REGISTRATION NO. 333-xxxxx
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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CONSECO, INC. INDIANA 35-1468632
Conseco Financing Trust VIII Delaware 91-1988898
Conseco Financing Trust IX Delaware 91-1988899
Conseco Financing Trust X Delaware 91-1988900
Conseco Financing Trust XII Delaware Applied for
(Exact name of the (State or other (I.R.S. Employer
Registrants as specified jurisdiction of Identification No.)
in their respective incorporation or
charters) organization)
11825 N. Pennsylvania St.
Carmel, Indiana 46032
(317) 817-6100
(Address, including zip code, and telephone number,
including area code, of each Registrant's principal
executive offices)
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John J. Sabl, Esquire
Conseco, Inc.
11825 N. Pennsylvania St.
Carmel, Indiana 46032
(317) 817-6163
(Name, address, including zip code, and telephone number,
including area code, of agent for service for each
Registrant)
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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. [ ]
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Calculation of Registration Fee
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TITLE OF EACH CLASS AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
OF SECURITIES TO TO BE OFFERING PRICE AGGREGATE OFFERING REGISTRATION
BE REGISTERED REGISTERED(1) PER UNIT (2)(3) PRICE (2)(3) FEE(3)(7)
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Debt Securities of Conseco,
Inc. ...........................
Preferred Stock of Conseco, Inc.,
no par value(4).................
Depositary Shares of Conseco,
Inc.(4).........................
Common Stock of Conseco, Inc.,
no par value (4)................
Stock Purchase Units of Conseco,
Inc.(5).........................
Stock Purchase Contracts of
Conseco, Inc.(5)................
Warrants of Conseco, Inc. ........
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Preferred Securities of Conseco
Financing Trust VIII............
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Preferred Securities of Conseco
Financing Trust IX..............
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Preferred Securities of Conseco
Financing Trust X...............
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Preferred Securities of Conseco
Financing Trust XII.............
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Guarantees and back-up undertakings
of Conseco, Inc. in connection
with Preferred Securities of
Conseco Financing Trust VIII,
Conseco Financing Trust IX,
Conseco Financing Trust X and
Conseco Financing Trust XII by
Conseco, Inc.(6)................
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Total............................. $3,000,000,000 100% $3,000,000,000 $792,000
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<FN>
(1) Such indeterminate number or amount of Debt Securities, Preferred Stock,
Depositary Shares, Common Stock, Stock Purchase Units, Stock Purchase Contracts,
Guarantees and Warrants of Conseco, Inc. and Preferred Securities of Conseco
Financing Trust VIII, Conseco Financing Trust IX, Conseco Financing Trust X and
Conseco Financing Trust XII (the "Conseco Trusts") as may from time to time be
issued at indeterminate prices. Debt Securities of Conseco, Inc. may be issued
and sold to the Conseco Trusts, in which event such Debt Securities may later be
distributed to the holders of Preferred Securities of
the Conseco Trusts upon a dissolution of any such Conseco Trust and the
distribution of the assets thereof. The amount registered is in United States
dollars or the equivalent thereof in any other currency, currency unit or units,
or composite currency or currencies.
(2) Estimated solely for the purpose of calculating the registration
fee pursuant to Rule 457. The aggregate offering price of the Debt
Securities, Preferred Stock, Depositary Shares, Common Stock, Stock Purchase
Units, Stock Purchase Contracts, Warrants and Preferred Securities, and the
exercise price of any securities issuable upon exercise of Warrants
registered hereby, will not exceed $3,000,000,000.
(3) Exclusive of accrued interest and distributions, if any.
(4) Also includes such indeterminate number of shares of Preferred Stock
and Common Stock as may be issued upon conversion of or exchange for any
Debt Securities or Preferred Stock that provide for conversion or exchange
into other securities. No separate consideration will be received for the
Preferred Stock or Common Stock issuable upon conversion of or in exchange
for Debt Securities or Preferred Stock. Also consists of such indeterminate
number of shares of Common Stock to be issuable by Conseco, Inc. upon
settlement of the Stock Purchase Contracts of Conseco, Inc.
(5) Each Stock Purchase Unit of Conseco, Inc. is a unit that consists of (i) a
Stock Purchase Contract of Conseco, Inc. under which the holder, upon
settlement of such Stock Purchase Contract, will purchase an indeterminate
number of shares of Common Stock, Preferred Stock, Depositary Shares or
other securities of Conseco, Inc. and (ii) initially a beneficial interest
in Preferred Securities of a Conseco Trust or debt obligations of third
parties, including U.S. Treasury Securities, pledged to secure the
obligation of such holder to purchase such shares of Common Stock. No
separate consideration will be received for the Stock Purchase Contracts.
(6) Includes the rights of holders of the Preferred Securities under
the Guarantees of Preferred Securities and back-up undertakings, consisting
of obligations of Conseco, Inc. to provide certain indemnities in respect
of, and pay and be responsible for, certain expenses, costs, liabilities and
debts of, as applicable, the Conseco Trusts as set forth in the Declaration
of Trust (including the obligation to pay expenses of the Conseco Trusts),
the Indenture and any applicable supplemental indentures thereto, and the
Debt Securities issued to the Conseco Trusts, in each case as further
described in the Registration Statement. No separate consideration will be
received for the Guarantees or any back-up undertakings.
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</FN>
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration
Statement shall become effective on such date as the Commission, acting
pursuant to Section 8(a), may determine.
The information in this prospectus is not complete and may be changed.
We may not sell these securities until the registration statement
filed with the Securities and Exchange Commission is effective.
This prospectus is not an offer to sell these securities
and it is not soliciting an offer to buy these securities in any state
where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED JANUARY 14, 2000
PROSPECTUS
$3,000,000,000
CONSECO, INC.
Debt Securities, Preferred Stock, Depositary Shares, Common Stock, Stock
Purchase Contracts, Stock Purchase Units and Warrants
CONSECO FINANCING TRUST VIII
CONSECO FINANCING TRUST IX
CONSECO FINANCING TRUST X
CONSECO FINANCING TRUST XII
Preferred Securities fully and unconditionally
guaranteed by Conseco, Inc.
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We will provide the specific terms of the particular securities issued under
this prospectus in a prospectus supplement for each security. You should read
this prospectus and any supplement carefully before investing.
The amount of the securities issued under this prospectus will be limited to a
total of U.S. $3,000,000,000 or the equivalent amount if denominated in foreign
currencies.
Our common stock is listed on the New York Stock Exchange under the trading
symbol "CNC".
----------------------------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy of accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
The date of this prospectus is January __, 2000.
TABLE OF CONTENTS
Page
About This Prospectus.....................................................3
Where You Can Find More Information.......................................3
The Securities We May Offer...............................................5
Conseco, Inc..............................................................6
The Conseco Trusts........................................................6
Use of Proceeds...........................................................7
Ratios of Earnings to Fixed Charges, Earnings to Fixed Charges and
Preferred Stock Dividends and Earnings to Fixed Charges,
Preferred Stock Dividends and Distributions on Company-Obligated
Mandatorily Redeemable Preferred Securities of Subsidiary
Trusts................................................................8
Description of Debt Securities............................................9
Description of Capital Stock.............................................23
Description of Depositary Shares.........................................28
Description of Warrants..................................................32
Description of Preferred Securities of the Conseco Trusts................33
Description of Guarantees................................................36
Description of Stock Purchase Contracts and Stock Purchase Units.........40
Plan of Distribution.....................................................40
Special Note Regarding Forward-Looking Statements........................43
Legal Matters............................................................44
Experts..................................................................44
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ABOUT THIS PROSPECTUS
In this prospectus, Conseco, Inc. may be referred to as "Conseco" or
"we". This prospectus is part of a registration statement that we and Conseco
Financing Trust VIII, Conseco Financing Trust IX, Conseco Financing Trust X and
Conseco Financing Trust XII, referred to in this prospectus as the "Conseco
Trusts", filed with the Securities and Exchange Commission utilizing a "shelf"
registration process. Under this shelf process, we may sell any combination of
the securities described in this prospectus in one or more offerings up to a
total dollar amount of $3,000,000,000. This prospectus provides you with a
general description of the securities we may offer. Each time we sell
securities, we will provide a prospectus supplement that will contain specific
information about the terms of that offering. The prospectus supplement may also
add, update or change information contained in this prospectus. You should read
both this prospectus and any prospectus supplement together with additional
information described under the heading "WHERE YOU CAN FIND MORE INFORMATION."
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. Our SEC filings are available to the public over
the Internet at the SEC's web site at http://www.sec.gov. You may read and copy
any document we file at the SEC's public reference room at 450 Fifth Street,
N.W., Washington, D.C. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference rooms.
We and the Conseco Trusts have filed with the SEC a registration
statement under the Securities Act of 1933 to register the securities offered by
this prospectus. This prospectus constitutes only part of the registration
statement and does not contain all of the information in the registration
statement and its exhibits because parts of the registration statement are
allowed to be omitted by SEC rules. Statements in this prospectus or in any
prospectus supplement about documents filed as an exhibit to the registration
statement or otherwise filed with the SEC are only summary statements and may
not contain all the information that may be important to you. For further
information about Conseco, the Conseco Trusts and the securities offered under
this prospectus, you should read the registration statement, including its
exhibits and the documents incorporated into it by reference.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus. Information that we file later with the
SEC will automatically update and supersede this information. We incorporate by
reference the documents listed below and any future filings made with the SEC
under Sections 13(a), 13(c), 14 or 15 (d) of the Securities Exchange Act of 1934
until we sell all of the securities offered under this prospectus.
1. Annual Report on Form 10-K for the fiscal year ended December
31, 1998;
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2. Quarterly Reports on Form 10-Q for the quarters ended March 31,
1999, June 30, 1999, as amended and September 30, 1999;
3. Current Reports on Form 8-K dated August 31, 1999, October 21,
1999, November 29, 1999, and December 15, 1999; and
4. The description of our common stock in the registration statements
filed by us with the SEC and any amendment or report filed for the purpose of
updating the description.
You may request a copy of these filings at no cost, by writing or
telephoning us at the following address;
John A. Dolphin, Senior Vice President, Investor Relations
Conseco, Inc.
11825 N. Pennsylvania Street
Carmel, Indiana 46032
Telephone: (317) 817-4418
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not authorized
anyone else to provide you with different information. We are not making an
offer of these securities in any state where the offer is not permitted. You
should not assume that the information in this prospectus or any prospectus
supplement is accurate as of any date other than the date on the front of those
documents.
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THE SECURITIES WE MAY OFFER
We may offer and sell from time to time, in one or more series,
o debt securities,
o preferred stock, which may be represented by depositary shares,
o common stock,
o stock purchase contracts, also called securities purchase
contracts, to purchase shares of our common stock, preferred stock,
depositary shares or other securities,
o stock purchase units, also called securities purchase units,
each representing ownership of a stock purchase contract and
preferred securities of one of the Conseco Trusts or debt
obligations of third parties, including U.S. treasury securities,
securing the holder's obligations to purchase our common stock
under the stock purchase contracts and
o warrants to purchase debt securities, preferred stock, common stock
or other securities or rights.
The Conseco Trusts may offer, from time to time, preferred securities
representing preferred undivided beneficial interests in the assets of a Conseco
Trust, referred to in this prospectus as "preferred securities". We will
guarantee the payment of periodic cash distributions on preferred securities out
of moneys held by each of the Conseco Trusts, and payments on liquidation,
redemption or otherwise with respect to the preferred securities to the extent
described in this prospectus or the applicable prospectus supplement. We will
directly or indirectly acquire common securities representing undivided
beneficial interests in the assets of each Conseco Trust, referred to in this
prospectus as "common securities". We may issue subordinated debt securities in
one or more series to a Conseco Trust as part of the investment of the proceeds
from the offering of preferred securities and common securities of the Conseco
Trust. The subordinated debt securities purchased by a Conseco Trust may be
subsequently distributed on a proportionate basis to holders of preferred
securities and common securities in connection with the dissolution of the
Conseco Trust.
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CONSECO, INC.
We are a financial services holding company. We conduct and manage our
business through two operating segments, reflecting our major lines of business:
(1) insurance and fee-based operations and (2) finance operations. Our insurance
subsidiaries develop, market and administer supplemental health insurance,
annuity, individual life insurance, individual and group major medical insurance
and other insurance products. Our finance subsidiaries make, purchase, sell and
service consumer and commercial finance loans throughout the United States.
Since 1982, we have acquired 19 insurance groups. In 1998, we acquired Conseco
Finance Corp. (formerly Green Tree Financial Corporation), which comprises our
finance operations. Our operating strategy is to grow our businesses by focusing
our resources on developing and expanding profitable products and strong
distribution channels, by actively managing assets to seek to achieve superior
investment returns and by controlling expenses.
Our principal executive offices are located at 11825 N. Pennsylvania
Street, Carmel, Indiana 46032. Our telephone number is (317) 817-6100.
THE CONSECO TRUSTS
Each of the Conseco Trusts is a statutory business trust formed under
Delaware law. Each Conseco Trust exists for the exclusive purposes of:
o issuing and selling the preferred securities and the
common securities;
o using the proceeds from the sale of the preferred securities and
common securities to acquire our subordinated debt securities; and
o engaging in only those other activities that are related to those
purposes.
All of the common securities will be directly or indirectly owned by
Conseco. The common securities will rank equally, and payments will be made
proportionally, with the preferred securities, except that, if an event of
default under the declaration of trust of the Conseco Trust has occurred and is
continuing, the rights of the holders of the common securities to payment of
distributions and payments upon liquidation, redemption and otherwise will be
subordinated to the rights of the holders of the preferred securities. We will
directly or indirectly acquire common securities in an amount equal to at least
3% of the total capital of each Conseco Trust.
Unless otherwise specified in the applicable prospectus supplement,
each Conseco Trust has a term of up to 55 years but may terminate earlier, as
provided in the declaration of trust. Each Conseco Trust's business and affairs
will be conducted by the trustees appointed by us as the direct or indirect
holder of all of the common securities. We will be entitled to appoint, remove
or replace any of, or increase or reduce the number of, the trustees of each
Conseco Trust. The declaration of trust will set forth the duties and
obligations of the trustees. A majority of the trustees of each Conseco Trust
will be employees or officers of or persons who are affiliated with Conseco,
referred to as "regular trustees".
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One trustee of each Conseco Trust will be an institution, referred to as the
"institutional trustee", that is not affiliated with Conseco and has a minimum
amount of combined capital and surplus of not less than $50,000,000, which will
act as property trustee and as indenture trustee for the purposes of compliance
with the provisions of Trust Indenture Act of 1939, under the terms of the
applicable prospectus supplement. In addition, unless the institutional trustee
maintains a principal place of business in the State of Delaware and otherwise
meets the requirements of applicable law, one trustee of each Conseco Trust will
be an institution having a principal place of business in, or a natural person
resident of, the State of Delaware, referred to as the "Delaware trustee".
Conseco will pay all fees and expenses related to the Conseco Trust and the
offering of the preferred securities and the common securities.
Unless otherwise specified in the applicable prospectus supplement, the
institutional trustee for each Conseco Trust will be Harris Trust and Savings
Bank. Unless otherwise specified in the applicable prospectus supplement, the
Delaware trustee for each Conseco Trust will be First Union Trust Company,
National Association, and its address in the State of Delaware is One Rodney
Square, 920 King Street, Wilmington, Delaware 19801. The principal place of
business of each Conseco Trust is c/o Conseco, Inc., 11825 N. Pennsylvania
Street, Carmel, Indiana 46032; telephone (317) 817-6100.
USE OF PROCEEDS
Unless otherwise indicated in the accompanying prospectus supplement,
we expect to use the net proceeds received by us from the sale of the securities
offered by this prospectus for general corporate purposes. The proceeds from the
sale of preferred securities by the Conseco Trusts will be invested in our
subordinated debt securities. Except as may otherwise be described in the
prospectus supplement relating to the preferred securities, we expect to use the
net proceeds from the sale of subordinated debt securities to the Conseco Trusts
for general corporate purposes. Any specific allocation of the proceeds to a
particular purpose that has been made at the date of any prospectus supplement
will be described in the prospectus supplement.
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RATIOS OF EARNINGS TO FIXED CHARGES, EARNINGS TO FIXED
CHARGES AND PREFERRED STOCK DIVIDENDS
AND EARNINGS TO FIXED CHARGES, PREFERRED STOCK DIVIDENDS
AND DISTRIBUTIONS ON COMPANY-OBLIGATED MANDATORILY
REDEEMABLE PREFERRED SECURITIES OF SUBSIDIARY TRUSTS
Our ratios of earnings to fixed charges, earnings to fixed charges
and preferred stock dividends and earnings to fixed charges, preferred stock
dividends and distributions on company-obligated mandatorily redeemable
preferred securities of subsidiary trusts for each of the five years ended
December 31, 1998 and for the nine months ended September 30, 1998 and 1999 are
set forth in the following table:
Nine months
Year ended December 31, ended September 30,
------------------------------------------------ -------------------
1994 1995 1996 1997 1998 1998 1999
---- ---- ---- ---- ---- ---- ----
Ratio of earnings to fixed charges:
As reported.................................. 5.80x 4.94x 4.85x 5.55x 3.30x 2.63x 4.62x
Excluding interest expense on debt related
to finance receivables and other
investments (1)............................ 9.28x 7.36x 7.80x 13.00x 6.79x 5.25x 11.23x
Ratio of earnings to fixed charges, preferred
stock dividends and distributions on
Company-obligated mandatorily redeemable
preferred securities of subsidiary trusts:
As reported................................ 4.48x 4.14x 3.74x 4.10x 2.47x 2.02x 3.35x
Excluding interest expense on debt related
to finance receivables and other
investments (1).......................... 6.14x 5.61x 5.11x 6.72x 3.68x 2.94x 5.42x
<FN>
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(1) These ratios are included to assist the reader in analyzing the impact
of interest expense on debt related to finance receivables and other
investments (which is generally offset by interest earned on finance
receivables and other investments financed by such debt). The ratios are
not intended to, and do not, represent the following ratios prepared in
accordance with generally accepted accounting principles: the ratio of
earnings to fixed charges; or the ratio of earnings to fixed charges,
preferred stock dividends and distributions on Company-obligated
mandatorily redeemable preferred securities of subsidiary trusts.
</FN>
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DESCRIPTION OF DEBT SECURITIES
We may offer one or more series of debt securities that are either
senior debt securities or subordinated debt securities. Unless otherwise
specified in the applicable prospectus supplement, the debt securities will be
issued under the senior indenture or the subordinated indenture, in each case
between us and the trustee identified in the indenture, copies of which have
been filed as exhibits to the registration statement of which this prospectus
forms a part. Except for the subordination provisions of the subordinated
indenture, which do not exist in the senior indenture, the provisions of the
subordinated indenture are substantially identical in substance to the
provisions of the senior indenture that bear the same section numbers.
We have summarized below the material provisions of the indentures and
the debt securities, or indicated which material provisions will be described in
the applicable prospectus supplement. These descriptions are only summaries, and
you should refer to the indentures which describe completely the terms and
definitions summarized below and contain additional information regarding the
debt securities. All article and section references in this prospectus are to
articles and sections of the applicable indenture and whenever particular
sections or defined terms of the indentures are referred to in this prospectus
or in a prospectus supplement, the sections or defined terms are incorporated
into this prospectus or the prospectus supplement by reference.
The debt securities will be unsecured obligations of Conseco. The
indentures do not limit the aggregate amount of debt securities that we may
issue and do not limit the incurrence or issuance by us of other secured or
unsecured debt. The debt securities issued under the senior indenture will be
unsecured and will rank equally with all our other unsecured and unsubordinated
obligations. The debt securities issued under the subordinated indenture will be
subordinate and junior in right of payment, to the extent and in the manner set
forth in the subordinated indenture, to all our senior indebtedness. See "--
Subordination under the Subordinated Indenture."
The applicable prospectus supplement will describe the specific terms
of the series of debt securities being offered. The following terms may be
included:
o the title, designation and purchase price, of the debt securities;
o whether the debt securities are senior debt securities or
subordinated debt securities and whether the debt securities will
be issued under the senior indenture, the subordinated indenture or
another indenture described in the prospectus supplement;
o any limit upon the aggregate principal amount of the debt
securities;
o the date or dates on which the principal of and premium, if any, on
the debt securities will mature or the method of determining or
resetting the date or dates;
o the rate or rates, which may be fixed or variable, at which the
debt securities will bear interest, if any, or the method of
calculating or resetting the rate or rates;
9
o the date or dates from which interest, if any, will accrue or the
method by which the date or dates will be determined;
o the date or dates on which interest, if any, will be payable and
the record date or dates for payment of interest;
o the place or places where principal of, premium, if any, and
interest, if any, on the debt securities will be payable;
o our right, if any, to defer payment of interest on debt securities
and the maximum length of any permitted deferral period;
o the period or periods within which, the price or prices at which,
the currency or currencies, including currency unit or units, in
which, and the terms and conditions upon which, the debt securities
may be redeemed, in whole or in part, at our option;
o our obligation, if any, to redeem or purchase the debt securities
under any sinking fund or similar provisions or upon the happening
of a specified event and the period or periods within which, the
price or prices at which and the other terms and conditions upon
which, the debt securities will be redeemed or purchased, in whole
or in part, under these obligations;
o the authorized denominations of the debt securities;
o the currency or currency unit for which debt securities
may be purchased or in which debt securities may be denominated
and/or the currency or currencies, including currency unit or
units, in which principal of, premium, if any, and interest, if
any, on the debt securities will be payable and whether we or the
holders of any debt securities may elect to receive payments in
respect of the debt securities in a currency or currency unit other
than that in which the debt securities are stated to be payable;
o if other than the principal amount of the debt securities, the
portion of the principal amount of the debt securities which will
be payable upon declaration of the acceleration of the maturity of
the debt securities or the method by which that portion will be
determined;
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o the person to whom any interest on any debt security will be
payable if other than the person in whose name the debt security is
registered on the applicable record date;
o any addition to, or modification or deletion of, any event of
default or any of our covenants specified in the indenture for the
debt securities;
o the application, if any, of defeasance or covenant defeasance
provisions to the debt securities;
o whether the debt securities are to be issued in whole or in part
in the form of one or more temporary or permanent global securities
and, if so, the identity of the depositary for the global security
or securities;
o any federal income tax considerations applicable to holders of
the debt securities; and
o any other special terms relating to the debt securities.
Unless otherwise specified in the applicable prospectus supplement, the debt
securities will not be listed on any securities exchange. (Section 3.1.)
Unless otherwise specified in the applicable prospectus supplement,
debt securities will be issued in fully-registered form without coupons. Where
debt securities of any series are issued in bearer form and are payable to the
bearer of the security, the special restrictions and considerations, including
special offering restrictions and special federal income tax considerations,
applicable to the debt securities and to payment on and transfer and exchange of
the debt securities will be described in the applicable prospectus supplement.
Bearer debt securities will be transferable by delivery. (Section 3.5.)
Debt securities may be sold at a substantial discount below their
stated principal amount, bearing no interest or interest at a rate which at the
time of issuance is below market rates. Federal income tax consequences and
special considerations applicable to these debt securities, or to debt
securities issued at par that are treated as having been issued at a discount,
will be described in the applicable prospectus supplement.
If the purchase price of any of the debt securities is payable in one
or more foreign currencies or currency units or if any debt securities are
denominated in one or more foreign currencies or currency units or if the
principal of, premium, if any, or interest, if any, on any debt securities is
payable in one or more foreign currencies or currency units, or by reference to
commodity prices, equity indices or other factors, the restrictions, elections,
federal income tax considerations, specific terms and other information about
the issue of debt securities and the foreign currency or currency units or
commodity prices, equity indices or other factors will be set forth in the
applicable prospectus supplement. In general, holders of these series of debt
securities may receive a principal amount on any principal payment date, or a
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payment of premium, if any, on any premium interest payment date or a payment
of interest on any interest payment date, that is greater than or less than the
amount of principal, premium, if any, or interest otherwise payable on the
payment dates, depending on the value on the payment dates of the applicable
currency, commodity, equity index or other factor.
Payment, Registration, Transfer and Exchange
Unless otherwise provided in the applicable prospectus supplement,
payments with respect to the debt securities will be made in the designated
currency at the office or agency maintained for that purpose that we may
designate from time to time, except that, at our option, interest payments, if
any, on debt securities in registered form may be made (1) by checks mailed to
the holders of debt securities entitled to receive these payments at their
registered addresses or (2) by wire transfer to an account maintained by the
person entitled to receive these payments as specified in the register
maintained to record the holders of the debt securities and transfer of debt
securities. (Sections 3.7(a) and 9.2.) Unless otherwise indicated in the
applicable prospectus supplement, payment of any installment of interest on debt
securities in registered form will be made to the person in whose name the debt
security is registered at the close of business on the regular record date for
payment of interest. (Section 3.7(a).)
Payment with respect to debt securities in bearer form will be made in
the currency and in the manner designated in the prospectus supplement, subject
to any applicable laws and regulations, at paying agencies outside the United
States that we may appoint from time to time. The paying agents outside the
United States initially appointed by us for a series of debt securities will be
named in the prospectus supplement. We may at any time designate additional
paying agents or rescind the designation of any paying agents, except that, if
debt securities of a series are issuable as registered securities, we will be
required to maintain at least one paying agent in each place, a "place of
payment", where payment of principal, premium, if any, and interest or other
payments on the securities are payable and, if debt securities of a series are
issuable as bearer securities, we will be required to maintain a paying agent in
a place of payment outside the United States where debt securities of the series
and any coupons may be presented and surrendered for payment. (Section 9.2.)
Unless otherwise provided in the applicable prospectus supplement, debt
securities in registered form will be transferable or exchangeable at the agency
maintained for this purpose that we will designate from time to time. (Sections
3.5 and 9.2.) Debt securities may be transferred or exchanged without service
charge, other than any tax or other governmental charge imposed in connection
with the transfer or exchange. (Section 3.5.)
Global Debt Securities
Unless otherwise specified in the applicable prospectus supplement, the
debt securities of a series may be issued in whole or in part in the form of one
or more global securities that will be deposited with the depositary or with a
nominee for the depositary identified in the applicable prospectus supplement.
In this event, one or more global securities will be issued in a denomination or
aggregate denominations equal to the portion of the aggregate principal amount
of outstanding debt securities of the series to be represented by the global
security or securities. (Section 3.3.) Except as described in the applicable
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prospectus supplement, unless and until it is exchanged in whole or in part for
debt securities in definitive certificated form, a global security may not be
registered for transfer or exchange except as a whole by:
o the depositary for the global security to a nominee of the
depositary;
o a nominee of the depositary to the depositary or another nominee
of the depositary; or
o the depositary or any nominee to a successor depositary for the
series or a nominee of the successor depositary. (Section 3.5.)
The specific terms of the depositary arrangement for any portion of a
series of debt securities to be represented by a global security will be
described in the applicable prospectus supplement. Unless otherwise specified in
the applicable prospectus supplement, we expect that the following provisions
will apply to the depositary arrangements.
Ownership of beneficial interests in a global security will be limited
to persons that have accounts with the depositary or a nominee of the
depositary, referred to as "participants", or persons that may hold interests
through participants. Upon the issuance of any global security, and the deposit
of the global security with or on behalf of the depositary for the global
security, the depositary will credit, on its book-entry registration and
transfer system, the respective principal amounts of the debt securities
represented by the global security to the accounts of participants. The accounts
to be credited will be designated by the underwriters or agents engaging in the
distribution of the debt securities or by us, if the debt securities are offered
and sold directly by us. Ownership of beneficial interests by participants in
the global security will be shown on, and the transfer of these beneficial
interests will be effected only through, records maintained by the depositary
for the global security or by its nominee. Ownership of beneficial interests in
a global security by persons that hold through participants will be shown on,
and the transfer of these beneficial interests within the participants will be
effected only through, records maintained by the participants. The laws of some
jurisdictions require that some purchasers of securities take physical delivery
of securities in certificated form. The limitations described above and these
laws may impair the ability to transfer beneficial interests in the global
security.
So long as the depositary for a global security, or its nominee, is the
registered owner of the global security, the depositary or the nominee, as the
case may be, will be considered the sole owner or holder of the debt securities
represented by the global security for all purposes under the applicable
indenture. Unless otherwise specified in the applicable prospectus supplement
and except as specified below, owners of beneficial interests in the global
security will not be entitled to have debt securities of the series represented
by the global security registered in their names, will not receive or be
entitled to receive physical delivery of debt securities of that series in
certificated form and will not be considered the holders of the debt securities
for any purposes under the relevant indenture. (Section 3.8.) Accordingly, each
person owning a beneficial interest in a global security must rely on the
procedures of the depositary and, if the person is not a participant, on the
procedures of the participant through which the person owns its interest, to
exercise any rights of a holder under the relevant indenture. The
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depositary may grant proxies and otherwise authorize participants to give or
take any request, demand, authorization, direction, notice, consent, waiver or
other action which a holder is entitled to give or take under the relevant
indenture. We understand that, under existing industry practices, if we request
any action of holders or if any owner of a beneficial interest in a global
security desires to give any notice or take any action which a holder is
entitled to give or take under the relevant indenture, the depositary would
authorize the participants to give the notice or take the action, and the
participants would authorize beneficial owners owning through the participants
to give the notice or take the action or would otherwise act upon the
instructions of beneficial owners owning through them.
Unless otherwise specified in the applicable prospectus supplement,
payments of principal, premium, if any, and interest, if any, on debt securities
represented by a global security registered in the name of a depositary or its
nominee will be made to the depositary or its nominee, as the case may be, as
the registered owner of the global security. We expect that the depositary for
any debt securities represented by a global security, upon receipt of any
payment of principal, premium or interest, will immediately credit participants'
accounts with payments in amounts proportionate to their respective beneficial
interests in the principal amount of the global security as shown on the records
of the depositary. We also expect that payments by participants to owners of
beneficial interests in a global security held through the participants will be
governed by standing instructions and customary practices, as is now the case
with the securities held for the accounts of customers registered in "street
names," and will be the responsibility of the participants. Neither we nor the
trustees nor any agent of ours or the trustees will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of beneficial interests of a global security, or for maintaining, supervising or
reviewing any records relating to the beneficial interests. (Section 3.8.)
Unless otherwise specified in the applicable prospectus supplement, if
the depositary for any debt securities represented by a global security is at
any time unwilling or unable to continue as depositary or ceases to be a
clearing agency registered under the Securities Exchange Act of 1934 and a duly
registered successor depositary is not appointed by us within 90 days, we will
issue these debt securities in definitive certificated form in exchange for the
global security. In addition, we may at any time and in our sole discretion
determine not to have any of the debt securities of a series represented by one
or more global securities and, in that event, will issue debt securities of the
series in definitive certificated form in exchange for the global security or
securities representing the debt securities. (Section 3.5.)
The debt securities of a series may also be issued in whole or in part
in the form of one or more global securities issued as a bearer security that
will be deposited with a depositary, or with a nominee for the depositary,
identified in the applicable prospectus supplement. Bearer global securities may
be issued in temporary or permanent form. (Section 3.4.) The specific terms and
procedures, including the specific terms of the depositary arrangement, for any
portion of a series of debt securities to be represented by one or more bearer
global securities will be described in the applicable prospectus supplement.
Consolidation, Merger or Sale by Conseco
Unless otherwise specified in the applicable prospectus supplement, we
may not consolidate with or merge into any other corporation or sell our assets
substantially as an entirety, unless:
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o the corporation formed by the consolidation or into which we are
merged or the corporation which acquires our assets is organized in
the United States;
o the corporation formed by the consolidation or into which we are
merged or which acquires our assets substantially as an entirety
expressly assumes all of our obligations under each indenture;
o immediately after giving effect to the transaction, no default or
event of default under the applicable indenture has happened and is
continuing, and
o if, as a result of the transaction, our properties or assets would
become subject to an encumbrance which would not be permitted by
the terms of any series of debt securities, we or the successor
corporation, as the case may be, take the steps that are necessary
to secure the debt securities equally and ratably with all
indebtedness secured by that encumbrance.
Upon the consolidation, merger or sale, the successor corporation
formed by the consolidation, or into which we are merged or to which the sale is
made, will succeed to, and be substituted for us under each indenture. (Section
7.1.)
Events of Default, Notice and Rights on Default
Each indenture provides that, if an event of default occurs relating to
the debt securities of any series and is continuing, the trustee for the series
or the holders of 25% in aggregate principal amount of all of the outstanding
debt securities of that series, by written notice to us and to the trustee for
the series, if notice is given by the holders of debt securities, may declare
the principal of or, if the debt securities of that series provide for an amount
that is more or less than the principal amount of the debt securities to be due
and payable upon a declaration of maturity of the debt securities upon an event
of default, that portion of the principal amount specified in the prospectus
supplement, and accrued interest on all the debt securities of that series to be
due and payable; provided, for any debt securities issued under the subordinated
indenture, that the payment of principal and interest on the debt securities
will remain subordinated to the extent provided in the subordinated indenture.
(Section 5.2.)
Unless otherwise specified in the applicable prospectus supplement,
events of default for debt securities of any series are defined in each
indenture as being:
o default for 30 days in payment of any interest on any debt
security of that series or any coupon pertaining to the debt
security or any additional amount payable on debt securities of
that series as specified in the applicable prospectus supplement
when due;
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o default in payment of principal, or premium, if any, at maturity
or on redemption or otherwise, or in the making of a mandatory
sinking fund payment on any debt securities of that series when
due;
o default for 60 days after notice to us by the trustee for that
series, or by the holders of 25% in aggregate principal amount of
the debt securities of that series then outstanding, in the
performance of any other agreement in the debt securities of that
series, in the indenture or in any supplemental indenture or board
resolution referred to in the indenture under which the debt
securities of that series may have been issued;
o default resulting in acceleration of any of our other indebtedness
for borrowed money where the aggregate principal amount so
accelerated exceeds $25 million and the acceleration is not
rescinded or annulled within 30 days after the written notice of
the default to us by the trustee or to us and the trustee by the
holders of 25% in aggregate principal amount of the debt securities
of that series then outstanding, provided that the event of default
will be remedied, cured or waived if the default that resulted in
the acceleration of the other indebtedness is remedied, cured or
waived; and
o our bankruptcy, insolvency or reorganization. (Section 5.1.)
The definition of event of default in each indenture specifically
excludes a default under a secured debt under which the obligee has recourse,
exclusive of recourse for ancillary matters including environmental indemnities,
misapplication of funds and costs of enforcement, only to the collateral pledged
for repayment and where the fair market value of the collateral is 2% or less of
our total assets appearing on our most recently prepared consolidated balance
sheet as at the end of one of our fiscal quarters, prepared in accordance with
generally accepted accounting principles, at the time of the default.
Events of default for a specified series of debt securities may be
added to the indenture and, if so added, will be described in the applicable
prospectus supplement. (Sections 3.1 and 5.1(7).) Each indenture provides that
the trustee will, within 90 days after the occurrence of a default for the debt
securities of any series, give to the holders of the debt securities of that
series notice of all defaults known to it unless the default has been cured or
waived; provided that except in the case of a default in payment on the debt
securities of that series, the trustee may withhold the notice if and so long as
a committee of its officers determines that withholding the notice is in the
interests of the holders of the debt securities of that series. (Section 6.6.)
Each indenture provides that the holders of a majority in aggregate principal
amount of the debt securities of each series affected, with each series voting
as a class, may, subject to limited conditions, direct the time, method and
place of conducting any proceeding for any remedy available to the trustee for
the series, or exercising any trust or power conferred on the trustee. (Section
5.8.) Each indenture includes a covenant that we will file annually with the
trustee a certificate as to our compliance with all conditions and covenants of
the indenture. (Section 9.5.) The holders of a majority in aggregate principal
amount of any series of debt securities by notice to the trustee for the series
may
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waive, on behalf of the holders of all debt securities of the series, any past
default or event of default for that series and its consequences except a
default or event of default in the payment of the principal of, premium, if any,
or interest, if any, on any debt security, and except for an event of default
resulting from the breach of a covenant or provision of either indenture which,
under the applicable indenture, cannot be amended or modified without the
consent of the holders of each outstanding debt security of the series affected.
(Section 5.7.)
Option to Defer Interest Payments
If provided in the applicable prospectus supplement, we will have the
right at any time and from time to time during the term of the series of debt
securities to defer the payment of interest for the number of consecutive
interest payment periods specified in the applicable prospectus supplement,
subject to the terms, conditions and covenants, if any, specified in the
prospectus supplement, provided that the deferral period may not extend beyond
the stated maturity of the debt securities. Material United States federal
income tax consequences and special considerations applicable to these debt
securities will be described in the applicable prospectus supplement. Unless
otherwise specified in the applicable prospectus supplement, at the end of the
deferral period, we will pay all interest then accrued and unpaid together with
interest on accrued and unpaid interest compounded semiannually at the rate
specified for the debt securities to the extent permitted by applicable law;
provided, that during the deferral period we may not:
o declare or pay dividends on, make distributions regarding, or
redeem, purchase, acquire or make a liquidation payment regarding,
any of our capital stock, other than:
(1) purchases or acquisitions of our capital stock in
connection with the satisfaction of our obligations under any
employee or agent benefit plans or the satisfaction of our
obligations under any contract or security outstanding on the
date of the event requiring us to purchase capital stock,
(2) as a result of a reclassification of our capital stock or
the exchange or conversion of one class or series of our
capital stock for another class or series of our capital stock,
(3) the purchase of fractional interests in shares of our
capital stock in connection with the conversion or exchange
provisions of that capital stock or the security being
converted or exchanged,
(4) dividends or distributions in our capital stock, or rights
to acquire capital stock, or repurchases or redemptions of
capital stock solely from the issuance or exchange of capital
stock, or
(5) redemptions or repurchases of any rights outstanding under
a shareholder rights plan,
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o make any payment of interest, principal or premium, if any, on or
repay, repurchase or redeem any debt securities issued by us that
rank junior to the debt securities, and
o make any guarantee payments regarding the foregoing, other than
payments under our guarantee of the preferred securities or the
common securities.
Prior to the termination of any deferral period, we may further defer
payments of interest by extending the interest payment period; provided,
however, that, the deferral period, including all previous and further
extensions, may not extend beyond the maturity of the debt securities.
Upon the termination of any deferral period and the payment of all
amounts then due, we may commence a new deferral period, subject to the terms
set forth in this section. No interest during a deferral period, except at the
end of the deferral period, will be due and payable, but we may prepay at any
time all or any portion of the interest accrued during a deferral period. We
have no present intention of exercising our right to defer payments of interest
by extending the interest payment period on the debt securities. If the
institutional trustee is the sole holder of the debt securities, we will give
the regular trustees and the institutional trustee notice of our selection of a
deferral period one business day before the earlier of (1) the date
distributions on the preferred securities are payable or (2) the date the
regular trustees are required to give notice to the New York Stock Exchange, or
other applicable self-regulatory organization, or to holders of the preferred
securities of the record or payment date of the distribution. The regular
trustees will give notice of our selection of the deferral period to the holders
of the preferred securities. If the institutional trustee is not the sole holder
of the debt securities, we will give the holders of the debt securities notice
of our selection of a deferral period ten business days before the earlier of
(1) the interest payment date or (2) the date upon which we are required to give
notice to the New York Stock Exchange, or other applicable self-regulatory
organization, or to holders of the debt securities of the record or payment date
of the related interest payment.
Modification of the Indentures
Unless otherwise specified in the applicable prospectus supplement,
each indenture contains provisions permitting us and the trustee to enter into
one or more supplemental indentures without the consent of the holders of any of
the debt securities in order to:
o evidence the succession of another corporation to Conseco and the
assumption of our covenants by the successor;
o add to our covenants or surrender any of our rights or powers;
o add additional events of default for any series of debt securities;
o add or change any provisions to the extent necessary to permit or
facilitate the issuance of bearer securities;
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o change or eliminate any provision affecting only debt securities
not yet issued;
o provide for security for the debt securities;
o to establish the form or terms of debt securities;
o evidence and provide for successor trustees;
o if allowed without penalty under applicable laws and regulations,
permit payment in respect of bearer securities in the United
States;
o correct any defect or supplement any inconsistent provisions or to
make any other provisions concerning matters or questions arising
under the indenture, provided that the action does not adversely
affect the interests of any holder of debt securities of any
series; or
o cure any ambiguity or correct any mistake.
The subordinated indenture also permits us and the trustee to enter into
supplemental indentures to modify the subordination provisions contained in the
subordinated indenture except in a manner adverse to any outstanding debt
securities. (Section 8.1.)
Unless otherwise specified in the applicable prospectus supplement,
each indenture also contains provisions permitting us and the trustee, with the
consent of the holders of a majority in aggregate principal amount of the
outstanding debt securities affected by a supplemental indenture, with the debt
securities of each series voting as a class, to execute supplemental indentures
adding any provisions to or changing or eliminating any of the provisions of the
indenture or any supplemental indenture or modifying the rights of the holders
of debt securities of that series, except that, without the consent of the
holder of each debt security so affected, no supplemental indenture may:
o change the time for payment of principal or premium, if any, or
interest on any debt security;
o reduce the principal of, or any installment of principal of, or
premium, if any, or interest on any debt security, or change the
manner in which they are determined;
o reduce the amount of premium, if any, payable upon the redemption
of any debt security;
o reduce the amount of principal payable upon acceleration of the
maturity of any debt security providing for an amount more or less
than the principal amount of the debt security to be due and
payable upon a declaration of maturity upon an event of default;
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o change the currency or currency unit in which any debt security or
any premium or interest on the debt security is payable;
o impair the right to institute suit for the enforcement of any
payment on or regarding any debt security;
o reduce the percentage in principal amount of the outstanding debt
securities affected by the supplemental indenture the consent of
whose holders is required for amendment of the indenture or for
waiver of compliance with provisions of the indenture or for waiver
of defaults;
o change our obligation to maintain an office or agency in the
places and for the purposes specified in the indenture;
o modify the provisions relating to the subordination of outstanding
debt securities of any series in a manner adverse to the holders
of the debt securities; or
o modify the provisions relating to waiver of defaults or any of the
provisions set forth above. (Section 8.2.)
Subordination under the Subordinated Indenture
The subordinated indenture provides that any subordinated debt
securities issued under the subordinated indenture are subordinate and junior in
right of payment to the extent provided in the subordinated indenture (Section
12.1 of the subordinated indenture.) to our senior indebtedness, which is
defined as:
o all of our indebtedness, whether outstanding on the date of the
subordinated indenture or created after that date, incurred or
assumed, which is for money borrowed, or evidenced by a note or
similar instrument given in connection with the acquisition of any
business, properties or assets, including securities;
o any indebtedness of others of the kinds described in the preceding
bulletpoint for the payment of which we are is responsible or
liable as guarantor or otherwise; and
o amendments, renewals, extensions and refundings of any of that
indebtedness, unless in any instrument or instruments evidencing or
securing that indebtedness or under which the indebtedness is
outstanding.
Senior indebtedness will continue to be senior indebtedness and
entitled to the benefits of the subordination provisions irrespective of any
amendment, modification or waiver of any term of the senior indebtedness or
extension or renewal of the senior indebtedness. Senior indebtedness does not
include:
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o any of our indebtedness to any of our subsidiaries;
o indebtedness incurred for the purchase of goods or materials or for
services obtained in the ordinary course of business; and
o any indebtedness which by its terms ranks equally with or
subordinate to the subordinated debt securities. (Section 12.2 of
the subordinated indenture.)
If (1) we default in the payment of any principal, or premium, if any,
or interest on any senior indebtedness when the same becomes due and payable,
whether at maturity or at a date fixed for prepayment or declaration or
otherwise or (2) an event of default occurs for any senior indebtedness
permitting the holders of the senior indebtedness to accelerate the maturity of
the senior indebtedness and written notice of the event of default, requesting
that payments on subordinated debt securities cease, is given to us by the
holders of senior indebtedness, then unless and until the default in payment or
event of default is cured or waived or ceases to exist, no direct or indirect
payment, in cash, property or securities, by set-off or otherwise, will be made
or agreed to be made on account of the subordinated debt securities or interest
on the subordinated debt securities or with respect to any repayment,
redemption, retirement, purchase or other acquisition of subordinated debt
securities. (Section 12.4 of the subordinated indenture.)
In the event of:
o any insolvency, bankruptcy, receivership, liquidation,
reorganization, readjustment, composition or other similar
proceeding relating to us, our creditors or our property,
o any proceeding for the liquidation, dissolution or other winding-up
of Conseco, voluntary or involuntary, whether or not involving
insolvency or bankruptcy proceedings,
o any assignment by us for the benefit of our creditors, or
o any other marshaling of our assets,
then all senior indebtedness including, without limitation, interest accruing
after the commencement of the proceeding, assignment or marshaling of assets,
must first be paid in full before any payment or distribution, whether in cash,
securities or other property, is made by us on account of subordinated debt
securities. In that event, except as described in this paragraph, any payment or
distribution, which, but for the subordination provisions, would be payable or
deliverable with respect to subordinated debt securities, will be paid or
delivered directly to the holders of senior indebtedness, or to their
representative or trustee, in accordance with the priorities then existing among
the holders until all senior indebtedness has been paid in full. (Section 12.3
of the subordinated indenture.) The payments or distributions described in the
previous sentence include those which may be payable or deliverable
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because of the payment of any other indebtedness of ours being subordinated to
the payment of subordinated debt securities. The payments or distributions
described in the first sentence of this paragraph do not include payments or
distributions of our securities or the securities of any other corporation
provided for by a plan of reorganization or readjustment, the payment of which
is subordinate, at least to the extent provided in the subordination provisions
of the subordinated indenture for the indebtedness evidenced by subordinated
debt securities, to the payment of all senior indebtedness at the time
outstanding and to any securities issued with respect to the senior indebtedness
under the plan of reorganization or readjustment. No present or future holder of
any senior indebtedness will be prejudiced in the right to enforce subordination
of the indebtedness evidenced by subordinated debt securities by any act or
failure to act on our part. (Section 12.9 of the subordinated indenture.)
Senior indebtedness will be deemed to have been paid in full if the
holders of senior indebtedness will have received cash, securities or other
property equal to the amount of the senior indebtedness then outstanding. Upon
the payment in full of all senior indebtedness, the holders of subordinated debt
securities will be subrogated to all the rights of any holders of senior
indebtedness to receive any further payments or distributions applicable to the
senior indebtedness until all subordinated debt securities are paid in full. The
payments or distributions received by any holder of subordinated debt
securities, by reason of the subrogation, of cash, securities or other property
which otherwise would be paid or distributed to the holders of senior
indebtedness, will, as between us and our creditors other than the holders of
senior indebtedness, on the one hand, and the holders of subordinated debt
securities, on the other, be deemed to be a payment by us on account of senior
indebtedness, and not on account of subordinated debt securities. (Section 12.7
of the subordinated indenture.)
The subordinated indenture provides that the subordination provisions
described in this section, to the extent as they relate to any particular issue
of subordinated debt securities, may be changed before the issuance of the
subordinated debt securities. Any change of this nature would be described in
the applicable prospectus supplement relating to the subordinated debt
securities.
Defeasance and Covenant Defeasance
If indicated in the applicable prospectus supplement, we may elect
either to defease and be discharged from any and all obligations with respect to
the debt securities of or within any series, referred to as "defeasance", or to
be released from our obligations with respect to selected covenants applicable
to the debt securities of or within any series, referred to as "covenant
defeasance", upon the deposit with the appropriate trustee, in trust for that
purpose, of money and/or U.S. government obligations which through the payment
of principal and interest in accordance with their terms will provide money in
an amount sufficient, without reinvestment, to pay the principal of and any
premium or interest on the debt securities to maturity or redemption, as the
case may be, and any mandatory sinking fund or similar payments on the debt
securities. As a condition to defeasance or covenant defeasance, we must deliver
to the trustee an opinion of counsel to the effect that the holders of the debt
securities will not recognize income, gain or loss for federal income tax
purposes as a result of the defeasance or covenant defeasance and will be
subject to federal income tax on the same amounts and in the same manner and at
the same times as would have been the case if the defeasance or covenant
defeasance had not occurred. The opinion of counsel, in the case of defeasance,
must refer to and be based upon a ruling of the Internal Revenue
22
Service or a change in applicable federal income tax law occurring after the
date of the relevant indenture. (Article 4.) If indicated in the applicable
prospectus supplement, in addition to obligations of the United States or an
agency or instrumentality of the United States, government obligations may
include obligations of the government or an agency or instrumentality of the
government issuing the currency or currency unit in which debt securities of the
series are payable. (Section 3.1.)
In addition, in order for covenants contained in the subordinated
indenture to be discharged no event or condition may exist that, under
provisions described in "-- Subordination under the Subordinated Indenture"
above, would prevent us from making payments of principal of, and premium, if
any, and interest on subordinated debt securities at the date of the required
irrevocable deposit. (Section 4.6(j) of the subordinated indenture.)
We may exercise our defeasance option for the debt securities in spite
of our earlier exercise of our covenant defeasance option. If we exercise our
defeasance option, payment of the debt securities may not be accelerated because
of a default or an event of default. (Section 4.4.) If we exercise our covenant
defeasance option, payment of the debt securities may not be accelerated by
reason of a default or an event of default under the covenants to which the
covenant defeasance is applicable. However, if the acceleration occurs by reason
of another event of default, the realizable value at the acceleration date of
the money and government obligations in the defeasance trust could be less than
the principal and interest then due on the debt securities, because the required
deposit in the defeasance trust is based upon scheduled cash flow rather than
market value, which will vary depending upon interest rates and other factors.
The Trustees
Unless otherwise specified in the applicable prospectus supplement,
Bank of New York will be the trustee under the senior indenture, and Harris
Trust and Savings Bank will be the trustee under the subordinated indenture. We
may also maintain banking and other commercial relationships with each of the
trustees and their affiliates in the ordinary course of business.
DESCRIPTION OF CAPITAL STOCK
Our authorized capital stock was 1,020,000,000 shares as of January
4, 2000, consisting of:
o 20,000,000 shares of preferred stock, of which 2,598,396 were
outstanding; and
o 1,000,000,000 shares of common stock, of which 327,678,638 shares
were outstanding.
In general, our authorized preferred stock is afforded preferences
regarding dividends and liquidation rights over our common stock. Our board of
directors is empowered, without approval of our
23
shareholders, to cause the preferred stock to be issued in one or more series,
with the numbers of shares of each series and the rights, preferences and
limitations of each series to be determined by the board, including the dividend
rights, conversion rights, redemption rights and liquidation preferences, if
any, of any wholly unissued series of preferred stock, or of the entire class of
preferred stock if none of the shares have been issued, the number of shares
constituting each series and the terms and conditions of the issue of each
series. The following is a summary of the terms of our preferred stock and
common stock and provisions of our articles of incorporation, bylaws and
statutes that affect our preferred stock and common stock and is subject to the
actual provisions of the articles of incorporation, bylaws and these statutes.
Preferred Stock
The applicable prospectus supplement will describe the following terms
of any preferred stock offered pursuant to this prospectus, to the extent
applicable to the preferred stock:
o the specific designation, number of shares, seniority and purchase
price;
o any liquidation preference per share;
o any date of maturity;
o any redemption, repayment or sinking fund provisions;
o any dividend rate or rates and the dates on which any dividends
will be payable, or the method by which the rates or dates will be
determined;
o any voting rights;
o if other than the currency of the United States, the currency or
currencies, including composite currencies, in which the preferred
stock is denominated and/or in which payments will or may be
payable;
o the method by which amounts with respect to the preferred stock may
be calculated and any commodities, currencies or indices, or value,
rate or price, relevant to the calculation;
o whether the preferred stock is convertible or exchangeable and, if
so, the securities or rights into which the preferred stock is
convertible or exchangeable, which may include other preferred
stock, debt securities, common stock or other securities or rights
of Conseco, including rights to receive payment in cash or
securities based on the value, rate or price of one or more
specified commodities, currencies or indices, or a combination any
of these, and the terms and conditions upon which the conversions
or exchanges will be effected, including the initial conversion or
exchange prices or rates, the conversion or exchange period and any
other related provisions;
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o the place or places where dividends and other payments on the
preferred stock will be payable; and
o any additional voting, dividend, liquidation, redemption and other
rights, preferences, privileges, limitations and restrictions.
As described under "Description of Depositary Shares", we may, at our
option, elect to offer depositary shares evidenced by depositary receipts, each
representing an interest, to be specified in the applicable prospectus
supplement for the particular series of the preferred stock, in a share of the
particular series of the preferred stock issued and deposited with a preferred
stock depositary. All shares of preferred stock offered by this prospectus, or
issuable upon conversion, exchange or exercise of securities, will, when issued,
be fully paid and non-assessable.
Common Stock
The prospectus supplement relating to an offering of common stock will
describe relevant terms, including the number of shares offered, the initial
offering price, market price and dividend information.
Dividends. Holders of common stock are entitled to receive dividends
and other distributions in cash, stock or property, when, as and if declared by
the board of directors out of our assets or funds legally available for payment
of dividends or other distributions and will share equally on a per share basis
in all dividends and other distributions, subject to the rights of holders of
preferred stock.
Voting Rights. At every meeting of shareholders, every holder of common
stock is entitled to one vote per share. Subject to any voting rights which may
be granted to holders of preferred stock, any action submitted to shareholders
is approved if the number of votes cast in favor of the action exceeds the
number of votes against, except where other provision is made by law and subject
to applicable quorum requirements.
Liquidation Rights. If there is any liquidation, dissolution or
winding-up of Conseco, whether voluntary or involuntary, the holders of common
stock are entitled to share equally in the assets available for distribution
after payment of all liabilities and provision for the liquidation preference of
any shares of preferred stock then outstanding.
The holders of common stock have no preemptive rights, cumulative
voting rights, subscription rights, or conversion rights and the common stock
may not be redeemed. The transfer agent and registrar for the common stock is
First Union National Bank. The common stock is traded on the New York Stock
Exchange under the symbol "CNC". All shares of common stock offered by this
prospectus, or issuable upon conversion, exchange or exercise of securities,
will, when issued, be fully paid and non-assessable.
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Provisions of Our Articles of Incorporation and By-laws
Some provisions of our articles of incorporation and bylaws may make it
more difficult to effect a change in control if our board of directors
determines that the change in control would not be in the best interests of our
shareholders. It could be argued, contrary to the belief of our board of
directors, that these provisions are not in the best interests of the
shareholders to the extent that they will have the effect of tending to
discourage possible takeover bids, which might be at prices that are higher than
the recent market prices for our common stock. The most important of those
provisions are described below.
Our articles of incorporation authorize the establishment in the bylaws
of a classified board of directors. The bylaws, in turn, provide that the
directors serve staggered three-year terms, with the members of only one class
being elected in any year.
A classified board of directors may increase the difficulty of removing
incumbent directors, providing the directors with enhanced ability to retain
their positions. A classified board of directors may also make it more difficult
for a third party to acquire control of Conseco by means of a proxy contest. In
addition, the classification may make it more difficult to replace a majority of
directors for business reasons unrelated to a change in control.
Our articles of incorporation provide that holders of our voting stock
will not be entitled to vote on some business transactions, defined to include,
among other things, some mergers, consolidations, sales, leases, transfers or
other dispositions of a substantial part of our assets, with related persons,
including persons beneficially owning more than 10% of our outstanding voting
stock, nor may the business combination transactions be effected, unless:
o the relevant business combination has been approved by two-thirds
of the continuing directors; or
o the aggregate amount of the cash and the fair value of any
consideration other than cash to be received by any holder of our
common stock or preferred stock in the business combination for
each share of common stock or preferred stock will be at least
equal to the highest per share price paid by the related person to
acquire any shares of common stock or preferred stock, as the case
may be, beneficially owned by the related person.
As discussed above, our preferred stock may be issued from time to time
in one or more series with the rights, preferences, limitations and restrictions
that may be determined by the board of directors. The issuance of preferred
stock could be used, under some circumstances, as a method of delaying or
preventing a change of control of Conseco and could have a detrimental effect on
the rights of holders of common stock, including loss of voting control.
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The provisions of our articles of incorporation regarding the
classified board of directors and business combination transactions may be
amended only with the affirmative approval of holders of at least 80% of our
outstanding voting stock.
Our bylaws may be amended by majority vote of the board of directors.
Provisions of Corporate and Insurance Laws
In addition to our articles of incorporation and bylaws, some
provisions of Indiana law may delay, deter or prevent a merger, tender offer or
other takeover attempt of Conseco.
Under the Indiana Business Corporation Law, a director may, in
considering the best interests of a corporation, consider the effects of any
action on shareholders, employees, suppliers and customers of the corporation,
on communities in which offices or other facilities of the corporation are
located, and any other factors the director considers pertinent.
The Indiana Business Corporation Law provides that no business
combination, defined to include some mergers, sales of assets, sales of 5% or
more of outstanding stock, loans, recapitalizations or liquidations or
dissolutions, involving a corporation and an interested shareholder, defined to
include any holder of 10% or more of the corporation's voting stock, may be
entered into unless it has been approved by the board of directors of the
corporation or:
o five years have expired since the acquisition of shares of the
corporation by the interested shareholder;
o all requirements of the corporation's articles of incorporation
relating to business combinations have been satisfied; and
o either (1) a majority of shareholders of the corporation, excluding
the interested shareholder, approve the business combination or (2)
all shareholders are paid fair value for their stock, as defined in
the statute.
However, this law does not restrict any offer to purchase all of a corporation's
shares.
The Indiana Business Corporation Law also provides that when a target
corporation, incorporated in Indiana and having its principal place of business,
principal office or substantial assets in Indiana, like Conseco, has a specified
threshold of ownership by Indiana residents, any acquisition which, together
with its previous holdings, gives the acquiror at least 20% of the target's
voting stock triggers a shareholder approval mechanism. If the acquiror files a
statutorily required disclosure statement, the target's management has 50 days
within which to hold a special meeting of shareholders at which all
disinterested shareholders of the target not affiliated with the acquiror or any
officer or inside director of the target consider and vote upon whether the
acquiror will have voting rights for the shares of the target held by it.
Without shareholder approval, the shares acquired by the acquiror have no voting
rights. If the acquiror fails to file the statutorily required disclosure
statement, the target can redeem the acquiror's
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shares at a price to be determined according to procedures devised by the
target. These provisions of the Indiana Business Corporation Law apply to
Indiana corporations, unless the corporation has elected otherwise, which we
have not done, in its articles of incorporation or bylaws.
In addition, the insurance laws and regulations of the jurisdictions in
which we or our insurance subsidiaries do business may impede or delay a
business combination involving us. State insurance holding company laws and
regulations applicable to us generally provide that no person may acquire
control of a company, and thus indirect control of its insurance subsidiaries,
unless the person has provided required information to, and the acquisition is
approved or not disapproved by, the appropriate insurance regulatory
authorities. Generally, any person acquiring beneficial ownership of 10% or more
of the common stock would be presumed to have acquired control, unless the
appropriate insurance regulatory authorities upon advance application determine
otherwise.
DESCRIPTION OF DEPOSITARY SHARES
The following sections summarize the material terms of a deposit
agreement which we may, at our option, elect to enter into, and of depositary
shares and depositary receipts which would be described in the deposit
agreement, and are qualified by, and are subject to, the form of deposit
agreement, if any, and form of depositary receipts, if any, relating to each
series of the preferred stock, as well as the articles of incorporation or any
required amendment to the articles of incorporation describing the applicable
series of preferred stock.
We may, at our option, elect to have shares of preferred stock be
represented by depositary shares. The shares of any series of the preferred
stock underlying the depositary shares will be deposited under a separate
deposit agreement to be entered into by us and a bank or trust company selected
by us as a preferred stock depositary. The prospectus supplement relating to a
series of depositary shares will set forth the name and address of the preferred
stock depositary. Subject to the terms of the deposit agreement, each owner of a
depositary share will be entitled, proportionately, to all the rights,
preferences and privileges of the preferred stock represented by the depositary
share, including dividend, voting, redemption, conversion, exchange and
liquidation rights.
The depositary shares will be evidenced by depositary receipts issued
in accordance with the deposit agreement, each of which will represent the
fractional interest in the number of shares of a particular series of the
preferred stock described in the applicable prospectus supplement.
Dividends and Other Distributions
The preferred stock depositary will distribute all cash dividends or
other cash distributions with respect to the series of preferred stock
represented by the depositary shares to the record holders of depositary
receipts in proportion, to the extent possible, to the number of depositary
shares owned by the holders. The depositary, however, will distribute only the
amount that can be distributed without attributing to any depositary share a
fraction of one cent, and any undistributed balance will be added to
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and treated as part of the next sum received by the depositary for distribution
to record holders of depositary receipts then outstanding.
If a distribution of property other than cash on the preferred stock
occurs, the preferred stock depositary will distribute the property to the
record holders of depositary receipts in proportion, to the extent possible, to
the number of depositary shares owned by the holders, unless the preferred stock
depositary determines, after consultation with us, that it is not feasible to
make the distribution, in which case the preferred stock depositary may, with
our approval, adopt a method it deems equitable and practicable for the purpose
of effecting the distribution, including a public or private sale of the
property, and distribution of the net proceeds from the sale to the holders.
The amount distributed to record holders of depositary receipts in any
of the cases described in this section will be reduced by any amount that we or
the preferred stock depositary are required to withhold on account of taxes.
Conversion and Exchange
If any series of preferred stock underlying the depositary shares is
subject to provisions relating to its conversion or exchange, as set forth in
the applicable prospectus supplement relating to that series, each record holder
of depositary receipts will have the right or obligation to convert or exchange
the depositary shares represented by the depositary receipts under their terms.
Redemption of Depositary Shares
If any series of preferred stock underlying the depositary shares is
subject to redemption, the depositary shares will be redeemed from the proceeds
received by the preferred stock depositary resulting from the redemption, in
whole or in part, of the preferred stock held by the preferred stock depositary.
Whenever we redeem preferred stock from the preferred stock depositary, the
preferred stock depositary will redeem as of the same redemption date a
proportionate number of depositary shares representing the shares of preferred
stock that were redeemed. If less than all the depositary shares are to be
redeemed, the depositary shares to be redeemed will be selected by lot or on a
proportionate basis as we may determine.
After the date fixed for redemption, the depositary shares so called
for redemption will no longer be deemed to be outstanding and all rights of the
holders of the depositary shares will cease, except the right to receive the
redemption price upon redemption. Any funds that we deposit with the preferred
stock depositary relating to depositary shares which are not redeemed by the
holders of the depositary shares will be returned to us after a period of two
years from the date the funds are deposited by us.
Voting
Upon receipt of notice of any meeting at which the holders of any
shares of preferred stock underlying the depositary shares are entitled to vote,
the preferred stock depositary will mail the information contained in the notice
to the record holders of the depositary receipts. Each record holder of the
depositary receipts on the record date, which will be the same date as the
record date for the preferred
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stock, will be entitled to instruct the preferred stock depositary as to the
exercise of the voting rights pertaining to the number of shares of preferred
stock underlying the holder's depositary shares. The preferred stock depositary
will endeavor, to the extent practicable, to vote the number of shares of
preferred stock underlying the depositary shares in accordance with the holder's
instructions, and we will take all reasonable action that is deemed necessary by
the preferred stock depositary to enable the preferred stock depositary to do
so. Unless the preferred stock depositary receives specific written instructions
from holders of depositary receipts, it will abstain from voting any of the
preferred stock.
Record Date
Subject to the provisions of the deposit agreement, the preferred
stock depositary will fix a record date, which will be the same as the record
date for the preferred stock, for the determination of the holders of depositary
receipts that are entitled to receive a distribution, exercise voting rights or
receive a notice whenever:
o any cash dividend or other cash distribution becomes payable;
o any distribution other than cash is to be made;
o any rights, preferences or privileges will be offered relating to
the preferred stock;
o the preferred stock depositary receives notice of any meeting at
which holders of preferred stock are entitled to vote or of which
holders of preferred stock are entitled to notice; or
o the preferred stock depositary receives notice of the mandatory
conversion of, or any election on our part to call for redemption,
any preferred stock.
Withdrawal of Preferred Stock
Upon surrender of depositary receipts at the principal office of the
preferred stock depositary, upon payment of any unpaid amount due the preferred
stock depositary, and subject to the terms of the deposit agreement, the owner
of the depositary shares evidenced by the depositary receipts is entitled to
delivery of the number of whole shares of preferred stock and all money and
other property, if any, represented by the depositary shares. Partial shares of
preferred stock will not be issued. If the depositary receipts delivered by the
holder evidence a number of depositary shares in excess of the number of
depositary shares representing the number of whole shares of preferred stock to
be withdrawn, the preferred stock depositary will deliver to the holder at the
same time a new depositary receipt evidencing the excess number of depositary
shares. Holders of preferred stock that are withdrawn will not be entitled to
deposit the shares that have been withdrawn under the deposit agreement or to
receive depositary receipts.
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Amendment and Termination of the Deposit Agreement
The deposit agreement will provide that the form of depositary receipt
and any provision of the deposit agreement may at any time be amended by
agreement between us and the preferred stock depositary. However, any amendment
which imposes or increases any fees, taxes or other charges payable by the
holders of depositary receipts, other than taxes and other governmental charges,
fees and other expenses payable by the holders as stated under "Charges of
Preferred Stock Depositary", or which otherwise prejudices any substantial
existing right of holders of depositary receipts, will not take effect as to
outstanding depositary receipts until the expiration of 90 days after notice of
the amendment has been mailed to the record holders of outstanding depositary
receipts.
Whenever directed by us to do so, the preferred stock depositary will
terminate the deposit agreement by mailing notice of the termination to the
record holders of all depositary receipts then outstanding at least 30 days
before the date fixed in the notice for the termination. The preferred stock
depositary may likewise terminate the deposit agreement if at any time 45 days
have expired after the preferred stock depositary has delivered to us a written
notice of its election to resign and a successor depositary has not been
appointed and accepted its appointment. If any depositary receipts remain
outstanding after the date of termination, the preferred stock depositary will
discontinue the transfer of depositary receipts, will suspend the distribution
of dividends to the holders of depositary receipts, and will not give any
further notices, other than notice of the termination, or perform any further
acts under the deposit agreement except as provided below and except that the
preferred stock depositary will continue to collect dividends and any other
distributions on the preferred stock and deliver the preferred stock together
with the dividends and distributions and the net proceeds of any sales of
rights, preferences, privileges or other property, without liability for any
interest, in exchange for surrendered depositary receipts. At any time after the
expiration of two years from the date of termination, the preferred stock
depositary may sell the preferred stock then held by it at public or private
sales, at any place or places and upon terms as it deems proper, and may hold
the net proceeds of any sale, together with any money and other property then
held by it, without liability for any interest, for the benefit, on a
proportionate basis, of the holders of depositary receipts which have not been
surrendered.
Charges of Preferred Stock Depositary
We will pay all charges of the preferred stock depositary including
charges in connection with:
o the initial deposit of the preferred stock,
o the initial issuance of the depositary receipts,
o the distribution of information to the holders of depositary
receipts regarding matters on which holders of preferred stock are
entitled to vote,
o withdrawals of the preferred stock by the holders of depositary
receipts, or
o redemption or conversion of the preferred stock,
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except for taxes, including transfer taxes, if any, and other governmental
charges and the other charges that are expressly provided in the deposit
agreement to be at the expense of holders of depositary receipts or persons
depositing preferred stock.
Duties of Preferred Stock Depositary
The preferred stock depositary will make available for inspection by
holders of depositary receipts, at its corporate office and its office in New
York City, all reports and communications from us which are delivered to the
preferred stock depositary as the holder of preferred stock. Neither the
preferred stock depositary nor we will be liable if it is prevented or delayed
by law or any circumstance beyond its control in performing its obligations
under the deposit agreement. The obligations of the preferred stock depositary
under the deposit agreement are limited to performing its duties without
negligence or bad faith. Our obligations under the deposit agreement are limited
to performing our duties in good faith. Neither we nor the preferred stock
depositary is obligated to prosecute or defend any legal proceeding with respect
to any depositary shares or preferred stock unless satisfactory indemnity is
furnished. We and the preferred stock depositary are entitled to rely upon
advice of or information from counsel, accountants or other persons believed to
be competent and on documents believed to be genuine.
The preferred stock depositary may resign at any time or be removed by
us, effective upon the acceptance by its successor of its appointment; provided,
that if a successor preferred stock depositary has not been appointed or
accepted the appointment within 45 days after the preferred stock depositary has
delivered a notice of election to resign to us, the preferred stock depositary
may terminate the deposit agreement.
DESCRIPTION OF WARRANTS
We may issue warrants to purchase debt securities, preferred stock,
common stock or any combination of any of them, and these warrants may be issued
independently or together with any debt securities, preferred stock or common
stock and may be attached to or separate from these securities. Each series of
warrants will be issued under a separate warrant agreement to be entered into
between us and a warrant agent. The warrant agent will act solely as our agent
in connection with the warrants of each series and will not assume any
obligation or relationship of agency for or with holders or beneficial owners of
warrants. Further terms of the warrants and the applicable warrant agreement
will be included in the applicable prospectus supplement.
The applicable prospectus supplement will describe the terms of any
warrants for which this prospectus is being delivered, including the following:
o the title of the warrants;
o the aggregate number of warrants;
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o the price or prices at which the warrants will be issued;
o the currency or currencies, including composite currencies, in
which the price of the warrants may be payable;
o the designation and terms of the securities, other than preferred
securities and common securities, purchasable upon exercise of the
warrants;
o the price at which and the currency or currencies, including
composite currencies, in which the securities, other than preferred
securities and common securities, purchasable upon exercise of the
warrants may be purchased;
o the date on which the right to exercise the warrants will commence
and the date on which this right will expire;
o whether the warrants will be issued in registered form or bearer
form;
o if applicable, the minimum or maximum amount of the warrants that
may be exercised at any one time;
o if applicable, the designation and terms of the securities, other
than preferred securities and common securities, with which the
warrants are issued and the number of warrants issued with each
security;
o if applicable, the date on and after which the warrants and the
related securities, other than preferred securities and common
securities, will be separately transferable;
o information about book-entry procedures, if any;
o if applicable, a discussion of applicable United States federal
income tax considerations; and
o any other terms of the warrants, including terms, procedures and
limitations relating to the exchange and exercise of the warrants.
DESCRIPTION OF PREFERRED SECURITIES OF THE CONSECO TRUSTS
Each Conseco Trust may issue, from time to time, only one series of
preferred securities having terms described in the prospectus supplement. The
declaration of trust of each Conseco Trust authorizes the regular trustees of
the Conseco Trust to issue on behalf of the Conseco Trust one series of
preferred securities. Each declaration of trust will be qualified as an
indenture under the Trust Indenture Act. The
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institutional trustee, an independent trustee, will act as indenture trustee for
the preferred securities for purposes of compliance with the provisions of the
Trust Indenture Act. The preferred securities will have the terms, including
distributions, redemption, voting, liquidation rights, maturity date or dates
and the other preferred, deferred or other special rights or restrictions as are
established by the regular trustees in accordance with the applicable
declaration of trust or as are set forth in the declaration of trust or made
part of the declaration of trust by the Trust Indenture Act. The prospectus
supplement relating to the preferred securities of a Conseco Trust will set
forth the specific terms of the preferred securities, including, to the extent
applicable:
o the distinctive designation of the preferred securities;
o the number of preferred securities issued by the Conseco Trust;
o the annual distribution rate, or method of determining the
rate, for preferred securities issued by the Conseco Trust and the
date or dates upon which distributions will be payable; provided,
however, that distributions on the preferred securities will,
subject to any deferral provisions and any provisions for payment
of defaulted distributions, be payable on a quarterly basis to
holders of the preferred securities as of a record date in each
quarter during which the preferred securities are outstanding and
any provisions relating to the resetting or adjustment of the
distribution rate;
o any right of the Conseco Trust to defer quarterly distributions on
the preferred securities as a result of an interest deferral right
exercised by us on the subordinated debt securities held by the
Conseco Trust;
o whether distributions on preferred securities will be cumulative,
and, in the case of preferred securities having cumulative
distribution rights, the date or dates or method of determining the
date or dates from which distributions on preferred securities will
be cumulative;
o the amount or amounts which will be paid out of the assets of the
Conseco Trust to the holders of preferred securities upon voluntary
or involuntary dissolution, winding-up or termination of the
Conseco Trust;
o the obligation or option, if any, of the Conseco Trust to purchase
or redeem preferred securities and the price or prices at which,
the period or periods within which and the terms and conditions
upon which preferred securities will be purchased or redeemed, in
whole or in part, under this obligation or option with the
redemption price or formula for determining the redemption price to
be specified in the applicable prospectus supplement;
o the voting rights, if any, of preferred securities in addition to
those required by law, including the number of votes per preferred
security and any requirement for the
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approval by the holders of preferred securities as a condition
to specified action or amendments to the declaration of trust;
o the terms and conditions, if any, upon which subordinated debt
securities held by the Conseco Trust may be distributed to holders
of preferred securities; and
o any other relevant terms, rights, preferences, privileges,
limitations or restrictions of preferred securities consistent with
the declaration of trust or applicable law.
All preferred securities offered by the prospectus will be guaranteed by us to
the extent set forth below under "Description of Guarantees." The guarantee
issued by us to each Conseco Trust, when taken together with our back-up
undertakings, consisting of our obligations under each declaration of trust,
including the obligation to pay expenses of each Conseco Trust, the applicable
indenture and any applicable supplemental indentures and the subordinated debt
securities issued to any Conseco Trust will provide a full and unconditional
guarantee by us of amounts due on the preferred securities issued by each
Conseco Trust. The payment terms of the preferred securities will be the same as
the subordinated debt securities issued to the applicable Conseco Trust by us.
Each declaration of trust authorizes the regular trustees to issue on
behalf of the applicable trust one series of common securities having terms,
including distributions, redemption, voting and liquidation rights, and
restrictions that are established by the regular trustees in accordance with the
declaration of trust or that are otherwise set forth in the declaration of
trust. The terms of the common securities issued by each Conseco Trust will be
substantially identical to the terms of the preferred securities issued by the
Conseco Trust, and the common securities will rank equally, and payments will be
made on the common securities on a proportionate basis, with the preferred
securities except that, if an event of default under the declaration of trust
has occurred and is continuing, the rights of the holders of the common
securities to payment of distributions and payments upon liquidation, redemption
and otherwise will be subordinated to the rights of the holders of the preferred
securities. The common securities will also carry the right to vote and to
appoint, remove or replace any of the trustees of the Conseco Trust. We will own
directly or indirectly all of the common securities of each Conseco Trust.
The financial statements of any Conseco Trust that issues preferred
securities will be reflected in our consolidated financial statements with the
preferred securities shown as company-obligated mandatorily-redeemable preferred
securities of a subsidiary trust under minority interest in consolidated
subsidiaries. We will include in a footnote to our audited financial statements,
statements that the applicable Conseco Trust is wholly-owned by us and that the
sole asset of the Conseco Trust is the subordinated debt securities, indicating
the principal amount, interest rate and maturity date of the subordinated debt
securities.
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DESCRIPTION OF GUARANTEES
Set forth below is a summary of information concerning the guarantees
that will be executed and delivered by us for the benefit of the holders, from
time to time, of preferred securities. Each guarantee will be qualified as an
indenture under the Trust Indenture Act. Unless otherwise specified in the
applicable prospectus supplement, Harris Trust and Savings Bank will act as the
preferred securities guarantee trustee. The terms of each guarantee will be set
forth in the guarantee and will include the terms made part of the guarantee by
the Trust Indenture Act. The following is a summary of the material terms of the
guarantees. You should refer to the provisions of the form of guarantee, a copy
of which has been filed as an exhibit to the registration statement of which
this prospectus is a part, and the Trust Indenture Act. Each guarantee will be
held by the preferred securities guarantee trustee for the benefit of the
holders of the preferred securities of the applicable Conseco Trust.
Unless otherwise specified in the applicable prospectus supplement, we
will agree, to the extent set forth in each guarantee, to pay in full to the
holders of the preferred securities, the payments and distributions to be made
with respect to the preferred securities, except to the extent paid by the
applicable Conseco Trust, as and when due, regardless of any defense, right of
set-off or counterclaim which the Conseco Trust may have or assert. The
following payments or distributions with respect to the preferred securities, to
the extent not paid by the Conseco Trust, will be subject to the guarantee,
without duplication:
o any accrued and unpaid distributions that are required to be paid
on the preferred securities, to the extent the Conseco Trust has
funds available to make the payment;
o the redemption price, to the extent the Conseco Trust has funds
available to make the payment, for any preferred securities called
for redemption by the Conseco Trust; and
o upon a voluntary or involuntary dissolution, winding-up or
termination of the Conseco Trust, other than in connection with the
distribution of subordinated debt securities to the holders of
preferred securities or the redemption of all of the preferred
securities upon maturity or redemption of the subordinated debt
securities, the lesser of (1) the sum of the liquidation amount and
all accrued and unpaid distributions on the preferred securities to
the date of payment, to the extent the Conseco Trust has funds
available to make the payment or (2) the amount of assets of the
Conseco Trust remaining for distribution to holders of the
preferred securities in liquidation of the Conseco Trust.
Our obligation to make a guarantee payment may be satisfied by our direct
payment of the required amounts to the holders of preferred securities or by
causing the applicable Conseco Trust to pay the amounts to the holders.
Each guarantee will not apply to any payment of distributions except to
the extent the applicable
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Conseco Trust has funds available to make the payment. If we do not make
interest or principal payments on the subordinated debt securities purchased by
the Conseco Trust, the Conseco Trust will not pay distributions on the preferred
securities issued by the Conseco Trust and will not have funds available to make
the payment.
We have also agreed to guarantee the obligations of each Conseco Trust
with respect to the common securities issued by the Conseco Trust to the same
extent as the guarantee with respect to the preferred securities, except that,
if an event of default under the subordinated indenture has occurred and is
continuing, holders of preferred securities guaranteed by us will have priority
over holders of the common securities guaranteed by us with respect to
distributions and payments on liquidation, redemption or otherwise.
Covenants of Conseco
Unless otherwise specified in the applicable prospectus supplement, in
each guarantee of the payment obligations of a Conseco Trust with respect to
preferred securities, we will covenant that, so long as any preferred securities
issued by the Conseco Trust remain outstanding, if there has occurred any event
of default under the guarantee or under the declaration of trust of the Conseco
Trust, then we will not:
o declare or pay any dividend on, make any other distributions on, or
redeem, purchase, acquire or make a liquidation payment regarding,
any of our capital stock, except:
(1) purchases or acquisitions of our capital stock in
connection with the satisfaction of our obligations under any
employee or agent benefit plans or the satisfaction of our
obligations under any contract or security outstanding on the
date of the event requiring us to purchase our capital stock;
(2) as a result of a reclassification of our capital stock or
the exchange or conversion of one class or series of our
capital stock for another class or series of our capital stock;
(3) the purchase of fractional interests in shares of our
capital stock in connection with the conversion or exchange
provisions of our capital stock or the security being converted
or exchanged;
(4) dividends or distributions in our capital stock, or rights
to acquire our capital stock, or repurchases or redemptions of
capital stock solely from the issuance or exchange of capital
stock; or
(5) redemptions or repurchases of any rights outstanding under
a shareholder rights plan;
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o make any payment of interest, principal or premium, if any, on or
repay, repurchase or redeem any debt securities issued by us which
rank junior to the subordinated debt securities issued to the
applicable Conseco Trust; and
o make any guarantee payments regarding the foregoing, other than
under a guarantee of the payment obligations of a Conseco Trust
with respect to preferred securities.
Modification of the Guarantees; Assignment
Except for any changes that do not adversely affect the rights of
holders of preferred securities, in which case no consent of the holders will be
required, each guarantee of the payment obligations of a Conseco Trust with
respect to preferred securities may be amended only with the prior approval of
the holders of at least a majority in liquidation amount of the outstanding
preferred securities of the Conseco Trust. The manner of obtaining any approval
of holders of the preferred securities will be set forth in accompanying
prospectus supplement. All guarantees and agreements contained in a guarantee of
the obligations of a Conseco Trust with respect to preferred securities will
bind the successors, assigns, receivers, trustees and representatives of Conseco
and will inure to the benefit of the holders of the preferred securities of the
applicable Conseco Trust then outstanding.
Events of Default
An event of default under a preferred securities guarantee will occur
upon our failure to perform any of our payment or other obligations under the
guarantee. The holders of a majority in liquidation amount of the preferred
securities to which the preferred securities guarantee relates have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the preferred securities guarantee trustee with respect to the
guarantee or to direct the exercise of any trust or power conferred upon the
preferred securities guarantee trustee under the guarantee.
If the preferred securities guarantee trustee fails to enforce the
guarantee, any record holder of preferred securities to which the guarantee
relates may institute a legal proceeding directly against us to enforce the
preferred securities guarantee trustee's rights under the guarantee without
first instituting a legal proceeding against the applicable Conseco Trust, the
preferred securities guarantee trustee or any other person or entity. If we have
failed to make a guarantee payment under a guarantee, a record holder of
preferred securities to which the guarantee relates may directly institute a
proceeding against us for enforcement of the guarantee for the payment to the
record holder of the preferred securities to which the guarantee relates of the
principal of or interest on the applicable subordinated debt securities on or
after the respective due dates specified in the subordinated debt securities,
and the amount of the payment will be based on the holder's proportionate share
of the amount due and owing on all of the preferred securities to which the
guarantee relates. We have waived any right or remedy to require that any action
be brought first against the applicable Conseco Trust or any other person or
entity before proceeding directly against us. The record holder in the case of
the issuance of one or more global preferred securities certificates will be The
Depository Trust Company, or its nominee, acting at the direction of the
beneficial owners of the preferred securities.
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We will be required to provide annually to the preferred securities
guarantee trustee a statement as to the performance of our obligations under
each outstanding preferred securities guarantee and as to any default in our
performance.
Information Concerning the Preferred Securities Guarantee Trustee
The preferred securities guarantee trustee, before the occurrence of a
default under a preferred securities guarantee, undertakes to perform only the
duties that are specifically set forth in the guarantee and, after a default
under a guarantee, will exercise the same degree of care as a prudent individual
would exercise in the conduct of his or her own affairs. Subject to this
provision, the preferred securities guarantee trustee is under no obligation to
exercise any of the powers vested in it by a preferred securities guarantee at
the request of any holder of preferred securities to which the guarantee relates
unless it is offered reasonable indemnity against the costs, expenses and
liabilities that might be incurred by the preferred securities guarantee trustee
in exercising any of its powers.
Termination
Each preferred securities guarantee will terminate as to the preferred
securities issued by the applicable Conseco Trust upon full payment of the
redemption price of all preferred securities of the Conseco Trust, upon
distribution of the subordinated debt securities held by the Conseco Trust to
the holders of all of the preferred securities of the Conseco Trust or upon full
payment of the amounts payable in accordance with the declaration of trust of
the Conseco Trust upon liquidation of the Conseco Trust. Each preferred
securities guarantee will continue to be effective or will be reinstated, as the
case may be, if at any time any holder of preferred securities issued by the
applicable Conseco Trust must restore payment of any sums paid under the
preferred securities or the preferred securities guarantee.
Status of the Guarantees
The preferred stock guarantees will constitute our unsecured
obligations and will rank:
o subordinate and junior in right of payment to all of our other
liabilities, including the subordinated debt securities, except
those liabilities made equivalent or subordinate by their terms;
o equivalently with the most senior preferred or preference stock now
or hereafter issued by us and with any guarantee now or hereafter
entered into by us in respect of any preferred or preference stock
of any of our affiliates; and
o senior to our common stock.
The terms of the preferred securities provide that each holder of preferred
securities by acceptance of the preferred securities agrees to the subordination
provisions and other terms of our guarantee relating to the preferred
securities.
39
Each preferred securities guarantee will constitute a guarantee of
payment and not of collection. This means that the guaranteed party may
institute a legal proceeding directly against us to enforce its rights under the
guarantee without instituting a legal proceeding against any other person or
entity.
Governing Law
The preferred securities guarantees will be governed by and construed
in accordance with the law of the State of New York.
DESCRIPTION OF STOCK PURCHASE CONTRACTS AND STOCK PURCHASE UNITS
We may issue stock purchase contracts, including contracts obligating
holders to purchase from us, and us to sell to the holders, shares of common
stock, preferred stock, depositary shares or other securities at a future date
or dates or, in any case, a number or dollar amount to be determined by a
specified formula or some other means. The consideration for the common stock,
preferred stock, depositary shares or other securities may be fixed at the time
the stock purchase contracts are issued or may be determined by reference to a
specific formula set forth in the stock purchase contracts. The stock purchase
contracts may be issued separately or as a part of stock purchase units
consisting of a stock purchase contract and our debt securities, preferred
securities issued by a Conseco Trust or debt obligations of third parties,
including U.S. Treasury securities, securing the holders' obligations to
purchase the common stock, preferred stock, depositary shares or other
securities under the stock purchase contracts. We may be required under the
stock purchase contracts to make periodic payments to the holders of the stock
purchase units or by the stock purchase units to make periodic payments to the
holders of the stock purchase units, and these payments may be unsecured or
prefunded on some basis. The stock purchase contracts may require holders to
secure their obligations under those contracts in a specified manner. The
applicable prospectus supplement will describe the terms of any stock purchase
contracts or stock purchase units.
PLAN OF DISTRIBUTION
We and/or any Conseco Trust may sell any of the securities being
offered by this prospectus in any one or more of the following ways from time
to time:
o through agents;
o to or through underwriters;
o through dealers; or
o directly to purchasers.
The prospectus supplement for the securities will set forth the terms
of the offering of the securities, including the name or names of any
underwriters, dealers or agents; the purchase price of the securities and the
proceeds to us and/or a Conseco Trust from the sale; any underwriting discounts
and
40
commissions or agency fees and other items constituting underwriters' or
agents' compensation; any initial public offering price and any discounts or
concessions allowed or reallowed or paid to dealers and any securities exchange
on which the securities may be listed. Any initial public offering price,
discounts or concessions allowed or reallowed or paid to dealers may be changed
from time to time.
The distribution of the securities may be effected from time to time in
one or more transactions at a fixed price or prices, which may be changed, at
market prices prevailing at the time of sale, at prices related to the
prevailing market prices or at negotiated prices.
Offers to purchase securities may be solicited by agents designated by
us from time to time. Any agent involved in the offer or sale of the securities
in respect of which this prospectus is delivered will be named, and any
commissions payable by us and/or the applicable Conseco Trust to the agent will
be set forth, in the applicable prospectus supplement. Unless otherwise
indicated in the prospectus supplement, any agent will be acting on a reasonable
best efforts basis for the period of its appointment. Any agent may be deemed to
be an underwriter, as that term is defined in the Securities Act of 1933, of the
securities so offered and sold.
If securities are sold by means of an underwritten offering, we and/or
the applicable Conseco Trust will execute an underwriting agreement with an
underwriter or underwriters at the time an agreement for the sale is reached,
and the names of the specific managing underwriter or underwriters, as well as
any other underwriters, and the terms of the transaction, including commissions,
discounts and any other compensation of the underwriters and dealers, if any,
will be set forth in the prospectus supplement which will be used by the
underwriters to make resales of the securities in respect of which this
prospectus is delivered to the public. We and/or the applicable Conseco Trust
may also agree with an underwriter or underwriters to enter into an underwriting
agreement or conduct an underwritten offering, in each case, at some future
date. If underwriters are utilized in the sale of the securities with respect to
which this prospectus is delivered, the securities will be acquired by the
underwriters for their own account and may be resold from time to time in one or
more transactions, including negotiated transactions, at fixed public offering
prices or at varying prices determined by the underwriter at the time of sale.
Securities may be offered to the public either through underwriting syndicates
represented by managing underwriters or directly by the managing underwriters.
If any underwriter or underwriters are utilized in the sale of the securities,
unless otherwise indicated in the prospectus supplement, the underwriting
agreement will provide that the obligations of the underwriters are subject to
specific conditions and that the underwriters for a sale of securities will be
obligated to purchase all of the securities of a series if any are purchased.
If a dealer is utilized in the sales of the securities with respect to
which this prospectus is delivered, we and/or the applicable Conseco Trust will
sell the securities to the dealer as principal. The dealer may then resell the
securities to the public at varying prices to be determined by the dealer at the
time of resale. Any dealer may be deemed to be an underwriter, as the term is
defined in the Securities Act of 1933, of the securities so offered and sold.
The name of the dealer and the terms of the transaction will be set forth in the
prospectus supplement relating to the sale of securities.
41
Offers to purchase securities may be solicited directly by us and/or
the applicable Conseco Trust and the sale of securities may be made by us and/or
the applicable Conseco Trust directly to institutional investors or others, who
may be deemed to be underwriters within the meaning of the Securities Act of
1933 for any resale of securities. The terms of any sales will be described in
the prospectus supplement relating to the sale of securities.
Agents, underwriters and dealers may be entitled under relevant
agreements to indemnification or contribution by us and/or the applicable
Conseco Trust against specified liabilities, including liabilities under the
Securities Act of 1933.
Agents, underwriters and dealers may be customers of, engage in
transactions with, or perform services for, us and our subsidiaries in the
ordinary course of business.
Securities may also be offered and sold, if so indicated in the
applicable prospectus supplement, in connection with a remarketing upon their
purchase, in accordance with a redemption or repayment under their terms, the
occurrence of specified events, or otherwise, by one or more remarketing firms,
acting as principals for their own accounts or as agents for us and/or the
applicable Conseco Trust. Any remarketing firm will be identified and the terms
of its agreement, if any, with its compensation will be described in the
applicable prospectus supplement. Remarketing firms may be deemed to be
underwriters, as the term is defined in the Securities Act of 1933, in
connection with the securities remarketed by the remarketing firms. Remarketing
firms may be entitled under agreements which may be entered into with us and/or
the applicable Conseco Trust to indemnification or contribution by us and/or the
applicable Conseco Trust against specified civil liabilities, including
liabilities under the Securities Act of 1933, and may be customers of, engage in
transactions with or perform services for us and our subsidiaries in the
ordinary course of business.
If so indicated in the applicable prospectus supplement, we and/or the
applicable Conseco Trust may authorize agents, underwriters or dealers to
solicit offers by specified types of institutions to purchase securities from us
and/or the applicable Conseco Trust at the public offering prices set forth in
the applicable prospectus supplement under delayed delivery contracts providing
for payment and delivery on a specified date or dates in the future. A
commission indicated in the applicable prospectus supplement will be paid to
underwriters, dealers and agents soliciting purchases of securities under the
delayed delivery contracts accepted by us and/or the applicable Conseco Trust.
No dealer, salesman or other individual has been authorized to give any
information or to make any representations not contained in this prospectus, any
accompanying prospectus supplement or the documents incorporated or deemed
incorporated into this prospectus by reference. If given or made, the
information or representations must not be relied upon as having been authorized
by us or any underwriter, dealer or agent. This prospectus does not constitute
an offer to sell, or a solicitation of an offer to buy, any securities other
than the registered securities to which it relates, or an offer to sell or a
solicitation of an offer to buy those securities to which it relates, in any
jurisdiction where, or to any person to whom, it is unlawful to make the offer
or solicitation. Neither the delivery of this prospectus or any prospectus
supplement nor any sale made under this prospectus should, under any
circumstances,
42
create any implication that there has not been any change in the facts set
forth in this prospectus or in our affairs since the date of this prospectus.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
All statements, trend analyses and other information contained in this
prospectus, any prospectus supplement or any document incorporated into this
prospectus by reference relative to markets for the our products and trends in
our operations or financial results, as well as other statements including words
like "anticipate," "believe," "plan," "estimate," "expect," "intend," "should,"
"could," "goal," "target," "on track," "comfortable with," and other similar
expressions, constitute forward-looking statements under the Private Securities
Litigation Reform Act of 1995. These forward-looking statements are subject to
known and unknown risks, uncertainties and other factors which may cause actual
results to be materially different from those contemplated by the
forward-looking statements. These factors include, among other things:
o general economic conditions and other factors, including prevailing
interest rate levels, stock and credit market performance and
health care inflation, which may affect, among other things, our
ability to sell our products, make loans and access capital
resources and the costs associated therewith, the market value of
our investments, the lapse rate and profitability of our policies
and the level of defaults and prepayments of loans we make;
o our ability to achieve anticipated synergies and levels of
operational efficiencies;
o customer response to new products, distribution channels and
marketing initiatives;
o mortality, morbidity, usage of health care services and other
factors which may affect the profitability of our insurance
products;
o changes in the federal income tax laws and regulations which may
affect the relative tax advantages of some of our products;
o increasing competition in the sale of insurance and annuities and
in the finance business;
o regulatory changes or actions, including those relating to
regulation of financial services affecting, among other things,
bank sales and underwriting of insurance products, regulation of
the sale, underwriting and pricing of insurance products, and
health care regulation affecting our health insurance products;
o the availability and terms of future acquisitions;
o our ability and the ability of our vendors and other external
parties to achieve year 2000 readiness for significant systems and
operations on a timely basis; and
43
o the risk factors or uncertainties listed from time to time in any
prospectus supplement or any document incorporated into this
prospectus by reference.
LEGAL MATTERS
Unless otherwise indicated in the applicable prospectus supplement, the
legal validity of securities, other than the preferred securities, will be
passed upon for us by John J. Sabl, our Executive Vice President and General
Counsel. Mr. Sabl is a full-time employee and owns shares and holds options to
purchase shares of our common stock. Matters of Delaware law relating to the
validity of the preferred securities will be passed upon for the Conseco Trusts
by Richards, Layton & Finger, P.A., Wilmington, Delaware, special Delaware
counsel to the Conseco Trusts.
EXPERTS
The consolidated financial statements of Conseco at December 31, 1998
and 1997, and for each of the three years in the period ended December 31, 1998,
which are incorporated by reference in this prospectus, have been audited by
PricewaterhouseCoopers LLP, independent accountants, as set forth in their
report thereon, which as to the years 1997 and 1996, insofar as the financial
statements relate to Conseco Finance Corp. (formerly Green Tree Financial
Corporation), is based on the report of KPMG LLP, independent auditors. The
financial statements referred to above are incorporated herein by reference in
reliance upon these reports given upon the authority of the firms as experts in
accounting and auditing.
44
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Securities and Exchange Commission registration fee.............. $ 792,000
New York Stock Exchange listing fees............................. 100,000
Legal fees and expenses.......................................... 250,000
Accounting fees.................................................. 175,000
Printing expenses and engraving expense.......................... 325,000
Trustee's fees and expenses...................................... 75,000
Rating agencies' fees............................................ 700,000
Miscellaneous.................................................... 83,000
----------
Total...................................................... $2,500,000
==========
Except for the SEC registration fee, all of the foregoing are
estimates.
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS
The Indiana Business Corporation Law grants authorization to Indiana
corporations to indemnify officers and directors for their conduct if such
conduct was in good faith and was in the corporation's best interests or, in the
case of directors, was not opposed to such best interests, and permits the
purchase of insurance in this regard. In addition, the shareholders of a
corporation may approve the inclusion of other or additional indemnification
provisions in the articles of incorporation and by-laws.
The 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.
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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.
The Declaration of Trust for each of Conseco Financing Trust VIII, Conseco
Financing Trust IX, Conseco Financing Trust X and Conseco Financing Trust XII
(the "Trusts") provides that no Institutional Trustee or any of its Affiliates,
Delaware Trustee or any of its Affiliates, or any officer, director,
shareholder, member, partner, employee, representative, custodian, nominee or
agent of the Institutional Trustee or the Delaware Trustee (each a "Fiduciary
Indemnified Person"), and no Regular Trustee, Affiliate of any Regular Trustee,
or any officer, director, shareholder, member, partner, employee, representative
or agent of any Regular Trustee or any Affiliate thereof, or any employee or
agent of any of the Trusts or any of their Affiliates (each a "Company
Indemnified Person") shall be liable, responsible or accountable in damages or
otherwise to any of such Trusts or any officer, director, shareholder, partner,
member, representative, employee or agent of any such Trust or its Affiliates or
to any holder of Preferred Securities for any loss, damage or claim incurred by
reason of any act or omission performed or omitted by such Fiduciary Indemnified
Person or Company Indemnified Person in good faith on behalf of any of such
Trusts and in a manner such Fiduciary Indemnified Person or Company Indemnified
Person reasonably believed to be within the scope of the authority conferred on
such Fiduciary Indemnified Person or Company Indemnified Person by such
Declaration or by law, except that a Fiduciary Indemnified Person or Company
Indemnified Person shall be liable for any such loss, damage or claim incurred
by reason of such Fiduciary Indemnified Person's or Company Indemnified Person's
gross negligence or willful misconduct with respect to such acts or omissions.
The Declaration of Trust for each of such Trusts also provides that to the
full extent permitted by law, the Company shall indemnify any Company
Indemnified Person who was or is a party or is threatened to be made a party to
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of any such Trust) by reason of the fact that he is or was a Company
Indemnified Person against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by such
person in connection with such action, suit or proceeding if such person acted
in good faith and in a manner such person reasonably believed to be in or not
opposed to the best interests of any such Trust, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe such person's
conduct was unlawful. Each of the Declaration of Trusts also provides that to
the full extent permitted by law, the Company shall indemnify any Company
Indemnified Person who was or is a party or is threatened to be made a party to
any threatened, pending or completed action or suit by or in the right of any
such trust to procure a judgment in its favor by reason of the fact that such
person is or was a Company Indemnified Person against expenses (including
attorneys' fees) actually and reasonably incurred by such person in connection
with the defense or
II-2
settlement of such action or suit if such person acted in good faith and in a
manner such person reasonably believed to be in or not opposed to the best
interests of any such trust and except that no such indemnification shall be
made in respect of any claim, issue or matter as to which such Company
Indemnified Person shall have been adjudged to be liable to any such trust
unless and only to the extent that the Court of Chancery of Delaware or the
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnity for such
expenses which such Court of Chancery or such other court shall deem proper. The
Declaration of Trust for each such Trust further provides that expenses
(including attorneys' fees) incurred by a Company Indemnified Person in
defending a civil, criminal, administrative or investigative action, suit or
proceeding referred to in the immediately preceding two sentences shall be paid
by the Company in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of such Company
Indemnified Person to repay such amount if it shall ultimately be determined
that such person is not entitled to be indemnified by the Company as authorized
in any such Declaration.
The Declaration of Trust for each Trust also provides that the Company
shall indemnify each Fiduciary Indemnified Person against any loss, liability or
expense incurred without negligence or bad faith on its part, arising out of or
in connection with the acceptance or administration of the trust or trusts under
any such Trust, including the costs and expenses (including reasonable legal
fees and expenses) of defending itself against or investigating any claim or
liability in connection with the exercise or performance of any of its powers or
duties thereunder.
ITEM 16. EXHIBITS
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT
1.1 Form of Purchase Agreement -- Debt Securities is
incorporated herein by reference to Exhibit 1.1 to the
Registration Statement on Form S-3 of the Registrant (No.
33-53095).
1.2 Form of Purchase Agreement -- Equity is incorporated
herein by reference to Exhibit 1.2 to the Registration
Statement on Form S-3 of the Registrant (No. 33-53095).
3.1 Amended and Restated Articles of Incorporation of Conseco,
Inc. and Articles of Amendment thereto.
3.2 Amended and Restated Bylaws of Conseco, Inc.
II-3
4.1 Senior Indenture, dated as of November 13, 1997 by and
between Conseco, Inc. and Bank of New York as successor in
interest to LTCB Trust Company, as Trustee, pursuant to
which the Senior Debt Securities are to be issued.*
4.2 Subordinated Indenture, dated as of July 21, 1999, between
Conseco, Inc. and Harris Trust and Savings Bank, as Trustee,
pursuant to which the Subordinated Debentures are to be
issued. **
4.3 Form of Deposit Agreement will be filed as an exhibit
subsequently included or incorporated by reference herein.
4.4 Certificate of Trust of Conseco Financing Trust XII.
4.5 Declaration of Trust of Conseco Financing Trust XII.
4.6 Certificate of Trust of Conseco Financing Trust VIII. **
4.7 Declaration of Trust of Conseco Financing Trust VIII. **
4.8 Certificate of Trust of Conseco Financing Trust IX. **
4.9 Declaration of Trust of Conseco Financing Trust IX. **
4.10 Certificate of Trust of Conseco Financing Trust X. **
4.11 Declaration of Trust of Conseco Financing Trust X. **
4.12 Form of Amended and Restated Declaration of Trust is
incorporated by reference to Exhibit 4.10 to Amendment No. 1
to the Registration Statement on Form S-3 of Conseco (No.
333-14991).
4.13 Form of Preferred Securities Guarantee Agreement by Conseco,
Inc. is incorporated by reference to Exhibit 4.11 to
Amendment No. 1 to the Registration Statement on Form S-3 of
Conseco (No. 333-14991)
4.14 Form of Debt Security -- The form or forms of such Debt
Securities with respect to each particular offering will be
filed as an exhibit subsequently included or incorporated by
reference herein.
4.15 Form of Preferred Stock -- Any amendment to the Company's
Articles of Incorporation authorizing the creation of any
series of Preferred Stock or Depositary Shares representing
such shares of Preferred Stock and setting forth the rights,
preferences and designations thereof will be filed as an
exhibit subsequently included or incorporated by reference
herein.
4.16 Form of Warrant Agreement will be filed as an exhibit
subsequently included or incorporated by reference herein.
4.17 Form of Preferred Security is incorporated by reference
to Exhibit 4.15 to Amendment No. 1 to the Registration
Statement on Form S-3 of Conseco (No.333-14991).
4.18 Form of Supplemental Indenture is incorporated by reference
to Exhibit 4.16 to Amendment No. 1 to the Registration
Statement on Form S-3 of Conseco (No. 333-14991).
4.19 Form of __% Subordinated Deferrable Interest Debenture is
incorporated by reference to Exhibit 4.17 to Amendment No. 1
to the Registration Statement on Form S-3 of Conseco (No.
333-14991).
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5.1 Opinion of John J. Sabl.
5.2 Opinion of Richards, Layton & Finger, P.A.
12.1 Computation of Ratios of Earnings to Fixed Charges,
Preferred Dividends and Distributions on Company-obligated
Mandatorily Redeemable Preferred Securities of Subsidiary
Trusts
23.1 Consent of John J. Sabl (included in Exhibit 5.1 hereto)
23.2 Consent of PricewaterhouseCoopers LLP with respect to the
financial statements of Conseco, Inc.
23.3 Consent of Richards, Layton & Finger, P.A. (included in
Exhibit 5.2 hereto)
23.4 Consent of KPMG LLP with respect to the financial statements
of Conseco Finance Corp. (formerly Green Tree Financial
Corporation)
24.1 Powers of Attorney from 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, Robert S.
Nickoloff and David V. Harkins are included on the signature
pages of this Registration Statement.
25.1 Statement of Eligibility on Form T-1 under the Trust
Indenture Act of 1939, as amended, of Bank of New York, as
Trustee under the Senior Indenture.
25.2 Statement of Eligibility on Form T-1 under the Trust
Indenture Act of 1939, as amended, of Harris Trust and
Savings Bank, as Trustee under the Subordinated Indenture.
25.3 Statements of Eligibility on Form T-1 under the Trust
Indenture Act of 1939, as amended, of Harris Trust and
Savings Bank, as Trustee under the the Declaration of Trust
of Conseco Financing Trust VIII, the Declaration of Trust of
Conseco Financing Trust IX, the Declaration of Trust of
Conseco Financing Trust X and the Declaration of Trust of
Conseco Financing Trust XII.
25.4 Statements of Eligibility on Form T-1 under the Trust
Indenture Act of 1939, as amended, of Harris Trust and
Savings Bank, as Trustee of the Preferred Securities
Guarantees for the benefit of the holders of Preferred
Securities of Conseco Financing Trust VIII, Conseco
Financing Trust IX, Conseco Financing Trust X and Conseco
Financing Trust XII.
* Incorporated herein by reference to the corresponding exhibit to Amendment No.
1 to the Registration Statement on Form S-3 of Conseco (No. 33-53095).
** Incorporated herein by reference to the corresponding exhibit to the
Registration Statement on Form S-3 of Conseco (No. 333-83465).
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ITEM 17. UNDERTAKINGS
(a) The undersigned Registrants hereby undertake:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration
Statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) 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) if, in the aggregate,
the changes in volume and price represent no more than a
20% change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in
the effective Registration Statement.
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
Registration Statement or any material change to such
information in the Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) above do
not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed 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 Registrants hereby undertake that, for purposes of
determining any liability under the Securities Act of 1933, each
filing of the Registrant's annual report pursuant to Section 13(a)
or Section 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in the Registration Statement shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such
II-6
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 Registrants pursuant to the foregoing
provisions, or otherwise, each of the Registrants has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and
is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the Registrants of expenses incurred or paid by a director, officer
or controlling person of the Registrants in the successful defense
of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities
being registered, the Registrants will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit
to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Act and will be governed by the final adjudication of such issue.
(d) If the securities to be registered are to be offered at competitive
bidding, the undersigned Registrants hereby undertake: (1) to use
its best efforts to distribute prior to the opening of bids, to
prospective bidders, underwriters, and dealers, a reasonable number
of copies of a prospectus which at that time meets the requirements
of Section 10(a) of the Act, and relating to the securities offered
at competitive bidding, as contained in the Registration Statement,
together with any supplements thereto, and (2) to file an amendment
to the Registration Statement reflecting the results of bidding, the
terms of the reoffering and related matters to the extent required
by the applicable form, not later than the first use, authorized by
the issuer after the opening of bids, of a prospectus relating to
the securities offered at competitive bidding, unless no further
public offering of such securities by the issuer and no reoffering
of such securities by the purchasers is proposed to be made.
(e) The undersigned Registrants hereby undertake that (1) for purposes
of determining any liability under the Securities Act of 1933, the
information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained
in a form of prospectus filed by the Registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed
to be part of this Registration Statement as of the time it was
declared effective; and (2) for the purpose of determining any
liability under the Securities Act of 1933, each post-effective
amendment that contains a form of prospectus shall be deemed to be a
new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-7
(f) The undersigned Registrants hereby undertake to file, if necessary,
an application for the purpose of determining the eligibility of the
Trustee to act under subsection (a) of Section 310 of the Trust
Indenture Act of 1939, as amended, in accordance with the rules and
regulations prescribed by the Securities and Exchange Commission
under Section 305(b)(2) of such Act.
II-8
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Conseco, Inc.
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, there unto duly
authorized, in the City of Carmel, State of Indiana, on January 14, 2000.
CONSECO, INC.
By: /s/ Rollin M. Dick
------------------------------
Rollin M. Dick,
Executive Vice President and
Chief Financial Officer
POWER OF ATTORNEY
Each person whose signature to this Registration Statement appears below
hereby appoints John J. Sabl and Karl W. Kindig, and each of them, either of
whom may act without the joinder of the other, as his or her attorney-in-fact to
sign on his or her behalf individually and in the capacity stated below and to
file all amendments and post-effective amendments to this Registration
Statement, which amendments may make such changes in and additions to this
Registration Statement as such attorney-in-fact may deem necessary or
appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
II-9
SIGNATURE TITLE DATE
- --------- ----- ----
/s/ Stephen C. Hilbert Director, Chairman of the Board, January 14, 2000
- --------------------------- President and Chief Executive Officer
Stephen C. Hilbert (Principal Executive Officer
/s/ Rollin M. Dick Director, Executive Vice President January 14, 2000
- --------------------------- and Chief Financial Officer
Rollin M. Dick (Principal Financial Officer
/s/ James S. Adams Senior Vice President, Chief January 14, 2000
- --------------------------- Accounting Officer and Treasurer
James S. Adams (Principal Accounting Office)
/s/ Lawrence M. Coss Director January 14, 2000
- ---------------------------
Lawrence M. Coss
/s/ Ngaire E. Cuneo Director January 14, 2000
- ---------------------------
Ngaire E. Cuneo
/s/ David R. Decatur Director January 14, 2000
- ---------------------------
David R. Decatur
/s/ M. Phil Hathaway Director January 14, 2000
- ---------------------------
M. Phil Hathaway
/s/ Donald F. Gongaware Director January 14, 2000
- ---------------------------
Donald F. Gongaware
/s/ James D. Massey Director January 14, 2000
- ---------------------------
James D. Massey
/s/ Dennis E. Murray, Sr. Director January 14, 2000
- ---------------------------
Dennis E. Murray, Sr.
/s/ John M. Mutz Director January 14, 2000
- ---------------------------
John M. Mutz
/s/ Robert S. Nickoloff Director January 14, 2000
- ---------------------------
Robert S. Nickoloff
/s/ David V. Harkins Director January 14, 2000
- ---------------------------
David V. Harkins
II-10
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Conseco
Financing Trust VIII certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Carmel, State of Indiana, on January 14, 2000.
CONSECO FINANCING TRUST VIII
By: /s/ Stephen C. Hilbert
------------------------------
Stephen C. Hilbert, as Trustee
By: /s/ Rollin M. Dick
------------------------------
Rollin M. Dick, as Trustee
POWER OF ATTORNEY
Each person whose signature to this Registration Statement appears
below hereby appoints John J. Sabl and Karl W. Kindig, and each of them, either
of whom may act without the joinder of the other, as his or her attorney-in-fact
to sign on his or her behalf individually and in the capacity stated below and
to file all amendments and post-effective amendments to this Registration
Statement, which amendments may make such changes in and additions to this
Registration Statement as such attorney-in-fact may deem necessary or
appropriate.
By: /s/ Stephen C. Hilbert
------------------------------
Stephen C. Hilbert, as Trustee
By: /s/ Rollin M. Dick
------------------------------
Rollin M. Dick, as Trustee
II-11
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Conseco
Financing Trust IX certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Carmel, State of Indiana, on January 14, 2000.
CONSECO FINANCING TRUST IX
By: /s/ Stephen C. Hilbert
------------------------------
Stephen C. Hilbert, as Trustee
By: /s/ Rollin M. Dick
------------------------------
Rollin M. Dick, as Trustee
POWER OF ATTORNEY
Each person whose signature to this Registration Statement appears
below hereby appoints John J. Sabl and Karl W. Kindig, and each of them, either
of whom may act without the joinder of the other, as his or her attorney-in-fact
to sign on his or her behalf individually and in the capacity stated below and
to file all amendments and post-effective amendments to this Registration
Statement, which amendments may make such changes in and additions to this
Registration Statement as such attorney-in-fact may deem necessary or
appropriate.
By: /s/ Stephen C. Hilbert
------------------------------
Stephen C. Hilbert, as Trustee
By: /s/ Rollin M. Dick
------------------------------
Rollin M. Dick, as Trustee
II-12
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Conseco
Financing Trust X certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Carmel, State of Indiana, on January 14, 2000.
CONSECO FINANCING TRUST X
By: /s/ Stephen C. Hilbert
------------------------------
Stephen C. Hilbert, as Trustee
By: /s/ Rollin M. Dick
------------------------------
Rollin M. Dick, as Trustee
POWER OF ATTORNEY
Each person whose signature to this Registration Statement appears
below hereby appoints John J. Sabl and Karl W. Kindig, and each of them, either
of whom may act without the joinder of the other, as his or her attorney-in-fact
to sign on his or her behalf individually and in the capacity stated below and
to file all amendments and post-effective amendments to this Registration
Statement, which amendments may make such changes in and additions to this
Registration Statement as such attorney-in-fact may deem necessary or
appropriate.
By: /s/ Stephen C. Hilbert
------------------------------
Stephen C. Hilbert, as Trustee
By: /s/ Rollin M. Dick
------------------------------
Rollin M. Dick, as Trustee
II-13
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Conseco
Financing Trust XII certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Carmel, State of Indiana, on January 14, 2000.
CONSECO FINANCING TRUST XII
By: /s/ Stephen C. Hilbert
------------------------------
Stephen C. Hilbert, as Trustee
By: /s/ Rollin M. Dick
------------------------------
Rollin M. Dick, as Trustee
POWER OF ATTORNEY
Each person whose signature to this Registration Statement appears
below hereby appoints John J. Sabl and Karl W. Kindig, and each of them, either
of whom may act without the joinder of the other, as his or her attorney-in-fact
to sign on his or her behalf individually and in the capacity stated below and
to file all amendments and post-effective amendments to this Registration
Statement, which amendments may make such changes in and additions to this
Registration Statement as such attorney-in-fact may deem necessary or
appropriate.
By: /s/ Stephen C. Hilbert
------------------------------
Stephen C. Hilbert, as Trustee
By: /s/ Rollin M. Dick
------------------------------
Rollin M. Dick, as Trustee
II-14
EXHIBIT INDEX
TO REGISTRATION STATEMENT
ON FORM S-3
CONSECO, INC.
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT
-------------- ----------------------
3.1 Amended and Restated Articles of Incorporation of Conseco,
Inc. and Articles of Amendment thereto.
3.2 Amended and Restated Bylaws of Conseco, Inc.
4.4 Certificate of Trust of Conseco Financing Trust XII.
4.5 Declaration of Trust of Conseco Financing Trust XII.
5.1 Opinion of John J. Sabl
5.2 Opinion of Richards, Layton & Finger, P.A.
12.1 Computation of Ratios of Earnings to Fixed Charges,
Preferred Dividends and Distributions on Company-obligated
Mandatorily Redeemable Preferred Securities of Subsidiary
Trusts
23.1 Consent of John J. Sabl (included in Exhibit 5.1 hereto)
23.2 Consent of PricewaterhouseCoopers LLP with respect to the
financial statements of Conseco, Inc.
23.3 Consent of Richards, Layton & Finger, P.A. (included in
Exhibit 5.2 hereto)
23.4 Consent of KPMG LLP with respect to the financial statements
of Conseco Finance Corp. (formerly Green Tree Financial
Corporation)
25.1 Statement of Eligibility on Form T-1 under the Trust
Indenture Act of 1939, as amended, of Bank Of New York, as
Trustee under the Senior Indenture
25.2 Statement of Eligibility on Form T-1 under the Trust
Indenture Act of 1939, as amended, of Harris Trust and
Savings Bank, as Trustee under the Subordinated Indenture.
25.3 Statement of Eligibility on Form T-1 under the Trust
Indenture Act of 1939, as amended, of Harris Trust and
Savings Bank, as Trustee under the Declaration of Trust of
Conseco Financing Trust VIII, the Declaration of Trust of
Conseco Financing Trust IX, the Declaration of Trust of
Conseco Financing Trust X and the Declaration of Trust of
Conseco Financing Trust XII.
25.4 Statement of Eligibility on Form T-1 under the Trust
Indenture Act of 1939, as amended, of Harris Trust and
Savings Bank, as Trustee of the Preferred Securities
Guarantees for the benefit of the holders of Preferred
Securities of Conseco Financing Trust VIII, Conseco
Financing Trust IX, Conseco Financing Trust X and Conseco
Financing Trust XII.
II-15