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): December 18, 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 December 18, 1998, Conseco, Inc. ("Conseco") completed the offering
of $150.0 million of 7.875 percent Notes (the "Notes") due December 15, 2000.
The Notes were priced at 99.893 percent of par. Interest on the Notes is payable
semi-annually on June 15 and December 15 of each year. The Notes are redeemable
in whole or in part at the option of Conseco at any time, at a redemption price
equal to the sum of (a) the greater of: (i) 100 percent of the principal amount;
and (ii) the sum of the present values of the remaining scheduled payments of
principal and interest thereon from the redemption date to the maturity date,
computed by discounting such payments, in each case, to the redemption date on a
semi-annual basis at the treasury rate (as defined in the Notes) plus 25 basis
points, plus (b) accrued and unpaid interest on the principal amount thereof to
the date of redemption. The Notes are unsecured and rank pari passu with all
other unsecured and unsubordinated obligations of Conseco.
Proceeds from the offering of approximately $149.0 million (after
original issue discount and other associated costs) will be used by Conseco for
the repayment of outstanding indebtedness.
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ITEM 7(c). EXHIBITS.
1.1 Underwriting Agreement dated December 15, 1998
4.27 7 7/8% Note due December 15, 2000
5.1 Opinion of John J. Sabl
12.1 Computation of Ratios of Earnings to Fixed Charges,
Preferred Dividends and Distributions on Company-Obligated
Mandatorily Redeemable Preferred Securities of Subsidiary
Trusts
23.1 Opinion of John J. Sabl (included in Exhibit 5.1)
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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: December 18, 1998
By: /s/ JAMES S. ADAMS
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Name: James S. Adams
Title: Senior Vice President, Chief
Accounting Officer and
Treasurer
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CONSECO, INC.
(an Indiana Corporation)
$150,000,000 7 7/8% Notes due December 15, 2000
Underwriting Agreement
December 15, 1998
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CONSECO, INC.
(an Indiana Corporation)
$150,000,000 7 7/8% Notes due December 15, 2000
Underwriting Agreement
December 15, 1998
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
CHASE SECURITIES INC.
LEHMAN BROTHERS
J.P. MORGAN SECURITIES INC.
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Merrill Lynch World Headquarters
World Financial Center
North Tower
New York, New York 10281-1209
Ladies and Gentlemen:
Conseco, Inc., an Indiana corporation (the "Company"), confirms its
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 Company and the purchase by the Underwriters, acting
severally and not jointly, of $150,000,000 aggregate principal amount of the
Company's 7 7/8% Notes due December 15, 2000 (the "Securities"), to be issued
pursuant to an indenture dated as of November 13, 1997 (the "Indenture"),
between the Company and LTCB Trust Company, as trustee (the "Trustee").
Capitalized terms used herein without definition shall be used as defined in the
Prospectus (defined below).
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 333-56611) covering the
registration of securities of the Company, 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
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to the execution of this Agreement. Such registration statement, as so amended,
has been declared effective by the Commission and the Indenture has been duly
qualified under the Trust Indenture Act of 1939, as amended (the "1939 Act").
Such registration statement, as so amended, including the exhibits and schedules
thereto, if any, and the information, if any, deemed to be a part thereof
pursuant to Rule 430A(b) of the 1933 Act Regulations (the "Rule 430A
Information") or Rule 434(d) of the 1933 Act Regulations (the "Rule 434
Information") is referred to herein as the "Registration Statement" and the
final prospectus and the prospectus supplement relating to the offering of the
Securities, in the form first furnished to the 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" 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 Company files 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 Company elects 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 Agreement, all
references to the Registration Statement, any preliminary prospectus, the
Prospectus or any Term Sheet or any amendment or supplement to any of the
foregoing shall be deemed to include the copy thereof filed with the Commission
pursuant to its Electronic Data Gathering, Analysis and Retrieval system
("EDGAR").
All references in this Agreement to financial statements and schedules
and other information which is "contained," "included" or "stated" in the
Registration Statement, any preliminary prospectus or the Prospectus (or other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is incorporated
by reference in the Registration Statement, any preliminary prospectus or the
Prospectus, as the case may be; and all references in this Agreement to
amendments or supplements to the Registration Statement, any preliminary
prospectus or the Prospectus shall be deemed to mean and include the filing of
any document under the 1934 Act which is incorporated by reference in the
Registration Statement, such preliminary prospectus or the Prospectus, as the
case may be.
The Company understands 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.
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SECTION 1. Representations and Warranties.
(a) The Company represents and warrants to each Underwriter as of the
date hereof (such date being hereinafter referred to as the "Representation
Date") that:
(i) No stop order suspending the effectiveness of the
Registration Statement has been issued and no proceeding for that purpose has
been initiated or, to the knowledge and information of the Company, threatened
by the Commission.
(ii) The Company meets, and at the respective times of the
commencement and consummation of the offering of the Securities will meet, the
requirements for the use of Form S-3 under the 1933 Act. Each of the
Registration Statement and any Rule 462(b) Registration Statement has become
effective under the 1933 Act. At the respective times the Registration
Statement, any Rule 462(b) Registration Statement and any post-effective
amendments thereto became effective and at the Representation Date and at the
Closing Time (as defined herein), the Registration Statement, any Rule 462
Registration Statement and any amendments and supplements thereto complied and
will comply in all material respects with the requirements of the 1933 Act and
the 1933 Act Regulations and the 1939 Act and the rules and regulations of the
Commission under the 1939 Act (the "1939 Act Regulations") and did not and will
not contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading. At the date of the Prospectus and at the Closing Time, 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 Company elects
to rely upon Rule 434 of the 1933 Act Regulations, the Company will comply with
the requirements of Rule 434. Notwithstanding the foregoing, the representations
and warranties in this subsection shall not apply to (A) statements in or
omissions from the Registration Statement or the Prospectus made in reliance
upon and in conformity with information furnished to the Company in writing by
the Underwriters expressly for use in the Registration Statement or the
Prospectus or (B) the part of the Registration Statement which shall constitute
the Statement of Eligibility (Form T-1) under the 1939 Act.
Each preliminary prospectus and prospectus filed as part of
the Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the 1933 Act, complied when so
filed in all material respects with the 1933 Act Regulations and, if applicable,
each preliminary prospectus and the Prospectus delivered to the 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 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
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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 in the 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 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 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 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 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 and the Prospectus. Any pro forma financial statements
and the related notes thereto included in the Registration Statement and the
Prospectus present fairly the information shown therein, have been prepared in
accordance with the Commission's rules and guidelines with respect to pro forma
financial statements and have been properly compiled on the bases described
therein, and the assumptions used in the preparation thereof are reasonable and
the adjustments used therein are appropriate to give effect to the transactions
and circumstances referred to therein.
(vi) The statutory financial statements of each of the
Company's insurance subsidiaries, from which certain ratios and other
statistical data contained in the Registration Statement have been derived, have
for each relevant period been prepared in accordance with accounting practices
prescribed or permitted by the National Association of Insurance Commissioners,
and with respect to each insurance
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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.
(vii) Since the respective dates as of which information is
given in the 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 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 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 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
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the Company resulting from (A) employee or agent benefit plan or dividend
reinvestment and stock purchase plan transactions, including, without
limitation, the purchase of shares of Common Stock of the Company or
cancellation of options in connection therewith, or (B) the exercise of
conversion or exchange rights with respect to securities outstanding as of the
date of the Prospectus); 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.
(xi) 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 valid and legally 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 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"); the Indenture conforms in all material respects to the description
thereof contained in the Prospectus.
(xii) The Securities 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.
(xiii) 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.
(xiv) The offer of the Securities as contemplated herein and
in the Prospectus; the execution, delivery and performance of this Agreement and
the Indenture, and the consummation of the transactions contemplated herein,
therein and in the 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 Company with its 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
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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
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,
writ or decree of any government, government instrumentality or court, domestic
or foreign, having jurisdiction over 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 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 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 Company
or any Significant Subsidiary.
(xv) 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 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 Indenture or the transactions contemplated herein, therein or in
the 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 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 to be incorporated by reference therein, by the 1933 Act, the 1933
Act Regulations, the 1934 Act or the 1934 Act Regulations, which have not been
so filed or incorporated by reference.
(xvi) 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
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Insurance Licenses which, singly or in the aggregate, may reasonably be expected
to result in a Material Adverse Effect.
(xvii) 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 offering, issuance and sale of the Securities
or the consummation by the Company 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.
(xviii) This Agreement has been duly authorized, executed and
delivered by the Company.
(xix) 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.
(xx) Neither 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").
(xxi) None of 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 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.
(xxii) No "forward looking statement" (as defined in Rule 175
under the 1933 Act) contained in the 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 and delivered
to the Underwriters or to counsel for the Underwriters shall be deemed a
representation and warranty by the Company 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 Company agrees to
sell to each Underwriter, and each Underwriter
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severally and not jointly agrees to purchase from the Company, at the price of
99.543% of the principal amount thereof, the principal amount of Securities set
forth in Schedule A hereto opposite the name of such Underwriter, plus any
additional principal amount of Securities which such Underwriter may become
obligated to purchase pursuant to the provisions of Section 10 hereof.
(b) The initial public offering price of the Securities shall be
99.893% of the principal amount thereof, plus accrued interest, if any, from the
date of issuance. The interest rate on the Securities shall be 7 7/8% per annum.
The Securities will be redeemable as a whole or in part at the option of the
Company at any time, at a redemption price equal to the greater of (i) 100% of
the principal amount thereof and (ii) the sum of the present values of the
remaining scheduled payments of principal and interest thereon from the
redemption date to the maturity date, computed by discounting such payments, in
each case, to the redemption date on a semiannual basis (assuming a 360-day year
consisting of twelve 30-day months) at the Treasury Rate (as defined in the
Prospectus) plus 25 basis points plus, in each case, accrued interest on the
principal amount thereof to the date of redemption.
(c) Delivery of certificates for the Securities against payment of the
purchase price for such 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 Company,
at 9:00 a.m. (New York City time) on the third business day after execution of
this Agreement (or, if pricing of the Securities occurs after 4:30 p.m., New
York City 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 Company (such time and date of payment and delivery being
referred to herein as the "Closing Time"). Payment for the Securities purchased
by the Underwriters shall be made by wire transfer of immediately available
funds, payable to the Company, against delivery to the respective accounts of
the Underwriters of the Securities to be purchased by them. Delivery of, and
payment for, the Securities shall be made through the facilities of the
Depository Trust Company.
Certificates for the 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 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 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 Company. The Company agrees with the
Underwriters as follows:
(a) Promptly following the execution of this Agreement, the Company
will cause the Prospectus to be filed with the Commission pursuant to Rule 424
of the 1933 Act Regulations and the Company will promptly advise the
Underwriters when such filing has been made. Prior to the filing, the Company
will
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cooperate with the Underwriters in the preparation of the prospectus supplement
to assure that the Underwriters have no reasonable objection to the form or
content thereof when filed or mailed.
(b) The Company, 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 of (i) the effectiveness of any post-effective amendment to the
Registration Statement or the filing of any supplement or amendment to the
Prospectus, (ii) the receipt of any comments from the Commission, (iii) any
request by the Commission for any amendment to the Registration Statement or any
amendment or supplement to the Prospectus or for additional information, (iv)
the issuance by the Commission of any stop order suspending the effectiveness of
the Registration Statement or the initiation of any proceedings for that purpose
and (v) 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 Company 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 (including any
post-effective amendment and any filing under Rule 462(b) of the 1933 Act
Regulations), any Term Sheet or any amendment, supplement or revision to either
the prospectus included in the Registration Statement at the time it became
effective or to the Prospectus, whether pursuant to the 1933 Act, the 1934 Act
or otherwise; will furnish the 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 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 as originally
filed and of each amendment thereto (without exhibits) for each of the
Underwriters. If applicable, the copies of the 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
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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 Company will comply with the 1933 Act and the 1933 Act
Regulations and the 1934 Act and the 1934 Act Regulations so as to permit the
completion of the distribution of the Securities as contemplated in this
Agreement and in the 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 Company, to amend the Registration Statement in
order that the Registration Statement will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading or to amend or
supplement the Prospectus in order that the Prospectus will not include an
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein not misleading in the light of the
circumstances existing at the time it is delivered to a purchaser, or if it
shall be necessary, in the opinion of such counsel, at any such time to amend
the Registration Statement or amend or supplement the Prospectus in order to
comply with the requirements of the 1933 Act or the 1933 Act Regulations, the
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 or the Prospectus comply with
such requirements, and the Company will furnish to the Underwriters, without
charge, such number of copies of such amendment or supplement as the
Underwriters may reasonably request.
(g) The Company will use its 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 will use the net proceeds received by it from the sale
of the Securities in the manner specified in the Prospectus under "Use of
Proceeds."
(j) If, at the time that the Registration Statement became (or in the
case of a post-effective amendment becomes) effective, any information shall
have been omitted therefrom in reliance upon Rule 430A or Rule 434 of the 1933
Act Regulations, then immediately following the execution of this Agreement, the
Company will prepare, and file or transmit for filing with the Commission in
accordance
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with such Rule 430A or Rule 434 and Rule 424(b) of the 1933 Act Regulations,
copies of an amended Prospectus, or Term Sheet, or, if required by such Rule
430A, a post-effective amendment to the Registration Statement (including an
amended Prospectus), containing all information so omitted.
(k) If the Company elects to rely upon Rule 462(b), the Company 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).
(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) Between the date of the Prospectus and the Closing Time, the
Company will not, 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 debt securities of the Company
(other than the Securities or commercial paper in the ordinary course of
business).
(n) 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 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 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 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 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
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Trustee 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 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
Securities by nationally 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
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 Company herein contained or in certificates of any officer of the Company or
any subsidiary delivered pursuant to the provisions hereof, to the performance
by the Company of its obligations hereunder, and to the following further
conditions:
(a) The Registration Statement, including any Rule 462(b) Registration
Statement, shall have become effective under the 1933 Act not later than 5:30
p.m., New York City time, on the date hereof, and on the date hereof and at the
Closing Time, no stop order suspending the effectiveness of the Registration
Statement or any part thereof shall have been issued under the 1933 Act or
proceedings therefor initiated or threatened by the Commission, and any request
on the part of the Commission for additional information shall have been
complied with to the satisfaction of counsel to the 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:
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(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.
(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 (x) incentive compensation
plan, employee or agent benefit plan or dividend reinvestment and stock
purchase plan transactions, including, without limitation, the purchase
of shares of Common Stock of the Company or cancellation of options in
connection therewith, or (y) the exercise of conversion or exchange
rights with respect to securities outstanding as of the date of the
Prospectus), 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
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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) The 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 has been
issued under the 1933 Act, and no proceedings therefor have been
initiated or threatened by the Commission.
(viii) The Registration Statement as of its 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 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 Indenture 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 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, 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 information in the Prospectus under the
caption "Description of the Notes," to the extent it involves matters
of law, summaries of legal matters, documents or proceedings or legal
conclusions, has been reviewed by such counsel and is correct in all
material respects.
(xi) This Agreement has been duly authorized,
executed and delivered by the Company.
(xii) The Indenture has been duly authorized,
executed and delivered by the Company and, assuming authorization,
execution, and delivery thereof by the 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 the Bankruptcy Exceptions; and
the Indenture has been duly qualified under the 1939 Act and conforms
in all material respects to the description thereof contained in the
Prospectus.
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<PAGE>
(xiii) The Securities are in the form contemplated by
the Indenture, have been duly authorized, executed and delivered by the
Company and, when authenticated by the 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, and the Securities conform in all material
respects to the description thereof contained in the Prospectus.
(xiv) The offer of the Securities as contemplated
herein and in the Prospectus; the execution, delivery and performance
of this Agreement and the Indenture, and the consummation of the
transactions contemplated herein, therein and in the 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
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.
(xv) To such counsel's knowledge, there are no
statutes required to be described in or incorporated by reference in
the 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,
other than those disclosed or incorporated by reference therein.
(xvi) 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 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.
(xvii) 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
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Securities by the Company to the Underwriters or the performance by the
Company of its obligations under this Agreement, the Indenture and the
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.
(xviii) 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.
(xix) Neither the Company nor 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, 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 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 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.
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(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 nothing has come to such counsel's attention that causes such counsel to
believe that the 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 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 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 light of the circumstances
under which they were made, not misleading.
(3) 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 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 upon the opinion referred to
in Section 5(b)(1) 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
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 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 affairs
or business prospects of 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 Company has
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 has been issued and
no proceedings for that purpose have been initiated or, to the knowledge of such
officers, threatened by the Commission.
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(e) At the time of the execution of this Agreement, the Underwriters
shall have received from PricewaterhouseCoopers LLP a "comfort letter", with
respect to the financial information of the Company, 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
PricewaterhouseCoopers LLP, with respect to the Company, and KPMG 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 subsections (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 which are filed subsequent to the date of this Agreement and
prior to the Closing Time 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, the Securities shall be rated at least BBB+ by
Duff & Phelps Credit Rating Agency and BBB by Standard & Poor's Ratings Service,
and the Company 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; and between
the Representation Date and the Closing Time (i) there shall not have occurred
any decrease in the rating assigned to the 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 (ii) 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.
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.
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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 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 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 Form
T-1 filed as an exhibit to the 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 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
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<PAGE>
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 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 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 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.
(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
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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
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
Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of such
Securities (before deducting expenses) received by the 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
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 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
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<PAGE>
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 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 aggregate principal amount of 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 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 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 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
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<PAGE>
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 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 aggregate principal amount of Defaulted Securities
does not exceed 10% of the total aggregate principal amount of Securities, the
non-defaulting Underwriters shall be obligated, severally and not jointly, to
purchase the full amount thereof in the proportions that their respective
underwriting obligations hereunder bear to the underwriting obligations of all
non-defaulting Underwriters, or
(b) if the aggregate principal amount of Defaulted Securities
exceeds 10% of the total aggregate principal amount of the 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 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 &
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<PAGE>
Co., 5500 Sears Tower, 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 shall be directed to the Company at 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 Company 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 Company 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 thereto and
their respective successors and legal representatives, and said controlling
persons and officers and directors and their heirs and legal representatives,
and for the benefit of no other person, firm or corporation. No purchaser of
Securities from 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 Company a counterpart hereof,
whereupon this instrument, along with all counterparts, shall become a binding
agreement among the Company 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
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
CHASE SECURITIES INC.
LEHMAN BROTHERS
J.P. MORGAN SECURITIES INC.
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: /s/ David C. Sherwood
-----------------------------------
Authorized Signatory
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<PAGE>
Schedule A
Principal
Underwriters Amount
------------ ---------
Merrill Lynch, Pierce, Fenner & Smith
Incorporated........................................ $ 75,000,000
Chase Securities Inc.............................................. 25,000,000
Lehman Brothers Inc............................................... 25,000,000
J.P. Morgan Securities Inc........................................ 25,000,000
------------
Total............................................ $150,000,000
============
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<PAGE>
Schedule B
Significant Subsidiaries
Jefferson National Life Insurance Company of Texas
CIHC, Incorporated
Bankers Life Insurance Company of Illinois
Bankers Life and Casualty Company
American Life Holdings, Inc.
Conseco Annuity Assurance Company
Conseco Senior Health Insurance Company
Wabash Life Insurance Company
Pioneer Financial Services, Inc.
Capitol American Financial Corporation
Green Tree Financial Corporation
Conseco Health Insurance Company
Conseco Life Insurance Company
Philadelphia Life Insurance Company
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Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation (the "Depository"), to the
Company or its agent for registration of transfer, exchange, or payment, and any
certificate issued is registered in the name of Cede & Co. or in such other name
as is requested by an authorized representative of the Depository (and any
payment is made to Cede & Co. or to such other entity as is requested by an
authorized representative of the Depository), ANY TRANSFER, PLEDGE, OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the
registered owner hereof, Cede & Co., has an interest herein.
REGISTERED REGISTERED
CONSECO, INC.
7 7/8% NOTE DUE DECEMBER 15, 2000
CUSIP 208464AP2
No. 1 US$ 150,000,000
CONSECO, INC., a corporation duly organized and existing under the laws
of Indiana (herein called the "Company," which term includes any successor
corporation under the Indenture hereinafter referred to), for value received,
hereby promises to pay to Cede & Co. or registered assigns, the principal sum of
One Hundred Fifty Million Dollars ($150,000,000) on December 15, 2000, and to
pay interest thereon from December 18, 1998 or from the most recent Interest
Payment Date (as hereinafter defined) to which interest has been paid or duly
provided for, as the case may be.
Interest will be payable on June 15 and December 15 of each year (each
an "Interest Payment Date"), at the rate of 7 7/8% per annum, commencing June
15, 1999 (except as provided below) until the principal hereof becomes due and
payable. Interest payments will be made in an amount equal to the amount accrued
from and including the immediately preceding Interest Payment Date in respect of
which interest has been paid or duly made available for payment (or from and
including the date of issue, if no interest has been paid or duly made available
for payment) to but excluding the applicable Interest Payment Date or Maturity.
The interest 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 Note (or one or more predecessor Notes) is registered at the
close of business on the Regular Record Date for such interest payment, which
shall be the June 1 or December 1 (whether or not a Business Day), as the case
may be, next preceding such Interest Payment Date. Except as otherwise provided
in the Indenture, any such interest not so punctually paid or duly provided for
will forthwith cease to be payable to the Holder on such Regular Record Date by
virtue of their having been such Holder and may either be paid to the Person in
whose name this Note (or one or more predecessor Notes) is registered at the
close of business on a Special
1
<PAGE>
Record Date for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof is to be given to Holders of Notes not less than 10
calendar days prior to such Special Record Date, or be paid at any time in any
other lawful manner not inconsistent with the requirements of any securities
exchange on which Notes of this series may be listed, and upon such notice as
may be required by such exchange, all as more fully provided in said Indenture.
If any Interest Payment Date(s) or the date of Maturity falls on a day
that is not a Business Day, the required payment of principal, premium, if any,
and/or interest will be made on the next succeeding Business Day as if made on
the date such payment was due, and no interest will accrue on such payment for
the period from and after such Interest Payment Date or the date of Maturity, as
the case may be, to the date of such payment on the next succeeding Business
Day.
While this Note is represented by one or more global notes registered
in the name of the Depository or its nominee, the Company will cause payments of
principal of, premium, if any, and interest on this Note to be made to the
Depository or its nominee, as the case may be, by wire transfer to the extent,
in the funds and in the manner required by agreements with, or regulations or
procedures prescribed from time to time by, the Depository or its nominee, and
otherwise in accordance with such agreements, regulations and procedures. THIS
NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY 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 OF THE DEPOSITORY OR A NOMINEE
OF SUCH SUCCESSOR.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to herein, or its successor as Trustee, or its
Authenticating Agent, by manual signature of an authorized signatory, this Note
will not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
This Note is one of a duly authorized issue of securities of the
Company (the "Securities") issued under an indenture, dated as of November 13,
1997, as amended from time to time (the "Indenture"), between the Company and
LTCB Trust Company, as trustee (the "Trustee"), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Trustee and the Holders of the Notes and of the terms upon
which the Securities are, and are to be, authenticated and delivered. This Note
is one of the Securities designated on the face hereof limited in aggregate
principal amount to $150,000,000.
The Notes of this series will be redeemable as a whole or in part at
the option of the Company at any time, at a redemption price equal to the sum of
(a) the greater of (i) 100% of the principal amount of such Notes and (ii) the
sum of the present values of the remaining scheduled payments of principal and
interest thereon from the redemption date to the date of Maturity, computed by
discounting such payments, in each case, to the redemption date on a semiannual
basis
2
<PAGE>
(assuming a 360-day year consisting of twelve 30-day months) at the Treasury
Rate, plus 25 basis points, plus (b) accrued and unpaid interest on the
principal amount thereof to the date of redemption.
"Treasury Rate" means, with respect to any redemption date, the rate
per annum equal to the semi-annual equivalent yield to maturity of the
Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for such redemption date.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term of the Notes to be redeemed that would be utilized, at the
time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of such Notes. "Independent Investment Banker" means one of the
Reference Treasury Dealers appointed by the Trustee after consultation with the
Company.
"Comparable Treasury Price" means, with respect to any redemption date,
(i) the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
Business Day preceding such redemption date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (ii) if such release (or any successor release) is not
published or does not contain such prices on such Business Day, the average of
the Reference Treasury Dealer Quotations actually obtained by the Trustee for
such redemption date. "Reference Treasury Dealer Quotations" means, with respect
to each Reference Treasury Dealer and any redemption date, the average, as
determined by the Trustee, of the bid and asked prices for the Comparable
Treasury Issue (expressed in each case as a percentage of its principal amount)
quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m.
(New York City time) on the third Business Day preceding such redemption date.
"Reference Treasury Dealer" means each of Merrill Lynch, Pierce, Fenner
& Smith Incorporated, Chase Securities Inc., Lehman Brothers Inc. and J.P.
Morgan Securities Inc. and their respective successors; provided, however, that
if any of the foregoing shall cease to be a primary U.S. Government securities
dealer in New York City (a "Primary Treasury Dealer"), the Company may
substitute therefor another Primary Treasury Dealer.
Notice of any redemption will be mailed at least 30 days but no more
than 60 days before the redemption date to each holder of Notes to be redeemed.
If, at the time notice of redemption is given, the redemption moneys are not
held by the Trustee, the redemption may be made subject to their receipt on or
before the date fixed for redemption and such notice shall be of no effect
unless such moneys are so received.
Upon payment of the redemption price, on and after the redemption date
interest will cease to accrue on this Note or portions hereof called for
redemption.
3
<PAGE>
The Notes of this series contain the following covenants:
Limitations on Issuance or Disposition of Stock of Significant
Subsidiaries. The Company will not, nor will it permit any Significant
Subsidiary to, issue, sell or otherwise dispose of any shares of Capital Stock
(other than non-voting Preferred Stock) of any Significant Subsidiary, except
for (i) directors' qualifying shares; (ii) sales or other dispositions to the
Company or to one or more wholly owned Significant Subsidiaries; (iii) the sale
or other disposition of all or any part of the Capital Stock of any Significant
Subsidiary for consideration which is at least equal to the fair value of such
Capital Stock as determined by the Company's board of directors (acting in good
faith); or (iv) any issuance, sale, assignment, transfer or other disposition
made in compliance with an order of a court or regulatory authority of competent
jurisdiction, other than an order issued at the request of the Company or any
Significant Subsidiary.
Limitation on Liens. Except as provided below, neither the Company nor
any Significant Subsidiary may incur, issue, assume or guarantee any
Indebtedness secured by a Lien on any property or assets of the Company or any
Significant Subsidiary, or any shares of Capital Stock of any Significant
Subsidiary, without effectively providing that the Notes (together with, if the
Company shall so determine, any other Indebtedness which is not subordinated to
the Notes) shall be secured equally and ratably with (or prior to) such
Indebtedness, so long as such Indebtedness shall be so secured; provided,
however, that this covenant shall not apply to Indebtedness secured by (i) Liens
existing on December 15, 1998; (ii) Liens on property of, or on any shares of
stock of, any corporation existing at the time such corporation becomes a
Significant Subsidiary or merges into or consolidates with the Company or a
Significant Subsidiary; (iii) Liens on property or on shares of stock existing
at the time of acquisition thereof by the Company or any Significant Subsidiary;
(iv) Liens to secure the financing of the acquisition, construction or
improvement of property, or the acquisition of shares of stock by the Company or
any Significant Subsidiary, provided that such Liens are created not later than
one year after such acquisition or, in the case of property, no later than one
year after completion of construction or commencement of commercial operation,
whichever is later, are limited to the property acquired, constructed or
improved or the shares of stock acquired and do not secure indebtedness in
excess of the cost of such acquisition, construction or improvement; (v) Liens
in favor of the Company or any Subsidiary; (vi) Liens in favor of, or required
by, governmental authorities; and (vii) any extension, renewal or replacement as
a whole or in part, of any Lien referred to in the foregoing clauses (i) to (vi)
inclusive; provided, however, that (a) such extension, renewal or replacement
Lien shall be limited to all or a part of the same property or shares of stock
that secured the Lien extended, renewed or replaced and (b) the Indebtedness
secured by such Lien at such time is not so increased.
The restrictions in the immediately preceding paragraph do not apply
if, immediately after the incurrence, issuance, assumption or guarantee of any
Indebtedness secured by a Lien, the aggregate principal amount of such secured
Indebtedness, (other than Indebtedness secured by Liens described in clauses (i)
to (vii), inclusive, of the immediately preceding paragraph) at that time would
not exceed 10% of Consolidated Capitalization.
4
<PAGE>
"Capital Lease Obligations" of a Person means any obligation that is
required to be classified and accounted for as a capital lease on the face of a
balance sheet of such person prepared in accordance with generally accepted
accounting principles; the amount of such obligations shall be the capitalized
amount thereof, determined in accordance with generally accepted accounting
principles; and the Stated Maturity thereof shall be the date of the last
payment of rent or any other amount due under such lease prior to the first date
upon which such lease may be terminated by the lessee without payment of a
penalty.
"Capital Stock" means any and all shares, interests, rights to
purchase, warrants, options, participations or other equivalents of or interest
in (however designated) corporate stock, including any Preferred Stock.
"Consolidated Capitalization" means the sum of the Company's
consolidated shareholders' equity, redeemable preferred stock and preferred
securities in any trust, partnership, corporation or other entity of which more
than 50% of the voting equity is owned directly or indirectly by the Company,
including, without limitation, the trust securities issued by Conseco Financing
Trust I, Conseco Financing Trust II, Conseco Financing Trust III, Conseco
Financing Trust IV, Conseco Financing Trust V and Conseco Financing Trust VI.
"Indebtedness" means (i) any liability of any Person (1) for borrowed
money, or under any reimbursement obligation relating to a letter of credit
(other than letters of credit obtained in the ordinary course of business), or
(2) evidenced by a bond, note, debenture or similar instrument (including a
purchase money obligation) given in connection with the acquisition of any
businesses, properties or assets of any kind or with services incurred in
connection with capital expenditures (other than accounts payable or other
indebtedness to trade creditors arising in the ordinary course of business), or
(3) for the payment of money relating to a Capital Lease Obligation; (ii) any
liability of others described in the preceding clause (i) that the Person has
guaranteed or that is otherwise its legal liability; and (iii) any amendment,
supplement, modification, deferral, renewal, extension or refunding of any
liability of types referred to in clauses (i) and (ii) above.
"Lien" means any lien, mortgage, pledge, security interest, charge or
encumbrance of any kind (including any conditional sale or other title retention
agreement and any lease in the nature thereof).
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock or limited liability company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
"Preferred Stock," as applied to the Capital Stock of any corporation,
means Capital Stock of any class or classes (however designated) which is
preferred as to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
5
<PAGE>
"Significant Subsidiary" means any Subsidiary with net earnings which
constituted at least 20% of the Company's consolidated total net earnings, all
as determined as of the date of the Company's most recently prepared quarterly
financial statements for the 12-month period then ended.
"Stated Maturity," when used with respect to any security or any
installment of interest on any security, means the date specified in such
security as the fixed date on which the principal of such security or such
installment of interest, respectively, is finally due and payable, except as
otherwise provided in the case of Capital Lease Obligations.
"Subsidiary" means a corporation of which a majority of the Capital
Stock having voting power under ordinary circumstances to elect a majority of
the board of directors is owned directly or indirectly by the Company or by one
or more Subsidiaries, or by the Company and one or more Subsidiaries.
If any Event of Default with respect to Notes of this series will occur
and be continuing, the principal of the Notes of this series may be declared due
and payable in the manner and with the effect provided in the Indenture.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of not less than a majority in aggregate principal amount
of the outstanding Securities of each series to be affected. The Indenture also
contains provisions permitting the Holders of specified percentages in principal
amount of the outstanding Securities of each series, on behalf of the Holders of
all Securities of such series, to waive, with respect to the Securities of such
series, compliance by the Company with certain provisions of the Indenture and
certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the Holder of this Note will be conclusive and binding upon
such Holder and upon all future Holders of this Note and of any Note issued upon
the registration of transfer hereof or in exchange therefore or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Note.
Holders of Notes may not enforce their rights pursuant to the Indenture
or the Notes except as provided in the Indenture. No reference herein to the
Indenture and no provision of this Note or of the Indenture will alter or impair
the obligation of the Company, which is absolute and unconditional, to pay the
principal of, and premium, if any, and interest on this Note at the times,
places and rates, herein prescribed.
The Indenture contains provisions for defeasance at any time of (a) the
entire indebtedness of the Company on this Note and (b) certain restrictive
covenants and the related Events of Default upon compliance by the Company with
certain conditions specified therein, which provisions apply to this Note.
6
<PAGE>
The Notes of this series are issuable only in global or certificated
registered form, without coupons, in denominations of $1,000 and integral
multiples thereof. As provided in the Indenture and subject to certain
limitations therein specified and to the limitations described below, if
applicable, Notes of this series are exchangeable for Notes of this series of
like aggregate principal amount of a different authorized denomination, as
requested by the Holder surrendering the same.
As provided in the Indenture and subject to certain limitations therein
specified and to the limitations described below, if applicable, the transfer of
this Note is registerable in the Security Register upon surrender of this Note
for registration of transfer at the office or agency of the Company maintained
for that purpose duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Company and the Security Registrar (which
will initially be the Trustee at its principal corporate trust office located in
the Borough of Manhattan, The City of New York) duly executed by the Holder
hereof or his attorney duly authorized in writing, and thereupon one or more new
Notes of this series with like terms and conditions, of authorized denominations
and for the same aggregate principal amount, will be issued to the designated
transferee or transferees.
This Note is exchangeable for certificated Notes only upon the terms
and conditions provided in the Indenture. Except as provided in the Indenture,
owners of beneficial interests in this Note will not be entitled to receive
physical delivery of Notes in certificated registered form and will not be
considered the Holders thereof for any purpose under the Indenture.
This Note is in the form of a Global Security as provided in the
Indenture. If at any time the Depository notifies the Company that it is
unwilling or unable to continue as Depository for this Note or if at any time
the Depository for this series shall no longer be eligible or in good standing
under the Securities Exchange Act of 1934, as amended, or other applicable
statute or regulation, the Company shall appoint a successor Depository with
respect to this Note. If a successor Depository for this Note is not appointed
by the Company within 90 days after the Company receives notice or becomes aware
of such ineligibility, the Company will execute, and the Trustee or its agent,
upon receipt of a Company Request for the authentication and delivery of
certificates representing Securities of this series in exchange for this
Security will authenticate and deliver, certificates representing securities of
this series of like tenor and terms in an aggregate principal amount equal to
the principal amount of this Note in exchange for this Note.
If specified by the Company pursuant to the Indenture with respect to
this Note, the Depository may surrender this Note in exchange in whole or in
part for certificates representing Securities of this series of like tenor and
terms in definitive form on such terms as are acceptable to the Company and the
Depository. Thereupon the Company shall execute, and the trustee or its agent
shall authenticate and deliver, without a service charge, (1) to each Holder
specified by the Security Registrar or the Depository a certificate or
certificates representing Securities of this series of like tenor and terms and
of any authorized denomination as requested by such person in an aggregate
principal amount equal to and in exchange for such Holder's beneficial interest
as specified by the security Registrar or the Depository in this Note; and (2)
to the Depository a new Global Security
7
<PAGE>
of like tenor and terms and in an authorized denomination equal to the
difference, if any, between the principal amount of the surrendered Note and the
aggregate principal amount of certificates representing Notes delivered to
Holders thereof.
No service charge will be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this Note is registered as the owner hereof for all
purposes, whether or not this Note be overdue and notwithstanding any notation
of ownership or other writing hereon, and none of the Company, the Trustee or
any such agent will be affected by notice to the contrary.
The Indenture and the Notes will be governed by and construed in
accordance with the laws of the State of New York.
All terms used in this Note which are defined in the Indenture will
have the meanings assigned to them in the Indenture unless otherwise defined
herein; and all references in the Indenture to "Security" or "Securities" will
be deemed to include this Note.
8
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Date: December 18, 1998 CONSECO, INC.
By /s/ STEPHEN C. HILBERT
---------------------------------
Stephen C. Hilbert, President
[SEAL]
Attest:
By /s/ JOHN J. SABL
---------------------------------
John J. Sabl, Secretary
This is one of the Securities of the series designated therein referred
to in the within-mentioned Indenture.
Dated: December 18, 1998 LTCB TRUST COMPANY,
as Trustee
By:/s/ BARBARA BEVELAQUA
---------------------------------
Authorized Officer
9
<PAGE>
-----------------
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and not
as tenants in common
UNIF GIFT MIN ACT - ..................Custodian................
(Cust) (Minor)
Under Uniform Gifts to Minors Act
....................................
(State)
Additional abbreviations may also be used though not in the above list.
------------------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------------------------------------------------------
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE
- -------------------------------------
the within Security and all rights thereunder, hereby irrevocably constituting
and appointing __________________ attorney to transfer said Security on the
books of the Company, with full power of substitution in the premises.
Date:
----------------------
Signature
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE WITHIN INSTRUMENT IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.
THE SIGNATURE(S) MUST BE GUARANTEED BY AN "ELIGIBLE GUARANTOR
INSTITUTION" THAT IS A MEMBER OR PARTICIPANT IN A "SIGNATURE GUARANTEE PROGRAM"
(E.G., THE SECURITIES TRANSFER AGENTS MEDALLION PROGRAM, THE STOCK EXCHANGE
MEDALLION PROGRAM OR THE NEW YORK STOCK EXCHANGE, INC. MEDALLION SIGNATURE
PROGRAM).
10
December 18, 1998
To: Board of Directors
Conseco, Inc.
11825 N. Pennsylvania Street
Carmel, IN 46032
Re: Conseco, Inc.
7 7/8% Notes due December 15, 2000
Lady and Gentlemen:
I am Executive Vice President, General Counsel and Secretary of
Conseco, Inc., an Indiana corporation (the "Company"), and in such capacity I
have general supervision of the legal affairs of the Company. I, and lawyers
under my supervision (collectively, "we"), have acted as counsel for the Company
in connection with the sale by the Company pursuant to the Underwriting
Agreement dated December 15, 1998 (the "Underwriting Agreement") of a total of
$150,000,000 aggregate principal amount of 7 7/8% Notes due December 15, 2000 of
the Company (the "Notes").
In our capacity as such counsel, we have examined (i) the Notes, (ii)
the Registration Statement on Form S-3 (No. 333-56611), as originally filed with
the Commission on June 11, 1998, as amended by Pre-Effective Amendment No. 1 and
Post-Effective Amendment No. 1 thereto (the "Registration Statement"), (iii) the
Underwriting Agreement, (iv) the Indenture, dated as of November 13, 1997,
between the Company and LTCB Trust Company, as Trustee (the "Indenture"), and
(v) the Prospectus Supplement dated December 15, 1998 and the final Prospectus
dated June 22, 1998 relating to the Notes, in the form filed with the Commission
pursuant to Rule 424(b) under the 1933 Act Regulations (collectively, the
"Prospectus"). We have also examined originals, or copies certified or otherwise
identified to our satisfaction, of such other records and documents as we have
deemed necessary as a basis for the opinions expressed below. In such
examination and for the purposes of this opinion, we have assumed that all
natural persons have legal capacity, all items submitted to us as originals are
authentic and all signatures thereon are genuine, all items submitted to us as
copies conform to the originals and each original or copy is complete and has
been duly executed and delivered by each party (other than the Company) pursuant
to due authorization as such party's legal, valid and
<PAGE>
Board of Directors
December 18, 1998
Page 2
binding obligation, enforceable against such party in accordance with its
respective terms. As to facts material to the opinions expressed herein which
were not independently established or verified, we have relied upon oral or
written statements and representations of the Company. Capitalized terms used
herein and not otherwise defined shall have the respective meanings set forth in
the Underwriting Agreement.
Based upon and subject to the matters stated herein and upon such
investigation as we have deemed necessary and subject to the qualifications,
limitations and assumptions set forth herein, I advise you that in the opinion
of the undersigned:
1. The Company has been incorporated and is validly existing as a
corporation under the laws of the State of Indiana.
2. All legally required proceedings in connection with the
authorization and valid issuance of the Notes and the sale of the Notes in
accordance with the Underwriting Agreement (other than the filing of
post-issuance reports, the non-filing of which would not render the Notes
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 Notes and the sale of the Notes in
accordance with the Underwriting 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 I express no opinion) have been obtained and are in
full force and effect.
3. The Notes are in the form contemplated by the Indenture, have been
duly authorized, executed and delivered by the Company and, when authenticated
by the 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
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or other similar laws affecting the enforcement of creditors' rights
generally and by the effect of general principles of equity, regardless of
whether considered in a proceeding in equity or at law.
My opinions expressed herein are limited to the laws of the State of
Indiana and the federal laws of the United States, and I do not express any
opinion herein concerning any other law. I note that the Underwriting Agreement,
the Notes and the Indenture are expressly governed by the laws of the State of
New York and I have assumed, with your permission and without any investigation,
that the substantive laws of the State of Indiana are substantially identical to
those of the State of New York.
<PAGE>
Board of Directors
December 18, 1998
Page 3
The opinions expressed herein are matters of professional judgment and
not a guarantee of result. The opinions expressed herein are effective as of the
date hereof. I do not undertake to advise you of any matter within the scope of
this letter that comes to my attention after the date of this letter and
disclaim any responsibility to advise you of any future changes in law or in
fact that may affect the opinions set forth herein. The opinions expressed
herein are being delivered to you solely for your benefit and may not be relied
upon by any other person in any manner or for any purpose without my prior
written approval; accordingly, it may not be quoted, filed with any governmental
authority or other regulatory agency or otherwise circulated or utilized for any
other purpose without my written consent.
I consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Company's Report on Form 8-K being
filed on or about the date hereof. In giving the foregoing consent, I do not
admit that I come within the category of persons whose consent is required under
the Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder.
Very truly yours,
/s/ JOHN J. SABL
------------------------
John J. Sabl,
Executive Vice President
and General Counsel
<PAGE>
<TABLE>
<CAPTION>
CONSECO, INC. AND SUBSIDIARIES
Exhibit 12.1
Computation of Ratio of Earnings to Fixed Charges,
Preferred Dividends and Distributions on Company-Obligated Mandatorily
Redeemable Preferred Securities of Subsidiary Trusts
(Dollars in millions)
Nine Months Ended
Year Ended December 31, September 30,
---------------------------------------------------- ---------------------
1993 1994 1995 1996 1997 1997 1998
-------- -------- -------- -------- -------- -------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Pretax income from operations:
Net income.................................... $ 413.1 $330.5 $ 470.9 $ 452.2 $ 866.4 $ 712.3 $ 203.0
Add income tax expense........................ 307.1 231.2 240.7 302.2 560.1 456.0 287.1
Add extraordinary charge on
extinguishment of debt...................... 11.9 4.0 2.1 26.5 6.9 6.2 42.6
Add minority interest......................... 78.2 59.0 109.0 34.9 52.3 37.9 60.4
Less equity in undistributed
earnings of CCP Insurance, Inc.............. (36.6) (23.8) - - - - -
Less equity in undistributed
earnings of Western National Corp........... - (37.2) - - - - -
-------- ------ -------- -------- -------- -------- --------
Pretax income........................... 773.7 563.7 822.7 815.8 1,485.7 1,212.4 593.1
-------- ------ -------- -------- -------- -------- --------
Add fixed charges:
Interest expense on annuities and financial
products................................... 408.5 134.7 585.4 668.6 697.1 524.6 553.9
Interest expense:
Corporate................................... 58.0 59.3 119.4 108.1 109.4 76.0 120.6
Finance..................................... 51.2 41.6 57.3 70.1 160.9 111.4 160.3
Investment borrowings....................... 10.6 7.7 22.2 22.0 42.0 17.7 51.9
Other ....................................... .6 .9 1.0 .9 .7 .6 .4
Portion of rental(1).......................... 5.4 7.9 8.9 10.9 13.7 10.1 11.0
-------- ------ -------- -------- -------- -------- --------
Fixed charges............................. 534.3 252.1 794.2 880.6 1,023.8 740.4 898.1
-------- ------ -------- -------- -------- -------- --------
Adjusted earnings......................... $1,308.0 $815.8 $1,616.9 $1,696.4 $2,509.5 $1,952.8 $1,491.2
======== ====== ======== ======== ======== ======== ========
Ratio of earnings to fixed charges........ 2.45X 3.24X 2.04X 1.93X 2.45X 2.64X 1.66X
===== ===== ===== ===== ===== ===== =====
Ratio of earnings to fixed charges,
excluding interest on annuities and
financial product policyholder account
balances and interest expense on debt
related to finance receivables and
other investments................. .... 13.09X 9.28X 7.36X 7.80X 13.00X 14.98X 5.49X
====== ===== ===== ===== ====== ====== =====
Ratio of earnings (excluding nonrecurring
charge related to Green Tree of $688.0
million) to fixed charges.............. 2.43X
=====
Ratio of earnings (excluding nonrecurring
charge related to Green Tree of $688.0
million) to fixed charges, excluding
interest on annuities and financial
product policyholder account balances
and interest expense on debt related
to finance receivables and other
investments............................ 10.71X
======
(continued on following page)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONSECO, INC. AND SUBSIDIARIES
Computation of Ratio of Earnings to Fixed Charges,
Preferred Dividends and Distributions on Company-Obligated Mandatorily
Redeemable Preferred Securities of Subsidiary Trusts, continued
(Dollars in millions)
Nine Months Ended
Year Ended December 31, September 30,
---------------------------------------------------- ---------------------
1993 1994 1995 1996 1997 1997 1998
-------- -------- -------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Fixed charges................................. $534.3 $252.1 $ 794.2 $ 880.6 $1,023.8 $740.4 $898.1
Add dividends on preferred stock, including
dividends on preferred stock of subsidiaries
(divided by the rate of income before
minority interest and extraordinary
charge to pretax income).................... 35.3 34.8 40.3 57.6 40.4 37.2 11.6
Add distributions on Company-obligated
mandatorily redeemable preferred securities
of subsidiary trusts........................ - - - 5.5 75.4 53.3 92.2
-------- ------ -------- -------- -------- -------- --------
Fixed charges............................. $ 569.6 $286.9 $ 834.5 $ 943.7 $1,139.6 $ 830.9 $1,001.9
======== ====== ======== ======== ======== ======== ========
Adjusted earnings......................... $1,308.0 $815.8 $1,616.9 $1,696.4 $2,509.5 $1,952.8 $1,491.2
======== ====== ======== ======== ======== ======== ========
Ratio of earnings to fixed charges,
preferred dividends and distributions
on Company-obligated mandatorily
redeemable preferred securities
of subsidiary trusts................... 2.30X 2.84X 1.94X 1.80X 2.20X 2.35X 1.49X
===== ===== ===== ===== ===== ===== =====
Ratio of earnings to fixed charges,
preferred dividends and distributions
on Company-obligated mandatorily
redeemable preferred securities of
subsidiary trusts, excluding interest
on annuities and financial product
policyholder account balances and
interest expense on debt related to
finance receivables and other
investments........................... 8.44X 6.14X 5.61X 5.11X 6.72X 7.33X 3.08X
===== ===== ===== ===== ===== ===== =====
Ratio of earnings (excluding nonrecurring
charge related to Green Tree of $688.0
million) to fixed charges, preferred
dividends and distributions on Company-
obligated mandatorily redeemable
preferred securities of subsidiary
trusts................................. 2.18X
=====
Ratio of earnings (excluding nonrecurring
charge related to Green Tree of $688.0
million) to fixed charges, preferred
dividends and distributions on Company-
obligated mandatorily redeemable
preferred securities of subsidiary trusts,
excluding interest on annuities and
financial product policyholder account
balances and interest expense on debt
related to finance receivables and
other investments...................... 5.99X
=====
<FN>
(1) Interest portion of rental is assumed to be 33 percent.
</FN>
</TABLE>
