REGISTRATION NO. 333-81781
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
Post-Effective
Amendment No. 1*
to
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
---------------------
CONSECO, INC. INDIANA 35-1468632
(Exact name of the (State or other (I.R.S. Employer
Registrant as specified jurisdiction of Identification No.)
in its charter) incorporation or
organization)
11825 N. Pennsylvania St.
Carmel, Indiana 46032
(317) 817-6100
(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)
---------------------
John J. Sabl, Esquire
Conseco, Inc.
11825 N. Pennsylvania St.
Carmel, Indiana 46032
(317) 817-6092
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From
time to time after the Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
* THIS POST-EFFECTIVE AMENDMENT NO. 1 (THE "AMENDMENT") TO THE REGISTRANT'S
REGISTRATION STATEMENT NO. 333-81781 IS BEING FILED PURSUANT TO RULE 462(D)
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, FOR THE SOLE PURPOSE OF
FILING EXHIBITS AND, ACCORDINGLY, SHALL BECOME EFFECTIVE IMMEDIATELY UPON
FILING WITH THE SECURITIES AND EXCHANGE COMMISSION.
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Advisory fee to Warburg Dillon Read LLC............................ $ 905,000
Reimbursement of Warburg Dillon Read LLC expenses.................. 150,000
Securities and Exchange Commission registration fee................ 29,127
Legal fees and expenses............................................ 20,000
Accounting fees and expenses....................................... 10,000
Printing expenses.................................................. 5,000
Miscellaneous...................................................... 5,873
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Total........................................................... $1,125,000
Except for the advisory fees to Warburg Dillon Read LLC and the SEC
registration fee, all of the foregoing are estimates.
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS
The Indiana Business Corporation Law grants authorization to Indiana
corporations to indemnify officers and directors for their conduct if such
conduct was in good faith and was in the corporation's best interests or, in the
case of directors, was not opposed to such best interests, and permits the
purchase of insurance in this regard. In addition, the shareholders of a
corporation may approve the inclusion of other or additional indemnification
provisions in the articles of incorporation and by-laws.
The Bylaws of Conseco provide for the indemnification of any person
made a party to any action, suit or proceeding by reason of the fact that he is
a director, officer or employee of Conseco, if (a) such person is wholly
successful with respect to such action, suit or proceeding or (b) if such person
is determined to have acted in good faith, in what he or she reasonably believed
to be the best interests of Conseco or at least not opposed to its best
interests and, in addition, with respect to any criminal claim, is determined to
have had reasonable cause to believe that his or her conduct was lawful or had
no reasonable cause to believe that his or her conduct was unlawful. Such
indemnification shall be against the reasonable expenses, including attorneys'
fees, incurred by such person in connection with the defense of such action,
suit or proceeding and amounts paid in settlement. If such person was not wholly
successful, the determination of entitlement to indemnification shall be made by
one of the following methods, such method to be selected by the Board of
Directors: (a) by the Board of Directors by a majority vote of a quorum
consisting of directors who are not and have not been parties to the claim; (b)
by the majority vote of a committee duly designated by the Board of Directors,
consisting solely of two or more directors who are not and have not been parties
to the claim; and (c) by special legal counsel.
The above discussion of Conseco's Bylaws and the Indiana Business
Corporation Law is not intended to be exhaustive and is qualified in its
entirety by such Bylaws and the Indiana Business Corporation Law.
Conseco has purchased director and officer liability insurance which
would provide coverage against certain liabilities, including liabilities under
the securities laws.
II-1
<PAGE>
ITEM 16. EXHIBITS
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT
1.1 Form of Purchase Agreement between the Company and Warburg Dillon
Read LLC.*
1.2 ISDA Master Agreement dated as of April 21, 1999 between the
Company and UBS AG, London Branch, with attached Schedule and form
of Confirmation.*
1.3 Purchase Agreement dated June 29, 1999 between the Registrant and
Warburg Dillon Read LLC was filed with the Commission as
Exhibit 1.1 to Conseco's Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 1999, and is incorporated herein
by this reference.
1.4 ISDA Master Agreement dated as of April 21, 1999 between
Registrant and UBS AG, London Branch, with attached schedule and
confirmation was filed with the Commission as Exhibit 1.2 to
Conseco's Quarterly Report on Form 10-Q for the quarterly period
ended June 30, 1999, and is incorporated herein by this reference.
1.5 Amendment and Supplement to Purchase Agreement dated December 1,
1999.
1.6 Confirmation of terms and conditions as amended and restated on
December 1, 1999.
3.1 Amended and Restated Articles of Incorporation of Conseco, Inc.
were filed with the Commission as Exhibit 3.1 to Conseco's Annual
Report on Form 10-K for the year ended December 31, 1997, and are
incorporated herein by this reference.
3.2 Amended and Restated Bylaws of Conseco, Inc. were filed with the
Commission as Exhibit 3.2 to its Report on Form 10-Q for the
quarter ended June 30, 1998 and are incorporated herein by this
reference.
5.1 Opinion of John J. Sabl, Esquire.*
23.1 Consent of John J. Sabl, Esquire (included in Exhibit 5.1
hereto).*
23.2 Consent of PricewaterhouseCoopers LLP.*
23.3 Consent of KPMG Peat Marwick LLP.*
24.1 Powers of Attorney of Stephen C. Hilbert, Rollin M. Dick, James
S. Adams, Lawrence M. Coss, Ngaire E. Cuneo, David R. Decatur,
M. Phil Hathaway, Donald F. Gongaware, James D. Massey, Dennis E.
Murray Sr., John M. Mutz and Robert S. Nickoloff were included on
the signature page of the original filing of this Registration
Statement and are incorporated herein by reference.
* Filed previously.
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration
Statement:
(i) To include any prospectus required by Section 10(a)
(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration
Statement (or the most recent post-effective
amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the
information set forth in the Registration Statement.
Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the
total dollar value of securities offered would not
exceed that which was registered) and any deviation
from the low or high end of the estimated maximum
offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule
424(b) under the Securities Act if, in the aggregate,
the changes in volume and price represent no more
than a 20%
II-2
<PAGE>
change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table
in the effective Registration Statement.
II-3
<PAGE>
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in
the Registration Statement or any material change to
such information in the Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) above
do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed with or furnished to the Commission by the
Registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference
in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which
remain unsold at the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each
filing of the Registrant's annual report pursuant to Section 13(a)
or Section 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in the Registration Statement shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer
or controlling person of the Registrant in the successful defense
of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Post-Effective
Amendment No. 1 to Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Carmel, State of Indiana,
on December 6, 1999.
CONSECO, INC.
By: /s/ ROLLIN M. DICK
------------------------------
Rollin M. Dick,
Executive Vice President and
Chief Financial Officer
II-5
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 1 to Registration Statement has been signed by the
following persons in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
SIGNATURE TITLE DATE
--------- ----- ----
*
- - ----------------------------- Director, Chairman of the Board, December 6, 1999
Stephen C. Hilbert President and Chief Executive Officer
(Principal Executive Officer)
*
- - ----------------------------- Director, Executive Vice President December 6, 1999
Rollin M. Dick and Chief Financial Officer
(Principal Financial Officer)
*
- - ----------------------------- Senior Vice President, Chief December 6, 1999
James S. Adams Accounting Officer and Treasurer
(Principal Accounting Officer)
*
- - ----------------------------- Director December 6, 1999
Lawrence M. Coss
*
- - ----------------------------- Director December 6, 1999
Ngaire E. Cuneo
*
- - ----------------------------- Director December 6, 1999
David R. Decatur
II-6
<PAGE>
*
- - ----------------------------- Director December 6, 1999
M. Phil Hathaway
*
- - ----------------------------- Director December 6, 1999
Donald F. Gongaware
*
- - ----------------------------- Director December 6, 1999
James D. Massey
*
- - ------------------------------- Director December 6, 1999
Dennis E. Murray, Sr.
*
- - ----------------------------- Director December 6, 1999
John M. Mutz
*
- - ----------------------------- Director December 6, 1999
Robert S. Nickoloff
</TABLE>
* By: /S/ JOHN J. SABL
------------------------
John J. Sabl
Attorney-in-Fact
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AMENDMENT AND SUPPLEMENT
TO PURCHASE AGREEMENT
December 1, 1999
Warburg Dillon Read LLC
677 Washington Blvd.
Stamford, Connecticut 06901
UBS AG, London Branch
c/o Warburg Dillon Read LLC
677 Washington Blvd.
Stamford, Connecticut 06901
Ladies and Gentlemen:
This letter agreement (this "Purchase Agreement Supplement")
amends and supplements the Purchase Agreement, dated June 29, 1999, among
Conseco, Inc., an Indiana corporation (the "Company"), Warburg Dillon Read LLC
(the "Purchaser") and UBS AG, London Branch (the "Selling Stockholder"). Except
as otherwise expressly provided herein, capitalized terms used in this Purchase
Agreement Supplement have the meanings given such terms in the Purchase
Agreement.
The Company, the Purchaser and the Selling Stockholder hereby
agree as follows:
1. Concurrent with and as a condition to the effectiveness of this
Purchase Agreement Supplement, the Company and the Selling Stockholder have
entered into a restated equity forward confirmation, which amends and restates
the June 29, 1999 equity forward confirmation between such parties. References
in the Purchase Agreement to the "Forward Purchase Agreement" shall hereafter
mean such equity forward confirmation as amended and restated effective December
1, 1999.
2. From and after such time as the Company may be required pursuant to
the provisions of the Forward Purchase Agreement (or may otherwise elect) to
file one or more
1
<PAGE>
additional registration statements with the Commission under the 1933 Act
(including but not limited to a Rule 462(b) Registration Statement) with respect
to any of the Shares or the Predelivered Shares (as defined in the Forward
Purchase Agreement), then, except where the context otherwise requires, (A) the
term "Registration Statement" as used in the Purchase Agreement shall thereafter
include each such additional registration statement (including but not limited
to any Rule 462(b) Registration Statement) filed with respect to any of the
Shares or the Predelivered Shares (as defined in the Forward Purchase
Agreement), (B) the term "Prospectus" shall thereafter include the final
prospectus included in such additional registration statement, in the form in
which it is filed with the Commission under Rule 424 or (if no such filing is
required) first furnished to the Purchaser and the Selling Stockholder by the
Company for use in connection with the offering of any of the Shares, and all
applicable amendments or supplements thereto, and (C) the term "Preliminary
Prospectus" shall include any preliminary prospectus included in such additional
registration statement prior to the time such additional registration statement
was declared effective.
3. Concurrent with and as a condition to the effectiveness of this
Purchase Agreement Supplement, the Company shall:
(A) pay to the Selling Stockholder, by federal funds wire transfer,
a fee in the amount of $905,000, as consideration for the
extension of the Termination Date (as defined in the Forward
Purchase Agreement);
(B) deliver to the Purchaser, on behalf of the Selling Stockholder,
through the facilities of The Depository Trust Company, the
Initial Predelivered Shares (as defined in the Forward Purchase
Agreement); and
(C) Furnish the Purchaser and the Selling Stockholder with the
following:
(i) A certificate, dated the date hereof, to the effect that
the representations contained in Section 2 of the Purchase
Agreement and in the certificate referred to in Section
4(e) thereof are true and correct as though made at and as
of such time of delivery.
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<PAGE>
(ii) The written opinion of John J. Sabl, Executive Vice
President, General Counsel and Secretary of Company, dated
the date hereof, of the same tenor as the opinion referred
to in Section 4(c) of the Purchase Agreement, but modified
to apply to this Purchase Agreement Supplement and the
Purchase Agreement, as amended and supplemented by this
Purchase Agreement Supplement, and to the equity forward
confirmation, as amended and restated effective December 1,
1999.
4. The provisions for reimbursement of expenses set forth in Section 5
of the Purchase Agreement shall be applicable to reasonable out-of-pocket
expenses (including reasonable fees and disbursements of counsel) incurred by
the Purchaser and the Selling Stockholder in connection with this Purchase
Agreement Supplement and the amendment and restatement of the equity forward
confirmation, and the maximum amount of such reimbursement shall be increased by
$25,000.
5. The Company shall file copies of this Purchase Agreement Supplement
and of the amended and restated equity forward confirmation as exhibits to the
Registration Statement within five days after the date of this Purchase
Agreement Supplement. Prior to the time that any offer or sale of Shares is
effected under the Registration Statement and, in any event, prior to April 1,
2000, the Company shall amend the Registration Statement (or if counsel for the
Company and counsel for the Purchaser and the Selling Stockholder shall conclude
that a post-effective amendment is not required, amend the Prospectus) to
reflect changes related to this Purchase Agreement Supplement and the amended
and restated equity forward confirmation.
6. Except as expressly modified by this Purchase Agreement Supplement,
the Purchase Agreement shall not be affected hereby and shall remain in full
force and effect.
3
<PAGE>
If the foregoing Amendment and Supplement to Purchase Agreement
correctly sets forth the understanding among the Company, the Purchaser and the
Selling Stockholder, please so indicate in the space provided below for the
purpose, whereupon this letter and your acceptance shall constitute a binding
agreement among the Company, the Purchaser and the Selling Stockholder.
Very truly yours,
CONSECO, INC.
By: /S/ ROLLIN M. DICK
---------------------------
Name: Rollin M. Dick
Title: Executive Vice President and
Chief Financial Officer
Accepted and agreed to as of the date first above written:
WARBURG DILLON READ LLC
By: /S/ CHRISTOPHER POHLE
----------------------------
Name: Christopher Pohle
Title: Managing Director
By: /S/ DAVID WEINER
----------------------------
Name: David Weiner
Title: Director
UBS AG, LONDON BRANCH
By: /S/ RUPERT HILMI
----------------------------
Name: Rupert Hilmi
Title: Authorized Signatory
By: /S/ MANISHA HIRANI
----------------------------
Name: Manisha Hirani
Title: Authorized Signatory
4
CONFIRMATION
Date: June 29, 1999, as amended and restated on December 1, 1999
To: Conseco, Inc. ("Party B")
11825 N. Pennsylvania Street
Carmel, Indiana 46032
Attention: James S. Adams, Senior Vice President and Treasurer
Phone: (317) 817- 6166
Fax: (317) 817-2166
From: UBS AG, London Branch ("Party A")
Re: Equity Forward Confirmation
Reference Number: 1299482
- - --------------------------------------------------------------------------------
The purpose of this communication is to confirm the terms and conditions of the
forward transaction (the "Transaction") entered into between us on the Trade
Date specified below, as such terms and conditions have been amended and
restated on the Modification Date specified below. This communication
constitutes a "Confirmation" as referred to in the 1992 ISDA Master Agreement
specified below.
The definitions and provisions contained in the 1991 ISDA Definitions (the "Swap
Definitions") and the 1996 ISDA Equity Derivatives Definitions (the Equity
Definitions and, together with the Swap Definitions, the "Definitions"), each as
published by the International Swaps and Derivatives Association, Inc., are
incorporated into this Confirmation. In the event of any inconsistency between
the Swap Definitions and the Equity Definitions, the Equity Definitions will
govern. In the event of any inconsistency between the Definitions and this
Confirmation, this Confirmation will govern.
This Confirmation supplements, forms part of, and is subject to, the ISDA Master
Agreement dated as of April 21, 1999 (the "Agreement") between Party B and Party
A. All provisions contained in the Agreement govern this confirmation except as
expressly modified below.
The terms of the Transaction to which this Confirmation relates are as follows:
General
- - -------
Type of Transaction : Share Forward Transaction
Trade Date : June 29, 1999 (time of execution available upon request)
<PAGE>
Modification Date : December 1, 1999
Effective Date : The Closing Date (if any) under the Purchase Agreement
Termination Date : June 15, 2000, as it may be extended as provided
elsewhere in this Confirmation, or if such day is
not an Exchange Business Day, the next succeeding
day that is an Exchange Business Day
Buyer : Party B
Seller : Party A
Shares : Common Stock of Conseco, Inc. (Symbol: CNC)
Initial Number
of Shares : The number of Purchased Shares (as defined in the
Purchase Agreement)
Current Number
of Shares : At any time, the Initial Number of Shares less
the aggregate Number of Terminated Shares at that
time, determined as of the end of the most recent
Business Day
Number of
Terminated Shares : In respect of any early termination hereunder,
(i) the proceeds, net of Commission, of Party A's
sales of Purchased Shares pursuant to Party B's
Direction to Sell divided by (ii) the Forward Price
Per Share
Forward Price
per Share : The Purchase Price (as defined in the Purchase
Agreement)
Total Forward Price : At any time, the Current Number of Shares at that
time multiplied by the Forward Price per Share
Direction to Sell : As defined in the Purchase Agreement
Averaging Period : As defined under Settlement Terms, below
Purchase Agreement : The Purchase Agreement among Party A, Party B and WDR,
dated as of June 29, 1999, as amended and supplemented
by the Amendment and Supplement to Purchase Agreement
among Party A, Party B and WDR, dated as of December 1,
1999
Purchased Shares : The Shares sold by Party B to WDR pursuant to the
Purchase Agreement and immediately transferred by WDR
to Party A
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<PAGE>
WDR : Warburg Dillon Read LLC, which shall serve as
Party A's selling agent in respect of Party A's sales
of Shares
Exchange : New York Stock Exchange
Related Exchange : Any exchange on which options with respect to the Shares
are traded
Calculation Agent : Party A, subject to Section 4(e) of the Schedule to the
Agreement
Clearance System : The Depository Trust Company
Commission : $ 0.05 per Share, for each Share (as defined in the
Purchase Agreement) sold by Party A.
Parallel Termination : If the Purchase Agreement is terminated for any reason
before the purchase and sale of the Purchased Shares
contemplated therein is consummated, this Confirmation
and the Transaction hereby confirmed shall likewise be
terminated, and neither party shall have any further
obligation hereunder.
Dividend Payment
- - ----------------
Dividend Amount
Payer : Party A
Dividend Amount
Payee : Party B
Dividend Payment
Dates : The Floating Rate Payer Payment Date for each Calculation
Period during which an Applicable Dividend is paid by
Party B, provided that if an Applicable Dividend is paid
by Party B after the termination of the Transaction, the
Dividend Payment Date in respect of that dividend shall
be the second Business Day after receipt thereof by Party
A
Dividend Amount : The per-share amount of an Applicable Dividend
multiplied by the aggregate number of Purchased Shares,
Payment Shares, Initial Predelivered Shares, Additional
Predelivered Shares, and Make-whole Shares of which Party
A or its nominee is the record holder on
3
<PAGE>
the record date for such Applicable Dividend (after
giving effect to any sales of Purchased Shares, Payment
Shares or Make-whole Shares that are settled on the
record date)
Applicable Dividend : Each dividend paid in respect of the Shares the
ex-dividend date of which occurs during the Dividend
Period
Dividend Period : The period from and including the second Exchange
Business Day before the Effective Date to and including
the Termination Date or any Early End Date on which the
Transaction (or such portion of the Transaction as
remains after any previous terminations in part) is
terminated in whole, provided that if Party A holds
Payment Shares or Make-whole Shares after such
termination, the Dividend Period shall be extended until
Party A has disposed of all such Shares
Floating Rate Payments
- - ----------------------
Floating Rate Payer : Party B
Floating Rate Payee : Party A
Initial Notional
Amount : The Total Forward Price on the Effective Date
Current Notional
Amount : At any time, the Total Forward Price at that time,
provided that for this purpose the Current Number of
Shares shall be reduced in respect of each sale by Party
A of Purchased Shares in the Averaging Period by a number
equal to the net proceeds of such sale divided by the
Forward Price per Share, and provided further that no
reduction (whether in respect of a sale of Shares in the
Averaging Period or otherwise) shall take effect until
Party A has received the net proceeds of such sale.
Final Calculation
Period : The last day of the final Calculation Period shall be the
date on which Party A has received the net proceeds of
all sales of Purchased Shares during the Averaging
Period.
Floating Amount : For any day in a Calculation Period, the result of
multiplying (i) the Current Notional Amount on that day
by (ii) the sum of the Floating
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<PAGE>
Rate for that Calculation Period and the Spread by (iii)
the Floating Rate Day Count Fraction
Floating Rate Option : USD-LIBOR-BBA
Designated Maturity : 1 month
Spread : plus (A) 0.65% through December 15, 1999 and (B) 0.75%
thereafter
Floating Rate for
Initial Calculation
Period : To be determined by Party A on the Effective Date and
advised to Party B
Floating Rate Day
Count Fraction : 1/360 for each day in the Calculation Period. (See
"Daily Basis" below)
Reset Dates : The first day of each Calculation Period
Floating Rate Payer
Payment Dates : Monthly, on the calendar date corresponding to
the Closing Date, and on the Termination Date, subject to
adjustment in accordance with the Business Day Convention
specified below.
Business Day
Convention : Modified Following
Daily Basis : Floating Amounts hereunder shall be calculated on
a daily basis and paid on each Floating Rate Payer
Payment Date.
Settlement Terms
- - ----------------
Settlement : The Transaction will be physically settled; provided,
however, that Party B may elect to require that the
Transaction be net share settled by giving an irrevocable
notice to Party A no later than ten Exchange Business
Days before the Termination Date.
Settlement Date : Three Clearance System Business Days after the
Termination Date
5
<PAGE>
Physical Settlement : If the Transaction is to be physically settled, on the
Settlement Date the Seller shall deliver to the Buyer the
Current Number of Shares at the Termination Date against
payment in immediately available U.S. funds by the Buyer
to the Seller of an amount equal to the Total Forward
Price.
Net Share Settlement : If the Transaction is to be net share settled, the
following provisions shall apply (subject to "Termination
on Satisfaction in Full," below):
(a) If the Forward Price per Share is less than the Final
Price, on the Settlement Date Party A shall deliver to
Party B the number of whole Shares equal to (i) the
product of (A) the Current Number of Shares at the close
of trading on the Exchange on the Termination Date
multiplied by (B) the amount by which the Forward Price
per Share is less than the Final Price, divided by (ii)
the Final Price, plus cash in lieu of any fractional
Share.
(b) If the Forward Price per Share is greater than the
Final Price, on the Settlement Date Party B shall deliver
to Party A the number of whole Shares (the "Payment
Shares") equal to (i) the product of (A) the Current
Number of Shares at the close of trading on the Exchange
on the Termination Date multiplied by (B) the amount by
which the Forward Price per Share is greater than the
Final Price, divided by (ii) the Final Price, plus cash
in lieu of any fractional Share.
(c) If the Forward Price per Share is equal to the Final
Price, no delivery shall be made by either Party A or
Party B.
Final Price : (a) If on the first day of the Averaging Period Party
A holds Purchased Shares in a number greater than or
equal to one-half the Current Number of Shares at that
time, the volume-weighted average price at which Party A
sells its entire holding of the Purchased Shares during
the Averaging Period, less Commission, provided that if
Party A is unable to sell its entire holding in a
commercially reasonable manner, the Final Price shall be
the volume-weighted average price at which Party A sells
the number of Purchased Shares that it is able to sell
during the Averaging Period in a commercially reasonable
manner, or
(b) if on the first day of the Averaging Period Party A
holds
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<PAGE>
Purchased Shares in a number less than one-half the
Current Number of Shares at that time, then the
Transaction shall be bifurcated into Transactions 1 and
2, where Transaction 1 comprises that portion of the
Current Number of Shares equal to the number of Purchased
Shares then held by Party A and Transaction 2 comprises
the remainder of the Current Number of Shares. The Final
Price for purposes of the settlement of Transaction 1
shall be the volume-weighted average sale price at which
Party A sells its Purchased Shares during the Averaging
Period, and the Final Price for purposes of the
settlement of Transaction 2 shall be the arithmetic
average of the Relevant Prices on all Averaging Dates.
Averaging Period : The period from and including the ninth Exchange
Business Day immediately preceding the Termination Date
to and including the Termination Date
Relevant Price : With respect to any Averaging Date, the closing
price of a Share on such Averaging Date, as reported by
the Exchange
Averaging Dates : The Exchange Business Days in the Averaging Period
Averaging Date
Market Disruption : Modified Postponement, and for this purpose the
Transaction shall be deemed to be a Share Transaction.
Valuation Date : The Termination Date
Extension for
Residual Shares : If Party A is unable to sell in a commercially reasonable
manner its entire holding of the Purchased Shares during
the Averaging Period, Party A shall so notify Party B,
and settlement of the Transaction shall proceed, except
with respect to the Purchased Shares not sold. The
Termination Date of the Transaction shall be postponed
until the earliest date on which all such unsold
Purchased Shares (the "Residual Shares") have been sold
or until July 17, 2000, whichever first occurs. A new
Averaging Period ("Supplemental Averaging Period") shall
commence on the Exchange Business Day following the last
day of the Averaging Period, and net share settlement
shall apply (provided that the Conditions for Net Share
Settlement are met during the Supplemental Averaging
Period). The Final Price for purposes of settlement shall
be the volume-weighted average price at
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<PAGE>
which Residual Shares are sold during the Supplemental
Averaging Period. For purposes of floating rate payments,
a supplemental Calculation Period shall run from the last
day of the final Calculation Period to the date on which
Party A has received the net proceeds of all sales of
Residual Shares made during the Supplemental Averaging
Period.
Conditions on Net
Share Settlement : If Party B elects to have the Transaction net-share
settled, the following conditions must be met at all
times during the Averaging Period: (i) the Registration
Statement shall be effective, (ii) Party B shall have
filed all reports and any definitive proxy or information
statements required to be filed by Party B pursuant to
Section 13(a), 13(c) or 15(d) of the Securities Exchange
Act of 1934, (iii) no stop order or any order preventing
or suspending the use of any prospectus relating to the
Registered Shares or suspending the qualification of the
Registered Shares for offering or sale in any
jurisdiction shall have been issued and shall continue in
effect, (iv) no notice by Party B to Party A pursuant to
Section 3(f) of the Purchase Agreement shall have been
given and remain in effect, (v) Party B shall not be in
possession of material non-public information relating to
Party B, (vi) any Shares deliverable to Party A shall
have been authorized for listing on the Exchange, and
(vii) if Party A is delivering Shares to Party B, (1) no
issuer or third-party tender offer shall be in effect in
respect of the Shares on the Settlement Date, and no
issuer tender offer shall have been in effect within the
ten business days preceding the Settlement Date, and (2)
net share settlement of the Transaction shall not
constitute or cause a violation of Rule 102 of Regulation
M under the Securities Exchange Act of 1934. If any of
the foregoing conditions are not met at all required
times, physical settlement shall apply to the relevant
termination.
Registration
Statement : The registration statement and any additional
registration statements filed by Party B with the
Securities and Exchange Commission on Form S-3,
registering Purchased Shares, Payment Shares, Make-whole
Shares, or Predelivered Shares, as amended and
supplemented from time to time
Registered Shares : All Shares registered under the Registration Statement
Make-Whole
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<PAGE>
Provisions : If Party A receives Payment Shares pursuant to net share
settlement, whether incident to an early termination in
part or in whole or final settlement, and if within ten
Exchange Business Days after the Settlement Date Party A
resells all or any portion of the Payment Shares in
commercially reasonable market transactions and the net
proceeds received by Party A upon the resale of such
shares exceeds the product of the number of Payment
Shares multiplied by the Final Price (the "Settlement
Amount") (or if less than all of the Payment Shares are
sold, the applicable pro rata portion of the Settlement
Amount), Party A shall promptly refund in cash such
difference to Party B. If such net proceeds are less than
the Settlement Amount (or if less than all the Payment
Shares are sold, the applicable pro rata portion of the
Settlement Amount), Party B shall pay in cash or (subject
to the satisfaction of the Conditions on Net Share
Settlement) additional Shares such difference (the
"Make-whole Amount") to Party A promptly after receipt of
notice thereof. If Party B elects to pay the Make-Whole
Amount in additional Shares, Party B shall deliver to
Party A the number of whole Shares (the "Make-whole
Shares") equal to (i) the Make-whole Amount divided by
(ii) the closing price of the Shares as reported on the
Exchange on the Exchange Business Day immediately
preceding the day of delivery of such Shares. If within
ten Exchange Business Days after delivery of the
Make-whole Shares to Party A, Party A resells all or any
portion of such Shares in commercially reasonable market
transactions and the net proceeds received by Party A
from the resale of Make-whole Shares exceed or are less
than the Make-whole Amount (or if less than all of the
Make-whole Shares are sold, the applicable portion of the
Make-whole Amount), Party A shall pay to Party B any such
excess in cash and Party B shall pay to Party A any
additional Make-whole Amount in cash. In calculating the
net proceeds from the resale of any Payment Shares or
Make-whole Shares, the Commission shall be deducted from
the proceeds. In determining when the ten Exchange
Business Days referred to above in relation to resales by
Party A of Payment Shares or Make-whole Shares have
elapsed, Exchange Business Days occurring during any
period when Party A is required to suspend sales of the
Shares pursuant to a notice given by Party B under
Section 3(f) of the Purchase Agreement, and Exchange
Business Days on which a Market Disruption Event occurs,
shall be disregarded.
Deficiency of
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<PAGE>
Registered Shares : If there is an insufficient number of Registered
Shares to enable Party B to satisfy its obligation to
Party A to deliver Registered Shares as Payment Shares or
Make-whole Shares, the Transaction shall be cash-settled
to the extent of the deficiency, and Party B, in addition
to delivering such Registered Shares as it has, shall pay
to Party A on the Settlement Date (in the case of Payment
Shares) or on the date of delivery (in the case of
Make-whole Shares) an amount in immediately available
U.S. funds equal to the Settlement Amount or the
Make-whole Amount, as the case may be, less the product
of the number of Registered Shares delivered by Party B
times the Final Price (in the case of Payment Shares) or
the closing price of the Shares as reported on the
Exchange on the Exchange Business Day immediately
preceding the day of delivery of such Registered Shares
(in the case of Make-whole Shares).
Settlement
Disruption : If a Settlement Disruption Event prevents delivery of
Shares (whether pursuant to physical settlement or net
share settlement) on the Settlement Date, then the
Settlement Date will be the first succeeding day on which
delivery of the Shares can take place through the
relevant Clearance System unless a Settlement Disruption
Event prevents settlement on each of the 10 relevant
Clearance System Business Days immediately following the
original date, that, but for the Settlement Disruption
Event, would have been the Settlement Date. In that case
(a) if such Shares can be delivered in any other
commercially reasonable manner, then the Settlement Date
will be the first day on which settlement of a sale of
Shares executed on the 10th relevant Clearance System
Business Day customarily would take place using such
other commercially reasonable manner of delivery (which
other manner of delivery will be deemed the relevant
Clearance System for the purposes of delivery of the
relevant Shares), and (b) if such Shares cannot be
delivered in any other commercially reasonable manner,
then the Settlement Date will be postponed until delivery
can be effected through the relevant Clearance System or
in any other commercially reasonable manner.
Settlement
Disruption Event : An event beyond the control of the parties as a result
of which the relevant Clearance System cannot clear the
transfer of Shares
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<PAGE>
Early Termination
- - -----------------
Early End Date : Any Exchange Business Day in advance of the Termination
Date on which the Transaction is terminated, in whole or
in part, pursuant to the terms hereof
Termination on
Satisfaction in Full : If at any time while the Transaction is outstanding
Party A has attained the full amount (after deducting
Commission) of the Total Forward Price (as adjusted from
time to time) through sales of Purchased Shares pursuant
to Directions to Sell, Payment Shares or Make-whole
Shares in any combination, Party A shall promptly cease
all sales of such Shares and shall promptly notify Party
B accordingly. Upon the giving of such notice, and
notwithstanding any other terms of the Transaction
regarding termination, the Transaction shall terminate,
the Early End Date shall be the date on which such notice
is given, and Party A shall forthwith deliver to Party B
the remaining Purchased Shares, Payment Shares,
Make-whole Shares and Predelivered Shares that it may be
holding (other than Shares needed to meet delivery
requirements resulting from previous sales), and Party A
shall pay to Party B in cash the amount of any excess
that Party A may have attained over the Total Forward
Price.
Termination on
Direction to Sell : If Party A sells Shares pursuant to a Direction to
Sell given by Party B, the Transaction shall be
terminated on the date of sale (which shall be the Early
End Date) to the extent of the Number of Terminated
Shares. If the Number of Terminated Shares equals the
entire Current Number of Shares on the date of the
Direction to Sell, the Transaction shall be terminated in
whole. If the Number of Terminated Shares is less than
the entire Current Number of Shares on the date of the
Direction to Sell, the Transaction shall be terminated in
part as to the Number of Terminated Shares. If the
Transaction is terminated in part, then on the Early End
Date the Current Number of Shares shall be reduced by the
Number of Terminated Shares, the Total Forward Price
shall be recalculated using the Current Number of Shares
as so reduced, and the Transaction, with the Current
Number of Shares and Total Forward Price so reduced,
shall continue to be a Transaction for all purposes of
this Confirmation and the Agreement.
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<PAGE>
Conditions on
Termination on
Direction to Sell : The early termination of the Transaction or part
thereof is subject to the satisfaction of the following
conditions at all times from the giving of the Direction
to Sell to the consummation of the early termination: (i)
the Registration Statement shall be effective, (ii) Party
B shall have filed all reports and any definitive proxy
or information statements required to be filed by Party B
pursuant to Section 13(a), 13(c) or 15(d) of the
Securities Exchange Act of 1934, (iii) no stop order or
any order preventing or suspending the use of any
prospectus relating to the Registered Shares or
suspending the qualification of the Registered Shares for
offering or sale in any jurisdiction shall have been
issued and shall continue in effect, (iv) no notice by
Party B to Party A pursuant to Section 3(f) of the
Purchase Agreement shall have been given and remain in
effect, (v) Party B shall not be in possession of
material non-public information relating to Party B, (vi)
any Shares deliverable to Party A shall have been
authorized for listing on the Exchange, (vii) the Early
End Date shall not fall within the Averaging Period or
the Supplemental Averaging Period, if any, and (viii) if
Party A is delivering Shares to Party B, (1) no issuer or
third-party tender offer shall be in effect in respect of
the Shares on the Settlement Date in respect of the early
termination, and no issuer tender offer shall have been
in effect within the ten business days preceding such
Settlement Date, and (2) net share settlement of the
Transaction or part thereof shall not constitute or cause
a violation of Rule 102 of Regulation M under the
Securities Exchange Act of 1934. If any of the foregoing
conditions are not met at all required times, the
Direction to Sell shall be void and no early termination
shall take place.
Net Share Settlement
on Termination on
Direction to Sell : Any Termination on Direction to Sell shall be net share
settled as follows:
(a) If the Forward Price per Share is less than the Final
Price on Early Termination, on the Settlement Date Party
A shall deliver to Party B the number of whole Shares
equal to (i) the product of (A) the Number of Terminated
Shares multiplied by (B) the amount by which the Forward
Price per Share is less than the Final Price on Early
Termination, divided by (ii) the Final Price on Early
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<PAGE>
Termination, plus cash in lieu of any fractional Share.
(b) If the Forward Price per Share is greater than the
Final Price on Early Termination, on the Settlement Date
Party B shall deliver to Party A the number of whole
Shares (the "Payment Shares") equal to (i) the product of
(A) the Number of Terminated Shares multiplied by (B) the
amount by which the Forward Price per Share is greater
than the Final Price on Early Termination, divided by
(ii) the Final Price on Early Termination, plus cash in
lieu of any fractional Share.
(c) If the Forward Price per Share is equal to the Final
Price on Early Termination, no delivery shall be made by
either Party A or Party B.
Final Price on Early
Termination : The volume-weighted average price at which Party A
sells the number of Purchased Shares that it is directed
to sell, less Commission, provided that if Party A does
not hold that number of Purchased Shares, Party A shall
sell such Purchased Shares as it does hold and shall also
be deemed to have sold, at the closing price on the Early
End Date, an additional number of Shares equal to the
difference between the number of Purchased Shares that
Party A is directed to sell and the number of Purchased
Shares that Party A then holds, and the Final Price on
Early Termination shall in that case equal the
volume-weighted average price of Party A's sales of
Purchased Shares, less Commission, and deemed sales of
additional Shares.
Early Termination
SettlementDate : All payments and deliveries required to be made upon the
early termination of the Transaction, whether in whole or
in part, shall be made on the third Clearance System
Business Day after the Early End Date.
Make-whole
Provisions : The Make-whole Provisions set forth above under
Settlement Terms shall apply to settlements on early
termination.
No Termination
During Call : If Pioneer Financial Services, Inc. calls for
redemption its 6-1/2% Convertible Subordinated Notes Due
2003 (the "Notes") while the Transaction is outstanding,
Party B may not give Party A a Direction to Sell, and the
Transaction shall not be terminated in whole or in part,
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<PAGE>
during the period from and including the day that is one
Business Day before the effective date of the call to and
including the last day on which the Notes may be tendered
for conversion.
No Further
Obligations : Upon the early termination of the Transaction, whether
in whole or in part, and payment of all amounts due and
owing and the making of all required deliveries to either
party hereunder, neither party shall have any further
obligation to the other party with respect to the
Transaction as a whole, in the case of termination in
whole, and the portion so terminated, in the case of
termination in part.
Breakage Cost : In the case of any early termination on an Early End
Date that is not also a Reset Date, Party A shall
determine whether it has sustained a net economic cost or
a net economic benefit from such event. If Party A
determines that it has sustained a net economic cost,
then (i) if physical settlement applies, the aggregate
amount of such cost shall be added to the Total Forward
Price, and (ii) if net share settlement applies, the
result of dividing the amount of the cost by the Number
of Terminated Shares shall be subtracted from the Final
Price on Early Termination. If Party A determines that it
has sustained a net economic benefit, then (iii) if
physical settlement applies, the aggregate amount of such
benefit shall be subtracted from the Total Forward Price,
and (iv) if net share settlement applies, the result of
dividing the amount of the benefit by the Number of
Terminated Shares shall be added to the Final Price on
Early Termination. If Party A determines that it has
sustained neither a net economic cost nor a net economic
benefit, then no such adjustments shall be made. Party A
shall provide to Party B an accounting if any adjustment
is made pursuant to this paragraph, which shall be
binding on the parties, absent demonstrable error.
Predelivery of Shares
- - ---------------------
Initial Predelivered
Shares : 467,000 Registered Shares delivered to Party A on the
Modification Date
Requirements to
Deliver Additional
Predelivered Shares : (a) If the closing price of the Shares on the Exchange
first becomes
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<PAGE>
less than or equal to $15 per share on a date while the
Transaction is outstanding (the "Threshold Date"), Party
A shall notify Party B of the occurrence of the Threshold
Date within seven Exchange Business Days thereafter, and
Party B shall thereupon issue and predeliver to Party A,
no later than the third Clearance System Business Day
after the date on which Party B receives such notice, the
number of Shares that Party B would be required to
deliver if the Transaction were terminated in whole on
the Threshold Date, net share settlement applied and the
Final Price on Early Termination were the closing price
on the Exchange on the Threshold Date, less the number of
Initial Predelivered Shares (the "Additional Predelivered
Shares," and, together with the Initial Predelivered
Shares, the "Predelivered Shares"); provided that if any
of the Additional Predelivered Shares are not registered
under the Registration Statement on the date on which
Party B would otherwise be required to deliver such
Additional Predelivered Shares to Party A, Party B shall
(i) as promptly as practicable cause such shares to be
registered under the Securities Act of 1933 and listed on
the Exchange, and (ii), unless Party A shall have
notified Party B of its election to waive the requirement
that such shares be registered prior to delivery, defer
delivery of such unregistered shares to Party A until
such time as such shares have been so registered.
(b) In the event that on May 1, 2000 the total number of
Registered Shares available for offer and sale under the
Registration Statement minus the number of Purchased
Shares held by Party A on such date is less than the
product of (i) 1.05 times (ii) the number of Payment
Shares that Party B would be required to deliver to Party
A if the Transaction were terminated in whole on May 1,
2000, net share settlement applied, and the Final Price
on Early Termination were the closing price of the Shares
on the Exchange on such date, then Party B shall (i) file
with the Securities and Exchange Commission a
Registration Statement covering the offer and sale of a
number of Shares equal to not less than the deficit no
later than May 5, 2000, (ii) as promptly as practicable
cause such Registration Statement to become effective and
such number of Shares to be listed on the Exchange, and
(iii) deliver a number of Registered Shares equal to such
deficit as Additional Predelivered Shares, provided that
if such deficit is less than the maximum number of shares
that the Company could then include in a Registration
Statement that it is permitted to file pursuant to Rule
462(b) of the Securities and Exchange
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<PAGE>
Commission, Party B, with the prior written consent of
Party A, may defer the filing of such Registration
Statement and may defer delivery of such Additional
Predelivered Shares to Party A to a date not less than 11
Exchange Business Days prior to the Termination Date.
(c) In the event that the preceding paragraphs (a) and
(b) concurrently apply, Party B shall cause to be
registered, listed on the Exchange, and delivered to
Party A a number of Additional Predelivered Shares equal
to the greater of the number of Additional Predelivered
Shares that Party B is obligated to register and deliver
to Party A under the preceding paragraphs (a) and (b);
provided that if such number is less than the maximum
number of shares that the Company could then include in a
Registration Statement that it is permitted to file
pursuant to Rule 462(b) of the Securities and Exchange
Commission, Party B, with the prior written consent of
Party A, may defer the filing of such Registration
Statement and may defer delivery of such Additional
Predelivered Shares to Party A to a date not less than 11
Exchange Business Days prior to the Termination Date.
Application of
Shares : If Party B elects net share settlement at termination or
any early termination, and Party B is the party required
to deliver Shares, Party B's obligation to deliver
Payment Shares and Make-whole Shares shall be satisfied
first out of the Predelivered Shares, to the extent
thereof.
Retention of Shares : Party A shall not sell or otherwise transfer any
Predelivered Shares that it has not applied to the
satisfaction of an obligation of Party B to deliver
Shares.
Return of Shares : If the Transaction is terminated in whole, whether on
the Termination Date or an Early End Date, and Party A
has Predelivered Shares remaining after all obligations
of Party B to deliver Payment Shares, Make-whole Shares
or cash have been satisfied, Party A shall return such
remaining Predelivered Shares to Party B.
Dividends : The provisions under Dividend Payment above shall apply
to Predelivered Shares until such time as they are sold
or otherwise transferred as permitted hereunder, or until
they are returned to Party B.
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<PAGE>
Other Provisions
- - ----------------
Undirected Sales
of Purchased Shares
by Party A : Party A may sell Purchased Shares in its discretion
without having received a Direction to Sell from Party B,
provided that Party A shall notify Party B of its intent
to make any such sale sufficiently in advance of such
sale to enable Party B to verify that the Prospectus
provided by Party B for delivery by Party A to offerees
and purchasers of the Shares registered under the
Registration Statement will meet the requirements of the
Securities Act of 1933 at the time of the intended sales,
and to amend such Prospectus if it will not meet those
requirements. Such sales shall not in any way reduce
Party A's obligations hereunder, including but not
limited to its obligations in regard to scheduled or
early termination.
Commercial
Reasonableness : All sales by Party A of Purchased Shares, Payment Shares
and Make-whole Shares shall be made in a commercially
reasonable manner, provided that undirected sales of
Purchased Shares (if any) shall not be subject to this
requirement.
Market Transactions : Party A shall not, and shall cause WDR as its selling
agent not to, sell any Purchased Shares, Payment Shares
or Make-whole Shares otherwise than in ordinary trading
transactions for purposes of Rule 100 of Regulation M.
Direction to Sell : Party A shall use its best efforts to comply with a
valid Direction to Sell, but shall not be liable to Party
B if Party A is unable, despite its best efforts, to sell
the entire number of Shares specified in the Direction to
Sell.
Registration
Statement
Ineffective : If the Registration Statement is declared effective but
does not remain effective until all Payment and
Make-whole Shares have been sold by Party A, Party A
shall have the right to require that Party B repurchase
any unsold Payment Shares at a price per share equal to
the Final Price and any unsold Make-whole Shares at an
aggregate price equal to that portion of the Make-whole
Amount not recovered in the net proceeds of prior sales
of Make-whole Shares.
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<PAGE>
Method of Settlement : All payments of funds and deliveries of Shares pursuant
to scheduled termination and early termination of the
Transaction in whole or in part shall be made through the
Clearance System at the accounts specified as provided
below, on a delivery versus payment basis.
Adjustments and Extraordinary Events
- - ------------------------------------
Adjustments:
Method of Adjustment : Options Exchange Adjustment; provided that references in
the Equity Definitions to "Strike Price" shall be deemed
to refer to "Notional Amount" and references to "Number
of Options" shall be deemed to refer to "Current Number
of Shares" herein.
Options Exchange : The Options Clearing Corporation
Consequences of Merger Events:
(a) Share-for-Share : Cancellation and Payment
(b) Share-for-Other : Cancellation and Payment
(c) Share-for-Combined : Cancellation and Payment
Nationalization and Insolvency : Cancellation and Payment
Amendment of the
Equity Definitions : For the purposes of this Transaction, the Definitions
are amended as follows:
(A) A new Section 1.3A is added after Section 1.3:
Section 1.3A. Share Forward Transaction. "Share Forward
Transaction" means an OTC equity forward transaction
relating to a single share or other security.
(B) Section 1.5 is amended to read:
Section 1.5. Share Transaction. "Share Transaction" means
a Share Option Transaction, a Share Swap Transaction, and
for the purposes of Article 9, a Share Forward
Transaction.
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(C) A new clause (E) is added to Section 9.1(c):
"(E) in respect of a Share Forward Transaction, the
Forward Price per Share and the Current Number of
Shares";
(D) Clause (vi) of Section 9.1(e) is amended to read:
"(vi) any other similar event that, in the reasonable
judgment of the Calculation Agent, may have a diluting or
concentrative effect on the theoretical value of the
relevant Shares."
Miscellaneous
- - -------------
Title to Shares : A party delivering Shares or Predelivered Shares to the
other party hereunder represents, warrants and agrees
that (a) it is the legal and beneficial owner of the
Shares it is required to deliver; (b) it has the right to
transfer those Shares; and (c) it will convey good title
to the Shares it is required to deliver, free from all
liens, charges, equities, preemptive rights or other
security interests or encumbrances whatsoever.
In addition, if the Transaction is net share settled,
Party B represents with respect to any Payment Shares and
Make-whole Shares delivered to Party A that such Shares
will, at the time of delivery, be duly authorized,
validly issued, fully paid and nonassessable.
Transfer : Neither party may transfer the Transaction, in whole or
in part, without the prior written consent of the
non-transferring party.
Account Details
- - ---------------
Party A : As provided in separate direction
Party B : As provided in separate direction
Special Provisions
- - ------------------
1. Additional Party B Representations
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Party B will be deemed to represent to Party A on the date on which it enters
into this Transaction that:
(a) Party B has a valid business purpose for entering into this Transaction.
(b) Party B is not entering into this Transaction to create actual or apparent
trading activity in the Shares (or any security convertible into or
exchangeable for Shares) or to raise or depress or otherwise manipulate the
price of the Shares (or any security convertible into or exchangeable for
Shares).
(c) At the time of Party B's entry into the Transaction no "restricted period"
for purposes of Rule 102 of Regulation M under the Securities Exchange Act
of 1934 and no tender offer for Shares (whether by Party B or a third
party) is in effect, and no Party B tender offer has been in effect within
the preceding ten business days.
2. Offeree/Buyer Representations
If the parties enter into a Transaction, or if one party offers to transfer or
transfers the security underlying a Transaction to the other party, in either
case in reliance on Section 4(2) of the Securities Act or Regulation D
thereunder, then the offeree or buyer of the Transaction and/or the offeree or
buyer of the security underlying the Transaction (the "Offeree"), shall make the
following representations, warranties and covenants on and as of the date on
which the Offeree enters into such a Transaction or makes any payment or
delivery relating thereto or to the transfer of the underlying security:
(a) the Offeree is entering into the Transaction for its own account as
principal, for investment purposes only, and not with a view to, or for, resale,
distribution or fractionalization thereof, in whole or in part, and no other
person has a direct or indirect beneficial interest in the Transaction entered
into by the Offeree hereunder;
(b) the Offeree acknowledges its understanding that the offer and sale of any
Transaction with the other party is intended to be exempt from registration
under the Securities Act, by virtue of Section 4(2) of the Securities Act. In
furtherance thereof, the Offeree represents and warrants to the other party that
(i) it has the financial ability to bear the economic risk of its investment,
and (ii) the Offeree qualifies as an "accredited investor" as that term is
defined under Regulation D under the Securities Act.
(c) the Offeree has been given the opportunity to ask questions of, and receive
answers from, the other party concerning the terms and conditions of the
Transaction and has been given the opportunity to obtain such additional
information necessary in order for the Offeree to evaluate the merits and risks
of the Transaction, to the extent the other party possesses such information or
can
20
<PAGE>
acquire it without unreasonable effort or expense, and the Offeree has
determined that the Transaction is a suitable investment for the Offeree. The
Offeree represents and warrants to the other party that, each time the Offeree
enters into a Transaction with the other party, the Offeree will be able to bear
a loss of its entire investment. The Offeree further understands and agrees that
in circumstances where the Offeree holds a short position, its risk of loss
could be unlimited;
(d) the Offeree represents and warrants that, in effecting a Transaction, it
will not be in possession of any material non-public information with respect to
any security related to a Transaction that, under the U.S. federal securities
laws, it would have to disclose in advance to a party effecting a purchase or
sale with the Offeree of such security;
(e) the Offeree fully understands and agrees that it must bear the economic risk
of the Transaction for the entire time period set forth in the Confirmation; and
the Offeree understands and agrees that disposition of the Transaction is
restricted under the Master Agreement, the Securities Act and state securities
laws. The Offeree understands that the Transaction has not been, and is not
intended to be, registered under the Securities Act or under the securities laws
of certain states and, therefore, cannot be resold, pledged, assigned or
otherwise disposed of unless registered under the Securities Act and under the
applicable laws of such states, or an exemption from such registration is
available. The Offeree understands and agrees that the other party is not
obliged to register the Transaction on behalf of the Offeree or to assist the
Offeree in complying with any exemption from registration under the Securities
Act or state securities laws. The Offeree further understands and agrees that
the other party is not, and will not be, obliged under any circumstances to
enter into or arrange a Transaction for the purpose of offsetting a particular
Transaction, but may do so in its discretion; and
(f) nothing contained herein shall require the other party to enter into any
part or all of a Transaction offered by the Offeree. The other party reserves
the right to limit the number and amount of certain Transactions that the
Offeree, acting by itself or as part of a group, may maintain or acquire through
or from the other party (or any affiliate of the other party) at any time.
3. Relationship Between Parties
Each party will be deemed to represent to the other party on the date on which
it enters into a Transaction that (absent a written agreement between the
parties that expressly imposes affirmative obligations to the contrary for that
Transaction):
(a) It is acting for its own account, and it has made its own independent
decisions to enter into that Transaction and as to whether that Transaction is
appropriate or proper for it based upon its own judgement and upon advice from
such advisers as it has deemed necessary. It is not relying on any communication
(written or oral) of the other party as investment advice or as a recommendation
to enter into that Transaction; it being understood that information and
explanations related to the terms
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and conditions of a Transaction shall not be considered investment advice or a
recommendation to enter into that Transaction. No communication (written or
oral) received from the other party shall be deemed to be an assurance or
guarantee as to the expected results of that Transaction.
(b) It is capable of assessing the merits of and understanding (on its own
behalf or through independent professional advice), and understands and accepts,
the terms, conditions and risks of that Transaction. It is also capable of
assuming, and assumes, the risks of that Transaction.
(c) The other party is not acting as a fiduciary for or an adviser to it in
respect of that Transaction.
Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing the copy of this Confirmation enclosed for that purpose
and returning it to us or by sending to us a letter or telex substantially
similar to this letter, which letter or telex sets forth the material terms of
the Transaction to which this Confirmation relates and indicates your agreement
to those terms.
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Yours sincerely,
UBS AG, LONDON BRANCH
By: /S/ MANISHA HIRANI By: /S/ RUPERT HILMI
---------------------------- ----------------------------
Name: Manisha Hirani Name: Rupert Hilmi
Title: Authorised Signatory Title: Authorised Signatory
Confirmed as of the 29th day of June, 1999, and
amended and restated as of the 1st day of December, 1999
CONSECO, INC.
By: /S/ ROLLIN M. DICK
----------------------------
Name: Rollin M. Dick
Title: Executive Vice President
and Chief Financial Officer
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