities issued in
respect thereof under any such plan of reorganization or readjustment), which
would otherwise (but for the subordination provisions) be payable or deliverable
in respect of Subordinated Debt Securities (including any such payment or
distribution which may be payable or deliverable by reason of the payment of any
other indebtedness of the Company being subordinated to the payment of
Subordinated Debt Securities) shall be paid or delivered directly to the holders
of Senior Indebtedness, or to their representative or trustee, in accordance
with the priorities then existing among such holders until all Senior
Indebtedness shall have been paid in full.
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(Section 12.3 of the Subordinated Indenture.) No present or future holder of any
Senior Indebtedness shall be prejudiced in the right to enforce subordination of
the indebtedness evidenced by Subordinated Debt Securities by any act or failure
to act on the part of the Company. (Section 12.9 of the Subordinated Indenture.)
Senior Indebtedness shall not be deemed to have been paid in full unless
the holders thereof shall have received cash, securities or other property equal
to the amount of such Senior Indebtedness then outstanding. Upon the payment in
full of all Senior Indebtedness, the holders of Subordinated Debt Securities
shall be subrogated to all the rights of any holders of Senior Indebtedness to
receive any further payments or distributions applicable to the Senior
Indebtedness until all Subordinated Debt Securities shall have been paid in
full, and such payments or distributions received by any holder of Subordinated
Debt Securities, by reason of such subrogation, of cash, securities or other
property which otherwise would be paid or distributed to the holders of Senior
Indebtedness, shall, as between the Company and its creditors other than the
holders of Senior Indebtedness, on the one hand, and the holders of Subordinated
Debt Securities, on the other, be deemed to be a payment by the Company on
account of Senior Indebtedness, and not on account of Subordinated Debt
Securities. (Section 12.7 of the Subordinated Indenture.)
The Subordinated Indenture provides that the foregoing subordination
provisions, insofar as they relate to any particular issue of Subordinated Debt
Securities, may be changed prior to such issuance. Any such change would be
described in the applicable Prospectus Supplement relating to such Subordinated
Debt Securities.
DEFEASANCE AND COVENANT DEFEASANCE
If indicated in the applicable Prospectus Supplement, the Company may elect
either (i) to defease and be discharged from any and all obligations with
respect to the Debt Securities of or within any series (except as otherwise
provided in the relevant Indenture) ("defeasance") or (ii) to be released from
its obligations with respect to certain covenants applicable to the Debt
Securities of or within any series ("covenant defeasance"), upon the deposit
with the relevant Trustee (or other qualifying trustee), in trust for such
purpose, of money and/or Government Obligations which through the payment of
principal and interest in accordance with their terms will provide money in an
amount sufficient, without reinvestment, to pay the principal of and any premium
or interest on such Debt Securities to Maturity or redemption, as the case may
be, and any mandatory sinking fund or analogous payments thereon. As a condition
to defeasance or covenant defeasance, the Company must deliver to the Trustee an
Opinion of Counsel to the effect that the Holders of such Debt Securities will
not recognize income, gain or loss for Federal income tax purposes as a result
of such defeasance or covenant defeasance and will be subject to Federal income
tax on the same amounts and in the same manner and at the same times as would
have been the case if such defeasance or covenant defeasance had not occurred.
Such Opinion of Counsel, in the case of defeasance under clause (i) above, must
refer to and be based upon a ruling of the Internal Revenue Service or a change
in applicable Federal income tax law occurring after the date of the relevant
Indenture. (Article 4.) If indicated in the applicable Prospectus Supplement, in
addition to obligations of the United States or an agency or instrumentality
thereof, Government Obligations may include obligations of the government or an
agency or instrumentality of the government issuing the currency or currency
unit in which Debt Securities of such series are payable. (Section 3.1.)
In addition, with respect to the Subordinated Indenture, in order to be
discharged no event or condition shall exist that, pursuant to certain
provisions described under "-- Subordination under the Subordinated Indenture"
above, would prevent the Company from making payments of principal of (and
premium, if any) and interest on Subordinated Debt Securities at the date of the
irrevocable deposit referred to above. (Section 4.6(j) of the Subordinated
Indenture.)
The Company may exercise its defeasance option with respect to such Debt
Securities notwithstanding its prior exercise of its covenant defeasance option.
If the Company exercises its defeasance option, payment of such Debt Securities
may not be accelerated because of a Default or an Event of Default. (Section
4.4.) If the Company exercises its covenant defeasance option, payment of such
Debt Securities may not be accelerated by reason of a Default or an Event of
Default with respect to the covenants to which such covenant defeasance
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is applicable. However, if such acceleration were to occur by reason of another
Event of Default, the realizable value at the acceleration date of the money and
Government Obligations in the defeasance trust could be less than the principal
and interest then due on such Debt Securities, in that the required deposit in
the defeasance trust is based upon scheduled cash flow rather than market value,
which will vary depending upon interest rates and other factors.
THE TRUSTEES
LTCB Trust Company will be the Trustee under the Senior Indenture. Fleet
National Bank will be the Trustee under the Subordinated Indenture. The Company
may also maintain banking and other commercial relationships with each of the
Trustees and their affiliates in the ordinary course of business.
DESCRIPTION OF CAPITAL STOCK
At May 16, 1997, the authorized capital stock of the Company was
1,020,000,000 shares, consisting of:
(a) 20,000,000 shares of Preferred Stock, of which 2,177,500 shares of
Preferred Redeemable Increased Dividend Equity Securities, 7% PRIDES,
were outstanding; and
(b) 1,000,000,000 shares of Common Stock, of which 179,880,594 shares were
outstanding.
In general, the classes of authorized capital stock are afforded
preferences with respect to dividends and liquidation rights in the order listed
above. The Board of Directors of the Company is empowered, without approval of
the shareholders, to cause the Preferred Stock to be issued in one or more
series, with the numbers of shares of each series and the rights, preferences
and limitations of each series to be determined by it including, without
limitation, the dividend rights, conversion rights, redemption rights and
liquidation preferences, if any, of any wholly unissued series of Preferred
Stock (or of the entire class of Preferred Stock if none of such shares have
been issued), the number of shares constituting each such series and the terms
and conditions of the issue thereof. The descriptions set forth below do not
purport to be complete and are qualified in their entirety by reference to the
Amended and Restated Articles of Incorporation of the Company, as amended (the
"Articles of Incorporation").
The Prospectus Supplement relating to an offering of Common Stock will
describe terms relevant thereto, including the number of shares offered, the
initial offering price, market price and dividend information.
The applicable Prospectus Supplement will describe the following terms of
any Preferred Stock in respect of which this Prospectus is being delivered (to
the extent applicable to such Preferred Stock): (i) the specific designation,
number of shares, seniority and purchase price; (ii) any liquidation preference
per share; (iii) any date of maturity; (iv) any redemption, repayment or sinking
fund provisions; (v) any dividend rate or rates and the dates on which any such
dividends will be payable (or the method by which such rates or dates will be
determined); (vi) any voting rights; (vii) if other than the currency of the
United States of America, the currency or currencies, including composite
currencies, in which such Preferred Stock is denominated and/or in which
payments will or may be payable; (viii) the method by which amounts in respect
of such Preferred Stock may be calculated and any commodities, currencies or
indices, or value, rate or price, relevant to such calculation; (ix) whether the
Preferred Stock is convertible or exchangeable and, if so, the securities or
rights into which such Preferred Stock is convertible or exchangeable (which may
include other Preferred Stock, Debt Securities, Common Stock or other securities
or rights of the Company (including rights to receive payment in cash or
securities based on the value, rate or price of one or more specified
commodities, currencies or indices) or a combination of the foregoing), and the
terms and conditions upon which such conversions or exchanges will be effected,
including the initial conversion or exchange prices or rates, the conversion or
exchange period and any other related provisions; (x) the place or places where
dividends and other payments on the Preferred Stock will be payable; and (xi)
any additional voting, dividend, liquidation, redemption and other rights,
preferences, privileges, limitations and restrictions.
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As described under "Description of Depositary Shares", the Company may, at
its option, elect to offer Depositary Shares evidenced by depositary receipts
("Depositary Receipts"), each representing an interest (to be specified in the
applicable Prospectus Supplement relating to the particular series of the
Preferred Stock) in a share of the particular series of the Preferred Stock
issued and deposited with a Preferred Stock Depositary (as defined herein).
All shares of Preferred Stock offered hereby, or issuable upon conversion,
exchange or exercise of Securities, will, when issued, be fully paid and
non-assessable.
COMMON STOCK
Dividends. Except as provided below, holders of Common Stock are entitled
to receive dividends and other distributions in cash, stock or property of the
Company, when, as and if declared by the Board of Directors out of assets or
funds of the Company legally available therefor and shall share equally on a per
share basis in all such dividends and other distributions (subject to the rights
of holders of Preferred Stock).
Voting Rights. At every meeting of shareholders, every holder of Common
Stock is entitled to one vote per share. Subject to any voting rights which may
be granted to holders of Preferred Stock any action submitted to shareholders is
approved if the number of votes cast in favor of such action exceeds the number
of votes against, except where other provision is made by law and subject to
applicable quorum requirements.
Liquidation Rights. In the event of any liquidation, dissolution or
winding-up of the business of the Company, whether voluntary or involuntary (any
such event, a "Liquidation"), the holders of Common Stock are entitled to share
equally in the assets available for distribution after payment of all
liabilities and provision for the liquidation preference of any shares of
Preferred Stock then outstanding.
Miscellaneous. The holders of Common Stock have no preemptive rights,
cumulative voting rights, subscription rights, or conversion rights and the
Common Stock is not subject to redemption.
The transfer agent and registrar with respect to the Common Stock and the
PRIDES is First Union National Bank of North Carolina.
All shares of Common Stock offered hereby, or issuable upon conversion,
exchange or exercise of Securities, will, when issued, be fully paid and
non-assessable. The Common Stock is traded on the New York Stock Exchange under
the symbol "CNC".
PRIDES
General. The PRIDES are shares of convertible preferred stock and rank
prior to the Common Stock as to payment of dividends and distribution of assets
upon liquidation. The shares of PRIDES mandatorily convert into shares of Common
Stock on February 1, 2000, (the "Mandatory Conversion Date"), and the Company
has the option to redeem the shares of PRIDES, in whole or in part, at any time
and from time to time on or after February 1, 1999 and prior to the Mandatory
Conversion Date pursuant to the terms described below and payable in shares of
Common Stock. In addition, the shares of PRIDES are convertible into shares of
Common Stock at the option of the holder at any time prior to the Mandatory
Conversion Date as set forth below.
Dividends. Holders of shares of PRIDES are entitled to receive annual
cumulative dividends at a rate per annum of 7% of the stated liquidation
preference (equivalent to $4.279 per each share of PRIDES) payable quarterly in
arrears on each February 1, May 1, August 1, and November 1.
Mandatory Conversion. On the Mandatory Conversion Date, unless previously
redeemed or converted, each outstanding share of PRIDES will mandatorily convert
into (i) two shares of Common Stock, subject to adjustment in certain events,
and (ii) the right to receive cash in an amount equal to all accrued and unpaid
dividends thereon (other than previously declared dividends payable to a holder
of record as of a prior date).
Optional Redemption. Shares of PRIDES are not redeemable prior to February
1, 1999. At any time and from time to time on or after February 1, 1999 and
ending immediately prior to the Mandatory Conversion Date, the Company may
redeem any or all of the outstanding shares of PRIDES. Upon any such
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redemption, each holder will receive, in exchange for each share of PRIDES, the
number of shares of Common Stock equal to the Call Price (which is the sum of
(i) $62.195, declining after February 1, 1999 to $61.125 until the Mandatory
Conversation Date and (ii) all accrued and unpaid dividends thereon (other than
previously declared dividends payable to a holder of record as of a prior date))
divided by the current market price on the applicable date of determination, but
in no event less than 3.42 shares of Common Stock, subject to adjustment. The
number of shares of Common Stock to be delivered in payment of the applicable
Call Price will be determined on the basis of the current market price of the
Common Stock prior to the announcement of the redemption.
Conversion at the Option of the Holder. At any time prior to the Mandatory
Conversion Date, unless previously redeemed, each share of PRIDES is convertible
at the option of the holder thereof into 3.42 shares of Common Stock (the
"Optional Conversion Rate"), equivalent to the conversion price of $17.8728 per
share of Common Stock, subject to adjustment as described herein. The right of
holders to convert shares of PRIDES called for redemption will terminate
immediately prior to the close of business on the redemption date.
Voting Rights. The holders of shares of PRIDES will have the right with
the holders of Common Stock to vote in the election of directors and upon each
other matter coming before any meeting of the holders of Common Stock on the
basis of 4/5 of one vote for each share of PRIDES. On such matters, the holders
of shares of PRIDES and the holders of Common Stock will vote together as one
class except as otherwise provided by law or the Company's Articles of
Incorporation. In addition, (i) whenever dividends on the shares of PRIDES or
any other series of the Company's preferred stock with like voting rights are in
arrears and unpaid for six quarterly dividend periods, and in certain other
circumstances, the holders of the shares of PRIDES (voting separately as a class
with the holders of all other series of the Company's preferred stock with like
voting rights that are exercisable) will be entitled to vote, on the basis of
one vote for each share of PRIDES, for the election of two directors of the
Company, such directors to be in addition to the number of directors
constituting the Board of Directors immediately prior to the accrual of such
right, and (ii) the holders of the shares of PRIDES may have voting rights with
respect to certain alterations of the Company's Articles of Incorporation and
certain other matters, voting on the same basis or separately as a series.
Liquidation Preference and Ranking. The shares of PRIDES rank prior to the
Common Stock as to payment of dividends and distribution of assets upon
liquidation. The liquidation preference of each share of PRIDES is an amount
equal to the sum of (i) $61.125 per share and (ii) all accrued and unpaid
dividends thereon.
CERTAIN PROVISIONS OF THE ARTICLES OF INCORPORATION AND BY-LAWS OF CONSECO
Certain provisions of the Articles of Incorporation and the Code of By-laws
of the Company (the "By-laws") may make it more difficult to effect a change in
control of the Company if the Board of Directors determines that such action
would not be in the best interests of the shareholders. It could be argued,
contrary to the belief of the Board of Directors, that such provisions are not
in the best interests of the shareholders to the extent that they will have the
effect of tending to discourage possible takeover bids, which might be at prices
involving a premium over then recent market quotations for the Common Stock. The
most important of those provisions are described below.
The Articles of Incorporation authorize the establishment of a classified
Board of Directors pursuant to the By-laws. The By-laws, in turn, provide that
the Directors serve staggered three-year terms, with the members of only one
class being elected in any year.
A classified Board of Directors may increase the difficulty of removing
incumbent directors, providing such directors with enhanced ability to retain
their positions. A classified Board of Directors may also make the acquisition
of control of the Company by a third party by means of a proxy contest more
difficult. In addition, the classification may make it more difficult to replace
a majority of directors for business reasons unrelated to a change in control.
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The Articles of Incorporation provide that holders of the Company's voting
stock shall not be entitled to vote on certain business transactions (defined to
include, among other things, certain mergers, consolidations, sales, leases,
transfers or other dispositions of a substantial part of the Company's assets)
with certain related persons (which includes persons beneficially owning more
than 10% of the Company's outstanding voting stock), nor may such business
combination transactions be effected, unless (i) the relevant business
combination shall have been approved by two-thirds of the continuing directors
or (ii) the aggregate amount of the cash and the fair value of any consideration
other than cash to be received by any holder of the Company's Common Stock or
Preferred Stock in the business combination for each such share of Common Stock
or Preferred Stock shall be at least equal to the highest per share price paid
by the related person in order to acquire any shares of Common Stock or
Preferred Stock, as the case may be, beneficially owned by such related person.
As discussed above, Preferred Stock may be issued from time to time in one
or more series with such rights, preferences, limitations and restrictions as
may be determined by the Board of Directors. The issuance of Preferred Stock
could be used, under certain circumstances, as a method of delaying or
preventing a change of control of the Company and could have a detrimental
effect on the rights of holders of Common Stock, including loss of voting
control.
The provisions of the Articles of Incorporation regarding the classified
Board of Directors and certain business combination transactions may not be
amended without the affirmative approval of holders of not less than 80% of the
outstanding voting stock of the Company.
The By-laws may be amended by majority vote of the Board of Directors.
CERTAIN PROVISIONS OF CORPORATE AND INSURANCE LAWS
In addition to the Articles of Incorporation and By-laws, certain
provisions of Indiana law may delay, deter or prevent a merger, tender offer or
other takeover attempt of the Company.
Under the Indiana Business Corporation Law (the "IBCL"), a director may, in
considering the best interests of a corporation, consider the effects of any
action on shareholders, employees, suppliers and customers of the corporation,
on communities in which offices or other facilities of the corporation are
located, and any other factors the director considers pertinent.
The IBCL provides that no business combination (defined to include certain
mergers, sales of assets, sales of 5% or more of outstanding stock, loans,
recapitalizations or liquidations or dissolutions) involving a corporation and
an interested shareholder (defined to include any holder of 10% or more of such
corporation's voting stock) may be entered into unless (1) it has been approved
by the board of directors of the corporation or (2) (a) five years have expired
since the acquisition of shares of the corporation by the interested
shareholder, (b) all requirements of the corporation's articles of incorporation
relating to business combinations have been satisfied and (c) either (i) a
majority of shareholders of the corporation (excluding the interested
shareholder) approve the business combination or (ii) all shareholders are paid
fair value (as defined in the statute) for their stock. However, such law does
not restrict any offer to purchase all of a corporation's shares.
The IBCL also provides that when a target corporation (such as the
Company), incorporated in Indiana and having its principal place of business,
principal office or substantial assets in Indiana, has a certain threshold of
ownership by Indiana residents, any acquisition which, together with its
previous holdings, gives the acquiror at least 20% of the target's voting stock
triggers a shareholder approval mechanism. If the acquiror files a statutorily
required disclosure statement, the target's management has 50 days within which
to hold a special meeting of shareholders at which all disinterested
shareholders of the target (those not affiliated with the acquiror or any
officer or inside director of the target) consider and vote upon whether the
acquiror shall have voting rights with respect to the shares of the target held
by it. Without shareholder approval, the shares acquired by the acquiror have no
voting rights. If the acquiror fails to file the statutorily required disclosure
statement, the target can redeem the acquiror's shares at a price to be
determined according to
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procedures devised by the target. In order for these provisions of the IBCL not
to apply to a particular Indiana company, the company must affirmatively so
provide in its articles of incorporation or bylaws.
In addition, the insurance laws and regulations of the jurisdictions in
which the Company's insurance subsidiaries do business may impede or delay a
business combination involving the Company.
DESCRIPTION OF DEPOSITARY SHARES
The description set forth below of certain provisions of the Deposit
Agreement (as defined below) and of the Depositary Shares and Depositary
Receipts summarizes the material terms of the Deposit Agreement and of the
Depositary Shares and Depositary Receipts and is qualified in its entirety by
reference to the form of Deposit Agreement and form of Depositary Receipts
relating to each series of the Preferred Stock, as well as the Articles of
Incorporation or any required amendment thereto describing the applicable series
of Preferred Stock.
GENERAL
The Company may, as its option, elect to have shares of Preferred Stock be
represented by Depositary Shares. The shares of any series of the Preferred
Stock underlying the Depositary Shares will be deposited under a separate
deposit agreement (the "Deposit Agreement") to be entered into by the Company
and a bank or trust company selected by the Company (the "Preferred Stock
Depositary") a form of which will be filed as an exhibit to a Current Report on
Form 8-K. The Prospectus Supplement relating to a series of Depositary Shares
will set forth the name and address of the Preferred Stock Depositary. Subject
to the terms of the Deposit Agreement, each owner of a Depositary Share will be
entitled, proportionately, to all the rights, preferences and privileges of the
Preferred Stock represented thereby (including dividend, voting, redemption,
conversion, exchange and liquidation rights).
The Depositary Shares will be evidenced by Depositary Receipts issued
pursuant to the Deposit Agreement, each of which will represent the fractional
interest in the number of shares of a particular series of the Preferred Stock
described in the applicable Prospectus Supplement.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Preferred Stock Depositary will distribute all cash dividends or other
cash distributions in respect of the series of Preferred Stock represented by
the Depositary Shares to the record holders of Depositary Receipts in
proportion, insofar as possible, to the number of Depositary Shares owned by
such holders. The Depositary, however, will distribute only such amount as can
be distributed without attributing to any Depositary Share a fraction of one
cent, and any balance not so distributed will be added to and treated as part of
the next sum received by the Depositary for distribution to record holders of
Depositary Receipts then outstanding.
In the event of a distribution other than in cash in respect of the
Preferred Stock, the Preferred Stock Depositary will distribute property
received by it to the record holders of Depositary Receipts in proportion,
insofar as possible, to the number of Depositary Shares owned by such holders,
unless the Preferred Stock Depositary determines (after consultation with the
Company) that it is not feasible to make such distribution, in which case the
Preferred Stock Depositary may, with the approval of the Company, adopt such
method as it deems equitable and practicable for the purpose of effecting such
distribution, including a public or private sale, of such property, and
distribution of the net proceeds from such sale to such holders.
The amount so distributed to record holders of Depositary Receipts in any
of the foregoing cases will be reduced by any amount required to be withheld by
the Company or the Preferred Stock Depositary on account of taxes.
CONVERSION AND EXCHANGE
If any series of Preferred Stock underlying the Depositary Shares is
subject to provisions relating to its conversion or exchange, as set forth in
the applicable Prospectus Supplement relating thereto, each record
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holder of Depositary Receipts will have the right or obligation to convert or
exchange the Depositary Shares represented by such Depositary Receipts pursuant
to the terms thereof.
REDEMPTION OF DEPOSITARY SHARES
If any series of Preferred Stock underlying the Depositary Shares is
subject to redemption, the Depositary Shares will be redeemed from the proceeds
received by the Preferred Stock Depositary resulting from the redemption, in
whole or in part, of the Preferred Stock held by the Preferred Stock Depositary.
Whenever the Company redeems Preferred Stock from the Preferred Stock
Depositary, the Preferred Stock Depositary will redeem as of the same redemption
date a proportionate number of Depositary Shares representing the shares of
Preferred Stock that were redeemed. If less than all the Depositary Shares are
to be redeemed, the Depositary Shares to be redeemed will be selected by lot or
pro rata as may be determined by the Company.
After the date fixed for redemption, the Depositary Shares so called for
redemption will no longer be deemed to be outstanding and all rights of the
holders of the Depositary Shares will cease, except the right to receive the
redemption price upon such redemption. Any funds deposited by the Company with
the Preferred Stock Depositary for any Depositary Shares which the holders
thereof fail to redeem shall be returned to the Company after a period of two
years from the date such funds are so deposited.
VOTING
Upon receipt of notice of any meeting at which the holders of any shares of
Preferred Stock underlying the Depositary Shares are entitled to vote, the
Preferred Stock Depositary will mail the information contained in such notice to
the record holders of the Depositary Receipts. Each record holder of such
Depositary Receipts on the record date (which will be the same date as the
record date for the Preferred Stock) will be entitled to instruct the Preferred
Stock Depositary as to the exercise of the voting rights pertaining to the
number of shares of Preferred Stock underlying such holder's Depositary Shares.
The Preferred Stock Depositary will endeavor, insofar as practicable, to vote
the number of shares of Preferred Stock underlying such Depositary Shares in
accordance with such instructions, and the Company will agree to take all
reasonable action which may be deemed necessary by the Preferred Stock
Depositary in order to enable the Preferred Stock Depositary to do so. The
Preferred Stock Depositary will abstain from voting any of the Preferred Stock
to the extent it does not receive specific written instructions from holders of
Depositary Receipts representing such Preferred Stock.
RECORD DATE
Whenever (i) any cash dividend or other cash distribution shall become
payable, any distribution other than cash shall be made, or any rights,
preferences or privileges shall be offered with respect to the Preferred Stock,
or (ii) the Preferred Stock Depositary shall receive notice of any meeting at
which holders of Preferred Stock are entitled to vote or of which holders of
Preferred Stock are entitled to notice, or of the mandatory conversion of, or
any election on the part of the Company to call for the redemption of, any
Preferred Stock, the Preferred Stock Depositary shall in each such instance fix
a record date (which shall be the same as the record date for the Preferred
Stock) for the determination of the holders of Depositary Receipts (x) that
shall be entitled to receive such dividend, distribution, rights, preferences or
privileges or the net proceeds of the sale thereof or (y) that shall be entitled
to give instructions for the exercise of voting rights at any such meeting or to
receive notice of such meeting or of such redemption or conversion, subject to
the provisions of the Deposit Agreement.
WITHDRAWAL OF PREFERRED STOCK
Upon surrender of Depositary Receipts at the principal office of the
Preferred Stock Depositary, upon payment of any unpaid amount due the Preferred
Stock Depositary, and subject to the terms of the Deposit Agreement, the owner
of the Depositary Shares evidenced thereby is entitled to delivery of the number
of whole shares of Preferred Stock and all money and other property, if any,
represented by such Depositary Shares. Partial shares of Preferred Stock will
not be issued. If the Depositary Receipts delivered by the holder
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evidence a number of Depositary Shares in excess of the number of Depositary
Shares representing the number of whole shares of Preferred Stock to be
withdrawn, the Preferred Stock Depositary will deliver to such holder at the
same time a new Depositary Receipt evidencing such excess number of Depositary
Shares. Holders of Preferred Stock thus withdrawn will not thereafter be
entitled to deposit such shares under the Deposit Agreement or to receive
Depositary Receipts evidencing Depositary Shares therefor.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The Deposit Agreement will provide that the form of Depositary Receipt and
any provision of the Deposit Agreement may at any time be amended by agreement
between the Company and the Preferred Stock Depositary. However, any amendment
which imposes or increases any fees, taxes or other charges payable by the
holders of Depositary Receipts (other than taxes and other governmental charges,
fees and other expenses payable by such holders as stated under "Charges of
Preferred Stock Depositary"), or which otherwise prejudices any substantial
existing right of holders of Depositary Receipts, will not take effect as to
outstanding Depositary Receipts until the expiration of 90 days after notice of
such amendment has been mailed to the record holders of outstanding Depositary
Receipts.
Whenever so directed by the Company, the Preferred Stock Depositary will
terminate the Deposit Agreement by mailing notice of such termination to the
record holders of all Depositary Receipts then outstanding at least 30 days
prior to the date fixed in such notice for such termination. The Preferred Stock
Depositary may likewise terminate the Deposit Agreement if at any time 45 days
shall have expired after the Preferred Stock Depositary shall have delivered to
the Company a written notice of its election to resign and a successor
depositary shall not have been appointed and accepted its appointment. If any
Depositary Receipts remain outstanding after the date of termination, the
Preferred Stock Depositary thereafter will discontinue the transfer of
Depositary Receipts, will suspend the distribution of dividends to the holders
thereof, and will not give any further notices (other than notice of such
termination) or perform any further acts under the Deposit Agreement except as
provided below and except that the Preferred Stock Depositary will continue (i)
to collect dividends on the Preferred Stock and any other distributions with
respect thereto and (ii) to deliver the Preferred Stock together with such
dividends and distributions and the net proceeds of any sales of rights,
preferences, privileges or other property, without liability for interest
thereon, in exchange for Depositary Receipts surrendered. At any time after the
expiration of two years from the date of termination, the Preferred Stock
Depositary may sell the Preferred Stock then held by it at public or private
sales, at such place or places and upon such terms as it deems proper, and may
thereafter hold the net proceeds of any such sale, together with any money and
other property then held by it, without liability for interest thereon, for the
pro rata benefit of the holders of Depositary Receipts which have not been
surrendered.
CHARGES OF PREFERRED STOCK DEPOSITARY
The Company will pay all charges of the Preferred Stock Depositary
including charges in connection with the initial deposit of the Preferred Stock,
the initial issuance of the Depositary Receipts, the distribution of information
to the holders of Depositary Receipts with respect to matters on which Preferred
Stock is entitled to vote, withdrawals of the Preferred Stock by the holders of
Depositary Receipts or redemption or conversion of the Preferred Stock, except
for taxes (including transfer taxes, if any) and other governmental charges and
such other charges as are expressly provided in the Deposit Agreement to be at
the expense of holders of Depositary Receipts or persons depositing Preferred
Stock.
MISCELLANEOUS
The Preferred Stock Depositary will make available for inspection by
holders of Depositary Receipts, at its Corporate Office and its New York Office,
all reports and communications from the Company which are delivered to the
Preferred Stock Depositary as the holder of Preferred Stock.
Neither the Preferred Stock Depositary nor the Company will be liable if it
is prevented or delayed by law or any circumstance beyond its control in
performing its obligations under the Deposit Agreement. The obligations of the
Preferred Stock Depositary under the Deposit Agreement are limited to performing
its
21
<PAGE> 24
duties thereunder without negligence or bad faith. The obligations of the
Company under the Deposit Agreement are limited to performing its duties
thereunder in good faith. Neither the Company nor the Preferred Stock Depositary
is obligated to prosecute or defend any legal proceeding in respect of any
Depositary Shares or Preferred Stock unless satisfactory indemnity is furnished.
The Company and the Preferred Stock Depositary are entitled to rely upon advice
of or information from counsel, accountants or other persons believed to be
competent and on documents believed to be genuine.
The Preferred Stock Depositary may resign at any time or be removed by the
Company, effective upon the acceptance by its successor of its appointment;
provided, that if a successor Preferred Stock Depositary has not been appointed
or accepted such appointment within 45 days after the Preferred Stock Depositary
has delivered a notice of election to resign to the Company, the Preferred Stock
Depositary may terminate the Deposit Agreement. See "Amendment and Termination
of the Deposit Agreement" above.
DESCRIPTION OF WARRANTS
GENERAL
The Company may issue Warrants to purchase Debt Securities, Preferred
Stock, Common Stock or any combination thereof, and such Warrants may be issued
independently or together with any such Securities and may be attached to or
separate from such Securities. Each series of Warrants will be issued under a
separate warrant agreement (each a "Warrant Agreement") to be entered into
between the Company and a warrant agent ("Warrant Agent") a form of which will
be filed as an exhibit to a Current Report on Form 8-K. The Warrant Agent will
act solely as an agent of the Company in connection with the Warrants of each
such series and will not assume any obligation or relationship of agency for or
with holders or beneficial owners of Warrants. The following sets forth certain
general terms and provisions of the Warrants offered hereby. Further terms of
the Warrants and the applicable Warrant Agreement will be set forth in the
applicable Prospectus Supplement.
The applicable Prospectus Supplement will describe the terms of any
Warrants in respect of which this Prospectus is being delivered, including the
following: (i) the title of such Warrants; (ii) the aggregate number of such
Warrants; (iii) the price or prices at which such Warrants will be issued; (iv)
the currency or currencies, including composite currencies, in which the price
of such Warrants may be payable; (v) the designation and terms of the Securities
(other than Preferred Securities and Common Securities) purchasable upon
exercise of such Warrants; (vi) the price at which and the currency or
currencies, including composite currencies, in which the Securities (other than
Preferred Securities and Common Securities) purchasable upon exercise of such
Warrants may be purchased; (vii) the date on which the right to exercise such
Warrants shall commence and the date on which such right shall expire; (viii)
whether such Warrants will be issued in registered form or bearer form; (ix) if
applicable, the minimum or maximum amount of such Warrants which may be
exercised at any one time; (x) if applicable, the designation and terms of the
Securities (other than Preferred Securities and Common Securities) with which
such Warrants are issued and the number of such Warrants issued with each such
Security; (xi) if applicable, the date on and after which such Warrants and the
related Securities (other than Preferred Securities and Common Securities) will
be separately transferable; (xii) information with respect to book-entry
procedures, if any; (xiii) if applicable, a discussion of certain United States
federal income tax considerations; and (xiv) any other terms of such Warrants,
including terms, procedures and limitations relating to the exchange and
exercise of such Warrants.
DESCRIPTION OF PREFERRED SECURITIES OF THE CONSECO TRUSTS
GENERAL
Each Conseco Trust may issue, from time to time, only one series of
Preferred Securities having terms described in the Prospectus Supplement
relating thereto. The Declaration of each Conseco Trust authorizes the Regular
Trustees of such Conseco Trust to issue on behalf of such Conseco Trust one
series of Preferred Securities. Each Declaration will be qualified as an
indenture under the Trust Indenture Act. The Property Trustee, an independent
trustee, will act as indenture trustee for the Preferred Securities for purposes
of
22
<PAGE> 25
compliance with the provisions of the Trust Indenture Act. The Preferred
Securities will have such terms, including distributions, redemption, voting,
liquidation rights and such other preferred, deferred or other special rights or
such restrictions as shall be established by the Regular Trustees in accordance
with the applicable Declaration or as shall be set forth in the Declaration or
made part of the Declaration by the Trust Indenture Act. Reference is made to
any Prospectus Supplement relating to the Preferred Securities of a Conseco
Trust for specific terms of the Preferred Securities, including, to the extent
applicable, (i) the distinctive designation of such Preferred Securities, (ii)
the number of Preferred Securities issued by such Conseco Trust, (iii) the
annual distribution rate (or method of determining such rate) for Preferred
Securities issued by such Conseco Trust and the date or dates upon which such
distributions shall be payable (provided, however, that distributions on such
Preferred Securities shall, subject to any deferral provisions, and any
provisions for payment of defaulted distributions, be payable on a quarterly
basis to holders of such Preferred Securities as of a record date in each
quarter during which such Preferred Securities are outstanding), (iv) any right
of such Conseco Trust to defer quarterly distributions on the Preferred
Securities as a result of an interest deferral right exercised by the Company on
the Subordinated Debt Securities held by such Conseco Trust; (v) whether
distributions on Preferred Securities shall be cumulative, and, in the case of
Preferred Securities having such cumulative distribution rights, the date or
dates or method of determining the date or dates from which distributions on
Preferred Securities shall be cumulative, (vi) the amount or amounts which shall
be paid out of the assets of such Conseco Trust to the holders of Preferred
Securities upon voluntary or involuntary dissolution, winding-up or termination
of such Conseco Trust, (vii) the obligation or option, if any, of such Conseco
Trust to purchase or redeem Preferred Securities and the price or prices at
which, the period or periods within which and the terms and conditions upon
which Preferred Securities shall be purchased or redeemed, in whole or in part,
pursuant to such obligation or option with such redemption price to be specified
in the applicable Prospectus Supplement, (viii) the voting rights, if any, of
Preferred Securities in addition to those required by law, including the number
of votes per Preferred Security and any requirement for the approval by the
holders of Preferred Securities as a condition to specified action or amendments
to the Declaration, (ix) the terms and conditions, if any, upon which
Subordinated Debt Securities held by such Conseco Trust may be distributed to
holders of Preferred Securities, and (x) any other relevant rights, preferences,
privileges, limitations or restrictions of Preferred Securities consistent with
the Declaration or with applicable law. All Preferred Securities offered hereby
will be guaranteed by the Company to the extent set forth below under
"Description of Trust Guarantees." The Trust Guarantee issued to each Conseco
Trust, when taken together with the Company's back-up undertakings, consisting
of its obligations under each Declaration (including the obligation to pay
expenses of each Conseco Trust), the Indenture and any applicable supplemental
indentures thereto and the Subordinated Debt Securities issued to any Conseco
Trust will provide a full and unconditional guarantee by the Company of amounts
due on the Preferred Securities issued by each Conseco Trust. The payment terms
of the Preferred Securities will be the same as the Subordinated Debt Securities
issued to the applicable Conseco Trust by the Company.
Each Declaration authorizes the Regular Trustees to issue on behalf of the
applicable Trust one series of Common Securities having such terms including
distributions, redemption, voting, liquidation rights or such restrictions as
shall be established by the Regular Trustees in accordance with the Declaration
or as shall otherwise be set forth therein. The terms of the Common Securities
issued by each Conseco Trust will be substantially identical to the terms of the
Preferred Securities issued by such Conseco Trust, and the Common Securities
will rank pari passu, and payments will be made thereon pro rata, with the
Preferred Securities except that, if an event of default under such Declaration
has occurred and is continuing, the rights of the holders of the Common
Securities to payment in respect of distributions and payments upon liquidation,
redemption and otherwise will be subordinated to the rights of the holders of
the Preferred Securities. The Common Securities will also carry the right to
vote and to appoint, remove or replace any of the Conseco Trustees of such
Conseco Trust. All of the Common Securities of each Conseco Trust will be
directly or indirectly owned by the Company.
The financial statements of any Conseco Trust that issues Preferred
Securities will be reflected in the Company's consolidated financial statements
with the Preferred Securities shown as Company-obligated mandatorily-redeemable
preferred securities of a subsidiary trust under minority interest in
consolidated subsidiaries. In a footnote to the Company's audited financial
statements there will be included statements
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<PAGE> 26
that the applicable Conseco Trust is wholly-owned by the Company and that the
sole asset of such Conseco Trust is the Subordinated Debt Securities (indicating
the principal amount, interest rate and maturity date thereof).
DESCRIPTION OF TRUST GUARANTEES
Set forth below is a summary of information concerning the Trust Guarantees
that will be executed and delivered by the Company for the benefit of the
holders, from time to time, of Preferred Securities. Each Trust Guarantee will
be qualified as an indenture under the Trust Indenture Act. Fleet National Bank
will act as independent indenture trustee for Trust Indenture Act purposes under
each Trust Guarantee (the "Preferred Securities Guarantee Trustee"). The terms
of each Trust Guarantee will be those set forth in such Trust Guarantee and
those made part of such Trust Guarantee by the Trust Indenture Act. The
following summary does not purport to be complete and is subject to and
qualified in its entirety by reference to the provisions of the form of Trust
Guarantee, a copy of which has been filed as an exhibit to the Registration
Statement of which this Prospectus is a part, and the Trust Indenture Act. Each
Trust Guarantee will be held by the Preferred Securities Guarantee Trustee for
the benefit of the holders of the Preferred Securities of the applicable Conseco
Trust.
GENERAL
Pursuant to each Trust Guarantee, the Company will agree, to the extent set
forth therein, to pay in full to the holders of the Preferred Securities, the
Guarantee Payments (as defined below) (except to the extent paid by such Conseco
Trust), as and when due, regardless of any defense, right of set-off or
counterclaim which such Conseco Trust may have or assert. The following payments
or distributions with respect to the Preferred Securities (the "Guarantee
Payments"), to the extent not paid by such Conseco Trust, will be subject to the
Trust Guarantee (without duplication): (i) any accrued and unpaid distributions
that are required to be paid on such Preferred Securities, to the extent such
Conseco Trust shall have funds available therefor, (ii) the redemption price,
including all accrued and unpaid distributions to the date of redemption (the
"Redemption Price"), to the extent such Conseco Trust has funds available
therefor, with respect to any Preferred Securities called for redemption by such
Conseco Trust and (iii) upon a voluntary or involuntary dissolution, winding-up
or termination of such Conseco Trust (other than in connection with such
distribution of Subordinated Debt Securities to the holders of Preferred
Securities or the redemption of all of the Preferred Securities upon maturity or
redemption of the Subordinated Debt Securities) the lesser of (a) the aggregate
of the liquidation amount and all accrued and unpaid distributions on such
Preferred Securities to the date of payment, to the extent such Conseco Trust
has funds available therefor or (b) the amount of assets of such Conseco Trust
remaining for distribution to holders of such Preferred Securities in
liquidation of such Conseco Trust. The Company's obligation to make a Guarantee
Payment may be satisfied by direct payment of the required amounts by the
Company to the holders of Preferred Securities or by causing the applicable
Conseco Trust to pay such amounts to such holders.
Each Trust Guarantee will not apply to any payment of distributions except
to the extent the applicable Conseco Trust shall have funds available therefor.
If the Company does not make interest or principal payments on the Subordinated
Debt Securities purchased by such Conseco Trust, such Conseco Trust will not pay
distributions on the Preferred Securities issued by such Conseco Trust and will
not have funds available therefore.
The Company has also agreed to guarantee the obligations of each Conseco
Trust with respect to the Common Securities (the "Common Guarantee") issued by
such Conseco Trust to the same extent as the Trust Guarantee, except that, if an
Event of Default under the Subordinated Indenture has occurred and is
continuing, holders of Preferred Securities under the Trust Guarantee shall have
priority over holders of the Common Securities under the Trust Common Guarantee
with respect to distributions and payments on liquidation, redemption or
otherwise.
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<PAGE> 27
CERTAIN COVENANTS OF THE COMPANY
In each Trust Guarantee, the Company will covenant that, so long as any
Preferred Securities issued by the applicable Conseco Trust remain outstanding,
if there shall have occurred any event of default under such Trust Guarantee or
under the Declaration of such Conseco Trust, then (a) the Company will not
declare or pay any dividend on, make any distributions with respect to, or
redeem, purchase, acquire or make a liquidation payment with respect to, any of
its capital stock; (b) the Company shall not make any payment of interest,
principal or premium, if any, on or repay, repurchase or redeem any debt
securities (including guarantees) issued by the Company which rank pari passu
with or junior to the Subordinated Debt Securities issued to the applicable
Conseco Trust and (c) the Company shall not make any guarantee payments with
respect to the foregoing (other than pursuant to a Trust Guarantee); provided,
however, that the Company may (i) declare and pay a stock dividend where the
dividend stock is the same stock as that on which the dividend is being paid and
(ii) purchase or acquire shares of Company Common Stock in connection with the
satisfaction by the Company of its obligations under any employee benefit plans.
MODIFICATION OF THE TRUST GUARANTEES; ASSIGNMENT
Except with respect to any changes that do not adversely affect the rights
of holders of Preferred Securities (in which case no consent of such holders
will be required), each Trust Guarantee may be amended only with the prior
approval of the holders of not less than a majority in liquidation amount of the
outstanding Preferred Securities of such Conseco Trust. The manner of obtaining
any such approval of holders of such Preferred Securities will be set forth in
accompanying Prospectus Supplement. All guarantees and agreements contained in a
Trust Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Company and shall inure to the benefit of the holders of
the Preferred Securities of the applicable Conseco Trust then outstanding.
EVENTS OF DEFAULT
An event of default under a Trust Guarantee will occur upon the failure of
the Company to perform any of its payment or other obligations thereunder. The
holders of a majority in liquidation amount of the Preferred Securities to which
such Trust Guarantee relates have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the Preferred
Securities Guarantee Trustee in respect of such Trust Guarantee or to direct the
exercise of any trust or power conferred upon the Preferred Securities Guarantee
Trustee under such Trust Guarantee.
If the Preferred Securities Guarantee Trustee fails to enforce such Trust
Guarantee, any record holder of Preferred Securities to which such Trust
Guarantee relates may institute a legal proceeding directly against the Company
to enforce the Preferred Securities Guarantee Trustee's rights under such Trust
Guarantee without first instituting a legal proceeding against the applicable
Conseco Trust, the Preferred Securities Guarantee Trustee or any other person or
entity. Notwithstanding the foregoing, if the Company has failed to make a
Guarantee Payment under a Trust Guarantee, a record holder of Preferred
Securities to which such Trust Guarantee relates may directly institute a
proceeding against the Company for enforcement of such Trust Guarantee for such
payment to the record holder of the Preferred Securities to which such Trust
Guarantee relates of the principal of or interest on the applicable Subordinated
Debt Securities on or after the respective due dates specified in the
Subordinated Debt Securities, and the amount of the payment will be based on the
holder's pro rata share of the amount due and owing on all of the Preferred
Securities to which such Trust Guarantee relates. The Company has waived any
right or remedy to require that any action be brought first against the
applicable Conseco Trust or any other person or entity before proceeding
directly against the Company. The record holder in the case of the issuance of
one or more global Preferred Securities certificates will be The Depository
Trust Company acting at the direction of the beneficial owners of the Preferred
Securities.
The Company will be required to provide annually to the Preferred
Securities Guarantee Trustee a statement as to the performance by the Company of
certain of its obligations under each outstanding Trust Guarantee and as to any
default in such performance.
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<PAGE> 28
INFORMATION CONCERNING THE PREFERRED SECURITIES GUARANTEE TRUSTEE
The Preferred Securities Guarantee Trustee, prior to the occurrence of a
default to a Trust Guarantee, undertakes to perform only such duties as are
specifically set forth in such Trust Guarantee and, after default with respect
to such Trust Guarantee, shall exercise the same degree of care as a prudent
individual would exercise in the conduct of his or her own affairs. Subject to
such provision, the Preferred Securities Guarantee Trustee is under no
obligation to exercise any of the powers vested in it by a Trust Guarantee at
the request of any holder of Preferred Securities to which such Trust Guarantee
relates unless it is offered reasonable indemnity against the costs, expenses
and liabilities that might be incurred thereby.
TERMINATION
Each Trust Guarantee will terminate as to the Preferred Securities issued
by the applicable Conseco Trust upon full payment of the Redemption Price of all
Preferred Securities of such Conseco Trust, upon distribution of the
Subordinated Debt Securities held by such Conseco Trust to the holders of all of
the Preferred Securities of such Conseco Trust or upon full payment of the
amounts payable in accordance with the Declaration of such Conseco Trust upon
liquidation of such Conseco Trust. Each Trust Guarantee will continue to be
effective or will be reinstated, as the case may be, if at any time any holder
of Preferred Securities issued by the applicable Conseco Trust must restore
payment of any sums paid under such Preferred Securities or such Trust
Guarantee.
STATUS OF THE TRUST GUARANTEES
The Trust Guarantees will constitute an unsecured obligation of the Company
and will rank (i) subordinate and junior in right of payment to all other
liabilities of the Company, including the Subordinated Debt Securities, except
those liabilities of the Company made pari passu or subordinate by their terms,
(ii) pari passu with the most senior preferred or preference stock now or
hereafter issued by the Company and with any guarantee now or hereafter entered
into by the Company in respect of any preferred or preference stock of any
affiliate of the Company and (iii) senior to the Company's Common Stock. The
terms of the Preferred Securities provide that each holder of Preferred
Securities by acceptance thereof agrees to the subordination provisions and
other terms of the Trust Guarantee relating thereto.
Each Trust Guarantee will constitute a guarantee of payment and not of
collection (that is, the guaranteed party may institute a legal proceeding
directly against the Company to enforce its rights under such Trust Guarantee
without instituting a legal proceeding against any other person or entity).
GOVERNING LAW
The Trust Guarantees will be governed by and construed in accordance with
the law of the State of New York.
PLAN OF DISTRIBUTION
The Company and/or any Conseco Trust may sell any of the Securities being
offered hereby in any one or more of the following ways from time to time: (i)
through agents; (ii) to or through underwriters; (iii) through dealers; or (iv)
directly to purchasers.
The Prospectus Supplement with respect to the Securities will set forth the
terms of the offering of the Securities, including the name or names of any
underwriters, dealers or agents; the purchase price of the Securities and the
proceeds to the Company and/or a Conseco Trust from such sale; any underwriting
discounts and commissions or agency fees and other items constituting
underwriters' or agents' compensation; any initial public offering price and any
discounts or concessions allowed or reallowed or paid to dealers and any
securities exchange on which such Securities may be listed. Any initial public
offering price, discounts or concessions allowed or reallowed or paid to dealers
may be changed from time to time.
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<PAGE> 29
The distribution of the Securities may be effected from time to time in one
or more transactions at a fixed price or prices, which may be changed, at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices or at negotiated prices.
Offers to purchase Securities may be solicited by agents designated by the
Company from time to time. Any such agent involved in the offer or sale of the
Securities in respect of which this Prospectus is delivered will be named, and
any commissions payable by the Company and/or the applicable Conseco Trust to
such agent will be set forth, in the applicable Prospectus Supplement. Unless
otherwise indicated in such Prospectus Supplement, any such agent will be acting
on a reasonable best efforts basis for the period of its appointment. Any such
agent may be deemed to be an underwriter, as that term is defined in the
Securities Act, of the Securities so offered and sold.
If Securities are sold by means of an underwritten offering, the Company
and/or the applicable Conseco Trust will execute an underwriting agreement with
an underwriter or underwriters at the time an agreement for such sale is
reached, and the names of the specific managing underwriter or underwriters, as
well as any other underwriters, and the terms of the transaction, including
commissions, discounts and any other compensation of the underwriters and
dealers, if any, will be set forth in the Prospectus Supplement which will be
used by the underwriters to make resales of the Securities in respect of which
this Prospectus is delivered to the public. If underwriters are utilized in the
sale of the Securities in respect of which this Prospectus is delivered, the
Securities will be acquired by the underwriters for their own account and may be
resold from time to time in one or more transactions, including negotiated
transactions, at fixed public offering prices or at varying prices determined by
the underwriter at the time of sale. Securities may be offered to the public
either through underwriting syndicates represented by managing underwriters or
directly by the managing underwriters. If any underwriter or underwriters are
utilized in the sale of the Securities, unless otherwise indicated in the
Prospectus Supplement, the underwriting agreement will provide that the
obligations of the underwriters are subject to certain conditions precedent and
that the underwriters with respect to a sale of Securities will be obligated to
purchase all such Securities of a series if any are purchased.
If a dealer is utilized in the sales of the Securities in respect of which
this Prospectus is delivered, the Company and/or the applicable Conseco Trust
will sell such Securities to the dealer as principal. The dealer may then resell
such Securities to the public at varying prices to be determined by such dealer
at the time of resale. Any such dealer may be deemed to be an underwriter, as
such term is defined in the Securities Act, of the Securities so offered and
sold. The name of the dealer and the terms of the transaction will be set forth
in the Prospectus Supplement relating thereto.
Offers to purchase Securities may be solicited directly by the Company
and/or the applicable Conseco Trust and the sale thereof may be made by the
Company and/or the applicable Conseco Trust directly to institutional investors
or others, who may be deemed to be underwriters within the meaning of the
Securities Act with respect to any resale thereof. The terms of any such sales
will be described in the Prospectus Supplement relating thereto.
Agents, underwriters and dealers may be entitled under relevant agreements
to indemnification or contribution by the Company and/or the applicable Conseco
Trust against certain liabilities, including liabilities under the Securities
Act.
Agents, underwriters and dealers may be customers of, engage in
transactions with, or perform services for, the Company and its subsidiaries in
the ordinary course of business.
Securities may also be offered and sold, if so indicated in the applicable
Prospectus Supplement, in connection with a remarketing upon their purchase, in
accordance with a redemption or repayment pursuant to their terms, or otherwise,
by one or more firms ("remarketing firms"), acting as principals for their own
accounts or as agents for the Company and/or the applicable Conseco Trust. Any
remarketing firm will be identified and the terms of its agreement, if any, with
its compensation will be described in the applicable Prospectus Supplement.
Remarketing firms may be deemed to be underwriters, as such term is defined in
the Securities Act, in connection with the Securities remarketed thereby.
Remarketing firms may be entitled under agreements which may be entered into
with the Company and/or the applicable Conseco Trust to
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<PAGE> 30
indemnification or contribution by the Company and/or the applicable Conseco
Trust against certain civil liabilities, including liabilities under the
Securities Act, and may be customers of, engage in transactions with or perform
services for Conseco and its subsidiaries in the ordinary course of business.
If so indicated in the applicable Prospectus Supplement, the Company and/or
the applicable Conseco Trust may authorize agents, underwriters or dealers to
solicit offers by certain types of institutions to purchase Securities from the
Company and/or the applicable Conseco Trust at the public offering prices set
forth in the applicable Prospectus Supplement pursuant to delayed delivery
contracts ("Contracts") providing for payment and delivery on a specified date
or dates in the future. A commission indicated in the applicable Prospectus
Supplement will be paid to underwriters, dealers and agents soliciting purchases
of Securities pursuant to Contracts accepted by the Company and/or the
applicable Conseco Trust.
LEGAL MATTERS
Unless otherwise indicated in the applicable Prospectus Supplement, the
legal validity of Securities (other than the Preferred Securities) will be
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
Company common stock.
Certain matters of Delaware law relating to the validity of the Preferred
Securities will be passed upon for the Conseco Trusts by Richards, Layton &
Finger, P.A., Wilmington, Delaware, special Delaware counsel to the Conseco
Trusts.
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.
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======================================================
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS OR THE PROSPECTUS SUPPLEMENT IN
CONNECTION WITH THE OFFER CONTAINED HEREIN AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR ANY UNDERWRITER. NEITHER THE DELIVERY OF THIS PROSPECTUS OR
THE PROSPECTUS SUPPLEMENT NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. THIS PROSPECTUS AND THE PROSPECTUS
SUPPLEMENT DO NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH
THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO
ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS
Available Information.................. 3
Incorporation of Certain Documents by
Reference............................ 4
The Company............................ 5
The Conseco Trusts..................... 5
Use of Proceeds........................ 6
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.................... 6
Description of Debt Securities......... 7
Description of Capital Stock........... 15
Description of Depositary Shares....... 19
Description of Warrants................ 22
Description of Preferred Securities of
the Conseco Trusts................... 22
Description of the Trust Guarantees.... 24
Plan of Distribution................... 26
Legal Matters.......................... 28
Experts................................ 28
</TABLE>
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<PAGE> 32
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee......... $ 424,242
New York Stock Exchange listing fee......................... 50,000
Legal fees and expenses..................................... 200,000
Accounting fees and expenses................................ 300,000
Printing and engraving expenses............................. 350,000
Trustee's fees and expenses................................. 80,000
Rating agencies' fees....................................... 350,000
Blue sky fees and expenses.................................. 60,000
Miscellaneous............................................... 185,758
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Total....................................................... $2,000,000
==========
</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.
The Declaration of Trust for each of Conseco Financing Trust IV, Conseco
Financing Trust V, Conseco Financing Trust VI and Conseco Financing Trust VII
(the "Trusts") provides that no Property Trustee or any of its Affiliates,
Delaware Trustee or any of its Affiliates, or any officer, director,
shareholder, member, partner, employee, representative, custodian, nominee or
agent of the Property Trustee or the Delaware Trustee (each a "Fiduciary
Indemnified Person"), and no Regular Trustee, Affiliate of any Regular Trustee,
or any officer, director, shareholder, member, partner, employee, representative
or agent of any Regular Trustee or any Affiliate thereof, or any employee or
agent of any of the Trusts or any of their Affiliates (each a "Company
Indemnified Person") shall be liable, responsible or accountable in damages or
otherwise to any of such Trusts or any officer, director, shareholder, partner,
member, representative, employee or agent of any such Trust or its Affiliates or
to any holder of Preferred Securities for any loss, damage or claim incurred by
reason of any act or omission performed or omitted by such Fiduciary Indemnified
Person or Company Indemnified Person in good faith on behalf of any of such
Trusts and in a manner such Fiduciary Indemnified Person or Company Indemnified
Person reasonably believed to be within the scope of the authority conferred on
such Fiduciary
II-1
<PAGE> 33
Indemnified Person or Company Indemnified Person by such Declaration or by law,
except that a Fiduciary Indemnified Person or Company Indemnified Person shall
be liable for any such loss, damage or claim incurred by reason of such
Fiduciary Indemnified Person's or Company Indemnified Person's gross negligence
or willful misconduct with respect to such acts or omissions.
The Declaration of Trust for each of such Trusts also provides that to the
full extent permitted by law, the Company shall indemnify any Company
Indemnified Person who was or is a party or is threatened to be made a party to
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of any such Trust) by reason of the fact that he is or was a Company
Indemnified Person against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in good faith and in
a manner he reasonably believed to be in or not opposed to the best interests of
any such Trust, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. Each of the Declaration of
Trusts also provides that to the full extent permitted by law, the Company shall
indemnify any Company Indemnified Person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action or suit by or
in the right of any such trust to procure a judgment in its favor by reason of
the fact that he is or was a Company Indemnified Person against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of any such trust and except that no such indemnification shall
be made in respect of any claim, issue or matter as to which such Company
Indemnified Person shall have been adjudged to be liable to any such trust
unless and only to the extent that the Court of Chancery of Delaware or the
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnity for such
expenses which such Court of Chancery or such other court shall deem proper. The
Declaration of Trust for each such Trust further provides that expenses
(including attorneys' fees) incurred by a Company Indemnified Person in
defending a civil, criminal, administrative or investigative action, suit or
proceeding referred to in the immediately preceding two sentences shall be paid
by the Company in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of such Company
Indemnified Person to repay such amount if it shall ultimately be determined
that he is not entitled to be indemnified by the Company as authorized in any
such Declaration.
The Declaration of Trust for each Trust also provides that the Company
shall indemnify each Fiduciary Indemnified Person against any loss, liability or
expense incurred without negligence or bad faith on its part, arising out of or
in connection with the acceptance or administration of the trust or trusts under
any such Trust, including the costs and expenses (including reasonable legal
fees and expenses) of defending itself against or investigating any claim or
liability in connection with the exercise or performance of any of its powers or
duties thereunder.
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT
-------------- ----------------------
<C> <S>
1.1 Form of Purchase Agreement -- Debt Securities is
incorporated herein by reference to Exhibit 1.1 to the
Registration Statement on Form S-3 of the Registrant (No.
33-53095) ((i) An Underwriting Agreement relating to
Securities to be distributed outside the United States or
for Securities denominated in foreign currencies or foreign
currency units or (ii) any Selling Agency or Distribution
Agreement with any Agent will be filed as an exhibit to a
Current Report on Form 8-K and incorporated herein by
reference.)
1.2 Form of Purchase Agreement -- Equity is incorporated herein
by reference to Exhibit 1.2 to the Registration Statement on
Form S-3 of the Registrant (No. 33-53095)
</TABLE>
II-2
<PAGE> 34
<TABLE>
<C> <S>
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 Exhibit 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 Form of Senior Indenture dated as of , 1995 by and between Conseco, Inc. and
, as Trustee, pursuant to which the Senior Debt Securities are to be issued is
incorporated herein by reference to Exhibit 4.1 to the Registration Statement on Form S-3 of
Conseco (No. 33-53095)
4.2 Subordinated Indenture, dated as of November 14, 1996 between Conseco, Inc. and Fleet
National Bank, as Trustee, pursuant to which the Subordinated Debentures are to be issued is
incorporated herein by reference to Exhibit 4.17.1 to Conseco's Current Report on Form 8-K
dated November 19, 1996.
4.3 Form of Deposit Agreement is incorporated herein by reference to Exhibit 4.3 to the
Registration Statement on Form S-3 of the Registrant (No. 33-53095)
4.4 Certificate of Trust of Conseco Financing Trust IV
4.5 Declaration of Trust of Conseco Financing Trust IV
4.6 Certificate of Trust of Conseco Financing Trust V
4.7 Declaration of Trust of Conseco Financing Trust V
4.8 Certificate of Trust of Conseco Financing Trust VI
4.9 Declaration of Trust of Conseco Financing Trust VI
4.10 Certificate of Trust of Conseco Financing Trust VII
4.11 Declaration of Trust of Conseco Financing Trust VII
4.12 Form of Amended and Restated Declaration of Trust is incorporated by reference to Exhibit
4.10 to Amendment No. 2 to the Registration Statement on Form S-3 of Conseco (No. 333-14991)
4.13 Form of Preferred Securities Guarantee Agreement by Conseco, Inc. is incorporated by
reference to Exhibit 4.11 to Amendment No. 2 to the Registration Statement on Form S-3 of
Conseco (No. 333-14991)
4.14 Form of Debt Security
The form or forms of such Debt Securities with respect to each particular offering will be
filed as an exhibit to a Current Report on Form 8-K and incorporated herein by reference.
4.15 Form of Preferred Stock
</TABLE>
II-3
<PAGE> 35
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT
- ----------------- ---------------------------------------------------------------------------------------------
<C> <S>
Any amendment to the Company's Articles of Incorporation authorizing the creation of any
series of Preferred Stock or Depositary Shares representing such shares of Preferred Stock
and setting forth the rights, preferences and designations thereof will be filed as an
exhibit to a Current Report on Form 8-K and incorporated herein by reference.
4.16 Form of Warrant Agreement is incorporated herein by reference to Exhibit 4.4 to the
Registration Statement on Form S-3 of the Registrant (No. 33-53095).
4.17 Form of Preferred Security is incorporated by reference to Exhibit 4.15 to Amendment No. 1 to
the Registration Statement on Form S-3 of Conseco (No. 333-14991)
4.18 Form of Supplemental Indenture is incorporated by reference to Exhibit 4.16 to Amendment No.
1 to the Registration Statement on Form S-3 of Conseco (No. 333-14991)
4.19 Form of % Subordinated Deferrable Interest Debenture due , 2027 is incorporated
by reference to Exhibit 4.17 to Amendment No. 1 to the Registration Statement on Form S-3 of
Conseco (No. 333-14991)
5.1 Opinion of Karl W. Kindig, Esquire
5.2 Opinion of Richards, Layton & Finger, P.A.*
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.
23.3 Consent of Richards, Layton & Finger, P.A. (included in Exhibit 5.2 hereto)*
25.1 Statement of Eligibility on Form T-1 under the Trust Indenture Act of 1939, as amended, of
LTCB Trust Company, as Trustee under the Indenture is incorporated herein by reference to
Exhibit 25.1 to the Registration Statement on Form S-3 of the Registrant (No. 33-53095)
25.2 Statement of Eligibility on Form T-1 under the Trust Indenture Act of 1939, as amended, of
Fleet National Bank, as Trustee under the Subordinated Indenture is incorporated by reference
to Exhibit 25.2 to Amendment No. 1 to the Registration Statement on Form S-3 of Conseco (No.
333-14991)
25.3 Statement of Eligibility on Form T-1 under the Trust Indenture Act of 1939, as amended, of
Fleet National Bank, as Trustee under the Declaration of Trust of Conseco Financing Trust IV,
the Declaration of Trust of Conseco Financing Trust V, the Declaration of Trust of Conseco
Financing Trust VI and the Declaration of Trust of Conseco Financing Trust VII*
25.4 Statement of Eligibility on Form T-1 under the Trust Indenture Act of 1939, as amended, of
Fleet National Bank, as Trustee of the Preferred Securities Guarantees for the benefit of the
holders of Preferred Securities of Conseco Financing Trust IV, Conseco Financing Trust V,
Conseco Financing Trust VI and Conseco Financing Trust VII*
</TABLE>
* To be filed by amendment
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrants hereby undertake:
(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-4
<PAGE> 36
(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 Registrants hereby undertake 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.
(c) If the securities to be registered are to be offered at competitive
bidding, the undersigned Registrants hereby undertake: (1) to use its
best efforts to distribute prior to the opening of bids, to prospective
bidders, underwriters, and dealers, a reasonable number of copies of a
prospectus which at that time meets the requirements of Section 10(a) of
the Act, and relating to the securities offered at competitive bidding,
as contained in the Registration Statement, together with any
supplements thereto, and (2) to file an amendment to the Registration
Statement reflecting the results of bidding, the terms of the reoffering
and related matters to the extent required by the applicable form, not
later than the first use, authorized by the issuer after the opening of
bids, of a prospectus relating to the securities offered at competitive
bidding, unless no further public offering of such securities by the
issuer and no reoffering of such securities by the purchasers is
proposed to be made.
(d) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrants pursuant to the foregoing
provisions, or otherwise, each of the Registrants 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 Registrants of
expenses incurred or paid by a director, officer or controlling
II-5
<PAGE> 37
person of the Registrants 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
Registrants 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.
(e) The undersigned Registrants hereby undertake 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.
(f) The undersigned Registrants hereby undertake to file, if necessary, an
application for the purpose of determining the eligibility of the
Trustee to act under subsection (a) of Section 310 of the Trust
Indenture Act of 1939, as amended, in accordance with the rules and
regulations prescribed by the Securities and Exchange Commission under
Section 305(b)(2) of such Act.
(g) The undersigned Registrants hereby undertake 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-6
<PAGE> 38
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 May 23, 1997.
CONSECO, INC.
By: /S/ STEPHEN C. HILBERT
------------------------------------
Stephen C. Hilbert,
Chairman of the Board, President and
Chief Executive 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
others, 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
--------- ----- ----
<C> <S> <C>
/s/ STEPHEN C. HILBERT Director, Chairman of the Board, May 23, 1997
- --------------------------------------------- President and Chief Executive Officer
Stephen C. Hilbert (Principal Executive Officer of
Conseco, Inc.)
/s/ ROLLIN M. DICK Director, Executive Vice President and May 23, 1997
- --------------------------------------------- Chief Financial Officer
Rollin M. Dick (Principal Financial Officer
of Conseco, Inc.)
/s/ JAMES S. ADAMS Senior Vice President, Chief May 23, 1997
- --------------------------------------------- Accounting Officer and Treasurer
James S. Adams (Principal Accounting Officer
of Conseco, Inc.)
/s/ NGAIRE E. CUNEO Director May 23, 1997
- ---------------------------------------------
Ngaire E. Cuneo
Director
- ---------------------------------------------
David R. Decatur
Director
- ---------------------------------------------
M. Phil Hathaway
/s/ DONALD F. GONGAWARE Director May 23, 1997
- ---------------------------------------------
Donald F. Gongaware
</TABLE>
II-7
<PAGE> 39
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
Director
- ---------------------------------------------
James D. Massey
/s/ DENNIS E. MURRAY, SR. Director May 23, 1997
- ---------------------------------------------
Dennis E. Murray, Sr.
Director
- ---------------------------------------------
John M. Mutz
</TABLE>
II-8
<PAGE> 40
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Conseco
Financing Trust IV 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 May 23, 1997.
CONSECO FINANCING TRUST IV
By: /s/ STEPHEN C. HILBERT
----------------------------------
Stephen C. Hilbert, as Trustee
By: /s/ ROLLIN M. DICK
----------------------------------
Rollin M. Dick, as Trustee
II-9
<PAGE> 41
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Conseco
Financing Trust V 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 May 23, 1997.
CONSECO FINANCING TRUST V
By: /s/ STEPHEN C. HILBERT
----------------------------------
Stephen C. Hilbert, as Trustee
By: /s/ ROLLIN M. DICK
----------------------------------
Rollin M. Dick, as Trustee
II-10
<PAGE> 42
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Conseco
Financing Trust VI 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 May 23, 1997.
CONSECO FINANCING TRUST VI
By: /s/ STEPHEN C. HILBERT
----------------------------------
Stephen C. Hilbert, as Trustee
By: /s/ ROLLIN M. DICK
----------------------------------
Rollin M. Dick, as Trustee
II-11
<PAGE> 43
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Conseco
Financing Trust VII 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 May 23, 1997.
CONSECO FINANCING TRUST VII
By: /s/ STEPHEN C. HILBERT
----------------------------------
Stephen C. Hilbert, as Trustee
By: /s/ ROLLIN M. DICK
----------------------------------
Rollin M. Dick, as Trustee
II-12
<PAGE> 44
EXHIBIT INDEX
TO REGISTRATION STATEMENT
ON FORM S-3
CONSECO, INC.
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT
- -------------- ----------------------
<C> <S>
1.1 Form of Purchase Agreement -- Debt Securities is
incorporated herein by reference to Exhibit 1.1 to the
Registration Statement on Form S-3 of the Registrant (No.
33-53095) ((i) An Underwriting Agreement relating to
Securities to be distributed outside the United States or
for Securities denominated in foreign currencies or foreign
currency units or (ii) any Selling Agency or Distribution
Agreement with any Agent will be filed as an exhibit to a
Current Report on Form 8-K and incorporated herein by
reference.)
1.2 Form of Purchase Agreement -- Equity is incorporated herein
by reference to Exhibit 1.2 to the Registration Statement on
Form S-3 of the Registrant (No. 33-53095)
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
Exhibit 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 Form of Senior Indenture dated as of , 1995 by and
between Conseco, Inc. and , as Trustee, pursuant
to which the Senior Debt Securities are to be issued is
incorporated herein by reference to Exhibit 4.1 to the
Registration Statement on Form S-3 of Conseco (No. 33-53095)
4.2 Subordinated Indenture, dated as of November 14, 1996
between Conseco, Inc. and Fleet National Bank, as Trustee,
pursuant to which the Subordinated Debentures are to be
issued is incorporated herein by reference to Exhibit 4.17.1
to Conseco's Current Report on Form 8-K dated November 19,
1996.
4.3 Form of Deposit Agreement is incorporated herein by
reference to Exhibit 4.3 to the Registration Statement on
Form S-3 of the Registrant (No. 33-53095)
4.4 Certificate of Trust of Conseco Financing Trust IV
4.5 Declaration of Trust of Conseco Financing Trust IV
4.6 Certificate of Trust of Conseco Financing Trust V
4.7 Declaration of Trust of Conseco Financing Trust V
4.8 Certificate of Trust of Conseco Financing Trust VI
4.9 Declaration of Trust of Conseco Financing Trust VI
4.10 Certificate of Trust of Conseco Financing Trust VII
4.11 Declaration of Trust of Conseco Financing Trust VII
4.12 Form of Amended and Restated Declaration of Trust is
incorporated by reference to Exhibit 4.10 to Amendment No. 2
to the Registration Statement on Form S-3 of Conseco (No.
333-14991)
</TABLE>
II-13
<PAGE> 45
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT
- -------------- ----------------------
<C> <S>
4.13 Form of Preferred Securities Guarantee Agreement by Conseco,
Inc. is incorporated by reference to Exhibit 4.11 to
Amendment No. 2 to the Registration Statement on Form S-3 of
Conseco (No. 333-14991)
4.14 Form of Debt Security
The form or forms of such Debt Securities with respect to
each particular offering will be filed as an exhibit to a
Current Report on Form 8-K and incorporated herein by
reference.
4.15 Form of Preferred Stock
Any amendment to the Company's Articles of Incorporation
authorizing the creation of any series of Preferred Stock or
Depositary Shares representing such shares of Preferred
Stock and setting forth the rights, preferences and
designations thereof will be filed as an exhibit to a
Current Report on Form 8-K and incorporated herein by
reference.
4.16 Form of Warrant Agreement is incorporated herein by
reference to Exhibit 4.4 to the Registration Statement on
Form S-3 of the Registrant (No. 33-53095).
4.17 Form of Preferred Security is incorporated by reference to
Exhibit 4.15 to Amendment No. 1 to the Registration
Statement on Form S-3 of Conseco (No. 333-14991)
4.18 Form of Supplemental Indenture is incorporated by reference
to Exhibit 4.16 to Amendment No. 1 to the Registration
Statement on Form S-3 of Conseco (No. 333-14991)
4.19 Form of % Subordinated Deferrable Interest Debenture due
, 2027 is incorporated by reference to Exhibit
4.17 to Amendment No. 1 to the Registration Statement on
Form S-3 of Conseco (No. 333-14991)
5.1 Opinion of Karl W. Kindig, Esquire
5.2 Opinion of Richards, Layton & Finger, P.A.*
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.
23.3 Consent of Richards, Layton & Finger, P.A. (included in
Exhibit 5.2 hereto)*
25.1 Statement of Eligibility on Form T-1 under the Trust
Indenture Act of 1939, as amended, of LTCB Trust Company, as
Trustee under the Indenture is incorporated herein by
reference to Exhibit 25.1 to the Registration Statement on
Form S-3 of the Registrant (No. 33-53095)
25.2 Statement of Eligibility on Form T-1 under the Trust
Indenture Act of 1939, as amended, of Fleet National Bank,
as Trustee under the Subordinated Indenture is incorporated
by reference to Exhibit 25.2 to Amendment No. 1 to the
Registration Statement on Form S-3 of Conseco (No.
333-14991)
25.3 Statement of Eligibility on Form T-1 under the Trust
Indenture Act of 1939, as amended, of Fleet National Bank,
as Trustee under the Declaration of Trust of Conseco
Financing Trust IV, the Declaration of Trust of Conseco
Financing Trust V, the Declaration of Trust of Conseco
Financing Trust VI and the Declaration of Trust of Conseco
Financing Trust VII*
25.4 Statement of Eligibility on Form T-1 under the Trust
Indenture Act of 1939, as amended, of Fleet National Bank,
as Trustee of the Preferred Securities Guarantees for the
benefit of the holders of Preferred Securities of Conseco
Financing Trust IV, Conseco Financing Trust V, Conseco
Financing Trust VI and Conseco Financing Trust VII*
</TABLE>
* To be filed by amendment.
II-14
<PAGE> 1
EXHIBIT 4.4
CERTIFICATE OF TRUST
The undersigned, the trustees of Conseco Financing Trust IV, desiring
to form a business trust pursuant to Delaware Business Trust Act, 12 Del. C.
Section 3810, hereby certify as follows:
1. The name of the business trust being formed hereby (the "Trust")
is "Conseco Financing Trust IV."
2. The name and business address of the trustee of the Trust which
has its principal place of business in the State of Delaware is
as follows:
First Union Trust Company, National Association
Corporate Trust Administration
One Rodney Square
920 King Street
Wilmington, DE 19801
3. This Certificate of Trust shall be effective as of the date of
filing with the office of the Secretary of State of the State of
Delaware.
IN WITNESS WHEREOF, the undersigned have executed this Certificate of
Trust as of the date written below.
Dated: May 21, 1997
/s/ ROLLIN M. DICK
- ---------------------------------- FIRST UNION TRUST COMPANY,
Rollin M. Dick, Trustee NATIONAL ASSOCIATION, as Trustee
By: /s/ Edward L. Truitt, Jr.
--------------------------
/s/ STEPHEN C. HILBERT Name: Edward L. Truitt, Jr.
- ---------------------------------- Title: Assistant Vice President
Stephen C. Hilbert, Trustee
<PAGE> 1
EXHIBIT 4.5
---------------------------------------------------------------
DECLARATION OF TRUST
OF
CONSECO FINANCING TRUST IV
Dated as of May 21, 1997
---------------------------------------------------------------
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C> <C> <C>
ARTICLE I DEFINITIONS
SECTION 1.1
Definitions....................................................................................1
ARTICLE II ORGANIZATION
SECTION 2.1
Name...........................................................................................3
SECTION 2.2
Office.........................................................................................4
SECTION 2.3
Purpose........................................................................................4
SECTION 2.4
Authority......................................................................................4
SECTION 2.5
Title to Property of the Trust.................................................................4
SECTION 2.6
Powers of the Trustee..........................................................................4
SECTION 2.7
Filing of Certificate of Trust.................................................................5
SECTION 2.8
Duration of Trust..............................................................................5
SECTION 2.9
Responsibilities of the Sponsor................................................................5
SECTION 2.10
Declaration Binding on Securities Holders.......................................................6
ARTICLE III TRUSTEES
SECTION 3.1
Trustees.......................................................................................6
SECTION 3.2
Regular Trustees...............................................................................7
SECTION 3.3
Delaware Trustee...............................................................................7
SECTION 3.4
Property Trustee...............................................................................7
SECTION 3.5
Not Responsible for Recitals or Sufficiency
of Declaration................................................................................8
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ARTICLE IV LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES, TRUSTEES
OR OTHERS
SECTION 4.1
Exculpation....................................................................................8
SECTION 4.2
Fiduciary Duty.................................................................................8
SECTION 4.3
Indemnification................................................................................9
SECTION 4.4
Outside Businesses............................................................................12
ARTICLE V AMENDMENTS, TERMINATION, MISCELLANEOUS
SECTION 5.1
Amendments....................................................................................12
SECTION 5.2
Termination of Trust..........................................................................12
SECTION 5.3
Governing Law.................................................................................13
SECTION 5.4
Headings......................................................................................13
SECTION 5.5
Successors and Assigns........................................................................13
SECTION 5.6
Partial Enforceability........................................................................13
SECTION 5.7
Counterparts..................................................................................13
</TABLE>
ii
<PAGE> 4
DECLARATION OF TRUST OF CONSECO FINANCING TRUST IV
DECLARATION OF TRUST ("Declaration") dated and effective as of
May 21, 1997 by the undersigned Trustees (together with all other persons from
time to time duly appointed and serving as trustees in accordance with the
provisions of this Declaration, the "Trustees"), Conseco, Inc., an Indiana
corporation, as trust sponsor (the "Sponsor"), and by the holders, from time to
time, of undivided beneficial interests in the Trust to be issued pursuant to
this Declaration;
WHEREAS, the Trustees and the Sponsor desire to establish a
trust (the "Trust") pursuant to the Business Trust Act (as hereinafter defined);
WHEREAS, the sole purpose of the Trust shall be to issue and
sell certain securities representing undivided beneficial interests in the
assets of the Trust and to invest the proceeds thereof in certain Debentures of
the Debenture Issuer (as those terms are hereinafter defined) and, except as
otherwise limited herein, to engage in only those other activities necessary,
appropriate, convenient or incidental thereto.
NOW, THEREFORE, it being the intention of the parties hereto
that the Trust constitute a business trust under the Business Trust Act and that
this Declaration constitute the governing instrument of such business trust, the
Trustees declare that all assets contributed to the Trust will be held in trust
for the benefit of the holders, from time to time, of the securities
representing undivided beneficial interests in the assets of the Trust issued
hereunder, subject to the provisions of this Declaration.
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions.
Unless the context otherwise requires:
(a) Capitalized terms used in this Declaration but not
defined in the preamble above have the respective
meanings assigned to them in this Section 1.1;
(b) a term defined anywhere in this Declaration has the same
meaning throughout;
(c) all references to "the Declaration" or "this
Declaration" are to this Declaration of Trust as
modified, supplemented or amended from time to time;
(d) all references in this Declaration to Articles and
Sections are to Articles and Sections of this
Declaration unless otherwise specified; and
(e) a reference to the singular includes the plural and vice
versa.
<PAGE> 5
"Affiliate" has the same meaning as given to that term in Rule
405 of the Securities Act or any successor rule thereunder.
"Business Day" means any day other than a day on which banking
institutions in New York, New York are authorized or required by law to close.
"Business Trust Act" means Chapter 38 of Title 12 of the
Delaware Code, 12 Del. Code ss.3801 et seq., as it may be amended from time to
time, or any successor legislation.
"Commission" means the Securities and Exchange Commission.
"Common Security" means a security representing a common
undivided beneficial interest in the assets of the Trust with such terms as may
be set out in any amendment to this Declaration.
"Company Indemnified Person" means (a) any Regular Trustee;
(b) any Affiliate of any Regular Trustee; (c) any officers, directors,
shareholders, members, partners, employees, representatives or agents of any
Regular Trustee; or (d) any employee or agent of the Trust or its Affiliates.
"Covered Person" means (a) any officer, director, shareholder,
partner, member, representative, employee or agent of (i) the Trust or (ii) the
Trust's Affiliates and (b) any holder of Securities.
"Debenture Issuer" means Conseco, Inc. in its capacity as the
issuer of the Debentures under the Indenture.
"Debentures" means the series of Debentures to be issued under
the Indenture by the Debenture Issuer and acquired by the Trust.
"Debenture Trustee" means, Fleet National Bank, as trustee
under the Indenture until a successor is appointed thereunder, and thereafter
means such successor trustee.
"Delaware Trustee" has the meaning set forth in Section 3.1.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time or any successor legislation.
"Fiduciary Indemnified Person" has the meaning set forth in
Section 4.3(b).
"Holder" means the person in whose name a certificate
representing a Security is registered.
2
<PAGE> 6
"Indemnified Person" means a Company Indemnified Person or a
Fiduciary Indemnified Person.
"Indenture" means the indenture dated as of November 14, 1996
entered into among Conseco, Inc. and Fleet National Bank, as trustee and any
indenture supplemental thereto pursuant to which the Debentures are to be
issued.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Preferred Security" means a security representing a preferred
undivided beneficial interest in the assets of the Trust with such terms as may
be set out in any amendment to this Declaration.
"Regular Trustee" has the meaning set forth in Section 3.1.
"Securities" means the Common Securities and the Preferred
Securities.
"Securities Act" means the Securities Act of 1933, as amended
from time to time, or any successor legislation.
"Sponsor" means Conseco, Inc. in its capacity as sponsor of
the Trust.
"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as Trustees in accordance with the
provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.
ARTICLE II
ORGANIZATION
SECTION 2.1 Name.
The Trust created by this Declaration is named "Conseco
Financing Trust IV." The Trust's activities may be conducted under the name of
the Trust or any other name deemed advisable by the Regular Trustees.
3
<PAGE> 7
SECTION 2.2 Office.
The address of the principal office of the Trust is c/o
General Counsel, 11825 North Pennsylvania Street, Carmel, Indiana 46032. At
any time, the Regular Trustees may designate another principal office.
SECTION 2.3 Purpose.
The exclusive purposes and functions of the Trust are (a) to
issue and sell the Securities and use the proceeds from such sale to acquire the
Debentures, and (b) except as otherwise limited herein, to engage in only those
other activities necessary, appropriate, convenient or incidental thereto. The
Trust shall not borrow money, issue debt or reinvest proceeds derived from
investments, pledge any of its assets, or otherwise undertake (or permit to be
undertaken) any activity that would cause the Trust not to be classified for
United States federal income tax purposes as a grantor trust.
SECTION 2.4 Authority.
Subject to the limitations provided in this Declaration, the
Regular Trustees shall have exclusive and complete authority to carry out the
purposes of the Trust. An action taken by the Regular Trustees in accordance
with their powers shall constitute the act of and serve to bind the Trust. In
dealing with the Regular Trustees acting on behalf of the Trust, no person shall
be required to inquire into the authority of the Regular Trustees to bind the
Trust. Persons dealing with the Trust are entitled to rely conclusively on the
power and authority of the Regular Trustees as set forth in this Declaration.
SECTION 2.5 Title to Property of the Trust.
Legal title to all assets of the Trust shall be vested in the
Trust.
SECTION 2.6 Powers of the Trustee.
The Regular Trustees shall have the exclusive power and
authority to cause the Trust to engage in the following activities:
(a) to issue and sell the Preferred Securities and the Common
Securities in accordance with this Declaration; provided, however, that the
Trust may issue no more than one series of Preferred Securities and no more than
one series of Common Securities, and, provided further, that there shall be no
interests in the Trust other than the Securities and the issuance of the
Securities shall be limited to a one-time, simultaneous issuance of both
Preferred Securities and Common Securities;
(b) in connection with the issue and sale of the Preferred
Securities, at the direction of the Sponsor, to:
(i) execute and file with the Commission a
registration statement on Form S-3 prepared by the Sponsor, including any
amendments thereto in relation to the Preferred Securities;
4
<PAGE> 8
(ii) execute and file any documents prepared by
the Sponsor, or take any acts as determined by the Sponsor to be necessary in
order to qualify or register all or part of the Preferred Securities in any
State in which the Sponsor has determined to qualify or register such Preferred
Securities for sale;
(iii) execute and file an application, prepared by
the Sponsor, to the New York Stock Exchange or any other national stock exchange
or the Nasdaq Stock Market's National Market for listing upon notice of issuance
of any Preferred Securities;
(iv) execute and file with the Commission a
registration statement on Form 8-A, including any amendments thereto, prepared
by the Sponsor relating to the registration of the Preferred Securities under
Section 12(b) of the Exchange Act; and
(v) execute and enter into an underwriting
agreement and pricing agreement providing for the sale of the Preferred
Securities;
(c) to employ or otherwise engage employees and agents (who
may be designated as officers with titles) and managers, contractors, advisors,
and consultants and provide for reasonable compensation for such services;
(d) to incur expenses which are necessary, appropriate,
convenient or incidental to carry out any of the purposes of this Declaration;
and
(e) to execute all documents or instruments, perform all
duties and powers, and do all things for and on behalf of the Trust in all
matters necessary, appropriate, convenient or incidental to the foregoing.
SECTION 2.7 Filing of Certificate of Trust.
On or after the date of execution of this Declaration, the
Trustees shall cause the filing of the Certificate of Trust for the Trust in the
form attached hereto as Exhibit A with the Secretary of State of the State of
Delaware.
SECTION 2.8 Duration of Trust.
The Trust, absent termination pursuant to the provisions of
Section 5.2, shall have existence for fifty-five (55) years from the date
hereof.
SECTION 2.9 Responsibilities of the Sponsor.
In connection with the issuance and sale of the Preferred
Securities, the Sponsor shall have the exclusive right and responsibility to
engage in the following activities:
(a) to prepare for filing by the Trust with the Commission a
registration statement on Form S-3 in relation to the Preferred Securities,
including any amendments thereto;
5
<PAGE> 9
(b) to determine the States in which to take appropriate
action to qualify or register for sale all or part of the Preferred Securities
and to do any and all such acts, other than actions which must be taken by the
Trust, and advise the Trust of actions it must take, and prepare for execution
and filing any documents to be executed and filed by the Trust, as the Sponsor
deems necessary or advisable in order to comply with the applicable laws of any
such States;
(c) to prepare for filing by the Trust an application to the
New York Stock Exchange or any other national stock exchange or the Nasdaq
National Market for listing upon notice of issuance of any Preferred Securities;
(d) to prepare for filing by the Trust with the Commission a
registration statement on Form 8-A relating to the registration of the class of
Preferred Securities under Section 12(b) of the Exchange Act, including any
amendments thereto; and
(e) to negotiate the terms of an underwriting agreement and
pricing agreement providing for the sale of the Preferred Securities.
SECTION 2.10 Declaration Binding on Securities Holders.
Every Person by virtue of having become a Holder of a Security
or any interest therein in accordance with the terms of this Declaration, shall
be deemed to have expressly assented and agreed to the terms of, and shall be
bound by, this Declaration.
ARTICLE III
TRUSTEES
SECTION 3.1 Trustees.
The number of Trustees initially shall be three (3), and
thereafter the number of Trustees shall be such number as shall be fixed from
time to time by a written instrument signed by the Sponsor. The Sponsor is
entitled to appoint or remove without cause any Trustee at any time; provided,
however, that the number of Trustees shall in no event be less than two (2);
provided, further, that one Trustee, in the case of a natural person, shall be a
person who is a resident of the State of Delaware or that, if not a natural
person, is an entity which has its principal place of business in the State of
Delaware and meets any other requirements imposed by applicable law (the
"Delaware Trustee"); provided, further, that there shall be at least one trustee
who is an employee or officer of, or is affiliated with the Sponsor (a "Regular
Trustee").
6
<PAGE> 10
SECTION 3.2 Regular Trustees.
The initial Regular Trustees shall be: Rollin M. Dick
and Stephen C. Hilbert.
(a) Except as expressly set forth in this Declaration, any
power of the Regular Trustees may be exercised by, or with the consent of, any
one such Regular Trustee.
(b) Unless otherwise determined by the Regular Trustees, and
except as otherwise required by the Business Trust Act, any Regular Trustee is
authorized to execute on behalf of the Trust any documents which the Regular
Trustees have the power and authority to cause the Trust to execute pursuant to
Section 2.6 provided, that, the registration statement referred to in Section
2.6(b)(i), including any amendments thereto, shall be signed by at least a
majority of the Regular Trustees; and
(c) a Regular Trustee may, by power of attorney consistent
with applicable law, delegate to any other natural person over the age of 21 his
or her power for the purposes of signing any documents which the Regular
Trustees have power and authority to cause the Trust to execute pursuant to
Section 2.6.
SECTION 3.3 Delaware Trustee.
The initial Delaware Trustee shall be: First Union Trust
Company, National Association.
Notwithstanding any other provision of this Declaration, the
Delaware Trustee shall not be entitled to exercise any of the powers, nor shall
the Delaware Trustee have any of the duties and responsibilities of the Regular
Trustees described in this Declaration. The Delaware Trustee shall be a Trustee
for the sole and limited purpose of fulfilling the requirements of ss. 3807 of
the Business Trust Act. Notwithstanding anything herein to the contrary, the
Delaware Trustee shall not be liable for the acts or omissions to act of the
Trust, of the Sponsor or of the Regular Trustees except such acts as the
Delaware Trustee is expressly obligated or authorized to undertake under this
Declaration or the Business Trust Act and except for the gross negligence or
willful misconduct of the Delaware Trustee.
SECTION 3.4 Property Trustee.
Prior to the issuance of the Preferred Securities and Common
Securities, the Sponsor shall appoint a trustee (the "Property Trustee") meeting
the requirements of an eligible trustee of the Trust Indenture Act of 1939, as
amended, by the execution of an amendment to this Declaration executed by the
Regular Trustees, the Sponsor, the Property Trustee and the Delaware Trustee.
7
<PAGE> 11
SECTION 3.5 Not Responsible for Recitals or Sufficiency of Declaration.
The recitals contained in this Declaration shall be taken as
the statements of the Sponsor, and the Trustees do not assume any responsibility
for their correctness. The Trustees make no representations as to the value or
condition of the property of the Trust or any part thereof. The Trustees make no
representations as to the validity or sufficiency of this Declaration.
ARTICLE IV
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 4.1 Exculpation.
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Trust or any Covered Person for any
loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith on behalf of the Trust and in a
manner such Indemnified Person reasonably believed to be within the scope of the
authority conferred on such Indemnified Person by this Declaration or by law,
except that an Indemnified Person shall be liable for any such loss, damage or
claim incurred by reason of such Indemnified Person's gross negligence or
willful misconduct with respect to such acts or omissions; and
(b) An Indemnified Person shall be fully protected in relying
in good faith upon the records of the Trust and upon such information, opinions,
reports or statements presented to the Trust by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Trust, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets from
which distributions to holders of Securities might properly be paid.
SECTION 4.2 Fiduciary Duty.
(a) To the extent that, at law or in equity, an Indemnified
Person has duties (including fiduciary duties) and liabilities relating thereto
to the Trust or to any other Covered Person, an Indemnified Person acting under
this Declaration shall not be liable to the Trust or to any other Covered Person
for its good faith reliance on the provisions of this Declaration. The
provisions of this Declaration, to the extent that they restrict the duties and
liabilities of an Indemnified Person otherwise existing at law or in equity, are
agreed by the parties hereto to replace such other duties and liabilities of
such Indemnified Person;
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises
between Covered Persons; or
8
<PAGE> 12
(ii) whenever this Declaration or any other
agreement contemplated herein or therein provides that an Indemnified Person
shall act in a manner that is, or provides terms that are, fair and reasonable
to the Trust or any Holder of Securities,
the Indemnified Person shall resolve such conflict of interest, take such action
or provide such terms, considering in each case the relative interest of each
party (including its own interest) to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such interests, any customary
or accepted industry practices, and any applicable generally accepted accounting
practices or principles. In the absence of bad faith by the Indemnified Person,
the resolution, action or term so made, taken or provided by the Indemnified
Person shall not constitute a breach of this Declaration or any other agreement
contemplated herein or of any duty or obligation of the Indemnified Person at
law or in equity or otherwise; and
(c) whenever in this Declaration an Indemnified Person is
permitted or required to make a decision:
(i) in its "discretion" or under a grant of
similar authority, the Indemnified Person shall be entitled to consider such
interests and factors as it desires, including its own interests, and shall have
no duty or obligation to give any consideration to any interest of or factors
affecting the Trust or any other Person; or
(ii) in its "good-faith" or under another express
standard, the Indemnified Person shall act under such express standard and shall
not be subject to any other or different standard imposed by this Declaration or
by applicable law.
SECTION 4.3 Indemnification.
(a) The Sponsor shall indemnify, to the full extent permitted
by law, any Company Indemnified Person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other than
an action by or in the right of the Trust) by reason of the fact that he is or
was a Company Indemnified Person against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with such action, suit or proceeding if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the Trust, and, with respect to any criminal action or proceeding,
had no reasonable cause to believe his conduct was unlawful. The termination of
any action, suit or proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the Company Indemnified Person did not act in good faith and in
a manner which he reasonably believed to be in or not opposed to the best
interests of the Trust, and, with respect to any criminal action or proceeding,
had reasonable cause to believe that his conduct was unlawful.
9
<PAGE> 13
(i) The Sponsor shall indemnify, to the full
extent permitted by law, any Company Indemnified Person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action
or suit by or in the right of the Trust to procure a judgment in its favor by
reason of the fact that he is or was a Company Indemnified Person against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Trust and except that no such indemnification shall be
made in respect of any claim, issue or matter as to which such Company
Indemnified Person shall have been adjudged to be liable to the Trust unless and
only to the extent that the Court of Chancery of Delaware or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which such Court of Chancery or such other court shall deem proper.
(ii) To the extent that a Company Indemnified
Person shall be successful on the merits or otherwise (including dismissal of an
action without prejudice or the settlement of an action without admission of
liability) in defense of any action, suit or proceeding referred to in
paragraphs (i) and (ii) of this Section 4.3(a), or in defense of any claim,
issue or matter therein, he shall be indemnified, to the full extent permitted
by law, against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.
(iii) Any indemnification under paragraphs (i) and
(ii) of this Section 4.3(a) (unless ordered by a court) shall be made by the
Sponsor only as authorized in the specific case upon a determination that
indemnification of the Company Indemnified Person is proper in the circumstances
because he has met the applicable standard of conduct set forth in paragraphs
(i) and (ii). Such determination shall be made (1) by the Regular Trustees by a
majority vote of a quorum consisting of such Regular Trustees who were not
parties to such action, suit or proceeding, (2) if such a quorum is not
obtainable, or, even if obtainable, if a quorum of disinterested Regular
Trustees so directs, by independent legal counsel in a written opinion, or (3)
by the Common Security Holder of the Trust.
(iv) Expenses (including attorneys' fees) incurred
by a Company Indemnified Person in defending a civil, criminal, administrative
or investigative action, suit or proceeding referred to in paragraphs (i) and
(ii) of this Section 4.3(a) shall be paid by the Sponsor in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking by
or on behalf of such Company Indemnified Person to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified by the
Sponsor as authorized in this Section 4.3(a). Notwithstanding the foregoing, no
advance shall be made by the Sponsor if a determination is reasonably and
promptly made (i) by the Regular Trustees by a majority vote of a quorum of
disinterested Regular Trustees, (ii) if such a quorum is not obtainable, or,
even if obtainable, if a quorum of disinterested Regular Trustees so directs, by
independent legal counsel in a written opinion or (iii) the Common Security
Holder of the Trust, that, based upon the facts known to the Regular Trustees,
counsel or the Common Security Holder at the time such determination is made,
such Company Indemnified Person acted in bad faith or in a manner that such
person did not believe to be in or not opposed to the best interests of the
Trust, or, with respect to any
10
<PAGE> 14
criminal proceeding, that such Company Indemnified Person believed or had
reasonable cause to believe his conduct was unlawful. In no event shall any
advance be made in instances where the Regular Trustees, independent legal
counsel or Common Security Holder reasonably determine that such person
deliberately breached his duty to the Trust or its Common or Preferred Security
Holders.
(v) The indemnification and advancement of
expenses provided by, or granted pursuant to, the other paragraphs of this
Section 4.3(a) shall not be deemed exclusive of any other rights to which those
seeking indemnification and advancement of expenses may be entitled under any
agreement, vote of stockholders or disinterested directors of the Sponsor or
Preferred Security Holders of the Trust or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office. All rights to indemnification under this Section 4.3(a) shall be deemed
to be provided by a contract between the Sponsor and each Company Indemnified
Person who serves in such capacity at any time while this Section 4.3(a) is in
effect. Any repeal or modification of this Section 4.3(a) shall not affect any
rights or obligations then existing.
(vi) The Sponsor or the Trust may purchase and
maintain insurance on behalf of any person who is or was a Company Indemnified
Person against any liability asserted against him and incurred by him in any
such capacity, or arising out of his status as such, whether or not the Sponsor
would have the power to indemnify him against such liability under the
provisions of this Section 4.3 (a)
(vii) For purposes of this Section 4.3(a),
references to "the Trust" shall include, in addition to the resulting or
surviving entity, any constituent entity (including any constituent of a
constituent) absorbed in a consolidation or merger, so that any person who is or
was a director, trustee, officer or employee of such constituent entity, or is
or was serving at the request of such constituent entity as a director, trustee,
officer, employee or agent of another entity, shall stand in the same position
under the provisions of this Section 4.3(a) with respect to the resulting or
surviving entity as he would have with respect to such constituent entity if its
separate existence had continued.
(viii) The indemnification and advancement of
expenses provided by, or granted pursuant to, this Section 4.3(a) shall, unless
otherwise provided when authorized or ratified, continue as to a person who has
ceased to be a Company Indemnified Person and shall inure to the benefit of the
heirs, executors and administrators of such a person.
(b) The Sponsor agrees to indemnify the (i) the Delaware
Trustee, (ii) any Affiliate of the Delaware Trustee, and (iii) any officers,
directors, shareholders, members, partners, employees, representatives,
nominees, custodians or agents of the Delaware Trustee (each of the Persons in
(i) through (iii) being referred to as a "Fiduciary Indemnified Person") for,
and to hold each Fiduciary Indemnified Person harmless against, any loss,
liability or expense incurred without gross negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of the
trust or trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against, or
investigating, any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder. The obligation to
indemnify as set forth in this Section 4.3(b) shall survive the termination of
this Declaration.
11
<PAGE> 15
SECTION 4.4 Outside Businesses.
Any Covered Person, the Sponsor and the Delaware Trustee may
engage in or possess an interest in other business ventures of any nature or
description, independently or with others, similar or dissimilar to the business
of the Trust, and the Trust and the Holders of Securities shall have no rights
by virtue of this Declaration in and to such independent ventures or the income
or profits derived therefrom and the pursuit of any such venture, even if
competitive with the business of the Trust, shall not be deemed wrongful or
improper. No Covered Person, the Sponsor or the Delaware Trustee shall be
obligated to present any particular investment or other opportunity to the Trust
even if such opportunity is of a character that, if presented to the Trust,
could be taken by the Trust, and any Covered Person, the Sponsor and the
Delaware Trustee shall have the right to take for its own account (individually
or as a partner or fiduciary) or to recommend to others any such particular
investment or other opportunity. Any Covered Person and the Delaware Trustee may
engage or be interested in any financial or other transaction with the Sponsor
or any Affiliate of the Sponsor, or may act as depositary for, trustee or agent
for or may act on any committee or body of holders of, securities or other
obligations of the Sponsor or its Affiliates.
ARTICLE V
AMENDMENTS, TERMINATION, MISCELLANEOUS
SECTION 5.1 Amendments.
At any time before the issue of any Securities, this
Declaration may be amended by, and only by, a written instrument executed by all
of the Regular Trustees and the Sponsor; provided, however, if the amendment
effects the rights, powers, duties, obligation or immunities of the Delaware
Trustee, the amendment shall also be approved by the Delaware Trustee.
SECTION 5.2 Termination of Trust.
(a) The Trust shall terminate and be of no further force
or effect:
(i) upon the bankruptcy of the Sponsor;
(ii) upon the filing of a certificate of
dissolution or its equivalent with respect to the Sponsor or the revocation of
the Sponsor's charter or of the Trust's certificate of trust;
(iii) upon the entry of a decree of judicial
dissolution of the Sponsor, or the Trust; and
(iv) before the issue of any Securities, with
the consent of all of the Regular Trustees and the Sponsor; and
12
<PAGE> 16
(b) as soon as is practicable after the occurrence of an event
referred to in Section 5.2(a), the Trustees shall file a certificate of
cancellation with the Secretary of State of the State of Delaware.
SECTION 5.3 Governing Law.
This Declaration and the rights of the parties hereunder shall
be governed by and interpreted in accordance with the laws of the State of
Delaware and all rights and remedies shall be governed by such laws without
regard to principles of conflict of laws.
SECTION 5.4 Headings.
Headings contained in this Declaration are inserted for
convenience of reference only and do not affect the interpretation of this
Declaration or any provision hereof.
SECTION 5.5 Successors and Assigns.
Whenever in this Declaration any of the parties hereto is
named or referred to, the successors and assigns of such party shall be deemed
to be included, and all covenants and agreements in this Declaration by the
Sponsor and the Trustees shall bind and inure to the benefit of their respective
successors and assigns, whether so expressed.
SECTION 5.6 Partial Enforceability.
If any provision of this Declaration, or the application of
such provision to any Person or circumstance, shall be held invalid, the
remainder of this Declaration, or the application of such provision to persons
or circumstances other than those to which it is held invalid, shall not be
affected thereby.
SECTION 5.7 Counterparts.
This Declaration may contain more than one counterpart of the
signature page and this Declaration may be executed by the affixing of the
signature of each of the Trustees to one of such counterpart signature pages.
All of such counterpart signature pages shall be read as though one, and they
shall have the same force and effect as though all of the signers had signed a
single signature page.
13
<PAGE> 17
IN WITNESS WHEREOF, the undersigned have caused these presents
to be executed as of the day and year first above written.
CONSECO, INC., as sponsor and
Debenture Issuer
By: /s/ ROLLIN M. DICK
--------------------------------------
Name: Rollin M. Dick
Title: Executive Vice President
FIRST UNION TRUST COMPANY,
NATIONAL ASSOCIATION, as
Delaware Trustee
By: /s/ EDWARD L. TRUITT, JR.
--------------------------------------
Name: Edward L. Truitt, Jr.
Title: Assistant Vice President
/s/ ROLLIN M. DICK
-------------------------------------------
Rollin M. Dick, as Regular Trustee
/s/ STEPHEN C. HILBERT
-------------------------------------------
Stephen C. Hilbert, as Regular Trustee
14
<PAGE> 1
EXHIBIT 4.6
CERTIFICATE OF TRUST
The undersigned, the trustees of Conseco Financing Trust V, desiring to
form a business trust pursuant to Delaware Business Trust Act, 12 Del. C.
Section 3810, hereby certify as follows:
1. The name of the business trust being formed hereby (the "Trust")
is "Conseco Financing Trust V."
2. The name and business address of the trustee of the Trust which
has its principal place of business in the State of Delaware is
as follows:
First Union Trust Company, National Association
Corporate Trust Administration
One Rodney Square
920 King Street
Wilmington, DE 19801
3. This Certificate of Trust shall be effective as of the date of
filing with the office of the Secretary of State of the State of
Delaware.
IN WITNESS WHEREOF, the undersigned have executed this Certificate of
Trust as of the date written below.
Dated: May 21, 1997
/s/ ROLLIN M. DICK
- ----------------------------- FIRST UNION TRUST COMPANY,
Rollin M. Dick, Trustee NATIONAL ASSOCIATION, as Trustee
By: /s/ EDWARD L. TRUITT, JR.
--------------------------
/s/ STEPHEN C. HILBERT Name: Edward L. Truitt, Jr.
- ------------------------------ Title: Assistant Vice President
Stephen C. Hilbert, Trustee
<PAGE> 1
EXHIBIT 4.7
---------------------------------------------------------------
DECLARATION OF TRUST
OF
CONSECO FINANCING TRUST V
Dated as of May 21, 1997
---------------------------------------------------------------
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C> <C> <C>
ARTICLE I DEFINITIONS
SECTION 1.1
Definitions....................................................................................1
ARTICLE II ORGANIZATION
SECTION 2.1
Name...........................................................................................3
SECTION 2.2
Office.........................................................................................4
SECTION 2.3
Purpose........................................................................................4
SECTION 2.4
Authority......................................................................................4
SECTION 2.5
Title to Property of the Trust.................................................................4
SECTION 2.6
Powers of the Trustee..........................................................................4
SECTION 2.7
Filing of Certificate of Trust.................................................................5
SECTION 2.8
Duration of Trust..............................................................................5
SECTION 2.9
Responsibilities of the Sponsor................................................................5
SECTION 2.10
Declaration Binding on Securities Holders.......................................................6
ARTICLE III TRUSTEES
SECTION 3.1
Trustees.......................................................................................6
SECTION 3.2
Regular Trustees...............................................................................7
SECTION 3.3
Delaware Trustee...............................................................................7
SECTION 3.4
Property Trustee...............................................................................7
SECTION 3.5
Not Responsible for Recitals or Sufficiency
of Declaration................................................................................8
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ARTICLE IV LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES, TRUSTEES
OR OTHERS
SECTION 4.1
Exculpation....................................................................................8
SECTION 4.2
Fiduciary Duty.................................................................................8
SECTION 4.3
Indemnification................................................................................9
SECTION 4.4
Outside Businesses............................................................................12
ARTICLE V AMENDMENTS, TERMINATION, MISCELLANEOUS
SECTION 5.1
Amendments....................................................................................12
SECTION 5.2
Termination of Trust..........................................................................12
SECTION 5.3
Governing Law.................................................................................13
SECTION 5.4
Headings......................................................................................13
SECTION 5.5
Successors and Assigns........................................................................13
SECTION 5.6
Partial Enforceability........................................................................13
SECTION 5.7
Counterparts..................................................................................13
</TABLE>
ii
<PAGE> 4
DECLARATION OF TRUST OF CONSECO FINANCING TRUST V
DECLARATION OF TRUST ("Declaration") dated and effective as of
May 21, 1997 by the undersigned Trustees (together with all other persons from
time to time duly appointed and serving as trustees in accordance with the
provisions of this Declaration, the "Trustees"), Conseco, Inc., an Indiana
corporation, as trust sponsor (the "Sponsor"), and by the holders, from time to
time, of undivided beneficial interests in the Trust to be issued pursuant to
this Declaration;
WHEREAS, the Trustees and the Sponsor desire to establish a
trust (the "Trust") pursuant to the Business Trust Act (as hereinafter defined);
WHEREAS, the sole purpose of the Trust shall be to issue and
sell certain securities representing undivided beneficial interests in the
assets of the Trust and to invest the proceeds thereof in certain Debentures of
the Debenture Issuer (as those terms are hereinafter defined) and, except as
otherwise limited herein, to engage in only those other activities necessary,
appropriate, convenient or incidental thereto.
NOW, THEREFORE, it being the intention of the parties hereto
that the Trust constitute a business trust under the Business Trust Act and that
this Declaration constitute the governing instrument of such business trust, the
Trustees declare that all assets contributed to the Trust will be held in trust
for the benefit of the holders, from time to time, of the securities
representing undivided beneficial interests in the assets of the Trust issued
hereunder, subject to the provisions of this Declaration.
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions.
Unless the context otherwise requires:
(a) Capitalized terms used in this Declaration but not
defined in the preamble above have the respective
meanings assigned to them in this Section 1.1;
(b) a term defined anywhere in this Declaration has the
same meaning throughout;
(c) all references to "the Declaration" or "this
Declaration" are to this Declaration of Trust as
modified, supplemented or amended from time to time;
(d) all references in this Declaration to Articles and
Sections are to Articles and Sections of this
Declaration unless otherwise specified; and
(e) a reference to the singular includes the plural and
vice versa.
<PAGE> 5
"Affiliate" has the same meaning as given to that term in Rule
405 of the Securities Act or any successor rule thereunder.
"Business Day" means any day other than a day on which banking
institutions in New York, New York are authorized or required by law to close.
"Business Trust Act" means Chapter 38 of Title 12 of the
Delaware Code, 12 Del. Code ss.3801 et seq., as it may be amended from time to
time, or any successor legislation.
"Commission" means the Securities and Exchange Commission.
"Common Security" means a security representing a common
undivided beneficial interest in the assets of the Trust with such terms as may
be set out in any amendment to this Declaration.
"Company Indemnified Person" means (a) any Regular Trustee;
(b) any Affiliate of any Regular Trustee; (c) any officers, directors,
shareholders, members, partners, employees, representatives or agents of any
Regular Trustee; or (d) any employee or agent of the Trust or its Affiliates.
"Covered Person" means (a) any officer, director, shareholder,
partner, member, representative, employee or agent of (i) the Trust or (ii) the
Trust's Affiliates and (b) any holder of Securities.
"Debenture Issuer" means Conseco, Inc. in its capacity as the
issuer of the Debentures under the Indenture.
"Debentures" means the series of Debentures to be issued under
the Indenture by the Debenture Issuer and acquired by the Trust.
"Debenture Trustee" means, Fleet National Bank, as trustee
under the Indenture until a successor is appointed thereunder, and thereafter
means such successor trustee.
"Delaware Trustee" has the meaning set forth in Section 3.1.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time or any successor legislation.
"Fiduciary Indemnified Person" has the meaning set forth in
Section 4.3(b).
"Holder" means the person in whose name a certificate
representing a Security is registered.
2
<PAGE> 6
"Indemnified Person" means a Company Indemnified Person or a
Fiduciary Indemnified Person.
"Indenture" means the indenture dated as of November 14, 1996
entered into among Conseco, Inc. and Fleet National Bank, as trustee and any
indenture supplemental thereto pursuant to which the Debentures are to be
issued.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Preferred Security" means a security representing a preferred
undivided beneficial interest in the assets of the Trust with such terms as may
be set out in any amendment to this Declaration.
"Regular Trustee" has the meaning set forth in Section 3.1.
"Securities" means the Common Securities and the Preferred
Securities.
"Securities Act" means the Securities Act of 1933, as amended
from time to time, or any successor legislation.
"Sponsor" means Conseco, Inc. in its capacity as sponsor of
the Trust.
"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as Trustees in accordance with the
provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.
ARTICLE II
ORGANIZATION
SECTION 2.1 Name.
The Trust created by this Declaration is named "Conseco
Financing Trust V." The Trust's activities may be conducted under the name of
the Trust or any other name deemed advisable by the Regular Trustees.
3
<PAGE> 7
SECTION 2.2 Office.
The address of the principal office of the Trust is c/o
General Counsel, 11825 North Pennsylvania Street, Carmel, Indiana 46032. At
any time, the Regular Trustees may designate another principal office.
SECTION 2.3 Purpose.
The exclusive purposes and functions of the Trust are (a) to
issue and sell the Securities and use the proceeds from such sale to acquire the
Debentures, and (b) except as otherwise limited herein, to engage in only those
other activities necessary, appropriate, convenient or incidental thereto. The
Trust shall not borrow money, issue debt or reinvest proceeds derived from
investments, pledge any of its assets, or otherwise undertake (or permit to be
undertaken) any activity that would cause the Trust not to be classified for
United States federal income tax purposes as a grantor trust.
SECTION 2.4 Authority.
Subject to the limitations provided in this Declaration, the
Regular Trustees shall have exclusive and complete authority to carry out the
purposes of the Trust. An action taken by the Regular Trustees in accordance
with their powers shall constitute the act of and serve to bind the Trust. In
dealing with the Regular Trustees acting on behalf of the Trust, no person shall
be required to inquire into the authority of the Regular Trustees to bind the
Trust. Persons dealing with the Trust are entitled to rely conclusively on the
power and authority of the Regular Trustees as set forth in this Declaration.
SECTION 2.5 Title to Property of the Trust.
Legal title to all assets of the Trust shall be vested in the
Trust.
SECTION 2.6 Powers of the Trustee.
The Regular Trustees shall have the exclusive power and
authority to cause the Trust to engage in the following activities:
(a) to issue and sell the Preferred Securities and the Common
Securities in accordance with this Declaration; provided, however, that the
Trust may issue no more than one series of Preferred Securities and no more than
one series of Common Securities, and, provided further, that there shall be no
interests in the Trust other than the Securities and the issuance of the
Securities shall be limited to a one-time, simultaneous issuance of both
Preferred Securities and Common Securities;
(b) in connection with the issue and sale of the Preferred
Securities, at the direction of the Sponsor, to:
(i) execute and file with the Commission a
registration statement on Form S-3 prepared by the Sponsor, including any
amendments thereto in relation to the Preferred Securities;
4
<PAGE> 8
(ii) execute and file any documents prepared by
the Sponsor, or take any acts as determined by the Sponsor to be necessary in
order to qualify or register all or part of the Preferred Securities in any
State in which the Sponsor has determined to qualify or register such Preferred
Securities for sale;
(iii) execute and file an application, prepared by
the Sponsor, to the New York Stock Exchange or any other national stock exchange
or the Nasdaq Stock Market's National Market for listing upon notice of issuance
of any Preferred Securities;
(iv) execute and file with the Commission a
registration statement on Form 8-A, including any amendments thereto, prepared
by the Sponsor relating to the registration of the Preferred Securities under
Section 12(b) of the Exchange Act; and
(v) execute and enter into an underwriting
agreement and pricing agreement providing for the sale of the Preferred
Securities;
(c) to employ or otherwise engage employees and agents (who
may be designated as officers with titles) and managers, contractors, advisors,
and consultants and provide for reasonable compensation for such services;
(d) to incur expenses which are necessary, appropriate,
convenient or incidental to carry out any of the purposes of this Declaration;
and
(e) to execute all documents or instruments, perform all
duties and powers, and do all things for and on behalf of the Trust in all
matters necessary, appropriate, convenient or incidental to the foregoing.
SECTION 2.7 Filing of Certificate of Trust.
On or after the date of execution of this Declaration, the
Trustees shall cause the filing of the Certificate of Trust for the Trust in the
form attached hereto as Exhibit A with the Secretary of State of the State of
Delaware.
SECTION 2.8 Duration of Trust.
The Trust, absent termination pursuant to the provisions of
Section 5.2, shall have existence for fifty-five (55) years from the date
hereof.
SECTION 2.9 Responsibilities of the Sponsor.
In connection with the issuance and sale of the Preferred
Securities, the Sponsor shall have the exclusive right and responsibility to
engage in the following activities:
(a) to prepare for filing by the Trust with the Commission
a registration statement on Form S-3 in relation to the Preferred Securities,
including any amendments thereto;
5
<PAGE> 9
(b) to determine the States in which to take appropriate
action to qualify or register for sale all or part of the Preferred Securities
and to do any and all such acts, other than actions which must be taken by the
Trust, and advise the Trust of actions it must take, and prepare for execution
and filing any documents to be executed and filed by the Trust, as the Sponsor
deems necessary or advisable in order to comply with the applicable laws of any
such States;
(c) to prepare for filing by the Trust an application to the
New York Stock Exchange or any other national stock exchange or the Nasdaq
National Market for listing upon notice of issuance of any Preferred Securities;
(d) to prepare for filing by the Trust with the Commission a
registration statement on Form 8-A relating to the registration of the class of
Preferred Securities under Section 12(b) of the Exchange Act, including any
amendments thereto; and
(e) to negotiate the terms of an underwriting agreement and
pricing agreement providing for the sale of the Preferred Securities.
SECTION 2.10 Declaration Binding on Securities Holders.
Every Person by virtue of having become a Holder of a Security
or any interest therein in accordance with the terms of this Declaration, shall
be deemed to have expressly assented and agreed to the terms of, and shall be
bound by, this Declaration.
ARTICLE III
TRUSTEES
SECTION 3.1 Trustees.
The number of Trustees initially shall be three (3),
and thereafter the number of Trustees shall be such number as shall
be fixed from time to time by a written instrument signed by the Sponsor.
The Sponsor is entitled to appoint or remove without cause any Trustee at
any time; provided, however, that the number of Trustees shall in no event
be less than two (2); provided, further, that one Trustee, in the case of a
natural person, shall be a person who is a resident of the State of Delaware
or that, if not a natural person, is an entity which has its principal place
of business in the State of Delaware and meets any other requirements
imposed by applicable law (the "Delaware Trustee"); provided, further, that
there shall be at least one trustee who is an employee or officer of, or is
affiliated with the Sponsor (a "Regular Trustee").
6
<PAGE> 10
SECTION 3.2 Regular Trustees.
The initial Regular Trustees shall be: Rollin M. Dick
and Stephen C. Hilbert.
(a) Except as expressly set forth in this Declaration, any
power of the Regular Trustees may be exercised by, or with the consent of, any
one such Regular Trustee.
(b) Unless otherwise determined by the Regular Trustees, and
except as otherwise required by the Business Trust Act, any Regular Trustee is
authorized to execute on behalf of the Trust any documents which the Regular
Trustees have the power and authority to cause the Trust to execute pursuant to
Section 2.6 provided, that, the registration statement referred to in Section
2.6(b)(i), including any amendments thereto, shall be signed by at least a
majority of the Regular Trustees; and
(c) a Regular Trustee may, by power of attorney consistent
with applicable law, delegate to any other natural person over the age of 21 his
or her power for the purposes of signing any documents which the Regular
Trustees have power and authority to cause the Trust to execute pursuant to
Section 2.6.
SECTION 3.3 Delaware Trustee.
The initial Delaware Trustee shall be: First Union Trust
Company, National Association.
Notwithstanding any other provision of this Declaration, the
Delaware Trustee shall not be entitled to exercise any of the powers, nor shall
the Delaware Trustee have any of the duties and responsibilities of the Regular
Trustees described in this Declaration. The Delaware Trustee shall be a Trustee
for the sole and limited purpose of fulfilling the requirements of ss. 3807 of
the Business Trust Act. Notwithstanding anything herein to the contrary, the
Delaware Trustee shall not be liable for the acts or omissions to act of the
Trust, of the Sponsor or of the Regular Trustees except such acts as the
Delaware Trustee is expressly obligated or authorized to undertake under this
Declaration or the Business Trust Act and except for the gross negligence or
willful misconduct of the Delaware Trustee.
SECTION 3.4 Property Trustee.
Prior to the issuance of the Preferred Securities and Common
Securities, the Sponsor shall appoint a trustee (the "Property Trustee") meeting
the requirements of an eligible trustee of the Trust Indenture Act of 1939, as
amended, by the execution of an amendment to this Declaration executed by the
Regular Trustees, the Sponsor, the Property Trustee and the Delaware Trustee.
7
<PAGE> 11
SECTION 3.5 Not Responsible for Recitals or Sufficiency of Declaration.
The recitals contained in this Declaration shall be taken as
the statements of the Sponsor, and the Trustees do not assume any responsibility
for their correctness. The Trustees make no representations as to the value or
condition of the property of the Trust or any part thereof. The Trustees make no
representations as to the validity or sufficiency of this Declaration.
ARTICLE IV
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 4.1 Exculpation.
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Trust or any Covered Person for any
loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith on behalf of the Trust and in a
manner such Indemnified Person reasonably believed to be within the scope of the
authority conferred on such Indemnified Person by this Declaration or by law,
except that an Indemnified Person shall be liable for any such loss, damage or
claim incurred by reason of such Indemnified Person's gross negligence or
willful misconduct with respect to such acts or omissions; and
(b) An Indemnified Person shall be fully protected in relying
in good faith upon the records of the Trust and upon such information, opinions,
reports or statements presented to the Trust by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Trust, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets from
which distributions to holders of Securities might properly be paid.
SECTION 4.2 Fiduciary Duty.
(a) To the extent that, at law or in equity, an Indemnified
Person has duties (including fiduciary duties) and liabilities relating thereto
to the Trust or to any other Covered Person, an Indemnified Person acting under
this Declaration shall not be liable to the Trust or to any other Covered Person
for its good faith reliance on the provisions of this Declaration. The
provisions of this Declaration, to the extent that they restrict the duties and
liabilities of an Indemnified Person otherwise existing at law or in equity, are
agreed by the parties hereto to replace such other duties and liabilities of
such Indemnified Person;
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises
between Covered Persons; or
8
<PAGE> 12
(ii) whenever this Declaration or any other
agreement contemplated herein or therein provides that an Indemnified Person
shall act in a manner that is, or provides terms that are, fair and reasonable
to the Trust or any Holder of Securities,
the Indemnified Person shall resolve such conflict of interest, take such action
or provide such terms, considering in each case the relative interest of each
party (including its own interest) to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such interests, any customary
or accepted industry practices, and any applicable generally accepted accounting
practices or principles. In the absence of bad faith by the Indemnified Person,
the resolution, action or term so made, taken or provided by the Indemnified
Person shall not constitute a breach of this Declaration or any other agreement
contemplated herein or of any duty or obligation of the Indemnified Person at
law or in equity or otherwise; and
(c) whenever in this Declaration an Indemnified Person is
permitted or required to make a decision:
(i) in its "discretion" or under a grant of
similar authority, the Indemnified Person shall be entitled to consider such
interests and factors as it desires, including its own interests, and shall have
no duty or obligation to give any consideration to any interest of or factors
affecting the Trust or any other Person; or
(ii) in its "good-faith" or under another express
standard, the Indemnified Person shall act under such express standard and shall
not be subject to any other or different standard imposed by this Declaration or
by applicable law.
SECTION 4.3 Indemnification.
(a) The Sponsor shall indemnify, to the full extent permitted
by law, any Company Indemnified Person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other than
an action by or in the right of the Trust) by reason of the fact that he is or
was a Company Indemnified Person against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with such action, suit or proceeding if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the Trust, and, with respect to any criminal action or proceeding,
had no reasonable cause to believe his conduct was unlawful. The termination of
any action, suit or proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the Company Indemnified Person did not act in good faith and in
a manner which he reasonably believed to be in or not opposed to the best
interests of the Trust, and, with respect to any criminal action or proceeding,
had reasonable cause to believe that his conduct was unlawful.
9
<PAGE> 13
(i) The Sponsor shall indemnify, to the full
extent permitted by law, any Company Indemnified Person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action
or suit by or in the right of the Trust to procure a judgment in its favor by
reason of the fact that he is or was a Company Indemnified Person against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Trust and except that no such indemnification shall be
made in respect of any claim, issue or matter as to which such Company
Indemnified Person shall have been adjudged to be liable to the Trust unless and
only to the extent that the Court of Chancery of Delaware or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which such Court of Chancery or such other court shall deem proper.
(ii) To the extent that a Company Indemnified
Person shall be successful on the merits or otherwise (including dismissal of an
action without prejudice or the settlement of an action without admission of
liability) in defense of any action, suit or proceeding referred to in
paragraphs (i) and (ii) of this Section 4.3(a), or in defense of any claim,
issue or matter therein, he shall be indemnified, to the full extent permitted
by law, against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.
(iii) Any indemnification under paragraphs (i) and
(ii) of this Section 4.3(a) (unless ordered by a court) shall be made by the
Sponsor only as authorized in the specific case upon a determination that
indemnification of the Company Indemnified Person is proper in the circumstances
because he has met the applicable standard of conduct set forth in paragraphs
(i) and (ii). Such determination shall be made (1) by the Regular Trustees by a
majority vote of a quorum consisting of such Regular Trustees who were not
parties to such action, suit or proceeding, (2) if such a quorum is not
obtainable, or, even if obtainable, if a quorum of disinterested Regular
Trustees so directs, by independent legal counsel in a written opinion, or (3)
by the Common Security Holder of the Trust.
(iv) Expenses (including attorneys' fees) incurred
by a Company Indemnified Person in defending a civil, criminal, administrative
or investigative action, suit or proceeding referred to in paragraphs (i) and
(ii) of this Section 4.3(a) shall be paid by the Sponsor in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking by
or on behalf of such Company Indemnified Person to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified by the
Sponsor as authorized in this Section 4.3(a). Notwithstanding the foregoing, no
advance shall be made by the Sponsor if a determination is reasonably and
promptly made (i) by the Regular Trustees by a majority vote of a quorum of
disinterested Regular Trustees, (ii) if such a quorum is not obtainable, or,
even if obtainable, if a quorum of disinterested Regular Trustees so directs, by
independent legal counsel in a written opinion or (iii) the Common Security
Holder of the Trust, that, based upon the facts known to the Regular Trustees,
counsel or the Common Security Holder at the time such determination is made,
such Company Indemnified Person acted in bad faith or in a manner that such
person did not believe to be in or not opposed to the best interests of the
Trust, or, with respect to any
10
<PAGE> 14
criminal proceeding, that such Company Indemnified Person believed or had
reasonable cause to believe his conduct was unlawful. In no event shall any
advance be made in instances where the Regular Trustees, independent legal
counsel or Common Security Holder reasonably determine that such person
deliberately breached his duty to the Trust or its Common or Preferred Security
Holders.
(v) The indemnification and advancement of expenses
provided by, or granted pursuant to, the other paragraphs of this Section 4.3(a)
shall not be deemed exclusive of any other rights to which those seeking
indemnification and advancement of expenses may be entitled under any agreement,
vote of stockholders or disinterested directors of the Sponsor or Preferred
Security Holders of the Trust or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office. All
rights to indemnification under this Section 4.3(a) shall be deemed to be
provided by a contract between the Sponsor and each Company Indemnified Person
who serves in such capacity at any time while this Section 4.3(a) is in effect.
Any repeal or modification of this Section 4.3(a) shall not affect any rights or
obligations then existing.
(vi) The Sponsor or the Trust may purchase and
maintain insurance on behalf of any person who is or was a Company Indemnified
Person against any liability asserted against him and incurred by him in any
such capacity, or arising out of his status as such, whether or not the Sponsor
would have the power to indemnify him against such liability under the
provisions of this Section 4.3 (a)
(vii) For purposes of this Section 4.3(a),
references to "the Trust" shall include, in addition to the resulting or
surviving entity, any constituent entity (including any constituent of a
constituent) absorbed in a consolidation or merger, so that any person who is or
was a director, trustee, officer or employee of such constituent entity, or is
or was serving at the request of such constituent entity as a director, trustee,
officer, employee or agent of another entity, shall stand in the same position
under the provisions of this Section 4.3(a) with respect to the resulting or
surviving entity as he would have with respect to such constituent entity if its
separate existence had continued.
(viii) The indemnification and advancement of
expenses provided by, or granted pursuant to, this Section 4.3(a) shall, unless
otherwise provided when authorized or ratified, continue as to a person who has
ceased to be a Company Indemnified Person and shall inure to the benefit of the
heirs, executors and administrators of such a person.
(b) The Sponsor agrees to indemnify the (i) the Delaware
Trustee, (ii) any Affiliate of the Delaware Trustee, and (iii) any officers,
directors, shareholders, members, partners, employees, representatives,
nominees, custodians or agents of the Delaware Trustee (each of the Persons in
(i) through (iii) being referred to as a "Fiduciary Indemnified Person") for,
and to hold each Fiduciary Indemnified Person harmless against, any loss,
liability or expense incurred without gross negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of the
trust or trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against, or
investigating, any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder. The obligation to
indemnify as set forth in this Section 4.3(b) shall survive the termination of
this Declaration.
11
<PAGE> 15
SECTION 4.4 Outside Businesses.
Any Covered Person, the Sponsor and the Delaware Trustee may
engage in or possess an interest in other business ventures of any nature or
description, independently or with others, similar or dissimilar to the business
of the Trust, and the Trust and the Holders of Securities shall have no rights
by virtue of this Declaration in and to such independent ventures or the income
or profits derived therefrom and the pursuit of any such venture, even if
competitive with the business of the Trust, shall not be deemed wrongful or
improper. No Covered Person, the Sponsor or the Delaware Trustee shall be
obligated to present any particular investment or other opportunity to the Trust
even if such opportunity is of a character that, if presented to the Trust,
could be taken by the Trust, and any Covered Person, the Sponsor and the
Delaware Trustee shall have the right to take for its own account (individually
or as a partner or fiduciary) or to recommend to others any such particular
investment or other opportunity. Any Covered Person and the Delaware Trustee may
engage or be interested in any financial or other transaction with the Sponsor
or any Affiliate of the Sponsor, or may act as depositary for, trustee or agent
for or may act on any committee or body of holders of, securities or other
obligations of the Sponsor or its Affiliates.
ARTICLE V
AMENDMENTS, TERMINATION, MISCELLANEOUS
SECTION 5.1 Amendments.
At any time before the issue of any Securities, this
Declaration may be amended by, and only by, a written instrument executed by all
of the Regular Trustees and the Sponsor; provided, however, if the amendment
effects the rights, powers, duties, obligation or immunities of the Delaware
Trustee, the amendment shall also be approved by the Delaware Trustee.
SECTION 5.2 Termination of Trust.
(a) The Trust shall terminate and be of no further force
or effect:
(i) upon the bankruptcy of the Sponsor;
(ii) upon the filing of a certificate of
dissolution or its equivalent with respect to the Sponsor or the revocation of
the Sponsor's charter or of the Trust's certificate of trust;
(iii) upon the entry of a decree of judicial
dissolution of the Sponsor, or the Trust; and
(iv) before the issue of any Securities, with the
consent of all of the Regular Trustees and the Sponsor; and
12
<PAGE> 16
(b) as soon as is practicable after the occurrence of an event
referred to in Section 5.2(a), the Trustees shall file a certificate of
cancellation with the Secretary of State of the State of Delaware.
SECTION 5.3 Governing Law.
This Declaration and the rights of the parties hereunder shall
be governed by and interpreted in accordance with the laws of the State of
Delaware and all rights and remedies shall be governed by such laws without
regard to principles of conflict of laws.
SECTION 5.4 Headings.
Headings contained in this Declaration are inserted for
convenience of reference only and do not affect the interpretation of this
Declaration or any provision hereof.
SECTION 5.5 Successors and Assigns.
Whenever in this Declaration any of the parties hereto is
named or referred to, the successors and assigns of such party shall be deemed
to be included, and all covenants and agreements in this Declaration by the
Sponsor and the Trustees shall bind and inure to the benefit of their respective
successors and assigns, whether so expressed.
SECTION 5.6 Partial Enforceability.
If any provision of this Declaration, or the application of
such provision to any Person or circumstance, shall be held invalid, the
remainder of this Declaration, or the application of such provision to persons
or circumstances other than those to which it is held invalid, shall not be
affected thereby.
SECTION 5.7 Counterparts.
This Declaration may contain more than one counterpart of the
signature page and this Declaration may be executed by the affixing of the
signature of each of the Trustees to one of such counterpart signature pages.
All of such counterpart signature pages shall be read as though one, and they
shall have the same force and effect as though all of the signers had signed a
single signature page.
13
<PAGE> 17
IN WITNESS WHEREOF, the undersigned have caused these presents
to be executed as of the day and year first above written.
CONSECO, INC., as sponsor and
Debenture Issuer
By: /s/ ROLLIN M. DICK
-----------------------------------
Name: Rollin M. Dick
Title: Executive Vice President
FIRST UNION TRUST COMPANY,
NATIONAL ASSOCIATION, as
Delaware Trustee
By: /s/ EDWARD L. TRUITT, JR.
----------------------------------
Name: Edward L. Truitt, Jr.
Title: Assistant Vice President
/s/ ROLLIN M. DICK
----------------------------------------
Rollin M. Dick, as Regular Trustee
/s/ STEPHEN C. HILBERT
----------------------------------------
Stephen C. Hilbert, as Regular Trustee
14
<PAGE> 1
EXHIBIT 4.8
CERTIFICATE OF TRUST
The undersigned, the trustees of Conseco Financing Trust VI, desiring
to form a business trust pursuant to Delaware Business Trust Act, 12 Del. C.
Section 3810, hereby certify as follows:
1. The name of the business trust being formed hereby (the "Trust")
is "Conseco Financing Trust VI."
2. The name and business address of the trustee of the Trust which
has its principal place of business in the State of Delaware is
as follows:
First Union Trust Company, National Association
Corporate Trust Administration
One Rodney Square
920 King Street
Wilmington, DE 19801
3. This Certificate of Trust shall be effective as of the date of
filing with the office of the Secretary of State of the State of
Delaware.
IN WITNESS WHEREOF, the undersigned have executed this Certificate of
Trust as of the date written below.
Dated: May 21, 1997
/s/ ROLLIN M. DICK
- ----------------------------- FIRST UNION TRUST COMPANY,
Rollin M. Dick, Trustee NATIONAL ASSOCIATION, as Trustee
By: /s/ EDWARD L. TRUITT, JR.
----------------------------
/s/ STEPHEN C. HILBERT Name: Edward L. Truitt, Jr.
- ----------------------------- Title: Assistant Vice President
Stephen C. Hilbert, Trustee
<PAGE> 1
EXHIBIT 4.9
---------------------------------------------------------------
DECLARATION OF TRUST
OF
CONSECO FINANCING TRUST VI
Dated as of May 21, 1997
---------------------------------------------------------------
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C> <C> <C>
ARTICLE I DEFINITIONS
SECTION 1.1
Definitions....................................................................................1
ARTICLE II ORGANIZATION
SECTION 2.1
Name...........................................................................................3
SECTION 2.2
Office.........................................................................................4
SECTION 2.3
Purpose........................................................................................4
SECTION 2.4
Authority......................................................................................4
SECTION 2.5
Title to Property of the Trust.................................................................4
SECTION 2.6
Powers of the Trustee..........................................................................4
SECTION 2.7
Filing of Certificate of Trust.................................................................5
SECTION 2.8
Duration of Trust..............................................................................5
SECTION 2.9
Responsibilities of the Sponsor................................................................5
SECTION 2.10
Declaration Binding on Securities Holders.......................................................6
ARTICLE III TRUSTEES
SECTION 3.1
Trustees.......................................................................................6
SECTION 3.2
Regular Trustees...............................................................................7
SECTION 3.3
Delaware Trustee...............................................................................7
SECTION 3.4
Property Trustee...............................................................................7
SECTION 3.5
Not Responsible for Recitals or Sufficiency
of Declaration................................................................................8
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ARTICLE IV LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES, TRUSTEES
OR OTHERS
SECTION 4.1
Exculpation....................................................................................8
SECTION 4.2
Fiduciary Duty.................................................................................8
SECTION 4.3
Indemnification................................................................................9
SECTION 4.4
Outside Businesses............................................................................12
ARTICLE V AMENDMENTS, TERMINATION, MISCELLANEOUS
SECTION 5.1
Amendments....................................................................................12
SECTION 5.2
Termination of Trust..........................................................................12
SECTION 5.3
Governing Law.................................................................................13
SECTION 5.4
Headings......................................................................................13
SECTION 5.5
Successors and Assigns........................................................................13
SECTION 5.6
Partial Enforceability........................................................................13
SECTION 5.7
Counterparts..................................................................................13
</TABLE>
ii
<PAGE> 4
DECLARATION OF TRUST OF CONSECO FINANCING TRUST VI
DECLARATION OF TRUST ("Declaration") dated and effective as of
May 21, 1997 by the undersigned Trustees (together with all other persons from
time to time duly appointed and serving as trustees in accordance with the
provisions of this Declaration, the "Trustees"), Conseco, Inc., an Indiana
corporation, as trust sponsor (the "Sponsor"), and by the holders, from time to
time, of undivided beneficial interests in the Trust to be issued pursuant to
this Declaration;
WHEREAS, the Trustees and the Sponsor desire to establish a
trust (the "Trust") pursuant to the Business Trust Act (as hereinafter defined);
WHEREAS, the sole purpose of the Trust shall be to issue and
sell certain securities representing undivided beneficial interests in the
assets of the Trust and to invest the proceeds thereof in certain Debentures of
the Debenture Issuer (as those terms are hereinafter defined) and, except as
otherwise limited herein, to engage in only those other activities necessary,
appropriate, convenient or incidental thereto.
NOW, THEREFORE, it being the intention of the parties hereto
that the Trust constitute a business trust under the Business Trust Act and that
this Declaration constitute the governing instrument of such business trust, the
Trustees declare that all assets contributed to the Trust will be held in trust
for the benefit of the holders, from time to time, of the securities
representing undivided beneficial interests in the assets of the Trust issued
hereunder, subject to the provisions of this Declaration.
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions.
Unless the context otherwise requires:
(a) Capitalized terms used in this Declaration but not
defined in the preamble above have the respective
meanings assigned to them in this Section 1.1;
(b) a term defined anywhere in this Declaration has the
same meaning throughout;
(c) all references to "the Declaration" or "this
Declaration" are to this Declaration of Trust as
modified, supplemented or amended from time to time;
(d) all references in this Declaration to Articles and
Sections are to Articles and Sections of this
Declaration unless otherwise specified; and
(e) a reference to the singular includes the plural and
vice versa.
<PAGE> 5
"Affiliate" has the same meaning as given to that term in Rule
405 of the Securities Act or any successor rule thereunder.
"Business Day" means any day other than a day on which banking
institutions in New York, New York are authorized or required by law to close.
"Business Trust Act" means Chapter 38 of Title 12 of the
Delaware Code, 12 Del. Code ss.3801 et seq., as it may be amended from time to
time, or any successor legislation.
"Commission" means the Securities and Exchange Commission.
"Common Security" means a security representing a common
undivided beneficial interest in the assets of the Trust with such terms as may
be set out in any amendment to this Declaration.
"Company Indemnified Person" means (a) any Regular Trustee;
(b) any Affiliate of any Regular Trustee; (c) any officers, directors,
shareholders, members, partners, employees, representatives or agents of any
Regular Trustee; or (d) any employee or agent of the Trust or its Affiliates.
"Covered Person" means (a) any officer, director, shareholder,
partner, member, representative, employee or agent of (i) the Trust or (ii) the
Trust's Affiliates and (b) any holder of Securities.
"Debenture Issuer" means Conseco, Inc. in its capacity as the
issuer of the Debentures under the Indenture.
"Debentures" means the series of Debentures to be issued under
the Indenture by the Debenture Issuer and acquired by the Trust.
"Debenture Trustee" means, Fleet National Bank, as trustee
under the Indenture until a successor is appointed thereunder, and thereafter
means such successor trustee.
"Delaware Trustee" has the meaning set forth in Section 3.1.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time or any successor legislation.
"Fiduciary Indemnified Person" has the meaning set forth in
Section 4.3(b).
"Holder" means the person in whose name a certificate
representing a Security is registered.
2
<PAGE> 6
"Indemnified Person" means a Company Indemnified Person or a
Fiduciary Indemnified Person.
"Indenture" means the indenture dated as of November 14, 1996
entered into among Conseco, Inc. and Fleet National Bank, as trustee and any
indenture supplemental thereto pursuant to which the Debentures are to be
issued.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Preferred Security" means a security representing a preferred
undivided beneficial interest in the assets of the Trust with such terms as may
be set out in any amendment to this Declaration.
"Regular Trustee" has the meaning set forth in Section 3.1.
"Securities" means the Common Securities and the Preferred
Securities.
"Securities Act" means the Securities Act of 1933, as amended
from time to time, or any successor legislation.
"Sponsor" means Conseco, Inc. in its capacity as sponsor of the
Trust.
"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as Trustees in accordance with the
provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.
ARTICLE II
ORGANIZATION
SECTION 2.1 Name.
The Trust created by this Declaration is named "Conseco
Financing Trust VI." The Trust's activities may be conducted under the name of
the Trust or any other name deemed advisable by the Regular Trustees.
3
<PAGE> 7
SECTION 2.2 Office.
The address of the principal office of the Trust is c/o
General Counsel, 11825 North Pennsylvania Street, Carmel, Indiana 46032. At
any time, the Regular Trustees may designate another principal office.
SECTION 2.3 Purpose.
The exclusive purposes and functions of the Trust are (a) to
issue and sell the Securities and use the proceeds from such sale to acquire the
Debentures, and (b) except as otherwise limited herein, to engage in only those
other activities necessary, appropriate, convenient or incidental thereto. The
Trust shall not borrow money, issue debt or reinvest proceeds derived from
investments, pledge any of its assets, or otherwise undertake (or permit to be
undertaken) any activity that would cause the Trust not to be classified for
United States federal income tax purposes as a grantor trust.
SECTION 2.4 Authority.
Subject to the limitations provided in this Declaration, the
Regular Trustees shall have exclusive and complete authority to carry out the
purposes of the Trust. An action taken by the Regular Trustees in accordance
with their powers shall constitute the act of and serve to bind the Trust. In
dealing with the Regular Trustees acting on behalf of the Trust, no person shall
be required to inquire into the authority of the Regular Trustees to bind the
Trust. Persons dealing with the Trust are entitled to rely conclusively on the
power and authority of the Regular Trustees as set forth in this Declaration.
SECTION 2.5 Title to Property of the Trust.
Legal title to all assets of the Trust shall be vested in the
Trust.
SECTION 2.6 Powers of the Trustee.
The Regular Trustees shall have the exclusive power and
authority to cause the Trust to engage in the following activities:
(a) to issue and sell the Preferred Securities and the Common
Securities in accordance with this Declaration; provided, however, that the
Trust may issue no more than one series of Preferred Securities and no more than
one series of Common Securities, and, provided further, that there shall be no
interests in the Trust other than the Securities and the issuance of the
Securities shall be limited to a one-time, simultaneous issuance of both
Preferred Securities and Common Securities;
(b) in connection with the issue and sale of the Preferred
Securities, at the direction of the Sponsor, to:
(i) execute and file with the Commission a
registration statement on Form S-3 prepared by the Sponsor, including any
amendments thereto in relation to the Preferred Securities;
4
<PAGE> 8
(ii) execute and file any documents prepared by
the Sponsor, or take any acts as determined by the Sponsor to be necessary in
order to qualify or register all or part of the Preferred Securities in any
State in which the Sponsor has determined to qualify or register such Preferred
Securities for sale;
(iii) execute and file an application, prepared by
the Sponsor, to the New York Stock Exchange or any other national stock exchange
or the Nasdaq Stock Market's National Market for listing upon notice of issuance
of any Preferred Securities;
(iv) execute and file with the Commission a
registration statement on Form 8-A, including any amendments thereto, prepared
by the Sponsor relating to the registration of the Preferred Securities under
Section 12(b) of the Exchange Act; and
(v) execute and enter into an underwriting
agreement and pricing agreement providing for the sale of the Preferred
Securities;
(c) to employ or otherwise engage employees and agents (who
may be designated as officers with titles) and managers, contractors, advisors,
and consultants and provide for reasonable compensation for such services;
(d) to incur expenses which are necessary, appropriate,
convenient or incidental to carry out any of the purposes of this Declaration;
and
(e) to execute all documents or instruments, perform all
duties and powers, and do all things for and on behalf of the Trust in all
matters necessary, appropriate, convenient or incidental to the foregoing.
SECTION 2.7 Filing of Certificate of Trust.
On or after the date of execution of this Declaration, the
Trustees shall cause the filing of the Certificate of Trust for the Trust in the
form attached hereto as Exhibit A with the Secretary of State of the State of
Delaware.
SECTION 2.8 Duration of Trust.
The Trust, absent termination pursuant to the provisions of
Section 5.2, shall have existence for fifty-five (55) years from the date
hereof.
SECTION 2.9 Responsibilities of the Sponsor.
In connection with the issuance and sale of the Preferred
Securities, the Sponsor shall have the exclusive right and responsibility to
engage in the following activities:
(a) to prepare for filing by the Trust with the Commission a
registration statement on Form S-3 in relation to the Preferred Securities,
including any amendments thereto;
5
<PAGE> 9
(b) to determine the States in which to take appropriate
action to qualify or register for sale all or part of the Preferred Securities
and to do any and all such acts, other than actions which must be taken by the
Trust, and advise the Trust of actions it must take, and prepare for execution
and filing any documents to be executed and filed by the Trust, as the Sponsor
deems necessary or advisable in order to comply with the applicable laws of any
such States;
(c) to prepare for filing by the Trust an application to the
New York Stock Exchange or any other national stock exchange or the Nasdaq
National Market for listing upon notice of issuance of any Preferred Securities;
(d) to prepare for filing by the Trust with the Commission a
registration statement on Form 8-A relating to the registration of the class of
Preferred Securities under Section 12(b) of the Exchange Act, including any
amendments thereto; and
(e) to negotiate the terms of an underwriting agreement and
pricing agreement providing for the sale of the Preferred Securities.
SECTION 2.10 Declaration Binding on Securities Holders.
Every Person by virtue of having become a Holder of a Security
or any interest therein in accordance with the terms of this Declaration, shall
be deemed to have expressly assented and agreed to the terms of, and shall be
bound by, this Declaration.
ARTICLE III
TRUSTEES
SECTION 3.1 Trustees.
The number of Trustees initially shall be three (3),
and thereafter the number of Trustees shall be such number as shall
be fixed from time to time by a written instrument signed by the Sponsor.
The Sponsor is entitled to appoint or remove without cause any Trustee at
any time; provided, however, that the number of Trustees shall in no event
be less than two (2); provided, further, that one Trustee, in the case of a
natural person, shall be a person who is a resident of the State of Delaware
or that, if not a natural person, is an entity which has its principal place
of business in the State of Delaware and meets any other requirements
imposed by applicable law (the "Delaware Trustee"); provided, further, that
there shall be at least one trustee who is an employee or officer of, or is
affiliated with the Sponsor (a "Regular Trustee").
6
<PAGE> 10
SECTION 3.2 Regular Trustees.
The initial Regular Trustees shall be: Rollin M. Dick
and Stephen C. Hilbert.
(a) Except as expressly set forth in this Declaration, any
power of the Regular Trustees may be exercised by, or with the consent of, any
one such Regular Trustee.
(b) Unless otherwise determined by the Regular Trustees, and
except as otherwise required by the Business Trust Act, any Regular Trustee is
authorized to execute on behalf of the Trust any documents which the Regular
Trustees have the power and authority to cause the Trust to execute pursuant to
Section 2.6 provided, that, the registration statement referred to in Section
2.6(b)(i), including any amendments thereto, shall be signed by at least a
majority of the Regular Trustees; and
(c) a Regular Trustee may, by power of attorney consistent
with applicable law, delegate to any other natural person over the age of 21 his
or her power for the purposes of signing any documents which the Regular
Trustees have power and authority to cause the Trust to execute pursuant to
Section 2.6.
SECTION 3.3 Delaware Trustee.
The initial Delaware Trustee shall be: First Union Trust
Company, National Association.
Notwithstanding any other provision of this Declaration, the
Delaware Trustee shall not be entitled to exercise any of the powers, nor shall
the Delaware Trustee have any of the duties and responsibilities of the Regular
Trustees described in this Declaration. The Delaware Trustee shall be a Trustee
for the sole and limited purpose of fulfilling the requirements of ss. 3807 of
the Business Trust Act. Notwithstanding anything herein to the contrary, the
Delaware Trustee shall not be liable for the acts or omissions to act of the
Trust, of the Sponsor or of the Regular Trustees except such acts as the
Delaware Trustee is expressly obligated or authorized to undertake under this
Declaration or the Business Trust Act and except for the gross negligence or
willful misconduct of the Delaware Trustee.
SECTION 3.4 Property Trustee.
Prior to the issuance of the Preferred Securities and Common
Securities, the Sponsor shall appoint a trustee (the "Property Trustee") meeting
the requirements of an eligible trustee of the Trust Indenture Act of 1939, as
amended, by the execution of an amendment to this Declaration executed by the
Regular Trustees, the Sponsor, the Property Trustee and the Delaware Trustee.
7
<PAGE> 11
SECTION 3.5 Not Responsible for Recitals or Sufficiency of Declaration.
The recitals contained in this Declaration shall be taken as
the statements of the Sponsor, and the Trustees do not assume any responsibility
for their correctness. The Trustees make no representations as to the value or
condition of the property of the Trust or any part thereof. The Trustees make no
representations as to the validity or sufficiency of this Declaration.
ARTICLE IV
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 4.1 Exculpation.
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Trust or any Covered Person for any
loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith on behalf of the Trust and in a
manner such Indemnified Person reasonably believed to be within the scope of the
authority conferred on such Indemnified Person by this Declaration or by law,
except that an Indemnified Person shall be liable for any such loss, damage or
claim incurred by reason of such Indemnified Person's gross negligence or
willful misconduct with respect to such acts or omissions; and
(b) An Indemnified Person shall be fully protected in relying
in good faith upon the records of the Trust and upon such information, opinions,
reports or statements presented to the Trust by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Trust, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets from
which distributions to holders of Securities might properly be paid.
SECTION 4.2 Fiduciary Duty.
(a) To the extent that, at law or in equity, an Indemnified
Person has duties (including fiduciary duties) and liabilities relating thereto
to the Trust or to any other Covered Person, an Indemnified Person acting under
this Declaration shall not be liable to the Trust or to any other Covered Person
for its good faith reliance on the provisions of this Declaration. The
provisions of this Declaration, to the extent that they restrict the duties and
liabilities of an Indemnified Person otherwise existing at law or in equity, are
agreed by the parties hereto to replace such other duties and liabilities of
such Indemnified Person;
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises
between Covered Persons; or
8
<PAGE> 12
(ii) whenever this Declaration or any other
agreement contemplated herein or therein provides that an Indemnified Person
shall act in a manner that is, or provides terms that are, fair and reasonable
to the Trust or any Holder of Securities,
the Indemnified Person shall resolve such conflict of interest, take such action
or provide such terms, considering in each case the relative interest of each
party (including its own interest) to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such interests, any customary
or accepted industry practices, and any applicable generally accepted accounting
practices or principles. In the absence of bad faith by the Indemnified Person,
the resolution, action or term so made, taken or provided by the Indemnified
Person shall not constitute a breach of this Declaration or any other agreement
contemplated herein or of any duty or obligation of the Indemnified Person at
law or in equity or otherwise; and
(c) whenever in this Declaration an Indemnified Person is
permitted or required to make a decision:
(i) in its "discretion" or under a grant of similar
authority, the Indemnified Person shall be entitled to consider such interests
and factors as it desires, including its own interests, and shall have no duty
or obligation to give any consideration to any interest of or factors affecting
the Trust or any other Person; or
(ii) in its "good-faith" or under another express
standard, the Indemnified Person shall act under such express standard and shall
not be subject to any other or different standard imposed by this Declaration or
by applicable law.
SECTION 4.3 Indemnification.
(a) The Sponsor shall indemnify, to the full extent permitted
by law, any Company Indemnified Person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other than
an action by or in the right of the Trust) by reason of the fact that he is or
was a Company Indemnified Person against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with such action, suit or proceeding if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the Trust, and, with respect to any criminal action or proceeding,
had no reasonable cause to believe his conduct was unlawful. The termination of
any action, suit or proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the Company Indemnified Person did not act in good faith and in
a manner which he reasonably believed to be in or not opposed to the best
interests of the Trust, and, with respect to any criminal action or proceeding,
had reasonable cause to believe that his conduct was unlawful.
9
<PAGE> 13
(i) The Sponsor shall indemnify, to the full extent
permitted by law, any Company Indemnified Person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the Trust to procure a judgment in its favor by
reason of the fact that he is or was a Company Indemnified Person against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Trust and except that no such indemnification shall be
made in respect of any claim, issue or matter as to which such Company
Indemnified Person shall have been adjudged to be liable to the Trust unless and
only to the extent that the Court of Chancery of Delaware or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which such Court of Chancery or such other court shall deem proper.
(ii) To the extent that a Company Indemnified Person
shall be successful on the merits or otherwise (including dismissal of an action
without prejudice or the settlement of an action without admission of liability)
in defense of any action, suit or proceeding referred to in paragraphs (i) and
(ii) of this Section 4.3(a), or in defense of any claim, issue or matter
therein, he shall be indemnified, to the full extent permitted by law, against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
(iii) Any indemnification under paragraphs (i) and
(ii) of this Section 4.3(a) (unless ordered by a court) shall be made by the
Sponsor only as authorized in the specific case upon a determination that
indemnification of the Company Indemnified Person is proper in the circumstances
because he has met the applicable standard of conduct set forth in paragraphs
(i) and (ii). Such determination shall be made (1) by the Regular Trustees by a
majority vote of a quorum consisting of such Regular Trustees who were not
parties to such action, suit or proceeding, (2) if such a quorum is not
obtainable, or, even if obtainable, if a quorum of disinterested Regular
Trustees so directs, by independent legal counsel in a written opinion, or (3)
by the Common Security Holder of the Trust.
(iv) Expenses (including attorneys' fees) incurred
by a Company Indemnified Person in defending a civil, criminal, administrative
or investigative action, suit or proceeding referred to in paragraphs (i) and
(ii) of this Section 4.3(a) shall be paid by the Sponsor in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking by
or on behalf of such Company Indemnified Person to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified by the
Sponsor as authorized in this Section 4.3(a). Notwithstanding the foregoing, no
advance shall be made by the Sponsor if a determination is reasonably and
promptly made (i) by the Regular Trustees by a majority vote of a quorum of
disinterested Regular Trustees, (ii) if such a quorum is not obtainable, or,
even if obtainable, if a quorum of disinterested Regular Trustees so directs, by
independent legal counsel in a written opinion or (iii) the Common Security
Holder of the Trust, that, based upon the facts known to the Regular Trustees,
counsel or the Common Security Holder at the time such determination is made,
such Company Indemnified Person acted in bad faith or in a manner that such
person did not believe to be in or not opposed to the best interests of the
Trust, or, with respect to any
10
<PAGE> 14
criminal proceeding, that such Company Indemnified Person believed or had
reasonable cause to believe his conduct was unlawful. In no event shall any
advance be made in instances where the Regular Trustees, independent legal
counsel or Common Security Holder reasonably determine that such person
deliberately breached his duty to the Trust or its Common or Preferred Security
Holders.
(v) The indemnification and advancement of expenses
provided by, or granted pursuant to, the other paragraphs of this Section 4.3(a)
shall not be deemed exclusive of any other rights to which those seeking
indemnification and advancement of expenses may be entitled under any agreement,
vote of stockholders or disinterested directors of the Sponsor or Preferred
Security Holders of the Trust or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office. All
rights to indemnification under this Section 4.3(a) shall be deemed to be
provided by a contract between the Sponsor and each Company Indemnified Person
who serves in such capacity at any time while this Section 4.3(a) is in effect.
Any repeal or modification of this Section 4.3(a) shall not affect any rights or
obligations then existing.
(vi) The Sponsor or the Trust may purchase and
maintain insurance on behalf of any person who is or was a Company Indemnified
Person against any liability asserted against him and incurred by him in any
such capacity, or arising out of his status as such, whether or not the Sponsor
would have the power to indemnify him against such liability under the
provisions of this Section 4.3 (a)
(vii) For purposes of this Section 4.3(a),
references to "the Trust" shall include, in addition to the resulting or
surviving entity, any constituent entity (including any constituent of a
constituent) absorbed in a consolidation or merger, so that any person who is or
was a director, trustee, officer or employee of such constituent entity, or is
or was serving at the request of such constituent entity as a director, trustee,
officer, employee or agent of another entity, shall stand in the same position
under the provisions of this Section 4.3(a) with respect to the resulting or
surviving entity as he would have with respect to such constituent entity if its
separate existence had continued.
(viii) The indemnification and advancement of
expenses provided by, or granted pursuant to, this Section 4.3(a) shall, unless
otherwise provided when authorized or ratified, continue as to a person who has
ceased to be a Company Indemnified Person and shall inure to the benefit of the
heirs, executors and administrators of such a person.
(b) The Sponsor agrees to indemnify the (i) the Delaware
Trustee, (ii) any Affiliate of the Delaware Trustee, and (iii) any officers,
directors, shareholders, members, partners, employees, representatives,
nominees, custodians or agents of the Delaware Trustee (each of the Persons in
(i) through (iii) being referred to as a "Fiduciary Indemnified Person") for,
and to hold each Fiduciary Indemnified Person harmless against, any loss,
liability or expense incurred without gross negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of the
trust or trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against, or
investigating, any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder. The obligation to
indemnify as set forth in this Section 4.3(b) shall survive the termination of
this Declaration.
11
<PAGE> 15
SECTION 4.4 Outside Businesses.
Any Covered Person, the Sponsor and the Delaware Trustee may
engage in or possess an interest in other business ventures of any nature or
description, independently or with others, similar or dissimilar to the business
of the Trust, and the Trust and the Holders of Securities shall have no rights
by virtue of this Declaration in and to such independent ventures or the income
or profits derived therefrom and the pursuit of any such venture, even if
competitive with the business of the Trust, shall not be deemed wrongful or
improper. No Covered Person, the Sponsor or the Delaware Trustee shall be
obligated to present any particular investment or other opportunity to the Trust
even if such opportunity is of a character that, if presented to the Trust,
could be taken by the Trust, and any Covered Person, the Sponsor and the
Delaware Trustee shall have the right to take for its own account (individually
or as a partner or fiduciary) or to recommend to others any such particular
investment or other opportunity. Any Covered Person and the Delaware Trustee may
engage or be interested in any financial or other transaction with the Sponsor
or any Affiliate of the Sponsor, or may act as depositary for, trustee or agent
for or may act on any committee or body of holders of, securities or other
obligations of the Sponsor or its Affiliates.
ARTICLE V
AMENDMENTS, TERMINATION, MISCELLANEOUS
SECTION 5.1 Amendments.
At any time before the issue of any Securities, this
Declaration may be amended by, and only by, a written instrument executed by all
of the Regular Trustees and the Sponsor; provided, however, if the amendment
effects the rights, powers, duties, obligation or immunities of the Delaware
Trustee, the amendment shall also be approved by the Delaware Trustee.
SECTION 5.2 Termination of Trust.
(a) The Trust shall terminate and be of no further force
or effect:
(i) upon the bankruptcy of the Sponsor;
(ii) upon the filing of a certificate of
dissolution or its equivalent with respect to the Sponsor or the revocation of
the Sponsor's charter or of the Trust's certificate of trust;
(iii) upon the entry of a decree of judicial
dissolution of the Sponsor, or the Trust; and
(iv) before the issue of any Securities, with the
consent of all of the Regular Trustees and the Sponsor; and
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<PAGE> 16
(b) as soon as is practicable after the occurrence of an event
referred to in Section 5.2(a), the Trustees shall file a certificate of
cancellation with the Secretary of State of the State of Delaware.
SECTION 5.3 Governing Law.
This Declaration and the rights of the parties hereunder shall
be governed by and interpreted in accordance with the laws of the State of
Delaware and all rights and remedies shall be governed by such laws without
regard to principles of conflict of laws.
SECTION 5.4 Headings.
Headings contained in this Declaration are inserted for
convenience of reference only and do not affect the interpretation of this
Declaration or any provision hereof.
SECTION 5.5 Successors and Assigns.
Whenever in this Declaration any of the parties hereto is
named or referred to, the successors and assigns of such party shall be deemed
to be included, and all covenants and agreements in this Declaration by the
Sponsor and the Trustees shall bind and inure to the benefit of their respective
successors and assigns, whether so expressed.
SECTION 5.6 Partial Enforceability.
If any provision of this Declaration, or the application of
such provision to any Person or circumstance, shall be held invalid, the
remainder of this Declaration, or the application of such provision to persons
or circumstances other than those to which it is held invalid, shall not be
affected thereby.
SECTION 5.7 Counterparts.
This Declaration may contain more than one counterpart of the
signature page and this Declaration may be executed by the affixing of the
signature of each of the Trustees to one of such counterpart signature pages.
All of such counterpart signature pages shall be read as though one, and they
shall have the same force and effect as though all of the signers had signed a
single signature page.
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<PAGE> 17
IN WITNESS WHEREOF, the undersigned have caused these presents
to be executed as of the day and year first above written.
CONSECO, INC., as sponsor and
Debenture Issuer
By: /S/ROLLIN M. DICK
---------------------------------
Name: Rollin M. Dick
Title: Executive Vice President
FIRST UNION TRUST COMPANY,
NATIONAL ASSOCIATION, as
Delaware Trustee
By: /S/EDWARD L. TRUITT, JR.
----------------------------------
Name: Edward L. Truitt, Jr.
Title: Assistant Vice President
/S/ROLLIN M. DICK
----------------------------------
Rollin M. Dick, as Regular Trustee
/S/STEPHEN C. HILBERT
----------------------------------------
Stephen C. Hilbert, as Regular Trustee
14
<PAGE> 1
EXHIBIT 4.10
CERTIFICATE OF TRUST
The undersigned, the trustees of Conseco Financing Trust VII, desiring
to form a business trust pursuant to Delaware Business Trust Act, 12 Del. C.
Section 3810, hereby certify as follows:
1. The name of the business trust being formed hereby (the "Trust")
is "Conseco Financing Trust VII."
2. The name and business address of the trustee of the Trust which
has its principal place of business in the State of Delaware is
as follows:
First Union Trust Company, National Association
Corporate Trust Administration
One Rodney Square
920 King Street
Wilmington, DE 19801
3. This Certificate of Trust shall be effective as of the date of
filing with the office of the Secretary of State of the State of
Delaware.
IN WITNESS WHEREOF, the undersigned have executed this Certificate of
Trust as of the date written below.
Dated: May 21, 1997
/s/ ROLLIN M. DICK
- ---------------------------- FIRST UNION TRUST COMPANY,
Rollin M. Dick, Trustee NATIONAL ASSOCIATION, as Trustee
By: /s/ EDWARD L. TRUITT, JR.
--------------------------
/s/STEPHEN C. HILBERT Name: Edward L. Truitt, Jr.
- ---------------------------- Title: Assistant Vice President
Stephen C. Hilbert, Trustee
<PAGE> 1
EXHIBIT 4.11
---------------------------------------------------------------
DECLARATION OF TRUST
OF
CONSECO FINANCING TRUST VII
Dated as of May 21, 1997
---------------------------------------------------------------
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C> <C> <C>
ARTICLE I DEFINITIONS
SECTION 1.1
Definitions....................................................................................1
ARTICLE II ORGANIZATION
SECTION 2.1
Name...........................................................................................3
SECTION 2.2
Office.........................................................................................4
SECTION 2.3
Purpose........................................................................................4
SECTION 2.4
Authority......................................................................................4
SECTION 2.5
Title to Property of the Trust.................................................................4
SECTION 2.6
Powers of the Trustee..........................................................................4
SECTION 2.7
Filing of Certificate of Trust.................................................................5
SECTION 2.8
Duration of Trust..............................................................................5
SECTION 2.9
Responsibilities of the Sponsor................................................................5
SECTION 2.10
Declaration Binding on Securities Holders.......................................................6
ARTICLE III TRUSTEES
SECTION 3.1
Trustees.......................................................................................6
SECTION 3.2
Regular Trustees...............................................................................7
SECTION 3.3
Delaware Trustee...............................................................................7
SECTION 3.4
Property Trustee...............................................................................7
SECTION 3.5
Not Responsible for Recitals or Sufficiency
of Declaration................................................................................8
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ARTICLE IV LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES, TRUSTEES
OR OTHERS
SECTION 4.1
Exculpation....................................................................................8
SECTION 4.2
Fiduciary Duty.................................................................................8
SECTION 4.3
Indemnification................................................................................9
SECTION 4.4
Outside Businesses............................................................................12
ARTICLE V AMENDMENTS, TERMINATION, MISCELLANEOUS
SECTION 5.1
Amendments....................................................................................12
SECTION 5.2
Termination of Trust..........................................................................12
SECTION 5.3
Governing Law.................................................................................13
SECTION 5.4
Headings......................................................................................13
SECTION 5.5
Successors and Assigns........................................................................13
SECTION 5.6
Partial Enforceability........................................................................13
SECTION 5.7
Counterparts..................................................................................13
</TABLE>
ii
<PAGE> 4
DECLARATION OF TRUST OF CONSECO FINANCING TRUST VII
DECLARATION OF TRUST ("Declaration") dated and effective as of
May 21, 1997 by the undersigned Trustees (together with all other persons from
time to time duly appointed and serving as trustees in accordance with the
provisions of this Declaration, the "Trustees"), Conseco, Inc., an Indiana
corporation, as trust sponsor (the "Sponsor"), and by the holders, from time to
time, of undivided beneficial interests in the Trust to be issued pursuant to
this Declaration;
WHEREAS, the Trustees and the Sponsor desire to establish a
trust (the "Trust") pursuant to the Business Trust Act (as hereinafter defined);
WHEREAS, the sole purpose of the Trust shall be to issue and
sell certain securities representing undivided beneficial interests in the
assets of the Trust and to invest the proceeds thereof in certain Debentures of
the Debenture Issuer (as those terms are hereinafter defined) and, except as
otherwise limited herein, to engage in only those other activities necessary,
appropriate, convenient or incidental thereto.
NOW, THEREFORE, it being the intention of the parties hereto
that the Trust constitute a business trust under the Business Trust Act and that
this Declaration constitute the governing instrument of such business trust, the
Trustees declare that all assets contributed to the Trust will be held in trust
for the benefit of the holders, from time to time, of the securities
representing undivided beneficial interests in the assets of the Trust issued
hereunder, subject to the provisions of this Declaration.
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions.
Unless the context otherwise requires:
(a) Capitalized terms used in this Declaration but not
defined in the preamble above have the respective
meanings assigned to them in this Section 1.1;
(b) a term defined anywhere in this Declaration has the
same meaning throughout;
(c) all references to "the Declaration" or "this
Declaration" are to this Declaration of Trust as
modified, supplemented or amended from time
to time;
(d) all references in this Declaration to Articles and
Sections are to Articles and Sections of this
Declaration unless otherwise specified; and
(e) a reference to the singular includes the plural and
vice versa.
<PAGE> 5
"Affiliate" has the same meaning as given to that term in Rule
405 of the Securities Act or any successor rule thereunder.
"Business Day" means any day other than a day on which banking
institutions in New York, New York are authorized or required by law to close.
"Business Trust Act" means Chapter 38 of Title 12 of the
Delaware Code, 12 Del. Code ss.3801 et seq., as it may be amended from time to
time, or any successor legislation.
"Commission" means the Securities and Exchange Commission.
"Common Security" means a security representing a common
undivided beneficial interest in the assets of the Trust with such terms as may
be set out in any amendment to this Declaration.
"Company Indemnified Person" means (a) any Regular Trustee;
(b) any Affiliate of any Regular Trustee; (c) any officers, directors,
shareholders, members, partners, employees, representatives or agents of any
Regular Trustee; or (d) any employee or agent of the Trust or its Affiliates.
"Covered Person" means (a) any officer, director, shareholder,
partner, member, representative, employee or agent of (i) the Trust or (ii) the
Trust's Affiliates and (b) any holder of Securities.
"Debenture Issuer" means Conseco, Inc. in its capacity as the
issuer of the Debentures under the Indenture.
"Debentures" means the series of Debentures to be issued under
the Indenture by the Debenture Issuer and acquired by the Trust.
"Debenture Trustee" means, Fleet National Bank, as trustee
under the Indenture until a successor is appointed thereunder, and thereafter
means such successor trustee.
"Delaware Trustee" has the meaning set forth in Section 3.1.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time or any successor legislation.
"Fiduciary Indemnified Person" has the meaning set forth in
Section 4.3(b).
"Holder" means the person in whose name a certificate
representing a Security is registered.
2
<PAGE> 6
"Indemnified Person" means a Company Indemnified Person or a
Fiduciary Indemnified Person.
"Indenture" means the indenture dated as of November 14, 1996
entered into among Conseco, Inc. and Fleet National Bank, as trustee and any
indenture supplemental thereto pursuant to which the Debentures are to be
issued.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Preferred Security" means a security representing a preferred
undivided beneficial interest in the assets of the Trust with such terms as may
be set out in any amendment to this Declaration.
"Regular Trustee" has the meaning set forth in Section 3.1.
"Securities" means the Common Securities and the Preferred
Securities.
"Securities Act" means the Securities Act of 1933, as amended
from time to time, or any successor legislation.
"Sponsor" means Conseco, Inc. in its capacity as sponsor of
the Trust.
"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as Trustees in accordance with the
provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.
ARTICLE II
ORGANIZATION
SECTION 2.1 Name.
The Trust created by this Declaration is named "Conseco
Financing Trust VII." The Trust's activities may be conducted under the name of
the Trust or any other name deemed advisable by the Regular Trustees.
3
<PAGE> 7
SECTION 2.2 Office.
The address of the principal office of the Trust is c/o
General Counsel, 11825 North Pennsylvania Street, Carmel, Indiana 46032. At
any time, the Regular Trustees may designate another principal office.
SECTION 2.3 Purpose.
The exclusive purposes and functions of the Trust are (a) to
issue and sell the Securities and use the proceeds from such sale to acquire the
Debentures, and (b) except as otherwise limited herein, to engage in only those
other activities necessary, appropriate, convenient or incidental thereto. The
Trust shall not borrow money, issue debt or reinvest proceeds derived from
investments, pledge any of its assets, or otherwise undertake (or permit to be
undertaken) any activity that would cause the Trust not to be classified for
United States federal income tax purposes as a grantor trust.
SECTION 2.4 Authority.
Subject to the limitations provided in this Declaration, the
Regular Trustees shall have exclusive and complete authority to carry out the
purposes of the Trust. An action taken by the Regular Trustees in accordance
with their powers shall constitute the act of and serve to bind the Trust. In
dealing with the Regular Trustees acting on behalf of the Trust, no person shall
be required to inquire into the authority of the Regular Trustees to bind the
Trust. Persons dealing with the Trust are entitled to rely conclusively on the
power and authority of the Regular Trustees as set forth in this Declaration.
SECTION 2.5 Title to Property of the Trust.
Legal title to all assets of the Trust shall be vested in the
Trust.
SECTION 2.6 Powers of the Trustee.
The Regular Trustees shall have the exclusive power and
authority to cause the Trust to engage in the following activities:
(a) to issue and sell the Preferred Securities and the Common
Securities in accordance with this Declaration; provided, however, that the
Trust may issue no more than one series of Preferred Securities and no more than
one series of Common Securities, and, provided further, that there shall be no
interests in the Trust other than the Securities and the issuance of the
Securities shall be limited to a one-time, simultaneous issuance of both
Preferred Securities and Common Securities;
(b) in connection with the issue and sale of the Preferred
Securities, at the direction of the Sponsor, to:
(i) execute and file with the Commission a
registration statement on Form S-3 prepared by the Sponsor, including any
amendments thereto in relation to the Preferred Securities;
4
<PAGE> 8
(ii) execute and file any documents prepared by
the Sponsor, or take any acts as determined by the Sponsor to be necessary in
order to qualify or register all or part of the Preferred Securities in any
State in which the Sponsor has determined to qualify or register such Preferred
Securities for sale;
(iii) execute and file an application, prepared by
the Sponsor, to the New York Stock Exchange or any other national stock exchange
or the Nasdaq Stock Market's National Market for listing upon notice of issuance
of any Preferred Securities;
(iv) execute and file with the Commission a
registration statement on Form 8-A, including any amendments thereto, prepared
by the Sponsor relating to the registration of the Preferred Securities under
Section 12(b) of the Exchange Act; and
(v) execute and enter into an underwriting
agreement and pricing agreement providing for the sale of the Preferred
Securities;
(c) to employ or otherwise engage employees and agents (who
may be designated as officers with titles) and managers, contractors, advisors,
and consultants and provide for reasonable compensation for such services;
(d) to incur expenses which are necessary, appropriate,
convenient or incidental to carry out any of the purposes of this Declaration;
and
(e) to execute all documents or instruments, perform all
duties and powers, and do all things for and on behalf of the Trust in all
matters necessary, appropriate, convenient or incidental to the foregoing.
SECTION 2.7 Filing of Certificate of Trust.
On or after the date of execution of this Declaration, the
Trustees shall cause the filing of the Certificate of Trust for the Trust in the
form attached hereto as Exhibit A with the Secretary of State of the State of
Delaware.
SECTION 2.8 Duration of Trust.
The Trust, absent termination pursuant to the provisions of
Section 5.2, shall have existence for fifty-five (55) years from the date
hereof.
SECTION 2.9 Responsibilities of the Sponsor.
In connection with the issuance and sale of the Preferred
Securities, the Sponsor shall have the exclusive right and responsibility to
engage in the following activities:
(a) to prepare for filing by the Trust with the Commission a
registration statement on Form S-3 in relation to the Preferred Securities,
including any amendments thereto;
5
<PAGE> 9
(b) to determine the States in which to take appropriate
action to qualify or register for sale all or part of the Preferred Securities
and to do any and all such acts, other than actions which must be taken by the
Trust, and advise the Trust of actions it must take, and prepare for execution
and filing any documents to be executed and filed by the Trust, as the Sponsor
deems necessary or advisable in order to comply with the applicable laws of any
such States;
(c) to prepare for filing by the Trust an application to the
New York Stock Exchange or any other national stock exchange or the Nasdaq
National Market for listing upon notice of issuance of any Preferred Securities;
(d) to prepare for filing by the Trust with the Commission a
registration statement on Form 8-A relating to the registration of the class of
Preferred Securities under Section 12(b) of the Exchange Act, including any
amendments thereto; and
(e) to negotiate the terms of an underwriting agreement and
pricing agreement providing for the sale of the Preferred Securities.
SECTION 2.10 Declaration Binding on Securities Holders.
Every Person by virtue of having become a Holder of a Security
or any interest therein in accordance with the terms of this Declaration, shall
be deemed to have expressly assented and agreed to the terms of, and shall be
bound by, this Declaration.
ARTICLE III
TRUSTEES
SECTION 3.1 Trustees.
The number of Trustees initially shall be four (4), and
thereafter the number of Trustees shall be such number as shall be fixed from
time to time by a written instrument signed by the Sponsor. The Sponsor is
entitled to appoint or remove without cause any Trustee at any time; provided,
however, that the number of Trustees shall in no event be less than two (2);
provided, further, that one Trustee, in the case of a natural person, shall be a
person who is a resident of the State of Delaware or that, if not a natural
person, is an entity which has its principal place of business in the State of
Delaware and meets any other requirements imposed by applicable law (the
"Delaware Trustee"); provided, further, that there shall be at least one trustee
who is an employee or officer of, or is affiliated with the Sponsor (a "Regular
Trustee").
6
<PAGE> 10
SECTION 3.2 Regular Trustees.
The initial Regular Trustees shall be: Rollin M. Dick
and Stephen C. Hilbert.
(a) Except as expressly set forth in this Declaration, any
power of the Regular Trustees may be exercised by, or with the consent of, any
one such Regular Trustee.
(b) Unless otherwise determined by the Regular Trustees, and
except as otherwise required by the Business Trust Act, any Regular Trustee is
authorized to execute on behalf of the Trust any documents which the Regular
Trustees have the power and authority to cause the Trust to execute pursuant to
Section 2.6 provided, that, the registration statement referred to in Section
2.6(b)(i), including any amendments thereto, shall be signed by at least a
majority of the Regular Trustees; and
(c) a Regular Trustee may, by power of attorney consistent
with applicable law, delegate to any other natural person over the age of 21 his
or her power for the purposes of signing any documents which the Regular
Trustees have power and authority to cause the Trust to execute pursuant to
Section 2.6.
SECTION 3.3 Delaware Trustee.
The initial Delaware Trustee shall be: First Union Trust
Company, National Association.
Notwithstanding any other provision of this Declaration, the
Delaware Trustee shall not be entitled to exercise any of the powers, nor shall
the Delaware Trustee have any of the duties and responsibilities of the Regular
Trustees described in this Declaration. The Delaware Trustee shall be a Trustee
for the sole and limited purpose of fulfilling the requirements of ss. 3807 of
the Business Trust Act. Notwithstanding anything herein to the contrary, the
Delaware Trustee shall not be liable for the acts or omissions to act of the
Trust, of the Sponsor or of the Regular Trustees except such acts as the
Delaware Trustee is expressly obligated or authorized to undertake under this
Declaration or the Business Trust Act and except for the gross negligence or
willful misconduct of the Delaware Trustee.
SECTION 3.4 Property Trustee.
Prior to the issuance of the Preferred Securities and Common
Securities, the Sponsor shall appoint a trustee (the "Property Trustee") meeting
the requirements of an eligible trustee of the Trust Indenture Act of 1939, as
amended, by the execution of an amendment to this Declaration executed by the
Regular Trustees, the Sponsor, the Property Trustee and the Delaware Trustee.
7
<PAGE> 11
SECTION 3.5 Not Responsible for Recitals or Sufficiency of Declaration.
The recitals contained in this Declaration shall be taken as
the statements of the Sponsor, and the Trustees do not assume any responsibility
for their correctness. The Trustees make no representations as to the value or
condition of the property of the Trust or any part thereof. The Trustees make no
representations as to the validity or sufficiency of this Declaration.
ARTICLE IV
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 4.1 Exculpation.
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Trust or any Covered Person for any
loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith on behalf of the Trust and in a
manner such Indemnified Person reasonably believed to be within the scope of the
authority conferred on such Indemnified Person by this Declaration or by law,
except that an Indemnified Person shall be liable for any such loss, damage or
claim incurred by reason of such Indemnified Person's gross negligence or
willful misconduct with respect to such acts or omissions; and
(b) An Indemnified Person shall be fully protected in relying
in good faith upon the records of the Trust and upon such information, opinions,
reports or statements presented to the Trust by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Trust, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets from
which distributions to holders of Securities might properly be paid.
SECTION 4.2 Fiduciary Duty.
(a) To the extent that, at law or in equity, an Indemnified
Person has duties (including fiduciary duties) and liabilities relating thereto
to the Trust or to any other Covered Person, an Indemnified Person acting under
this Declaration shall not be liable to the Trust or to any other Covered Person
for its good faith reliance on the provisions of this Declaration. The
provisions of this Declaration, to the extent that they restrict the duties and
liabilities of an Indemnified Person otherwise existing at law or in equity, are
agreed by the parties hereto to replace such other duties and liabilities of
such Indemnified Person;
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises
between Covered Persons; or
8
<PAGE> 12
(ii) whenever this Declaration or any other
agreement contemplated herein or therein provides that an Indemnified Person
shall act in a manner that is, or provides terms that are, fair and reasonable
to the Trust or any Holder of Securities,
the Indemnified Person shall resolve such conflict of interest, take such action
or provide such terms, considering in each case the relative interest of each
party (including its own interest) to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such interests, any customary
or accepted industry practices, and any applicable generally accepted accounting
practices or principles. In the absence of bad faith by the Indemnified Person,
the resolution, action or term so made, taken or provided by the Indemnified
Person shall not constitute a breach of this Declaration or any other agreement
contemplated herein or of any duty or obligation of the Indemnified Person at
law or in equity or otherwise; and
(c) whenever in this Declaration an Indemnified Person is
permitted or required to make a decision:
(i) in its "discretion" or under a grant of
similar authority, the Indemnified Person shall be entitled to consider such
interests and factors as it desires, including its own interests, and shall have
no duty or obligation to give any consideration to any interest of or factors
affecting the Trust or any other Person; or
(ii) in its "good-faith" or under another express
standard, the Indemnified Person shall act under such express standard and shall
not be subject to any other or different standard imposed by this Declaration or
by applicable law.
SECTION 4.3 Indemnification.
(a) The Sponsor shall indemnify, to the full extent permitted
by law, any Company Indemnified Person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other than
an action by or in the right of the Trust) by reason of the fact that he is or
was a Company Indemnified Person against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with such action, suit or proceeding if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the Trust, and, with respect to any criminal action or proceeding,
had no reasonable cause to believe his conduct was unlawful. The termination of
any action, suit or proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the Company Indemnified Person did not act in good faith and in
a manner which he reasonably believed to be in or not opposed to the best
interests of the Trust, and, with respect to any criminal action or proceeding,
had reasonable cause to believe that his conduct was unlawful.
9
<PAGE> 13
(i) The Sponsor shall indemnify, to the full
extent permitted by law, any Company Indemnified Person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action
or suit by or in the right of the Trust to procure a judgment in its favor by
reason of the fact that he is or was a Company Indemnified Person against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Trust and except that no such indemnification shall be
made in respect of any claim, issue or matter as to which such Company
Indemnified Person shall have been adjudged to be liable to the Trust unless and
only to the extent that the Court of Chancery of Delaware or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which such Court of Chancery or such other court shall deem proper.
(ii) To the extent that a Company Indemnified
Person shall be successful on the merits or otherwise (including dismissal of an
action without prejudice or the settlement of an action without admission of
liability) in defense of any action, suit or proceeding referred to in
paragraphs (i) and (ii) of this Section 4.3(a), or in defense of any claim,
issue or matter therein, he shall be indemnified, to the full extent permitted
by law, against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.
(iii) Any indemnification under paragraphs (i) and
(ii) of this Section 4.3(a) (unless ordered by a court) shall be made by the
Sponsor only as authorized in the specific case upon a determination that
indemnification of the Company Indemnified Person is proper in the circumstances
because he has met the applicable standard of conduct set forth in paragraphs
(i) and (ii). Such determination shall be made (1) by the Regular Trustees by a
majority vote of a quorum consisting of such Regular Trustees who were not
parties to such action, suit or proceeding, (2) if such a quorum is not
obtainable, or, even if obtainable, if a quorum of disinterested Regular
Trustees so directs, by independent legal counsel in a written opinion, or (3)
by the Common Security Holder of the Trust.
(iv) Expenses (including attorneys' fees) incurred
by a Company Indemnified Person in defending a civil, criminal, administrative
or investigative action, suit or proceeding referred to in paragraphs (i) and
(ii) of this Section 4.3(a) shall be paid by the Sponsor in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking by
or on behalf of such Company Indemnified Person to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified by the
Sponsor as authorized in this Section 4.3(a). Notwithstanding the foregoing, no
advance shall be made by the Sponsor if a determination is reasonably and
promptly made (i) by the Regular Trustees by a majority vote of a quorum of
disinterested Regular Trustees, (ii) if such a quorum is not obtainable, or,
even if obtainable, if a quorum of disinterested Regular Trustees so directs, by
independent legal counsel in a written opinion or (iii) the Common Security
Holder of the Trust, that, based upon the facts known to the Regular Trustees,
counsel or the Common Security Holder at the time such determination is made,
such Company Indemnified Person acted in bad faith or in a manner that such
person did not believe to be in or not opposed to the best interests of the
Trust, or, with respect to any
10
<PAGE> 14
criminal proceeding, that such Company Indemnified Person believed or had
reasonable cause to believe his conduct was unlawful. In no event shall any
advance be made in instances where the Regular Trustees, independent legal
counsel or Common Security Holder reasonably determine that such person
deliberately breached his duty to the Trust or its Common or Preferred Security
Holders.
(v) The indemnification and advancement of expenses
provided by, or granted pursuant to, the other paragraphs of this Section 4.3(a)
shall not be deemed exclusive of any other rights to which those seeking
indemnification and advancement of expenses may be entitled under any agreement,
vote of stockholders or disinterested directors of the Sponsor or Preferred
Security Holders of the Trust or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office. All
rights to indemnification under this Section 4.3(a) shall be deemed to be
provided by a contract between the Sponsor and each Company Indemnified Person
who serves in such capacity at any time while this Section 4.3(a) is in effect.
Any repeal or modification of this Section 4.3(a) shall not affect any rights or
obligations then existing.
(vi) The Sponsor or the Trust may purchase and
maintain insurance on behalf of any person who is or was a Company Indemnified
Person against any liability asserted against him and incurred by him in any
such capacity, or arising out of his status as such, whether or not the Sponsor
would have the power to indemnify him against such liability under the
provisions of this Section 4.3 (a)
(vii) For purposes of this Section 4.3(a),
references to "the Trust" shall include, in addition to the resulting or
surviving entity, any constituent entity (including any constituent of a
constituent) absorbed in a consolidation or merger, so that any person who is or
was a director, trustee, officer or employee of such constituent entity, or is
or was serving at the request of such constituent entity as a director, trustee,
officer, employee or agent of another entity, shall stand in the same position
under the provisions of this Section 4.3(a) with respect to the resulting or
surviving entity as he would have with respect to such constituent entity if its
separate existence had continued.
(viii) The indemnification and advancement of
expenses provided by, or granted pursuant to, this Section 4.3(a) shall, unless
otherwise provided when authorized or ratified, continue as to a person who has
ceased to be a Company Indemnified Person and shall inure to the benefit of the
heirs, executors and administrators of such a person.
(b) The Sponsor agrees to indemnify the (i) the Delaware
Trustee, (ii) any Affiliate of the Delaware Trustee, and (iii) any officers,
directors, shareholders, members, partners, employees, representatives,
nominees, custodians or agents of the Delaware Trustee (each of the Persons in
(i) through (iii) being referred to as a "Fiduciary Indemnified Person") for,
and to hold each Fiduciary Indemnified Person harmless against, any loss,
liability or expense incurred without gross negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of the
trust or trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against, or
investigating, any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder. The obligation to
indemnify as set forth in this Section 4.3(b) shall survive the termination of
this Declaration.
11
<PAGE> 15
SECTION 4.4 Outside Businesses.
Any Covered Person, the Sponsor and the Delaware Trustee may
engage in or possess an interest in other business ventures of any nature or
description, independently or with others, similar or dissimilar to the business
of the Trust, and the Trust and the Holders of Securities shall have no rights
by virtue of this Declaration in and to such independent ventures or the income
or profits derived therefrom and the pursuit of any such venture, even if
competitive with the business of the Trust, shall not be deemed wrongful or
improper. No Covered Person, the Sponsor or the Delaware Trustee shall be
obligated to present any particular investment or other opportunity to the Trust
even if such opportunity is of a character that, if presented to the Trust,
could be taken by the Trust, and any Covered Person, the Sponsor and the
Delaware Trustee shall have the right to take for its own account (individually
or as a partner or fiduciary) or to recommend to others any such particular
investment or other opportunity. Any Covered Person and the Delaware Trustee may
engage or be interested in any financial or other transaction with the Sponsor
or any Affiliate of the Sponsor, or may act as depositary for, trustee or agent
for or may act on any committee or body of holders of, securities or other
obligations of the Sponsor or its Affiliates.
ARTICLE V
AMENDMENTS, TERMINATION, MISCELLANEOUS
SECTION 5.1 Amendments.
At any time before the issue of any Securities, this
Declaration may be amended by, and only by, a written instrument executed by all
of the Regular Trustees and the Sponsor; provided, however, if the amendment
effects the rights, powers, duties, obligation or immunities of the Delaware
Trustee, the amendment shall also be approved by the Delaware Trustee.
SECTION 5.2 Termination of Trust.
(a) The Trust shall terminate and be of no further force
or effect:
(i) upon the bankruptcy of the Sponsor;
(ii) upon the filing of a certificate of
dissolution or its equivalent with respect to the Sponsor or the revocation of
the Sponsor's charter or of the Trust's certificate of trust;
(iii) upon the entry of a decree of judicial
dissolution of the Sponsor, or the Trust; and
(iv) before the issue of any Securities, with the
consent of all of the Regular Trustees and the Sponsor; and
12
<PAGE> 16
(b) as soon as is practicable after the occurrence of an event
referred to in Section 5.2(a), the Trustees shall file a certificate of
cancellation with the Secretary of State of the State of Delaware.
SECTION 5.3 Governing Law.
This Declaration and the rights of the parties hereunder shall
be governed by and interpreted in accordance with the laws of the State of
Delaware and all rights and remedies shall be governed by such laws without
regard to principles of conflict of laws.
SECTION 5.4 Headings.
Headings contained in this Declaration are inserted for
convenience of reference only and do not affect the interpretation of this
Declaration or any provision hereof.
SECTION 5.5 Successors and Assigns.
Whenever in this Declaration any of the parties hereto is
named or referred to, the successors and assigns of such party shall be deemed
to be included, and all covenants and agreements in this Declaration by the
Sponsor and the Trustees shall bind and inure to the benefit of their respective
successors and assigns, whether so expressed.
SECTION 5.6 Partial Enforceability.
If any provision of this Declaration, or the application of
such provision to any Person or circumstance, shall be held invalid, the
remainder of this Declaration, or the application of such provision to persons
or circumstances other than those to which it is held invalid, shall not be
affected thereby.
SECTION 5.7 Counterparts.
This Declaration may contain more than one counterpart of the
signature page and this Declaration may be executed by the affixing of the
signature of each of the Trustees to one of such counterpart signature pages.
All of such counterpart signature pages shall be read as though one, and they
shall have the same force and effect as though all of the signers had signed a
single signature page.
13
<PAGE> 17
IN WITNESS WHEREOF, the undersigned have caused these presents
to be executed as of the day and year first above written.
CONSECO, INC., as sponsor and
Debenture Issuer
By: /s/ ROLLIN M. DICK
-----------------------------------
Name: Rollin M. Dick
Title: Executive Vice President
FIRST UNION TRUST COMPANY,
NATIONAL ASSOCIATION, as
Delaware Trustee
By: /s/ EDWARD L. TRUITT, JR.
---------------------------------
Name: Edward L. Truitt, Jr.
Title: Assistant Vice President
/s/ ROLLIN M. DICK
----------------------------------------
Rollin M. Dick, as Regular Trustee
/s/ STEPHEN C. HILBERT
----------------------------------------
Stephen C. Hilbert, as Regular Trustee
14
<PAGE> 1
EXHIBIT 5.1
May 23, 1997
Board of Directors
Conseco, Inc.
11825 North Pennsylvania Street
Carmel, IN 46032
RE: Registration of $1,500,000,000 in Securities of Conseco, Inc.
Ladies and Gentlemen:
I am Senior Vice President, Legal of Conseco Services, LLC. At your
request, I have examined or caused to be examined the Registration Statement on
Form S-3 (the "Registration Statement") of Conseco, Inc. (the "Corporation")
with respect to unsecured senior debt securities (the "Senior Debt Securities"),
unsecured subordinated debt securities (the "Subordinated Debt Securities")
shares of serial preferred stock, without par value (the "Preferred Stock"),
shares of common stock, without par value (the "Common Stock") and warrants to
purchase Senior Debt Securities, Subordinated Debt Securities, Preferred Stock
or Common Stock or any combination thereof, as shall be designated by the
Company at the time of the offering (the "Warrants") in amounts, at prices and
on terms to be determined at the time of the offering. The Registration
Statement also relates to the guarantee by the Corporation of preferred
securities of Conseco Financing Trust IV, Conseco Financing Trust V, Conseco
Financing Trust VI and Conseco Financing Trust VII, pursuant to guarantee
agreements to be entered into by the Corporation (the "Preferred Securities
Guarantee Agreements"). The Senior Debt Securities will be issued under a
Senior Indenture (the "Senior Indenture") between the Corporation and LTCB Trust
Company as Trustee in the form incorporated as an exhibit to the Registration
Statement. The Subordinated Debt Securities will be issued under a
Subordinated Indenture (the "Subordinated Indenture") between the Corporation
and Fleet National Bank as Trustee in the form incorporated as an exhibit to the
Registration Statement.
In rendering this opinion, I, or attorneys under my supervision
(together referred to herein as "we"), have examined and relied upon a copy of
the Registration Statement. We have also examined originals, or copies of
originals certified to our satisfaction, of such agreements, documents,
certificates and statements of government officials and other instruments, and
have examined such questions of law and have satisfied ourselves as to such
matters of fact, as have considered relevant and necessary as a basis for this
opinion. We have assumed the authenticity of all documents submitted to us as
originals, the genuineness of all signatures, the legal capacity of all natural
persons and the conformity with the original documents of any copies thereof
submitted to us for examination.
Based on the foregoing, and subject to the qualifications and
limitations hereinafter set forth, I am of the opinion that:
1. When (i) the Registration Statement, as finally amended (including any
necessary post-effective amendments), shall have become effective under the
Securities Act of 1933, as amended (the "Securities Act") and the Senior
Indenture, including any necessary supplemental indenture, filed as an exhibit
to the Registration Statement shall have been duly executed and delivered by
the Corporation and the Trustee thereunder and qualified
<PAGE> 2
under the Trust Indenture Act of 1939, as amended; (ii) a prospectus
supplement with respect to such series of Senior Debt Securities shall
have been filed with the Commission in compliance with the Securities
Act and the rules and regulations thereunder; (iii) a Board Resolution
or Officers' Certificate within the meaning of the Senior Indenture
shall have been duly issued, or supplemental indenture entered into, in
accordance with the Senior Indenture detailing the establishment of such
series of Senior Debt Securities; and (iv) such series of Senior Debt
Securities shall have been duly executed and authenticated and shall
have been duly delivered to the purchasers thereof against payment of
the agreed consideration therefor, each series of Senior Debt Securities
will be legally issued and binding obligations of the Corporation
(except as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or other similar laws
affecting the enforcement of creditors' rights generally and by the
effect of general principles of equity, regardless of whether considered
in a proceeding in equity or at law).
2. When (i) the Registration Statement, as finally amended (including any
necessary post-effective amendments), shall have become effective under
the Securities Act and the Subordinated Indenture, including any
necessary supplemental indenture, filed as an exhibit to the
Registration Statement shall have been duly executed and delivered by
the Corporation and the Trustee thereunder and qualified under the Trust
Indenture Act of 1939, as amended; (ii) a prospectus supplement with
respect to such series of Subordinated Debt Securities shall have been
filed with the Commission in compliance with the Securities Act and the
rules and regulations thereunder; (iii) a Board Resolution or Officers'
Certificate within the meaning of the Subordinated Indenture shall have
been duly issued, or supplemental indenture entered into, in accordance
with the Subordinated Indenture detailing the establishment of such
series of Subordinated Debt Securities; and (iv) such series of
Subordinated Debt Securities shall have been duly executed and
authenticated and shall have been duly delivered to the purchasers
thereof against payment of the agreed consideration therefor, each
series of Subordinated Debt Securities will be legally issued and
binding obligations of the Corporation (except as may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer or other similar laws affecting the enforcement of
creditors' rights generally and by the effect of general principles of
equity, regardless of whether considered in a proceeding in equity or at
law).
3. When the Common Stock has been duly issued and the consideration
therefor has been received by the Corporation, the Common Stock will be
legally issued, fully paid and nonassessable.
4. When (i) the Board of Directors of the Corporation has duly adopted
resolutions specifying the terms and conditions of the applicable series
of Preferred Stock; (ii) the Corporation has filed with the Indiana
Secretary of State articles of amendment with respect to such series of
Preferred Stock; and (iii) such series of Preferred Stock has been duly
issued and the consideration therefor has been received by the
Corporation, each series of Preferred Stock will be legally issued,
fully paid and nonassessable.
5. When (i) the Warrant Agreement relating to the Warrants (the "Warrant
Agreement") has been duly executed and delivered; (ii) the terms of the
Warrants and of their issuance and sale have been duly established in
conformity with the Warrant Agreement relating to such Warrants so as
not to violate any applicable law or result in a default under or breach
of any agreement or instrument binding upon the Corporation and so as to
comply with any requirement or restriction imposed by any court or
governmental or regulatory body having jurisdiction over the
Corporation; and (iii) the Warrants have been duly executed and
countersigned in
<PAGE> 3
accordance with the Warrant Agreement relating to such Warrants, and
issued and sold in the form and manner contemplated in the
Registration Statement and any prospectus supplement relating thereto,
such Warrants will be legally issued and binding obligations of the
Corporation (except as may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer or other
similar laws affecting the enforcement of creditors' rights generally
and by the effect of general principles of equity, regardless of whether
considered in a proceeding in equity or at law).
6. When the Preferred Securities Guarantee has been duly executed and
delivered by the Corporation and the preferred guarantee trustee,
the Preferred Securities Guarantee will constitute the legal and
binding obligation of the Corporation (except as may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer or other similar laws affecting the enforcement of
creditors' rights generally and by the effect of general principles of
equity, regardless of whether considered in a proceeding in equity or at
law).
I do not find it necessary for the purposes of this opinion to cover,
and accordingly I express no opinion as to, the application of the securities
or blue sky laws of the various states to the sale of the securities to be
registered pursuant to the Registration Statement. Without limiting the
generality of the foregoing, I express no opinion in connection with the
matters contemplated by the Registration Statement, and no opinion may be
implied or inferred, except as expressly set forth herein.
This opinion is limited to the laws of the State of Indiana and of the
United States of America to the extent applicable.
I hereby consent to the inclusion of this opinion as Exhibit 5.1 to the
Registration Statement and to all references to me in the Registration
Statement or the Prospectus included therein.
Very truly yours,
/s/ Karl W. Kindig
Karl W. Kindig
Senior Vice President, Legal
KWK/mhg
<PAGE> 1
<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> 2
<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>
<PAGE> 1
EXHIBIT 23.2
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
May 21, 1997
