Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation (the "Depository"), to the
Company or its agent for registration of transfer, exchange, or payment, and any
certificate issued is registered in the name of Cede & Co. or in such other name
as is requested by an authorized representative of the Depository (and any
payment is made to Cede & Co. or to such other entity as is requested by an
authorized representative of the Depository), ANY TRANSFER, PLEDGE, OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the
registered owner hereof, Cede & Co., has an interest herein.
REGISTERED REGISTERED
CONSECO, INC.
7 7/8% NOTE DUE DECEMBER 15, 2000
CUSIP 208464AP2
No. 1 US$ 150,000,000
CONSECO, INC., a corporation duly organized and existing under the laws
of Indiana (herein called the "Company," which term includes any successor
corporation under the Indenture hereinafter referred to), for value received,
hereby promises to pay to Cede & Co. or registered assigns, the principal sum of
One Hundred Fifty Million Dollars ($150,000,000) on December 15, 2000, and to
pay interest thereon from December 18, 1998 or from the most recent Interest
Payment Date (as hereinafter defined) to which interest has been paid or duly
provided for, as the case may be.
Interest will be payable on June 15 and December 15 of each year (each
an "Interest Payment Date"), at the rate of 7 7/8% per annum, commencing June
15, 1999 (except as provided below) until the principal hereof becomes due and
payable. Interest payments will be made in an amount equal to the amount accrued
from and including the immediately preceding Interest Payment Date in respect of
which interest has been paid or duly made available for payment (or from and
including the date of issue, if no interest has been paid or duly made available
for payment) to but excluding the applicable Interest Payment Date or Maturity.
The interest so payable and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in the Indenture, be paid to the Person
in whose name this Note (or one or more predecessor Notes) is registered at the
close of business on the Regular Record Date for such interest payment, which
shall be the June 1 or December 1 (whether or not a Business Day), as the case
may be, next preceding such Interest Payment Date. Except as otherwise provided
in the Indenture, any such interest not so punctually paid or duly provided for
will forthwith cease to be payable to the Holder on such Regular Record Date by
virtue of their having been such Holder and may either be paid to the Person in
whose name this Note (or one or more predecessor Notes) is registered at the
close of business on a Special
1
Record Date for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof is to be given to Holders of Notes not less than 10
calendar days prior to such Special Record Date, or be paid at any time in any
other lawful manner not inconsistent with the requirements of any securities
exchange on which Notes of this series may be listed, and upon such notice as
may be required by such exchange, all as more fully provided in said Indenture.
If any Interest Payment Date(s) or the date of Maturity falls on a day
that is not a Business Day, the required payment of principal, premium, if any,
and/or interest will be made on the next succeeding Business Day as if made on
the date such payment was due, and no interest will accrue on such payment for
the period from and after such Interest Payment Date or the date of Maturity, as
the case may be, to the date of such payment on the next succeeding Business
Day.
While this Note is represented by one or more global notes registered
in the name of the Depository or its nominee, the Company will cause payments of
principal of, premium, if any, and interest on this Note to be made to the
Depository or its nominee, as the case may be, by wire transfer to the extent,
in the funds and in the manner required by agreements with, or regulations or
procedures prescribed from time to time by, the Depository or its nominee, and
otherwise in accordance with such agreements, regulations and procedures. THIS
NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY OR BY A NOMINEE
OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY OR BY
THE DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR OF THE DEPOSITORY OR A NOMINEE
OF SUCH SUCCESSOR.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to herein, or its successor as Trustee, or its
Authenticating Agent, by manual signature of an authorized signatory, this Note
will not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
This Note is one of a duly authorized issue of securities of the
Company (the "Securities") issued under an indenture, dated as of November 13,
1997, as amended from time to time (the "Indenture"), between the Company and
LTCB Trust Company, as trustee (the "Trustee"), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Trustee and the Holders of the Notes and of the terms upon
which the Securities are, and are to be, authenticated and delivered. This Note
is one of the Securities designated on the face hereof limited in aggregate
principal amount to $150,000,000.
The Notes of this series will be redeemable as a whole or in part at
the option of the Company at any time, at a redemption price equal to the sum of
(a) the greater of (i) 100% of the principal amount of such Notes and (ii) the
sum of the present values of the remaining scheduled payments of principal and
interest thereon from the redemption date to the date of Maturity, computed by
discounting such payments, in each case, to the redemption date on a semiannual
basis
2
(assuming a 360-day year consisting of twelve 30-day months) at the Treasury
Rate, plus 25 basis points, plus (b) accrued and unpaid interest on the
principal amount thereof to the date of redemption.
"Treasury Rate" means, with respect to any redemption date, the rate
per annum equal to the semi-annual equivalent yield to maturity of the
Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for such redemption date.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term of the Notes to be redeemed that would be utilized, at the
time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of such Notes. "Independent Investment Banker" means one of the
Reference Treasury Dealers appointed by the Trustee after consultation with the
Company.
"Comparable Treasury Price" means, with respect to any redemption date,
(i) the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
Business Day preceding such redemption date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (ii) if such release (or any successor release) is not
published or does not contain such prices on such Business Day, the average of
the Reference Treasury Dealer Quotations actually obtained by the Trustee for
such redemption date. "Reference Treasury Dealer Quotations" means, with respect
to each Reference Treasury Dealer and any redemption date, the average, as
determined by the Trustee, of the bid and asked prices for the Comparable
Treasury Issue (expressed in each case as a percentage of its principal amount)
quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m.
(New York City time) on the third Business Day preceding such redemption date.
"Reference Treasury Dealer" means each of Merrill Lynch, Pierce, Fenner
& Smith Incorporated, Chase Securities Inc., Lehman Brothers Inc. and J.P.
Morgan Securities Inc. and their respective successors; provided, however, that
if any of the foregoing shall cease to be a primary U.S. Government securities
dealer in New York City (a "Primary Treasury Dealer"), the Company may
substitute therefor another Primary Treasury Dealer.
Notice of any redemption will be mailed at least 30 days but no more
than 60 days before the redemption date to each holder of Notes to be redeemed.
If, at the time notice of redemption is given, the redemption moneys are not
held by the Trustee, the redemption may be made subject to their receipt on or
before the date fixed for redemption and such notice shall be of no effect
unless such moneys are so received.
Upon payment of the redemption price, on and after the redemption date
interest will cease to accrue on this Note or portions hereof called for
redemption.
3
The Notes of this series contain the following covenants:
Limitations on Issuance or Disposition of Stock of Significant
Subsidiaries. The Company will not, nor will it permit any Significant
Subsidiary to, issue, sell or otherwise dispose of any shares of Capital Stock
(other than non-voting Preferred Stock) of any Significant Subsidiary, except
for (i) directors' qualifying shares; (ii) sales or other dispositions to the
Company or to one or more wholly owned Significant Subsidiaries; (iii) the sale
or other disposition of all or any part of the Capital Stock of any Significant
Subsidiary for consideration which is at least equal to the fair value of such
Capital Stock as determined by the Company's board of directors (acting in good
faith); or (iv) any issuance, sale, assignment, transfer or other disposition
made in compliance with an order of a court or regulatory authority of competent
jurisdiction, other than an order issued at the request of the Company or any
Significant Subsidiary.
Limitation on Liens. Except as provided below, neither the Company nor
any Significant Subsidiary may incur, issue, assume or guarantee any
Indebtedness secured by a Lien on any property or assets of the Company or any
Significant Subsidiary, or any shares of Capital Stock of any Significant
Subsidiary, without effectively providing that the Notes (together with, if the
Company shall so determine, any other Indebtedness which is not subordinated to
the Notes) shall be secured equally and ratably with (or prior to) such
Indebtedness, so long as such Indebtedness shall be so secured; provided,
however, that this covenant shall not apply to Indebtedness secured by (i) Liens
existing on December 15, 1998; (ii) Liens on property of, or on any shares of
stock of, any corporation existing at the time such corporation becomes a
Significant Subsidiary or merges into or consolidates with the Company or a
Significant Subsidiary; (iii) Liens on property or on shares of stock existing
at the time of acquisition thereof by the Company or any Significant Subsidiary;
(iv) Liens to secure the financing of the acquisition, construction or
improvement of property, or the acquisition of shares of stock by the Company or
any Significant Subsidiary, provided that such Liens are created not later than
one year after such acquisition or, in the case of property, no later than one
year after completion of construction or commencement of commercial operation,
whichever is later, are limited to the property acquired, constructed or
improved or the shares of stock acquired and do not secure indebtedness in
excess of the cost of such acquisition, construction or improvement; (v) Liens
in favor of the Company or any Subsidiary; (vi) Liens in favor of, or required
by, governmental authorities; and (vii) any extension, renewal or replacement as
a whole or in part, of any Lien referred to in the foregoing clauses (i) to (vi)
inclusive; provided, however, that (a) such extension, renewal or replacement
Lien shall be limited to all or a part of the same property or shares of stock
that secured the Lien extended, renewed or replaced and (b) the Indebtedness
secured by such Lien at such time is not so increased.
The restrictions in the immediately preceding paragraph do not apply
if, immediately after the incurrence, issuance, assumption or guarantee of any
Indebtedness secured by a Lien, the aggregate principal amount of such secured
Indebtedness, (other than Indebtedness secured by Liens described in clauses (i)
to (vii), inclusive, of the immediately preceding paragraph) at that time would
not exceed 10% of Consolidated Capitalization.
4
"Capital Lease Obligations" of a Person means any obligation that is
required to be classified and accounted for as a capital lease on the face of a
balance sheet of such person prepared in accordance with generally accepted
accounting principles; the amount of such obligations shall be the capitalized
amount thereof, determined in accordance with generally accepted accounting
principles; and the Stated Maturity thereof shall be the date of the last
payment of rent or any other amount due under such lease prior to the first date
upon which such lease may be terminated by the lessee without payment of a
penalty.
"Capital Stock" means any and all shares, interests, rights to
purchase, warrants, options, participations or other equivalents of or interest
in (however designated) corporate stock, including any Preferred Stock.
"Consolidated Capitalization" means the sum of the Company's
consolidated shareholders' equity, redeemable preferred stock and preferred
securities in any trust, partnership, corporation or other entity of which more
than 50% of the voting equity is owned directly or indirectly by the Company,
including, without limitation, the trust securities issued by Conseco Financing
Trust I, Conseco Financing Trust II, Conseco Financing Trust III, Conseco
Financing Trust IV, Conseco Financing Trust V and Conseco Financing Trust VI.
"Indebtedness" means (i) any liability of any Person (1) for borrowed
money, or under any reimbursement obligation relating to a letter of credit
(other than letters of credit obtained in the ordinary course of business), or
(2) evidenced by a bond, note, debenture or similar instrument (including a
purchase money obligation) given in connection with the acquisition of any
businesses, properties or assets of any kind or with services incurred in
connection with capital expenditures (other than accounts payable or other
indebtedness to trade creditors arising in the ordinary course of business), or
(3) for the payment of money relating to a Capital Lease Obligation; (ii) any
liability of others described in the preceding clause (i) that the Person has
guaranteed or that is otherwise its legal liability; and (iii) any amendment,
supplement, modification, deferral, renewal, extension or refunding of any
liability of types referred to in clauses (i) and (ii) above.
"Lien" means any lien, mortgage, pledge, security interest, charge or
encumbrance of any kind (including any conditional sale or other title retention
agreement and any lease in the nature thereof).
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock or limited liability company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
"Preferred Stock," as applied to the Capital Stock of any corporation,
means Capital Stock of any class or classes (however designated) which is
preferred as to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
5
"Significant Subsidiary" means any Subsidiary with net earnings which
constituted at least 20% of the Company's consolidated total net earnings, all
as determined as of the date of the Company's most recently prepared quarterly
financial statements for the 12-month period then ended.
"Stated Maturity," when used with respect to any security or any
installment of interest on any security, means the date specified in such
security as the fixed date on which the principal of such security or such
installment of interest, respectively, is finally due and payable, except as
otherwise provided in the case of Capital Lease Obligations.
"Subsidiary" means a corporation of which a majority of the Capital
Stock having voting power under ordinary circumstances to elect a majority of
the board of directors is owned directly or indirectly by the Company or by one
or more Subsidiaries, or by the Company and one or more Subsidiaries.
If any Event of Default with respect to Notes of this series will occur
and be continuing, the principal of the Notes of this series may be declared due
and payable in the manner and with the effect provided in the Indenture.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of not less than a majority in aggregate principal amount
of the outstanding Securities of each series to be affected. The Indenture also
contains provisions permitting the Holders of specified percentages in principal
amount of the outstanding Securities of each series, on behalf of the Holders of
all Securities of such series, to waive, with respect to the Securities of such
series, compliance by the Company with certain provisions of the Indenture and
certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the Holder of this Note will be conclusive and binding upon
such Holder and upon all future Holders of this Note and of any Note issued upon
the registration of transfer hereof or in exchange therefore or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Note.
Holders of Notes may not enforce their rights pursuant to the Indenture
or the Notes except as provided in the Indenture. No reference herein to the
Indenture and no provision of this Note or of the Indenture will alter or impair
the obligation of the Company, which is absolute and unconditional, to pay the
principal of, and premium, if any, and interest on this Note at the times,
places and rates, herein prescribed.
The Indenture contains provisions for defeasance at any time of (a) the
entire indebtedness of the Company on this Note and (b) certain restrictive
covenants and the related Events of Default upon compliance by the Company with
certain conditions specified therein, which provisions apply to this Note.
6
The Notes of this series are issuable only in global or certificated
registered form, without coupons, in denominations of $1,000 and integral
multiples thereof. As provided in the Indenture and subject to certain
limitations therein specified and to the limitations described below, if
applicable, Notes of this series are exchangeable for Notes of this series of
like aggregate principal amount of a different authorized denomination, as
requested by the Holder surrendering the same.
As provided in the Indenture and subject to certain limitations therein
specified and to the limitations described below, if applicable, the transfer of
this Note is registerable in the Security Register upon surrender of this Note
for registration of transfer at the office or agency of the Company maintained
for that purpose duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Company and the Security Registrar (which
will initially be the Trustee at its principal corporate trust office located in
the Borough of Manhattan, The City of New York) duly executed by the Holder
hereof or his attorney duly authorized in writing, and thereupon one or more new
Notes of this series with like terms and conditions, of authorized denominations
and for the same aggregate principal amount, will be issued to the designated
transferee or transferees.
This Note is exchangeable for certificated Notes only upon the terms
and conditions provided in the Indenture. Except as provided in the Indenture,
owners of beneficial interests in this Note will not be entitled to receive
physical delivery of Notes in certificated registered form and will not be
considered the Holders thereof for any purpose under the Indenture.
This Note is in the form of a Global Security as provided in the
Indenture. If at any time the Depository notifies the Company that it is
unwilling or unable to continue as Depository for this Note or if at any time
the Depository for this series shall no longer be eligible or in good standing
under the Securities Exchange Act of 1934, as amended, or other applicable
statute or regulation, the Company shall appoint a successor Depository with
respect to this Note. If a successor Depository for this Note is not appointed
by the Company within 90 days after the Company receives notice or becomes aware
of such ineligibility, the Company will execute, and the Trustee or its agent,
upon receipt of a Company Request for the authentication and delivery of
certificates representing Securities of this series in exchange for this
Security will authenticate and deliver, certificates representing securities of
this series of like tenor and terms in an aggregate principal amount equal to
the principal amount of this Note in exchange for this Note.
If specified by the Company pursuant to the Indenture with respect to
this Note, the Depository may surrender this Note in exchange in whole or in
part for certificates representing Securities of this series of like tenor and
terms in definitive form on such terms as are acceptable to the Company and the
Depository. Thereupon the Company shall execute, and the trustee or its agent
shall authenticate and deliver, without a service charge, (1) to each Holder
specified by the Security Registrar or the Depository a certificate or
certificates representing Securities of this series of like tenor and terms and
of any authorized denomination as requested by such person in an aggregate
principal amount equal to and in exchange for such Holder's beneficial interest
as specified by the security Registrar or the Depository in this Note; and (2)
to the Depository a new Global Security
7
of like tenor and terms and in an authorized denomination equal to the
difference, if any, between the principal amount of the surrendered Note and the
aggregate principal amount of certificates representing Notes delivered to
Holders thereof.
No service charge will be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this Note is registered as the owner hereof for all
purposes, whether or not this Note be overdue and notwithstanding any notation
of ownership or other writing hereon, and none of the Company, the Trustee or
any such agent will be affected by notice to the contrary.
The Indenture and the Notes will be governed by and construed in
accordance with the laws of the State of New York.
All terms used in this Note which are defined in the Indenture will
have the meanings assigned to them in the Indenture unless otherwise defined
herein; and all references in the Indenture to "Security" or "Securities" will
be deemed to include this Note.
8
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Date: December 18, 1998 CONSECO, INC.
By /s/ STEPHEN C. HILBERT
---------------------------------
Stephen C. Hilbert, President
[SEAL]
Attest:
By /s/ JOHN J. SABL
---------------------------------
John J. Sabl, Secretary
This is one of the Securities of the series designated therein referred
to in the within-mentioned Indenture.
Dated: December 18, 1998 LTCB TRUST COMPANY,
as Trustee
By:/s/ BARBARA BEVELAQUA
---------------------------------
Authorized Officer
9
-----------------
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and not
as tenants in common
UNIF GIFT MIN ACT - ..................Custodian................
(Cust) (Minor)
Under Uniform Gifts to Minors Act
....................................
(State)
Additional abbreviations may also be used though not in the above list.
------------------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------------------------------------------------------
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE
- -------------------------------------
the within Security and all rights thereunder, hereby irrevocably constituting
and appointing __________________ attorney to transfer said Security on the
books of the Company, with full power of substitution in the premises.
Date:
----------------------
Signature
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE WITHIN INSTRUMENT IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.
THE SIGNATURE(S) MUST BE GUARANTEED BY AN "ELIGIBLE GUARANTOR
INSTITUTION" THAT IS A MEMBER OR PARTICIPANT IN A "SIGNATURE GUARANTEE PROGRAM"
(E.G., THE SECURITIES TRANSFER AGENTS MEDALLION PROGRAM, THE STOCK EXCHANGE
MEDALLION PROGRAM OR THE NEW YORK STOCK EXCHANGE, INC. MEDALLION SIGNATURE
PROGRAM).
10