UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of
the Securities Exchange Act of 1934
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Date of Report (Date of earliest event reported): August 24, 1998
CONSECO, INC.
(Exact name of registrant as specified in its charter)
Indiana 1-9250 35-1468632
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(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
organization)
11825 North Pennsylvania Street
Carmel, Indiana 46032
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(Address of principal executive offices) (Zip Code)
(317) 817-6100
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name or former address,
if changed since last report.)
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ITEM 5. OTHER EVENTS.
On August 24, 1998, Conseco, Inc. ("Conseco") completed the public
offering of 20 million of the 8.70% Trust Originated Preferred Securities SM
("TOPrS SM") of Conseco Financing Trust V, a subsidiary trust of Conseco, at $25
per security. Each TOPrS security will pay cumulative cash distributions at the
annual rate of 8.70 percent of the stated $25 liquidation amount per security,
payable quarterly commencing September 30, 1998. The TOPrS are fully and
unconditionally guaranteed by Conseco. Proceeds from the offering of
approximately $483 million (after underwriting and other associated costs) will
be used to repay indebtedness.
SM - "Trust Originated Preferred Securities" and "TOPrs" are service marks
of Merrill Lynch & Co., Inc.
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ITEM 7(c). EXHIBITS.
1.1 Underwriting Agreement for 20,000,000 Preferred Securities of Conseco
Financing Trust V, dated August 19, 1998.
4.25.1 Fourth Supplemental Indenture, dated as of August 24, 1998, between
Conseco, Inc. and State Street Bank and Trust Company, as Trustee.
4.25.2 8.70% Subordinated Deferrable Interest Debenture due 2028.
4.25.3 Amended and Restated Declaration of Trust of Conseco Financing Trust
V, dated as of August 24, 1998, among Conseco, Inc., as sponsor, the
Trustees named therein and the holders from time to time of undivided
beneficial interests in the assets of Conseco Financing Trust V.
4.25.4 Global Certificates for Preferred Securities of Conseco Financing
Trust V.
4.25.5 Preferred Securities Guarantee Agreement, dated as of August 24, 1998,
between Conseco, Inc. and State Street Bank and Trust Company.
5.1 Opinion of Richards, Layton & Finger, P.A. (included in Exhibit 5.1).
8.1 Opinion of Locke Reynolds Boyd & Weisell as to certain federal income
taxation matters.
23.1 Consent of Richards, Layton & Finger, P.A. (included in Exhibit 5.1).
23.2 Consent of Locke Reynolds Boyd & Weisell (included in Exhibit 8.1).
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CONSECO, INC.
DATE: August 24, 1998 By: /s/ ROLLIN M. DICK
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Name: Rollin M. Dick
Title: Executive Vice President
and Chief Financial Officer
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EXECUTION COPY
$500,000,000
CONSECO FINANCING TRUST V
(a Delaware Business Trust)
8.70% Preferred Securities
(Liquidation Amount $25 per Security)
Underwriting Agreement
August 19, 1998
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$500,000,000
CONSECO FINANCING TRUST V
(a Delaware Business Trust)
8.70% Trust Originated Preferred Securities
(Liquidation Amount $25 per Preferred Security)
Underwriting Agreement
August 19, 1998
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
A.G. EDWARDS & SONS, INC.
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
SALOMON SMITH BARNEY
as Representatives of the several Underwriters
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Merrill Lynch World Headquarters
World Financial Center
North Tower
New York, New York 10281
Ladies and Gentlemen:
Conseco Financing Trust V (the "Trust"), a statutory business trust
organized under the Business Trust Act (the "Delaware Act") of the State of
Delaware (Chapter 38, Title 12, of the Delaware Code, 12 Del. C. Sections 3801
et seq.) and Conseco, Inc., an Indiana corporation (the "Company" and, together
with the Trust, the "Offerors"), confirm their agreement with the several
underwriters named in Schedule A hereto (collectively, the "Underwriters," which
term shall also include any underwriter substituted as hereinafter provided in
Section 10 hereof) with respect to the issue and sale by the Trust and the
purchase by the Underwriters, acting severally and not jointly, of the
respective number of 8.70% preferred securities (liquidation amount $25 per
preferred security) of the Trust (the "Preferred Securities"), to be issued
pursuant to an Amended and Restated Declaration of Trust, dated as of August 24,
1998 (the "Declaration"), among the Company, as Sponsor, State Street Bank and
Trust Company, as Property Trustee (the "Property Trustee"), First Union Bank of
Delaware, as Delaware Trustee (the "Delaware Trustee"), Stephen C. Hilbert and
Rollin M. Dick, as regular trustees (the "Regular Trustees" and, together with
the Property Trustee and
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the Delaware Trustee, the "Trustees"), and the holders from time to time of
undivided beneficial interests in the assets of the Trust. The Preferred
Securities will be guaranteed by the Company with respect to distributions and
payments upon liquidation, redemption or otherwise (the "Preferred Securities
Guarantee") pursuant to the Preferred Securities Guarantee Agreement (the
"Preferred Securities Guarantee Agreement"), to be dated as of August 24, 1998,
between the Company and State Street Bank and Trust Company as trustee (the
"Guarantee"), and in certain circumstances described in the Prospectus, the
Trust will distribute Subordinated Debentures (as defined herein) to holders of
Preferred Securities. The 20,000,000 Preferred Securities to be purchased by the
Underwriters, together with the related Preferred Securities Guarantee and the
Subordinated Debentures, are collectively referred to herein as the
"Securities." Capitalized terms used herein without definition shall be used as
defined in the Prospectus (defined below).
The Company and the Trust, Conseco Financing Trust VI and Conseco
Financing Trust VII (collectively, the "Conseco Trusts") have filed with the
Securities and Exchange Commission (the "Commission") a registration statement
on Form S-3 (No. 333-56611) and a registration statement on Form S-3 (No.
333-27803) covering the registration of securities of the Company and the
Conseco Trusts, including the Securities, under the Securities Act of 1933, as
amended (the "1933 Act"), including the related preliminary prospectus or
prospectuses, and the offering thereof from time to time in accordance with Rule
415 of the rules and regulations of the Commission under the 1933 Act (the "1933
Act Regulations") and the Company has filed such post-effective amendments
thereto as may be required prior to the execution of this Agreement. Such
registration statements, as amended, have been declared effective by the
Commission. Registration statement no. 333-56611 and registration statement no.
333-27803, as so amended, including the exhibits and schedules thereto, if any,
and the information, if any, deemed to be a part thereof pursuant to Rule
430A(b) of the 1933 Act Regulations (the "Rule 430A Information") or Rule 434(d)
of the 1933 Act Regulations (the "Rule 434 Information"), are referred to herein
as the "Registration Statement" and the "Previous Registration Statement,"
respectively; and the final prospectus and the prospectus supplement relating to
the offering of the Securities, in the form first furnished to the Underwriters
by the Company for use in connection with the offering of the Securities, are
collectively referred to herein as the "Prospectus"; provided, however, that all
references to the "Registration Statement," the "Previous Registration
Statement" and the "Prospectus" shall be deemed to include all documents
incorporated therein by reference pursuant to the Securities Exchange Act of
1934, as amended (the "1934 Act"), prior to the execution of this Agreement;
provided, further, that if the Offerors file a registration statement with the
Commission pursuant to Section 462(b) of the 1933 Act Regulations (the "Rule
462(b) Registration Statement"), then after such filing, all references to the
"Registration Statement" shall be deemed to include the Rule 462(b) Registration
Statement; and provided, further, that if the Offerors elect to rely upon Rule
434 of the 1933 Act Regulations, then all references to "Prospectus" shall be
deemed to include the final or preliminary prospectus and the applicable term
sheet or abbreviated term sheet (the "Term Sheet"), as the case may be, in the
form first furnished to the Underwriters by the Company in reliance upon Rule
434 of the 1933 Act Regulations, and all references in this Agreement to the
date of the Prospectus shall mean the date of the Term Sheet. A "preliminary
prospectus" shall be deemed to refer to any prospectus used before the
applicable registration statement became effective and any prospectus that
omitted, as applicable, the Rule 430A Information, the Rule 434 Information or
other information to be included upon pricing in a form of prospectus filed with
the Commission pursuant to Rule 424(b) of the 1933 Act Regulations, that was
used after such effectiveness and prior to the execution and delivery of the
applicable underwriting agreement. For purposes of this
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Agreement, all references to the Registration Statement, the Previous
Registration Statement, any preliminary prospectus, the Prospectus or any Term
Sheet or any amendment or supplement to any of the foregoing shall be deemed to
include the copy filed with the Commission pursuant to its Electronic Data
Gathering, Analysis and Retrieval system ("EDGAR").
All references in this Agreement to financial statements and schedules
and other information which is "contained," "included" or "stated" in the
Registration Statement, the Previous Registration Statement, any preliminary
prospectus or the Prospectus (or other references of like import) shall be
deemed to mean and include all such financial statements and schedules and other
information which is incorporated by reference in the Registration Statement,
the Previous Registration Statement, any preliminary prospectus or the
Prospectus, as the case may be; and all references in this Agreement to
amendments or supplements to the Registration Statement, the Previous
Registration Statement, any preliminary prospectus or the Prospectus shall be
deemed to mean and include the filing of any document under the 1934 Act which
is incorporated by reference in the Registration Statement, the Previous
Registration Statement, such preliminary prospectus or the Prospectus, as the
case may be.
The Offerors understand that the Underwriters propose to make a public
offering of the Securities as soon as the Underwriters deem advisable after this
Agreement has been executed and delivered and the Declaration, the Indenture (as
defined herein), and the Preferred Securities Guarantee Agreement have been
qualified under the Trust Indenture Act of 1939, as amended (the "1939 Act").
The entire proceeds from the sale of the Preferred Securities will be combined
with the entire proceeds from the sale by the Trust to the Company of its common
securities (the "Common Securities," and together with the Preferred Securities,
the "Trust Securities") and will be used by the Trust to purchase $515,500,000
aggregate principal amount of 8.70% subordinated deferrable interest debentures
(the "Subordinated Debentures") issued by the Company. The Common Securities
will be guaranteed by the Company, to the extent set forth in the Prospectus,
with respect to distributions and payments upon liquidation and redemption (the
"Common Securities Guarantee" and together with the Preferred Securities
Guarantee, the "Guarantees") pursuant to the Common Securities Guarantee
Agreement (the "Common Securities Guarantee Agreement" and, together with the
Preferred Securities Guarantee Agreement, the "Guarantee Agreements"), to be
dated as of August 24, 1998, between the Company and the Guarantee Trustee, as
Trustee. The Preferred Securities and the Common Securities will be issued
pursuant to the Declaration. The Subordinated Debentures will be issued pursuant
to an indenture, dated as of November 14, 1996, between the Company and State
Street Bank and Trust Company, successor to Fleet National Bank, as trustee (the
"Debt Trustee"), as supplemented by the Fourth Supplemental Indenture dated as
of August 24, 1998 (the "Supplemental Indenture," and together with any other
amendments or supplements thereto, the "Indenture"), between the Company and the
Debt Trustee.
SECTION 1. Representations and Warranties.
(a) The Offerors jointly and severally represent and warrant to each
Underwriter as of the date hereof and as of the Closing Date (each such date
being hereinafter referred to as a "Representation Date") that:
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(i) No stop order suspending the effectiveness of the Registration
Statement or the Previous Registration Statement has been issued and no
proceeding for that purpose has been initiated or, to the knowledge and
information of the Offerors, threatened by the Commission.
(ii) The Company and the Conseco Trusts meet, and at the respective
times of the commencement and consummation of the offering of the Securities
will meet, the requirements for the use of Form S-3 under the 1933 Act. Each of
the Registration Statement, the Previous Registration Statement and any Rule
462(b) Registration Statement has become effective under the 1933 Act. At the
respective times the Registration Statement, the Previous Registration
Statement, any Rule 462(b) Registration Statement and any post-effective
amendments thereto became effective and at each Representation Date, the
Registration Statement, the Previous Registration Statement, any Rule 462
Registration Statement and any amendments and supplements thereto complied and
will comply in all material respects with the requirements of the 1933 Act and
the 1933 Act Regulations and the 1939 Act and the rules and regulations of the
Commission under the 1939 Act (the "1939 Act Regulations") and did not and will
not contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading. At the date of the Prospectus and at the Closing Time (as
defined herein), the Prospectus and any amendments and supplements thereto did
not and will not include an untrue statement of a material fact or omit to state
a material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading. If the Offerors
elect to rely upon Rule 434 of the 1933 Act Regulations, the Offerors will
comply with the requirements of Rule 434. Notwithstanding the foregoing, the
representations and warranties in this subsection shall not apply to (A)
statements in or omissions from the Registration Statement, the Previous
Registration Statement or the Prospectus made in reliance upon and in conformity
with information furnished to the Offerors in writing by the Underwriters
expressly for use in the Registration Statement, the Previous Registration
Statement or the Prospectus or (B) the part of the Registration Statement and
the Previous Registration Statement which shall constitute the Statement of
Eligibility (Form T-1) under the 1939 Act.
Each preliminary prospectus and prospectus filed as part of the
Registration Statement or the Previous Registration Statement as originally
filed or as part of any amendment thereto, or filed pursuant to Rule 424 under
the 1933 Act, complied when so filed in all material respects with the 1933 Act
Regulations and, if applicable, each preliminary prospectus and the Prospectus
delivered to the Underwriters for use in connection with the offering of
Securities will, at the time of such delivery, be identical to the
electronically transmitted copies thereof filed with the Commission pursuant to
EDGAR, except to the extent permitted by Regulation S-T.
(iii) The documents incorporated or deemed to be incorporated by
reference in the Registration Statement, the Previous Registration Statement or
the Prospectus, at the time they were or hereafter are filed or last amended, as
the case may be, with the Commission, complied and will comply in all material
respects with the requirements of the 1934 Act, and the rules and regulations of
the Commission thereunder (the "1934 Act Regulations"), and at the time of
filing or as of the time of any subsequent amendment, did not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were or are made, not misleading; and any
additional documents deemed to be incorporated by reference
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in the Registration Statement, the Previous Registration Statement or the
Prospectus will, if and when such documents are filed with the Commission, or
when amended, as appropriate, comply in all material respects with the
requirements of the 1934 Act and the 1934 Act Regulations and will not contain
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not misleading;
provided, however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with information
furnished in writing to the Company by an Underwriter through Merrill Lynch &
Co. ("Merrill Lynch") expressly for use in the Registration Statement, the
Previous Registration Statement or the Prospectus.
(iv) PricewaterhouseCoopers LLP and KPMG Peat Marwick LLP, which
certified the financial statements and supporting schedules of the Company and
Green Tree Financial Corporation ("Green Tree"), respectively, included or
incorporated by reference in the Registration Statement, the Previous
Registration Statement and the Prospectus, each are independent public
accountants as required by the 1933 Act and the 1933 Act Regulations with
respect to the Company and Green Tree, respectively.
(v) The financial statements of the Company and of Green Tree included
or incorporated by reference in the Registration Statement, the Previous
Registration Statement and the Prospectus, together with the related schedules
and notes, present fairly the financial position of the Company and its
consolidated subsidiaries and Green Tree and its consolidated subsidiaries,
respectively, as of the dates indicated and the results of their respective
operations for the periods specified. Except as otherwise stated therein such
financial statements have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis throughout the periods
involved. The supporting schedules, if any, included or incorporated by
reference in the Registration Statement, the Previous Registration Statement and
the Prospectus present fairly the information required to be stated therein. The
ratio of earnings to fixed charges (and the ratio of earnings to fixed charges
and preferred stock dividends) included in the Prospectus have been calculated
in compliance with Item 503(d) of Regulation S-K of the Commission. Any selected
financial information and summary financial data included in the Prospectus
present fairly the information shown therein and have been compiled on a basis
consistent with that of the audited financial statements included in the
Registration Statement, the Previous Registration Statement and the Prospectus.
Any pro forma financial statements and the related notes thereto included in the
Registration Statement, the Previous Registration Statement and the Prospectus
present fairly the information shown therein, have been prepared in accordance
with the Commission's rules and guidelines with respect to pro forma financial
statements and have been properly compiled on the bases described therein, and
the assumptions used in the preparation thereof are reasonable and the
adjustments used therein are appropriate to give effect to the transactions and
circumstances referred to therein.
(vi) The statutory financial statements of each of the Company's
insurance subsidiaries, from which certain ratios and other statistical data
contained in the Registration Statement and the Previous Registration Statement
have been derived, have for each relevant period been prepared in accordance
with accounting practices prescribed or permitted by the National Association of
Insurance Commissioners, and with respect to each insurance subsidiary, the
appropriate Insurance Department of the state of domicile of such insurance
subsidiary, and such accounting practices have been applied on a consistent
basis throughout the periods involved.
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(vii) Since the respective dates as of which information is given in
the Registration Statement, the Previous Registration Statement and the
Prospectus, and except as otherwise stated therein, (A) there has been no
material adverse change and no development which could reasonably be expected to
result in a material adverse change in the condition, financial or otherwise, or
in the earnings, business affairs or business prospects of the Trust or of the
Company and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business (a "Material Adverse Effect"), (B)
there have been no transactions entered into by the Company or any of its
subsidiaries, other than those arising in the ordinary course of business, which
are material with respect to the Company and its subsidiaries, considered as one
enterprise, and (C) except for regular dividends on the Common Stock or
Preferred Stock of the Company in amounts per share that are consistent with
past practice or the applicable charter document or supplement thereto,
respectively, there has been no dividend or distribution of any kind declared,
paid or made by the Company on any class of its capital stock.
(viii) The Company has been incorporated, is validly existing as a
corporation and its status is active under the laws of the State of Indiana,
with corporate power and authority to own, lease and operate its properties and
to conduct its business as presently conducted and as described in the
Prospectus and to enter into and perform its obligations under, or as
contemplated under, this Agreement, the Guarantee Agreements, the Subordinated
Debentures, and the Indenture. The Company is qualified as a foreign corporation
to transact business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure to so qualify or
be in good standing would not have a Material Adverse Effect.
(ix) Each significant subsidiary (as such term is defined in Rule 1-02
of Regulation S-X promulgated under the 1933 Act) (each, a "Significant
Subsidiary") of the Company is set forth on Schedule B hereto and has been
incorporated and is validly existing as a corporation in good standing under the
laws of the jurisdiction of its incorporation, has the corporate power and
authority to own, lease and operate its properties and to conduct its business
as presently conducted and as described in the Prospectus, and is qualified as a
foreign corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except where the
failure to so qualify or be in good standing would not have a Material Adverse
Effect. Except as otherwise stated in the Registration Statement, the Previous
Registration Statement and the Prospectus, all of the issued and outstanding
shares of capital stock of each Significant Subsidiary of the Company have been
authorized and validly issued, are fully paid and non-assessable and all such
shares are owned by the Company, directly or through its subsidiaries, free and
clear of any material security interest, mortgage, pledge, lien, encumbrance,
claim or equity.
(x) The authorized, issued and outstanding capital stock of the Company
is as set forth in the Prospectus; since the date indicated in the Prospectus
there has been no change in the consolidated capitalization of the Company and
its subsidiaries (other than changes in outstanding Common Stock of the Company
resulting from employee or agent benefit plan or dividend reinvestment and stock
purchase plan transactions); and all of the issued and outstanding capital stock
of the Company has been authorized and validly issued, is fully paid and
non-assessable and conforms to the descriptions thereof contained in the
Prospectus.
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(xi) The Trust has been duly created and is validly existing in good
standing as a business trust under the Delaware Act with the power and authority
to own property and to conduct its business as described in the Registration
Statement, the Previous Registration Statement and Prospectus and to enter into
and perform its obligations under this Agreement, the Preferred Securities, the
Common Securities and the Declaration; the Trust is duly qualified to transact
business as a foreign company and is in good standing in each jurisdiction in
which such qualification is necessary, except where the failure to so qualify or
be in good standing would not have a material adverse effect on the Trust; the
Trust is not a party to or otherwise bound by any agreement other than those
described in the Prospectus; the Trust is and will, under current law, be
classified for United States federal income tax purposes as a grantor trust and
not as an association taxable as a corporation.
(xii) The Common Securities have been duly authorized by the
Declaration and, when issued and delivered by the Trust to the Company against
payment therefor as described in the Registration Statement, the Previous
Registration Statement and Prospectus, will be validly issued and will represent
undivided beneficial interests in the assets of the Trust and will conform in
all material respects to the description thereof contained in the Prospectus;
the issuance of the Common Securities is not subject to preemptive or other
similar rights; and at the Closing Time all of the issued and outstanding Common
Securities of the Trust will be directly owned by the Company free and clear of
any security interest, mortgage, pledge, lien, encumbrance, claim or equitable
right.
(xiii) The Declaration has been duly authorized by the Company and, at
the Closing Time, will have been duly executed and delivered by the Company and
the Trustees, and assuming due authorization, execution and delivery of the
Declaration by the Property Trustee and the Delaware Trustee, the Declaration
will, at the Closing Time, be a valid and binding obligation of the Company and
the Regular Trustees, enforceable against the Company and the Regular Trustees
in accordance with its terms, except to the extent that enforcement thereof may
be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally or by general principles of
equity (regardless of whether enforcement is considered in a proceeding at law
or in equity) (the "Bankruptcy Exceptions") and will conform in all material
respects to the description thereof contained in the Prospectus.
(xiv) Each of the Guarantee Agreements has been duly authorized by the
Company and, when validly executed and delivered by the Company, and, in the
case of the Preferred Securities Guarantee Agreement, assuming due
authorization, execution and delivery of the Preferred Securities Guarantee by
the Guarantee Trustee, will constitute a valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms except to
the extent that enforcement thereof may be limited by the Bankruptcy Exceptions,
and each of the Guarantee Agreements will conform in all material respects to
the description thereof contained in the Prospectus.
(xv) The Preferred Securities have been duly authorized for issuance
and sale to the Underwriters and, when issued and delivered against payment
therefor as provided herein, will be validly issued and fully paid and
non-assessable undivided beneficial interests in the assets of the Trust and
will conform in all material respects to the description thereof contained in
the Prospectus; the issuance of the Preferred Securities is not subject to
preemptive or other similar rights.
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(xvi) The Indenture has been authorized by the Company and qualified
under the 1939 Act and, at the Closing Time, has been executed and delivered and
constitutes a legal, valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms except to the extent that
enforcement thereof may be limited by the Bankruptcy Exceptions; the Indenture
conforms in all material respects to the description thereof contained in the
Prospectus.
(xvii) The Subordinated Debentures have been authorized by the Company
and, at the Closing Time, will have been executed by the Company and, when
authenticated in the manner provided for in the Indenture and delivered against
payment therefor as described in the Prospectus, will constitute legal, valid
and binding obligations of the Company, enforceable against the Company in
accordance with their terms except to the extent that enforcement thereof may be
limited by the Bankruptcy Exceptions, and will be in the form contemplated by,
and entitled to the benefits of, the Indenture and will conform in all material
respects to the description thereof contained in the Prospectus.
(xviii) Each of the Regular Trustees of the Trust is an officer of the
Company and has been duly authorized by the Company to execute and deliver the
Declaration.
(xix) Neither the Company nor any of its Significant Subsidiaries is in
violation of its articles of incorporation or by-laws. None of the Company or
any of its Significant Subsidiaries is in default in the performance or
observance of any obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, note, lease, loan or credit agreement or any
other agreement or instrument (the "Agreements and Instruments") to which the
Company or any of its Significant Subsidiaries is a party or by which any of
them may be bound, or to which any of the property or assets of the Company or
any Significant Subsidiary is subject, or in violation of any applicable law,
rule or regulation or any judgment, order or decree of any government,
governmental instrumentality or court, domestic or foreign, having jurisdiction
over the Company or any of its Significant Subsidiaries or any of their
respective properties or assets, which violation or default would, singly or in
the aggregate, have a Material Adverse Effect; the Trust is not in violation of
the Declaration or its certificate of trust filed with the State of Delaware on
May 23, 1997 (the "Certificate of Trust").
(xx) The offer of the Securities as contemplated herein and in the
Prospectus; the execution, delivery and performance of this Agreement, the
Declaration, the Preferred Securities, the Common Securities, the Indenture, the
Subordinated Debentures, the Guarantee Agreements and the Guarantees and the
consummation of the transactions contemplated herein, therein and in the
Registration Statement and the Previous Registration Statement (including the
issuance and sale of the Securities and the use of proceeds from the sale of the
Securities as described in the Prospectus under the caption "Use of Proceeds")
and compliance by the Offerors with their respective obligations hereunder and
thereunder do not and will not, whether with or without the giving of notice or
passage of time or both, conflict with or constitute a breach of any of the
terms or provisions of, or constitute a default or Repayment Event (as defined
below) under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Trust, the Company or any
subsidiary pursuant to, the Agreements and Instruments (except for such
conflicts, breaches or defaults or liens, charges or encumbrances that would not
result in a Material Adverse Effect), nor will such action result in any
violation of any applicable law, statute, rule, regulation, judgment, order,
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writ or decree of any government, government instrumentality or court, domestic
or foreign, having jurisdiction over the Trust, the Company or any of its
Significant Subsidiaries, or any of their assets, properties or operations
(except for such violations that would not result in a Material Adverse Effect),
nor will such action result in any violation of the provisions of the
Certificate of Trust or the charter or by-laws of the Company or any Significant
Subsidiary. As used herein, a "Repayment Event" means any event or condition
which gives the holder of any note, debenture or other evidence of indebtedness
of the Trust, the Company or any Significant Subsidiary (or any person acting on
such holder's behalf) the right to require the repurchase, redemption or
repayment of all or a portion of such indebtedness by the Trust, the Company or
any Significant Subsidiary.
(xxi) There is no action, suit, proceeding, inquiry or investigation
before or by any court or governmental agency or body, domestic or foreign
(including, without limitation, any proceeding to revoke or deny renewal of any
Insurance Licenses (as defined below)), now pending or to the knowledge of the
Company threatened against or affecting the Company or any of its Significant
Subsidiaries which is required to be disclosed in the Registration Statement,
the Previous Registration Statement and the Prospectus (other than as stated
therein), or which might reasonably be expected to result in a Material Adverse
Effect, or which might be reasonably expected to materially and adversely affect
the consummation of this Agreement, the Declaration, the Preferred Securities,
the Common Securities, the Indenture, the Subordinated Debentures, the Guarantee
Agreements or the Guarantees or the consummation of the transactions
contemplated herein, therein or in the Registration Statement or the Previous
Registration Statement. The aggregate of all pending legal or governmental
proceedings to which the Company or any subsidiary thereof is a party or of
which any of their respective properties or operations is the subject which are
not described in the Registration Statement, the Previous Registration Statement
or the Prospectus, including ordinary routine litigation incidental to the
business or the Company or any of its subsidiaries, could not reasonably be
expected to result in a Material Adverse Effect; and there are no contracts or
documents of the Company or any of its subsidiaries which are required to be
filed as exhibits to the Registration Statement or the Previous Registration
Statement, or to be incorporated by reference therein, by the 1933 Act, the 1933
Act Regulations, the 1934 Act of the 1934 Act Regulations, which have not been
so filed or incorporated by reference.
(xxii) The Company and its subsidiaries possess such permits, licenses,
approvals, consents and other authorizations issued by the appropriate federal,
state, local or foreign regulatory agencies or bodies (including, without
limitation, insurance licenses from the insurance departments of the various
states where the subsidiaries write insurance business (the "Insurance
Licences")) that are material to the Company and its subsidiaries taken as a
whole and are necessary to conduct the business now operated by them; the
Company and its subsidiaries are in compliance with the terms and conditions of
all such Insurance Licenses, except where the failure so to comply would not,
singly or in the aggregate, result in a Material Adverse Effect; all of the
Insurance Licenses are valid and in full force and effect, except where the
invalidity of such Insurance Licenses or the failure of such Insurance Licences
to be in full force and effect would not result in a Material Adverse Effect;
and neither the Company nor any of its subsidiaries has received any notice of
proceedings relating to the revocation or modification of any such Insurance
Licenses which, singly or in the aggregate, may reasonably be expected to result
in a Material Adverse Effect.
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(xxiii) No authorization, approval, consent, order, registration or
qualification of or with any court or governmental authority or agency
(including, without limitation, any Insurance regulatory agency or body) is
required in connection with the issuance and sale of the Common Securities or
the offering, issuance and sale of the Preferred Securities, the Subordinated
Debentures or the Guarantees hereunder, or the consummation by the Offerors of
any other transactions contemplated hereby, except such as have been obtained
and made under the federal securities laws or state Insurance laws and such as
may be required under state or foreign securities or Blue Sky laws.
(xxiv) This Agreement has been duly authorized, executed and delivered
by each of the Offerors.
(xxv) The Company is in compliance with, the provisions of that certain
Florida act relating to disclosure of doing business in Cuba, codified as
Section 517.075 of the Florida statutes, and the rules and regulations
thereunder (collectively, the "Cuba Act") or is exempt therefrom.
(xxvi) Neither the Trust, nor the Company nor any of its Significant
Subsidiaries is, and upon the issuance and sale of the Securities as herein
contemplated and the application of the net proceeds therefrom as described in
the Prospectus will be, an "investment company" or an entity "controlled" by an
"investment company" as such terms are defined in the Investment Company Act of
1940, as amended (the "1940 Act").
(xxvii) None of the Trust, the Company, its Significant Subsidiaries or
any of their respective directors, officers or controlling persons, has taken,
directly or indirectly, any action resulting in a violation of Regulation M
under the 1934 Act, or designed to cause or result in, or that has constituted
or that reasonably might be expected to constitute, the stabilization or
manipulation of the price of any security of the Trust or the Company to
facilitate the sale or resale of the Securities or the Common Stock of the
Company, in each case in violation of applicable law.
(xxviii) No "forward looking statement" (as defined in Rule 175 under
the 1933 Act) contained in the Registration Statement, the Previous Registration
Statement, any preliminary prospectus or the Prospectus was made or reaffirmed
without a reasonable basis or was disclosed other than in good faith.
(b) Any certificate signed by any officer of the Company or a Trustee
of the Trust and delivered to the Underwriters or to counsel for the
Underwriters shall be deemed a representation and warranty by the Company or the
Trust, as the case may be, to the Underwriters as to the matters covered
thereby.
SECTION 2. Sale and Delivery to Underwriters; Closing.
(a) On the basis of the representations and warranties herein contained
and subject to the terms and conditions herein set forth, the Trust agrees to
sell to each Underwriter, and each Underwriter severally and not jointly agrees
to purchase from the Trust, at the price per security of $25.00, the number of
Preferred Securities set forth in Schedule A hereto opposite the name of such
Underwriter, plus any additional number
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of Preferred Securities which such Underwriter may become obligated to purchase
pursuant to the provisions of Section 10 hereof. The compensation to be paid by
the Company to the Underwriters in respect of its commitments hereunder shall be
an amount in same day funds of $0.7875 per Preferred Security.
(b) Delivery of certificates for the Preferred Securities against
payment of the purchase price for such Preferred Securities shall be made at the
offices of LeBoeuf, Lamb, Greene & MacRae, L.L.P., 125 West 55th Street, New
York, New York 10019 or at such other place as shall be agreed upon by the
Underwriters and the Offerors, at 9:00 a.m. (New York City time) on the third
business day after the Registration Statement becomes effective (or, if the
Offerors have elected to rely upon Rule 430A, the third full business day after
execution of this Agreement (or, if pricing of the Preferred Securities occurs
after 4:30 p.m., Eastern time, on the fourth full business day thereafter), or
such other time not later than ten business days after such date as shall be
agreed upon by the Underwriters and the Offerors (such time and date of payment
and delivery being referred to herein as the "Closing Time"). Payment for the
Preferred Securities purchased by the Underwriters shall be made to the Trust by
wire transfer of immediately available funds, payable to the order of the Trust,
against delivery to the respective accounts of the Underwriters of the
certificates for the Preferred Securities to be purchased by them. Delivery of,
and payment for, the Preferred Securities shall be made through the facilities
of the Depository Trust Company.
Certificates for the Preferred Securities, if any, shall be in
such denominations and registered in such names as the Underwriters may request
in writing at least two full business days before the Closing Time. Merrill
Lynch, individually and not as representative of the Underwriters, may (but
shall not be obligated to) make payment of the purchase price for the Preferred
Securities, if any, to be purchased by any Underwriter whose funds have not been
received by the Closing Time, but such payment shall not relieve such
Underwriter from its obligations hereunder. The certificates for the Preferred
Securities will be made available for examination by the Underwriters no later
than 10:00 a.m. (New York City time) on the last business day prior to the
Closing Time.
SECTION 3. Covenants of the Offerors. The Offerors agree with the
Underwriters as follows:
(a) Promptly following the execution of this Agreement, the Offerors
will cause the Prospectus to be filed with the Commission pursuant to Rule 424
of the 1933 Act Regulations and the Offerors will promptly advise the
Underwriters when such filing has been made. Prior to the filing, the Offerors
will cooperate with the Underwriters in the preparation of such prospectus
supplement to assure that the Underwriters have no reasonable objection to the
form or content thereof when filed or mailed.
(b) The Offerors, subject to Section 3(c), will comply with the
requirements of Rule 430A of the 1933 Act Regulations and/or Rule 434 of the
1933 Act Regulations if and as applicable, and will notify the Underwriters
immediately (i) of the effectiveness of any post-effective amendment to the
Registration Statement or the Previous Registration Statement or the filing of
any supplement or amendment to the Prospectus, (ii) the receipt of any comments
from the Commission, (iii) of any request by the Commission for any amendment to
the Registration Statement or the Previous Registration Statement or any
amendment or supplement to the Prospectus or for additional information, (iv) of
the issuance by the Commission of any stop order suspending the effectiveness of
the Registration Statement or the Previous Registration Statement
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or the initiation of any proceedings for that purpose and (v) of the issuance by
any state securities commission or other regulatory authority of any order
suspending the qualification or the exemption from qualification of the
Securities under state securities or Blue Sky laws or the initiation or
threatening of any proceeding for such purpose. The Offerors will make all
reasonable efforts to prevent the issuance of any stop order and, if any stop
order is issued, to promptly obtain the lifting thereof.
(c) The Company will give the Underwriters notice of its intention to
file or prepare any amendment to the Registration Statement or the Previous
Registration Statement (including any post-effective amendment and any filing
under Rule 462(b) of the 1933 Act Regulations), any Term Sheet or any amendment,
supplement or revision to either the prospectus included in the Registration
Statement or the Previous Registration Statement at the time it became effective
or to the Prospectus, whether pursuant to the 1933 Act, the 1934 Act or
otherwise; will furnish the Underwriters with copies of any such Rule 462(b)
Registration Statement, Term Sheet, amendment, supplement or revision a
reasonable amount of time prior to such proposed filing or use, as the case may
be; and will not file any such Rule 462(b) Registration Statement, Term Sheet,
amendment, supplement or revision to which the Underwriters or counsel for the
Underwriters shall reasonably object.
(d) The Company will deliver to Merrill Lynch and counsel for the
Underwriters, without charge, conformed copies of the Registration Statement and
the Previous Registration Statement as originally filed and of each amendment
thereto (including exhibits filed therewith or incorporated by reference therein
and documents incorporated or deemed to be incorporated by reference therein)
and conformed copies of all consents and certificates of experts, and will also
deliver to Merrill Lynch, without charge, a conformed copy of the Registration
Statement and the Previous Registration Statement as originally filed and of
each amendment thereto (without exhibits) for each of the Underwriters. If
applicable, the copies of the Registration Statement and the Previous
Registration Statement and each amendment thereto furnished to the Underwriters
will be identical to the electronically transmitted copies thereof filed with
the Commission pursuant to EDGAR, except to the extent permitted by Regulation
S-T.
(e) The Company has delivered to each Underwriter, without charge, as
many copies of any preliminary prospectus as such Underwriter reasonably
requested, and the Company hereby consents to the use of such copies for
purposes permitted by the 1933 Act. The Company will furnish to each
Underwriter, without charge, during the period when the Prospectus is required
to be delivered under the 1933 Act or the 1934 Act, such number of copies of the
Prospectus (as amended or supplemented) as such Underwriter may reasonably
request. If applicable, the Prospectus and any amendments or supplements thereto
furnished to the Underwriter will be identical to the electronically transmitted
copies thereof filed with the Commission pursuant to EDGAR, except to the extent
permitted by Regulation S-T.
(f) The Offerors will comply with the 1933 Act and the 1933 Act
Regulations and the 1934 Act and the 1934 Act Regulations so as to permit the
completion of the distribution of the Preferred Securities as contemplated in
this Agreement and in the Registration Statement, the Previous Registration
Statement and the Prospectus. If at any time when the Prospectus is required by
the 1933 Act or the 1934 Act to be delivered in connection with sales of the
Securities, any event shall occur or condition shall exist as a result of which
it is necessary, in the opinion of counsel for the Underwriters or for the
Offerors, to amend the
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<PAGE>
Registration Statement or the Previous Registration Statement in order that the
Registration Statement or the Previous Registration Statement, as the case may
be, will not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading or to amend or supplement the Prospectus in order that
the Prospectus will not include an untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements therein not
misleading in the light of the circumstances existing at the time it is
delivered to a purchaser, or if it shall be necessary, in the opinion of such
counsel, at any such time to amend the Registration Statement or the Previous
Registration Statement or amend or supplement the Prospectus in order to comply
with the requirements of the 1933 Act or the 1933 Act Regulations, the Company
will promptly prepare and file with the Commission, subject to Section 3(c),
such amendment or supplement as may be necessary to correct such statement or
omission or to make the Registration Statement, the Previous Registration
Statement or the Prospectus comply with such requirements, and the Offerors will
furnish to the Underwriters, without charge, such number of copies of such
amendment or supplement as the Underwriters may reasonably request.
(g) The Offerors will use their best efforts, in cooperation with the
Underwriters, to qualify the Securities for offering and sale under the
applicable securities laws of such states and other jurisdictions (domestic or
foreign) as Merrill Lynch may designate; provided, however, that the Company
shall not be obligated to qualify as a foreign corporation in any jurisdiction
in which it is not so qualified or subject itself to taxation in respect of
doing business in any jurisdiction in which it is not otherwise so subject.
(h) The Company will make generally available to its securityholders as
soon as practicable, but not later than 45 days (or 90 days, in the case of a
period that is also the Company's fiscal year) after the close of the period
covered thereby, an earnings statement of the Company and its subsidiaries (in
form complying with the provisions of Rule 158 of the 1933 Act Regulations)
covering a twelve-month period beginning not later than the first day of the
Company's fiscal quarter next following the "effective date" (as defined in said
Rule 158) of the Registration Statement.
(i) The Company and the Trust will use the net proceeds received by
them from the sale of the Securities in the manner specified in the Prospectus
under "Use of Proceeds."
(j) If, at the time that the Registration Statement or the Previous
Registration Statement became (or in the case of a post-effective amendment
becomes) effective, any information shall have been omitted therefrom in
reliance upon Rule 430A or Rule 434 of the 1933 Act Regulations, then
immediately following the execution of this Agreement, the Company will prepare,
and file or transmit for filing with the Commission in accordance with such Rule
430A or Rule 434 and Rule 424(b) of the 1933 Act Regulations, copies of an
amended Prospectus, or Term Sheet, or, if required by such Rule 430A, a
post-effective amendment to the Registration Statement or the Previous
Registration Statement (including an amended Prospectus), containing all
information so omitted.
(k) If the Offerors elect to rely upon Rule 462(b), the Offerors shall
file a Rule 462(b) Registration Statement with the Commission in compliance with
Rule 462(b) and pay the applicable fees in accordance with Rule 111 of the 1933
Act Regulations by the earlier of (i) 10:00 p.m. New York City time on the date
of this Agreement and (ii) the time confirmations are sent or given, as
specified by Rule 462(b)(2).
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<PAGE>
(l) The Company, during the period when the Prospectus is required to
be delivered under the 1933 Act, will file all documents required to be filed
with the Commission pursuant to Section 13, 14 or 15 of the 1934 Act within the
time periods required by the 1934 Act and the 1934 Act Regulations.
(m) During a period of 30 days from the date hereof, neither the Trust
nor the Company will, without the prior written consent of Merrill Lynch,
directly or indirectly, issue, sell, offer or contract to sell, grant any option
for the sale of, or otherwise transfer or dispose of, any Preferred Securities
or any securities substantially similar to the Preferred Securities, any
security convertible into or exchangeable or exercisable for Preferred
Securities or any securities substantially similar to the Preferred Securities,
or any debt securities of the Company (other than the Securities or commercial
paper in the ordinary course of business).
(n) The Trust and the Company, during a period of one year from the
Closing Time, will make generally available to the Underwriters copies of all
reports and other communications (financial or other) mailed to stockholders,
and deliver to the Underwriters promptly after they are available, copies of any
reports and financial statements furnished to or filed with the Commission or
any national securities exchange on which any class of securities of the Company
is listed (such financial statements to be on a consolidated basis to the extent
the accounts of the Company and its subsidiaries are consolidated in reports
furnished to its stockholders generally or to the Commission).
(o) Neither the Trust, the Company nor its subsidiaries will take,
directly or indirectly, any action resulting in a violation of Regulation M
under the 1934 Act, or designed to cause or result in, or that reasonably might
be expected to constitute, the stabilization or manipulation of the price of any
security of the Trust or the Company to facilitate the sale or resale of the
Securities or the Common Stock of the Company, in each case in violation of
applicable law.
SECTION 4. Payment of Expenses. The Company will pay all expenses
incident to the performance of its obligations under this Agreement including,
without limitation, expenses related to the following, if incurred: (i) the
preparation, delivery, printing and filing of the Registration Statement, the
Previous Registration Statement and Prospectus as originally filed (including
financial statements and exhibits) and of each amendment thereto; (ii) the
preparation, printing and delivery to the Underwriters of this Agreement, any
Agreement Among Underwriters, the Indenture and such other documents as may be
required in connection with the offering, purchase, sale and delivery of the
Securities; (iii) the preparation, issuance and delivery of the certificates for
the Preferred Securities; (iv) the fees and disbursements of the Company's
counsel, accountants and other advisors or agents (including the transfer agents
and registrars), as well as fees and disbursements of the Trustees and any
Depositary, and their respective counsel (except as provided for in the
Prospectus); (v) the qualification of the Securities under securities laws in
accordance with the provisions of Section 3(g), including filing fees and the
reasonable fees and disbursements of counsel for the Underwriters in connection
therewith and in connection with the preparation of any Blue Sky Survey and any
Legal Investment Survey; (vi) the printing and delivery to the Underwriters of
copies of the Registration Statement and the Previous Registration Statement as
originally filed and of each amendment thereto, of each preliminary prospectus,
any Term Sheet and of the Prospectus and any amendments or supplements thereto;
(vii) the printing and delivery to the Underwriters of copies of any Blue Sky
Survey and any Legal Investment Survey; (viii) any fees payable in connection
with the rating of the Preferred Securities by nationally
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recognized statistical rating organizations; (ix) the filing fees incident to,
and the fees and disbursements of counsel to the Underwriters in connection
with, the review, if any, by the National Association of Securities Dealers,
Inc. (the "NASD") of the terms of the sale of the Preferred Securities; (x) any
fees payable in connection with any listing of Securities on any securities
exchange or quotation system; and (xi) any fees payable to the Commission.
If this Agreement is terminated by the Underwriters in
accordance with the provisions of Section 5 or Section 9(a)(i) hereof, the
Company shall reimburse the Underwriters for all of their out-of-pocket
expenses, including the reasonable fees and disbursements of LeBoeuf, Lamb,
Greene & MacRae, L.L.P., counsel for the Underwriters.
SECTION 5. Conditions of Underwriters' Obligations. The obligations of
the Underwriters to purchase and pay for the Securities pursuant to this
Agreement are subject to the accuracy of the representations and warranties of
the Offerors herein contained or in certificates of any officer of the Company
or any subsidiary or the trustees of the Trust delivered pursuant to the
provisions hereof, to the performance by the Offerors of their obligations
hereunder, and to the following further conditions:
(a) The Registration Statement, including any Rule 462(b) Registration
Statement, and the Previous Registration Statement shall have become effective
under the 1933 Act not later than 5:30 p.m., New York City time, on the date
hereof and on the date hereof and at the Closing Time, no stop order suspending
the effectiveness of the Registration Statement or the Previous Registration
Statement or any part thereof shall have been issued under the 1933 Act or
proceedings therefor initiated or threatened by the Commission, and any request
on the part of the Commission for additional information shall have been
complied with to the satisfaction of counsel to the Underwriters. A prospectus
containing information relating to the description of the Securities, the
specific method of distribution and similar matters shall have been filed with
the Commission in accordance with Rule 424(b)(1), (2), (3), (4) or (5), as
applicable (or any required post-effective amendment providing such information
shall have been filed and declared effective in accordance with the requirements
of Rule 430A), or, if the Company has elected to rely upon Rule 434 of the 1933
Act Regulations, a Term Sheet including the Rule 434 Information shall have been
filed with the Commission in accordance with Rule 424(b)(7).
(b) At the Closing Time the Underwriters shall have received:
(1) The favorable opinion, dated as of the Closing Time, of
Mr. John J. Sabl, Executive Vice President, General Counsel and Secretary of the
Company, in form and substance reasonably satisfactory to counsel for the
Underwriters, to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation under the laws of the State of Indiana.
(ii) The Company has corporate power and authority to own,
lease and operate its properties and to conduct its business as
described in the Prospectus;
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(iii) The Company is qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in which
such qualification is required, except where the failure to so qualify
or be in good standing would not result in a Material Adverse Effect.
(iv) The authorized, issued and outstanding capital stock of
the Company is as set forth in the Prospectus (including information
which is incorporated by reference therein) (except for subsequent
issuances, if any, pursuant to incentive compensation plan, employee or
agent benefit plan or dividend reinvestment and stock purchase plan
transactions), and the shares of issued and outstanding capital stock
of the Company have been authorized and validly issued and are fully
paid and non-assessable.
(v) Each Significant Subsidiary of the Company has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, has the
corporate power and authority to own, lease and operate its properties
and to conduct its business as described in the Prospectus, and is duly
qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure to so qualify or be in
good standing would not have a Material Adverse Effect; all of the
issued and outstanding capital stock of each such Significant
Subsidiary of the Company has been authorized and validly issued, is
fully paid and non-assessable and, except as set forth in the
Prospectus, all such shares are owned by the Company, directly or
through its subsidiaries, free and clear of any material security
interest, mortgage, pledge, lien, encumbrance, claim or equity.
(vi) All legally required proceedings in connection with the
authorization and valid issuance of the Securities and the sale of the
Securities in accordance with this Agreement (other than the filing of
post-issuance reports, the non-filing of which would not render the
Securities invalid) have been taken and all legally required orders,
consents or other authorizations or approvals of any other public
boards or bodies (including, without limitation, any insurance
regulatory agency or body) in connection with the authorization and
valid issuance of the Securities and the sale of the Securities in
accordance with this Agreement (other than in connection with or in
compliance with the provisions of the securities or Blue Sky laws of
any jurisdictions, as to which no opinion need be expressed) have been
obtained and are in full force and effect.
(vii) Each of the Registration Statement and the Previous
Registration Statement is effective under the 1933 Act and, to the
knowledge of such counsel, no stop order suspending the effectiveness
of the Registration Statement or the Previous Registration Statement
has been issued under the 1933 Act, and no proceedings therefor have
been initiated or threatened by the Commission.
(viii) Each of the Registration Statement and the Previous
Registration Statement as of its respective effective date and the
Prospectus and each amendment or supplement thereto as of its issue
date (in each case, other than the financial statements and the notes
thereto, the financial schedules, and any other financial data included
or incorporated by reference therein, as to
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which such counsel need express no belief), complied as to form in all
material respects with the requirements of the 1933 Act and the 1933
Act Regulations; and the Declaration, the Indenture and the Preferred
Securities Guarantee Agreement filed with the Commission as part of the
Registration Statement complied as to form in all material respects
with the requirements of the 1939 Act and the 1939 Act Regulations.
(ix) Each of the documents incorporated by reference in the
Registration Statement, the Previous Registration Statement or the
Prospectus at the time they were filed or last amended (other than the
financial statements and the notes thereto, the financial schedules,
and any other financial data included or incorporated by reference
therein and the Statements of Eligibility on Form T-1 filed with the
Commission as part of the Registration Statement or the Previous
Registration Statement, as to which such counsel need express no
belief), complied as to form in all material respects with the
requirements of the 1934 Act and the 1934 Act Regulations, as
applicable.
(x) The Common Securities, the Preferred Securities, the
Subordinated Debentures, each of the Guarantees, the Declaration, the
Indenture and each of the Guarantee Agreements conform in all material
respects to the descriptions thereof contained in the Prospectus.
(xi) The information in the Prospectus under the captions
"Description of the Preferred Securities," "Description of the Trust
Guarantee," "Description of the Subordinated Debentures" and "Effect of
Obligations under the Subordinated Debentures and the Trust Guarantee,"
to the extent that they involve matters of law, summaries of legal
matters, the Company's Charter and By-Laws, the Declaration or legal
proceedings, or legal conclusions, has been reviewed by such counsel
and is correct in all material respects.
(xii) To such counsel's knowledge, all of the issued and
outstanding Common Securities of the Trust are directly owned by the
Company free and clear of any security interest, mortgage, pledge,
lien, encumbrance, claim or equitable right.
(xiii) This Agreement has been duly authorized, executed and
delivered by each of the Trust and the Company.
(xiv) Each of the Guarantee Agreements has been duly
authorized, executed and delivered by the Company; the Preferred
Securities Guarantee Agreement, assuming it is duly authorized,
executed, and delivered by the Guarantee Trustee, constitutes a valid
and legally binding obligation of the Company, enforceable against the
Company in accordance with its terms, except to the extent that
enforcement thereof may be limited by Bankruptcy Exceptions; and the
Preferred Securities Guarantee Agreement has been duly qualified under
the 1939 Act.
(xv) The Indenture has been duly authorized, executed and
delivered by the Company and, assuming authorization, execution, and
delivery thereof by the Debt Trustee, constitutes a valid and legally
binding obligation of the Company, enforceable against the Company
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in accordance with its terms, except to the extent that enforcement
thereof may be limited by the Bankruptcy Exceptions; and the Indenture
has been duly qualified under the 1939 Act.
(xvi) The Subordinated Debentures are in the form contemplated
by the Indenture, have been duly authorized, executed and delivered by
the Company and, when authenticated by the Debt Trustee in the manner
provided for in the Indenture and delivered against payment therefor by
the Company, will constitute valid and legally binding obligations of
the Company, enforceable against the Company in accordance with their
terms, except to the extent that enforcement thereof may be limited by
the Bankruptcy Exceptions.
(xvii) The offer of the Preferred Securities as contemplated
herein and in the Prospectus, the execution, delivery and performance
of this Agreement, the Declaration, the Preferred Securities, the
Common Securities, the Indenture, the Subordinated Debentures, the
Guarantee Agreements and the Guarantees and the consummation of the
transactions contemplated herein, therein and in the Registration
Statement and the Previous Registration Statement (including the
issuance and sale of the Preferred Securities and the use of proceeds
from the sale of the Securities as described in the prospectus under
the caption "Use of Proceeds") and compliance by the Company with its
obligations hereunder and thereunder have been authorized by all
necessary corporate action and do not and will not, whether with or
without the giving of notice or passage of time or both, conflict with
or constitute a breach of any of the terms or provisions of, or
constitute a default or Repayment Event under, or result in the
creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any Significant Subsidiary
pursuant to, the Agreements and Instruments (except for such conflicts,
breaches or defaults or liens, charges or encumbrances that would not
result in a Material Adverse Effect), nor will such action result in
any violation of any applicable law, statute, rule, regulation,
judgment, order, writ or decree of any government, government
instrumentality or court, domestic or foreign, having jurisdiction over
the Company or any Significant Subsidiary or any of their assets,
properties, or operations (except for such violations that would not
result in a Material Adverse Effect), nor will such action result in
any violation of the provisions of the charter or by-laws of the
Company or any Significant Subsidiary.
(xviii) To such counsel's knowledge, there are no statutes
required to be described in or incorporated by reference in the
Registration Statement or the Previous Registration Statement which are
not described or incorporated by reference; and there are no legal or
governmental proceedings pending or, to such counsel's knowledge,
threatened which are required to be disclosed or incorporated by
reference in the Registration Statement or the Previous Registration
Statement other than those disclosed or incorporated by reference
therein.
(xix) To such counsel's knowledge, there are no contracts,
indentures, mortgages, agreements, notes, leases or other instruments
required to be described or referred to or incorporated by reference in
the Registration Statement or the Previous Registration Statement or to
be filed as exhibits thereto other than those described or referred to
or incorporated by reference therein or filed as exhibits thereto; and
the descriptions thereof or references thereto are true and correct in
all material respects.
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<PAGE>
(xx) No authorization, approval, consent, order, registration
or qualification of or with any court or federal or state governmental
authority or agency (including, without limitation, any insurance
regulatory agency or body) is required for the issuance and sale of the
Securities by the Company to the Underwriters or the performance by the
Company of its obligations in this Agreement, the Indenture, the
Subordinated Debentures, the Preferred Securities Guarantee Agreement,
the Preferred Securities Guarantee, the Declaration and the Preferred
Securities except such as has been obtained and made under the federal
securities laws or such as may be required under state or foreign
securities or Blue Sky laws.
(xxi) The Company and its subsidiaries possess such permits,
licenses, approvals, consents and other authorizations issued by the
appropriate federal, state, local or foreign regulatory agencies or
bodies (including, without limitation, the Insurance Licenses) that are
material to the Company and its subsidiaries taken as a whole and are
necessary to conduct the business now operated by them; the Company and
its subsidiaries are in compliance with the terms and conditions of all
such Insurance Licenses, except where the failure so to comply would
not, singly or in the aggregate, result in a Material Adverse Effect;
all of the Insurance Licenses are valid and in full force and effect,
except where the invalidity of such Insurance Licenses or the failure
of such Insurance Licences to be in full force and effect would not
result in a Material Adverse Effect; and neither the Company nor any of
its subsidiaries has received any notice of proceedings relating to the
revocation or modification of any such Insurance Licenses which, singly
or in the aggregate, may reasonably be expected to result in a Material
Adverse Effect.
(xxii) None of the Trust or the Company or any of its
subsidiaries is, and upon the issuance and sale of the Securities as
herein contemplated and the application of the net proceeds therefrom
as described in the Prospectus will be, an "investment company" as such
term is defined in the 1940 Act.
Moreover, such counsel shall confirm that nothing has come to such
counsel's attention that causes such counsel to believe that the
Registration Statement or the Previous Registration Statement including
any information provided pursuant to Rule 430A and related schedules
and Rule 434 (except for financial statements and the notes thereto,
the financial schedules and any other financial data included or
incorporated by reference therein, and the Statements of Eligibility on
Form T-1 filed with the Commission as part of the Registration
Statement or the Previous Registration Statement as to which such
counsel need express no opinion), at the time it became effective or at
the Representation Date, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading or that the
Prospectus (except for financial statements and the notes thereto, the
financial schedules, and any other financial data included or
incorporated by reference therein, as to which such counsel need
express no opinion), at the Representation Date (unless the term
"Prospectus" refers to a prospectus which has been provided to the
Underwriters by the Company for use in connection with the offering of
the Securities which differs from the Prospectus on file at the
Commission at the time the Registration Statement and the Previous
Registration Statement became effective, in which case at the time it
is first provided to the Underwriters for such use) or at the Closing
Time, included (or
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includes) an untrue statement of a material fact or omitted or omits to
state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading.
(2) The favorable opinion, dated as of the Closing Time, of
Locke Reynolds Boyd & Weisell, special counsel to the Company, in form and
substance reasonably satisfactory to counsel for the Underwriters, to the effect
that the statements in the Prospectus under the caption "United States Federal
Income Taxation" have been reviewed by such counsel and, insofar as they
constitute legal conclusions or matters of law, fairly summarize the matters
referred to therein. Moreover, such counsel shall confirm that nothing has come
to such counsel's attention that causes such counsel to believe that the
Registration Statement or the Previous Registration Statement, including any
information provided pursuant to Rule 434 (except for financial statements and
the notes thereto, the financial schedules and any other financial data included
or incorporated by reference therein, and the Statements of Eligibility on Form
T-1 filed with the Commission as part of the Registration Statement or the
Previous Registration Statement as to which counsel need express no opinion), at
the time it became effective or at the Representation Date, contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading or
that the Prospectus (except for financial statements and the notes thereto, the
financial schedules, and any other financial data included or incorporated by
reference therein, as to which counsel need express no opinion), at the
Representation Date (unless the term "Prospectus" refers to a prospectus which
has been provided to the Underwriters by the Company for use in connection with
the offering of the Securities which differs from the Prospectus on file at the
Commission at the time the Registration Statement and the Previous Registration
Statement became effective, in which case at the time it is first provided to
the Underwriters for such use) or at the Closing Time, included (or includes) an
untrue statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(3) The favorable opinion, dated as of Closing Time, of
Richards, Layton & Finger, P.A., special Delaware counsel to the Offerors, in
form and substance satisfactory to counsel for the Underwriters, to the effect
that:
(i) The Trust has been duly created and is validly
existing in good standing as a business trust under the Delaware Act,
and all filings required under the laws of the State of Delaware with
respect to the creation and valid existence of the Trust as a business
trust have been made.
(ii) Under the Delaware Act and the Declaration, the
Trust has the business trust power and authority to own property and
conduct its business, all as described in the Prospectus.
(iii) The Declaration constitutes a valid and binding
obligation of the Company and the Trustees and is enforceable against
the Company and the Trustees, in accordance with its terms, subject, as
to enforcement, to (i) bankruptcy, insolvency, moratorium,
receivership, reorganization, liquidation, fraudulent conveyance and
other similar laws relating to or affecting the rights and
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remedies of creditors generally, (ii) principles of equity, including
applicable law relating to fiduciary duties (regardless of whether
considered and applied in a proceeding in equity or at law), and (iii)
the effect of applicable public policy on the enforceability of
provisions relating to indemnification or contribution.
(iv) Under the Delaware Act and the Declaration, the
Trust has the business trust power and authority to (i) execute and
deliver, and to perform its obligations under, this Agreement and (ii)
issue, and perform its obligations under, the Trust Securities.
(v) Under the Delaware Act and the Declaration, the
execution and delivery by the Trust of this Agreement, and the
performance by the Trust of its obligations hereunder, have been duly
authorized by all necessary action on the part of the Trust.
(vi) Under the Delaware Act, the certificate attached to
the Declaration as Exhibit A-1 is an appropriate form of certificate to
evidence ownership of the Preferred Securities; the Preferred
Securities have been duly authorized by the Declaration and are duly
and validly issued and, subject to qualifications hereinafter expressed
in this paragraph (vi), fully paid and nonassessable undivided
beneficial interests in the assets of the Trust; the holders of the
Preferred Securities, as beneficial owners of the Trust, will be
entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the
General Corporation Law of the State of Delaware; said counsel may note
that the holders of the Preferred Securities may be obligated to make
payments as set forth in the Declaration.
(vii) The Common Securities have been duly authorized by
the Declaration and are duly and validly issued and represent undivided
beneficial interests in the assets of the Trust.
(viii) Under the Delaware Act and the Declaration, the
issuance of the Trust Securities is not subject to preemptive rights.
(ix) The issuance and sale by the Trust of the Trust
Securities, the purchase by the Trust of the Subordinated Debentures,
the execution, delivery and performance by the Trust of this Agreement,
the consummation by the Trust of the transactions contemplated hereby
and compliance by the Trust with its obligations hereunder and
thereunder will not violate (i) any of the provisions of the
Certificate of Trust or the Declaration or (ii) any applicable Delaware
law or Delaware administrative regulation.
(4) The favorable opinion, dated as of Closing Time, of Reid &
Riege, P.C., counsel to State Street Bank and Trust Company as Debt Trustee
under the Indenture, Property Trustee under the Declaration, and Guarantee
Trustee under the Preferred Securities Guarantee Agreements, in form and
substance satisfactory to counsel for the Underwriters, to the effect that:
(i) State Street Bank and Trust Company is a national
banking association with trust powers, formed and authorized to
transact the business of banking under the laws of the United
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States with all necessary power and authority to execute and deliver,
and to carry out and perform its obligations under the terms of the
Indenture, the Declaration and the Preferred Securities Guarantee
Agreement.
(ii) The execution, delivery and performance by the Debt
Trustee of the Indenture, the Property Trustee of the Declaration and
the execution, delivery and performance by the Guarantee Trustee of the
Preferred Securities Guarantee Agreement have been duly authorized by
all necessary corporate action on the part of the Debt Trustee, the
Property Trustee and the Guarantee Trustee, respectively. The
Indenture, the Declaration and the Preferred Securities Guarantee
Agreement have been duly executed and delivered by the Debt Trustee,
the Property Trustee and the Guarantee Trustee, respectively, and
constitute the legal, valid and binding obligations of the Debt
Trustee, the Property Trustee and the Guarantee Trustee, respectively,
enforceable against the Debt Trustee, the Property Trustee and the
Guarantee Trustee, respectively, in accordance with their terms, except
to the extent the enforcement thereof may be limited by the Bankruptcy
Exceptions.
(iii) The execution, delivery and performance of the
Indenture, the Declaration and the Preferred Securities Guarantee
Agreement by the Debt Trustee, the Property Trustee and the Guarantee
Trustee, respectively, do not conflict with or constitute a breach of
the Articles of Organization or By-laws of the Debt Trustee, the
Property Trustee and the Guarantee Trustee, respectively.
(iv) No consent, approval or authorization of, or
registration with or notice to, any federal banking authority is
required for the execution, delivery or performance by the Debt
Trustee, the Property Trustee and the Guarantee Trustee of the
Indenture, the Declaration and the Preferred Securities Guarantee
Agreement.
(5) The favorable opinion, dated as of the Closing Time, of
LeBoeuf, Lamb, Greene & MacRae, L.L.P., counsel for the Underwriters, in form
and substance satisfactory to the Underwriters, with respect to the issuance and
sale of the Preferred Securities, and other related matters as the Underwriters
may reasonably require, and the Company shall have furnished to such counsel
such documents as they request for the purpose of enabling them to pass upon
such matters. In rendering such opinion LeBoeuf, Lamb, Greene & MacRae, L.L.P.
may rely as to matters governed by the laws of Indiana and Delaware upon the
opinions referred to in Sections 5(b)(1) and 5(b)(3) hereto.
(c) Between the date of this Agreement and prior to the Closing Time,
no material adverse change shall have occurred in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of the
Trust or the Company and its subsidiaries considered as one enterprise, whether
or not in the ordinary course of business.
(d) At the Closing Time, the Underwriters shall have received a
certificate of a Regular Trustee of the Trust and a certificate of the President
or a Vice-President of the Company and of the Chief Financial Officer or Chief
Accounting Officer of the Company, dated as of the Closing Time, to the effect
that (i) there has been no material adverse change in the condition, financial
or otherwise, or in the earnings, business
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affairs or business prospects of the Trust or the Company and its subsidiaries
considered as one enterprise, whether or not in the ordinary course of business,
(ii) the representations and warranties in Section 1 hereof are true and correct
as though expressly made at and as of the Closing Time, (iii) the Trust and the
Company have complied with all agreements and satisfied all conditions on their
part to be performed or satisfied at or prior to the Closing Time, and (iv) no
stop order suspending the effectiveness of the Registration Statement or the
Previous Registration Statement has been issued and no proceedings for that
purpose have been initiated or, to the knowledge of such officers, threatened by
the Commission.
(e) At the time of the execution of this Agreement, the Underwriters
shall have received from PricewaterhouseCoopers LLP a "comfort letter" dated
such date in form and substance satisfactory to the Underwriters and counsel to
the Underwriters.
(f) At the time of the execution of this Agreement, the Underwriters
shall have received from KPMG Peat Marwick LLP a "comfort letter" with respect
to the financial information of Green Tree, dated such date in form and
substance satisfactory to the Underwriters and counsel to the Underwriters.
(g) At the Closing Time, the Underwriters shall have received from each
of PricewaterhouseCoopers LLP, with respect to the Company, and Peat Marwick
LLP, with respect to Green Tree, a letter, dated as of the Closing Time, to the
effect that they reaffirm the statements made in the letters furnished pursuant
to subsection (e) and (f) of this Section, and other customary matters, except
that (i) such statements shall include any financial statements and pro forma
financial information incorporated by reference in the Registration Statement
and the Prospectus or the Previous Registration Statement which are filed
subsequent to the date of this Agreement and prior to the Closing Date. and (ii)
the specified date referred to shall be a date not more than five days prior to
the Closing Time.
(h) At the Closing Time, counsel for the Underwriters shall have been
furnished with such documents and opinions as they may require for the purpose
of enabling them to pass upon the issuance and sale of the Securities as herein
contemplated and related proceedings, or in order to evidence the accuracy of
any of the representations or warranties, or the fulfillment of any of the
conditions herein contained; and all proceedings taken by the Company in
connection with the issuance and sale of the Securities as herein contemplated
shall be satisfactory in form and substance to the Underwriters and counsel for
the Underwriters.
(i) At the Closing Time, (i) the Preferred Securities shall be rated at
least BBB- by Standard & Poor's Ratings Service, and the Trust shall have
delivered to the Underwriters a letter, dated the Closing Time, from each such
rating agency, or other evidence satisfactory to the Underwriters, confirming
that the Securities have such ratings; (ii) there shall not have occurred any
decrease in the rating assigned to the Preferred Securities or any securities of
the Company or of the financial strength or claims paying ability of the Company
by any "nationally recognized statistical rating organization," as defined for
purposes of Rule 436(g)(2) under the 1933 Act Regulations, and (iii) no such
organization shall have publicly announced that it has under surveillance or
review, without indicating an improvement, its rating of the Securities or any
securities of the Company or of the financial strength or claims paying ability
of the Company.
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<PAGE>
If any condition specified in this Section 5 shall not have been fulfilled when
and as required to be fulfilled, this Agreement may be terminated by the
Underwriters by notice to the Company at any time at or prior to the Closing
Time and such termination shall be without liability of any party to any other
party except as provided in Section 4 and except that Sections 1, 6, 7 and 8
shall survive any such termination and remain in full force and effect.
SECTION 6. Indemnification.
(a) The Company agrees to indemnify and hold harmless each Underwriter
and each person, if any, who controls any Underwriter within the meaning of
Section 15 of the 1933 Act or Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, arising out of any untrue
statement or alleged untrue statement of a material fact contained in
the Registration Statement or the Previous Registration Statement (or
any amendment thereto), including the Rule 434 Information deemed to be
part thereof, if applicable, or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary
to make the statements therein not misleading or arising out of any
untrue statement or alleged untrue statement of a material fact
included in any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto), or the omission or alleged omission
therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading;
(ii) against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, to the extent of the aggregate
amount paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened,
or of any claim whatsoever arising out of or based upon any such untrue
statement or omission, or any such alleged untrue statement or
omission, provided, that (subject to Section 6(d) below) any such
settlement is effected with the written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by Merrill
Lynch), reasonably incurred in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim
whatsoever arising out of or based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, to the
extent that any such expense is not paid under (i) or (ii) above;
provided, however, that the foregoing indemnity agreement shall not
apply to any loss, liability, claim, damage or expense to the extent
arising out of or based upon any untrue statement or omission or
alleged untrue statement or omission (A) made in reliance upon and in
conformity with written information furnished to the Company by any
Underwriter through Merrill Lynch expressly for use in the Registration
Statement or the Previous Registration Statement (or any amendment
thereto), including the Rule 434 Information deemed to be a part
thereof, if applicable, or any preliminary prospectus or the Prospectus
(or any amendment or supplement thereto), (B) made in any Statement of
Eligibility on
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Form T-1 filed as an exhibit to the Registration Statement or the
Previous Registration Statement or (C) made in any preliminary
prospectus supplement and corrected in the Prospectus, as supplemented,
where the person asserting any such loss, liability, claim, damage or
expense purchased the Preferred Securities that are the subject
thereof, and it shall have been established (i) that there was not sent
or given, at or prior to the written confirmation of such sale, a copy
of the Prospectus (excluding documents incorporated by reference) in
any case where such delivery is required by the 1933 Act and (ii) the
Company shall have previously furnished copies thereof in sufficient
quantities to such Underwriter.
(b) Each Underwriter severally agrees to indemnify and hold harmless
the Company, its directors, each of its officers who signed the Registration
Statement, and each person, if any, who controls the Company within the meaning
of Section 15 of the 1933 Act or Section 20 of the 1934 Act, and the Trust and
each of the Regular Trustees of the Trust, against any and all loss, liability,
claim, damage and expense described in the indemnity contained in subsection (a)
of this Section, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Registration
Statement or the Previous Registration Statement (or any amendment thereto),
including the Rule 434 Information deemed to be a part thereof, if applicable,
or any preliminary prospectus or the Prospectus (or any amendment or supplement
thereto) in reliance upon and in conformity with written information furnished
to the Company by such Underwriter through Merrill Lynch expressly for use in
the Registration Statement or the Previous Registration Statement (or any
amendment thereto) or such preliminary prospectus or the Prospectus (or any
amendment or supplement thereto).
(c) Each indemnified party shall give notice as promptly as reasonably
practicable to each indemnifying party of any action commenced against it in
respect of which indemnity may be sought hereunder, but failure to so notify an
indemnifying party shall not relieve such indemnifying party from any liability
hereunder to the extent it is not materially prejudiced as a result thereof and
in any event shall not relieve it from any liability which it may have otherwise
than on account of this indemnity agreement. In the case of parties indemnified
pursuant to Section 6(a) above, counsel to the indemnified parties shall be
selected by Merrill Lynch, and, in the case of parties indemnified pursuant to
Section 6(b) above, counsel to the indemnified parties shall be selected by the
Company. An indemnifying party may participate at its own expense in the defense
of any such action; provided, however, that counsel to the indemnifying party
shall not (except with the consent of the indemnified party) also be counsel to
the indemnified party. In no event shall the indemnifying parties be liable for
fees and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances. No
indemnifying party shall, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of any judgment with
respect to any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever in
respect of which indemnification or contribution could be sought under this
Section 6 or Section 7 hereof (whether or not the indemnified parties are actual
or potential parties thereto), unless such settlement, compromise or consent (i)
includes an unconditional release of each indemnified party from all liability
arising out of such litigation investigation, proceeding or claim and (ii) does
not include a statement as to or an admission of fault, culpability or a failure
to act by or on behalf of any indemnified party.
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<PAGE>
(d) If at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel, such indemnifying party agrees that it shall be liable for any
settlement of the nature contemplated by Section 6(a)(ii) effected without its
written consent if (i) such settlement is entered into more than 45 days after
receipt by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall have received notice of the terms of such settlement at
least 30 days prior to such settlement being entered into and (iii) such
indemnifying party shall not have reimbursed such indemnified party in
accordance with such request prior to the date of such settlement.
Notwithstanding the immediately preceding sentence, if at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, an indemnifying party shall
not be liable for any settlement of the nature contemplated by Section 6(a)(ii)
affected without its consent if such indemnifying party (i) reimburses such
indemnified party in accordance with such request to the extent it considers
such request to be reasonable and (ii) provides written notice to the
indemnified party substantiating the unpaid balance as unreasonable, in each
case prior to the date of such settlement.
SECTION 7. Contribution. If the indemnification provided for in Section
6 hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand, and the Underwriters, on the other hand, from the offering of the
Preferred Securities pursuant to this Agreement or (ii) if the allocation
provided by clause (i) is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the Company on the one hand, and the
Underwriters, on the other hand, in connection with the statements or omissions
which resulted in such losses, liabilities, claims, damages or expenses, as well
as any other relevant equitable considerations.
The relative benefits received by Company on the one hand, and the
Underwriters, on the other hand, in connection with the offering of the
Preferred Securities pursuant to this Agreement shall be deemed to be in the
same respective proportions as the total net proceeds from the offering of such
Preferred Securities (before deducting expenses) received by the Company and the
total underwriting discount received by the Underwriters, in each case as set
forth on the cover of the Prospectus, or, if Rule 434 is used, the corresponding
location on the Term Sheet bear to the aggregate initial public offering price
of such Preferred Securities as set forth on such cover.
The relative fault of the Company, on the one hand, and the
Underwriters, on the other hand, shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company or by the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable
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considerations referred to above in this Section 7. The aggregate amount of
losses, liabilities, claims, damages and expenses incurred by an indemnified
party and referred to above in this Section 7 shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no Underwriter shall
be required to contribute any amount in excess of the amount by which the total
price at which the Preferred Securities underwritten by it and distributed to
the public were offered to the public exceeds the amount of any damages which
such Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter, and
each director of the Company, each officer of the Company who signed the
Registration Statement, and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall
have the same rights to contribution as the Company. The Underwriters'
respective obligations to contribute pursuant to this Section 7 are several in
proportion to the number of Preferred Securities set forth opposite their
respective names in Schedule A to this Agreement, and not joint.
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement or contained in certificates of officers of the Company and the Trust
submitted pursuant hereto, shall remain operative and in full force and effect,
regardless of any investigation made by or on behalf of any Underwriter or
controlling person, or by or on behalf of the Company, and shall survive
delivery of and payment for the Preferred Securities to the Underwriters.
SECTION 9. Termination of Agreement.
(a) The Underwriters may terminate this Agreement, by notice to the
Company at any time at or prior to the Closing Time, if (i) there has been,
since the date of this Agreement or since the respective dates as of which
information is given in the Prospectus, any material adverse change or any
development which could reasonably be expected to result in a prospective
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business, or (ii) there has occurred any material adverse
change in the financial markets in the United States or any outbreak of
hostilities or escalation of hostilities or other calamity or crisis, or any
change or development involving a
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prospective change in national or international political, financial or economic
conditions the effect of which is such as to make it, in the judgment of Merrill
Lynch impracticable to market the Securities or to enforce contracts for the
sale of the Securities, or (iii) if trading in the Common Stock or any other
security of the Company has been suspended or limited by the Commission, NASD or
the New York Stock Exchange, or if trading generally on either the American
Stock Exchange, the New York Stock Exchange or in the over-the-counter market
has been suspended or limited, or minimum or maximum prices for trading have
been fixed, or maximum ranges for prices for securities have been required, by
either of said exchanges or by such system or by order of the Commission, NASD
or any other governmental authority, or (iv) if a banking moratorium has been
declared by either Federal, New York or Indiana authorities.
(b) If this Agreement is terminated pursuant to this Section 9, such
termination shall be without liability of any party to any other party except as
provided in Section 4, and provided, further, that Sections 1, 6, 7 and 8 shall
survive such termination and remain in full force and effect.
SECTION 10. Default by One or More of the Underwriters. If one or more
of the Underwriters shall fail at the Closing Time to purchase the Preferred
Securities which it or they are obligated to purchase under this Agreement (the
"Defaulted Securities"), Merrill Lynch shall have the right, within 24 hours
thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase all, but not less than all,
of the Defaulted Securities in such amounts as may be agreed upon and upon the
terms herein set forth; if, however, Merrill Lynch shall not have completed such
arrangements within such 24-hour period, then:
(a) if the number of Defaulted Securities does not exceed 10% of the
total number of Preferred Securities, the non-defaulting Underwriters shall be
obligated, severally and not jointly, to purchase the full number thereof in the
proportions that their respective underwriting obligations hereunder bear to the
underwriting obligations of all non-defaulting Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the total
number of the Defaulted Securities to be purchased on such date, this Agreement
shall terminate without liability on the part of any non-defaulting Underwriter.
No action taken pursuant to this Section 10 shall relieve any
defaulting Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination
of this Agreement, either Merrill Lynch or the Company shall have the right to
postpone the Closing Time for a period not exceeding seven days in order to
effect any required changes in the Registration Statement, the Previous
Registration Statement or the Prospectus or in any other documents or
arrangements. As used herein, the term "Underwriter" includes any person
substituted for an Underwriter under this Section 10.
SECTION 11. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to the Underwriters c/o Merrill Lynch & Co., 5500
Sears Tower,
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Chicago, Illinois 60606, Attention of David C. Sherwood, with a copy to LeBoeuf,
Lamb, Greene & MacRae, L.L.P., Attention of Michael Groll, Esq.; notices to the
Company or the Trust shall be directed to the Company or the Trust at, or in
care of, Conseco, Inc., 11825 N. Pennsylvania Street, Carmel, Indiana 46032,
Attention of John J. Sabl, Esq., Executive Vice President, General Counsel and
Secretary.
SECTION 12. Parties. This Agreement shall inure to the benefit of and
be binding upon the Offerors and the Underwriters and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Underwriters and the Offerors and their respective successors and the
controlling persons and officers and directors referred to in Sections 6 and 7
and their heirs and legal representatives, any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision herein or
therein contained. This Agreement and all conditions and provisions hereof are
intended to be for the sole and exclusive benefit of the parties hereto and
their respective successors and legal representatives, and said controlling
persons and officers and directors and their heirs and legal representatives,
and for the benefit of no other person, firm or corporation. No purchaser of
Securities from any Underwriter shall be deemed to be a successor by reason
merely of such purchase.
SECTION 13. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. SPECIFIED
TIMES OF DAY REFER TO NEW YORK CITY TIME UNLESS OTHERWISE INDICATED.
SECTION 14. Effect of Headings. The Article and Section headings herein
are for convenience only and shall not affect the construction hereof.
SECTION 15. Counterparts. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts hereof shall constitute a single instrument.
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<PAGE>
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to the Trust a counterpart hereof,
whereupon this instrument, along with all counterparts, shall become a binding
agreement among the Offerors and the Underwriters in accordance with its terms.
Very truly yours,
CONSECO, INC.
By: /s/ Rollin M. Dick
----------------------------------
Name: Rollin M. Dick
Title: Executive Vice President
CONSECO FINANCING TRUST V
By: /s/ Rollin M. Dick
----------------------------------
Name: Rollin M. Dick
Title: Trustee
CONFIRMED AND ACCEPTED, as of the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
A.G. EDWARDS & SONS, INC.
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
SALOMON SMITH BARNEY
as Representatives of the several Underwriters
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: /s/ John P. Tullsen, Jr.
------------------------------------------------
Name: John P. Tullsen, Jr.
Title: Vice President
<PAGE>
SCHEDULE A
-----------
Number of Preferred Securities
Underwriters to be Purchased
------------ ------------------------------
Merrill Lynch, Pierce, Fenner & Smith
Incorporated................................ 2,860,000
A.G. Edwards & Sons, Inc................................ 2,860,000
PaineWebber Incorporated................................ 2,860,000
Prudential Securities Incorporated...................... 2,860,000
Smith Barney Inc........................................ 2,860,000
ABN AMRO Incorporated................................... 200,000
BT Alex. Brown Incorporated............................. 200,000
Robert W. Baird & Co. Incorporated...................... 200,000
Bear, Stearns & Co. Inc................................. 200,000
CIBC Oppenheimer Corp................................... 200,000
Dain Rauscher Wessels................................... 200,000
Donaldson, Lufkin & Jenrette Securities Corporation..... 200,000
EVEREN Securities, Inc.................................. 200,000
Legg Mason Wood Walker, Incorporated.................... 200,000
NationsBanc Montgomery Securities LLC................... 200,000
Piper Jaffray Inc....................................... 200,000
Raymond James & Associates, Inc......................... 200,000
Sands Brothers & Co., Ltd............................... 200,000
SG Cowen Securities Corporation......................... 200,000
Tucker Anthony Incorporated............................. 200,000
Wheat First Securities, Inc............................. 200,000
Advest, Inc............................................. 100,000
J.C. Bradford & Co...................................... 100,000
Craigie Incorporated.................................... 100,000
Crowell, Weedon & Co.................................... 100,000
Fahnestock & Co. Inc.................................... 100,000
Fidelity Securities & Investment Co. Inc................ 100,000
First Albany Corporation................................ 100,000
Gruntal & Co., L.L.C.................................... 100,000
Interstate/Johnson Lane Corporation..................... 100,000
Janney Montgomery Scott Inc............................. 100,000
Kirkpatrick, Pettis, Smith, Polian Inc.................. 100,000
McDonald & Company Securities, Inc...................... 100,000
McGinn, Smith & Co., Inc................................ 100,000
Mesirow Financial, Inc.................................. 100,000
Morgan Keegan & Company, Inc............................ 100,000
Fifth Third/The Ohio Company............................ 100,000
Parker/Hunter Incorporated.............................. 100,000
The Robinson-Humphrey Company, LLC...................... 100,000
Roney Capital Markets
A division of First Chicago Capital Markets, Inc... 100,000
Scott & Stringfellow, Inc............................... 100,000
Stephens Inc............................................ 100,000
A-1
<PAGE>
Number of Preferred Securities
Underwriters to be Purchased
----------- ------------------------------
Stifel, Nicolaus & Company, Incorporated......... 100,000
Stone & Youngberg................................ 100,000
Trilon International Inc......................... 100,000
Utendahl Capital Partners, L.P................... 100,000
-------
Total................................... 20,000,000
==========
A-2
<PAGE>
SCHEDULE B
----------
Significant Subsidiaries
------------------------
Jefferson National Life Insurance Company of Texas
CIHC, Incorporated
Bankers Life Insurance Company of Illinois
Bankers Life and Casualty Company
American Life Holdings, Inc.
American Life and Casualty Insurance Company
American Travellers Life Insurance Company
Wabash Life Insurance Company
Pioneer Financial Services, Inc.
Capitol American Financial Corporation
Green Tree Financial Corporation
B-1
FOURTH SUPPLEMENTAL INDENTURE
between
CONSECO, INC.
and
STATE STREET BANK AND TRUST COMPANY, AS TRUSTEE
Dated as of August 24, 1998
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<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
ARTICLE I.........................................................................................................2
DEFINITION........................................................................................................2
SECTION 1.1. Definition of Terms........................................................................2
ARTICLE II........................................................................................................5
GENERAL TERMS AND CONDITIONS OF THE DEBENTURES....................................................................5
SECTION 2.1. Designation and Principal Amount; Purchase Price; Payment of
Principal; Global Securities....................................................................5
SECTION 2.2. Maturity...................................................................................5
SECTION 2.3. Form and Payment...........................................................................6
SECTION 2.4. Global Debenture...........................................................................7
SECTION 2.5. Interest...................................................................................8
SECTION 2.6. Authorized Denominations...................................................................9
SECTION 2.7. Redemption.................................................................................9
SECTION 2.8 Defeasance..................................................................................9
SECTION 2.9 No Sinking Fund.............................................................................9
SECTION 2.10 Depository..................................................................................9
ARTICLE III......................................................................................................10
REDEMPTION OF THE DEBENTURES.....................................................................................10
SECTION 3.1. Special Event Redemption..................................................................10
SECTION 3.2. Optional Redemption.......................................................................10
SECTION 3.3. Partial Redemption........................................................................10
ARTICLE IV.......................................................................................................11
EXTENSION OF INTEREST PAYMENT PERIOD.............................................................................11
SECTION 4.1. Extension of Interest Payment Period......................................................11
SECTION 4.2. Notice of Extension.......................................................................12
SECTION 4.3. Limitation of Transactions................................................................12
ARTICLE V........................................................................................................13
EXPENSE ........................................................................................................13
SECTION 5.1. Payment of Expenses.......................................................................13
SECTION 5.2. Payment Upon Resignation or Removal.......................................................14
ARTICLE VI.......................................................................................................14
COVENANT TO LIST ON EXCHANGE.....................................................................................14
SECTION 6.1. Listing on an Exchange....................................................................14
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ARTICLE VII......................................................................................................14
FORM OF DEBENTURE................................................................................................14
SECTION 7.1. Form of Debenture.........................................................................14
ARTICLE VIII.....................................................................................................23
ORIGINAL ISSUE OF DEBENTURES.....................................................................................23
SECTION 8.1. Original Issue of Debentures..............................................................23
SECTION 8.2. Reports by the Trustee....................................................................23
ARTICLE IX.......................................................................................................24
COVENANTS........................................................................................................24
SECTION 9.1. Covenants as to Trust.....................................................................24
ARTICLE X........................................................................................................24
DEFAULT ........................................................................................................24
SECTION 10.1. Additional Event of Default..............................................................24
SECTION 10.2. Limitations on Waivers and Consents......................................................24
SECTION 10.3. Acknowledgment of Rights.................................................................25
ARTICLE XI.......................................................................................................25
MISCELLANEOUS....................................................................................................25
SECTION 11.1. Ratification of Indenture................................................................25
SECTION 11.2. Trustee Not Responsible for Recitals.....................................................26
SECTION 11.3. Governing Law............................................................................26
SECTION 11.4. Separability.............................................................................26
SECTION 11.5. Counterparts.............................................................................27
SECTION 11.6. Effect of Headings.......................................................................27
</TABLE>
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<PAGE>
FOURTH SUPPLEMENTAL INDENTURE dated as of August 24, 1998 (the "Fourth
Supplemental Indenture") between Conseco, Inc., an Indiana corporation (the
"Issuer"), and State Street Bank and Trust Company, as trustee (the "Trustee")
under the Indenture dated as of November 14, 1996 between the Issuer and State
Street Bank and Trust Company as successor trustee to Fleet National Bank, as
supplemented by a First Supplemental Indenture dated as of November 14, 1996, a
Second Supplemental Indenture dated as of November 22, 1996 and a Third
Supplemental Indenture dated as of March 26, 1997 (the "Base Indenture" and as
supplemented by this Fourth Supplemental Indenture, the "Indenture").
WHEREAS, the Issuer executed and delivered the Indenture to the Trustee
to provide for the future issuance of the Issuer's unsecured subordinated
debentures, notes or other evidence of indebtedness (the "Securities") to be
issued from time to time in one or more series as might be determined by the
Issuer under the Indenture, in an unlimited aggregate principal amount which may
be authenticated and delivered as provided in the Indenture;
WHEREAS, pursuant to the terms of the Indenture, the Issuer desires to
provide for the establishment of a new series of its Securities to be known as
its 8.70% Subordinated Deferrable Interest Debentures due 2028 (the
"Debentures"), the form and substance of such Debentures and the terms,
provisions and conditions thereof to be set forth as provided in the Indenture
and this Fourth Supplemental Indenture;
WHEREAS, Conseco Financing Trust V, a Delaware statutory business trust
(the "Trust"), is offering to the public $500 million aggregate liquidation
amount of its 8.70% Trust Originated Preferred Securities (the "Preferred
Securities"), representing preferred undivided beneficial interests in the
assets of the Trust and proposes to invest the proceeds from such offering,
together with the proceeds of the issuance and sale by the Trust to the Issuer
of $15,500,000 aggregate liquidation amount of its 8.70% Trust Originated Common
Securities (the"Common Securities"), in $515,500,000 aggregate principal amount
of the Debentures;
WHEREAS, the Issuer has requested that the Trustee execute and deliver
this Fourth Supplemental Indenture; and
WHEREAS, all requirements necessary to make this Fourth Supplemental
Indenture a valid instrument in accordance with its terms and to make the
Debentures, when executed by the Issuer and authenticated and delivered by the
Trustee as provided in the Indenture, the valid obligations of the Issuer have
been performed, and the execution and delivery of this Fourth Supplemental
Indenture has been duly authorized in all respects.
NOW, THEREFORE, in consideration of the purchase and acceptance of the
Debentures by the Holders thereof, and for the purpose of setting forth, as
provided in the Indenture, the form and substance of the Debentures and the
terms, provisions and conditions thereof, the Issuer covenants and agrees with
the Trustee as follows:
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<PAGE>
ARTICLE I
DEFINITIONS
SECTION 1.1. Definition of Terms.
Unless the context otherwise requires:
(a) a term defined in the Indenture (including as set forth in the
first paragraph of Section 1.1 of the Indenture) has the same meaning when used
in this Fourth Supplemental Indenture unless otherwise defined herein;
(b) a term defined anywhere in this Fourth Supplemental Indenture has
the same meaning throughout;
(c) the singular includes the plural and vice versa;
(d) a reference to a Section or Article is to a Section or Article of
this Fourth Supplemental Indenture unless otherwise specified herein;
(e) headings are for convenience of reference only and do not affect
interpretation;
(f) the following terms have the meanings given to them in the
Declaration (as defined herein) or in the terms of the Trust Securities (as
defined herein) as established in accordance with the Declaration:
(i) Affiliate;
(ii) Business Day;
(iii) Debenture Issuer;
(iv) Delaware Trustee;
(v) Distribution;
(vi) Investment Company Event;
(vii) Preferred Securities;
(viii) Preferred Security Certificate;
(ix) Pricing Agreement;
(x) Pro Rata;
(xi) Property Trustee;
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<PAGE>
(xii) Regular Trustees;
(xiii) Securities;
(xiv) Securities Guarantees;
(xv) Special Event;
(xvi) Sponsor;
(xvii) Tax Event; and
(xviii) Underwriting Agreement;
(g) The following terms have the meanings given to them in this Section
1.1(g):
"Additional Interest" shall have the meaning set forth in Section
2.5(c).
"Compounded Interest" shall have the meaning set forth in Section 4.1.
"Coupon Rate" shall have the meaning set forth in Section 2.5(a).
"Declaration" means the Amended and Restated Declaration of Trust of
Conseco Financing Trust V, a Delaware statutory business trust, dated as of
August 24, 1998.
"Deferred Interest" shall have the meaning set forth in Section 4.1.
"Dissolution Event" means that as a result of an election by the
Issuer, the Trust is to be dissolved in accordance with the Declaration, and the
Debentures held by the Property Trustee are to be distributed to the holders of
the Trust Securities Pro Rata in accordance with the Declaration.
"Extended Interest Payment Period" shall have the meaning set forth in
Section 4.1.
"Extension Conditions" means the following:
(i) the Issuer is not in bankruptcy or otherwise insolvent;
(ii) the Issuer is not in default on any Debentures issued to
the Trust or to any trustee of the Trust in connection
with the issuance of Trust Securities by the Trust;
(iii) the Issuer has made timely payments on the Debentures
for the immediately preceding six quarters without
deferrals;
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<PAGE>
(iv) the Trust is not in arrears on payments of Distributions
on the Trust Securities;
(v) the Debentures or the Preferred Securities are rated
investment grade by any one of Standard & Poor's
Corporation, Moody's Investors Service, Inc., Fitch
Investor Service, LP, Duff & Phelps Credit Rating Company
or any other nationally recognized statistical rating
organization; and
(vi) the final maturity of such Debentures is no later than
the forty-ninth anniversary of the issuance of the
Preferred Securities.
"Global Debenture" shall have the meaning set forth in Section
2.4(a)(i).
"Interest Deduction Date" shall have the meaning set forth in Section
2.2(b).
"Interest Payment Date" shall have the meaning set forth in Section
2.5(a).
"Maturity Date" shall have the meaning set forth in Section 2.2(a).
"Non Book-Entry Preferred Securities" shall have the meaning set forth
in Section 2.4(a)(ii).
"Optional Redemption Price" shall have the meaning set forth in Section
3.2.
"Preceding Maturity Date" shall have the meaning set forth in Section
2.2(c).
"Redemption Price" shall have the meaning set forth in Section 3.1.
"Scheduled Maturity Date" means September 30, 2028.
"Trust Securities" shall mean the Securities.
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<PAGE>
ARTICLE II
GENERAL TERMS AND CONDITIONS OF THE DEBENTURES
SECTION 2.1. Designation and Principal Amount; Purchase Price; Payment of
Principal; Global Securities.
(a) There is hereby authorized a series of Securities designated the
"8.70% Subordinated Deferrable Interest Debentures due 2028," limited in
aggregate principal amount to $515,500,000 (not including Debentures
authenticated and delivered upon registration of transfer of, or in exchange
for, or in lieu of, other Debentures pursuant to Sections 3.4, 3.5, 3.6, 8.6 or
10.7 of the Indenture), which amount shall be as set forth in a Company Order
for the authentication and delivery of Debentures pursuant to Section 3.3 of the
Indenture.
(b) The Debentures shall be issued for a purchase price equal to 100%
of the principal amount of such Debentures.
(c) The principal of the Debentures shall be due and payable in full on
the Maturity Date.
(d) The Debentures shall initially be issued in fully registered
non-book entry certificated form in the aggregate principal amount of
$515,500,000.
SECTION 2.2. Maturity.
(a) The Maturity Date means the date on which the Debentures mature and
on which the principal shall be due and payable together with all accrued and
unpaid interest thereon (including Compounded Interest, if any), which date
shall be the Scheduled Maturity Date unless the Maturity Date has been changed
pursuant to Section 2.2(c) or (d), in which case the Maturity Date shall be the
Maturity Date most recently established in accordance with Section 2.2(c) or
(d).
(b) The Interest Deduction Date shall mean the date which is six months
earlier than the ending date of the maximum term (beginning on the date of issue
of the Debentures and including any extensions thereof), as determined under any
federal statute applicable by its terms to the Debentures which is enacted at
any time after the issuance of the Debentures, of a debt instrument for which
interest is deductible for federal income tax purposes.
(c) If the Issuer has elected to dissolve the Trust and cause the
Debentures to be distributed to the holders of the Trust Securities in
liquidation of the Trust in accordance with Section 8.1(a)(v) of the
Declaration, then the Issuer may elect to shorten the Maturity Date to a date
not earlier than September 30, 2003, or extend the Maturity Date to a date which
is not later than the earlier of (i) September 30, 2047, or (ii) the Interest
Deduction Date, and such election shall be made, and such change in the Maturity
Date shall be effective, on such date as notice thereof has been given in
accordance with Section 2.2(e) so long as, in the case of an extension of the
Maturity Date, the Issuer meets the Extension Conditions on such date; provided
that (i) any such extension of the Maturity Date shall cease to be in effect
(and the Maturity Date shall be the
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<PAGE>
Maturity Date in effect prior to such extension (the "Preceding Maturity Date"))
unless the Extension Conditions also are met on the Preceding Maturity Date, and
(ii) in no event shall an extended Maturity Date be later than the Interest
Deduction Date even if the Maturity Date has previously been extended to a date
beyond the Interest Deduction Date.
(d) The Issuer may at any time before the date which is 90 days before
the Maturity Date, elect to extend the Maturity Date for one or more periods,
but in no event to a date later than the earlier of (i) September 30, 2047, or
(ii) the Interest Deduction Date, and such election shall be made, and such
extension of the Maturity Date shall be effective, on such date as notice
thereof has been given in accordance with Section 2.2(e) so long as the Issuer
meets the Extension Conditions on such date; provided that (i) any such
extension of the Maturity Date shall cease to be in effect (and the Maturity
Date shall be the Preceding Maturity Date) unless the Extension Conditions also
are met on the Preceding Maturity Date, and (ii) in no event shall an extended
Maturity Date be later than the Interest Deduction Date even if the Maturity
Date has previously been extended to a date beyond the Interest Deduction Date.
(e) If the Issuer desires to change the Maturity Date pursuant to
Section 2.2(c) or (d), the Issuer shall give notice to Holders of the
Debentures, the Property Trustee, the Trust and the Trustee of the new Maturity
Date.
SECTION 2.3. Form and Payment.
Except as provided in Section 2.4, the Debentures shall be issued as
Registered Securities in fully registered certificated form without interest
coupons. The place where principal of and interest (including the Compounded
Interest, if any) on the Debentures will be payable, the Debentures may be
surrendered for registration of transfer or exchange, and where notices and
demands to or upon the Issuer in respect of the Debentures and the Indenture may
be served shall be the Corporate Trust Office of the Trustee, provided, however,
that payment of interest may be made at the option of the Issuer by wire
transfer to an account maintained by a Holder (upon appropriate instructions
from such Holder) or by check mailed to the Holder at such address as shall
appear in the Register. Notwithstanding the foregoing, so long as the Holder of
any Debentures is the Property Trustee, the payment of the principal of and
interest (including Compounded Interest, if any) on such Debentures held by the
Property Trustee will be made by wire transfer of immediately available funds at
such place and to such account as may be designated by the Property Trustee.
Payment of principal of the Debentures will only be made upon surrender of the
Debentures to the Trustee. The Debentures will be denominated in Dollars and
payment of principal and interest on the Debentures shall be made in Dollars.
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SECTION 2.4. Global Debenture.
(a) In connection with a distribution of the Debentures to the holders
of the Trust Securities pursuant to the Declaration: (i) The Debentures in
certificated form to be distributed to the holders of Preferred Securities may
be presented to the Trustee by the Property Trustee in exchange for a global
Debenture in an aggregate principal amount equal to the aggregate principal
amount of all Outstanding Debentures of such series (a "Global Debenture"), to
be registered in the name of the Depository, or its nominee, and delivered by
the Trustee to the Depository for crediting to the accounts of its participants
pursuant to the instructions of the Regular Trustees. The Issuer upon any such
presentation shall execute a Global Debenture in such aggregate principal amount
and deliver the same to the Trustee for authentication and delivery in
accordance with the Indenture and this Fourth Supplemental Indenture. Payments
on the Debentures issued as a Global Debenture will be made to the Depository.
(ii) If any Preferred Securities are held in non book-entry certificated form,
the Debentures in certificated form may be presented to the Trustee by the
Property Trustee and any Preferred Security Certificate which represents
Preferred Securities other than Preferred Securities held by the Depository or
its nominee ("Non Book-Entry Preferred Securities") will be deemed to represent
beneficial interests in Debentures presented to the Trustee by the Property
Trustee having an aggregate principal amount equal to the aggregate liquidation
amount of the Non Book-Entry Preferred Securities until such Preferred Security
Certificates are presented to the Registrar for transfer or reissuance at which
time such Preferred Security Certificates will be canceled and a Debenture,
registered in the name of the holder of the Preferred Security Certificate or
the transferee of the holder of such Preferred Security Certificate, as the case
may be, with an aggregate principal amount equal to the aggregate liquidation
amount of the Preferred Security Certificate canceled, will be executed by the
Issuer and delivered to the Trustee for authentication and delivery in
accordance with the Indenture and this Fourth Supplemental Indenture. On issue
of such Debentures, Debentures with an equivalent aggregate principal amount
that were presented by the Property Trustee to the Trustee will be deemed to
have been canceled.
(b) Unless and until it is exchanged for Debentures in registered
certificated form, a Global Debenture may be transferred, in whole but not in
part, only by the Depository to a nominee of the Depository or by a nominee of
the Depository to the Depository or another nominee of the Depository or by the
Depository or any such nominee to a successor Depository selected or approved by
the Issuer or a nominee of such successor Depository.
(c) If at any time the Depository for the Debentures notifies the
Issuer that it is unwilling or unable to continue as Depository for the
Debentures or if at any time the Depository for the Debentures shall no longer
be registered or in good standing as a clearing agency under the Securities
Exchange Act of 1934, as amended, or other applicable statute or regulation, at
a time at which the Depository is required to be so registered to act as
Depository for the Debentures, and a successor Depository for such series is not
appointed by the Issuer within 90 days after the Issuer receives such notice or
becomes aware of such condition, as the case may be, the Issuer will execute,
and, subject to Article 3 of the Indenture, the Trustee, upon written notice
from the Issuer, will authenticate and deliver the Debentures in definitive
registered form without coupons, in authorized denominations, and in an
aggregate principal amount equal to the principal amount of the Global Debenture
in exchange for such Global Debenture. In addition, the Issuer, in its
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sole discretion, may at any time determine that the Debentures shall no longer
be represented by a Global Debenture. In such event the Issuer will execute, and
subject to Article 3 of the Indenture, the Trustee, upon receipt of an Officers'
Certificate evidencing such determination by the Issuer, will authenticate and
deliver the Debentures in definitive registered form without coupons, in
authorized denominations, and in an aggregate principal amount equal to the
principal amount of the Global Debenture in exchange for such Global Debenture.
Upon the exchange of the Global Debenture for such Debentures in definitive
registered form without coupons, in authorized denominations, the Global
Debenture shall be canceled by the Trustee. Such Debentures in definitive
registered form issued in exchange for the Global Debenture shall be registered
in such names and in such authorized denominations as the Depository, pursuant
to instructions from its direct or indirect participants or otherwise, shall
instruct the Trustee in writing. The Trustee shall deliver such registered
certificated Debentures in definitive form in exchange for the Global Debenture
to the Depository for delivery to the Persons in whose names such Debentures are
so registered.
SECTION 2.5. Interest.
(a) The Debentures will bear interest at the fixed rate of 8.70% per
annum (the "Coupon Rate") from the original date of issuance or from the most
recent Interest Payment Date to which interest has been paid or duly provided
for until the principal thereof becomes due and payable, and on any overdue
principal and (to the extent that payment of such interest is enforceable under
applicable law) on any overdue installment of interest at the Coupon Rate,
compounded quarterly, payable (subject to the provisions of Article IV)
quarterly in arrears on March 31, June 30, September 30 and December 31 of each
year (each, an "Interest Payment Date"), commencing on September 30, 1998.
Interest on the Debentures (except defaulted interest) shall be paid to the
Persons in whose name the Debentures are registered, at the close of business on
the regular Record Date for such interest installment (including Debentures that
are cancelled after the Record Date and before the Interest Payment Date),
which, with respect to any Debentures of which the Property Trustee is the
Holder or with respect to a Global Debenture, shall be the close of business on
the Business Day next preceding that Interest Payment Date. Notwithstanding the
foregoing sentence, if the Preferred Securities are no longer in book-entry only
form or if, pursuant to the Indenture and this Fourth Supplemental Indenture the
Debentures are not represented by a Global Debenture, the Issuer may select a
regular Record Date for such interest installment which shall conform to the
rules of any securities exchange, interdealer quotation system or other
organization on which the Debentures are listed and which shall be at least one
Business Day but less than 60 Business Days before the applicable Interest
Payment Date. Notwithstanding the foregoing, any interest that is payable at
maturity shall be payable to the Person to whom principal payable at maturity
shall be payable.
(b) The amount of interest payable for any period will be computed on
the basis of a 360-day year of twelve 30-day months, and for any period shorter
than a full quarter on the basis of the actual number of days elapsed in such
90-day quarter. In the event that any date on which interest is payable on the
Debentures is not a Business Day, then payment of the interest payable on such
date will be made on the next succeeding day which is a Business Day (and
without any interest or other payment in respect of any such delay), except
that, notwithstanding any provision of the Indenture to the contrary, if such
Business Day is in the next succeeding calendar year, such
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<PAGE>
payment shall be made on the immediately preceding Business Day, in each case
with the same force and effect as if made on such date.
(c) If, at any time while the Property Trustee is the Holder of any
Debentures, the Trust or the Property Trustee is required to pay any taxes,
duties, assessment or governmental charges of whatever nature (other than
withholding taxes) imposed by the United States, or any other taxing authority,
then, in any case, the Company will pay as additional interest ("Additional
Interest") on the Debentures held by the Property Trustee, such additional
amounts as shall be required so that the net amounts received and retained by
the Trust and the Property Trustee after paying such taxes, duties, assessments
or other governmental charges will be equal to the amounts the Trust and the
Property Trustee would have received had no such taxes, duties, assessments or
other government charges been imposed.
SECTION 2.6. Authorized Denominations.
The Debentures shall be issuable in denominations of $25 and integral
multiples of $25 in excess thereof.
SECTION 2.7. Redemption.
The Debentures are not subject to conversion at the option of the
Holder. The Debentures are not subject to redemption at the option of the Holder
and are subject to redemption at the option of the Issuer or otherwise as
provided in Article III hereof.
SECTION 2.8 Defeasance.
The Debentures shall not be subject to the provisions of Article 4 of
the Indenture concerning the satisfaction and discharge of the Issuer's
indebtedness and obligations under the Indenture and the termination of certain
covenants of the Issuer under the Indenture.
SECTION 2.9 No Sinking Fund.
The Debentures shall not be entitled to the benefit of any sinking fund
or analogous provision.
SECTION 2.10 Depository.
The Depository Trust Company (or its nominee) shall act as the initial
Depository for any Global Debenture which may be issued pursuant to this Fourth
Supplemental Indenture.
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ARTICLE III
REDEMPTION OF THE DEBENTURES
SECTION 3.1. Special Event Redemption.
If a Special Event has occurred and is continuing then, notwithstanding
Section 3.2 but subject to the provisions of Article 10 of the Indenture, the
Issuer shall have the right, upon not less than 30 days' nor more than 60 days'
notice to the Holders of the Debentures, to redeem the Debentures, in whole (but
not in part), for cash within 90 days following the occurrence of such Special
Event at a redemption price equal to 100% of the principal amount to be redeemed
plus any accrued and unpaid interest thereon (including Compounded Interest, if
any) to the date of such redemption (the "Redemption Price"). The Redemption
Price shall be paid prior to 12:00 noon, New York time, on the date of such
redemption or at such earlier time as the Issuer determines and specifies in the
notice of redemption, provided the Issuer shall deposit with the Trustee an
amount sufficient to pay the Redemption Price at least one hour prior to the
time such Redemption Price is to be paid.
SECTION 3.2. Optional Redemption.
Subject to the provisions of Section 3.3 and Article 10 of the
Indenture, the Issuer shall have the right to redeem the Debentures, in whole or
in part, at any time or from time to time, on or after September 30, 2003, at a
redemption price equal to 100% of the principal amount to be redeemed plus any
accrued and unpaid interest thereon, (including Compounded Interest, if any), to
the date of such redemption (the "Optional Redemption Price"). Any redemption
pursuant to this paragraph will be made upon not less than 30 days nor more than
60 days notice to the Holder of the Debentures, at the Optional Redemption
Price. The Optional Redemption Price shall be paid prior to 12:00 noon, New York
time, on the date of such redemption or at such earlier time as the Issuer
determines and specifies in the notice of redemption, provided that the Issuer
shall deposit with the Trustee an amount sufficient to pay the Optional
Redemption Price at least one hour prior to the time such Optional Redemption
Price is to be paid.
SECTION 3.3. Partial Redemption.
(a) If a partial redemption of the Debentures would result in the delisting of
the Preferred Securities issued by the Trust from any national securities
exchange, interdealer quotation system or other organization on which the
Preferred Securities are then listed, the Issuer shall not be permitted to
effect such partial redemption and may only redeem the Debentures in whole.
(b) The Issuer may not redeem fewer than all of the Outstanding
Debentures unless all accrued and unpaid interest on the Debentures has been
paid as of the Interest Payment Date next preceding the Redemption Date.
(c) If the Debentures are only partially redeemed pursuant to Section
3.2, the Debentures will be redeemed pro rata or by lot or by any other method
utilized by the Trustee; provided that if at the time of redemption the
Debentures are registered as a Global Debenture, the Depository shall determine,
in accordance with its procedures, the principal amount of such Debentures
credited to each of its participant accounts to be redeemed.
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ARTICLE IV
EXTENSION OF INTEREST PAYMENT PERIOD
SECTION 4.1. Extension of Interest Payment Period.
The Issuer shall have the right, at any time and from time to time
during the term of the Debentures, to defer payments of interest on the
Debentures by extending the interest payment period of the Debentures for a
period not exceeding 20 consecutive quarters (the "Extended Interest Payment
Period"), during which Extended Interest Payment Period no interest shall be due
and payable; provided that no Extended Interest Payment Period may extend beyond
the Maturity Date. To the extent permitted by applicable law, interest, the
payment of which has been deferred because of the extension of the interest
payment period pursuant to this Section 4.1, will bear interest thereon at the
Coupon Rate compounded quarterly for each quarter of the Extended Interest
Payment Period ("Compounded Interest"). At the end of the Extended Interest
Payment Period, the Issuer shall pay all interest accrued and unpaid on the
Debentures, including any Compounded Interest (all such interest the "Deferred
Interest") that shall be payable to the Holders of the Debentures in whose names
the Subordinated Debentures are registered in the Register as of the Record Date
relating to the Interest Payment Date that corresponds to the end of such
Extended Interest Payment Period. Before the termination of any Extended
Interest Payment Period, the Issuer may further extend such period, provided
that such period together with all such previous and further extensions thereof
shall not exceed 20 consecutive quarters or extend beyond the Maturity Date.
Upon the termination of any Extended Interest Payment Period and upon the
payment of all Deferred Interest then due, the Issuer may commence a new
Extended Interest Payment Period, subject to the foregoing requirements. No
interest shall be due and payable during an Extended Interest Payment Period,
except at the end thereof, but the Issuer may prepay at any time all or any
portion of the Deferred Interest accrued during an Extended Interest Payment
Period.
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SECTION 4.2. Notice of Extension.
(a) If the Property Trustee is the only registered Holder of the
Debentures at the time the Issuer selects an Extended Interest Payment Period,
the Issuer shall give written notice to the Trustee, the Regular Trustees and
the Property Trustee of its selection of such Extended Interest Payment Period
one Business Day before the earlier of (i) the next succeeding date on which
Distributions on the Trust Securities are payable, or (ii) the date the Regular
Trustees, on behalf of the Trust, are required to give notice of the record
date, or the date such Distributions are payable, to holders of the Preferred
Securities (or any national securities exchange or self-regulatory organization
on which the Preferred Securities are listed).
(b) If the Property Trustee is not the only Holder of the Debentures at
the time the Issuer selects an Extended Interest Payment Period, the Issuer
shall give the Trustee, the Property Trustee and the Holders of the Debentures
written notice of its selection of such Extended Interest Payment Period 10
Business Days before the earlier of (i) the next succeeding Interest Payment
Date, or (ii) the date the Issuer is required to give notice of the record or
payment date of such interest payment to the New York Stock Exchange or other
applicable self-regulatory organization or to Holders of the Debentures.
(c) The quarter in which any notice is given pursuant to paragraphs (a)
or (b) of this Section 4.2 shall be counted as one of the 20 quarters permitted
in the maximum Extended Interest Payment Period permitted under Section 4.1.
SECTION 4.3. Limitation of Transactions.
If the Issuer shall exercise its right to defer payment of interest as
provided in Section 4.1, during any Extended Interest Payment Period (a) the
Issuer shall not declare or pay any dividends on, make any distributions with
respect to, or redeem, purchase, acquire or make a liquidation payment with
respect to, any of its capital stock, (b) the Issuer shall not make any payment
of interest, principal or premium, if any, on or repay, repurchase or redeem any
debt securities issued by the Issuer that rank pari passu with or junior to the
Debentures and (c) the Issuer shall not make guarantee payments with respect to
the foregoing (other than pursuant to the Securities Guarantees); provided,
however, that notwithstanding the restriction in clause (a) above, the Issuer
may (i) declare and pay a stock dividend where the dividend stock is the same
stock as that on which the dividend is being paid and (ii) purchase or acquire
shares of its common stock in connection with the satisfaction by the Issuer of
its obligations under any employee benefit plans.
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ARTICLE V
EXPENSES
SECTION 5.1. Payment of Expenses.
In connection with the offering, sale and issuance of the Debentures to
the Property Trustee in connection with the sale of the Trust Securities by the
Trust and during the existence of the Trust, the Issuer, in its capacity as
borrower with respect to the Debentures, shall:
(a) pay all costs and expenses relating to the offering, sale and
issuance of the Debentures, including commissions to the underwriters payable
pursuant to the Underwriting Agreement and compensation of the Trustee under the
Indenture in accordance with the provisions of Section 6.9 of the Indenture;
(b) pay other debts and obligations of the Trust (other than with
respect to the Trust Securities) and all costs and expenses of the Trust
(including, but not limited to, costs and expenses relating to the organization,
maintenance and dissolution of the Trust, the offering, sale and issuance of the
Trust Securities (including commissions to the underwriters payable pursuant to
the Underwriting Agreement), the retention of the Regular Trustees,
reimbursement of the Regular Trustees as provided in the Declaration, the fees
and expenses of the Property Trustee and the Delaware Trustee, the trustee under
the Preferred Securities Guarantee and the Common Securities Guarantee, the
costs and expenses relating to the operation of the Trust, including without
limitation, costs and expenses of accountants, attorneys, statistical or
bookkeeping services, expenses for printing and engraving and computing or
accounting equipment, paying agent(s), registrar(s), transfer agent(s),
duplicating, travel and telephone and other telecommunications expenses and
costs and expenses incurred in connection with the acquisition, financing and
disposition of Trust assets, and the fees and expenses related to the
enforcement by the Property Trustee of the rights of the holders of the
Preferred Securities) and all other amounts payable by the Issuer pursuant to
the Declaration;
(c) be primarily liable for any indemnification obligations arising
with respect to the Declaration; and
(d) pay any and all taxes, duties, assessments or governmental charges
of whatever nature (other than withholding taxes) imposed on the Trust or its
assets and all liabilities, costs and expenses of the Trust with respect to such
taxes, duties, assessments or governmental charges.
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SECTION 5.2. Payment Upon Resignation or Removal.
Upon termination of this Fourth Supplemental Indenture or the Indenture
or the removal or resignation of the Trustee pursuant to Section 6.10 of the
Indenture, the Issuer shall pay to the Trustee all amounts due to the Trustee
accrued to the date of such termination, removal or resignation. Upon
termination of the Declaration or the removal or resignation of the Delaware
Trustee or the Property Trustee, as the case may be, pursuant to Section 5.7 of
the Declaration, the Issuer shall pay to the Delaware Trustee or the Property
Trustee, as the case may be, all amounts due to such trustee accrued to the date
of such termination, removal or resignation.
ARTICLE VI
COVENANT TO LIST ON EXCHANGE
SECTION 6.1. Listing on an Exchange.
If the Debentures are to be distributed to the holders of the Preferred
Securities as described in Section 2.4(a), the Issuer will, if the Debentures
are not already so listed, use its best efforts to list such Subordinated
Debentures on the New York Stock Exchange, Inc. or on such other exchange or
other organization as the Preferred Securities are then listed.
ARTICLE VII
FORM OF DEBENTURE
SECTION 7.1. Form of Debenture.
The Debentures and the Trustee's Certificate of Authentication to be
endorsed thereon are to be substantially in the following forms:
(IF THE DEBENTURE IS TO BE A GLOBAL DEBENTURE, INSERT - This
Debenture is in Global form within the meaning of the Indenture hereinafter
referred to and is registered in the name of a Depository or a nominee of a
Depository. Unless and until it is exchanged in whole or in part for securities
in certificated form in the limited circumstances described in the indenture,
this security may not be transferred except as a whole by the depository to a
nominee of the Depository or by a nominee of the Depository to the Depository or
another nominee of the Depository or by the Depository or any such nominee to a
successor Depository or a nominee of such successor Depository.
Unless this Debenture is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the issuer or
its agent for registration of transfer, exchange or payment, and any Debenture
issued is registered in the name of Cede & Co. or such other name as requested
by an authorized representative of DTC (and any payment hereon is made to Cede &
Co. or to such other entity as is requested by an authorized representative of
DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE
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OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner hereof,
Cede & Co., has an interest herein.)
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CONSECO, INC.
8.70% SUBORDINATED DEFERRABLE INTEREST DEBENTURE
No. ____ DUE SEPTEMBER 30, 2028 REGISTERED
$______
Conseco, Inc., an Indiana corporation (the "Company", which term
includes any successor corporation under the Indenture hereinafter referred to),
for value received, hereby promises to pay to______ , or registered assigns, the
principal sum of______ Dollars on September 30, 2028 (or on such date that is no
earlier than September 30, 2003 or such date that is no later than the earlier
of: (i) September 30, 2047, or (ii) the Interest Deduction Date, if the Company
elects to shorten or extend the Maturity Date as further described herein), and
to pay interest on said principal sum from August 24, 1998, or from the most
recent interest payment date (each such date, an "Interest Payment Date") to
which interest has been paid or duly provided for, quarterly (subject to
deferral as set forth herein) in arrears on March 31, June 30, September 30 and
December 31 of each year commencing September 30, 1998, at the rate of 8.70% per
annum until the principal hereof shall have become due and payable, and on any
overdue principal and (without duplication and to the extent that payment of
such interest is enforceable under applicable law) on any overdue installment of
interest at the same rate per annum compounded quarterly. The amount of interest
payable on any Interest Payment Date shall be computed on the basis of a 360-day
year of twelve 30-day months, and for any period shorter than a full quarter on
the basis of the actual number of days elapsed in such 90-day quarter. In the
event that any date on which interest is payable on this Debenture is not a
Business Day, then payment of interest payable on such date will be made on the
next succeeding day that is a Business Day (and without any interest or other
payment in respect of any such delay), except that, if such Business Day is in
the next succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date. The interest installment so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in the Indenture,
be paid to the person in whose name this Debenture is registered at the close of
business on the regular record date for such interest installment, which shall
be the close of business on the Business Day next preceding such Interest
Payment Date. [If the Preferred Securities are no longer represented by a global
certificate or if the Debentures are not represented by a global debenture -
which shall be the close of business on the Business Day next preceding such
Interest payment.] Notwithstanding the foregoing, any interest that is payable
on the Maturity Date shall be payable to the Person to whom principal payable at
the Maturity Date shall be payable. Any such interest installment not punctually
paid or duly provided for shall forthwith cease to be payable to the registered
Holders on such regular record date and may be paid to the Person in whose name
this Debenture (or one or more Predecessor Security) is registered at the close
of business on a special record date to be fixed in accordance with the
provisions of Section 3.7(b) of the Indenture. The principal of and the interest
on this Debenture shall be payable at the office or agency of the Trustee
maintained for that purpose in any coin or currency of the United States of
America that at the time of payment is legal tender for payment of public and
private debts; provided, however, that payment of interest may be made at the
option of the Company by check mailed to the registered Holder at such address
as shall appear in the Register. Notwithstanding the foregoing, so long as the
Holder of this Debenture is the
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Property Trustee, the payment of the principal of and interest on this Debenture
will be made by wire transfer in immediately available funds at such place and
to such account as may be designated by the Property Trustee. Payment of
principal of the Debentures will only be made upon surrender of the Debentures
to the Trustee or Paying Agent.
The indebtedness evidenced by this Debenture is, to the extent provided
in the Indenture, subordinate and junior in right of payment to the prior
payment in full of all Senior Indebtedness, and this Debenture is issued subject
to the provisions of the Indenture with respect thereto. Each Holder of this
Debenture, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his or her behalf to take
such action as may be necessary or appropriate to acknowledge or effectuate the
subordination so provided and (c) appoints the Trustee his or her
attorney-in-fact for any and all such purposes. Each Holder hereof, by his or
her acceptance hereof, hereby waives all notice of the acceptance of the
subordination provisions contained herein and in the Indenture by each holder of
Senior Indebtedness, whether now outstanding or hereafter incurred, and waives
reliance by each such holder upon said provisions.
This Debenture shall not be entitled to any benefit under the Indenture
hereinafter referred to, be valid or become obligatory for any purpose until the
Certificate of Authentication hereon shall have been signed by or on behalf of
the Trustee.
The provisions of this Debenture are continued on the reverse side
hereof and such continued provisions shall for all purposes have the same effect
as though fully set forth at this place.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated: _________________, 1998.
CONSECO, INC.
By: _________________________________
By: _________________________________
SEAL
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(FORM OF CERTIFICATE OF AUTHENTICATION)
CERTIFICATE OF AUTHENTICATION
This is one of the Debentures referred to in the within-mentioned
Indenture.
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By: ______________________________
Authorized Signatory
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(FORM OF REVERSE OF DEBENTURE)
This Debenture is one of a duly authorized series of Debentures of the
Company (herein sometimes referred to as the "Debentures"), specified in the
Indenture, all issued or to be issued in one or more series under and pursuant
to an Indenture dated as of November 14, 1996, duly executed and delivered
between the Company and State Street Bank and Trust Company, as successor
trustee to Fleet National Bank, as Trustee (the "Trustee"), as supplemented by
the First Supplemental Indenture dated as of November 14, 1996, the Second
Supplemental Indenture dated as of November 22, 1996 and the Third Supplemental
Indenture dated as of March 26, 1997 (as so supplemented, the "Base Indenture"),
as supplemented by the Fourth Supplemental Indenture dated as of August 24, 1998
between the Company and the Trustee (the Base Indenture as so supplemented, the
"Indenture"), to which a description of the rights, limitations of rights,
obligations, duties and immunities thereunder of the Trustee, the Company and
the Holders of the Debentures, and to all of which provisions the Holder of this
Debenture by acceptance hereof, assents and agrees. By the terms of the
Indenture, the Debentures are issuable in series that may vary as to amount,
date of maturity, rate of interest and in other respects as provided in the
Indenture. This series of Debentures is limited in aggregate principal amount as
specified in said Indenture.
Except as provided in the next paragraph with respect to the occurrence
of a Special Event, the Debentures may not be redeemed by the Company prior to
September 30, 2003. The Company shall have the right to redeem this Debenture at
the option of the Company, without premium or penalty, in whole or in part at
any time and from time to time on or after September 30, 2003 (an "Optional
Redemption"), at a redemption price equal to 100% of the principal amount plus
any accrued and unpaid interest, including any Compounded Interest, if any, to
the date of such redemption (the "Optional Redemption Price"). Any redemption
pursuant to this paragraph will be made upon not less than 30 nor more than 60
days' notice at the Optional Redemption Price.
If, at any time, a Tax Event or an Investment Company Event (each, as
defined below, a "Special Event") shall occur and be continuing, the Company
shall have the right, upon not less than 30 nor more than 60 days' notice, to
redeem the Debentures in whole (but not in part) for cash at the Optional
Redemption Price within 90 days following the occurrence of such Special Event.
"Tax Event" means that the Regular Trustees shall have received an
opinion of independent tax counsel experienced in such matters to the effect
that, as a result of (a) any amendment to, or change (including any announced
prospective change) in, the laws (or any regulations thereunder) of the United
States or any political subdivision or taxing authority thereof or therein, or
(b) any official administrative pronouncement or judicial decision interpreting
or applying such laws or regulations, which amendment, or change is effective or
such pronouncement or decision is announced on or after the date of original
issuance of the Preferred Securities, there is more than an insubstantial risk
that (i) the Trust is, or will be within 90 days after the date thereof, subject
to United States federal income tax with respect to interest accrued or received
on the Debentures, (ii) the Trust is, or will be within 90 days after the date
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thereof, subject to more than a de minimis amount of taxes, duties or other
governmental charges, or (iii) interest payable to the Trust on the Debentures
is not, or within 90 days of the date thereof, will not be deductible, in whole
or in part, by the Company for United States federal income tax purposes.
"Investment Company Event" means that the Regular Trustees shall have
received an opinion of independent counsel experienced in practice under the
Investment Company Act of 1940, as amended (the "1940 Act"), to the effect that,
as a result of the occurrence of a change in law or regulation or a change in
interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority (a "Change in 1940 Act Law"),
there is more than an insubstantial risk that the Trust is or will be considered
an "investment company" which is required to be registered under the 1940 Act,
which Change in 1940 Act Law becomes effective on or after the date of original
issuance of the Preferred Securities.
If the Debentures are only partially redeemed by the Company pursuant
to an Optional Redemption, the Debentures will be redeemed pro rata or by lot or
in some other equitable manner determined by the Trustee. Notwithstanding the
foregoing, if a partial redemption of the Debentures would result in the
delisting of the Preferred Securities by any national securities exchange or
other organization on which the Preferred Securities are then listed, the
Company shall not be permitted to effect such partial redemption and will only
redeem the Debentures in whole.
In the event of redemption of this Debenture in part only, a new
Debenture or Debentures of this series (for the unredeemed portion hereof) will
be issued in the name of the Holder hereof upon the cancellation hereof.
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of all of the Debentures may be
declared, and upon such declaration shall become, due and payable, in the
manner, with the effect and subject to the conditions and limitations provided
in the Indenture.
The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the Holders of not less than a majority in
aggregate principal amount of the Debentures of each series affected at the time
outstanding, as defined in the Indenture, to execute supplemental indentures for
the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of the Indenture or of any supplemental indenture or of
modifying in any manner the rights of the Holders of the Debentures; provided,
however, that no such supplemental indentures shall (i) change the Stated
Maturity of the principal or any installment of principal or any installment of
interest (other than as contemplated herein), or reduce the amount or principal
or interest thereon or any premium payable upon redemption or repayment thereof,
or change the Place of Payment or currency in which principal or any interest is
payable, or impair the right to institute suit for the enforcement of any
payment of the principal and any premium and interest without the consent of the
Holder of each Debenture so affected; (ii) reduce the aforesaid percentage of
Debentures, the Holders of which are required to consent to any such
supplemental indenture, without the consent of the Holders of each Debenture
then
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outstanding and affected thereby; (iii) change any obligation of the Company to
maintain an office or agency in the Place of Payment; or (iv) modify any of the
above provisions. The Indenture also contains provisions permitting the Holders
of a majority in aggregate principal amount of the Debentures of any series at
the time outstanding affected thereby, on behalf of all of the Holders of the
Debentures of such series, to waive any past default in the performance of any
of the covenants contained in the Indenture, or established pursuant to the
Indenture with respect to such series, and its consequences, except a default in
the payment of the principal or interest on the Debentures or a default in
respect of a covenant or provision of the Indenture or the Debentures of such
series which cannot be modified or amended without the consent of each Holder of
Debentures of such series. Any such consent or waiver by the registered Holder
of this Debenture (unless revoked as provided in the Indenture) shall be
conclusive and binding upon such Holder and upon all future Holders and owners
of this Debenture and of any Debentures issued in exchange herefor or in place
hereof (whether by registration of transfer or otherwise), irrespective of
whether or not any notation of such consent or waiver is made upon this
Debenture.
No reference herein to the Indenture and no provision of this Debenture
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of and interest on this
Debenture at the time and place and at the rate and in the money herein
prescribed.
The Company shall have the right at any time during the term of the
Debentures from time to time to extend the interest payment period of such
Debentures for up to 20 consecutive quarters not to extend beyond the Maturity
Date of the Debentures (an "Extended Interest Payment Period"), at the end of
which period the Company shall pay all interest then accrued and unpaid
(together with interest thereon at the rate specified for the Debentures to the
extent that payment of such interest is enforceable under applicable law). In
the event that the Company exercises the right to defer interest payments, then,
prior to the payment of all accrued interest on outstanding Debentures, (a) the
Company shall not declare or pay dividends on, or make a distribution with
respect to, or redeem, purchase or acquire, or make a liquidation payment with
respect to, any of its capital stock, (b) the Company shall not make any payment
of interest, principal or premium, if any, on or repay, repurchase or redeem any
debt securities issued by the Company that rank pari passu with or junior to the
Debentures and (c) the Company shall not make any guarantee payments with
respect to the foregoing (other than pursuant to the Securities Guarantees);
provided, however, that restriction (a) above does not apply to (i) any stock
dividends paid by the Company where the dividend stock is the same stock as that
on which the dividend is being paid and (ii) purchases or acquisitions of shares
of Company Common Stock in connection with the satisfaction by the Company of
its obligation under any employee benefit plans. Before the termination of any
such Extended Interest Payment Period, the Company may further extend such
Extended Interest Payment Period, provided that such Extended Interest Payment
Period together with all such previous and further extensions thereof shall not
exceed 20 consecutive quarters and shall not extend beyond the Maturity Date of
the Debentures. At the termination of any such Extended Interest Payment Period
and upon the payment of all accrued and unpaid interest and any additional
amounts then due, the Company may commence a new Extended Interest Payment
Period.
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At any time the Company will have the right to dissolve the Trust and
cause the Debentures to be distributed to the holders of the Trust Securities in
liquidation of the Trust. If the Company elects to dissolve the Trust and
thereby causes the Debentures to be distributed to the holders of the Trust
Securities, the Company shall have the right to (a) shorten the Maturity Date to
any date that is not earlier than September 30, 2003 and (b) to extend the
Maturity Date to a date no later than the earlier of (i) September 30, 2047, or
(ii) the Interest Deduction Date, provided the conditions in clauses (i) through
(vi) below are met on the date the Company exercises such right and on the
Maturity Date in effect prior to such proposed extension (the "Preceding
Maturity Date"). In addition, the Company shall have the right, which must be
exercised at least 90 days prior to the Maturity Date then in effect, to extend
the Maturity Date for one or more periods, but in no event to a date later than
the earlier of (i) September 30, 2047, or (ii) the Interest Deduction Date,
provided that the Company must satisfy the following conditions on the date it
exercises such right and on the Preceding Maturity Date: (i) the Company is not
in bankruptcy or otherwise insolvent, (ii) the Company is not in default on any
Debentures issued to the Trust or any trustee of the Trust in connection with
the issuance of Trust Securities by the Trust, (iii) the Company has made timely
payments on the Debentures for the immediately preceding six quarters without
deferrals, (iv) the Trust is not in arrears on payment of distributions on the
Trust Securities, (v) the Debentures or the Preferred Securities are rated
investment grade by a nationally recognized statistical rating organization, and
(vi) the final maturity of the Debentures is no later than September 30, 2047.
In the event the conditions specified in clauses (i) through (vi) above are not
satisfied on the date of exercise of the right to extend the Maturity Date and
on the Preceding Maturity Date, then the Maturity Date of the Debentures shall
be the Preceding Maturity Date. In no event shall an extended Maturity Date be
later than the Interest Deduction Date even if the Maturity Date has previously
been extended to a date beyond the Interest Deduction Date.
As provided in the Indenture and subject to certain limitations therein
set forth, this Debenture is transferable by the registered Holder hereof on the
Register of the Company, upon surrender of this Debenture for registration of
transfer at the Corporate Trust Office of the Trustee accompanied by a written
instrument or instruments of transfer in form satisfactory to the Company or the
Trustee duly executed by the registered Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Debentures of authorized
denominations and for the same aggregate principal amount and series will be
issued to the designated transferee or transferees. No service charge will be
made for any such transfer, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in relation
thereto.
Prior to due presentment for registration of transfer of this
Debenture, the Company, the Trustee, any paying agent and any Registrar may deem
and treat the registered holder hereof as the absolute owner hereof (whether or
not this Debenture shall be overdue and notwithstanding any notice of ownership
or writing hereon made by anyone other than the Registrar) for the purpose of
receiving payment of or on account of the principal hereof and interest due
hereon and for all other purposes, and neither the Company nor the Trustee nor
any paying agent nor any Registrar shall be affected by any notice to the
contrary.
No recourse shall be had for the payment of the principal of or the
interest on this Debenture or for any claim based hereon, or otherwise in
respect hereof, or based on or in respect
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of the Indenture, against any incorporator, stockholder, officer or director,
past, present of future, as such, of the Company or of any predecessor or
successor corporation, whether by virtue of any constitution, statute or rule of
law, or by the enforcement of any assessment or penalty or otherwise, all such
liability being, by the acceptance hereof and as part of the consideration for
the issuance hereof, expressly waived and released.
[The Debentures of this series are issuable only in registered form
without coupons in denominations of $25 and any integral multiple thereof,
provided that this Global Debenture is exchangeable for Debentures in definitive
form only under certain limited circumstances set forth in the Indenture.] As
provided in the Indenture and subject to certain limitations herein and therein
set forth, Debentures of this series so issued are exchangeable for a like
aggregate principal amount of Debentures of this series of a different
authorized denomination, as requested by the Holder surrendering the same. All
terms used in this Debenture that are defined in the Indenture shall have the
meanings assigned to them in the Indenture.
The Company and the Holder agree (i) that for United States federal,
state and local tax purposes it is intended that the Debenture constitute
indebtedness and (ii) to file all United States federal, state and local tax
returns and reports on such basis (unless the Company or the Holder, as the case
may be, shall have received an opinion of independent nationally recognized tax
counsel to the effect that as a result of a change in law after the date of the
issuance of the Debenture the Company or the Holder, as the case may be, is
prohibited from filing on such basis).
ARTICLE VIII
ORIGINAL ISSUE OF DEBENTURES
SECTION 8.1. Original Issue of Debentures.
Debentures in the aggregate principal amount of $515,500,000 may, upon
execution of this Fourth Supplemental Indenture, be executed by the Issuer and
delivered to the Trustee for authentication, and the Trustee shall thereupon
authenticate and deliver such Debentures to or upon the written order of the
Issuer, signed by its Chairman, its President, or any Vice President and its
Treasurer or an Assistant Treasurer or its Secretary or an Assistant Secretary,
without any further action by the Issuer.
SECTION 8.2. Reports by the Trustee.
Up until and including the Maturity Date, the Trustee shall, in respect
of each applicable date, make such reports within such time periods as are
required to be made by the Trustee under the Trust Indenture Act and the
Indenture.
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ARTICLE IX
COVENANTS
SECTION 9.1. Covenants as to Trust.
In the event Debentures are issued and sold to the Property Trustee in
connection with the issuance of Trust Securities by the Trust, for so long as
the Trust Securities remain outstanding, the Issuer will (i) maintain 100%
direct or indirect ownership of the Common Securities of the Trust; provided,
however, that any permitted successor of the Issuer under the Indenture may
succeed to the Issuer's ownership of the Common Securities, (ii) not voluntarily
dissolve, wind up or terminate the Trust, except in connection with the
distribution of Debentures upon a Dissolution Event or otherwise, and in
connection with certain mergers, consolidations or amalgamations permitted by
the Declaration, (iii) timely perform its duties as sponsor of the Trust, (iv)
use its reasonable efforts to cause the Trust (a) to remain a business trust,
except in connection with the distribution of Debentures as provided in the
Declaration, the redemption of the Trust Securities or in connection with
certain mergers, consolidations or amalgamations as permitted by the
Declaration, and (b) otherwise continue not to be treated as an association
taxable as a corporation or partnership for United States federal income tax
purposes, and (v) use its reasonable efforts to cause each holder of Trust
Securities to be treated as owning an individual beneficial interest in the
Debentures. This covenant is intended solely for the benefit of the Holders of
the Debentures issued pursuant to this Fourth Supplemental Indenture and shall
not be applicable to the Securities of any other series issued pursuant to the
Indenture.
ARTICLE X
DEFAULT
SECTION 10.1. Additional Event of Default.
There is hereby established as an additional Event of Default (as
contemplated by Section 5.1(7) of the Indenture) the following:
In the event the Debentures are issued and sold to the
Property Trustee in connection with the issuance of Trust Securities by
the Trust, the Trust shall have voluntarily or involuntarily dissolved,
wound-up its business or otherwise terminated its existence except in
connection with (i) the distribution of the Debentures to holders of
Trust Securities in liquidation or redemption of their interests in the
Trust, (ii) the redemption of all or part of the outstanding Trust
Securities of the Trust or (iii) certain mergers, consolidations or
amalgamations of the Trust, each as permitted by the Declaration of the
Trust.
The foregoing Event of Default is intended solely for the benefit of
the Holders of the Debentures issued pursuant to this Fourth Supplemental
Indenture and shall not be applicable to any other series of Securities
heretofore or hereafter issued pursuant to the Indenture.
SECTION 10.2. Limitations on Waivers and Consents.
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(a) Notwithstanding anything to the contrary contained in Section 5.7
of the Indenture, if the Debentures are held by the Trust or by the Property
Trustee, a waiver of a past default or any modification to a waiver of a past
default shall not be effective until the holders of a majority in liquidation
amount of Trust Securities shall have consented to such waiver or modification;
provided, however, that if the consent of the Holder of each Outstanding
Debenture is required in connection with such waiver or modification, such
waiver or modification shall not be effective until each holder of the Trust
Securities shall have consented to such waiver or modification.
(b) Except for any supplemental indenture provided under Section 8.1 of
the Indenture and notwithstanding anything to the contrary contained in Section
3.8 of the Indenture, if the Debentures are held by the Trust or by the Property
Trustee, a supplemental indenture shall not be effective until the holders of a
majority in liquidation amount of Trust Securities shall have consented to such
supplemental indenture; provided, however, that if the consent of the Holder of
each Outstanding Debenture is required in connection with a supplemental
indenture, such supplemental indenture shall not be effective until each holder
of the Trust Securities shall have consented to such supplemental indenture.
SECTION 10.3. Acknowledgment of Rights.
The Issuer acknowledges that, with respect to any Debentures held
either by the Trust or by the Property Trustee, if the Property Trustee fails to
enforce its rights under the Indenture, this Fourth Supplemental Indenture or
the Debentures as the Holder of the Debentures held as the assets of the Trust,
any record holder of Preferred Securities may institute legal proceedings
directly against the Issuer to enforce the Property Trustee's rights under the
Indenture, this Fourth Supplemental Indenture or the Debentures without first
instituting any legal proceedings against such Property Trustee or any other
person or entity. Notwithstanding the foregoing, if an Event of Default under
the Declaration has occurred and is continuing and such event is attributable to
the failure of the Issuer to pay interest or principal on the Debentures on the
date such interest or principal is otherwise payable (or in the case of
redemption, on the applicable redemption date), the Issuer acknowledges that a
record holder of Preferred Securities may institute a proceeding directly
against the Issuer for enforcement of payment to the record holder of the
Preferred Securities of the principal of or interest on the Debentures on or
after the respective due date specified in the Debentures, and the amount of
payment will be based on the holder's pro rata share of the amount due and owing
on all the Preferred Securities.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1. Ratification of Indenture.
The Indenture, as supplemented by this Fourth Supplemental Indenture,
is in all respects ratified and confirmed, and this Fourth Supplemental
Indenture shall be deemed part of the Indenture in the manner and to the extent
herein and therein provided.
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SECTION 11.2. Trustee Not Responsible for Recitals.
The recitals contained herein and in the Debentures, except for the
Trustee's certificate of authentication, shall be taken as the statements of the
Issuer and not of the Trustee, and the Trustee assumes no responsibility for the
correctness of the same. The Trustee makes no representation as to the validity
or sufficiency of this Fourth Supplemental Indenture or of the Debentures.
SECTION 11.3. Governing Law.
This Fourth Supplemental Indenture and each Debenture shall be deemed
to be a contract made under the laws of the State of New York, and for all
purposes shall be construed in accordance with the laws of said State, except as
may otherwise be required by mandatory provisions of law.
SECTION 11.4. Separability.
In case any one or more of the provisions contained in this Fourth
Supplemental Indenture or in the Debentures shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Fourth
Supplemental Indenture or of the Debentures, but this Fourth Supplemental
Indenture and the Debentures shall be construed as if such invalid or illegal or
unenforceable provision had never been contained herein or therein.
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<PAGE>
SECTION 11.5. Counterparts.
This Fourth Supplemental Indenture may be executed in any number of
counterparts each of which shall be an original; but such counterparts shall
together constitute but one and the same instrument.
SECTION 11.6. Effect of Headings.
The Article and Section headings herein and the Table of Contents
hereto are for convenience only and shall not affect the construction hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Fourth
Supplemental Indenture to be duly executed as of the day and year first above
written.
CONSECO, INC.
By: /s/ Rollin M. Dick
------------------------------------------
Name: Rollin M. Dick
Title: Executive Vice President and Chief
Financial Officer
STATE STREET BANK AND
TRUST COMPANY, as Trustee
By: /s/ Mark A. Forgetta
------------------------------------------
Name: Mark A. Forgetta
Title: Vice President
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8.70% SUBORDINATED DEFERRABLE INTEREST DEBENTURE
No. 1 DUE SEPTEMBER 30, 2028
$515,500,000
Conseco, Inc., an Indiana corporation (the "Company", which term
includes any successor corporation under the Indenture hereinafter referred to),
for value received, hereby promises to pay to State Street Bank and Trust
Company, as Property Trustee under that certain Amended and Restated Declaration
of Trust, dated as of August 24, 1998, among the Trustees of Conseco Financing
Trust V named therein, the Company and the holders from time to time of
undivided beneficial interests in the assets of Conseco Financing Trust V, or
registered assigns, the principal sum of Five Hundred Fifteen Million Five
Hundred Thousand Dollars ($515,500,000) on September 30, 2028 (or on such date
that is no earlier than September 30, 2003 or such date that is no later than
the earlier of: (i) September 30, 2047, or (ii) the Interest Deduction Date, if
the Company elects to shorten or extend the Maturity Date as further described
herein), and to pay interest on said principal sum from August 24, 1998, or from
the most recent interest payment date (each such date, an "Interest Payment
Date") to which interest has been paid or duly provided for, quarterly (subject
to deferral as set forth herein) in arrears on March 31, June 30, September 30
and December 31 of each year commencing September 30, 1998, at the rate of 8.70%
per annum until the principal hereof shall have become due and payable, and on
any overdue principal and (without duplication and to the extent that payment of
such interest is enforceable under applicable law) on any overdue installment of
interest at the same rate per annum compounded quarterly. The amount of interest
payable on any Interest Payment Date shall be computed on the basis of a 360-day
year of twelve 30-day months, and for any period shorter than a full quarter on
the basis of the actual number of days elapsed in such 90-day quarter. In the
event that any date on which interest is payable on this Debenture is not a
Business Day, then payment of interest payable on such date will be made on the
next succeeding day that is a Business Day (and without any interest or other
payment in respect of any such delay), except that, if such Business Day is in
the next succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date. The interest installment so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in the Indenture,
be paid to the person in whose name this Debenture is registered at the close of
business on the regular record date for such interest installment, which shall
be the close of business on the Business Day next preceding such Interest
Payment Date. Notwithstanding the foregoing, any interest that is payable on the
Maturity Date shall be payable to the Person to whom principal payable at the
Maturity Date shall be payable. Any such interest installment not punctually
paid or duly provided for shall forthwith cease to be payable to the registered
Holders on such regular record date and may be paid to the Person in whose name
this Debenture (or one or more Predecessor Security) is registered at the close
of business on a special record date to be fixed in accordance with the
provisions of Section 3.7(b) of the Indenture. The principal of and the interest
on this Debenture shall be payable at the office or agency of the Trustee
maintained for that purpose in any coin or currency of the United States of
America that at the time of payment is legal tender for payment of public and
private debts; provided, however, that payment of interest may be made at the
option of the Company by check
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mailed to the registered Holder at such address as shall appear in the Register.
Notwithstanding the foregoing, so long as the Holder of this Debenture is the
Property Trustee, the payment of the principal of and interest on this Debenture
will be made by wire transfer in immediately available funds at such place and
to such account as may be designated by the Property Trustee. Payment of
principal of the Debentures will only be made upon surrender of the Debentures
to the Trustee or Paying Agent.
The indebtedness evidenced by this Debenture is, to the extent provided
in the Indenture, subordinate and junior in right of payment to the prior
payment in full of all Senior Indebtedness, and this Debenture is issued subject
to the provisions of the Indenture with respect thereto. Each Holder of this
Debenture, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his or her behalf to take
such action as may be necessary or appropriate to acknowledge or effectuate the
subordination so provided and (c) appoints the Trustee his or her
attorney-in-fact for any and all such purposes. Each Holder hereof, by his or
her acceptance hereof, hereby waives all notice of the acceptance of the
subordination provisions contained herein and in the Indenture by each holder of
Senior Indebtedness, whether now outstanding or hereafter incurred, and waives
reliance by each such holder upon said provisions.
This Debenture shall not be entitled to any benefit under the Indenture
hereinafter referred to, be valid or become obligatory for any purpose until the
Certificate of Authentication hereon shall have been signed by or on behalf of
the Trustee.
The provisions of this Debenture are continued on the reverse side
hereof and such continued provisions shall for all purposes have the same effect
as though fully set forth at this place.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated: August 24, 1998. CONSECO, INC.
By: /s/ Stephen C. Hilbert
----------------------------------------------
Stephen C. Hilbert, Chairman of the Board,
President and Chief Executive Officer
By: /s/ Rollin M. Dick
----------------------------------------------
Rollin M. Dick, Executive Vice President and
Chief Financial Officer
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<PAGE>
CERTIFICATE OF AUTHENTICATION
This is one of the Debentures referred to in the within-mentioned
Indenture.
STATE STREET BANK AND TRUST
COMPANY, as Trustee
By: /s/ Mark A. Forgetta
-----------------------
Authorized Signatory
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This Debenture is one of a duly authorized series of Debentures of the
Company (herein sometimes referred to as the "Debentures"), specified in the
Indenture, all issued or to be issued in one or more series under and pursuant
to an Indenture dated as of November 14, 1996, duly executed and delivered
between the Company and State Street Bank and Trust Company, as successor
trustee to Fleet National Bank, as Trustee (the "Trustee"), as supplemented by
the First Supplemental Indenture dated as of November 14, 1996, the Second
Supplemental Indenture dated as of November 22, 1996 and the Third Supplemental
Indenture dated as of March 26, 1997 (as so supplemented, the "Base Indenture"),
as supplemented by the Fourth Supplemental Indenture dated as of August 24, 1998
between the Company and the Trustee (the Base Indenture as so supplemented, the
"Indenture"), to which a description of the rights, limitations of rights,
obligations, duties and immunities thereunder of the Trustee, the Company and
the Holders of the Debentures, and to all of which provisions the Holder of this
Debenture by acceptance hereof, assents and agrees. By the terms of the
Indenture, the Debentures are issuable in series that may vary as to amount,
date of maturity, rate of interest and in other respects as provided in the
Indenture. This series of Debentures is limited in aggregate principal amount as
specified in said Indenture.
Except as provided in the next paragraph with respect to the occurrence
of a Special Event, the Debentures may not be redeemed by the Company prior to
September 30, 2003. The Company shall have the right to redeem this Debenture at
the option of the Company, without premium or penalty, in whole or in part at
any time and from time to time on or after September 30, 2003 (an "Optional
Redemption"), at a redemption price equal to 100% of the principal amount plus
any accrued and unpaid interest, including any Compounded Interest, if any, to
the date of such redemption (the "Optional Redemption Price"). Any redemption
pursuant to this paragraph will be made upon not less than 30 nor more than 60
days' notice at the Optional Redemption Price.
If, at any time, a Tax Event or an Investment Company Event (each, as
defined below, a "Special Event") shall occur and be continuing, the Company
shall have the right, upon not less than 30 nor more than 60 days' notice, to
redeem the Debentures in whole (but not in part) for cash at the Optional
Redemption Price within 90 days following the occurrence of such Special Event.
"Tax Event" means that the Regular Trustees shall have received an
opinion of independent tax counsel experienced in such matters to the effect
that, as a result of (a) any amendment to, or change (including any announced
prospective change) in, the laws (or any regulations thereunder) of the United
States or any political subdivision or taxing authority thereof or therein, or
(b) any official administrative pronouncement or judicial decision interpreting
or applying such laws or regulations, which amendment, or change is effective or
such pronouncement or decision is announced on or after the date of original
issuance of the Preferred Securities, there is more than an insubstantial risk
that (i) the Trust is, or will be within 90 days after the date thereof, subject
to United States federal income tax with respect to interest accrued or received
on the Debentures, (ii) the Trust is, or will be within 90 days after the date
thereof, subject to more than a de minimis amount of taxes, duties or other
governmental charges, or (iii) interest payable to the Trust on the Debentures
is not, or within 90 days of the date
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<PAGE>
thereof, will not be deductible, in whole or in part, by the Company for United
States federal income tax purposes.
"Investment Company Event" means that the Regular Trustees shall have
received an opinion of independent counsel experienced in practice under the
Investment Company Act of 1940, as amended (the "1940 Act"), to the effect that,
as a result of the occurrence of a change in law or regulation or a change in
interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority (a "Change in 1940 Act Law"),
there is more than an insubstantial risk that the Trust is or will be considered
an "investment company" which is required to be registered under the 1940 Act,
which Change in 1940 Act Law becomes effective on or after the date of original
issuance of the Preferred Securities.
If the Debentures are only partially redeemed by the Company pursuant
to an Optional Redemption, the Debentures will be redeemed pro rata or by lot or
in some other equitable manner determined by the Trustee. Notwithstanding the
foregoing, if a partial redemption of the Debentures would result in the
delisting of the Preferred Securities by any national securities exchange or
other organization on which the Preferred Securities are then listed, the
Company shall not be permitted to effect such partial redemption and will only
redeem the Debentures in whole.
In the event of redemption of this Debenture in part only, a new
Debenture or Debentures of this series (for the unredeemed portion hereof) will
be issued in the name of the Holder hereof upon the cancellation hereof.
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of all of the Debentures may be
declared, and upon such declaration shall become, due and payable, in the
manner, with the effect and subject to the conditions and limitations provided
in the Indenture.
The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the Holders of not less than a majority in
aggregate principal amount of the Debentures of each series affected at the time
outstanding, as defined in the Indenture, to execute supplemental indentures for
the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of the Indenture or of any supplemental indenture or of
modifying in any manner the rights of the Holders of the Debentures; provided,
however, that no such supplemental indentures shall (i) change the Stated
Maturity of the principal or any installment of principal or any installment of
interest (other than as contemplated herein), or reduce the amount or principal
or interest thereon or any premium payable upon redemption or repayment thereof,
or change the Place of Payment or currency in which principal or any interest is
payable, or impair the right to institute suit for the enforcement of any
payment of the principal and any premium and interest without the consent of the
Holder of each Debenture so affected; (ii) reduce the aforesaid percentage of
Debentures, the Holders of which are required to consent to any such
supplemental indenture, without the consent of the Holders of each Debenture
then outstanding and affected thereby; (iii) change any obligation of the
Company to maintain an office
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<PAGE>
or agency in the Place of Payment; or (iv) modify any of the above provisions.
The Indenture also contains provisions permitting the Holders of a majority in
aggregate principal amount of the Debentures of any series at the time
outstanding affected thereby, on behalf of all of the Holders of the Debentures
of such series, to waive any past default in the performance of any of the
covenants contained in the Indenture, or established pursuant to the Indenture
with respect to such series, and its consequences, except a default in the
payment of the principal or interest on the Debentures or a default in respect
of a covenant or provision of the Indenture or the Debentures of such series
which cannot be modified or amended without the consent of each Holder of
Debentures of such series. Any such consent or waiver by the registered Holder
of this Debenture (unless revoked as provided in the Indenture) shall be
conclusive and binding upon such Holder and upon all future Holders and owners
of this Debenture and of any Debentures issued in exchange herefor or in place
hereof (whether by registration of transfer or otherwise), irrespective of
whether or not any notation of such consent or waiver is made upon this
Debenture.
No reference herein to the Indenture and no provision of this Debenture
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of and interest on this
Debenture at the time and place and at the rate and in the money herein
prescribed.
The Company shall have the right at any time during the term of the
Debentures from time to time to extend the interest payment period of such
Debentures for up to 20 consecutive quarters not to extend beyond the Maturity
Date of the Debentures (an "Extended Interest Payment Period"), at the end of
which period the Company shall pay all interest then accrued and unpaid
(together with interest thereon at the rate specified for the Debentures to the
extent that payment of such interest is enforceable under applicable law). In
the event that the Company exercises the right to defer interest payments, then,
prior to the payment of all accrued interest on outstanding Debentures, (a) the
Company shall not declare or pay dividends on, or make a distribution with
respect to, or redeem, purchase or acquire, or make a liquidation payment with
respect to, any of its capital stock, (b) the Company shall not make any payment
of interest, principal or premium, if any, on or repay, repurchase or redeem any
debt securities issued by the Company that rank pari passu with or junior to the
Debentures and (c) the Company shall not make any guarantee payments with
respect to the foregoing (other than pursuant to the Securities Guarantees);
provided, however, that restriction (a) above does not apply to (i) any stock
dividends paid by the Company where the dividend stock is the same stock as that
on which the dividend is being paid and (ii) purchases or acquisitions of shares
of Company Common Stock in connection with the satisfaction by the Company of
its obligation under any employee benefit plans. Before the termination of any
such Extended Interest Payment Period, the Company may further extend such
Extended Interest Payment Period, provided that such Extended Interest Payment
Period together with all such previous and further extensions thereof shall not
exceed 20 consecutive quarters and shall not extend beyond the Maturity Date of
the Debentures. At the termination of any such Extended Interest Payment Period
and upon the payment of all accrued and unpaid interest and any additional
amounts then due, the Company may commence a new Extended Interest Payment
Period.
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At any time the Company will have the right to dissolve the Trust and
cause the Debentures to be distributed to the holders of the Trust Securities in
liquidation of the Trust. If the Company elects to dissolve the Trust and
thereby causes the Debentures to be distributed to the holders of the Trust
Securities, the Company shall have the right to (a) shorten the Maturity Date to
any date that is not earlier than September 30, 2003 and (b) to extend the
Maturity Date to a date no later than the earlier of (i) September 30, 2047, or
(ii) the Interest Deduction Date, provided the conditions in clauses (i) through
(vi) below are met on the date the Company exercises such right and on the
Maturity Date in effect prior to such proposed extension (the "Preceding
Maturity Date"). In addition, the Company shall have the right, which must be
exercised at least 90 days prior to the Maturity Date then in effect, to extend
the Maturity Date for one or more periods, but in no event to a date later than
the earlier of (i) September 30, 2047, or (ii) the Interest Deduction Date,
provided that the Company must satisfy the following conditions on the date it
exercises such right and on the Preceding Maturity Date: (i) the Company is not
in bankruptcy or otherwise insolvent, (ii) the Company is not in default on any
Debentures issued to the Trust or any trustee of the Trust in connection with
the issuance of Trust Securities by the Trust, (iii) the Company has made timely
payments on the Debentures for the immediately preceding six quarters without
deferrals, (iv) the Trust is not in arrears on payment of distributions on the
Trust Securities, (v) the Debentures or the Preferred Securities are rated
investment grade by a nationally recognized statistical rating organization, and
(vi) the final maturity of the Debentures is no later than September 30, 2047.
In the event the conditions specified in clauses (i) through (vi) above are not
satisfied on the date of exercise of the right to extend the Maturity Date and
on the Preceding Maturity Date, then the Maturity Date of the Debentures shall
be the Preceding Maturity Date. In no event shall an extended Maturity Date be
later than the Interest Deduction Date even if the Maturity Date has previously
been extended to a date beyond the Interest Deduction Date.
As provided in the Indenture and subject to certain limitations therein
set forth, this Debenture is transferable by the registered Holder hereof on the
Register of the Company, upon surrender of this Debenture for registration of
transfer at the Corporate Trust Office of the Trustee accompanied by a written
instrument or instruments of transfer in form satisfactory to the Company or the
Trustee duly executed by the registered Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Debentures of authorized
denominations and for the same aggregate principal amount and series will be
issued to the designated transferee or transferees. No service charge will be
made for any such transfer, but
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<PAGE>
the Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in relation thereto.
Prior to due presentment for registration of transfer of this
Debenture, the Company, the Trustee, any paying agent and any Registrar may deem
and treat the registered holder hereof as the absolute owner hereof (whether or
not this Debenture shall be overdue and notwithstanding any notice of ownership
or writing hereon made by anyone other than the Registrar) for the purpose of
receiving payment of or on account of the principal hereof and interest due
hereon and for all other purposes, and neither the Company nor the Trustee nor
any paying agent nor any Registrar shall be affected by any notice to the
contrary.
No recourse shall be had for the payment of the principal of or the
interest on this Debenture or for any claim based hereon, or otherwise in
respect hereof, or based on or in respect of the Indenture, against any
incorporator, stockholder, officer or director, past, present of future, as
such, of the Company or of any predecessor or successor corporation, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issuance hereof, expressly
waived and released.
As provided in the Indenture and subject to certain limitations herein
and therein set forth, Debentures of this series so issued are exchangeable for
a like aggregate principal amount of Debentures of this series of a different
authorized denomination, as requested by the Holder surrendering the same. All
terms used in this Debenture that are defined in the Indenture shall have the
meanings assigned to them in the Indenture.
The Company and the Holder agree (i) that for United States federal,
state and local tax purposes it is intended that the Debenture constitute
indebtedness and (ii) to file all United States federal, state and local tax
returns and reports on such basis (unless the Company or the Holder, as the case
may be, shall have received an opinion of independent nationally recognized tax
counsel to the effect that as a result of a change in law after the date of the
issuance of the Debenture the Company or the Holder, as the case may be, is
prohibited from filing on such basis).
8
-------------------------------------------------
AMENDED AND RESTATED
DECLARATION OF TRUST
CONSECO FINANCING TRUST V
Dated as of August 24, 1998
-------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
-----------------
Page
----
<S> <C>
ARTICLE I INTERPRETATION AND DEFINITIONS...............................................................1
SECTION 1.1 Interpretation and Definitions.............................................................1
ARTICLE II TRUST INDENTURE ACT..........................................................................7
SECTION 2.1 Trust Indenture Act; Application...........................................................7
SECTION 2.2 Lists of Holders of Securities.............................................................8
SECTION 2.3 Reports by the Property Trustee............................................................8
SECTION 2.4 Periodic Reports to the Property Trustee...................................................9
SECTION 2.5 Evidence of Compliance with Conditions Precedent...........................................9
SECTION 2.6 Events of Default; Waiver..................................................................9
SECTION 2.7 Event of Default; Notice..................................................................11
ARTICLE III ORGANIZATION................................................................................11
SECTION 3.1 Name and Organization.....................................................................11
SECTION 3.2 Office....................................................................................11
SECTION 3.3 Purpose...................................................................................11
SECTION 3.4 Authority.................................................................................12
SECTION 3.5 Title to Property of the Trust............................................................12
SECTION 3.6 Powers and Duties of the Regular Trustees.................................................12
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees......................................15
SECTION 3.8 Powers and Duties of the Property Trustee.................................................16
SECTION 3.9 Certain Duties and Responsibilities of the Property Trustee...............................18
SECTION 3.10 Certain Rights of Property Trustee........................................................20
SECTION 3.11 Delaware Trustee..........................................................................23
SECTION 3.12 Execution of Documents....................................................................23
SECTION 3.13 Not Responsible for Recitals or Issuance of Securities....................................23
SECTION 3.14 Duration of Trust.........................................................................23
SECTION 3.15 Mergers...................................................................................23
SECTION 3.16 Property Trustee May File Proofs of Claim.................................................25
ARTICLE IV SPONSOR.....................................................................................26
SECTION 4.1 Sponsor's Purchase of Common Securities...................................................26
SECTION 4.2 Responsibilities of the Sponsor...........................................................26
SECTION 4.3 Right to Dissolve Trust...................................................................26
SECTION 4.4 Direct Right of Action....................................................................27
i
<PAGE>
ARTICLE V TRUSTEES....................................................................................27
SECTION 5.1 Number of Trustees........................................................................27
SECTION 5.2 Delaware Trustee..........................................................................27
SECTION 5.3 Property Trustee; Eligibility.............................................................27
SECTION 5.4 Regular Trustees..........................................................................28
SECTION 5.5 Certain Qualifications of Regular Trustees and Delaware
Trustee Generally............................................................29
SECTION 5.6 Initial Trustees..........................................................................29
SECTION 5.7 Appointment, Removal and Resignation of Trustees..........................................29
SECTION 5.8 Vacancies among Trustees..................................................................30
SECTION 5.9 Effect of Vacancies.......................................................................30
SECTION 5.10 Meetings..................................................................................31
SECTION 5.11 Delegation of Power.......................................................................31
SECTION 5.12 Merger, Conversion, Consolidation or Succession to Business...............................31
ARTICLE VI DISTRIBUTIONS...............................................................................32
SECTION 6.1 Distributions.............................................................................32
ARTICLE VII ISSUANCE OF SECURITIES......................................................................32
SECTION 7.1 General Provisions Regarding Securities...................................................32
ARTICLE VIII TERMINATION OF TRUST........................................................................33
SECTION 8.1 Termination of Trust......................................................................33
ARTICLE IX TRANSFER OF INTERESTS.......................................................................34
SECTION 9.1 Transfer of Securities....................................................................34
SECTION 9.2 Transfer and Exchange of Certificates.....................................................35
SECTION 9.3 Deemed Security Holders...................................................................35
SECTION 9.4 Book Entry Interests......................................................................35
SECTION 9.5 Notices to Clearing Agency................................................................36
SECTION 9.6 Appointment of Successor Clearing Agency..................................................36
SECTION 9.7 Definitive Preferred Security Certificates................................................36
SECTION 9.8 Mutilated, Destroyed, Lost or Stolen Certificates.........................................37
ARTICLE X LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES,
TRUSTEES OR OTHERS........................................................................37
SECTION 10.1 Liability................................................................................37
SECTION 10.2 Exculpation..............................................................................38
SECTION 10.3 Fiduciary Duty...........................................................................38
SECTION 10.4 Indemnification and Compensation.........................................................39
SECTION 10.5 Outside Businesses.......................................................................42
ARTICLE XI ACCOUNTING..................................................................................42
SECTION 11.1 Fiscal Year...............................................................................42
SECTION 11.2 Certain Accounting Matters................................................................42
SECTION 11.3 Banking...................................................................................43
ii
<PAGE>
SECTION 11.4 Withholding...............................................................................43
ARTICLE XII AMENDMENTS AND MEETINGS.....................................................................44
SECTION 12.1 Amendments................................................................................44
SECTION 12.2 Meetings of the Holders of Securities; Action by Written Consent..........................45
ARTICLE XIII REPRESENTATIONS OF PROPERTY TRUSTEE
AND DELAWARE TRUSTEE...................................................................47
SECTION 13.1 Representations and Warranties of the Property Trustee....................................47
SECTION 13.2 Representations and Warranties of the Delaware Trustee....................................48
ARTICLE XIV MISCELLANEOUS...............................................................................48
SECTION 14.1 Notices...................................................................................48
SECTION 14.2 Governing Law.............................................................................50
SECTION 14.3 Intention of the Parties..................................................................50
SECTION 14.4 Headings..................................................................................50
SECTION 14.5 Successors and Assigns....................................................................50
SECTION 14.6 Partial Enforceability....................................................................51
SECTION 14.7 Counterparts..............................................................................51
ANNEX I..........................................................................................................53
EXHIBIT A-1....................................................................................................A1-1
EXHIBIT A-2....................................................................................................A2-1
</TABLE>
iii
<PAGE>
<TABLE>
<CAPTION>
CROSS - REFERENCE TABLE *
-------------------------
Section of Trust
Indenture Act of 1939, Section of
as amended Declaration
- ---------------------- -----------
<S> <C>
319 (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3(a)
310 (c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
311 (c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
312 (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2 (a)
312 (b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2 (b)
313. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . .2.3
314 (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4
314 (b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Inapplicable
314 (c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.5
314 (d). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Inapplicable
314 (f). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Inapplicable
315 (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3.9 (b)
315 (c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3.9 (a)
315 (d). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3.9 (a)
316 (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Annex I
316 (c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3.6 (e)
<FN>
________________
* This Cross - Reference Table does not constitute part of the
Declaration and shall not affect the interpretation of any of its
its terms or provisions.
</FN>
</TABLE>
iv
<PAGE>
AMENDED AND RESTATED DECLARATION OF TRUST
AMENDED AND RESTATED DECLARATION OF TRUST, including Annex I and all
exhibits attached hereto ("Declaration"), dated and effective as of August 24,
1998, by the Trustees (as defined herein), the Sponsor (as defined herein) and
by the holders, from time to time, of undivided beneficial interests in the
assets of the Trust to be issued pursuant to this Declaration;
WHEREAS, three of the Trustees and the Sponsor established Conseco
Financing Trust V (the "Trust"), a trust under the Delaware Business Trust Act
pursuant to a Declaration of Trust dated as of May 21, 1997 (the "Original
Declaration") and a Certificate of Trust filed with the Secretary of State of
the State of Delaware on May 23, 1997 (the "Certificate of Trust"), for the sole
purpose of issuing and selling certain securities representing undivided
beneficial interests in the assets of the Trust and investing the proceeds
thereof in certain Debentures (as defined herein) of the Debenture Issuer (as
defined herein);
WHEREAS, as of the date hereof, no beneficial interests in the Trust
have been issued; and
WHEREAS, all of the Trustees and the Sponsor, by this Declaration,
amend and restate each and every term and provision of the Original Declaration;
NOW, THEREFORE, it being the intention of the parties hereto to
continue the Trust as a business trust under the Business Trust Act and that
this Declaration constitutes the governing instrument of such business trust,
the Trustees declare that all assets contributed to the Trust will be held in
trust for the benefit of the Trust and the Holders (as defined herein), from
time to time, of the securities representing undivided beneficial interests in
the assets of the Trust issued hereunder, subject to the provisions of this
Declaration.
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Interpretation and Definitions.
Unless the context otherwise requires:
(a) capitalized terms used in this Declaration but not defined in the
preamble above have the respective meanings assigned to them in
this Section 1.1;
(b) a term defined anywhere in this Declaration has the same meaning
throughout;
(c) all references to "the Declaration" or "this Declaration" are to
this Declaration as modified, supplemented or amended from time to
time;
(d) all references in this Declaration to Articles and Sections are to
Articles and Sections of this Declaration unless otherwise
specified;
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<PAGE>
(e) a term defined in the Trust Indenture Act has the same meaning
when used in this Declaration unless otherwise defined in this
Declaration or unless the context otherwise requires; and
(f) a reference to the singular includes the plural and vice versa.
"Affiliate" has the same meaning as given to that term in Rule 405 of
the Securities Act or any successor rule thereunder.
"Authorized Officer" of a Person means any Person that is authorized to
bind such Person.
"Base Indenture" means the Indenture dated as of November 14, 1996
among the Debenture Issuer and State Street Bank and Trust Company, as successor
trustee to Fleet National Bank, as supplemented by the First Supplemental
Indenture dated as of November 14, 1996, the Second Supplemental Indenture dated
as of November 22, 1996 and the Third Supplemental Indenture dated as of March
26, 1997.
"Book Entry Interest" means a beneficial interest in a Global
Certificate, ownership and transfers of which shall be maintained and made
through book entries by a Clearing Agency as described in Section 9.4.
"Business Day" means any day other than a day on which banking
institutions in New York, New York or in the city of the principal Corporate
Trust Office of either the Property Trustee or the Debenture Trustee are
authorized or required by law to close.
"Business Trust Act" means Chapter 38 of Title 12 of the Delaware Code,
12 Del. Code Section 3801 et seq., as it may be amended from time to time, or
any successor legislation.
"Certificate" means a Common Security Certificate or a Preferred
Security Certificate.
"Clearing Agency" means an organization registered as a "Clearing
Agency" pursuant to Section 17A of the Exchange Act that is acting as depository
for the Preferred Securities and in whose name or in the name of a nominee of
that organization shall be registered a Global Certificate and which shall
undertake to effect book entry transfers and pledges of the Preferred
Securities.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time the Clearing
Agency effects book entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Date" means the date on which the Preferred Securities are
sold pursuant to the terms of the Underwriting Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, or any successor legislation. A reference to a specific section of the
Code refers not only to such specific section but also to any corresponding
provision of any federal tax statute enacted after the date of
2
<PAGE>
this Declaration, as such specific section or corresponding provision is in
effect on the date of application of the provisions of this Declaration
containing such reference.
"Commission" means the Securities and Exchange Commission.
"Common Securities Guarantee" means the guarantee agreement of the
Sponsor in respect of the Common Securities.
"Common Security" has the meaning specified in Section 7.1.
"Common Security Certificate" means a definitive certificate in fully
registered form representing a Common Security.
"Company Indemnified Person" means (a) any Regular Trustee; (b) any
Affiliate of any Regular Trustee; (c) any officers, directors, shareholders,
members, partners, employees, representatives or agents of any Regular Trustee
or any Affiliate thereof; or (d) any officer, employee or agent of the Trust or
its Affiliates.
"Corporate Trust Office" means the office of the Property Trustee at
which the corporate trust business of the Property Trustee shall, at any
particular time, be principally administered, which office at the date of
execution of this Declaration is located at 225 Asylum Street, Hartford, CT
06103, Attention: Corporate Trust Administration.
"Covered Person" means (a) any officer, director, shareholder, partner,
member, representative, employee or agent of (i) the Trust or (ii) the Trust's
Affiliates; and (b) any Holder of Securities.
"Debenture Issuer" means Conseco, Inc. in its capacity as issuer of the
Debentures under the Indenture.
"Debenture Trustee" means State Street Bank and Trust Company, as
trustee under the Indenture, until a successor is appointed thereunder, and
thereafter means such successor trustee.
"Debentures" means the series of subordinated deferrable interest
debentures to be issued by the Debenture Issuer under the Indenture to be held
by the Property Trustee.
"Definitive Preferred Security Certificates" has the meaning set forth
in Section 9.4.
"Delaware Trustee" has the meaning set forth in Section 5.2.
"Direction" by a Person means a written direction signed:
(a) if the Person is a natural person, by that Person; or
(b) in any other case, in the name of such Person by one or more
Authorized Officers of that Person.
3
<PAGE>
"Distribution" means a distribution payable to Holders of Securities in
accordance with Section 6.1.
"DTC" means The Depository Trust Company, the initial Clearing Agency.
"Event of Default" in respect of the Securities means an Event of
Default (as defined in the Indenture) has occurred and is continuing in respect
of the Debentures.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor legislation.
"Fiduciary Indemnified Person" has the meaning set forth in Section
10.4(b).
"Fiscal Year" has the meaning set forth in Section 11.1.
"Global Certificate" has the meaning set forth in Section 9.4.
"Holder" means a Person in whose name a Certificate representing a
Security is registered, such Person being a beneficial owner within the meaning
of the Business Trust Act, PROVIDED, HOWEVER, that in determining whether the
Holders of the requisite liquidation amount of Preferred Securities have voted
on any matter provided for in this Declaration, then for the purpose of such
determination only (and not for any other purpose hereunder), if the Preferred
Securities remain in the form of one or more Global Certificates, the term
"Holders" shall mean the holder of the Global Certificate acting at the
direction of the Preferred Security Beneficial Owners.
"Indemnified Person" means a Company Indemnified Person or a Fiduciary
Indemnified Person.
"Indenture" means the Base Indenture and any indenture supplemental
thereto pursuant to which the Debentures are to be issued.
"Investment Company" means an investment company as defined in the
Investment Company Act and the regulations promulgated thereunder.
"Investment Company Act" means the Investment Company Act of 1940, as
amended from time to time, or any successor legislation.
"Investment Company Event" has the meaning set forth in Annex I.
"Legal Action" has the meaning set forth in Section 3.6(g).
"List of Holders" has the meaning specified in Section 2.2(a).
"Majority in Liquidation Amount" means, except as provided in the terms
of the Preferred Securities or by the Trust Indenture Act, Holder(s) of
outstanding Securities, voting together as a single class, or, as the context
may require, Holders of outstanding Preferred Securities or Holders
4
<PAGE>
of outstanding Common Securities, voting separately as a class, who are the
record owners of more than 50% of the aggregate liquidation amount (including
the stated amount that would be paid on redemption, liquidation or otherwise,
plus accrued and unpaid Distributions to the date upon which the voting
percentages are determined) of all outstanding Securities of the relevant class.
"Officers' Certificate" means, with respect to any Person (other than
Regular Trustees who are natural persons), a certificate signed by two
Authorized Officers of such Person. Any Officers' Certificate delivered with
respect to compliance with a condition or covenant provided for in this
Declaration shall include:
(a) a statement that each officer signing the Officers' Certificate
has read the covenant or condition and the definitions relating
thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the
Officers' Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to
enable such officer to express an informed opinion as to whether
or not such covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with;
provided, that the term "Officers' Certificate" when used with reference to
Regular Trustees who are natural persons shall mean a certificate signed by two
of the Regular Trustees which otherwise satisfies the foregoing requirements.
"Paying Agent" has the meaning specified in Section 3.8(h).
"Payment Amount" has the meaning specified in Section 6.1.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
"Preferred Securities Guarantee" means the guarantee agreement of the
Sponsor in respect of the Preferred Securities.
"Preferred Security" has the meaning specified in Section 7.1.
"Preferred Security Beneficial Owner" means, with respect to a Book
Entry Interest, a Person who is the beneficial owner of such Book Entry
Interest, as reflected on the books of the Clearing Agency, or on the books of a
Person maintaining an account with such Clearing Agency (directly as a Clearing
Agency Participant or as an indirect participant, in each case in accordance
with the rules of such Clearing Agency).
5
<PAGE>
"Preferred Security Certificate" means a certificate representing a
Preferred Security.
"Property Trustee" means the Trustee meeting the eligibility
requirements set forth in Section 5.3
"Property Trustee Account" has the meaning set forth in Section 3.8(c).
"Quorum" means a majority of the Regular Trustees or, if there are only
two Regular Trustees, both of them.
"Regular Trustee" means any Trustee other than the Property Trustee and
the Delaware Trustee.
"Related Party" means, with respect to the Sponsor, any direct or
indirect wholly owned subsidiary of the Sponsor or any Person that owns,
directly or indirectly, 100% of the outstanding voting securities of the
Sponsor.
"Responsible Officer" means, with respect to the Property Trustee, any
officer within the Corporate Trust Office of the Property Trustee, including any
vice-president, any assistant vice-president, the secretary, any assistant
secretary, the treasurer, any assistant treasurer or other officer of the
Corporate Trust Office of the Property Trustee customarily performing functions
similar to those performed by any of the above designated officers and also
means, with respect to a particular corporate trust matter, any other officer to
whom such matter is referred because of that officer's knowledge of and
familiarity with the particular subject.
"Rule 3a-5" means Rule 3a-5 under the Investment Company Act or any
successor rule thereunder.
"Securities" means the Common Securities and the Preferred Securities.
"Securities Act" means the Securities Act of 1933, as amended from time
to time, or any successor legislation.
"Securities Guarantees" means the Common Securities Guarantee and the
Preferred Securities Guarantee.
"Special Event" has the meaning set forth in Annex I.
"Sponsor" means Conseco, Inc., an Indiana corporation, or any successor
entity in a merger, consolidation or amalgamation, in its capacity as sponsor of
the Trust.
"Successor Delaware Trustee" has the meaning specified in Section
5.7(b).
"Successor Entity" has the meaning specified in Section 3.15(b)(i).
"Successor Property Trustee" has the meaning specified in Section
5.7(b).
6
<PAGE>
"Successor Securities" has the meaning specified in Section
3.15(b)(i)(B).
"Super Majority" has the meaning set forth in Section 2.6(a) (ii).
"Tax Event" has the meaning set forth in Annex I.
"10% in Liquidation Amount" means, except as provided in the terms of
the Preferred Securities or by the Trust Indenture Act, Holder(s) of outstanding
Securities, voting together as a single class, or, as the context may require,
Holders of outstanding Preferred Securities or Holders of outstanding Common
Securities, voting separately as a class, who are the record owners of 10% or
more of the aggregate liquidation amount (including the stated amount that would
be paid on redemption, liquidation or otherwise, plus accrued and unpaid
Distributions to the date upon which the voting percentages are determined) of
all outstanding Securities of the relevant class.
"Treasury Regulations" means the income tax regulations, including
temporary and proposed regulations, promulgated under the Code by the United
States Treasury, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended
from time to time, or any successor legislation.
"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as Trustees in accordance with the
provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.
"Underwriting Agreement" means the Underwriting Agreement for the
offering and sale of Preferred Securities between the Trust, the Debenture
Issuer and the underwriters designated by the Regular Trustees.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application.
(a) This Declaration is subject to the provisions of the Trust
Indenture Act that are required to be part of this Declaration and shall, to the
extent applicable, be governed by such provisions.
(b) The Property Trustee shall be the only Trustee which is a Trustee
for the purposes of the Trust Indenture Act.
7
<PAGE>
(c) If and to the extent that any provision of this Declaration limits,
qualifies or conflicts with the duties imposed by Sections 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.
(d) The application of the Trust Indenture Act to this Declaration
shall not affect the nature of the Securities as equity securities representing
undivided beneficial interests in the assets of the Trust.
SECTION 2.2 Lists of Holders of Securities.
(a) Each of the Sponsor and the Regular Trustees on behalf of the Trust
shall provide the Property Trustee with a list, in such form as the Property
Trustee may reasonably require, of the names and addresses of the Holders of the
Securities ("List of Holders"), (i) within one Business Day after January 1 and
June 30 of each year and current as of such date, and (ii) at any other time,
within 30 days of receipt by the Trust of a written request from the Property
Trustee for a List of Holders as of a date no more than 14 days before such List
of Holders is given to the Property Trustee; PROVIDED THAT neither the Sponsor
nor the Regular Trustees on behalf of the Trust shall be obligated to provide
such List of Holders at any time the List of Holders does not differ from the
most recent List of Holders given to the Property Trustee by the Sponsor and the
Regular Trustees on behalf of the Trust. The Property Trustee shall preserve, in
as current a form as is reasonably practicable, all information contained in
Lists of Holders given to it or which it receives in the capacity as Paying
Agent (if acting in such capacity) provided that the Property Trustee may
destroy any List of Holders previously given to it on receipt of a new List of
Holders.
(b) The Property Trustee shall comply with its obligations under, and
shall be entitled to the benefits of, Sections 311(a), 311(b) and 312(b) of the
Trust Indenture Act.
SECTION 2.3 Reports by the Property Trustee.
Within 60 days after May 15 of each year (commencing with the year of
the first anniversary of the issuance of the Preferred Securities), the Property
Trustee shall provide to the Holders of the Preferred Securities such reports as
are required by Section 313 of the Trust
8
<PAGE>
Indenture Act, if any, in the form and in the manner provided by Section 313 of
the Trust Indenture Act. The Property Trustee shall also comply with the
requirements of Section 313(d) of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to the Property Trustee.
Each of the Sponsor and the Regular Trustees on behalf of the Trust
shall provide to the Property Trustee such documents, reports and information as
required by Section 314 (if any) of the Trust Indenture Act and the compliance
certificate required by Section 314 of the Trust Indenture Act in the form, in
the manner and at the times required by Section 314 of the Trust Indenture Act.
SECTION 2.5 Evidence of Compliance with Conditions Precedent.
Each of the Sponsor and the Regular Trustees on behalf of the Trust
shall provide to the Property Trustee such evidence of compliance with any
conditions precedent, if any, provided for in this Declaration that relate to
any of the matters set forth in Section 314(c) of the Trust Indenture Act. Any
certificate or opinion required to be given by an officer pursuant to Section
314(c)(1) may be given in the form of an Officers' Certificate.
SECTION 2.6 Events of Default; Waiver.
(a) The Holders of a Majority in Liquidation Amount of the Preferred
Securities may, by vote, on behalf of the Holders of all of the Preferred
Securities, waive any past Event of Default in respect of the Preferred
Securities and its consequences, provided that, if the underlying Event of
Default under the Indenture:
(i) is not waivable under the Indenture, the Event of Default under
the Declaration shall also not be waivable; or
(ii) requires the consent or vote of greater than a majority in
principal amount of the holders of the Debentures (a "Super
Majority") to be waived under the Indenture, the Event of Default
under the Declaration may only be waived by the vote of the
Holders of at least the proportion in liquidation amount of the
Preferred Securities that the relevant Super Majority represents
of the aggregate principal amount of the Debentures outstanding.
The foregoing provisions of this Section 2.6(a) shall be in lieu of
Section 316(a)(1)(B) of the Trust Indenture Act and such Section 316(a)(1)(B) of
the Trust Indenture Act is hereby expressly excluded from this Declaration and
the Securities, as permitted by the Trust Indenture Act. Upon such waiver, any
such default shall cease to exist, and any Event of Default with respect to the
Preferred Securities arising therefrom shall be deemed to have been cured, for
every purpose of this Declaration and the Preferred Securities, but no such
waiver shall extend to any subsequent or other default or Event of Default with
respect to the Preferred Securities or impair any right consequent thereon.
9
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(b) The Holders of a Majority in Liquidation Amount of the Common
Securities may, by vote, on behalf of the Holders of all of the Common
Securities, waive any past Event of Default in respect of the Common Securities
and its consequences, provided that, if the underlying Event of Default under
the Indenture:
(i) is not waivable under the Indenture, except where the Holders of
the Common Securities are deemed to have waived such Event of
Default under the Declaration as provided below in this Section
2.6(b), the Event of Default under the Declaration shall also not
be waivable; or
(ii) requires the consent or vote of a Super Majority to be waived
under the Indenture, except where the Holders of the Common
Securities are deemed to have waived such Event of Default under
the Declaration as provided below in this Section 2.6(b), the
Event of Default under the Declaration may only be waived by the
vote of the Holders of at least the proportion in liquidation
amount of the Common Securities that the relevant Super Majority
represents of the aggregate principal amount of the Debentures
outstanding;
provided further, each Holder of Common Securities will be deemed to have waived
any such Event of Default and all Events of Default with respect to the Common
Securities and the consequences thereof until all Events of Default with respect
to the Preferred Securities have been cured, waived or otherwise eliminated, and
until such Events of Default with respect to the Preferred Securities have been
so cured, waived or otherwise eliminated, the Property Trustee will be deemed to
be acting solely on behalf of the Holders of the Preferred Securities and only
the Holders of the Preferred Securities will have the right to direct the
Property Trustee in accordance with the terms of the Securities. The foregoing
provisions of this Section 2.6(b) shall be in lieu of Sections 316(a)(1)(A) and
316(a)(1)(B) of the Trust Indenture Act and such Sections 316(a)(1)(A) and
316(a)(1)(B) of the Trust Indenture Act are hereby expressly excluded from this
Declaration and the Securities, as permitted by the Trust Indenture Act. Subject
to the foregoing provisions of this Section 2.6(b), upon such waiver, any such
default shall cease to exist and any Event of Default with respect to the Common
Securities arising therefrom shall be deemed to have been cured for every
purpose of this Declaration, but no such waiver shall extend to any subsequent
or other default or Event of Default with respect to the Common Securities or
impair any right consequent thereon.
(c) A waiver of an Event of Default under the Indenture by the Property
Trustee at the direction of the Holders of the Preferred Securities constitutes
a waiver of the corresponding Event of Default with respect to the Preferred
Securities under this Declaration. The foregoing provisions of this Section
2.6(c) shall be in lieu of Section 316(a)(1)(B) of the Trust Indenture Act and
such Section 316(a)(1)(B) of the Trust Indenture Act is hereby expressly
excluded from this Declaration and the Securities, as permitted by the Trust
Indenture Act.
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SECTION 2.7 Event of Default; Notice.
(a) The Property Trustee shall, within 90 days after the occurrence of
an Event of Default, transmit by mail, first class postage prepaid, to the
Holders of the Securities, notices of all defaults with respect to the
Securities actually known to a Responsible Officer of the Property Trustee,
unless such defaults have been cured before the giving of such notice (the term
"defaults" for the purposes of this Section 2.7(a) being hereby defined to be an
Event of Default as defined in the Indenture, not including any periods of grace
provided for therein and irrespective of the giving of any notice provided
therein); provided that, except for a default in the payment of principal of (or
premium, if any) or interest on any of the Debentures or in the payment of any
sinking fund installment established for the Debentures, the Property Trustee
shall be protected in withholding such notice if and so long as a Responsible
Officer of the Property Trustee in good faith determines that the withholding of
such notice is in the interests of the Holders of the Securities.
(b) The Property Trustee shall not be deemed to have knowledge of any
default except:
(i) a default under Sections 5.1(1) and 5.1(2) of the Indenture; or
(ii) any default as to which the Property Trustee shall have received
written notice or of which a Responsible Officer of the Property
Trustee charged with the administration of this Declaration shall
have actual knowledge.
ARTICLE III
ORGANIZATION
SECTION 3.1 Name and Organization.
The Trust hereby created is named "Conseco Financing Trust V" as such
name may be modified from time to time by the Regular Trustees following written
notice to the Holders of Securities. The Trust's activities may be conducted
under the name of the Trust or any other name deemed advisable by the Regular
Trustees.
SECTION 3.2 Office.
The address of the principal office of the Trust is 11825 North
Pennsylvania Street, Carmel, Indiana 46032. On ten Business Days written notice
to the Holders of Securities, the Regular Trustees may designate another
principal office.
SECTION 3.3 Purpose.
The exclusive purposes and functions of the Trust are (a) to issue and
sell Securities and use the gross proceeds from such sale to acquire the
Debentures, and (b) except as otherwise limited herein, to engage in only those
other activities necessary, appropriate, convenient or incidental thereto. The
Trust shall not borrow money, issue debt or reinvest proceeds derived from
investments,
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pledge any of its assets or otherwise undertake (or permit to be undertaken) any
activity that would cause the Trust not to be classified for United States
federal income tax purposes as a grantor trust.
The Trust will be classified as a grantor trust for United States
federal income tax purposes under Subpart E of Subchapter J of the Code,
pursuant to which the owners of the Preferred Securities and the Common
Securities will be the owners of the Trust for United States federal income tax
purposes, and such owners will include directly in their gross income the
income, gain, deduction or loss of the Trust as if the Trust did not exist. By
the acceptance of this Trust, none of the Trustees, the Sponsor, the Holders of
the Preferred Securities or Common Securities or the Preferred Securities
Beneficial Owners will take any position for United States federal income tax
purposes which is contrary to the classification of the Trust as a grantor
trust.
SECTION 3.4 Authority.
Subject to the limitations provided in this Declaration and to the
specific duties of the Property Trustee, the Regular Trustees shall have
exclusive and complete authority to carry out the purposes of the Trust. An
action taken by the Regular Trustees in accordance with their powers shall
constitute the act of and serve to bind the Trust and an action taken by the
Property Trustee on behalf of the Trust in accordance with its powers shall
constitute the act of and serve to bind the Trust. In dealing with the Trustees
acting on behalf of the Trust, no person shall be required to inquire into the
authority of the Trustees to bind the Trust. Persons dealing with the Trust are
entitled to rely conclusively on the power and authority of the Trustees as set
forth in this Declaration.
SECTION 3.5 Title to Property of the Trust.
Except as provided in Section 3.8 with respect to the Debentures and
the Property Trustee Account or as otherwise provided in this Declaration, legal
title to all assets of the Trust shall be vested in the Trust. The Holders shall
not have legal title to any part of the assets of the Trust, but shall have an
undivided beneficial interest in the assets of the Trust.
SECTION 3.6 Powers and Duties of the Regular Trustees.
The Regular Trustees shall have the exclusive power, duty and authority
to cause the Trust to engage in the following activities:
(a) to issue and sell the 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 Securities shall be
limited to a one-time, simultaneous issuance of both Preferred
Securities and Common Securities on the Closing Date;
(b) in connection with the issue and sale of the Preferred Securities,
at the direction of the Sponsor, to:
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(i) execute and file with the Commission a registration
statement on Form S-3 prepared by the Sponsor, including any
amendments thereto, pertaining to the Preferred Securities
(and any other securities of the Sponsor which the Sponsor
may desire to include in such registration statement);
(ii) execute and file any documents prepared by the Sponsor, or
take any acts as determined by the Sponsor to be necessary,
in order to qualify or register all or part of the 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, Inc. or any other national
stock exchange or the Nasdaq Stock Market's National Market
System 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 the Underwriting Agreement providing
for the sale of the Preferred Securities;
(c) to acquire the Debentures with the proceeds of the sale of the
Preferred Securities and the Common Securities; provided, however,
that the Regular Trustees shall cause legal title to the
Debentures to be held of record in the name of the Property
Trustee for the benefit of the Holders of the Preferred Securities
and the Holders of the Common Securities;
(d) to give the Sponsor and the Property Trustee prompt written notice
of the occurrence of a Special Event; provided that the Regular
Trustees shall consult with the Sponsor and the Property Trustee
before taking or refraining from taking any action in relation to
a Special Event;
(e) to establish a record date with respect to all actions to be taken
hereunder that require a record date be established, including and
with respect to, for the purposes of Section 316(c) of the Trust
Indenture Act, Distributions, voting rights, redemptions and
exchanges, and to issue relevant notices to the Holders of
Preferred Securities and Holders of Common Securities as to such
actions and applicable record dates;
(f) to take all actions and perform such duties as may be required of
the Regular Trustees pursuant to the terms of this Declaration and
the Securities;
(g) to bring or defend, pay, collect, compromise, arbitrate, resort to
legal action or otherwise adjust claims or demands of or against
the Trust ("Legal Action"), unless
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pursuant to Section 3.8(e), the Property Trustee has the exclusive
power to bring such Legal Action;
(h) to employ or otherwise engage employees and agents (who may be
designated as officers with titles) and managers, contractors,
advisors and consultants and pay reasonable compensation for such
services;
(i) to cause the Trust to comply with the Trust's obligations under
the Trust Indenture Act;
(j) to give the certificate required by Section 314(a)(4) of the Trust
Indenture Act to the Property Trustee, which certificate may be
executed by any Regular Trustee;
(k) to incur expenses that are necessary, incidental or desirable to
carry out any of the purposes of the Trust;
(l) to act as, or appoint another Person to act as, registrar and
transfer agent for the Securities;
(m) to give prompt written notice to the Holders of the Securities of
any notice received from the Debenture Issuer of its election (i)
to defer payments of interest on the Debentures by extending the
interest payment period under the Debentures as authorized by the
Indenture, or (ii) to extend the maturity date of the Debentures
if so authorized by the Indenture, provided that any such
extension of the maturity date will not adversely affect the
federal income tax status of the Trust;
(n) to take all action that may be necessary or appropriate for the
preservation and the continuation of the Trust's valid existence,
rights, franchises and privileges as a statutory business trust
under the laws of the State of Delaware and of each other
jurisdiction in which such existence is necessary to protect the
limited liability of the Holders of the Preferred Securities or to
enable the Trust to effect the purposes for which the Trust was
created;
(o) to take any action, not inconsistent with this Declaration or with
applicable law, that the Regular Trustees determine in their
discretion to be necessary or desirable in carrying out the
purposes and functions of the Trust as set out in Section 3.3 or
the activities of the Trust as set out in this Section 3.6,
including, but not limited to:
(i) causing the Trust not to be deemed to be an Investment
Company required to be registered under the Investment
Company Act;
(ii) causing the Trust to be classified for United States federal
income tax purposes as a grantor trust; and
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(iii) cooperating with the Debenture Issuer to ensure that the
Debentures will be treated as indebtedness of the Debenture
Issuer for United States federal income tax purposes,
provided that such action does not adversely affect the interests
of Holders;
(p) to take all action necessary to cause all applicable tax returns
and tax information reports that are required to be filed with
respect to the Trust to be duly prepared and filed by the Regular
Trustees, on behalf of the Trust;
(q) to execute all documents or instruments, perform all duties and
powers, and do all things for and on behalf of the Trust in all
matters necessary, incidental or desirable to the foregoing;
(r) to give written notice to the Property Trustee of the rating
assigned to the Preferred Securities, from time to time, by a
"nationally recognized statistical rating organization", as that
term is defined for purposes of Rule 436(g)(2) under the
Securities Act promptly after such assignment and after any change
thereof.
The Regular Trustees must exercise the powers set forth in this Section
3.6 in a manner that is consistent with the purposes and functions of the Trust
set out in Section 3.3, and the Regular Trustees shall not take any action that
is inconsistent with the purposes and functions of the Trust set forth in
Section 3.3.
Subject to this Section 3.6, the Regular Trustees shall have none of
the powers or the authority of the Property Trustee set forth in Section 3.8.
Any expenses incurred by the Regular Trustees pursuant to this Section
3.6 shall be reimbursed by the Debenture Issuer.
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees.
(a) The Trust shall not, and the Regular Trustees and the Property
Trustee shall cause the Trust not to, engage in any activity other than as
required or authorized by this Declaration. In particular, the Trust shall not
and the Regular Trustees and the Property Trustee shall cause the Trust not to:
(i) invest any proceeds received by the Trust from holding the
Debentures, but shall distribute all such proceeds to Holders of
Securities pursuant to the terms of this Declaration and of the
Securities;
(ii) acquire any assets other than as expressly provided herein;
(iii) possess Trust property for other than a Trust purpose;
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(iv) make any loans or incur any indebtedness other than loans
represented by the Debentures;
(v) possess any power or otherwise act in such a way as to vary the
Trust assets or the terms of the Securities in any way whatsoever
(except to the extent expressly authorized in this Declaration or
by the terms of the Securities);
(vi) issue any securities or other evidences of beneficial ownership
of, or beneficial interest in, the Trust other than the
Securities; or
(vii)other than as provided in this Declaration or by the terms of the
Securities, (A) direct the time, method and place of exercising
any trust or power conferred upon the Debenture Trustee with
respect to the Debentures, (B) waive any past default that is
waivable under the Indenture, (C) exercise any right to rescind or
annul any declaration that the principal of all the Debentures
shall be due and payable, or (D) consent to any amendment,
modification or termination of the Indenture or the Debentures
where such consent shall be required unless the Trust shall have
received an opinion of counsel to the effect that such
modification will not cause more than an insubstantial risk that
for United States federal income tax purposes the Trust will not
be classified as a grantor trust.
SECTION 3.8 Powers and Duties of the Property Trustee.
(a) The legal title to the Debentures shall be owned by and held of
record in the name of the Property Trustee in trust for the benefit of the Trust
and the Holders of the Securities. The right, title and interest of the Property
Trustee to the Debentures shall vest automatically in each Person who may
hereafter be appointed as Property Trustee in accordance with Section 5.7. Such
vesting and cessation of title shall be effective whether or not conveyancing
documents with regard to the Debentures have been executed and delivered.
(b) The Property Trustee shall not transfer its right, title and
interest in the Debentures to the Regular Trustees or to the Delaware Trustee
(if the Property Trustee does not also act as Delaware Trustee).
(c) The Property Trustee shall:
(i) establish and maintain a segregated non-interest bearing trust
account (the "Property Trustee Account") in the name of and under
the exclusive control of the Property Trustee on behalf of the
Holders of the Securities and, upon the receipt of payments of
funds made in respect of the Debentures held by the Property
Trustee, deposit such funds into the Property Trustee Account and
make payments to the Holders of the Preferred Securities and
Holders of the Common Securities from the Property Trustee Account
in accordance with Section 6.1. Funds in the Property Trustee
Account shall be held uninvested until disbursed in accordance
with this Declaration. The Property Trustee Account shall be an
account that is maintained with a banking institution the rating
on whose long-term unsecured indebtedness is at least equal to the
rating
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assigned to the Preferred Securities by a "nationally recognized
statistical rating organization", as that term is defined for
purposes of Rule 436(g)(2) under the Securities Act;
(ii) engage in such ministerial activities as shall be necessary or
appropriate to effect the redemption of the Preferred Securities
and the Common Securities to the extent the Debentures are
redeemed or mature; and
(iii) upon written notice of distribution issued by the Regular
Trustees in accordance with the terms of the Securities, engage in
such ministerial activities as shall be necessary or appropriate
to effect the distribution of the Debentures to Holders of
Securities upon the occurrence of certain special events (as may
be defined in the terms of the Securities) arising from a change
in law or a change in legal interpretation or other specified
circumstances pursuant to the terms of the Securities.
(d) The Property Trustee shall take all actions and perform such duties
as may be specifically required of the Property Trustee pursuant to the terms of
this Declaration and the Securities.
(e) To the extent consistent with and not in contravention of the terms
and provisions of this Declaration and the Indenture, with respect to any
compromise, arbitration, or adjustment of claims or demands, the Property
Trustee shall take any Legal Action which arises out of or in connection with an
Event of Default of which a Responsible Officer of the Property Trustee has
actual knowledge or the Property Trustee's duties and obligations under this
Declaration or the Trust Indenture Act.
(f) The Property Trustee shall continue to serve as a Trustee until
either:
(i) the Trust has been completely liquidated and the proceeds of the
liquidation distributed to the Holders of Securities pursuant to
the terms of the Securities; or
(ii) a Successor Property Trustee has been appointed and has accepted
that appointment in accordance with Section 5.7.
(g) The Property Trustee shall have the legal power to exercise all of
the rights, powers and privileges of a holder of Debentures under the Indenture
and, if an Event of Default actually known to a Responsible Officer of the
Property Trustee occurs and is continuing, the Property Trustee shall, for the
benefit of Holders of the Securities, enforce its rights as holder of the
Debentures subject to the rights of the Holders pursuant to the terms of such
Securities.
(h) The Property Trustee may authorize one or more Persons (each, a
"Paying Agent") to pay Distributions, redemption payments or liquidation
payments on behalf of the Trust with respect to all Securities and any such
Paying Agent shall comply with Section 317(b) of the Trust Indenture Act. Any
Paying Agent may be removed by the Property Trustee at any time and a successor
Paying Agent or additional Paying Agents may be appointed at any time by the
Property Trustee. In the event the Preferred Securities do not remain in the
form of one or more Global Certificates, the
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Property Trustee will act as Paying Agent and may designate an additional or
substitute Paying Agent at any time.
(i) Subject to this Section 3.8, the Property Trustee shall have none
of the duties, liabilities, powers or the authority of the Regular
Trustees set forth in Section 3.6.
The Property Trustee must exercise the powers set forth in this Section
3.8 in a manner that is consistent with the purposes and functions of the Trust
set out in Section 3.3, and the Property Trustee shall not take any action that
is inconsistent with the purposes and functions of the Trust set out in Section
3.3.
SECTION 3.9 Certain Duties and Responsibilities of the Property Trustee.
(a) The Property Trustee, before the occurrence of any Event of Default
and after the curing of all Events of Default that may have occurred, shall
undertake to perform only such duties as are specifically set forth in this
Declaration and no implied covenants shall be read into this Declaration against
the Property Trustee. In case an Event of Default has occurred (that has not
been cured or waived pursuant to Section 2.6) of which a Responsible Officer of
the Property Trustee has actual knowledge, the Property Trustee shall exercise
such of the rights and powers vested in it by this Declaration, and use the same
degree of care and skill in their exercise, as a prudent person would exercise
or use under the circumstances in the conduct of his or her own affairs.
(b) No provision of this Declaration shall be construed to relieve the
Property Trustee from liability for its own negligent action, its own negligent
failure to act or its own willful misconduct, except that:
(i) prior to the occurrence of an Event of Default and after the
curing or waiving of all such Events of Default that may have
occurred:
(A) the duties and obligations of the Property Trustee shall be
determined solely by the express provisions of this
Declaration and the Securities and the Property Trustee
shall not be liable except for the performance of such
duties and obligations as are specifically set forth in this
Declaration, and no implied covenants or obligations shall
be read into this Declaration against the Property Trustee;
and
(B) in the absence of bad faith on the part of the Property
Trustee, the Property Trustee may conclusively rely, as to
the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or
opinions furnished to the Property Trustee and conforming to
the requirements of this Declaration; but in the case of any
such certificates or opinions that by any provision hereof
are specifically required to be furnished to the Property
Trustee, the Property Trustee shall be under a duty to
examine the same to determine whether or not they conform to
the requirements of this Declaration;
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(ii) the Property Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer of the Property
Trustee, unless it shall be proved that the Property Trustee was
negligent in ascertaining the pertinent facts;
(iii) the Property Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than a
Majority in Liquidation Amount of the Securities relating to the
time, method and place of conducting any proceeding for any remedy
available to the Property Trustee, or exercising any trust or
power conferred upon the Property Trustee under this Declaration;
(iv) no provision of this Declaration shall require the Property
Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its
duties or in the exercise of any of its rights or powers, if it
shall have reasonable grounds for believing that the repayment of
such funds or liability is not reasonably assured to it under the
terms of this Declaration or indemnity reasonably satisfactory to
the Property Trustee against such risk or liability is not
reasonably assured to it;
(v) the Property Trustee's sole duty with respect to the custody, safe
keeping and physical preservation of the Debentures and the
Property Trustee Account shall be to deal with such property in a
similar manner as the Property Trustee deals with similar property
for its own account, subject to the protections and limitations on
liability afforded to the Property Trustee under this Declaration
and the Trust Indenture Act;
(vi) the Property Trustee shall have no duty or liability for or with
respect to the value, genuineness, existence or sufficiency of the
Debentures or the payment of any taxes or assessments levied
thereon or in connection therewith;
(vii) the Property Trustee shall not be liable for any interest on any
money received by it except as it may otherwise agree in writing
with the Sponsor. Money held by the Property Trustee need not be
segregated from other funds held by it except in relation to the
Property Trustee Account maintained by the Property Trustee
pursuant to Section 3.8(c)(i) and except to the extent otherwise
required by law; and
(viii) the Property Trustee shall not be responsible for monitoring the
compliance by the Regular Trustees or the Sponsor with their
respective duties under this Declaration, nor shall the Property
Trustee be liable for any default or misconduct of the Regular
Trustees or the Sponsor.
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SECTION 3.10 Certain Rights of Property Trustee.
(a) Subject to the provisions of Section 3.9:
(i) the Property Trustee may conclusively rely and shall be fully
protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note, other
eviden ce of indebte dness or other paper or docum ent believe d
by it to be genuine and to have been signed, sent or present ed by
the proper party or parties;
(ii) any direction or act of the Sponsor or the Regular Trustees
contemplated by this Declaration shall be sufficiently evidenced
by a Direction or an Officers' Certificate;
(iii) whenever in the administration of this Declaration, the Property
Trustee shall deem it desirable that a matter be proved or
established before taking, suffering or omitting any action
hereunder, the Property Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of bad faith on its
part, request and conclusively rely upon an Officers' Certificate
which, upon receipt of such request, shall be promptly delivered
by the Sponsor or the Regular Trustees;
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(iv) the Property Trustee shall have no duty to see to any recording,
filing or registration of any instrument (including any financing
or continuation statement or any filing under tax or securities
laws) or any rerecording, refiling or registration thereof;
(v) the Property Trustee may consult with counsel or other experts and
the advice or opinion of such counsel and experts with respect to
legal matters or advice within the scope of such experts' area of
expertise shall be full and complete authorization and protection
in respect of any action taken, suffered or omitted by it
hereunder in good faith and in accordance with such advice or
opinion, such counsel may be counsel to the Sponsor or any of its
Affiliates, and may include any of its employees. The Property
Trustee shall have the right at any time to seek instructions
concerning the administration of this Declaration from any court
of competent jurisdiction;
(vi) the Property Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Declaration at the
request or direction of any Holder, unless such Holder shall have
provided to the Property Trustee security and indemnity,
reasonably satisfactory to the Property Trustee, against the
costs, expenses (including attorneys' fees and expenses and the
expenses of the Property Trustee's agents, nominees or custodians)
and liabilities that might be incurred by it in complying with
such request or direction, including such reasonable advances as
may be requested by the Property Trustee; provided that, nothing
contained in this Section 3.10(a)(vi) shall be taken to relieve
the Property Trustee, upon the occurrence of an Event of Default,
of its obligation to exercise the rights and powers vested in it
by this Declaration;
(vii) the Property Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence
of indebtedness or other paper or document, but the Property
Trustee, in its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit;
(viii) the Property Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents, custodians, nominees or attorneys and the Property
Trustee shall not be responsible for any misconduct or negligence
on the part of any agent or attorney appointed with due care by it
hereunder;
(ix) any action taken by the Property Trustee or its agents hereunder
shall bind the Trust and the Holders of the Securities, and the
signature of the Property Trustee or its agents alone shall be
sufficient and effective to perform any such action and no third
party shall be required to inquire as to the authority of the
Property Trustee to so act or as to its compliance with any of the
terms and provisions of this Declaration, both of which shall be
conclusively evidenced by the Property Trustee's or its agent's
taking such action;
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(x) whenever in the administration of this Declaration the Property
Trustee shall deem it desirable to receive instructions with
respect to enforcing any remedy or right or taking any other
action hereunder, the Property Trustee (i) may request
instructions from the Holders of the Securities which instructions
may only be given by the Holders of the same proportion in
liquidation amount of the Securities as would be entitled to
direct the Property Trustee under the terms of the Securities in
respect of such remedy, right or action, (ii) may refrain from
enforcing such remedy or right or taking such other action until
such instructions are received, and (iii) shall be protected in
conclusively relying on or acting in or accordance with such
instructions; and
(xi) except as otherwise expressly provided by this Declaration, the
Property Trustee shall not be under any obligation to take any
action that is discretionary under the provisions of this
Declaration.
(b) No provision of this Declaration shall be deemed to impose any duty
or obligation on the Property Trustee to perform any act or acts or exercise any
right, power, duty or obligation conferred or imposed on it, in any jurisdiction
in which it shall be illegal, or in which the Property Trustee shall be
unqualified or incompetent in accordance with applicable law, to perform any
such act or acts, or to exercise any such right, power, duty or obligation. No
permissive power or authority available to the Property Trustee shall be
construed to be a duty.
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SECTION 3.11 Delaware Trustee.
Notwithstanding any other provision of this Declaration other than
Section 5.2, the Delaware Trustee shall not be entitled to exercise any powers,
nor shall the Delaware Trustee have any of the duties and responsibilities of
the Regular Trustees or the Property Trustee described in this Declaration.
Except as set forth in Section 5.2, the Delaware Trustee shall be a Trustee for
the sole and limited purpose of fulfilling the requirements of Section 3807 of
the Business Trust Act.
SECTION 3.12 Execution of Documents.
Unless otherwise determined by the Regular Trustees, and except as
otherwise required by the Business Trust Act, any one Regular Trustee is
authorized to execute on behalf of the Trust any documents that the Regular
Trustees have the power and authority to execute pursuant to Section 3.6;
provided, that, the registration statement referred to in Section 3.6(b)(i),
including any amendments thereto, shall be signed by a majority of the Regular
Trustees.
SECTION 3.13 Not Responsible for Recitals or Issuance of Securities.
The recitals contained in this Declaration shall be taken as the
statements of the Sponsor, and the Trustees do not assume any responsibility for
their correctness. The Trustees make no representations as to the value or
condition of the property of the Trust or any part thereof. The Trustees make no
representations as to the validity or sufficiency of this Declaration or the
Securities.
SECTION 3.14 Duration of Trust.
The Trust, unless terminated pursuant to the provisions of Article VIII
hereof, shall have existence for fifty-five (55) years from the Closing Date.
SECTION 3.15 Mergers.
(a) The Trust may not consolidate, amalgamate, merge with or into, or
be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other body, except as
described in Section 3.15(b) and (c).
(b) The Trust may, with the consent of the Regular Trustees or, if
there are more than two, a majority of the Regular Trustees and without the
consent of the Holders of the Securities, the Delaware Trustee or the Property
Trustee, consolidate, amalgamate, merge with or into, or be replaced by a trust
organized as such under the laws of any State; provided that:
(i) such successor entity (the "Successor Entity") either:
(A) expressly assumes all of the obligations of the Trust under
the Securities; or
(B) substitutes for the Preferred Securities and Common
Securities other securities having substantially the same
terms as the Preferred Securities and Common Securities,
respectively (the "Successor Securities") so long as the
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Successor Securities rank the same as the Preferred
Securities and the Common Securities, respectively, rank with
respect to Distributions and payments upon liquidation,
redemption and otherwise;
(ii) the Debenture Issuer expressly accepts a trustee of the Successor
Entity that possesses the same powers and duties as the Property
Trustee as the holder of the Debentures;
(iii) the Preferred Securities or any Successor Securities (with
respect to the Preferred Securities) are listed, or any Successor
Securities (with respect to the Preferred Securities) will be
listed upon notification of issuance, on any national securities
exchange or with any other organization on which the Preferred
Securities are then listed or quoted;
(iv) such merger, consolidation, amalgamation or replacement does not
cause the Preferred Securities (including any Successor Securities
of the Preferred Securities) to be downgraded by any nationally
recognized statistical rating organization then rating the
Preferred Securities at the request of the Sponsor;
(v) such merger, consolidation, amalgamation or replacement does not
adversely affect the rights, preferences and privileges of the
Holders of the Securities (including any Successor Securities) in
any material respect (other than with respect to any dilution of
such Holders' interests in the Preferred Securities as a result of
such merger, consolidation, amalgamation or replacement);
(vi) such Successor Entity has a purpose identical to that of the
Trust;
(vii) prior to such merger, consolidation, amalgamation or replacement,
the Sponsor has received an opinion of qualified independent
counsel to the Trust experienced in such matters to the effect
that:
(A) such merger, consolidation, amalgamation or replacement does
not adversely affect the rights, preferences and privileges
of the Holders of the Securities (including any Successor
Securities) in any material respect (other than with respect
to any dilution of such Holders' interests in the Preferred
Securities as a result of such merger, consolidation,
amalgamation or replacement);
(B) following such merger, consolidation, amalgamation or
replacement, neither the Trust nor the Successor Entity will
be required to register as an Investment Company; and
(C) following such merger, consolidation, amalgamation or
replacement, the Trust (or the Successor Entity) will
continue to be classified as a grantor trust for United
States federal income tax purposes;
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(viii) the Sponsor guarantees the obligations of such Successor Entity
under the Successor Securities at least to the extent provided by
the Preferred Securities Guarantee and the Common Securities
Guarantee, respectively; and
(ix) the Regular Trustees shall have furnished the Delaware Trustee and
the Property Trustee at least 5 Business Days prior written notice
of the consummation of such merger, consolidation, amalgamation or
replacement; provided that failure to provide such notice shall
not affect the validity of any such transaction.
(c) Notwithstanding Section 3.15(b), the Trust shall not, except with
the consent of Holders of 100% in liquidation amount of the Securities,
consolidate, amalgamate, merge with or into, or be replaced by any other entity
or permit any other entity to consolidate, amalgamate, merge with or into, or
replace it if such consolidation, amalgamation, merger or replacement would
cause the Trust or Successor Entity to be classified as other than a grantor
trust for United States federal income tax purposes.
SECTION 3.16 Property Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
similar judicial proceeding relative to the Trust or any other obligor upon the
Securities or the property of the Trust or of such other obligor or their
creditors, the Property Trustee (irrespective of whether any Distributions on
the Securities shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Property Trustee shall
have made any demand on the Trust for the payment of any past due Distributions)
shall be entitled and empowered, to the fullest extent permitted by law, by
intervention in such proceeding or otherwise:
(a) to file and prove a claim for the whole amount of any
Distributions owing and unpaid in respect of the Securities (or,
if the Securities are original issue discount Securities, such
portion of the liquidation amount as may be specified in the terms
of such Securities) and to file such other papers or documents as
may be necessary or advisable in order to have the claims of the
Property Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Property
Trustee, its agents and counsel) and of the Holders allowed in
such judicial proceeding; and
(b) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Property Trustee and, in the event the
Property Trustee shall consent to the making of such payments directly to the
Holders, to pay to the Property Trustee any amount due it for the reasonable
compensation, expenses, disbursements and advances of the Property Trustee, its
agents and counsel, and any other amounts due the Property Trustee.
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Nothing herein contained shall be deemed to authorize the Property
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement adjustment or compensation affecting the
Securities or the rights of any Holder thereof or to authorize the Property
Trustee to vote in respect of the claim of any Holder in any such proceeding.
ARTICLE IV
SPONSOR
SECTION 4.1 Sponsor's Purchase of Common Securities.
On the Closing Date the Sponsor will purchase all of the Common
Securities issued by the Trust, in an amount at least equal to 3% of the capital
of the Trust, at the same time as the Preferred Securities are sold.
SECTION 4.2 Responsibilities of the Sponsor.
In connection with the issue 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 pertaining to the Preferred
Securities, including any amendments thereto (which registration
statement may also include other securities of the Sponsor);
(b) to determine the States in which to take appropriate action to
qualify or register for sale all or part of the 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, Inc. or any other national stock exchange or the
Nasdaq Stock Market's National Market System 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 Preferred Securities under Section 12(b) of the Exchange Act,
including any amendments thereto; and
(e) to negotiate the terms of the Underwriting Agreement providing for
the sale of the Preferred Securities.
SECTION 4.3 Right to Dissolve Trust.
The Sponsor shall have the right at any time after the Closing Date to
elect to dissolve the Trust in accordance with the terms of the Securities and
to direct the Property Trustee to take such
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action as shall be necessary to distribute the Debentures to the Holders of the
Securities in exchange for all of the Securities.
SECTION 4.4 Direct Right of Action.
Notwithstanding any provision of this Declaration to the contrary, to
the extent permitted by applicable law, any Holder of Securities may enforce
directly against the Sponsor the obligation of the Sponsor under the Indenture
to duly and punctually pay the principal and interest when due under the
Debentures and the Sponsor irrevocably waives any right or remedy to require
that any such Holder take any action against the Trust or any other Person
before proceeding against the Sponsor.
ARTICLE V
TRUSTEES
SECTION 5.1 Number of Trustees.
The number of Trustees initially shall be four (4), and:
(a) at any time before the issuance of any Securities, the Sponsor
may, by written instrument, increase or decrease the number of
Trustees; and
(b) after the issuance of any Securities, the number of Trustees may
be increased or decreased by vote of the Holders of a Majority in
Liquidation Amount of the Common Securities voting as a class at a
meeting of the Holders of the Common Securities or by written
consent in lieu of such meeting.
provided that, if the Property Trustee does not also act as Delaware Trustee,
the number of Trustees shall be at least three (3).
SECTION 5.2 Delaware Trustee.
If required by the Business Trust Act, one Trustee (the "Delaware
Trustee") shall be:
(a) a natural person who is a resident of the State of Delaware; or
(b) if not a natural person, an entity which has its principal place
of business in the State of Delaware, and otherwise meets the
requirements of applicable law,
provided that, if the Property Trustee has its principal place of business in
the State of Delaware and otherwise meets the requirements of applicable law,
then the Property Trustee shall also be the Delaware Trustee and Section 3.11
shall have no application.
SECTION 5.3 Property Trustee; Eligibility.
(a) There shall at all times be one Trustee acting as Property Trustee
which shall:
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(i) not be an Affiliate of the Sponsor; and
(ii) be a corporation or trust company organized and doing business
under the laws of the United States of America or any State or
Territory thereof or of the District of Columbia, or a corporation
or other Person permitted by the Commission to act as an
institutional trustee under the Trust Indenture Act, authorized
under such laws to exercise corporate trust powers, having a
combined capital and surplus of at least 50 million U.S. dollars
($50,000,000), and subject to supervision or examination by
Federal, State, Territorial or District of Columbia authority. If
such corporation or trust company publishes reports of condition
at least annually, pursuant to law or to the requirements of the
supervising or examining authority referred to above, then for the
purposes of this Section 5.3(a)(ii), the combined capital and
surplus of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of
condition so published.
(b) If at any time the Property Trustee shall cease to be eligible to
so act under Section 5.3(a), the Property Trustee shall immediately resign in
the manner and with the effect set forth in Section 5.7(c).
(c) If the Property Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act, the
Property Trustee and the Holder of the Common Securities (as if it were the
Obliger referred to in Section 310(b) of the Trust Indenture Act) shall in all
respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.
(d) The Preferred Securities Guarantee shall be deemed to be
specifically described in this Declaration for purposes of clause (i) of the
first provision contained in Section 310(b) of the Trust Indenture Act.
SECTION 5.4 Regular Trustees.
(a) Except as expressly set forth in this Declaration and except if a
meeting of the Regular Trustees is called with respect to any matter over which
the Regular Trustees have power to act, any power of the Regular Trustees may be
exercised by, or with the consent of, any one such Regular Trustee.
(b) Unless otherwise determined by the Regular Trustees, and except as
otherwise required by the Business Trust Act or applicable law, any one Regular
Trustee is authorized to execute on behalf of the Trust any documents which the
Regular Trustees have the power and authority to cause the Trust to execute
pursuant to Section 3.6, provided, that, the registration statement referred to
in Section 3.6, including any amendments thereto, shall be signed by a majority
of the Regular Trustees; and
(c) A Regular Trustee may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 his or
her power for the purposes of signing any documents which the Regular Trustees
have power and authority to cause the Trust to execute pursuant to Section 3.6.
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SECTION 5.5 Certain Qualifications of Regular Trustees and Delaware Trustee
Generally.
Each Regular Trustee and the Delaware Trustee (unless the Property
Trustee also acts as Delaware Trustee) shall be either a natural person who is
at least 21 years of age or a legal entity that shall act through one or more
Authorized Officers.
SECTION 5.6 Initial Trustees.
The initial Regular Trustees shall be: Rollin M. Dick and Stephen C.
Hilbert.
The initial Property Trustee shall be: State Street Bank and Trust
Company.
The initial Delaware Trustee shall be: First Union Trust Company,
National Association.
SECTION 5.7 Appointment, Removal and Resignation of Trustees.
(a) Subject to Section 5.7(b), Trustees may be appointed or removed
without cause at any time:
(i) until the issuance of any Securities, by written instrument
executed by the Sponsor; and
(ii) after the issuance of any Securities, by vote of the Holders of a
Majority in Liquidation Amount of the Common Securities voting as
a class at a meeting of the Holders of the Common Securities.
(b) The Trustee that acts as Property Trustee shall not be removed in
accordance with Section 5.7(a) until a successor Trustee possessing the
qualifications to act as Property Trustee under Section 5.3 (a "Successor
Property Trustee") has been appointed and has accepted such appointment by
written instrument executed by such Successor Property Trustee and delivered to
the Regular Trustees and the Sponsor. The Trustee that acts as Delaware Trustee
shall not be removed in accordance with Section 5.7(a) until a successor Trustee
possessing the qualifications to act as Delaware Trustee under Sections 5.2 and
5.5 (a "Successor Delaware Trustee") has been appointed and has accepted such
appointment by written instrument executed by such Successor Delaware Trustee
and delivered to the Regular Trustees and the Sponsor.
(c) A Trustee appointed to office shall hold office until his or its
successor shall have been appointed, until his death or its dissolution or until
his or its removal or resignation. Any Trustee may resign from office (without
need for prior or subsequent accounting) by an instrument in writing signed by
the Trustee and delivered to the Sponsor and the Trust, which resignation shall
take effect upon such delivery or upon such later date as is specified therein;
provided, however, that:
(i) No such resignation of the Trustee that acts as the Property
Trustee shall be effective:
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(A) until a Successor Property Trustee has been appointed and has
accepted such appointment by instrument executed by such
Successor Property Trustee and delivered to the Trust, the
Sponsor and the resigning Property Trustee; or
(B) until the assets of the Trust have been completely liquidated
and the proceeds thereof distributed to the holders of the
Securities; and
(ii) no such resignation of the Trustee that acts as the Delaware
Trustee shall be effective until a Successor Delaware Trustee has
been appointed and has accepted such appointment by instrument
executed by such Successor Delaware Trustee and delivered to the
Trust, the Sponsor and the resigning Delaware Trustee.
(d) The Holders of the Common Securities shall use their best efforts
to promptly appoint a Successor Delaware Trustee or Successor Property Trustee,
as the case may be, if the Property Trustee or the Delaware Trustee delivers an
instrument of resignation in accordance with this Section 5.7.
(e) If no Successor Property Trustee or Successor Delaware Trustee, as
the case may be, shall have been appointed and accepted appointment as provided
in this Section 5.7 within 60 days after delivery to the Sponsor and the Trust
of an instrument of resignation, the resigning Property Trustee or Delaware
Trustee, as applicable, may petition any court of competent jurisdiction for
appointment of a Successor Property Trustee or Successor Delaware Trustee, as
applicable. Such court may thereupon, after prescribing such notice, if any, as
it may deem proper, appoint a Successor Property Trustee or Successor Delaware
Trustee, as the case may be.
(f) No Property Trustee or Delaware Trustee shall be liable for the
acts or omissions to act of any Successor Property Trustee or Successor Delaware
Trustee, as the case may be.
(g) Any successor to a Regular Trustee shall be an officer, director,
employer or affiliate of the Sponsor.
SECTION 5.8 Vacancies among Trustees.
If a Trustee ceases to hold office for any reason and the number of
Trustees is not reduced pursuant to Section 5.1, or if the number of Trustees is
increased pursuant to Section 5.1, a vacancy shall occur. A resolution
certifying the existence of such vacancy by the Regular Trustees or, if there
are more than two, a majority of the Regular Trustees shall be conclusive
evidence of the existence of such vacancy. The vacancy shall be filled with a
Trustee appointed in accordance with Section 5.7.
SECTION 5.9 Effect of Vacancies.
The death, resignation, retirement, removal, bankruptcy, dissolution,
liquidation, incompetence or incapacity to perform the duties of a Trustee shall
not operate to annul the Trust. Whenever a vacancy in the number of Regular
Trustees shall occur, until such vacancy is filled by the appointment of a
Regular Trustee in accordance with Section 5.7, the Regular Trustees in office,
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regardless of their number, shall have all the powers granted to the Regular
Trustees and shall discharge all the duties imposed upon the Regular Trustees by
this Declaration.
SECTION 5.10 Meetings.
If there is more than one Regular Trustee, meetings of the Regular
Trustees shall be held from time to time upon the call of any Regular Trustee.
Regular meetings of the Regular Trustees may be held at a time and place fixed
by resolution of the Regular Trustees. Notice of any in-person meetings of the
Regular Trustees shall be hand delivered or otherwise delivered in writing
(including by facsimile, with a hard copy by overnight courier) not less than 48
hours before such meeting. Notice of any telephonic meetings of the Regular
Trustees shall be hand delivered or otherwise delivered in writing (including by
facsimile, with a hard copy by overnight courier) not less than 24 hours before
a meeting. Notices shall contain a brief statement of the time, place and
anticipated purposes of the meeting. The presence (whether in person or by
telephone) of a Regular Trustee at a meeting shall constitute a waiver of notice
of such meeting except where a Regular Trustee attends a meeting for the express
purpose of objecting to the transaction of any activity on the ground that the
meeting has not been lawfully called or convened. Unless provided otherwise in
this Declaration, any action of the Regular Trustees may be taken at a meeting
by vote of a majority of the Regular Trustees present (whether in person or by
telephone) and eligible to vote with respect to such matter, provided that a
Quorum is present, or without a meeting by the unanimous written consent of the
Regular Trustees. In the event there is only one Regular Trustee, any and all
action of such Regular Trustee shall be evidenced by a written consent of such
Regular Trustee.
SECTION 5.11 Delegation of Power.
(a) Any Regular Trustee may, by power of attorney consistent with
applicable law, delegate to any natural person over the age of 21 his, her or
its power for the purpose of executing any documents contemplated in Section
3.6, including any registration statement or amendment thereto filed with the
Commission, or making any other governmental filing.
(b) The Regular Trustees shall have power to delegate from time to time
to such of their number or to officers of the Trust the doing of such things and
the execution of such instruments either in the name of the Trust or the names
of the Regular Trustees or otherwise as the Regular Trustees may deem expedient,
to the extent such delegation is not prohibited by applicable law or contrary to
the provisions of the Trust, as set forth herein.
SECTION 5.12 Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Property Trustee or the Delaware
Trustee, as the case may be, may be merged or converted or with which either may
be consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Property Trustee or the Delaware Trustee, as the case
may be, shall be a party, or any corporation succeeding to all or substantially
all the corporate trust business of the Property Trustee or the Delaware
Trustee, as the case may be, shall be the successor of the Property Trustee or
the Delaware Trustee, as the case may be, hereunder, provided such corporation
shall be otherwise qualified and eligible under this Article without the
execution or filing of any paper or any further act on the part of any of the
parties hereto.
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ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions.
Holders shall receive Distributions (as defined herein) in accordance
with the applicable terms of the relevant Holder's Securities. Distributions
shall be made on the Preferred Securities and the Common Securities in
accordance with the preferences set forth in their respective terms. If and to
the extent that the Debenture Issuer makes a payment of interest (including
Compounded Interest (as defined in the Indenture) and Additional Interest (as
defined in the Indenture)), premium and/or principal on the Debentures held by
the Property Trustee (the amount of any such payment being a "Payment Amount"),
the Property Trustee shall and is directed, to the extent funds are available
for that purpose, to make a distribution (a "Distribution") of the Payment
Amount to Holders.
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities.
(a) The Regular Trustees shall on behalf of the Trust issue one class
of preferred securities (the "Preferred Securities") representing undivided
beneficial interests in the assets of the Trust having such terms as are set
forth in Annex I, as such Annex I may be amended from time to time in accordance
with the provisions of this Declaration and one class of common securities (the
"Common Securities") representing undivided beneficial interests in the assets
of the Trust having such terms as are set forth in Annex I, as such Annex I may
be amended from time to time in accordance with the provisions of this
Declaration. The Trust shall issue no securities or other interests in the
assets of the Trust other than the Preferred Securities and the Common
Securities.
(b) The Certificates shall be signed on behalf of the Trust by a
Regular Trustee. Such signature shall be the manual or facsimile signature of
any present or any future Regular Trustee. In case any Regular Trustee of the
Trust who shall have signed any of the Certificates shall cease to be such
Regular Trustee before the Certificates so signed shall be delivered by the
Trust, such Certificates nevertheless may be delivered as though the person who
signed such Certificates had not ceased to be such Regular Trustee; and any
Certificate may be signed on behalf of the Trust by such persons who, at the
actual date of execution of such Certificate, shall be the Regular Trustees of
the Trust, although at the date of the execution and delivery of the Declaration
any such person was not such a Regular Trustee. Certificates shall be printed,
lithographed or engraved or may be produced in any other manner as is reasonably
acceptable to the Regular Trustees, as evidenced by their execution thereof, and
may have such letters, numbers or other marks of identification or designation
and such legends or endorsements as the Regular Trustees may deem appropriate,
or as may be required to comply with any law or with any rule or regulation of
any stock exchange on which Securities may be listed, or to conform to usage.
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(c) The consideration received by the Trust for the issuance of the
Securities shall constitute a contribution to the capital of the Trust and shall
not constitute a loan to the Trust.
(d) Upon issuance of the Securities as provided in this Declaration,
the Securities so issued shall be deemed to be validly issued, fully paid and
non-assessable.
(e) Every Person, by virtue of having become a Holder or a Preferred
Security Beneficial Owner in accordance with the terms of this Declaration,
shall be deemed to have expressly assented and agreed to the terms of, and shall
be bound by, this Declaration and the terms of the Securities, the Securities
Guarantees, the Indenture and the Debentures.
ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1 Termination of Trust.
(a) The Trust shall dissolve upon the earlier of:
(i) the bankruptcy of the Holder of the Common Securities or the
Sponsor;
(ii) the filing of a certificate of dissolution or its equivalent with
respect to the Holder of the Common Securities or the Sponsor; the
revocation of the Holder of the Common Securities' or the
Sponsor's charter and the expiration of 90 days after the date of
revocation without a reinstatement thereof;
(iii) upon the entry of a decree of judicial dissolution of the Holder
of the Common Securities, the Sponsor or the Trust;
(iv) when all of the Securities shall have been called for redemption
and the amounts necessary for redemption thereof shall have been
paid to the Holders in accordance with the terms of the
Securities;
(v) the occurrence and continuation of a Special Event pursuant to
which the Trust shall have been dissolved in accordance with the
terms of the Securities and all of the Debentures shall have been
distributed to the Holders of Securities in exchange for all of
the Securities;
(vi) before the issuance of any Securities, when all of the Regular
Trustees and the Sponsor shall have consented to dissolution of
the Trust;
(vii) the distribution of the Debentures from the Trust to the Holders
of Securities in exchange for all of the Securities and in
liquidation of the Trust; or
(viii) the expiration of the term of the Trust as set forth in Section
3.14.
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(b) As soon as is practicable after the occurrence of an event referred
to in Section 8.1(a) and upon completion of the winding up of the Trust, the
Trustees shall file a certificate of cancellation with the Secretary of State of
the State of Delaware and thereupon the Trust shall terminate.
(c) The provisions of Section 3.9 and Article X shall survive the
termination of the Trust.
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 Transfer of Securities.
(a) Securities may only be transferred, in whole or in part, in
accordance with the terms and conditions set forth in this Declaration and in
the terms of the Securities. Any transfer or purported transfer of any Security
not made in accordance with this Declaration shall be null and void.
(b) Subject to this Article IX, Preferred Securities shall be freely
transferable.
(c) Subject to this Article IX, the Sponsor and any Related Party may
only transfer Common Securities to the Sponsor or a Related Party of the
Sponsor; provided that, any such transfer is subject to the condition precedent
that the transferor obtain the written opinion of qualified independent counsel
experienced in such matters that such transfer would not cause more than an
insubstantial risk that:
(i) the Trust would not be classified for United States federal income
tax purposes as a grantor trust; and
(ii) the Trust would be an Investment Company or the transferee would
become an Investment Company.
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SECTION 9.2 Transfer and Exchange of Certificates.
The Regular Trustees shall provide for the registration of Certificates
and of transfers or exchanges of Certificates, which will be effected without
charge but only upon payment (with such indemnity as the Regular Trustees may
require) in respect of any tax or other government charges that may be imposed
in relation to it. Upon surrender for registration of transfer of any
Certificate, the Regular Trustees shall cause one or more new Certificates to be
issued in the name of the designated transferee or transferees. Upon surrender
for exchange of any Certificate, the Regular Trustees shall cause one or more
new Certificates in the same aggregate liquidation amount as the Certificate
surrendered for exchange to be issued in the name of the Holder of the
Certificate so surrendered. Every Certificate surrendered for registration of
transfer or for exchange shall be accompanied by a written instrument of
transfer in form satisfactory to the Regular Trustees duly executed by the
Holder or such Holder's attorney duly authorized in writing. Each Certificate
surrendered for registration of transfer or for exchange shall be canceled by
the Regular Trustees. A transferee of a Certificate shall be entitled to the
rights and subject to the obligations of a Holder hereunder upon the receipt by
such transferee of a Certificate. By acceptance of a Certificate, each
transferee shall be deemed to have agreed to be bound by this Declaration.
SECTION 9.3 Deemed Security Holders.
The Trustees may treat the Person in whose name any Certificate shall
be registered on the books and records of the Trust as the sole holder of such
Certificate and of the Securities represented by such Certificate for purposes
of receiving Distributions and for all other purposes whatsoever and,
accordingly, shall not be bound to recognize any equitable or other claim to or
interest in such Certificate or in the Securities represented by such
Certificate on the part of any Person, whether or not the Trust shall have
actual or other notice thereof.
SECTION 9.4 Book Entry Interests.
Unless otherwise specified in the terms of the Preferred Securities,
the Preferred Securities Certificates, on original issuance, will be issued in
the form of one or more fully registered, global Preferred Security Certificates
(each a "Global Certificate"), to be delivered to DTC, the initial Clearing
Agency, by, or on behalf of, the Trust. Such Global Certificates shall initially
be registered on the books and records of the Trust in the name of Cede & Co.,
the nominee of DTC, and no Preferred Security Beneficial Owner will receive a
definitive Preferred Security Certificate representing such Preferred Security
Beneficial Owner's interests in such Global Certificates, except as provided in
Section 9.7. Unless and until definitive, fully registered Preferred Security
Certificates (the "Definitive Preferred Security Certificates") have been issued
to the Preferred Security Beneficial Owners pursuant to Section 9.7:
(a) the provisions of this Section 9.4 shall be in full force and
effect;
(b) the Trust and the Trustees shall be entitled to deal with the
Clearing Agency for all purposes of this Declaration (including
the payment of Distributions on the Global Certificates and
receiving approvals, votes or consents hereunder) as the
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Holder of the Preferred Securities and the sole holder of the
Global Certificates and shall have no obligation to the Preferred
Security Beneficial Owners;
(c) to the extent that the provisions of this Section 9.4 conflict
with any other provisions of this Declaration, the provisions of
this Section 9.4 shall control; and
(d) the rights of the Preferred Security Beneficial Owners shall be
exercised only through the Clearing Agency and shall be limited to
those established by law and agreements between such Preferred
Security Beneficial Owners and the Clearing Agency and/or the
Clearing Agency Participants. DTC will make book entry transfers
among the Clearing Agency Participants and receive and transmit
payments of Distributions on the Global Certificates to such
Clearing Agency Participants.
SECTION 9.5 Notices to Clearing Agency.
Whenever a notice or other communication to the Preferred Security
Holders is required under this Declaration, unless and until Definitive
Preferred Security Certificates shall have been issued to the Preferred Security
Beneficial Owners pursuant to Section 9.7, the Regular Trustees or the Property
Trustee, if the Property Trustee is specifically required to give such notice,
shall give all such notices and communications specified herein to be given to
the Preferred Security Holders to the Clearing Agency, and shall have no notice
obligations to the Preferred Security Beneficial Owners.
SECTION 9.6 Appointment of Successor Clearing Agency.
If any Clearing Agency elects to discontinue its services as securities
depository with respect to the Preferred Securities or if the Regular Trustees
elect to have another Clearing Agency serve as securities depository with
respect to the Preferred Securities, the Regular Trustees may, in their sole
discretion, appoint a successor Clearing Agency with respect to such Preferred
Securities.
SECTION 9.7 Definitive Preferred Security Certificates.
If:
(a) a Clearing Agency elects to discontinue its services as securities
depository with respect to the Preferred Securities and a successor
Clearing Agency is not appointed within 90 days after such
discontinuance pursuant to Section 9.6; or
(b) the Regular Trustees elect after consultation with the Sponsor to
terminate the book entry system through the Clearing Agency with
respect to the Preferred Securities, then:
(i) Definitive Preferred Security Certificates shall be prepared
by the Regular Trustees on behalf of the Trust with respect
to such Preferred Securities; and
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(ii) upon surrender of the Global Certificates by the Clearing
Agency, accompanied by registration instructions, the Regular
Trustees shall cause Definitive Preferred Security
Certificates to be delivered to the Preferred Security
Beneficial Owners in accordance with the instructions of the
Clearing Agency. Neither the Trustees nor the Trust shall be
liable for any delay in delivery of such instructions and
each of them may conclusively rely on, and shall be protected
in relying on, said instructions of the Clearing Agency. The
Definitive Preferred Security Certificates shall be printed,
lithographed or engraved or may be produced in any other
manner as is reasonably acceptable to the Regular Trustees,
as evidenced by their execution thereof, and may have such
letters, numbers or other marks of identification or
designation and such legends or endorsements as the Regular
Trustees may deem appropriate, or as may be required to
comply with any law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock
exchange on which Preferred Securities may be listed, or to
conform to usage.
SECTION 9.8 Mutilated, Destroyed, Lost or Stolen Certificates.
If:
(a) any mutilated Certificates should be surrendered to the Regular
Trustees, or if the Regular Trustees shall receive evidence to their
satisfaction of the destruction, loss or theft of any Certificate; and
(b) there shall be delivered to the Regular Trustees such security or
indemnity as may be required by them to keep each of them, the Sponsor
and the Trust harmless,
then, in the absence of notice that such Certificate shall have been acquired by
a bona fide purchaser, any Regular Trustee on behalf of the Trust shall execute
and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost
or stolen Certificate, a new Certificate of like denomination. In connection
with the issuance of any new Certificate under this Section 9.8, the Regular
Trustees may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection therewith. Any duplicate
Certificate issued pursuant to this Section shall constitute conclusive evidence
of an ownership interest in the relevant Securities, as if originally issued,
whether or not the lost, stolen or destroyed Certificate shall be found at any
time.
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 Liability.
(a) Except as expressly set forth in this Declaration, the Securities
Guarantees and the terms of the Securities, the Sponsor shall not be:
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(i) personally liable for the return of any portion of the capital
contributions (or any return thereon) of the Holders of the
Securities which shall be made solely from assets of the Trust;
and
(ii) be required to pay to the Trust or to any Holder of Securities any
deficit upon dissolution of the Trust or otherwise.
(b) The Holder of the Common Securities shall be liable for all of the
debts and obligations of the Trust (other than with respect to the Securities)
to the extent not satisfied out of the Trust's assets.
(c) Pursuant to Section 3803(a) of the Business Trust Act, the Holders
of the Preferred Securities shall be entitled to the same limitation of personal
liability extended to stockholders of private corporations for profit organized
under the General Corporation Law of the State of Delaware.
SECTION 10.2 Exculpation.
(a) No Indemnified Person shall be liable, responsible or accountable
in damages or otherwise to the Trust or any Covered Person for any loss, damage
or claim incurred by reason of any act or omission performed or omitted by such
Indemnified Person in good faith on behalf of the Trust and in a manner such
Indemnified Person reasonably believed to be within the scope of the authority
conferred on such Indemnified Person by this Declaration or by law, except that
an Indemnified Person shall be liable for any such loss, damage or claim
incurred by reason of such Indemnified Person's gross negligence or willful
misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Trust and upon such information, opinions, reports
or statements presented to the Trust by any Person as to matters the Indemnified
Person reasonably believes are within such other Person's professional or expert
competence and who has been selected with reasonable care by or on behalf of the
Trust, including information, opinions, reports or statements as to the value
and amount of the assets, liabilities, profits, losses or any other facts
pertinent to the existence and amount of assets from which Distributions to
Holders of Securities might properly be paid.
SECTION 10.3 Fiduciary Duty.
(a) To the extent that, at law or in equity, an Indemnified Person has
duties (including fiduciary duties) and liabilities relating thereto to the
Trust or to any other Covered Person, an Indemnified Person acting under this
Declaration shall not be liable to the Trust or to any other Covered Person for
its good faith reliance on the provisions of this Declaration. The provisions of
this Declaration, to the extent that they restrict the duties and liabilities of
an Indemnified Person otherwise existing at law or in equity (other than the
duties imposed on the Property Trustee under the Trust Indenture Act), are
agreed by the parties hereto to replace such other duties and liabilities of
such Indemnified Person.
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(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises between any
Covered Persons; or
(ii) whenever this Declaration or any other agreement contemplated
herein or therein provides that an Indemnified Person shall act in
a manner that is, or provides terms that are, fair and reasonable
to the Trust or any Holder of Securities,
the Indemnified Person shall resolve such conflict of interest, take such action
or provide such terms, considering in each case the relative interest of each
party (including its own interest) to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such interests, any customary
or accepted industry practices and any applicable generally accepted accounting
practices or principles. In the absence of bad faith by the Indemnified Person,
the resolution, action or term so made, taken or provided by the Indemnified
Person shall not constitute a breach of this Declaration or any other agreement
contemplated herein or of any duty or obligation of the Indemnified Person at
law or in equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person is permitted or
required to make a decision:
(i) in its "discretion" or under a grant of similar authority, the
Indemnified Person shall be entitled to consider such interests
and factors as it desires, including its own interests, and shall
have no duty or obligation to give any consideration to any
interest of or factors affecting the Trust or any other Person; or
(ii) in its "good faith" or under another express standard, the
Indemnified Person shall act under such express standard and shall
not be subject to any other or different standard imposed by this
Declaration or by applicable law.
SECTION 10.4 Indemnification and Compensation.
(a) (i) The Sponsor shall indemnify, to the full extent permitted by
law, any Company Indemnified Person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of the Trust) by reason of the fact that he is or was a
Company Indemnified Person against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with such action, suit or proceeding if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the Trust, and, with respect to any criminal action or proceeding,
had no reasonable cause to believe his conduct was unlawful. The termination of
any action, suit or proceeding by judgment, order, settlement, conviction or
upon a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the Company Indemnified Person did not act in good faith and in
a manner which he reasonably believed to be in or not opposed to the best
interests of the Trust, and, with respect to any criminal action or proceeding,
had reasonable cause to believe that his conduct was unlawful.
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(ii) The Sponsor shall indemnify, to the full extent permitted by law,
any Company Indemnified Person who was or is a party or is threatened to be made
a party to any threatened, pending or completed action or suit by or in the
right of the Trust to procure a judgment in its favor by reason of the fact that
he is or was a Company Indemnified Person against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the Trust
and except that no such indemnification shall be made in respect of any claim,
issue or matter as to which such Company Indemnified Person shall have been
adjudged to be liable to the Trust unless and only to the extent that the Court
of Chancery of Delaware or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which such Court of Chancery
or such other court shall deem proper.
(iii) Any indemnification under paragraphs (i) and (ii) of this Section
10.4(a) (unless ordered by a court) shall be made by the Sponsor only as
authorized in the specific case upon a determination that indemnification of the
Company Indemnified Person is proper in the circumstances because he has met the
applicable standard of conduct set forth in paragraphs (i) and (ii). Such
determination shall be made (1) by the Regular Trustees by a majority vote of a
quorum consisting of such Regular Trustees who were not parties to such action,
suit or proceeding, (2) if such a quorum is not obtainable, or, even if
obtainable, if a quorum of disinterested Regular Trustees so directs, by
independent legal counsel in a written opinion, or (3) by the Common Security
Holder of the Trust.
(iv) Expenses (including attorneys' fees) incurred by a Company
Indemnified Person in defending a civil, criminal, administrative or
investigative action, suit or proceeding referred to in paragraphs (i) and (ii)
of this Section 10.4(a) shall be paid by the Sponsor in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking by
or on behalf of such Company Indemnified Person to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified by the
Sponsor as authorized in this Section 10.4(a). Notwithstanding the foregoing, no
advance shall be made by the Sponsor if a determination is reasonably and
promptly made (i) by the Regular Trustees by a majority vote of a quorum of
disinterested Regular Trustees, (ii) if such a quorum is not obtainable, or,
even if obtainable, if a quorum of disinterested Regular Trustees so directs, by
independent legal counsel in a written opinion or (iii) the Common Security
Holder of the Trust, that, based upon the facts known to the Regular Trustees,
counsel or the Common Security Holder at the time such determination is made,
such Company Indemnified Person acted in bad faith or in a manner that such
person did not believe to be in or not opposed to the best interests of the
Trust, or, with respect to any criminal proceeding, that such Company
Indemnified Person believed or had reasonable cause to believe his conduct was
unlawful. In no event shall any advance be made in instances where the Regular
Trustees, independent legal counsel or Common Security Holder reasonably
determine that such person deliberately breached his duty to the Trust or its
Common or Preferred Security Holders.
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(v) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other paragraphs of this Section 10.4(a) shall not be
deemed exclusive of any other rights to which those seeking indemnification and
advancement of expenses may be entitled under any agreement, vote of
stockholders or disinterested directors of the Debenture Issuer or 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 10.4(a) shall be deemed to be
provided by a contract between the Debenture Issuer and each Company Indemnified
Person who serves in such capacity at any time while this Section 10.4(a) is in
effect. Any repeal or modification of this Section 10.4(a) shall not affect any
rights or obligations then existing.
(vi) The Debenture Issuer or the Trust may purchase and maintain
insurance on behalf of any person who is or was a Company Indemnified Person
against any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the Debenture
Issuer would have the power to indemnify him against such liability under the
provisions of this Section 10.4(a).
(vii) For purposes of this Section 10.4(a), references to "the Trust"
shall include, in addition to the resulting or surviving entity, any constituent
entity (including any constituent of a constituent) absorbed in a consolidation
or merger, so that any person who is or was a director, trustee, officer or
employee of such constituent entity, or is or was serving at the request of such
constituent entity as a director, trustee, member, partner, officer, employee or
agent of another entity, shall stand in the same position under the provisions
of this Section 10.4(a) with respect to the resulting or surviving entity as he
would have with respect to such constituent entity if its separate existence had
continued.
(viii) The indemnification and advancement of expenses provided by, or
granted pursuant to, this Section 10.4(a) shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a Company
Indemnified Person and shall inure to the benefit of the heirs, executors and
administrators of such a person. The obligation to indemnify as set forth in
this Section 10.4(a) shall survive the satisfaction and discharge of this
Declaration.
(b) The Debenture Issuer agrees to indemnify the (i) Property Trustee,
(ii) the Delaware Trustee, (iii) any Affiliate of the Property Trustee and the
Delaware Trustee, and (iv) any officers, directors, shareholders, members,
partners, employees, representatives, custodians, nominees or agents of the
Property Trustee and the Delaware Trustee (each of the Persons in (i) through
(iv) being referred to as a "Fiduciary Indemnified Person") for, and to hold
each Fiduciary Indemnified Person harmless against, any loss, liability or
expense incurred without negligence (or in the case of the Delaware Trustee,
gross negligence) or bad faith on its part, arising out of or in connection with
the acceptance or administration of the trust or trusts hereunder, including the
costs and expenses (including reasonable legal fees and expenses) of defending
itself against or investigating any claim or liability in connection with the
exercise or performance of any of its powers or duties hereunder. The obligation
to indemnify as set forth in this Section 10.4(b) shall survive the satisfaction
and discharge of this Declaration.
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(c) The Debenture Issuer shall pay to the Property Trustee from time to
time such reasonable compensation for its services as the Company and the
Property Trustee shall agree in writing from time to time. The Property
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Debenture Issuer Shall reimburse the Property
Trustee upon request for all reasonable out-of-pocket expenses incurred by it in
connection with the performance of its duties under this Declaration except any
such expense as may be attributed to its negligence or bad faith. Such expenses
shall include the reasonable compensation and expenses of the Property Trustee's
agents and counsel. The Debenture Issuer need not reimburse any expense incurred
by the Property Trustee through negligence or bad faith.
SECTION 10.5 Outside Businesses.
Any Covered Person, the Sponsor, the Delaware Trustee and the Property
Trustee may engage in or possess an interest in other business ventures of any
nature or description, independently or with others, similar or dissimilar to
the business of the Trust, and the Trust and the Holders of Securities shall
have no rights by virtue of this Declaration in and to such independent ventures
or the income or profits derived therefrom, and the pursuit of any such venture,
even if competitive with the business of the Trust, shall not be deemed wrongful
or improper. No Covered Person, the Sponsor, the Delaware Trustee or the
Property Trustee shall be obligated to present any particular investment or
other opportunity to the Trust even if such opportunity is of a character that,
if presented to the Trust, could be taken by the Trust, and any Covered Person,
the Sponsor, the Delaware Trustee and the Property Trustee shall have the right
to take for its own account (individually or as a partner or fiduciary) or to
recommend to others any such particular investment or other opportunity. Any
Covered Person, the Delaware Trustee and the Property Trustee may engage or be
interested in any financial or other transaction with the Sponsor or any
Affiliate of the Sponsor, or may act as depository for, trustee or agent for, or
act on any committee or body of holders of, securities or other obligations of
the Sponsor or its Affiliates.
ARTICLE XI
ACCOUNTING
SECTION 11.1 Fiscal Year.
The fiscal year ("Fiscal Year") of the Trust shall be the calendar
year, or such other year as is required by the Code.
SECTION 11.2 Certain Accounting Matters.
(a) At all times during the existence of the Trust, the Regular
Trustees shall keep, or cause to be kept, full books of account, records and
supporting documents, which shall reflect in reasonable detail, each transaction
of the Trust. The books of account shall be maintained on the accrual method of
accounting, in accordance with generally accepted accounting principles. The
Trust shall use the accrual method of accounting for United States federal
income tax purposes. The books of account
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and the records of the Trust shall be examined by and reported upon as of the
end of each Fiscal Year of the Trust by a firm of independent certified public
accountants selected by the Regular Trustees.
(b) The Regular Trustees shall cause to be duly prepared and delivered
to each of the Holders of Securities, any annual United States federal income
tax information statement, required by the Code, containing such information
with regard to the Securities held by each Holder as is required by the Code and
the Treasury Regulations. Notwithstanding any right under the Code to deliver
any such statement at a later date, the Regular Trustees shall endeavor to
deliver all such statements within 30 days after the end of each Fiscal Year of
the Trust.
(c) The Regular Trustees shall cause to be duly prepared and filed with
the appropriate taxing authority, an annual United States federal income tax
return, on a Form 1041 or such other form required by United States federal
income tax law, and any other annual income tax returns required to be filed by
the Regular Trustees on behalf of the Trust with any state or local taxing
authority.
SECTION 11.3 Banking.
The Trust shall maintain one or more bank accounts in the name and for
the sole benefit of the Trust; provided, however, that all payments of funds in
respect of the Debentures held by the Property Trustee shall be made directly to
the Property Trustee Account and no other funds of the Trust shall be deposited
in the Property Trustee Account. The sole signatories for such accounts shall be
designated by the Regular Trustees; provided, however, that the Property Trustee
shall designate the signatories for the Property Trustee Account.
SECTION 11.4 Withholding.
The Trust and the Regular Trustees shall comply with all withholding
requirements under United States federal, state and local law. The Trust shall
request, and the Holders shall provide to the Trust, such forms or certificates
as are necessary to establish an exemption from withholding with respect to each
Holder, and any representations and forms as shall reasonably be requested by
the Trust to assist it in determining the extent of, and in fulfilling, its
withholding obligations. The Regular Trustees shall file required forms with
applicable jurisdictions and, unless an exemption from withholding is properly
established by a Holder, shall remit amounts withheld with respect to the Holder
to applicable jurisdictions. To the extent that the Trust is required to
withhold and pay over any amounts to any authority with respect to distributions
or allocations to any Holder, the amount withheld shall be deemed to be a
distribution in the amount of the withholding to the Holder. In the event of any
claim over withholding, Holders shall be limited to an action against the
applicable jurisdiction. If the amount required to be withheld was not withheld
from actual Distributions made, the Trust may reduce subsequent Distributions by
the amount of such withholding. To the extent the Property Trustee performs the
functions provided for in this section, the Regular Trustees shall direct the
Property Trustee in carrying out such functions.
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ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments.
(a) Except as otherwise provided in this Declaration or by any
applicable terms of the Securities, this Declaration may only be
amended by:
(i) a written instrument approved and executed by the Regular Trustees
(or, if there are more than two Regular Trustees, a majority of the
Regular Trustees);
(ii) the Property Trustee if the amendment affects the rights, powers,
duties, obligations or immunities of the Property Trustee; and
(iii) the Delaware Trustee if the amendment affects the rights, powers,
duties, obligations or immunities of the Delaware Trustee;
(b) no amendment shall be made, and any such purported amendment shall
be void and ineffective:
(i) unless, in the case of any proposed amendment, the Property Trustee
shall have first received an Officers' Certificate from each of the
Trust and the Sponsor that such amendment is permitted by, and conforms
to, the terms of this Declaration (including the terms of the
Securities);
(ii) unless, in the case of any proposed amendment which affects the
rights, powers, duties, obligations or immunities of the Property
Trustee, the Property Trustee shall have first received:
(A) an Officers' Certificate from each of the Trust and the
Sponsor that such amendment is permitted by, and conforms to,
the terms of this Declaration (including the terms of the
Securities); and
(B) an opinion of counsel (who may be counsel to the Sponsor
or the Trust) that such amendment is permitted by, and
conforms to, the terms of this Declaration (including the
terms of the Securities); and
(iii) to the extent the result of such amendment would be to:
(A) cause the Trust to fail to continue to be classified for
purposes of United States federal income taxation as a grantor
trust;
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(B) reduce or otherwise adversely affect the powers of the
Property Trustee in contravention of the Trust Indenture Act;
or
(C) cause the Trust to be deemed to be an Investment Company
required to be registered under the Investment Company Act;
(c) at such time after the Trust has issued any Securities that remain
outstanding, any amendment that would adversely affect the rights, privileges or
preferences of any Holder of Securities may be effected only with such
additional requirements as may be set forth in the terms of such Securities;
(d) Section 9.1(c) and this Section 12.1 shall not be amended without
the consent of all of the Holders of the Securities;
(e) Article IV shall not be amended without the consent of the Holders
of a Majority in Liquidation Amount of the Common Securities;
(f) the rights of the Holders of the Common Securities under Article V
to increase or decrease the number of, and appoint and remove Trustees shall not
be amended without the consent of the Holders of a Majority in Liquidation
Amount of the Common Securities; and
(g) notwithstanding Section 12.1(c), this Declaration may be amended
without the consent of the Holders of the Securities to:
(i) cure any ambiguity;
(ii) correct or supplement any provision in this Declaration that may
be defective or inconsistent with any other provision of this
Declaration;
(iii) add to the covenants, restrictions or obligations of the Sponsor;
(iv) to conform to any change in Rule 3a-5 or written change in
interpretation or application of Rule 3a-5 by any legislative body,
court, government agency or regulatory authority which amendment does
not have a material adverse effect on the rights, preferences or
privileges of the Holders; and
(v) to modify, eliminate and add to any provision of this Declaration,
provided such modification, elimination or addition would not adversely
affect the rights, privileges or preferences of any Holder of the
Securities.
SECTION 12.2 Meetings of the Holders of Securities; Action by Written Consent.
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(a) Meetings of the Holders of any class of Securities may be called at
any time by the Regular Trustees (or as provided in the terms of the Securities)
to consider and act on any matter on which Holders of such class of Securities
are entitled to act under the terms of this Declaration, the terms of the
Securities or the rules of any stock exchange on which the Preferred Securities
are listed or admitted for trading. The Regular Trustees shall call a meeting of
the Holders of such class if directed to do so by the Holders of at least 10% in
Liquidation Amount of such class of Securities. Such direction shall be given by
delivering to the Regular Trustees one or more calls in a writing stating that
the signing Holders of Securities wish to call a meeting and indicating the
general or specific purpose for which the meeting is to be called. Any Holders
of Securities calling a meeting shall specify in writing the Certificates held
by the Holders of Securities exercising the right to call a meeting and only
those Securities specified shall be counted for purposes of determining whether
the required percentage set forth in the second sentence of this paragraph has
been met.
(b) Except to the extent otherwise provided in the terms of the
Securities, the following provisions shall apply to meetings of Holders of
Securities:
(i) notice of any such meeting shall be given to all the Holders of
Securities having a right to vote thereat at least 7 days and not more
than 60 days before the date of such meeting. Whenever a vote, consent
or approval of the Holders of Securities is permitted or required under
this Declaration or the rules of any stock exchange on which the
Preferred Securities are listed or admitted for trading, such vote,
consent or approval may be given at a meeting of the Holders of
Securities. Any action that may be taken at a meeting of the Holders of
Securities may be taken without a meeting if a consent in writing
setting forth the action so taken is signed by the Holders of
Securities owning not less than the minimum amount of Securities in
liquidation amount that would be necessary to authorize or take such
action at a meeting at which all Holders of Securities having a right
to vote thereon were present and voting. Prompt notice of the taking of
action without a meeting shall be given to the Holders of Securities
entitled to vote who have not consented in writing. The Regular
Trustees may specify that any written ballot submitted to the Security
Holders for the purpose of taking any action without a meeting shall be
returned to the Trust within the time specified by the Regular
Trustees;
(ii) each Holder of a Security may authorize any Person to act for it
by proxy on all matters in which a Holder of Securities is entitled to
participate, including waiving notice of any meeting, or voting or
participating at a meeting. No proxy shall be valid after the
expiration of 11 months from the date thereof unless otherwise provided
in the proxy. Every proxy shall be revocable at the pleasure of the
Holder of Securities executing such proxy. Except as otherwise provided
herein, all matters relating to the giving, voting or validity of
proxies shall be governed by the General Corporation Law of the State
of Delaware relating to proxies, and judicial interpretations
thereunder, as if the Trust were a Delaware corporation and the Holders
of the Securities were stockholders of a Delaware corporation;
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(iii) each meeting of the Holders of the Securities shall be conducted
by the Regular Trustees or by such other Person that the Regular
Trustees may designate; and
(iv) unless the Business Trust Act, this Declaration, the terms of the
Securities, the Trust Indenture Act or the listing rules of any stock
exchange on which the Preferred Securities are then listed for trading,
otherwise provides, the Regular Trustees, in their sole discretion,
shall establish all other provisions relating to meetings of Holders of
Securities, including notice of the time, place or purpose of any
meeting at which any matter is to be voted on by any Holders of
Securities, waiver of any such notice, action by consent without a
meeting, the establishment of a record date, quorum requirements,
voting in person or by proxy or any other matter with respect to the
exercise of any such right to vote.
ARTICLE XIII
REPRESENTATIONS OF PROPERTY TRUSTEE
AND DELAWARE TRUSTEE
SECTION 13.1 Representations and Warranties of the Property Trustee.
The Trustee that acts as initial Property Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Property Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Property Trustee's acceptance of its
appointment as Property Trustee that:
(a) the Property Trustee is a corporation, trust company or national
banking association, duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or
organization, with trust power and authority to execute and deliver,
and to carry out and perform its obligations under the terms of, this
Declaration;
(b) the Property Trustee satisfies the requirements set forth in
Section 5.3(a);
(c) the execution, delivery and performance by the Property Trustee of
this Declaration has been duly authorized by all necessary corporate
action on the part of the Property Trustee. This Declaration has been
duly executed and delivered by the Property Trustee, and it constitutes
a legal, valid and binding obligation of the Property Trustee,
enforceable against it in accordance with its terms, subject to
applicable bankruptcy, reorganization, moratorium, insolvency and other
similar laws affecting creditors' rights generally and to general
principles of equity and the discretion of the court (regardless of
whether the enforcement of such remedies is considered in a proceeding
in equity or at law);
(d) the execution, delivery and performance of this Declaration by the
Property Trustee does not conflict with or constitute a breach of the
articles of association or incorporation, as the case may be, or the
by-laws (or other similar organizational documents) of the Property
Trustee;
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(e) no consent, approval or authorization of, or registration with or
notice to, any Federal banking authority is required for the execution,
delivery or performance by the Property Trustee of this Declaration;
and
(f) the Property Trustee, pursuant to this Declaration, shall hold
legal title in the Debentures which are registered in the name of the
Property Trustee for the benefit of the Trust.
SECTION 13.2 Representations and Warranties of the Delaware Trustee.
The Trustee that acts as initial Delaware Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Delaware Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Delaware Trustee's acceptance of its
appointment as Delaware Trustee that:
(a) the Delaware Trustee satisfies the requirements set forth in
Section 5.2 and has the power and authority to execute and deliver, and
to carry out and perform its obligations under the terms of, this
Declaration and, if it is not a natural person, is duly organized,
validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization;
(b) the Delaware Trustee has been authorized to perform its obligations
under the Certificate of Trust and this Declaration. This Declaration
under Delaware law constitutes a legal, valid and binding obligation of
the Delaware Trustee, enforceable against it in accordance with its
terms, subject to applicable bankruptcy, reorganization, moratorium,
insolvency and other similar laws affecting creditors' rights generally
and to general principles of equity and the discretion of the court
(regardless of whether the enforcement of such remedies is considered
in a proceeding in equity or at law); and
(c) no consent, approval or authorization of, or registration with or
notice to, any State or Federal banking authority is required for the
execution, delivery or performance by the Delaware Trustee of this
Declaration.
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1 Notices.
All notices provided for in this Declaration shall be in writing, duly
signed by the party giving such notice, and shall be delivered, telecopied or
mailed by registered or certified mail, as follows:
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(a) if given to the Trust, in care of the Regular Trustees at the
Trust's mailing address set forth below (or such other address as the
Trust may give notice of to the Property Trustee, the Delaware Trustee
and the Holders of the Securities):
11825 North Pennsylvania Street
Carmel, Indiana 46032
Attention: John J. Sabl, Esq.
(b) if given to the Delaware Trustee, at the mailing address set forth
below (or such other address as Delaware Trustee may give notice of to
the Regular Trustees, the Property Trustee and the Holders of the
Securities):
First Union Trust Company, National Association
One Rodney Square
1st Floor
920 King Street
Wilmington, Delaware 19801
Attention: Corporate Trust Administration
(c) if given to the Property Trustee, at its Corporate Trust Office (or
such other address as the Property Trustee may give notice of to the
Regular Trustees, the Delaware Trustee and the Holders of the
Securities):
State Street Bank and Trust Company
Corporate Trust Administration
225 Asylum St., 23rd Floor
Hartford, Connecticut 06103
Attention: Corporate Trust Administration
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(d) if given to the Holder of the Common Securities, at the mailing
address of the Sponsor set forth below (or such other address as the
Holder of the Common Securities may give notice of to the Property
Trustee, the Delaware Trustee and the Trust):
Conseco, Inc.
11825 North Pennsylvania Street
Carmel, Indiana 46032
Attention: John J. Sabl, Esq.
(e) if given to any other Holder, at the address set forth on the books
and records of the Trust.
All such notices shall be deemed to have been given when received in person,
telecopied with receipt confirmed or mailed by first class mail, postage prepaid
except that if a notice or other document is refused delivery or cannot be
delivered because of a changed address of which no notice was given, such notice
or other document shall be deemed to have been delivered on the date of such
refusal or inability to deliver.
SECTION 14.2 Governing Law.
This Declaration and the rights of the parties hereunder shall be
governed by and interpreted in accordance with the laws of the State of Delaware
and all rights and remedies shall be governed by such laws without regard to
principles of conflict of laws.
SECTION 14.3 Intention of the Parties.
It is the intention of the parties hereto that the Trust be classified
for United States federal income tax purposes as a grantor trust. The provisions
of this Declaration shall be interpreted to further this intention of the
parties.
SECTION 14.4 Headings.
Headings contained in this Declaration are inserted for convenience of
reference only and do not affect the interpretation of this Declaration or any
provision hereof.
SECTION 14.5 Successors and Assigns.
Whenever in this Declaration any of the parties hereto is named or
referred to, the successors and assigns of such party shall be deemed to be
included, and all covenants and agreements in this Declaration by the Sponsor
and the Trustees shall bind and inure to the benefit of their respective
successors and assigns, whether so expressed.
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SECTION 14.6 Partial Enforceability.
If any provision of this Declaration, or the application of such
provision to any Person or circumstance, shall be held invalid, the remainder of
this Declaration, or the application of such provision to persons or
circumstances other than those to which it is held invalid, shall not be
affected thereby.
SECTION 14.7 Counterparts.
This Declaration may contain more than one counterpart of the signature
page and this Declaration may be executed by the affixing of the signature of
each of the Trustees to one of such counterpart signature pages. All of such
counterpart signature pages shall be read as though one, and they shall have the
same force and effect as though all of the signers had signed a single signature
page.
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IN WITNESS WHEREOF, the undersigned have caused these presents to be
executed as of the day and year first above written.
CONSECO INC, as Sponsor and Debenture Issuer
By: /s/ Rollin M. Dick
------------------------------------------
Name: Rollin M. Dick
Title: Executive Vice President and Chief
Financial Officer
STATE STREET BANK AND TRUST COMPANY,
as Property Trustee
By: /s/ Mark A. Forgetta
------------------------------------------
Name: Mark A. Forgetta
Title: Vice President
FIRST UNION TRUST COMPANY,
NATIONAL ASSOCIATION, as Delaware Trustee
By: /s/ Stephen J. Kaba
------------------------------------------
Name: Stephen J. Kaba
Title: Vice President
/s/ Rollin M. Dick
------------------------------------------
Rollin M. Dick, as Regular Trustee
/s/ Stephen C. Hilbert
------------------------------------------
Stephen C. Hilbert, as Regular Trustee
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ANNEX I
TERMS OF
8.70% TRUST ORIGINATED PREFERRED SECURITIES
8.70% TRUST ORIGINATED COMMON SECURITIES
Pursuant to Section 7.1 of the Amended and Restated
Declaration of Trust, dated as of August 24, 1998 (as amended from time to time,
the "Declaration"), the designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Preferred Securities are set
forth below (each capitalized term used but not defined herein having the
meaning set forth in the Declaration or, if not defined in the Declaration, as
defined in the Prospectus referred to below):
1. Designation and Number.
(a) PREFERRED SECURITIES. 20,000,000 Preferred Securities of the Trust
with an aggregate liquidation amount with respect to the assets of the Trust of
Five Hundred Million Dollars ($500,000,000) and a liquidation amount with
respect to the assets of the Trust of $25 per Preferred Security, are hereby
designated for the purposes of identification only as "8.70% Trust Originated
Preferred Securities(sm) ('TOPrS'(sm))" (the "Preferred Securities"). The
Preferred Security Certificates evidencing the Preferred Securities shall be
substantially in the form of Exhibit A-1 to the Declaration, with such changes
and additions thereto or deletions therefrom as may be required by ordinary
usage, custom or practice or to conform to the rules of any stock exchange on
which the Preferred Securities are listed.
(b) COMMON SECURITIES. 620,000 Common Securities of the Trust with an
aggregate liquidation amount with respect to the assets of the Trust of Fifteen
Million Five Hundred Thousand Dollars ($15,500,000) and a liquidation amount
with respect to the assets of the Trust of $25 per Common Security, are hereby
designated for the purposes of identification only as "8.70% Trust Originated
Common Securities" (the "Common Securities"). The Common Security Certificates
evidencing the Common Securities shall be substantially in the form of Exhibit
A-2 to the Declaration, with such changes and additions thereto or deletions
therefrom as may be required by ordinary usage, custom or practice.
2. Distributions.
(a) Distributions payable on each Security will be fixed at a rate per
annum of 8.70% (the "Coupon Rate") of the stated liquidation amount of $25 per
Security, such rate being the rate of interest payable on the Debentures to be
held by the Property Trustee. Distributions in arrears for more than one quarter
will bear interest thereon from and including the last day of such quarter at
the Coupon Rate compounded quarterly (to the extent permitted by applicable
law). The term "Distributions" as used herein includes such cash distributions
and any such interest payable unless otherwise stated. A Distribution is payable
only to the extent that payments are made in respect of the Debentures held by
the Property Trustee and to the extent the Property Trustee has funds
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available therefor. The amount of Distributions payable for any period will be
computed for any full quarterly Distribution period on the basis of a 360-day
year of twelve 30-day months, and for any period shorter than a full quarterly
Distribution period for which Distributions are computed, Distributions will be
computed on the basis of the actual number of days elapsed per 90-day quarter.
(b) Distributions on the Securities will be cumulative, will accrue
from August 24, 1998, and will be payable quarterly in arrears, on March 31,
June 30, September 30 and December 31 of each year, commencing on September 30,
1998, except as otherwise described below. The Debenture Issuer has the right
under the Indenture to defer payments of interest on the Debentures by extending
the interest payment period at any time and from time to time for a period not
exceeding 20 consecutive quarters (each an "Extension Period"), during which
Extension Period no interest shall be due and payable on the Debentures,
provided that no Extension Period shall last beyond the date of maturity of the
Debentures. As a consequence of such deferral, Distributions will also be
deferred. Despite such deferral, quarterly Distributions will continue to accrue
with interest thereon (to the extent permitted by applicable law) at the Coupon
Rate compounded quarterly during any such Extension Period. Prior to the
termination of any such Extension Period, the Debenture Issuer may further
extend such Extension Period, provided that such Extension Period together with
all such previous and further extensions thereof may not exceed 20 consecutive
quarters and may not extend beyond the date of maturity of the Debentures.
Payments of deferred Distributions will be payable to Holders of record of the
Securities as they appear on the books and records of the Trust on the record
date for Distributions due at the end of such Extension Period. Upon the
termination of any Extension Period and the payment of all amounts then due, the
Debenture Issuer may commence a new Extension Period, subject to the above
requirements.
(c) Distributions on the Securities will be payable to the Holders
thereof as they appear on the books and records of the Trust on the relevant
record dates. While the Preferred Securities remain in global form, the relevant
record dates shall be one Business Day prior to the relevant payment dates which
payment dates correspond to the interest payment dates on the Debentures.
Subject to any applicable laws and regulations and the provisions of the
Declaration, each such payment in respect of the Preferred Securities will be
made as described under the heading "Description of the Preferred Securities --
Book-Entry Issuance -- The Depository Trust Company" in the Prospectus
Supplement dated August 19, 1998, to the Prospectus dated June 22, 1998
(together, the "Prospectus") included in the Registration Statement on Form S-3
of the Sponsor and the Trust. The relevant record dates for the Common
Securities shall be the same record date as for the Preferred Securities. If the
Preferred Securities shall not continue to remain in global form, the relevant
record dates for the Preferred Securities shall conform to the rules of any
securities exchange on which the Preferred Securities are listed and, if none,
shall be selected by the Regular Trustees, which dates shall be at least one
Business Day but less than 60 Business Days before the relevant payment dates,
which payment dates correspond to the interest payment dates on the Debentures.
Distributions payable on any Securities that are not punctually paid on any
Distribution payment date, as a result of the Debenture Issuer having failed to
make a payment under the Debentures, will cease to be payable to the Person in
whose name such Securities are registered on the relevant record date, and such
defaulted Distribution will instead be payable to the Person in whose name such
Securities
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are registered on the special record date or other specified date determined in
accordance with the Indenture. If any date on which Distributions are payable on
the Securities is not a Business Day, then payment of the Distribution payable
on such date will be made on the next succeeding day that is a Business Day (and
without any interest or other payment in respect of any such delay) except that,
if such Business Day is in the next succeeding calendar year, such payment shall
be made on the immediately preceding Business Day, in each case with the same
force and effect as if made on such date.
(d) In the event that there is any money or other property held by or
for the Trust that is not accounted for hereunder, such property shall be
distributed Pro Rata (as defined herein) among the Holders of the Securities.
3. Liquidation Distribution Upon Dissolution.
(a) In the event of any voluntary or involuntary liquidation,
dissolution, winding-up or termination of the Trust, the Holders of the
Securities on the date of the liquidation, dissolution, winding-up or
termination, as the case may be, will be entitled to receive solely out of the
assets of the Trust available for distribution to Holders of Securities, after
satisfaction of liabilities of creditors, an amount equal to the aggregate of
the stated liquidation amount of $25 per Security plus accrued and unpaid
Distributions thereon to the date of payment (such amount being the "Liquidation
Distribution"), unless, in connection with such liquidation, dissolution,
winding-up or termination, Debentures in an aggregate principal amount equal to
the aggregate stated liquidation amount of such Securities, with an interest
rate equal to the Coupon Rate of, and bearing accrued and unpaid interest in an
amount equal to the accrued and unpaid Distributions on, such Securities, shall
be distributed on a Pro Rata basis to the Holders of the Securities in exchange
for such Securities in accordance with Section 4(e) hereof.
(b) If, upon any such dissolution, the Liquidation Distribution can be
paid only in part because the Trust has insufficient assets available to pay in
full the aggregate Liquidation Distribution, then the amounts payable directly
by the Trust on the Securities shall be paid on a Pro Rata basis.
4. Redemption and Distribution.
(a) Upon the repayment of the Debentures in whole or in part, whether
at maturity or upon redemption (such redemption being either at the option of
the Debenture Issuer on or after September 30, 2003 or at the option of the
Debenture Issuer in connection with the occurrence of a Special Event as
described below), the proceeds from such repayment or redemption shall be
simultaneously applied to redeem Securities having an aggregate liquidation
amount equal to the aggregate principal amount of the Debentures so repaid or
redeemed at a redemption price of $25 per Security plus an amount equal to
accrued and unpaid Distributions thereon at the date of the redemption, payable
in cash (the "Redemption Price"). Holders will be given not less than 30 nor
more than 60 days notice of such redemption.
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(b) If fewer than all the outstanding Securities are to be so redeemed,
the Common Securities and the Preferred Securities will be redeemed Pro Rata and
the Preferred Securities to be redeemed will be as described in Section 4(f)(ii)
below.
(c) If, at any time, a Tax Event or an Investment Company Event (each
as defined below, and each a "Special Event") shall occur and be continuing the
Debenture Issuer shall have the right, upon not less than 30 nor more than 60
days notice, to redeem the Debentures in whole (but not in part) for cash within
90 days following the occurrence of such Special Event, and, following such
redemption, Securities with an aggregate liquidation amount equal to the
aggregate principal amount of the Debentures so redeemed shall be redeemed by
the Trust at the Redemption Price on a Pro Rata basis in accordance with Section
8 hereof. The Common Securities will be redeemed Pro Rata with the Preferred
Securities, except that if an Event of Default has occurred and is continuing,
the Preferred Securities will have priority over the Common Securities with
respect to payment of the Redemption Price.
"Tax Event" means that the Regular Trustees shall have received an
opinion of an independent tax counsel experienced in such matters to the effect
that, as a result of (i) any amendment to, or change (including any announced
prospective change) in, the laws (or any regulations thereunder) of the United
States or any political subdivision or taxing authority thereof or therein, or
(ii) any official administrative pronouncement or judicial decision interpreting
or applying such laws or regulations, which amendment or change is effective or
such pronouncement or decision is announced on or after the date of original
issuance of the Preferred Securities, there is more than an insubstantial risk
that (A) the Trust is, or will be within 90 days after the date thereof, subject
to United States federal income tax with respect to interest accrued or received
on the Debentures, (B) the Trust is, or will be within 90 days after the date
thereof, subject to more than a de minimis amount of taxes, duties or other
governmental charges, or (C) interest payable by the Debenture Issuer to the
Trust on the Debentures is not, or within 90 days of the date thereof, will not
be deductible, in whole or in part, by the Debenture Issuer for United States
federal income tax purposes.
"Investment Company Event" means that the Regular Trustees shall have
received an opinion of an independent counsel experienced in practice under the
Investment Company Act to the effect that, as a result of the occurrence of a
change in law or regulation or a change in interpretation or application of law
or regulation by any legislative body, court, governmental agency or regulatory
authority (a "Change in 1940 Act Law"), there is a more than an insubstantial
risk that the Trust is or will be considered an "investment company" which is
required to be registered under the Investment Company Act, which Change in 1940
Act Law becomes effective on or after the date of original issuance of the
Preferred Securities.
(d) The Trust may not redeem fewer than all the outstanding Securities
unless all accrued and unpaid Distributions have been paid on all Securities for
all quarterly Distribution periods terminating on or before the date of
redemption.
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(e) In the event that the Sponsor makes the election referred to in
Section 8.1(a)(v) of the Declaration, the Regular Trustees shall dissolve the
Trust and, after satisfaction of creditors, cause Debentures, held by the
Property Trustee, having an aggregate principal amount equal to the aggregate
stated liquidation amount of, with an interest rate identical to the Coupon Rate
of, and accrued and unpaid interest equal to accrued and unpaid Distributions on
and having the same record date for payment, as the Securities, to be
distributed to the Holders of the Securities in liquidation of such Holders'
interests in the Trust on a Pro Rata basis in accordance with Section 8 hereof.
On and from the date fixed by the Regular Trustees for any distribution of
Debentures and dissolution of the Trust: (i) the Securities will no longer be
deemed to be outstanding, and (ii) the Clearing Agency or its nominee (or any
successor Clearing Agency or its nominee) will receive one or more global
certificate or certificates representing the Debentures to be delivered upon
such distribution, and having an aggregate principal amount equal to the
aggregated stated liquidation amount of, with an interest rate identical to the
Coupon Rate of, and accrued and unpaid interest equal to accrued and unpaid
Distributions on such Securities. Any certificates representing Securities,
except for certificates representing Preferred Securities held by the Clearing
Agency or its nominee (or any successor Clearing Agency or its nominee), will be
deemed to represent beneficial interests in the Debentures having an aggregate
principal amount equal to the aggregated stated liquidation amount of, with an
interest rate identical to the Coupon Rate of, and accrued and unpaid interest
equal to accrued and unpaid Distributions on such Securities until such
certificates are presented to the Debenture Issuer or its agent for transfer or
reissue. If the Debentures are distributed to Holders of the Securities,
pursuant to the terms of the Indenture, the Debenture Issuer will use its best
efforts to have the Debentures listed on the New York Stock Exchange or on such
other exchange as the Preferred Securities were listed immediately prior to the
distribution of the Debentures.
(f) Redemption or Distribution Procedures.
(i) Notice of any redemption of, or notice of distribution of
Debentures in exchange for the Securities (a "Redemption/Distribution Notice")
will be given by the Trust by mail to each Holder of Securities to be redeemed
or exchanged not fewer than 30 nor more than 60 days before the date fixed for
redemption or exchange thereof which, in the case of a redemption, will be the
date fixed for redemption of the Debentures. For purposes of the calculation of
the date of redemption or exchange and the dates on which notices are given
pursuant to this Section 4(f)(i), a Redemption/ Distribution Notice shall be
deemed to be given on the day such notice is first mailed by first-class mail,
postage prepaid, to Holders of Securities. Each Redemption/Distribution Notice
shall be addressed to the Holders of Securities at the address of each such
Holder appearing in the books and records of the Trust. No defect in the
Redemption/Distribution Notice or in the mailing of either thereof with respect
to any Holder shall affect the validity of the redemption or exchange
proceedings with respect to any other Holder.
(ii) In the event that fewer than all the outstanding Securities are to
be redeemed, the Securities to be redeemed shall be redeemed Pro Rata from each
Holder of Preferred Securities, it being understood that, in respect of
Preferred Securities registered in the name of and held of record by the
Clearing Agency or its nominee (or any successor Clearing Agency or its
nominee), the
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distribution of the proceeds of such redemption will be made to each Clearing
Agency Participant (or Person on whose behalf such nominee holds such
securities) in accordance with the procedures applied by such agency or nominee.
(iii) If Securities are to be redeemed and the Trust gives a
Redemption/Distribution Notice (which notice will be irrevocable), then (A)
while the Preferred Securities are in global form, with respect to the Preferred
Securities, by 12:00 noon, New York City time, on the redemption date, provided
that the Debenture Issuer has paid the Property Trustee a sufficient amount of
cash in connection with the related redemption or maturity of the Debentures,
the Property Trustee will deposit irrevocably with the Clearing Agency or its
nominee (or successor Clearing Agency or its nominee) funds sufficient to pay
the applicable Redemption Price with respect to the Preferred Securities and
will give the Clearing Agency irrevocable instructions and authority to pay the
Redemption Price to the Holders of the Preferred Securities, and (B) with
respect to Preferred Securities issued in definitive form and Common Securities,
provided that the Debenture Issuer has paid the Property Trustee a sufficient
amount of cash in connection with the related redemption or maturity of the
Debentures, the Property Trustee will pay the relevant Redemption Price to the
Holders of such Securities by check mailed to the address of the relevant Holder
appearing on the books and records of the Trust on the redemption date. If a
Redemption/Distribution Notice shall have been given and funds deposited as
required, then immediately prior to the close of business on the date of such
deposit, Distributions will cease to accrue on the Securities so called for
redemption and all rights of Holders of such Securities so called for redemption
will cease, except the right of the Holders of such Securities to receive the
Redemption Price, but without interest on such Redemption Price. Neither the
Regular Trustees nor the Trust shall be required to register or cause to be
registered the transfer of any Securities that have been so called for
redemption. If any date fixed for redemption of Securities is not a Business
Day, then payment of the Redemption Price payable on such date will be made on
the next succeeding day that is a Business Day (and without any interest or
other payment in respect of any such delay) except that, if such Business Day
falls in the next calendar year, such payment will be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date fixed for redemption. If the Debenture Issuer fails to repay the
Debentures on the date of redemption or on maturity or if payment of the
Redemption Price in respect of any Securities is improperly withheld or refused
and not paid either by the Property Trustee or by the Sponsor as guarantor
pursuant to the relevant Securities Guarantee, Distributions on such Securities
will continue to accrue at the then applicable rate from the original redemption
date to the actual date of payment, in which case the actual payment date will
be considered the date fixed for redemption for purposes of calculating the
Redemption Price.
(iv) Redemption/Distribution Notices shall be sent by the Regular
Trustees on behalf of the Trust to (A) in respect of the Preferred Securities,
the Clearing Agency or its nominee (or any successor Clearing Agency or its
nominee) if the Global Certificates have been issued or, if Definitive Preferred
Security Certificates have been issued, to the Holder thereof, and (B) in
respect of the Common Securities to the Holder thereof.
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(v) Subject to the foregoing and applicable law (including, without
limitation, United States federal securities laws), the Sponsor or any of its
subsidiaries may at any time and from time to time purchase outstanding
Preferred Securities by tender, in the open market or by private agreement.
5. Voting Rights - Preferred Securities.
(a) Except as provided under Sections 5(b) and 7 and as otherwise
required by law and the Declaration, the Holders of the Preferred Securities
will have no voting rights.
(b) Subject to the requirements set forth in this paragraph, the
Holders of a Majority in Liquidation Amount of the Preferred Securities, voting
separately as a class, may direct the time, method and place of conducting any
proceeding for any remedy available to the Property Trustee, or direct the
exercise of any trust or power conferred upon the Property Trustee under the
Declaration, including the right to direct the Property Trustee, as Holder of
the Debentures, to (i) exercise the remedies available under the Indenture with
respect to the Debentures, (ii) waive any past default and its consequences that
is waivable under the Indenture, or (iii) exercise any right to rescind or annul
a declaration that the principal of all the Debentures shall be due and payable,
or consent to any amendment, modification or termination of the Indenture or the
Debentures, where such consent would be required; provided that where a consent
or action under the Indenture would require the consent or act of the Holders of
greater than a majority in principal amount of Debentures affected thereby (a
"Super Majority"), the Property Trustee may only give such consent or take such
action at the written direction of the Holders of at least the proportion in
liquidation amount of the Preferred Securities which the relevant Super Majority
represents of the aggregate principal amount of the Debentures outstanding. The
Property Trustee shall not revoke any action previously authorized or approved
by a vote of the Holders of the Preferred Securities. Other than with respect to
directing the time, method and place of conducting a proceeding for any remedy
available to the Property Trustee or the Debenture Trustee as set forth above,
the Property Trustee shall not take any action in accordance with the directions
of the Holders of the Preferred Securities under this paragraph unless the
Property Trustee has obtained an opinion of tax counsel to the effect that for
the purposes of United States federal income tax the Trust will not be
classified as other than a grantor trust on account of such action. If the
Property Trustee fails to enforce its rights with respect to the Debentures held
by the Trust, any Holder of Preferred Securities may, to the extent permitted by
applicable law, institute legal proceedings directly against the Debenture
Issuer to enforce the Property Trustee's rights under the Debentures without
first instituting any legal proceedings against the Property Trustee or any
other person or entity. Notwithstanding the foregoing, if an Event of Default
under the Declaration has occurred and is continuing and such event is
attributable to the failure of the Debenture Issuer to pay interest or principal
on the Debentures issued to the Trust on the date such interest or principal is
otherwise payable, then a Holder of Preferred Securities may institute a
proceeding directly against the Debenture Issuer for enforcement of payment to
the Holder of the Preferred Securities of the principal of or interest on the
Debentures on or after the respective due dates specified in the Debentures, and
the amount of the payment will be based on the Holder's pro rata share of the
amount due and owing on all of the Preferred Securities.
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Any approval or direction of Holders of Preferred Securities may be
given at a separate meeting of Holders of Preferred Securities convened for such
purpose, at a meeting of all of the Holders of Securities in the Trust or
pursuant to written consent. The Regular Trustees will cause a notice of any
meeting at which Holders of Preferred Securities are entitled to vote, or of any
matter upon which action by written consent of such Holders is to be taken, to
be mailed to each Holder of Preferred Securities. Each such notice will include
a statement setting forth (i) the date of such meeting or the date by which such
action is to be taken, (ii) a description of any resolution proposed for
adoption at such meeting on which such Holders are entitled to vote or of such
matter upon which written consent is sought and (iii) instructions for the
delivery of proxies or consents.
No vote or consent of the Holders of the Preferred Securities will be
required for the Trust to redeem and cancel Preferred Securities or to
distribute the Debentures in accordance with the Declaration and the terms of
the Securities.
Notwithstanding that Holders of Preferred Securities are entitled to
vote or consent under any of the circumstances described above, any of the
Preferred Securities that are owned by the Sponsor or any Affiliate of the
Sponsor shall not be entitled to vote or consent and shall, for purposes of such
vote or consent, be treated as if they were not outstanding.
6. Voting Rights - Common Securities.
(a) Except as provided under Sections 6(b) and (c) and as otherwise
required by law and the Declaration, the Holders of the Common Securities will
have no voting rights.
(b) The Holders of the Common Securities are entitled, in accordance
with Article V of the Declaration, to vote to appoint, remove or replace any
Trustee or to increase or decrease the number of Trustees.
(c) Subject to Section 2.6 of the Declaration and only after the Event
of Default with respect to the Preferred Securities has been cured, waived or
otherwise eliminated and subject to the requirements set forth in this
paragraph, the Holders of a Majority in Liquidation Amount of the Common
Securities, voting separately as a class, may direct the time, method and place
of conducting any proceeding for any remedy available to the Property Trustee,
or direct the exercise of any trust or power conferred upon the Property Trustee
under the Declaration, including the right to direct the Property Trustee, as
Holder of the Debentures, to (i) exercise the remedies available under the
Indenture with respect to the Debentures, (ii) waive any past default and its
consequences that is waivable under the Indenture, or (iii) exercise any right
to rescind or annul a declaration that the principal of all the Debentures shall
be due and payable, or consent to any amendment, modification or termination of
the Indenture or the Debentures, where such consent would be required; provided
that, where a consent or action under the Indenture would require the consent or
act of a Super Majority of the Holders of the Debentures affected thereby, the
Property Trustee may only give such consent or take such action at the written
direction of the Holders of at least the proportion in liquidation amount of the
Common Securities which the relevant Super Majority represents of the
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aggregate principal amount of the Debentures outstanding. The Property Trustee
shall not revoke any action previously authorized or approved by a vote of the
Holders of the Common Securities. Other than with respect to directing the time,
method and place of conducting a proceeding for any remedy available to the
Property Trustee or the Debenture Trustee as set forth above, the Property
Trustee shall not take any action in accordance with the directions of the
Holders of the Common Securities under this paragraph unless the Property
Trustee has obtained an opinion of tax counsel to the effect that for the
purposes of United States federal income tax the Trust will not be classified as
other than a grantor trust on account of such action. If the Property Trustee
fails to enforce its rights with respect to the Debentures held by the Trust,
any Holder of Common Securities may, to the extent permitted by applicable law,
institute legal proceedings directly against the Debenture Issuer to enforce the
Property Trustee's rights under the Debentures without first instituting any
legal proceedings against the Property Trustee or any other person or entity.
Notwithstanding the foregoing, if an Event of Default under the Declaration has
occurred and is continuing and such event is attributable to the failure of the
Debenture Issuer to pay interest or principal on the Debentures issued to the
Trust on the date such interest or principal is otherwise payable, then a Holder
of Common Securities may institute a proceeding directly against the Debenture
Issuer for enforcement of payment to the Holder of the Common Securities of the
principal of or interest on the Debentures on or after the respective due dates
specified in the Debentures, and the amount of the payment will be based on the
Holder's pro rata share of the amount due and owing on all of the Common
Securities.
Any approval or direction of Holders of Common Securities may be given
at a separate meeting of Holders of Common Securities convened for such purpose,
at a meeting of all of the Holders of Securities in the Trust or pursuant to
written consent. The Regular Trustees will cause a notice of any meeting at
which Holders of Common Securities are entitled to vote, or of any matter upon
which action by written consent of such Holders is to be taken, to be mailed to
each Holder of Common Securities. Each such notice will include a statement
setting forth (i) the date of such meeting or the date by which such action is
to be taken, (ii) a description of any resolution proposed for adoption at such
meeting on which such Holders are entitled to vote or of such matter upon which
written consent is sought and (iii) instructions for the delivery of proxies or
consents.
No vote or consent of the Holders of the Common Securities will be
required for the Trust to redeem and cancel Common Securities or to distribute
the Debentures in accordance with the Declaration and the terms of the
Securities.
7. Amendments to Declaration and Indenture.
(a) In addition to any requirements under Section 12.1 of the
Declaration, if any proposed amendment to the Declaration provides for, or the
Regular Trustees otherwise propose to effect, (i) any action that would
adversely affect the powers, preferences or special rights of the Securities,
whether by way of amendment to the Declaration or otherwise, or (ii) the
dissolution, winding-up or termination of the Trust, other than as described in
Section 8.1 of the Declaration, then the Holders of outstanding Securities
voting together as a single class, will be entitled to vote on such amendment
61
<PAGE>
or proposal (but not on any other amendment or proposal) and such amendment or
proposal shall not be effective except with the approval of the Holders of at
least a Majority in Liquidation Amount of the Securities affected thereby,
voting together as a single class; provided, however, if any amendment or
proposal referred to in clause (i) above would adversely affect only the
Preferred Securities or only the Common Securities, then only the affected class
will be entitled to vote on such amendment or proposal and such amendment or
proposal shall not be effective except with the approval of a Majority in
Liquidation Amount of such class of Securities.
(b) In the event the consent of the Property Trustee as the holder of
the Debentures is required under the Indenture with respect to any amendment,
modification or termination of the Indenture or the Debentures, the Property
Trustee shall request the written direction of the Holders of the Securities
with respect to such amendment, modification or termination and shall vote with
respect to such amendment, modification or termination as directed by a Majority
in Liquidation Amount of the Securities voting together as a single class;
provided, however, that where a consent under the Indenture would require the
consent of a Super Majority of the Holders of the Debentures, the Property
Trustee may only give such consent at the direction of the Holders of at least
the proportion in liquidation amount of the Securities which the relevant Super
Majority represents of the aggregate principal amount of the Debentures
outstanding; provided, further, that the Property Trustee shall not take any
action in accordance with the directions of the Holders of the Securities under
this Section 7(b) unless the Property Trustee has obtained an opinion of tax
counsel to the effect that for the purposes of United States federal income tax
the Trust will not be classified as other than a grantor trust on account of
such action.
8. Pro Rata.
A reference in these terms of the Securities to any payment,
distribution or treatment as being "Pro Rata" shall mean pro rata to each Holder
of Securities according to the aggregate liquidation amount of the Securities
held by the relevant Holder in relation to the aggregate liquidation amount of
all Securities outstanding unless, in relation to a payment, an Event of Default
under the Declaration has occurred and is continuing, in which case any funds
available to make such payment shall be paid first to each Holder of the
Preferred Securities pro rata according to the aggregate liquidation amount of
Preferred Securities held by the relevant Holder relative to the aggregate
liquidation amount of all Preferred Securities outstanding, and only after
satisfaction of all amounts owed to the Holders of the Preferred Securities, to
each Holder of Common Securities pro rata according to the aggregate liquidation
amount of Common Securities held by the relevant Holder relative to the
aggregate liquidation amount of all Common Securities outstanding. When the
Property Trustee is making payments on the Securities, it is entitled to assume
that no Event of Default has occurred and is continuing unless the Event of
Default is actually known to a Responsible Officer of the Property Trustee.
62
<PAGE>
9. Ranking.
The Preferred Securities rank pari passu and payment thereon shall be
made Pro Rata with the Common Securities except that, where an Event of Default
occurs and is continuing under the Indenture in respect of the Debentures held
by the Property Trustee, the rights of Holders of the Common Securities to
payment in respect of Distributions and payments upon liquidation, redemption
and otherwise are subordinated to the rights to payment of the Holders of the
Preferred Securities.
10. Listing.
The Regular Trustees shall use their best efforts to cause the
Preferred Securities to be listed for quotation on the New York Stock Exchange,
Inc.
11. Acceptance of Securities Guarantee and Indenture.
Each Holder of Preferred Securities and Common Securities, by the
acceptance thereof, agrees to the provisions of the Preferred Securities
Guarantee and the Common Securities Guarantee, respectively, including the
subordination provisions therein and to the provisions of the Indenture and the
Debentures.
12. No Preemptive Rights.
The Holders of the Securities shall have no preemptive rights to
subscribe for any additional securities.
13. Miscellaneous.
These terms constitute a part of the Declaration.
The Sponsor will provide a copy of the Declaration, the Preferred
Securities Guarantee or the Common Securities Guarantee (as may be appropriate)
and the Indenture to a Holder without charge on written request to the Sponsor
at its principal place of business.
63
<PAGE>
EXHIBIT A-1
FORM OF PREFERRED SECURITY CERTIFICATE
[IF THE PREFERRED SECURITY IS TO BE A GLOBAL CERTIFICATE
INSERT - This Preferred Security is a Global Certificate within the meaning of
the Declaration hereinafter referred to and is registered in the name of The
Depository Trust Company (the "Depository") or a nominee of the Depository. This
Preferred Security is exchangeable for Preferred Securities registered in the
name of a person other than the Depository or its nominee only in the limited
circumstances described in the Declaration and no transfer of this Preferred
Security (other than a transfer of this Preferred Security as a whole by the
Depository to a nominee of the Depository or by a nominee of the Depository to
the Depository or another nominee of the Depository) may be registered except in
limited circumstances.
Unless this Preferred Security Certificate is presented by an
authorized representative of the Depository to the Trust or its agent for
registration of transfer, exchange or payment, and any Preferred Security
Certificate issued is registered in the name of Cede & Co. or such other name as
requested by an authorized representative of the Depository (and any payment
hereon is made to Cede & Co. or to such other entity as is requested by an
authorized representative of the Depository), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the
registered owner hereof, Cede & Co., has an interest herein.]
Certificate Number Number of Preferred Securities
CUSIP NO.
Certificate Evidencing Preferred Securities
of
CONSECO FINANCING TRUST V
8.70% Trust Originated Preferred SecuritiesSM ("TOPrS"SM)
(liquidation amount $25 per Preferred Security)
CONSECO FINANCING TRUST V, a statutory business trust formed under the
laws of the State of Delaware (the "Trust"), hereby certifies that
_______________________________ (the "Holder") is the registered owner of
preferred securities of the Trust representing undivided beneficial interests in
the assets of the Trust designated the 8.70% Trust Originated Preferred
SecuritiesSM (liquidation amount $25 per Preferred Security) (the "Preferred
Securities"). The Preferred Securities are transferable on the books and records
of the Trust, in person or by a duly authorized attorney, upon surrender of this
certificate duly endorsed and in proper form for transfer. The designation,
A1-1
<PAGE>
rights, privileges, restrictions, preferences and other terms and provisions of
the Preferred Securities represented hereby are issued and shall in all respects
be subject to the provisions of the Amended and Restated Declaration of Trust of
the Trust dated as of August 24, 1998, as the same may be amended from time to
time (the "Declaration"), including the designation of the terms of the
Preferred Securities as set forth in Annex I to the Declaration. Capitalized
terms used herein but not defined shall have the meaning given them in the
Declaration. The Holder is entitled to the benefits of the Preferred Securities
Guarantee to the extent provided therein. The Sponsor will provide a copy of the
Declaration, the Preferred Securities Guarantee and the Indenture to a Holder
without charge upon written request to the Sponsor at its principal place of
business.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat, for United States federal
income tax purposes, the Debentures as indebtedness and the Preferred Securities
as evidence of indirect beneficial ownership in the Debentures.
IN WITNESS WHEREOF, the Trust has executed this certificate this _____ day of
___________________, 199___.
CONSECO FINANCING TRUST V
By: _________________________________________
Name: _______________________________________
Title: Regular Trustee
A1-2
<PAGE>
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Preferred Security will be fixed
at a rate per annum of 8.70% (the "Coupon Rate") of the stated liquidation
amount of $25 per Preferred Security, such rate being the rate of interest
payable on the Debentures to be held by the Property Trustee. Distributions in
arrears for more than one quarter will bear interest thereon compounded
quarterly at the Coupon Rate (to the extent permitted by applicable law). The
term "Distributions" as used herein includes such cash distributions and any
such interest payable unless otherwise stated. A Distribution is payable only to
the extent that payments are made in respect of the Debentures held by the
Property Trustee and to the extent the Property Trustee has funds available
therefor. The amount of Distributions payable for any period will be computed
for any full quarterly Distribution period on the basis of a 360-day year of
twelve 30-day months, and for any period shorter than a full quarterly
Distribution period for which Distributions are computed, Distributions will be
computed on the basis of the actual number of days elapsed per 90-day quarter.
Except as otherwise described below, distributions on the
Preferred Securities will be cumulative, will accrue from the date of original
issuance and will be payable quarterly in arrears, on March 31, June 30,
September 30 and December 31 of each year, commencing on September 30, 1998,
which payment dates shall correspond to the interest payment dates on the
Debentures. The Debenture Issuer has the right under the Indenture to defer
payments of interest by extending the interest payment period from time to time
on the Debentures for a period not exceeding 20 consecutive quarters (each an
"Extension Period") and, as a consequence of such deferral, Distributions will
also be deferred. Despite such deferral, quarterly Distributions will continue
to accrue with interest thereon (to the extent permitted by applicable law) at
the Coupon Rate compounded quarterly during any such Extension Period. Prior to
the termination of any such Extension Period, the Debenture Issuer may further
extend such Extension Period; provided that such Extension Period together with
all such previous and further extensions thereof may not exceed 20 consecutive
quarters. Payments of accrued Distributions will be payable to Holders as they
appear on the books and records of the Trust on the first record date after the
end of the Extension Period. Upon the termination of any Extension Period and
the payment of all amounts then due, the Debenture Issuer may commence a new
Extension Period, subject to the above requirements.
The Preferred Securities shall be redeemable as provided in
the Declaration.
A1-3
<PAGE>
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred
Security Certificate to:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert assignee's social security or tax identification number)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints
________________________________________________________________________________
________________________________________________________________________________
___________________________________________ agent to transfer this Preferred
Security Certificate on the books of the Trust. The agent may substitute another
to act for him or her.
Date: __________________
Signature: _____________________________
(Sign exactly as your name appears on the other side of this Preferred Security
Certificate)
A1-4
<PAGE>
EXHIBIT A-2
FORM OF COMMON SECURITY CERTIFICATE
Certificate Number Number of Common Securities
Certificate Evidencing Common Securities
of
CONSECO FINANCING TRUST V
8.70% Trust Originated Common Securities
(liquidation amount $25 per Common Security)
CONSECO FINANCING TRUST V, a statutory business trust formed
under the laws of the State of Delaware (the "Trust"), hereby certifies that
___________________ (the "Holder") is the registered owner of common securities
of the Trust representing common undivided beneficial interests in the assets of
the Trust designated the 8.70% Trust Originated Common Securities (liquidation
amount $25 per Common Security) (the "Common Securities"). The Common Securities
are transferable on the books and records of the Trust, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer. The designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Common Securities represented
hereby are issued and shall in all respects be subject to the provisions of the
Amended and Restated Declaration of Trust of the Trust dated as of August 24,
1998, as the same may be amended from time to time (the "Declaration"),
including the designation of the terms of the Common Securities as set forth in
Annex I to the Declaration. Capitalized terms used herein but not defined shall
have the meaning given them in the Declaration. The Holder is entitled to the
benefits of the Common Securities Guarantee to the extent provided therein. The
Sponsor will provide a copy of the Declaration, the Common Securities Guarantee
and the Indenture to a Holder without charge upon written request to the Sponsor
at its principal place of business.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat, for United States
federal income tax purposes, the Debentures as indebtedness and the Common
Securities as evidence of indirect beneficial ownership in the Debentures.
A2-1
<PAGE>
IN WITNESS WHEREOF, the Trust has executed this certificate this _____
day of ________________, 199___.
CONSECO FINANCING TRUST V
By:_______________________________
Name:_____________________________
Title: Regular Trustee
A2-2
<PAGE>
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Common Security will be fixed at
a rate per annum of 8.70% (the "Coupon Rate") of the stated liquidation amount
of $25 per Common Security, such rate being the rate of interest payable on the
Debentures to be held by the Property Trustee. Distributions in arrears for more
than one quarter will bear interest thereon compounded quarterly at the Coupon
Rate (to the extent permitted by applicable law). The term "Distributions" as
used herein includes such cash distributions and any such interest payable
unless otherwise stated. A Distribution is payable only to the extent that
payments are made in respect of the Debentures held by the Property Trustee and
to the extent the Property Trustee has funds available therefor. The amount of
Distributions payable for any period will be computed for any full quarterly
Distribution period on the basis of a 360-day year of twelve 30-day months, and
for any period shorter than a full quarterly Distribution period for which
Distributions are computed, Distributions will be computed on the basis of the
actual number of days elapsed per 90-day quarter.
Except as otherwise described below, distributions on the
Common Securities will be cumulative, will accrue from the date of original
issuance and will be payable quarterly in arrears, on March 31, June 30,
September 30 and December 31 of each year, commencing on September 30, 1998, to
Holders of record on a date to be selected by the Regular Trustees, which dates
shall be at least one Business Day but less than 60 Business Days before the
relevant payment dates, which payment dates shall correspond to the interest
payment dates on the Debentures. The Debentures Issuer has the right under the
Indenture to defer payments of interest by extending the interest payment period
from time to time on the Debentures for a period not exceeding 20 consecutive
quarters (each an "Extension Period") and, as a consequence of such deferral,
Distributions will also be deferred. Despite such deferral, quarterly
Distributions will continue to accrue with interest thereon (to the extent
permitted by applicable law) at the Coupon Rate compounded quarterly during any
such Extension Period. Prior to the termination of any such Extension Period,
the Debenture Issuer may further extend such Extension Period; provided that
such Extension Period together with all such previous and further extensions
thereof may not exceed 20 consecutive quarters. Payments of accrued
Distributions will be payable to Holders as they appear on the books and records
of the Trust on the first record date after the end of the Extension Period.
Upon the termination of any Extension Period and the Payment of all amounts then
due, the Debenture Issuer may commence a new Extension Period, subject to the
above requirements.
The Common Securities shall be redeemable as provided in the
Declaration.
A2-3
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Common Security
Certificate to:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert assignee's social security or tax identification number)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints
________________________________________________________________________________
________________________________________________________________________________
_________________________________________________________agent to transfer this
Common Security Certificate on the books of the Trust. The agent may substitute
another to act for him or her.
Date: ________________________
Signature: ______________________
(Sign exactly as your name appears on the other side of this Common Security
Certificate)
A2-4
This Preferred Security is a Global Certificate within the
meaning of the Declaration hereinafter referred to and is registered in the name
of The Depository Trust Company (the "Depository") or a nominee of the
Depository. This Preferred Security is exchangeable for Preferred Securities
registered in the name of a person other than the Depository or its nominee only
in the limited circumstances described in the Declaration and no transfer of
this Preferred Security (other than a transfer of this Preferred Security as a
whole by the Depository to a nominee of the Depository or by a nominee of the
Depository to the Depository or another nominee of the Depository) may be
registered except in limited circumstances.
Unless this Preferred Security Certificate is presented by an
authorized representative of the Depository to the Trust or its agent for
registration of transfer, exchange or payment, and any Preferred Security
Certificate issued is registered in the name of Cede & Co. or such other name as
requested by an authorized representative of the Depository (and any payment
hereon is made to Cede & Co. or to such other entity as is requested by an
authorized representative of the Depository), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the
registered owner hereof, Cede & Co., has an interest herein.
Certificate Number Number of Preferred Securities
-1- -8,000,000-
CUSIP NO. 20847D205
Certificate Evidencing Preferred Securities
of
CONSECO FINANCING TRUST V
8.70% Trust Originated Preferred SecuritiesSM ("TOPrS"SM)
(liquidation amount $25 per Preferred Security)
CONSECO FINANCING TRUST V, a statutory business trust formed under the
laws of the State of Delaware (the "Trust"), hereby certifies that Cede & Co.
(the "Holder") is the registered owner of Eight Million (8,000,000) preferred
securities of the Trust representing undivided beneficial interests in the
assets of the Trust designated the 8.70% Trust Originated Preferred SecuritiesSM
(liquidation amount $25 per Preferred Security) (the "Preferred Securities").
The Preferred Securities are transferable on the books and records of the Trust,
in person or by a duly authorized attorney, upon surrender of this certificate
duly endorsed and in proper form for transfer. The designation, rights,
privileges, restrictions, preferences and other terms and provisions of the
Preferred Securities represented hereby are issued and shall in all respects be
subject to the provisions of the Amended and Restated Declaration of Trust of
the Trust dated as of August 24, 1998, as the same may be amended from time to
time (the "Declaration"), including the designation of the terms of the
Preferred Securities as set forth in Annex I to the Declaration. Capitalized
terms used herein but not defined shall have the meaning given them in the
Declaration. The Holder is entitled to the benefits of the Preferred Securities
Guarantee to the extent provided therein. The Sponsor will provide a copy of
1
<PAGE>
the Declaration, the Preferred Securities Guarantee and the Indenture to a
Holder without charge upon written request to the Sponsor at its principal place
of business.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat, for United States federal
income tax purposes, the Debentures as indebtedness and the Preferred Securities
as evidence of indirect beneficial ownership in the Debentures.
IN WITNESS WHEREOF, the Trust has executed this certificate this 24th
day of August, 1998.
CONSECO FINANCING TRUST V
By: /s/ Rollin M. Dick
-------------------------------------
Name: Rollin M. Dick
Title: Regular Trustee
2
<PAGE>
Distributions payable on each Preferred Security will be fixed at a
rate per annum of 8.70% (the "Coupon Rate") of the stated liquidation amount of
$25 per Preferred Security, such rate being the rate of interest payable on the
Debentures to be held by the Property Trustee. Distributions in arrears for more
than one quarter will bear interest thereon compounded quarterly at the Coupon
Rate (to the extent permitted by applicable law). The term "Distributions" as
used herein includes such cash distributions and any such interest payable
unless otherwise stated. A Distribution is payable only to the extent that
payments are made in respect of the Debentures held by the Property Trustee and
to the extent the Property Trustee has funds available therefor. The amount of
Distributions payable for any period will be computed for any full quarterly
Distribution period on the basis of a 360-day year of twelve 30-day months, and
for any period shorter than a full quarterly Distribution period for which
Distributions are computed, Distributions will be computed on the basis of the
actual number of days elapsed per 90-day quarter.
Except as otherwise described below, distributions on the
Preferred Securities will be cumulative, will accrue from the date of original
issuance and will be payable quarterly in arrears, on March 31, June 30,
September 30 and December 31 of each year, commencing on September 30, 1998,
which payment dates shall correspond to the interest payment dates on the
Debentures. The Debenture Issuer has the right under the Indenture to defer
payments of interest by extending the interest payment period from time to time
on the Debentures for a period not exceeding 20 consecutive quarters (each an
"Extension Period") and, as a consequence of such deferral, Distributions will
also be deferred. Despite such deferral, quarterly Distributions will continue
to accrue with interest thereon (to the extent permitted by applicable law) at
the Coupon Rate compounded quarterly during any such Extension Period. Prior to
the termination of any such Extension Period, the Debenture Issuer may further
extend such Extension Period; provided that such Extension Period together with
all such previous and further extensions thereof may not exceed 20 consecutive
quarters. Payments of accrued Distributions will be payable to Holders as they
appear on the books and records of the Trust on the first record date after the
end of the Extension Period. Upon the termination of any Extension Period and
the payment of all amounts then due, the Debenture Issuer may commence a new
Extension Period, subject to the above requirements.
The Preferred Securities shall be redeemable as provided in
the Declaration.
3
<PAGE>
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned assigns and transfers this
Preferred Security Certificate to:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert assignee's social security or tax identification number)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints
________________________________________________________________________________
________________________________________________________________________________
____________________________________________ agent to transfer this Preferred
Security Certificate on the books of the Trust. The agent may substitute another
to act for him or her.
Date: __________________
Signature: _____________________________
(Sign exactly as your name appears on the other side of this Preferred Security
Certificate)
4
<PAGE>
This Preferred Security is a Global Certificate within the
meaning of the Declaration hereinafter referred to and is registered in the name
of The Depository Trust Company (the "Depository") or a nominee of the
Depository. This Preferred Security is exchangeable for Preferred Securities
registered in the name of a person other than the Depository or its nominee only
in the limited circumstances described in the Declaration and no transfer of
this Preferred Security (other than a transfer of this Preferred Security as a
whole by the Depository to a nominee of the Depository or by a nominee of the
Depository to the Depository or another nominee of the Depository) may be
registered except in limited circumstances.
Unless this Preferred Security Certificate is presented by an
authorized representative of the Depository to the Trust or its agent for
registration of transfer, exchange or payment, and any Preferred Security
Certificate issued is registered in the name of Cede & Co. or such other name as
requested by an authorized representative of the Depository (and any payment
hereon is made to Cede & Co. or to such other entity as is requested by an
authorized representative of the Depository), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the
registered owner hereof, Cede & Co., has an interest herein.
Certificate Number Number of Preferred Securities
-2- -8,000,000-
CUSIP NO. 20847D205
Certificate Evidencing Preferred Securities
of
CONSECO FINANCING TRUST V
8.70% Trust Originated Preferred SecuritiesSM ("TOPrS"SM)
(liquidation amount $25 per Preferred Security)
CONSECO FINANCING TRUST V, a statutory business trust formed under the
laws of the State of Delaware (the "Trust"), hereby certifies that Cede & Co.
(the "Holder") is the registered owner of Eight Million (8,000,000) preferred
securities of the Trust representing undivided beneficial interests in the
assets of the Trust designated the 8.70% Trust Originated Preferred SecuritiesSM
(liquidation amount $25 per Preferred Security) (the "Preferred Securities").
The Preferred Securities are transferable on the books and records of the Trust,
in person or by a duly authorized attorney, upon surrender of this certificate
duly endorsed and in proper form for transfer. The designation, rights,
privileges, restrictions, preferences and other terms and provisions of the
Preferred Securities represented hereby are issued and shall in all respects be
subject to the provisions of the Amended and Restated Declaration of Trust of
the Trust dated as of August 24, 1998, as the same may be amended from time to
time (the "Declaration"), including the designation of the terms of the
Preferred Securities as set forth in Annex I to the Declaration. Capitalized
terms used herein but not defined shall have the meaning given them in the
Declaration. The Holder is entitled to the benefits of the Preferred Securities
Guarantee to the extent provided therein. The Sponsor will provide a copy of
1
<PAGE>
the Declaration, the Preferred Securities Guarantee and the Indenture to a
Holder without charge upon written request to the Sponsor at its principal place
of business.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat, for United States federal
income tax purposes, the Debentures as indebtedness and the Preferred Securities
as evidence of indirect beneficial ownership in the Debentures.
IN WITNESS WHEREOF, the Trust has executed this certificate this 24th
day of August, 1998.
CONSECO FINANCING TRUST V
By: /s/ Rollin M. Dick
-------------------------------------
Name: Rollin M. Dick
Title: Regular Trustee
2
<PAGE>
Distributions payable on each Preferred Security will be fixed at a
rate per annum of 8.70% (the "Coupon Rate") of the stated liquidation amount of
$25 per Preferred Security, such rate being the rate of interest payable on the
Debentures to be held by the Property Trustee. Distributions in arrears for more
than one quarter will bear interest thereon compounded quarterly at the Coupon
Rate (to the extent permitted by applicable law). The term "Distributions" as
used herein includes such cash distributions and any such interest payable
unless otherwise stated. A Distribution is payable only to the extent that
payments are made in respect of the Debentures held by the Property Trustee and
to the extent the Property Trustee has funds available therefor. The amount of
Distributions payable for any period will be computed for any full quarterly
Distribution period on the basis of a 360-day year of twelve 30-day months, and
for any period shorter than a full quarterly Distribution period for which
Distributions are computed, Distributions will be computed on the basis of the
actual number of days elapsed per 90-day quarter.
Except as otherwise described below, distributions on the
Preferred Securities will be cumulative, will accrue from the date of original
issuance and will be payable quarterly in arrears, on March 31, June 30,
September 30 and December 31 of each year, commencing on September 30, 1998,
which payment dates shall correspond to the interest payment dates on the
Debentures. The Debenture Issuer has the right under the Indenture to defer
payments of interest by extending the interest payment period from time to time
on the Debentures for a period not exceeding 20 consecutive quarters (each an
"Extension Period") and, as a consequence of such deferral, Distributions will
also be deferred. Despite such deferral, quarterly Distributions will continue
to accrue with interest thereon (to the extent permitted by applicable law) at
the Coupon Rate compounded quarterly during any such Extension Period. Prior to
the termination of any such Extension Period, the Debenture Issuer may further
extend such Extension Period; provided that such Extension Period together with
all such previous and further extensions thereof may not exceed 20 consecutive
quarters. Payments of accrued Distributions will be payable to Holders as they
appear on the books and records of the Trust on the first record date after the
end of the Extension Period. Upon the termination of any Extension Period and
the payment of all amounts then due, the Debenture Issuer may commence a new
Extension Period, subject to the above requirements.
The Preferred Securities shall be redeemable as provided in
the Declaration.
3
<PAGE>
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned assigns and transfers this
Preferred Security Certificate to:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert assignee's social security or tax identification number)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints
________________________________________________________________________________
________________________________________________________________________________
___________________________________________ agent to transfer this Preferred
Security Certificate on the books of the Trust. The agent may substitute another
to act for him or her.
Date: __________________
Signature: _____________________________
(Sign exactly as your name appears on the other side of this Preferred Security
Certificate)
4
<PAGE>
This Preferred Security is a Global Certificate within the
meaning of the Declaration hereinafter referred to and is registered in the name
of The Depository Trust Company (the "Depository") or a nominee of the
Depository. This Preferred Security is exchangeable for Preferred Securities
registered in the name of a person other than the Depository or its nominee only
in the limited circumstances described in the Declaration and no transfer of
this Preferred Security (other than a transfer of this Preferred Security as a
whole by the Depository to a nominee of the Depository or by a nominee of the
Depository to the Depository or another nominee of the Depository) may be
registered except in limited circumstances.
Unless this Preferred Security Certificate is presented by an
authorized representative of the Depository to the Trust or its agent for
registration of transfer, exchange or payment, and any Preferred Security
Certificate issued is registered in the name of Cede & Co. or such other name as
requested by an authorized representative of the Depository (and any payment
hereon is made to Cede & Co. or to such other entity as is requested by an
authorized representative of the Depository), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the
registered owner hereof, Cede & Co., has an interest herein.
Certificate Number Number of Preferred Securities
-3- -4,000,000-
CUSIP NO. 20847D205
Certificate Evidencing Preferred Securities
of
CONSECO FINANCING TRUST V
8.70% Trust Originated Preferred SecuritiesSM ("TOPrS"SM)
(liquidation amount $25 per Preferred Security)
CONSECO FINANCING TRUST V, a statutory business trust formed under the
laws of the State of Delaware (the "Trust"), hereby certifies that Cede & Co.
(the "Holder") is the registered owner of Four Million (4,000,000) preferred
securities of the Trust representing undivided beneficial interests in the
assets of the Trust designated the 8.70% Trust Originated Preferred SecuritiesSM
(liquidation amount $25 per Preferred Security) (the "Preferred Securities").
The Preferred Securities are transferable on the books and records of the Trust,
in person or by a duly authorized attorney, upon surrender of this certificate
duly endorsed and in proper form for transfer. The designation, rights,
privileges, restrictions, preferences and other terms and provisions of the
Preferred Securities represented hereby are issued and shall in all respects be
subject to the provisions of the Amended and Restated Declaration of Trust of
the Trust dated as of August 24, 1998, as the same may be amended from time to
time (the "Declaration"), including the designation of the terms of the
Preferred Securities as set forth in Annex I to the Declaration. Capitalized
terms used herein but not defined shall have the meaning given them in the
Declaration. The Holder is entitled to the benefits of the Preferred Securities
Guarantee to the extent provided therein. The Sponsor will provide a copy of
1
<PAGE>
the Declaration, the Preferred Securities Guarantee and the Indenture to a
Holder without charge upon written request to the Sponsor at its principal place
of business.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat, for United States federal
income tax purposes, the Debentures as indebtedness and the Preferred Securities
as evidence of indirect beneficial ownership in the Debentures.
IN WITNESS WHEREOF, the Trust has executed this certificate this 24th
day of August, 1998.
CONSECO FINANCING TRUST V
By: /s/ Rollin M. Dick
-------------------------------------
Name: Rollin M. Dick
Title: Regular Trustee
2
<PAGE>
Distributions payable on each Preferred Security will be fixed at a
rate per annum of 8.70% (the "Coupon Rate") of the stated liquidation amount of
$25 per Preferred Security, such rate being the rate of interest payable on the
Debentures to be held by the Property Trustee. Distributions in arrears for more
than one quarter will bear interest thereon compounded quarterly at the Coupon
Rate (to the extent permitted by applicable law). The term "Distributions" as
used herein includes such cash distributions and any such interest payable
unless otherwise stated. A Distribution is payable only to the extent that
payments are made in respect of the Debentures held by the Property Trustee and
to the extent the Property Trustee has funds available therefor. The amount of
Distributions payable for any period will be computed for any full quarterly
Distribution period on the basis of a 360-day year of twelve 30-day months, and
for any period shorter than a full quarterly Distribution period for which
Distributions are computed, Distributions will be computed on the basis of the
actual number of days elapsed per 90-day quarter.
Except as otherwise described below, distributions on the
Preferred Securities will be cumulative, will accrue from the date of original
issuance and will be payable quarterly in arrears, on March 31, June 30,
September 30 and December 31 of each year, commencing on September 30, 1998,
which payment dates shall correspond to the interest payment dates on the
Debentures. The Debenture Issuer has the right under the Indenture to defer
payments of interest by extending the interest payment period from time to time
on the Debentures for a period not exceeding 20 consecutive quarters (each an
"Extension Period") and, as a consequence of such deferral, Distributions will
also be deferred. Despite such deferral, quarterly Distributions will continue
to accrue with interest thereon (to the extent permitted by applicable law) at
the Coupon Rate compounded quarterly during any such Extension Period. Prior to
the termination of any such Extension Period, the Debenture Issuer may further
extend such Extension Period; provided that such Extension Period together with
all such previous and further extensions thereof may not exceed 20 consecutive
quarters. Payments of accrued Distributions will be payable to Holders as they
appear on the books and records of the Trust on the first record date after the
end of the Extension Period. Upon the termination of any Extension Period and
the payment of all amounts then due, the Debenture Issuer may commence a new
Extension Period, subject to the above requirements.
The Preferred Securities shall be redeemable as provided in
the Declaration.
3
<PAGE>
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned assigns and transfers this
Preferred Security Certificate to:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert assignee's social security or tax identification number)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints
________________________________________________________________________________
________________________________________________________________________________
___________________________________________ agent to transfer this Preferred
Security Certificate on the books of the Trust. The agent may substitute another
to act for him or her.
Date: __________________
Signature: _____________________________
(Sign exactly as your name appears on the other side of this Preferred Security
Certificate)
4
----------------------------------------------------------------
PREFERRED SECURITIES GUARANTEE AGREEMENT
CONSECO FINANCING TRUST V
Dated as of August 24, 1998
----------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
CROSS REFERENCE TABLE*
Section of Trust Section of
Indenture Act of Guarantee
1939, as amended Agreement
___________________________________________________________________________________________________________________
<S> <C>
310(a) ......................................................................................................4.1(a)
310(b) ......................................................................................................4.1(c)
310(c) ................................................................................................Inapplicable
311(a) ......................................................................................................2.2(b)
311(b) ......................................................................................................2.2(b)
311(c) ................................................................................................Inapplicable
312(a) ......................................................................................................2.2(a)
312(b) ......................................................................................................2.2(b)
312(c) ......................................................................................................2.9
313(a) ......................................................................................................2.3
313(b) ......................................................................................................2.3
313(c) ......................................................................................................2.3
313(d) ......................................................................................................2.3
314(a) ......................................................................................................2.4
314(b) ................................................................................................Inapplicable
314(c) ......................................................................................................2.5
314(d) ................................................................................................Inapplicable
314(e) .........................................................................................................2.5
314(f) ................................................................................................Inapplicable
315(a) ..............................................................................................3.1(d); 3.2(a)
315(b) ......................................................................................................2.7(a)
315(c) ......................................................................................................3.1(c)
315(d) ......................................................................................................3.1(d)
316(a) .................................................................................................2.6; 5.4(a)
317(a) ...................................................................................................2.10; 5.4
318(a) ......................................................................................................2.1(b)
<FN>
- ----------------------
* This Cross-Reference Table does not constitute part of the Guarantee Agreement
and shall not have any bearing upon the interpretation of any of its terms or
provisions.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
ARTICLE I INTERPRETATION AND DEFINITIONS
<S> <C>
SECTION 1.1 Interpretation and Definitions.........................................................1
ARTICLE II TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application.......................................................4
SECTION 2.2 Lists of Holders of Securities.........................................................4
SECTION 2.3 Reports by Preferred Guarantee Trustee.................................................5
SECTION 2.4 Periodic Reports to Preferred Guarantee Trustee........................................5
SECTION 2.5 Evidence of Compliance with Conditions Precedent.......................................5
SECTION 2.6 Guarantee Event of Default; Waiver.....................................................5
SECTION 2.7 Guarantee Event of Default; Notice.....................................................5
SECTION 2.8 Conflicting Interests..................................................................5
ARTICLE III POWERS, DUTIES AND RIGHTS OF PREFERRED GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of Preferred Guarantee Trustee.......................................6
SECTION 3.2 Certain Rights of Preferred Guarantee Trustee..........................................7
SECTION 3.3 Not Responsible for Recitals or Issuance of Guarantee..................................9
ARTICLE IV PREFERRED GUARANTEE TRUSTEE
SECTION 4.1 Preferred Guarantee Trustee; Eligibility...............................................9
SECTION 4.2 Appointment, Removal and Resignation of Preferred Guarantee Trustee....................9
ARTICLE V GUARANTEE
SECTION 5.1 Guarantee.............................................................................10
SECTION 5.2 Waiver of Notice and Demand...........................................................10
SECTION 5.3 Obligations Not Affected..............................................................11
SECTION 5.4 Rights of Holders.....................................................................11
SECTION 5.5 Guarantee of Payment..................................................................12
SECTION 5.6 Subrogation...........................................................................12
SECTION 5.7 Independent Obligations...............................................................12
ARTICLE VI LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions............................................................12
SECTION 6.2 Ranking...............................................................................13
ARTICLE VII TERMINATION
SECTION 7.1 Termination...........................................................................13
ARTICLE VIII INDEMNIFICATION
SECTION 8.1 Exculpation...........................................................................13
SECTION 8.2 Indemnification.......................................................................14
i
<PAGE>
ARTICLE IX MISCELLANEOUS
SECTION 9.1 Successors and Assigns................................................................14
SECTION 9.2 Amendments............................................................................14
SECTION 9.3 Notices...............................................................................14
SECTION 9.4 Benefit...............................................................................15
SECTION 9.5 Governing Law.........................................................................15
</TABLE>
ii
<PAGE>
PREFERRED SECURITIES GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT (the "Preferred Securities Guarantee"), dated
as of August 24, 1998, is executed and delivered by Conseco, Inc., an Indiana
corporation (the "Guarantor"), and State Street Bank and Trust Company, as
trustee (the "Preferred Guarantee Trustee"), for the benefit of the Holders (as
defined herein) from time to time of the Preferred Securities (as defined
herein) of Conseco Financing Trust V, a Delaware statutory business trust (the
"Issuer").
WHEREAS, pursuant to the Declaration (as defined herein), the Issuer is
issuing on the date hereof 20,000,000 preferred securities, having an aggregate
liquidation amount of $500,000,000, designated the 8.70% Trust Originated
Preferred Securities (the "Preferred Securities");
WHEREAS, as incentive for the Holders to purchase the Preferred
Securities, the Guarantor desires irrevocably and unconditionally to agree, to
the extent set forth in this Preferred Securities Guarantee, to pay to the
Holders of the Preferred Securities the Guarantee Payments (as defined herein)
and to make certain other payments on the terms and conditions set forth herein;
and
WHEREAS, the Guarantor is also executing and delivering a guarantee
agreement (as amended, modified or supplemented from time to time, the "Common
Securities Guarantee") in substantially identical terms to this Preferred
Securities Guarantee for the benefit of the holders of the Common Securities (as
defined herein), except that if an Event of Default (as defined in the
Declaration), has occurred and is continuing, the rights of holders of the
Common Securities to receive payments under the Common Securities Guarantee are
subordinated to the rights of Holders of Preferred Securities to receive
Guarantee Payments under this Preferred Securities Guarantee.
NOW, THEREFORE, in consideration of the purchase by each Holder of
Preferred Securities, which purchase the Guarantor hereby agrees shall benefit
the Guarantor, the Guarantor executes and delivers this Preferred Securities
Guarantee for the benefit of the Holders.
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Interpretation and Definitions.
In this Preferred Securities Guarantee, unless the context otherwise
requires:
(a) capitalized terms used in this Preferred Securities Guarantee but
not defined in the preamble above have the respective meanings assigned to them
in this Section 1.1;
(b) a term defined anywhere in this Preferred Securities Guarantee has
the same meaning throughout;
(c) all references to "the Preferred Securities Guarantee" or "this
Preferred Securities Guarantee" are to this Preferred Securities Guarantee as
modified, supplemented or amended from time to time;
1
<PAGE>
(d) all references in this Preferred Securities Guarantee to Articles
and Sections are to Articles and Sections of this Preferred Securities
Guarantee, unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning when
used in this Preferred Securities Guarantee, unless otherwise defined in this
Preferred Securities Guarantee or unless the context otherwise requires; and
(f) a reference to the singular includes the plural and vice versa.
"Affiliate" has the same meaning as given to that term in Rule 405 of
the Securities Act of 1933, as amended, or any successor rule thereunder.
"Base Indenture" means the Indenture dated November 14, 1996 among the
Guarantor (the "Debenture Issuer") and State Street Bank and Trust Company, as
successor trustee to Fleet National Bank, as trustee, as supplemented by the
First Supplemental Indenture dated as of November 14, 1996, the Second
Supplemental Indenture dated as of November 22, 1996 and the Third Supplemental
Indenture dated as of March 26, 1997.
"Business Day" means any day other than a day on which banking
institutions in New York, New York or in the city of the Corporate Trust Office
are authorized or required by law to close.
"Common Securities" means the securities representing common undivided
beneficial interests in the assets of the Issuer.
"Corporate Trust Office" means the office of the Preferred Guarantee
Trustee at which the corporate trust business of the Preferred Guarantee Trustee
shall, at any particular time, be principally administered, which office at the
date of execution of this Preferred Securities Guarantee is located at 225
Asylum Street, Hartford, Connecticut 06103, Attention: Corporate Trust
Administration.
"Covered Person" means any Holder or beneficial owner of Preferred
Securities.
"Debentures" means the series of subordinated deferrable interest
debentures to be issued by the Guarantor designated the 8.70% Subordinated
Deferrable Interest Debentures due 2028 held by the Property Trustee (as defined
in the Declaration) of the Issuer.
"Declaration" means the Amended and Restated Declaration of Trust,
dated as of August 24, 1998, as amended, modified or supplemented from time to
time, among the trustees of the Issuer named therein, the Guarantor, as sponsor,
and the Holders from time to time of undivided beneficial interests in the
assets of the Issuer.
"Guarantee Event of Default" means a default by the Guarantor on any of
its payment or other obligations under this Preferred Securities Guarantee.
"Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Preferred Securities, to the extent not
paid or made by the Issuer: (i) any accrued and unpaid Distributions (as defined
in the Declaration) that are required to be paid on such Preferred Securities to
the extent the Issuer shall have funds available therefor, (ii) the redemption
price, including all accrued and unpaid Distributions to the date of redemption
(the "Redemption Price") to the extent the Issuer has funds available therefor,
with respect to any Preferred Securities called for redemption by the Issuer,
and (iii) upon a voluntary or involuntary dissolution, winding-up or termination
of the Issuer (other than in connection with the distribution of Debentures to
the Holders in exchange for Preferred Securities as provided in the Declaration
or the redemption of all the Preferred Securities upon maturity or redemption of
the Debentures as provided in the Declaration), the lesser of (a) the aggregate
of the liquidation
2
<PAGE>
amount and all accrued and unpaid Distributions on the Preferred Securities to
the date of payment, to the extent the Issuer shall have funds available
therefor, and (b) the amount of assets of the Issuer remaining available for
distribution to Holders in liquidation of the Issuer (in either case, the
"Liquidation Distribution"). If an Event of Default (as defined in the
Declaration) has occurred and is continuing, the rights of holders of the Common
Securities to receive payments under the Common Securities Guarantee are
subordinated to the rights of Holders of Preferred Securities to receive
Guarantee Payments under this Preferred Securities Guarantee.
"Holder" shall mean any holder, as registered on the books and records
of the Issuer of any Preferred Securities; provided, however, that, in
determining whether the holders of the requisite percentage of Preferred
Securities have given any request, notice, consent or waiver hereunder, "Holder"
shall not include the Guarantor or any Affiliate of the Guarantor; and provided
further, that in determining whether the Holders of the requisite liquidation
amount of Preferred Securities have voted on any matter provided for in this
Preferred Securities Guarantee, then for the purpose of such determination only
(and not for any other purpose hereunder), if the Preferred Securities remain in
the form of one or more Global Certificates (as defined in the Declaration), the
term "Holders" shall mean the holder of the Global Certificate acting at the
direction of the Preferred Security Beneficial Owners (as defined in the
Declaration).
"Indemnified Person" means the Preferred Guarantee Trustee, any
Affiliate of the Preferred Guarantee Trustee, or any officers, directors,
shareholders, members, partners, employees, representatives, nominees,
custodians or agents of the Preferred Guarantee Trustee.
"Indenture" means the Base Indenture and any indenture supplemental
thereto pursuant to which the Debentures are to be issued to the Property
Trustee (as defined in the Declaration) of the Issuer.
"Majority in Liquidation Amount of the Preferred Securities" means,
except as provided in the terms of the Preferred Securities or by the Trust
Indenture Act, Holder(s) of outstanding Preferred Securities, voting separately
as a class, who are the record holders of more than 50% of the aggregate
liquidation amount (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accrued and unpaid Distributions to
the date upon which the voting percentages are determined) of all outstanding
Preferred Securities. In determining whether the Holders of the requisite amount
of Preferred Securities have voted, Preferred Securities which are owned by the
Guarantor or any Affiliate of the Guarantor or any other obligor on the
Preferred Securities shall be disregarded (to the extent known to be so owned by
the Preferred Guarantee Trustee) for the purpose of any such determination.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two Authorized Officers (as defined in the Declaration) of
such Person. Any Officers' Certificate delivered with respect to compliance with
a condition or covenant provided for in this Preferred Securities Guarantee
shall include:
(a) a statement that each officer signing the Officers' Certificate has
read the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers' Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such officer
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
3
<PAGE>
"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 Guarantee Trustee" means State Street Bank and Trust Company
until a Successor Preferred Guarantee Trustee has been appointed and has
accepted such appointment pursuant to the terms of this Preferred Securities
Guarantee and thereafter means each such Successor Preferred Guarantee Trustee.
"Responsible Officer" means, with respect to the Preferred Guarantee
Trustee, any officer within the Corporate Trust Office of the Preferred
Guarantee Trustee, including any vice-president, any assistant vice-president,
the secretary, any assistant secretary, the treasurer, any assistant treasurer
or other officer of the Corporate Trust Office of the Preferred Guarantee
Trustee customarily performing functions similar to those performed by any of
the above designated officers and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of that officer's knowledge of and familiarity with the particular
subject.
"Successor Preferred Guarantee Trustee" means a successor Preferred
Guarantee Trustee possessing the qualifications to act as Preferred Guarantee
Trustee under Section 4.1.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended
from time to time, or any successor legislation.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application.
(a) This Preferred Securities Guarantee is subject to the provisions of
the Trust Indenture Act that are required to be part of this Preferred
Securities Guarantee and shall, to the extent applicable, be governed by such
provisions.
(b) If and to the extent that any provision of this Preferred
Securities Guarantee limits, qualifies or conflicts with the duties imposed by
Sections 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties
shall control.
SECTION 2.2 Lists of Holders of Securities.
(a) The Guarantor shall provide the Preferred Guarantee Trustee with a
list, in such form as the Preferred Guarantee Trustee may reasonably require, of
the names and addresses of the Holders of the Preferred Securities ("List of
Holders"), (i) within one Business Day after January 1 and June 30 of each year
and current as of such date, and (ii) at any other time, within 30 days of
receipt by the Guarantor of a written request from the Preferred Guarantee
Trustee for a List of Holders as of a date no more than 14 days before such List
of Holders is given to the Preferred Guarantee Trustee; provided, that the
Guarantor shall not be obligated to provide such List of Holders at any time the
List of Holders does not differ from the most recent List of Holders given to
the Preferred Guarantee Trustee by the Guarantor. The Preferred Guarantee
Trustee shall preserve, in as current a form as is reasonably practicable, all
information contained in Lists of Holders given to it, provided that it may
destroy any List of Holders previously given to it on receipt of a new List of
Holders.
4
<PAGE>
(b) The Preferred Guarantee Trustee shall comply with its obligations
under Section 311(a), 311(b) and Section 312(b) of the Trust Indenture Act.
SECTION 2.3 Reports by Preferred Guarantee Trustee.
Within 60 days after May 15 of each year (commencing with the year of
the first anniversary of the issuance of the Preferred Securities), the
Preferred Guarantee Trustee shall provide to the Holders of the Preferred
Securities such reports as are required by Section 313 of the Trust Indenture
Act, if any, in the form and in the manner provided by Section 313 of the Trust
Indenture Act. The Preferred Guarantee Trustee shall also comply with the
requirements of Section 313(d) of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Preferred Guarantee Trustee.
The Guarantor shall provide to the Preferred Guarantee Trustee such
documents, reports and information as required by Section 314 (if any) of the
Trust Indenture Act and the compliance certificate required by Section 314 of
the Trust Indenture Act in the form, in the manner and at the times required by
Section 314 of the Trust Indenture Act.
SECTION 2.5 Evidence of Compliance with Conditions Precedent.
The Guarantor shall provide to the Preferred Guarantee Trustee such
evidence of compliance with any conditions precedent provided for in this
Preferred Securities Guarantee that relate to any of the matters set forth in
Section 314(c) of the Trust Indenture Act. Any certificate or opinion required
to be given by an officer pursuant to Section 314(c)(1) may be given in the form
of an Officers' Certificate.
SECTION 2.6 Guarantee Event of Default; Waiver.
The Holders of a Majority in Liquidation Amount of the Preferred
Securities may, by vote, on behalf of the Holders of all of the Preferred
Securities, waive any past Guarantee Event of Default and its consequences. Upon
such waiver, any such Guarantee Event of Default shall cease to exist, and any
Guarantee Event of Default arising therefrom shall be deemed to have been cured,
for every purpose of this Preferred Securities Guarantee, but no such waiver
shall extend to any subsequent or other default or Guarantee Event of Default or
impair any right consequent thereon.
SECTION 2.7 Guarantee Event of Default; Notice.
(a) The Preferred Guarantee Trustee shall, within 90 days after the
occurrence of a Guarantee Event of Default, transmit by mail, first class
postage prepaid, to the Holders of the Preferred Securities, notices of all
Guarantee Events of Default actually known to a Responsible Officer of the
Preferred Guarantee Trustee, unless such defaults have been cured before the
giving of such notice; provided, that the Preferred Guarantee Trustee shall be
protected in withholding such notice if and so long as a Responsible Officer of
the Preferred Guarantee Trustee in good faith determines that the withholding of
such notice is in the interests of the Holders of the Preferred Securities.
(b) The Preferred Guarantee Trustee shall not be deemed to have
knowledge of any Guarantee Event of Default unless the Preferred Guarantee
Trustee shall have received written notice thereof, or a Responsible Officer of
the Preferred Guarantee Trustee charged with the administration of the
Declaration shall have obtained actual knowledge thereof.
SECTION 2.8 Conflicting Interests
5
<PAGE>
The Declaration shall be deemed to be specifically described in this
Preferred Securities Guarantee for the purposes of clause (i) of the first
proviso contained in Section 310(b) of the Trust Indenture.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
PREFERRED GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of Preferred Guarantee Trustee.
(a) This Preferred Securities Guarantee shall be held by the Preferred
Guarantee Trustee on behalf of the Issuer for the benefit of the Holders of the
Preferred Securities, and the Preferred Guarantee Trustee shall not transfer
this Preferred Securities Guarantee to any Person except a Holder of Preferred
Securities exercising his or her rights pursuant to Section 5.4(b) or to a
Successor Preferred Guarantee Trustee on acceptance by such Successor Preferred
Guarantee Trustee of its appointment to act as Successor Preferred Guarantee
Trustee. The right, title and interest of the Preferred Guarantee Trustee in and
to this Preferred Securities Guarantee shall automatically vest in any Successor
Preferred Guarantee Trustee, and such vesting and cessation of title shall be
effective whether or not conveyancing documents have been executed and delivered
pursuant to the appointment of such Successor Preferred Guarantee Trustee.
(b) If a Guarantee Event of Default actually known to a Responsible
Officer of the Preferred Guarantee Trustee has occurred and is continuing, the
Preferred Guarantee Trustee shall enforce this Preferred Securities Guarantee
for the benefit of the Holders of the Preferred Securities.
(c) The Preferred Guarantee Trustee, before the occurrence of any
Guarantee Event of Default and after the curing of all Guarantee Events of
Default that may have occurred, shall undertake to perform only such duties as
are specifically set forth in this Preferred Securities Guarantee, and no
implied covenants shall be read into this Preferred Securities Guarantee against
the Preferred Guarantee Trustee. In case a Guarantee Event of Default has
occurred (that has not been cured or waived pursuant to Section 2.6) and is
actually known to a Responsible Officer of the Preferred Guarantee Trustee, the
Preferred Guarantee Trustee shall exercise such of the rights and powers vested
in it by this Preferred Securities Guarantee, and use the same degree of care
and skill in its exercise thereof, as a prudent person would exercise or use
under the circumstances in the conduct of his or her own affairs.
(d) No provision of this Preferred Securities Guarantee shall be
construed to relieve the Preferred Guarantee Trustee from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) prior to the occurrence of any Guarantee Event of Default
and after the curing or waiving of all such Guarantee Events of Default that may
have occurred:
(A) the duties and obligations of the Preferred
Guarantee Trustee shall be determined solely by the express provisions of this
Preferred Securities Guarantee, and the Preferred Guarantee Trustee shall not be
liable except for the performance of such duties and obligations as are
specifically set forth in this Preferred Securities Guarantee, and no implied
covenants or obligations shall be read into this Preferred Securities Guarantee
against the Preferred Guarantee Trustee; and
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(B) in the absence of bad faith on the part of the
Preferred Guarantee Trustee, the Preferred Guarantee Trustee may conclusively
rely, as to the truth of the statements and the correctness of the opinions
expressed therein, upon any certificates or opinions furnished to the Preferred
Guarantee Trustee and conforming to the requirements of this Preferred
Securities Guarantee; but in the case of any such certificates or opinions that
by any provision hereof are specifically required to be furnished to the
Preferred Guarantee Trustee, the Preferred Guarantee Trustee shall be under a
duty to examine the same to determine whether or not they conform to the
requirements of this Preferred Securities Guarantee;
(ii) the Preferred Guarantee Trustee shall not be liable for
any error of judgment made in good faith by a Responsible Officer of the
Preferred Guarantee Trustee, unless it shall be proved that the Preferred
Guarantee Trustee was negligent in ascertaining the pertinent facts upon which
such judgment was made;
(iii) the Preferred Guarantee Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than a Majority in
Liquidation Amount of the Preferred Securities relating to the time, method and
place of conducting any proceeding for any remedy available to the Preferred
Guarantee Trustee, or exercising any trust or power conferred upon the Preferred
Guarantee Trustee under this Preferred Securities Guarantee; and
(iv) no provision of this Preferred Securities Guarantee shall
require the Preferred Guarantee Trustee to expend or risk its own funds or
otherwise incur personal financial liability in the performance of any of its
duties or in the exercise of any of its rights or powers, if the Preferred
Guarantee Trustee shall have reasonable grounds for believing that the repayment
of such funds or liability is not reasonably assured to it under the terms of
this Preferred Securities Guarantee or indemnity, reasonably satisfactory to the
Preferred Guarantee Trustee, against such risk or liability is not reasonably
assured to it.
SECTION 3.2 Certain Rights of Preferred Guarantee Trustee.
(a) Subject to the provisions of Section 3.1:
(i) The Preferred Guarantee Trustee may conclusively rely, and
shall be fully protected in acting or refraining from acting upon, any
resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document believed by it to be genuine and to have
been signed, sent or presented by the proper party or parties.
(ii) Any direction or act of the Guarantor contemplated by this
Preferred Securities Guarantee shall be sufficiently evidenced by an Officers'
Certificate.
(iii) Whenever, in the administration of this Preferred Securities
Guarantee, the Preferred Guarantee Trustee shall deem it desirable that a matter
be proved or established before taking, suffering or omitting any action
hereunder, the Preferred Guarantee Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of bad faith on its part, request
and conclusively rely upon an Officers' Certificate which, upon receipt of such
request, shall be promptly delivered by the Guarantor.
(iv) The Preferred Guarantee Trustee shall have no duty to see to
any recording, filing or registration of any instrument (or any rerecording,
refiling or registration thereof).
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(v) The Preferred Guarantee Trustee may consult with counsel, and
the written advice or opinion of such counsel with respect to legal matters
shall be full and complete authorization and protection in respect of any action
taken, suffered or omitted by it hereunder in good faith and in accordance with
such advice or opinion. Such counsel may be counsel to the Guarantor or any of
its Affiliates and may include any of its employees. The Preferred Guarantee
Trustee shall have the right at any time to seek instructions concerning the
administration of this Preferred Securities Guarantee from any court of
competent jurisdiction.
(vi) The Preferred Guarantee Trustee shall be under no obligation
to exercise any of the rights or powers vested in it by this Preferred
Securities Guarantee at the request or direction of any Holder, unless such
Holder shall have provided to the Preferred Guarantee Trustee such security and
indemnity, reasonably satisfactory to the Preferred Guarantee Trustee, against
the costs, expenses (including attorneys' fees and expenses and the expenses of
the Preferred Guarantee Trustee's agents, nominees or custodians) and
liabilities that might be incurred by it in complying with such request or
direction, including such reasonable advances as may be requested by the
Preferred Guarantee Trustee; provided, that nothing contained in this Section
3.2(a)(vi) shall be taken to relieve the Preferred Guarantee Trustee, upon the
occurrence of a Guarantee Event of Default, of its obligation to exercise the
rights and powers vested in it by this Preferred Securities Guarantee.
(vii) The Preferred Guarantee Trustee shall not be bound to make
any investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness or other
paper or document, but the Preferred Guarantee Trustee, in its discretion, may
make such further inquiry or investigation into such facts or matters as it may
see fit.
(viii) The Preferred Guarantee Trustee may execute any of the
trusts or powers hereunder or perform any duties hereunder either directly or by
or through agents, nominees, custodians or attorneys, and the Preferred
Guarantee Trustee shall not be responsible for any misconduct or negligence on
the part of any agent or attorney appointed with due care by it hereunder.
(ix) Any action taken by the Preferred Guarantee Trustee or its
agents hereunder shall bind the Holders of the Preferred Securities, and the
signature of the Preferred Guarantee Trustee or its agents alone shall be
sufficient and effective to perform any such action. No third party shall be
required to inquire as to the authority of the Preferred Guarantee Trustee to so
act or as to its compliance with any of the terms and provisions of this
Preferred Securities Guarantee, both of which shall be conclusively evidenced by
the Preferred Guarantee Trustee's or its agent's taking such action.
(x) Whenever in the administration of this Preferred Securities
Guarantee the Preferred Guarantee Trustee shall deem it desirable to receive
instructions with respect to enforcing any remedy or right or taking any other
action hereunder, the Preferred Guarantee Trustee (i) may request instructions
from the Holders of a Majority in Liquidation Amount of the Preferred
Securities, (ii) may refrain from enforcing such remedy or right or taking such
other action until such instructions are received, and (iii) shall be protected
in conclusively relying on or acting in accordance with such instructions.
(b) No provision of this Preferred Securities Guarantee shall be deemed
to impose any duty or obligation on the Preferred Guarantee Trustee to perform
any act or acts or exercise any right, power, duty or obligation conferred or
imposed on it in any jurisdiction in which it shall be illegal, or in which the
Preferred Guarantee Trustee shall be unqualified or incompetent in accordance
with applicable law, to perform any such act or acts or to exercise any such
right,
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power, duty or obligation. No permissive power or authority available to the
Preferred Guarantee Trustee shall be construed to be a duty.
SECTION 3.3 Not Responsible for Recitals or Issuance of Guarantee.
The recitals contained in this Preferred Securities Guarantee shall be
taken as the statements of the Guarantor, and the Preferred Guarantee Trustee
does not assume any responsibility for their correctness. The Preferred
Guarantee Trustee makes no representation as to the validity or sufficiency of
this Preferred Securities Guarantee.
ARTICLE IV
PREFERRED GUARANTEE TRUSTEE
SECTION 4.1 Preferred Guarantee Trustee; Eligibility.
(a) There shall at all times be a Preferred Guarantee Trustee which
shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation or trust company organized and doing
business under the laws of the United States of America or any State or
Territory thereof or of the District of Columbia, or a corporation or Person
permitted by the Securities and Exchange Commission to act as an institutional
trustee under the Trust Indenture Act, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at least 50
million U.S. dollars ($50,000,000), and subject to supervision or examination by
Federal, State, Territorial or District of Columbia authority. If such
corporation or trust company publishes reports of condition at least annually,
pursuant to law or to the requirements of the supervising or examining authority
referred to above, then, for the purposes of this Section 4.1(a)(ii), the
combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published.
(b) If at any time the Preferred Guarantee Trustee shall cease to be
eligible to so act under Section 4.1(a), the Preferred Guarantee Trustee shall
immediately resign in the manner and with the effect set out in Section 4.2(c).
(c) If the Preferred Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Preferred Guarantee Trustee and Guarantor shall in all
respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.
(d) Any corporation into which the Preferred Guarantee Trustee may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Preferred
Guarantee Trustee shall be a party, or any corporation succeeding to all or
substantially all the corporate trust business of the Preferred Guarantee
Trustee, shall be the successor of the Preferred Guarantee Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto.
SECTION 4.2 Appointment, Removal and Resignation of Preferred Guarantee
Trustee.
(a) Subject to Section 4.2(b), the Preferred Guarantee Trustee may be
appointed or removed without cause at any time by the Guarantor.
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(b) The Preferred Guarantee Trustee shall not be removed in accordance
with Section 4.2(a) until a Successor Preferred Guarantee Trustee has been
appointed and has accepted such appointment by written instrument executed by
such Successor Preferred Guarantee Trustee and delivered to the Guarantor.
(c) The Preferred Guarantee Trustee appointed to office shall hold
office until a Successor Preferred Guarantee Trustee shall have been appointed
or until its removal or resignation. The Preferred Guarantee Trustee may resign
from office (without need for prior or subsequent accounting) by an instrument
in writing executed by the Preferred Guarantee Trustee and delivered to the
Guarantor, which resignation shall not take effect until a Successor Preferred
Guarantee Trustee has been appointed and has accepted such appointment by
instrument in writing executed by such Successor Preferred Guarantee Trustee and
delivered to the Guarantor and the resigning Preferred Guarantee Trustee.
(d) If no Successor Preferred Guarantee Trustee shall have been
appointed and accepted appointment as provided in this Section 4.2 within 60
days after delivery to the Guarantor of an instrument of resignation, the
resigning Preferred Guarantee Trustee may petition any court of competent
jurisdiction for appointment of a Successor Preferred Guarantee Trustee. Such
court may thereupon, after prescribing such notice, if any, as it may deem
proper, appoint a Successor Preferred Guarantee Trustee.
(e) No Preferred Guarantee Trustee shall be liable for the acts or
omissions to act of any Successor Preferred Guarantee Trustee.
(f) Upon termination of this Preferred Securities Guarantee or removal
or resignation of the Preferred Guarantee Trustee pursuant to this Section 4.2,
the Guarantor shall pay to the Preferred Guarantee Trustee all amounts owing for
fees and reimbursement of expenses which have accrued to the date of such
termination, removal or resignation.
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee.
The Guarantor irrevocably and unconditionally agrees to pay in full to
the Holders the Guarantee Payments (without duplication of amounts theretofore
paid by the Issuer), as and when due, regardless of any defense, right of
set-off or counterclaim that the Issuer may have or assert. The Guarantor's
obligation to make a Guarantee Payment may be satisfied by direct payment of the
required amounts by the Guarantor to the Holders or by causing the Issuer to pay
such amounts to the Holders.
SECTION 5.2 Waiver of Notice and Demand.
The Guarantor hereby waives notice of acceptance of this Preferred
Securities Guarantee and of any liability to which it applies or may apply,
presentment, demand for payment, any right to require a proceeding first against
the Issuer or any other Person before proceeding against the Guarantor, protest,
notice of nonpayment, notice of dishonor, notice of redemption and all other
notices and demands. Notwithstanding anything to the contrary herein, the
Guarantor retains all of its rights under the Indenture to (i) extend the
interest payment period on the Debentures and the Guarantor shall not be
obligated hereunder to make any Guarantee Payments during any Extended Interest
Payment Period (as defined in the Indenture) with respect to the Distributions
(as defined in the Declaration) on the Preferred Securities, and (ii) change the
maturity date of the Debentures to the extent permitted by the Indenture.
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SECTION 5.3 Obligations Not Affected.
The obligations, covenants, agreements and duties of the Guarantor
under this Preferred Securities Guarantee shall be absolute and unconditional
and shall remain in full force and effect until the entire liquidation amount of
all outstanding Preferred Securities shall have been paid and such obligation
shall in no way be affected or impaired by reason of the happening from time to
time of any event, including without limitation, the following, whether or not
with notice to, or the consent of, the Guarantor:
(a) The release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied agreement,
covenant, term or condition relating to the Preferred Securities to be performed
or observed by the Issuer;
(b) The extension of time for the payment by the Issuer of all or any
portion of the Distributions, Redemption Price, Liquidation Distribution or any
other sums payable under the terms of the Preferred Securities or the extension
of time for the performance of any other obligation under, arising out of, or in
connection with, the Preferred Securities (other than an extension of time for
payment of Distributions, Redemption Price, Liquidation Distribution or other
sum payable that results from the extension of any interest payment period on
the Debentures or any change to the maturity date of the Debentures permitted by
the Indenture);
(c) Any failure, omission, delay or lack of diligence on the part of
the Property Trustee or the Holders to enforce, assert or exercise any right,
privilege, power or remedy conferred on the Property Trustee or the Holders
pursuant to the terms of the Preferred Securities, or any action on the part of
the Issuer granting indulgence or extension of any kind;
(d) The voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition or readjustment of debt of,
or other similar proceedings affecting, the Issuer or any of the assets of the
Issuer;
(e) Any invalidity of, or defect or deficiency in, the Preferred
Securities;
(f) The settlement or compromise of any obligation guaranteed hereby or
hereby incurred; or
(g) Any other circumstance whatsoever that might otherwise constitute a
legal or equitable discharge or defense of a guarantor, it being the intent of
this Section 5.3 that the obligations of the Guarantor hereunder shall be
absolute and unconditional under any and all circumstances. There shall be no
obligation of the Preferred Guarantee Trustee or the Holders to give notice to,
or obtain consent of, the Guarantor or any other Person with respect to the
happening of any of the foregoing. No set-off, counterclaim, reduction or
diminution of any obligation, or any defense of any kind or nature that the
Guarantor has or may have against any Holder shall be available hereunder to the
Guarantor against such Holder to reduce the payments to it under this Preferred
Securities Guarantee.
SECTION 5.4 Rights of Holders.
(a) The Holders of a Majority in Liquidation Amount of the Preferred
Securities have the right to direct the time, method and place of conducting of
any proceeding for any remedy available to the Preferred Guarantee Trustee in
respect of this Preferred Securities Guarantee or exercising any trust or power
conferred upon the Preferred Guarantee Trustee under this Preferred Securities
Guarantee.
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(b) If the Preferred Guarantee Trustee fails to enforce this Preferred
Securities Guarantee, then any Holder of Preferred Securities may institute a
legal proceeding directly against the Guarantor to enforce the Preferred
Guarantee Trustee's rights under this Preferred Securities Guarantee without
first instituting a legal proceeding against the Issuer, the Preferred Guarantee
Trustee or any other person or entity. Notwithstanding the foregoing, if the
Guarantor has failed to make a Guarantee Payment, a Holder of Preferred
Securities may directly institute a proceeding against the Guarantor for
enforcement of the Preferred Securities Guarantee for such payment to the Holder
of the Preferred Securities of the principal of or interest on the Debentures on
or after the respective due dates specified in the Debentures, and the amount of
the payment will be based on the Holder's pro rata share of the amount due and
owing on all of the Preferred Securities. The Guarantor hereby waives any right
or remedy to require that any action on this Preferred Securities Guarantee be
brought first against the Issuer or any other person or entity before proceeding
directly against the Guarantor.
SECTION 5.5 Guarantee of Payment.
This Preferred Securities Guarantee creates a guarantee of payment and
not of collection.
SECTION 5.6 Subrogation.
The Guarantor shall be subrogated to all (if any) rights of the Holders
of Preferred Securities against the Issuer in respect of any amounts paid to
such Holders by the Guarantor under this Preferred Securities Guarantee;
provided, however, that the Guarantor shall not (except to the extent required
by mandatory provisions of law) be entitled to enforce or exercise any right
that it may acquire by way of subrogation or any indemnity, reimbursement or
other agreement, in all cases as a result of payment under this Preferred
Securities Guarantee, if, at the time of any such payment, any amounts are due
and unpaid under this Preferred Securities Guarantee. If any amount shall be
paid to the Guarantor in violation of the preceding sentence, the Guarantor
agrees to hold such amount in trust for the Holders and to pay over such amount
to the Preferred Guarantee Trustee for the benefit of the Holders.
SECTION 5.7 Independent Obligations.
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Preferred
Securities, and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Preferred
Securities Guarantee notwithstanding the occurrence of any event referred to in
subsections (a) through (g), inclusive, of Section 5.3 hereof.
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions.
So long as any Preferred Securities remain outstanding, if there shall
have occurred a Guarantee Event of Default or an event of default under the
Declaration, then (a) the Guarantor shall not declare or pay any dividend on,
make any distributions with respect to, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of its capital stock, (b) the Guarantor
shall not make any payment of interest, principal or premium, if any, on or
repay, repurchase or redeem any debt securities (including guarantees) issued by
the Guarantor which rank pari passu with or junior to the Debentures and (c) the
Guarantor shall not make any guarantee payments with respect to the foregoing
(other than pursuant to this Preferred
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Securities Guarantee); provided, however, the Guarantor may declare and pay a
stock dividend where the dividend stock is the same stock as that on which the
dividend is being paid or (ii) purchase or acquire shares of its common stock in
connection with the satisfaction by the Guarantor of its obligations under any
employee benefit plans.
SECTION 6.2 Ranking.
This Preferred Securities Guarantee will constitute an unsecured
obligation of the Guarantor and will rank (i) subordinate and junior in right of
payment to all other liabilities of the Guarantor, except those liabilities of
the Guarantor made pari passu or subordinate by their terms, (ii) pari passu
with the most senior preferred or preference stock now or hereafter issued by
the Guarantor and with any guarantee now or hereafter entered into by the
Guarantor in respect of any preferred or preference stock of any Affiliate of
the Guarantor, and (iii) senior to the Guarantor's common stock.
If an Event of Default has occurred and is continuing under the
Declaration, the rights of the holders of the Common Securities to receive any
payments under the Common Securities Guarantee Agreement shall be subordinated
to the rights of the Holders of Preferred Securities to receive Guarantee
Payments hereunder.
ARTICLE VII
TERMINATION
SECTION 7.1 Termination.
This Preferred Securities Guarantee shall terminate upon (i) full
payment of the Redemption Price of all Preferred Securities, (ii) upon the
distribution of the Debentures to the Holders of all of the Preferred Securities
or (iii) upon full payment of the amounts payable in accordance with the
Declaration upon liquidation of the Issuer. Notwithstanding the foregoing, this
Preferred Securities Guarantee will continue to be effective or will be
reinstated, as the case may be, if at any time any Holder of Preferred
Securities must restore payment of any sums paid under the Preferred Securities
or under this Preferred Securities Guarantee.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation.
(a) No Indemnified Person shall be liable, responsible or accountable
in damages or otherwise to the Guarantor or any Covered Person for any loss,
damage or claim incurred by reason of any act or omission performed or omitted
by such Indemnified Person in good faith in accordance with this Preferred
Securities Guarantee and in a manner that such Indemnified Person reasonably
believed to be within the scope of the authority conferred on such Indemnified
Person by this Preferred Securities Guarantee or by law, except that an
Indemnified Person shall be liable for any such loss, damage or claim incurred
by reason of such Indemnified Person's negligence or willful misconduct with
respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Guarantor and upon such information, opinions,
reports or statements presented to the Guarantor by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with
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reasonable care by or on behalf of the Guarantor, including information,
opinions, reports or statements as to the value and amount of the assets,
liabilities, profits, losses, or any other facts pertinent to the existence and
amount of assets from which Distributions to Holders of Preferred Securities
might properly be paid.
SECTION 8.2 Indemnification.
The Guarantor agrees to indemnify each Indemnified Person for, and to
hold each Indemnified Person harmless against, any loss, liability or expense
incurred without negligence or bad faith on its part, arising out of or in
connection with the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses (including reasonable legal fees and
expenses) of defending itself against, or investigating, any claim or liability
in connection with the exercise or performance of any of its powers or duties
hereunder. The obligation to indemnify as set forth in this Section 8.2 shall
survive the termination of this Preferred Securities Guarantee.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns.
All guarantees and agreements contained in this Preferred Securities
Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders
of the Preferred Securities then outstanding.
SECTION 9.2 Amendments.
Except with respect to any changes that do not adversely affect the
rights of the Holders (in which case no consent of the Holders will be
required), this Preferred Securities Guarantee may only be amended with the
prior approval of the Holders of at least a Majority in Liquidation Amount of
the Preferred Securities. The provisions of Section 12.2 of the Declaration with
respect to meetings of, and action by written consent of, the Holders of the
Securities apply to the giving of such approval.
SECTION 9.3 Notices.
All notices provided for in this Preferred Securities Guarantee shall
be in writing, duly signed by the party giving such notice, and shall be
delivered, telecopied or mailed by registered or certified mail, as follows:
(a) If given to the Preferred Guarantee Trustee, at the Preferred
Guarantee Trustee's mailing address set forth below (or such other address as
the Preferred Guarantee Trustee may give notice of to the Guarantor and the
Holders of the Preferred Securities):
State Street Bank and Trust Company
225 Asylum Street
Hartford, Connecticut 06103
Attention: Corporate Trust Administration
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(b) If given to the Guarantor, at the Guarantor's mailing address set
forth below (or such other address as the Guarantor may give notice of to the
Preferred Guarantee Trustee and the Holders of the Preferred Securities):
Conseco, Inc.
11825 North Pennsylvania Street
Carmel, Indiana 46032
Attention: John J. Sabl, Esq.
(c) If given to any Holder of Preferred Securities, at the address set
forth on the books and records of the Issuer.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid, except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.
SECTION 9.4 Benefit.
This Preferred Securities Guarantee is solely for the benefit of the
Holders of the Preferred Securities and, subject to Section 3.1(a), is not
separately transferable from the Preferred Securities.
SECTION 9.5 Governing Law.
THIS PREFERRED SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
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IN WITNESS WHEREOF, this Preferred Securities Guarantee is executed as
of the day and year first above written.
CONSECO, INC., as Guarantor
By: /s/ Rollin M. Dick
-----------------------------------------
Name: Rollin M. Dick
Title: Executive Vice President and Chief
Financial Officer
STATE STREET BANK AND TRUST COMPANY,
as Preferred Guarantee Trustee
By: /s/ Mark A. Forgetta
------------------------------------------
Name: Mark A. Forgetta
Title: Vice President
16
August 24, 1998
Conseco Financing Trust V
c/o Conseco, Inc.
11825 N. Pennsylvania Street
Carmel, Indiana 46032
Re: Conseco Financing Trust V
Ladies and Gentlemen:
We have acted as special Delaware counsel for Conseco, Inc., an
Indiana corporation (the "Company"), and Conseco Financing Trust V, a Delaware
business trust (the "Trust"), in connection with the matters set forth herein.
At your request, this opinion is being furnished to you.
For purposes of giving the opinions hereinafter set forth, our
examination of documents has been limited to the examination of originals or
copies of the following:
(a) The Certificate of Trust of the Trust, dated May 21, 1997
(the "Certificate") as filed with the office of the Secretary of State of the
State of Delaware (the "Secretary of State") on May 23, 1997;
(b) The Declaration of Trust of the Trust, dated as of May 21,
1997 between the Company and the trustees of the Trust named therein, as amended
and restated by the Amended and Restated Declaration of Trust of the Trust,
dated as of August 24, 1998, between the Company, the trustees of the Trust
named therein, and the holders, from time to time, of the undivided beneficial
interests in the assets of the Trust (including the exhibits and Annex I
thereto) (the "Declaration");
<PAGE>
(c) The Prospectus dated June 22, 1998 and the Prospectus
Supplement dated August 19, 1998 with respect to the Trust (collectively, the
"Prospectus"), relating to the 8.70% Preferred Securities of the Trust
representing preferred undivided beneficial interests in the assets of the Trust
(each, a "Preferred Security" and collectively, the "Preferred Securities");
(d) A Certificate of Good Standing for the Trust, dated August
24, 1998, obtained from the Secretary of State.
Initially capitalized terms used herein and not otherwise defined
are used as defined in the Declaration.
For purposes of this opinion, we have not reviewed any documents
other than the documents listed in paragraphs (a) through (d) above. In
particular, we have not reviewed any document (other than the documents listed
in paragraphs (a) through (d) above) that is referred to in or incorporated by
reference into the documents reviewed by us. We have assumed that there exists
no provision in any document that we have not reviewed that is inconsistent with
the opinions stated herein. We have conducted no independent factual
investigation of our own but rather have relied solely upon the foregoing
documents, the statements and information set forth therein and the additional
matters recited or assumed herein, all of which we have assumed to be true,
complete and accurate in all material respects.
With respect to all documents examined by us, we have assumed (i)
the authenticity of all documents submitted to us as authentic originals, (ii)
the conformity with the originals of all documents submitted to us as copies or
forms, and (iii) the genuineness of all signatures.
For purposes of this opinion, we have assumed (i) that the
Declaration constitutes the entire agreement among the parties thereto with
respect to the subject matter thereof, including with respect to the creation,
operation and termination of the Trust, and that the Declaration and the
Certificate of Trust are in full force and effect and have not been amended,
(ii) except to the extent provided in paragraph 1 below, the due organization or
due formation, as the case may be, and valid existence in good standing of each
party to the documents examined by us under the laws of the jurisdiction
governing its organization or formation, (iii) the legal capacity of natural
persons who are parties to the documents examined by us, (iv) that each of the
parties to the documents examined by us has the power and authority to execute
and deliver, and to perform its obligations under, such documents, (v) the due
authorization, execution and delivery by all parties thereto of all documents
examined by us, (vi) the receipt by each Person to whom a Preferred Security is
to be issued by the Trust (collectively, the "Preferred Security Holders") of a
Preferred Security Certificate for such Preferred Security and the payment for
such Preferred Security, in accordance with the
<PAGE>
Declaration and the Prospectus, and (vii) that the Preferred Securities are
issued and sold to the Preferred Security Holders in accordance with the
Declaration and the Prospectus. We have not participated in the preparation of
the Prospectus and assume no responsibility for its contents.
This opinion is limited to the laws of the State of Delaware
(excluding the securities laws of the State of Delaware), and we have not
considered and express no opinion on the laws of any other jurisdiction,
including federal laws and rules and regulations relating thereto. Our opinions
are rendered only with respect to Delaware laws and rules, regulations and
orders thereunder which are currently in effect.
Based upon the foregoing, and upon our examination of such
questions of law and statutes of the State of Delaware as we have considered
necessary or appropriate, and subject to the assumptions, qualifications,
limitations and exceptions set forth herein, we are of the opinion that:
1. The Trust has been duly created and is validly existing in
good standing as a business trust under the Business Trust Act.
2. The Preferred Securities of the Trust will represent valid
and, subject to the qualifications set forth in paragraph 3 below, fully paid
and nonassessable undivided beneficial interests in the assets of the Trust.
3. The Preferred Security Holders, as beneficial owners of the
Trust, will be entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware. We note that the Preferred Security
Holders may be obligated to make payments as set forth in the Declaration.
We consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Company's Current Report on Form 8-K
being filed on or about the date hereof. In giving the foregoing consent, we do
not thereby admit that we come within the category of persons whose consent is
required under Section 7 of the Securities Act of 1933, as amended, or the rules
and regulations of the Securities and Exchange Commission thereunder. Except as
stated above, without our prior written consent, this opinion may not be
furnished or quoted to, or relied upon by, any other person for any purpose.
Very truly yours,
/s/ Richards, Layton & Finger, P.A.
August 24, 1998
Conseco, Inc.
Conseco Financing Trust V
11825 North Pennsylvania Street
Carmel, IN 46032
Ladies and Gentlemen:
We have acted as special tax counsel for Conseco, Inc. ("Conseco"), an
Indiana corporation, and Conseco Financing Trust V (the "Trust"), a Delaware
business trust, in connection with a Registration Statement on Form S-3 filed
with the Securities and Exchange Commission on or about June 11, 1998 (as
amended through the date hereof, the "Registration Statement") which registered,
among other things, Trust Originated Preferred Securities (the "Preferred
Securities") of the Trust (liquidation amount of $25 per Preferred Security). In
connection therewith, we have participated in the preparation of, and have
reviewed, portions of the Registration Statement, including the prospectus (the
"Prospectus") and the form of prospectus supplement (the "Prospectus
Supplement") included therewith with respect to the Trust.
We have examined and relied upon the Registration Statement as filed and
amended to the date of this letter. We have also examined and relied upon:
(i)the form of subordinated indenture (the "Indenture") between Conseco and
Fleet National Bank, as trustee dated as of November 14, 1996; (ii)the form of
Fourth Supplemental Indenture (the "Supplemental Indenture") between Conseco and
State Street Bank and Trust Company, as Trustee, dated as of August 24, 1998, to
be used in connection with the issuance of the Subordinated Deferrable Interest
Debentures of Conseco due September 30, 2028 (the "Subordinated Debentures"),
which Supplemental Indenture includes the form of the Subordinated Debentures;
(iii)the form of Amended and Restated Declaration of Trust (the "Declaration")
dated as of August 24, 1998, for the Trust, which Declaration includes the form
of the Preferred Securities; (iv)the form of Preferred Securities Guarantee
Agreement (the "Guarantee") between Conseco and State Street Bank and Trust
Company as Preferred Securities Guarantee Trustee, dated as of August 24, 1998;
and (v) certain other relevant documents used in connection with the issuance of
the Subordinated Debentures, the Preferred Securities and the Guarantee
(collectively the "Operative Documents").
As to certain questions of fact material or relevant to the opinion
expressed herein, we have relied upon a certificate obtained from an officer of
Conseco and have assumed the accuracy of the facts certified or stated to us and
have made no independent investigation of such facts.
Based on the foregoing and assuming that the Operative Documents are
executed and delivered substantially in the form filed as exhibits to the
Registration Statement and that the transactions contemplated to occur under the
Operative Documents in fact occur in accordance with the terms thereof, we
hereby confirm, in all material respects, that the statements set forth in the
Prospectus Supplement with respect to the Trust under the heading United States
Federal Income Taxation, insofar as they constitute legal conclusions or matters
of law, fairly summarize the matters referred to therein, based upon current law
and the assumptions stated or referred to therein. There can be no assurance
that contrary positions may not be taken by the Internal Revenue Service.
We hereby consent to the use of our name in the above-captioned
Registration Statement and to the filing of this opinion as Exhibit 8.1 to the
Registration Statement. In giving such consent, we do not thereby admit that we
are in the category of persons whose consent is required under Section 7 of the
Securities Act of 1933. This opinion is expressed as of the date hereof, unless
otherwise expressly stated, and we disclaim any undertaking to advise you of any
subsequent changes of the facts stated or assumed herein or any subsequent
changes in applicable law.
Very truly yours,
/s/ Locke Reynolds Boyd & Weisell
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Locke Reynolds Boyd & Weisell
