$300,000,000
CONSECO FINANCING TRUST VII
(a Delaware Business Trust)
9.44% Preferred Securities
(Liquidation Amount $25 per Security)
Underwriting Agreement
August 26, 1999
$300,000,000
CONSECO FINANCING TRUST VII
(a Delaware Business Trust)
9.44% Trust Originated Preferred Securities
(Liquidation Amount $25 per Preferred Security)
Underwriting Agreement
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
A.G. EDWARDS & SONS, INC.
LEHMAN BROTHERS INC.
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
CIBC WORLD MARKETS CORP.
CREDIT SUISSE FIRST BOSTON CORPORATION
as Representatives of the several Underwriters
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Merrill Lynch World Headquarters
World Financial Center
North Tower
New York, New York 10281
Ladies and Gentlemen:
Conseco Financing Trust VII (the "Trust"), a statutory business trust
organized under the Business Trust Act (the "Delaware Act") of the State of
Delaware (Chapter 38, Title 12, of the Delaware Code, 12 Del. C. Sections 3801
et seq.) and Conseco, Inc., an Indiana corporation (the "Company" and, together
with the Trust, the "Offerors"), confirm their agreement with the several
underwriters named in Schedule A hereto (collectively, the "Underwriters," which
term shall also include any underwriter substituted as hereinafter provided in
Section 10 hereof) with respect to the issue and sale by the Trust and the
purchase by the Underwriters, acting severally and not jointly, of the
respective number of 9.44% preferred securities (liquidation amount $25 per
preferred security) of the Trust (the "Preferred Securities") set forth in said
Schedule A (the "Initial Preferred Securities"), to be issued pursuant to an
Amended and Restated Declaration of Trust, to be dated as of August 31, 1999
(the "Declaration"), among the Company, as Sponsor, State Street Bank and Trust
Company, as Property Trustee (the "Property Trustee"), First Union Bank of
Delaware, as Delaware Trustee (the "Delaware Trustee"), Stephen C. Hilbert and
Rollin M. Dick, as regular trustees (the "Regular Trustees" and, together with
the Property Trustee and the Delaware Trustee, the "Trustees"), and the holders
from time to time of undivided beneficial interests in the assets of the Trust.
The Company and the Trust also propose to grant to the Underwriters an option to
purchase up
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to 1,800,000 additional Preferred Securities (the "Optional Securities") as
described in Section 2(b) hereof. The Preferred Securities will be guaranteed by
the Company with respect to distributions and payments upon liquidation,
redemption or otherwise (the "Preferred Securities Guarantee") pursuant to the
Preferred Securities Guarantee Agreement (the "Preferred Securities Guarantee
Agreement"), to be dated as of August 31, 1999, between the Company and State
Street Bank and Trust Company as trustee (the "Guarantee"), and in certain
circumstances described in the Prospectus, the Trust will distribute
Subordinated Debentures (as defined herein) to holders of Preferred Securities.
The 12,000,000 Initial Preferred Securities, and all or any part of the
1,800,000 Optional Securities, together with the related Preferred Securities
Guarantee and the Subordinated Debentures, are collectively referred to herein
as the "Securities." Capitalized terms used herein without definition shall be
used as defined in the Prospectus (defined below).
The Company and the Trust, Conseco Financing Trust V and Conseco
Financing Trust VI (collectively, the "Conseco Trusts") have filed with the
Securities and Exchange Commission (the "Commission") a registration statement
on Form S-3 (No. 333-56611) covering the registration of securities of the
Company and the Conseco Trusts, including the Securities, under the Securities
Act of 1933, as amended (the "1933 Act"), including the related preliminary
prospectus or prospectuses, and the offering thereof from time to time in
accordance with Rule 415 of the rules and regulations of the Commission under
the 1933 Act (the "1933 Act Regulations") and the Company has filed such
post-effective amendments thereto as may be required prior to the execution of
this Agreement. Such registration statement, as amended, has been declared
effective by the Commission and the Declaration, the Preferred Securities
Guarantee Agreement and the Indenture (as defined herein) have been duly
qualified under the Trust Indenture Act of 1939, as amended (the "1939 Act").
Such registration statement No. 333- 56611, as so amended, including the
exhibits and schedules thereto, if any, and the information, if any, deemed to
be a part thereof pursuant to Rule 430A(b) of the 1933 Act Regulations (the
"Rule 430A Information") or Rule 434(d) of the 1933 Act Regulations (the "Rule
434 Information"), is referred to herein as the "Registration Statement"; and
the final prospectus and the prospectus supplement relating to the offering of
the Securities, in the form first furnished to the Underwriters by the Company
for use in connection with the offering of the Securities, are collectively
referred to herein as the "Prospectus"; provided, however, that all references
to the "Registration Statement" and the "Prospectus" shall be deemed to include
all documents incorporated therein by reference pursuant to the Securities
Exchange Act of 1934, as amended (the "1934 Act"), prior to the execution of
this Agreement; provided, further, that if the Offerors file a registration
statement with the Commission pursuant to Section 462(b) of the 1933 Act
Regulations (the "Rule 462(b) Registration Statement"), then after such filing,
all references to the "Registration Statement" shall be deemed to include the
Rule 462(b) Registration Statement; and provided, further, that if the Offerors
elect to rely upon Rule 434 of the 1933 Act Regulations, then all references to
"Prospectus" shall be deemed to include the final or preliminary prospectus and
the applicable term sheet or abbreviated term sheet (the "Term Sheet"), as the
case may be, in the form first furnished to the Underwriters by the Company in
reliance upon Rule 434 of the 1933 Act Regulations, and all references in this
Agreement to the date of the Prospectus shall mean the date of the Term Sheet. A
"preliminary prospectus" shall be deemed to refer to any prospectus used before
the applicable registration statement became effective and any prospectus that
omitted, as applicable, the Rule 430A Information, the Rule 434 Information or
other information to be included upon pricing in a form of prospectus filed with
the Commission pursuant to Rule 424(b) of the 1933 Act Regulations, that was
used after such effectiveness and prior to the execution and delivery of the
applicable underwriting agreement. For purposes of this Agreement, all
references to the Registration Statement, any preliminary prospectus, the
Prospectus or any Term Sheet or any amendment or supplement to any of the
foregoing shall be deemed to include the copy
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thereof filed with the Commission pursuant to its Electronic Data Gathering,
Analysis and Retrieval system ("EDGAR").
All references in this Agreement to financial statements and schedules
and other information which is "contained," "included" or "stated" in the
Registration Statement, any preliminary prospectus or the Prospectus (or other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is incorporated
by reference in the Registration Statement, any preliminary prospectus or the
Prospectus, as the case may be; and all references in this Agreement to
amendments or supplements to the Registration Statement, any preliminary
prospectus or the Prospectus shall be deemed to mean and include the filing of
any document under the 1934 Act which is incorporated by reference in the
Registration Statement, such preliminary prospectus or the Prospectus, as the
case may be.
The Offerors understand that the Underwriters propose to make a public
offering of the Securities as soon as the Underwriters deem advisable after this
Agreement has been executed and delivered and the Declaration, the Indenture (as
defined herein), and the Preferred Securities Guarantee Agreement have been
qualified under the 1939 Act. The entire proceeds from the sale of the Preferred
Securities will be combined with the entire proceeds from the sale by the Trust
to the Company of its common securities (the "Common Securities," and together
with the Preferred Securities, the "Trust Securities") and will be used by the
Trust to purchase 9.44% subordinated deferrable interest debentures (the
"Subordinated Debentures") issued by the Company. The Common Securities will be
guaranteed by the Company, to the extent set forth in the Prospectus, with
respect to distributions and payments upon liquidation and redemption (the
"Common Securities Guarantee" and together with the Preferred Securities
Guarantee, the "Guarantees") pursuant to the Common Securities Guarantee
Agreement (the "Common Securities Guarantee Agreement" and, together with the
Preferred Securities Guarantee Agreement, the "Guarantee Agreements"), to be
dated as of August 31, 1999, between the Company and the Guarantee Trustee, as
Trustee. The Preferred Securities and the Common Securities will be issued
pursuant to the Declaration. The Subordinated Debentures will be issued pursuant
to an indenture, dated as of November 14, 1996, between the Company and State
Street Bank and Trust Company, successor to Fleet National Bank, as trustee (the
"Debt Trustee"), as supplemented by the Sixth Supplemental Indenture to be dated
as of August 31, 1999 (the "Supplemental Indenture," and together with any other
amendments or supplements thereto, the "Indenture"), between the Company and the
Debt Trustee.
SECTION 1. Representations and Warranties.
(a) The Offerors jointly and severally represent and warrant to each
Underwriter as of the date hereof (such date being hereinafter referred to as
the "Representation Date") that:
(i) No stop order suspending the effectiveness of the
Registration Statement has been issued and no proceeding for that purpose has
been initiated or, to the knowledge and information of the Offerors, threatened
by the Commission.
(ii) The Company and the Conseco Trusts meet, and at the
respective times of the commencement and consummation of the offering of the
Securities will meet, the requirements for the use of Form S-3 under the 1933
Act. Each of the Registration Statement and any Rule 462(b) Registration
Statement has become effective under the 1933 Act. At the respective times the
Registration Statement, any Rule 462(b) Registration Statement and any
post-effective amendments thereto became effective and at the Representation
Date and at the Closing Time (as defined herein), the Registration Statement,
any
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Rule 462 Registration Statement and any amendments and supplements thereto
complied and will comply in all material respects with the requirements of the
1933 Act and the 1933 Act Regulations and the 1939 Act and the rules and
regulations of the Commission under the 1939 Act (the "1939 Act Regulations")
and did not and will not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading. At the date of the Prospectus and at the
Closing Time, the Prospectus and any amendments and supplements thereto did not
and will not include an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. If the Offerors
elect to rely upon Rule 434 of the 1933 Act Regulations, the Offerors will
comply with the requirements of Rule 434. Notwithstanding the foregoing, the
representations and warranties in this subsection shall not apply to (A)
statements in or omissions from the Registration Statement or the Prospectus
made in reliance upon and in conformity with information furnished to the
Offerors in writing by the Underwriters expressly for use in the Registration
Statement or the Prospectus or (B) the part of the Registration Statement which
shall constitute the Statement of Eligibility (Form T-1) under the 1939 Act.
Each preliminary prospectus and prospectus filed as part of
the Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the 1933 Act, complied when so
filed in all material respects with the 1933 Act Regulations and, if applicable,
each preliminary prospectus and the Prospectus delivered to the Underwriters for
use in connection with the offering of Securities will, at the time of such
delivery, be identical to the electronically transmitted copies thereof filed
with the Commission pursuant to EDGAR, except to the extent permitted by
Regulation S-T.
(iii) The documents incorporated or deemed to be incorporated
by reference in the Registration Statement or the Prospectus, at the time they
were or hereafter are filed or last amended, as the case may be, with the
Commission, complied and will comply in all material respects with the
requirements of the 1934 Act, and the rules and regulations of the Commission
thereunder (the "1934 Act Regulations"), and at the time of filing or as of the
time of any subsequent amendment, did not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were or are made, not misleading; and any additional documents
deemed to be incorporated by reference in the Registration Statement or the
Prospectus will, if and when such documents are filed with the Commission, or
when amended, as appropriate, comply in all material respects with the
requirements of the 1934 Act and the 1934 Act Regulations and will not contain
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not misleading;
provided, however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with information
furnished in writing to the Company by an Underwriter through Merrill Lynch &
Co. ("Merrill Lynch") expressly for use in the Registration Statement or the
Prospectus.
(iv) PricewaterhouseCoopers LLP and KPMG Peat Marwick LLP,
which certified the financial statements and supporting schedules of the Company
and Green Tree Financial Corporation ("Green Tree"), respectively, included or
incorporated by reference in the Registration Statement and the Prospectus, each
are independent public accountants as required by the 1933 Act and the 1933 Act
Regulations with respect to the Company and Green Tree, respectively.
(v) The financial statements of the Company and of Green Tree
included or incorporated by reference in the Registration Statement and the
Prospectus, together with the related schedules and notes, present fairly the
financial position of the Company and its consolidated subsidiaries and Green
Tree
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and its consolidated subsidiaries, respectively, as of the dates indicated and
the results of their respective operations for the periods specified. Except as
otherwise stated therein such financial statements have been prepared in
conformity with generally accepted accounting principles applied on a consistent
basis throughout the periods involved. The supporting schedules, if any,
included or incorporated by reference in the Registration Statement and the
Prospectus present fairly the information required to be stated therein. The
ratio of earnings to fixed charges (and the ratio of earnings to fixed charges
and preferred stock dividends) included in the Prospectus have been calculated
in compliance with Item 503(d) of Regulation S-K of the Commission. Any selected
financial information and summary financial data included in the Prospectus
present fairly the information shown therein and have been compiled on a basis
consistent with that of the audited financial statements included in the
Registration Statement and the Prospectus. Any pro forma financial statements
and the related notes thereto included in the Registration Statement and the
Prospectus present fairly the information shown therein, have been prepared in
accordance with the Commission's rules and guidelines with respect to pro forma
financial statements and have been properly compiled on the bases described
therein, and the assumptions used in the preparation thereof are reasonable and
the adjustments used therein are appropriate to give effect to the transactions
and circumstances referred to therein.
(vi) The statutory financial statements of each of the
Company's insurance subsidiaries, from which certain ratios and other
statistical data contained in the Registration Statement have been derived, have
for each relevant period been prepared in accordance with accounting practices
prescribed or permitted by the National Association of Insurance Commissioners,
and with respect to each insurance subsidiary, the appropriate Insurance
Department of the state of domicile of such insurance subsidiary, and such
accounting practices have been applied on a consistent basis throughout the
periods involved.
(vii) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, and except as otherwise
stated therein, (A) there has been no material adverse change and no development
which could reasonably be expected to result in a material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Trust or of the Company and its subsidiaries
considered as one enterprise, whether or not arising in the ordinary course of
business (a "Material Adverse Effect"), (B) there have been no transactions
entered into by the Company or any of its subsidiaries, other than those arising
in the ordinary course of business, which are material with respect to the
Company and its subsidiaries, considered as one enterprise, and (C) except for
regular dividends on the Common Stock or Preferred Stock of the Company in
amounts per share that are consistent with past practice or the applicable
charter document or supplement thereto, respectively, there has been no dividend
or distribution of any kind declared, paid or made by the Company on any class
of its capital stock.
(viii) The Company has been incorporated, is validly existing
as a corporation and its status is active under the laws of the State of
Indiana, with corporate power and authority to own, lease and operate its
properties and to conduct its business as presently conducted and as described
in the Prospectus and to enter into and perform its obligations under, or as
contemplated under, this Agreement, the Guarantee Agreements, the Subordinated
Debentures, and the Indenture. The Company is qualified as a foreign corporation
to transact business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure to so qualify or
be in good standing would not have a Material Adverse Effect.
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(ix) Each "significant subsidiary" of the Company within the
meaning of Rule 1-02 of Regulation S-X promulgated under the 1933 Act is listed
on Schedule B hereto, and each such subsidiary, and each of the other
subsidiaries listed for purposes of this Agreement on Schedule B hereto (each of
such listed subsidiaries listed on Schedule B, for purposes of this Agreement, a
"Significant Subsidiary") has been incorporated and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own, lease and operate
its properties and to conduct its business as presently conducted and as
described in the Prospectus, and is qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure to so qualify or
be in good standing would not have a Material Adverse Effect. Except as
otherwise stated in the Registration Statement and the Prospectus, all of the
issued and outstanding shares of capital stock of each Significant Subsidiary of
the Company have been authorized and validly issued, are fully paid and
non-assessable and all such shares are owned by the Company, directly or through
its subsidiaries, free and clear of any material security interest, mortgage,
pledge, lien, encumbrance, claim or equity.
(x) The authorized, issued and outstanding capital stock of
the Company is as set forth in the Prospectus; since the date indicated in the
Prospectus there has been no change in the consolidated capitalization of the
Company and its subsidiaries (other than changes in outstanding Common Stock of
the Company resulting from (A) incentive compensation plan, employee or agent
benefit plan or dividend reinvestment and stock purchase plan transactions
including, without limitation, the purchase of shares of Common Stock of the
Company or cancellation of options in connection therewith, or (B) the exercise
of conversion or exchange rights with respect to securities outstanding as of
the date of the Prospectus); and all of the issued and outstanding capital stock
of the Company has been authorized and validly issued, is fully paid and
non-assessable and conforms to the descriptions thereof contained in the
Prospectus.
(xi) The Trust has been duly created and is validly existing
in good standing as a business trust under the Delaware Act with the power and
authority to own property and to conduct its business as described in the
Registration Statement and Prospectus and to enter into and perform its
obligations under this Agreement, the Preferred Securities, the Common
Securities and the Declaration; the Trust is duly qualified to transact business
as a foreign company and is in good standing in each jurisdiction in which such
qualification is necessary, except where the failure to so qualify or be in good
standing would not have a material adverse effect on the Trust; the Trust is not
a party to or otherwise bound by any agreement other than those described in the
Prospectus; the Trust is and will, under current law, be classified for United
States federal income tax purposes as a grantor trust and not as an association
taxable as a corporation.
(xii) The Common Securities have been duly authorized by the
Declaration and, when issued and delivered by the Trust to the Company against
payment therefor as described in the Registration Statement and Prospectus, will
be validly issued and will represent undivided beneficial interests in the
assets of the Trust and will conform in all material respects to the description
thereof contained in the Prospectus; the issuance of the Common Securities is
not subject to preemptive or other similar rights; and at the Closing Time and
each Date of Delivery all of the issued and outstanding Common Securities of the
Trust will be directly owned by the Company free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equitable right.
(xiii) The Declaration has been duly authorized by the Company
and qualified under the 1939 Act and, at the Closing Time, will have been duly
executed and delivered by the Company and the
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Trustees, and assuming due authorization, execution and delivery of the
Declaration by the Property Trustee and the Delaware Trustee, the Declaration
will, at the Closing Time and each Date of Delivery, be a valid and binding
obligation of the Company and the Regular Trustees, enforceable against the
Company and the Regular Trustees in accordance with its terms, except to the
extent that enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally or by general principles of equity (regardless of whether enforcement
is considered in a proceeding at law or in equity) (the "Bankruptcy Exceptions")
and will conform in all material respects to the description thereof contained
in the Prospectus.
(xiv) Each of the Guarantee Agreements has been duly
authorized by the Company, and, in the case of the Preferred Securities
Guarantee Agreement, qualified under the 1939 Act and, when validly executed and
delivered by the Company, and, in the case of the Preferred Securities Guarantee
Agreement, assuming due authorization, execution and delivery of the Preferred
Securities Guarantee by the Guarantee Trustee, will constitute a valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms except to the extent that enforcement thereof may be limited by
the Bankruptcy Exceptions, and each of the Guarantee Agreements will conform in
all material respects to the description thereof contained in the Prospectus.
(xv) The Preferred Securities have been duly authorized for
issuance and sale to the Underwriters and, when issued and delivered against
payment therefor as provided herein, will be validly issued and fully paid and
non-assessable undivided beneficial interests in the assets of the Trust and
will conform in all material respects to the description thereof contained in
the Prospectus; the issuance of the Preferred Securities is not subject to
preemptive or other similar rights.
(xvi) The Indenture has been authorized by the Company and
qualified under the 1939 Act and, at the Closing Time, has been executed and
delivered and constitutes a legal, valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms except to the
extent that enforcement thereof may be limited by the Bankruptcy Exceptions; the
Indenture conforms in all material respects to the description thereof contained
in the Prospectus.
(xvii) The Subordinated Debentures have been authorized by the
Company and, at the Closing Time and each Date of Delivery, will have been
executed by the Company and, when authenticated in the manner provided for in
the Indenture and delivered against payment therefor as described in the
Prospectus, will constitute legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms except to the
extent that enforcement thereof may be limited by the Bankruptcy Exceptions, and
will be in the form contemplated by, and entitled to the benefits of, the
Indenture and will conform in all material respects to the description thereof
contained in the Prospectus.
(xviii) Each of the Regular Trustees of the Trust is an
officer of the Company and has been duly authorized by the Company to execute
and deliver the Declaration.
(xix) Neither the Company nor any of its Significant
Subsidiaries is in violation of its articles of incorporation or by-laws. None
of the Company or any of its Significant Subsidiaries is in default in the
performance or observance of any obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, note, lease, loan or credit
agreement or any other agreement or instrument (the "Agreements and
Instruments") to which the Company or any of its Significant Subsidiaries is a
party or by which any of them may be bound, or to which any of the property or
assets of
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the Company or any Significant Subsidiary is subject, or in violation of any
applicable law, rule or regulation or any judgment, order or decree of any
government, governmental instrumentality or court, domestic or foreign, having
jurisdiction over the Company or any of its Significant Subsidiaries or any of
their respective properties or assets, which violation or default would, singly
or in the aggregate, have a Material Adverse Effect; the Trust is not in
violation of the Declaration or its certificate of trust filed with the State of
Delaware on May 23, 1997 (the "Certificate of Trust").
(xx) The offer of the Securities as contemplated herein and in
the Prospectus; the execution, delivery and performance of this Agreement, the
Declaration, the Preferred Securities, the Common Securities, the Indenture, the
Subordinated Debentures, the Guarantee Agreements and the Guarantees and the
consummation of the transactions contemplated herein, therein and in the
Registration Statement (including the issuance and sale of the Securities and
the use of proceeds from the sale of the Securities as described in the
Prospectus under the caption "Use of Proceeds") and compliance by the Offerors
with their respective obligations hereunder and thereunder do not and will not,
whether with or without the giving of notice or passage of time or both,
conflict with or constitute a breach of any of the terms or provisions of, or
constitute a default or Repayment Event (as defined below) under, or result in
the creation or imposition of any lien, charge or encumbrance upon any property
or assets of the Trust, the Company or any subsidiary pursuant to, the
Agreements and Instruments (except for such conflicts, breaches or defaults or
liens, charges or encumbrances that would not result in a Material Adverse
Effect), nor will such action result in any violation of any applicable law,
statute, rule, regulation, judgment, order, writ or decree of any government,
government instrumentality or court, domestic or foreign, having jurisdiction
over the Trust, the Company or any of its Significant Subsidiaries, or any of
their assets, properties or operations (except for such violations that would
not result in a Material Adverse Effect), nor will such action result in any
violation of the provisions of the Certificate of Trust or the charter or
by-laws of the Company or any Significant Subsidiary. As used herein, a
"Repayment Event" means any event or condition which gives the holder of any
note, debenture or other evidence of indebtedness of the Trust, the Company or
any Significant Subsidiary (or any person acting on such holder's behalf) the
right to require the repurchase, redemption or repayment of all or a portion of
such indebtedness by the Trust, the Company or any Significant Subsidiary.
(xxi) There is no action, suit, proceeding, inquiry or
investigation before or by any court or governmental agency or body, domestic or
foreign (including, without limitation, any proceeding to revoke or deny renewal
of any Insurance Licenses (as defined below)), now pending or to the knowledge
of the Company threatened against or affecting the Company or any of its
Significant Subsidiaries which is required to be disclosed in the Registration
Statement and the Prospectus (other than as stated therein), or which might
reasonably be expected to result in a Material Adverse Effect, or which might be
reasonably expected to materially and adversely affect the consummation of this
Agreement, the Declaration, the Preferred Securities, the Common Securities, the
Indenture, the Subordinated Debentures, the Guarantee Agreements or the
Guarantees or the consummation of the transactions contemplated herein, therein
or in the Registration Statement. The aggregate of all pending legal or
governmental proceedings to which the Company or any subsidiary thereof is a
party or of which any of their respective properties or operations is the
subject which are not described in the Registration Statement or the Prospectus,
including ordinary routine litigation incidental to the business or the Company
or any of its subsidiaries, could not reasonably be expected to result in a
Material Adverse Effect; and there are no contracts or documents of the Company
or any of its subsidiaries which are required to be filed as exhibits to the
Registration Statement, or to be incorporated by reference therein, by the 1933
Act, the 1933 Act Regulations, the 1934 Act of the 1934 Act Regulations, which
have not been so filed or incorporated by reference.
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(xxii) The Company and its subsidiaries possess such permits,
licenses, approvals, consents and other authorizations issued by the appropriate
federal, state, local or foreign regulatory agencies or bodies (including,
without limitation, insurance licenses from the insurance departments of the
various states where the subsidiaries write insurance business (the "Insurance
Licences")) that are material to the Company and its subsidiaries taken as a
whole and are necessary to conduct the business now operated by them; the
Company and its subsidiaries are in compliance with the terms and conditions of
all such Insurance Licenses, except where the failure so to comply would not,
singly or in the aggregate, result in a Material Adverse Effect; all of the
Insurance Licenses are valid and in full force and effect, except where the
invalidity of such Insurance Licenses or the failure of such Insurance Licences
to be in full force and effect would not result in a Material Adverse Effect;
and neither the Company nor any of its subsidiaries has received any notice of
proceedings relating to the revocation or modification of any such Insurance
Licenses which, singly or in the aggregate, may reasonably be expected to result
in a Material Adverse Effect.
(xxiii) No authorization, approval, consent, order,
registration or qualification of or with any court or governmental authority or
agency (including, without limitation, any Insurance regulatory agency or body)
is required in connection with the offering, issuance and sale of the Common
Securities or the offering, issuance and sale of the Preferred Securities, the
Subordinated Debentures or the Guarantees hereunder, or the consummation by the
Offerors of any other transactions contemplated hereby, except such as have been
obtained and made under the federal securities laws or state Insurance laws and
such as may be required under state or foreign securities or Blue Sky laws.
(xxiv) This Agreement has been duly authorized, executed and
delivered by each of the Offerors.
(xxv) Neither the Trust, nor the Company nor any of its
Significant Subsidiaries is, and upon the issuance and sale of the Securities as
herein contemplated and the application of the net proceeds therefrom as
described in the Prospectus will be, an "investment company" or an entity
"controlled" by an "investment company" as such terms are defined in the
Investment Company Act of 1940, as amended (the "1940 Act").
(xxvi) None of the Trust, the Company, its Significant
Subsidiaries or any of their respective directors, officers or controlling
persons, has taken, directly or indirectly, any action resulting in a violation
of Regulation M under the 1934 Act, or designed to cause or result in, or that
has constituted or that reasonably might be expected to constitute, the
stabilization or manipulation of the price of any security of the Trust or the
Company to facilitate the sale or resale of the Securities or the Common Stock
of the Company, in each case in violation of applicable law.
(xxvii) No "forward looking statement" (as defined in Rule 175
under the 1933 Act) contained in the Registration Statement, any preliminary
prospectus or the Prospectus was made or reaffirmed without a reasonable basis
or was disclosed other than in good faith.
(b) Any certificate signed by any officer of the Company or a
Trustee of the Trust and delivered to the Underwriters or to counsel for the
Underwriters shall be deemed a representation and warranty by the Company or the
Trust, as the case may be, to the Underwriters as to the matters covered
thereby.
- 9 -
SECTION 2. Sale and Delivery to Underwriters; Closing.
(a) On the basis of the representations and warranties herein contained
and subject to the terms and conditions herein set forth, the Trust agrees to
sell to each Underwriter, and each Underwriter severally and not jointly agrees
to purchase from the Trust, at the price per security of $25.00, the number of
Initial Preferred Securities set forth in Schedule A hereto opposite the name of
such Underwriter, plus any additional number of Preferred Securities which such
Underwriter may become obligated to purchase pursuant to the provisions of
Section 10 hereof. The compensation to be paid by the Company to the
Underwriters in respect of its commitments hereunder shall be an amount in same
day funds of $0.7875 per Preferred Security.
(b) In addition, on the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, the
Offerors hereby grant to the Underwriters, severally and not jointly, the right
to purchase at their election up to 1,800,000 Optional Securities at the price
per security of $25.00. The option hereby granted will expire automatically at
the close of business on the 30th calendar day after (i) the later of the date
the Registration Statement and any Rule 462(b) Registration Statement becomes
effective, if the Offerors have elected not to rely upon Rule 430A under the
1933 Act Regulations, or (ii) the Representation Date, if the Offerors have
elected to rely upon Rule 430A under the 1933 Act Regulations, and may be
exercised in whole or in part from time to time only for the purpose of covering
over-allotments which may be made in connection with the offering and
distribution of the Initial Preferred Securities upon notice by the Underwriters
to the Offerors setting forth the aggregate number of additional Optional
Securities to be purchased and the time and date of delivery for the related
Optional Securities. Any such time and date of delivery (a "Date of Delivery")
shall be determined by the Underwriters but shall not be later than seven full
business days after the exercise of such option, nor in any event before the
Closing Time, as defined below, unless otherwise agreed upon by the Underwriters
and the Offerors. If the option is exercised as to all or any portion of the
Optional Securities, each of the Underwriters, acting severally and not jointly,
will purchase from the Company the same percentage of the total number of
Optional Securities as such Underwriter is purchasing of the Initial Preferred
Securities as set forth in Schedule A hereto (subject in each case to such
adjustments as the Underwriters in their discretion shall make to eliminate any
fractional Optional Securities).
(c) Delivery of certificates for the Initial Preferred Securities and
the Optional Securities (if the option provided for in Section 2(b) hereof shall
have been exercised on or before the first business day prior to the Closing
Time) against payment of the purchase price for such Initial Preferred
Securities and the Optional Securities, if any, shall be made at the offices of
LeBoeuf, Lamb, Greene & MacRae, L.L.P., 125 West 55th Street, New York, New York
10019 or at such other place as shall be agreed upon by the Underwriters and the
Offerors, at 9:00 a.m. (New York City time) on the third business day after
execution of this Agreement (or, if pricing of the Securities occurs after 4:30
p.m., New York City time, on the fourth full business day thereafter) or such
other time not later than ten business days after such date as shall be agreed
upon by the Underwriters and the Offerors (such time and date of payment and
delivery being referred to herein as the "Closing Time"). In addition, if the
Underwriters purchase any or all of the Optional Securities (if the option
provided for in Section 2(b) hereof shall have been exercised after the first
business day prior to the Closing Time), payment of the purchase price and
delivery of certificates for such Optional Securities shall be made at the
offices of LeBoeuf, Lamb, Greene & MacRae, L.L.P. set forth above, or at such
other place as shall be agreed upon by the Underwriters and the Offerors, on
each Date of Delivery as specified in the relevant notice from the Underwriters
to the Offerors. Payment for the Preferred Securities purchased by the
Underwriters shall be made to the Trust by wire transfer of immediately
available funds, payable to the order of the Trust, against delivery to the
respective accounts
- 10 -
of the Underwriters of the certificates for the Preferred Securities to be
purchased by them. Delivery of, and payment for, the Preferred Securities shall
be made through the facilities of the Depository Trust Company.
Certificates for the Preferred Securities, if any, shall be in
such denominations and registered in such names as the Underwriters may request
in writing at least two full business days before the Closing Time or the Date
of Delivery, as the case may be. Merrill Lynch, individually and not as
representative of the Underwriters, may (but shall not be obligated to) make
payment of the purchase price for the Preferred Securities, if any, to be
purchased by any Underwriter whose funds have not been received by the Closing
Time or the Date of Delivery, as the case may be, but such payment shall not
relieve such Underwriter from its obligations hereunder. The certificates for
the Preferred Securities will be made available for examination by the
Underwriters no later than 10:00 a.m. (New York City time) on the last business
day prior to the Closing Time or the Date of Delivery, as the case may be.
(d) If settlement for the Optional Securities occurs after the Closing
Time, the Offerors will deliver to the Underwriters on the relevant Date of
Delivery, and the obligations of the Underwriters to purchase the Optional
Securities shall be conditioned upon the receipt of, supplemental opinions,
certificates and letters confirming as of such date the opinions, certificates
and letters delivered at the Closing Time pursuant to Section 5(j) hereof.
SECTION 3. Covenants of the Offerors. The Offerors agree with the
Underwriters as follows:
(a) Promptly following the execution of this Agreement, the Offerors
will cause the Prospectus to be filed with the Commission pursuant to Rule 424
of the 1933 Act Regulations and the Offerors will promptly advise the
Underwriters when such filing has been made. Prior to the filing, the Offerors
will cooperate with the Underwriters in the preparation of the prospectus
supplement to assure that the Underwriters have no reasonable objection to the
form or content thereof when filed or mailed.
(b) The Offerors, subject to Section 3(c), will comply with the
requirements of Rule 430A of the 1933 Act Regulations and/or Rule 434 of the
1933 Act Regulations if and as applicable, and will notify the Underwriters
immediately of (i) the effectiveness of any post-effective amendment to the
Registration Statement or the filing of any supplement or amendment to the
Prospectus, (ii) the receipt of any comments from the Commission, (iii) any
request by the Commission for any amendment to the Registration Statement or any
amendment or supplement to the Prospectus or for additional information, (iv)
the issuance by the Commission of any stop order suspending the effectiveness of
the Registration Statement or the initiation of any proceedings for that purpose
and (v) the issuance by any state securities commission or other regulatory
authority of any order suspending the qualification or the exemption from
qualification of the Securities under state securities or Blue Sky laws or the
initiation or threatening of any proceeding for such purpose. The Offerors will
make all reasonable efforts to prevent the issuance of any stop order and, if
any stop order is issued, to promptly obtain the lifting thereof.
(c) The Company will give the Underwriters notice of its intention to
file or prepare any amendment to the Registration Statement (including any
post-effective amendment and any filing under Rule 462(b) of the 1933 Act
Regulations), any Term Sheet or any amendment, supplement or revision to either
the prospectus included in the Registration Statement at the time it became
effective or to the Prospectus, whether pursuant to the 1933 Act, the 1934 Act
or otherwise; will furnish the Underwriters with copies of any such Rule 462(b)
Registration Statement, Term Sheet, amendment, supplement or revision a
reasonable amount of time prior to such proposed filing or use, as the case may
be; and will not
- 11 -
file any such Rule 462(b) Registration Statement, Term Sheet, amendment,
supplement or revision to which the Underwriters or counsel for the Underwriters
shall reasonably object.
(d) The Company will deliver to Merrill Lynch and counsel for the
Underwriters, without charge, conformed copies of the Registration Statement as
originally filed and of each amendment thereto (including exhibits filed
therewith or incorporated by reference therein and documents incorporated or
deemed to be incorporated by reference therein) and conformed copies of all
consents and certificates of experts, and will also deliver to Merrill Lynch,
without charge, a conformed copy of the Registration Statement as originally
filed and of each amendment thereto (without exhibits) for each of the
Underwriters. If applicable, the copies of the Registration Statement and each
amendment thereto furnished to the Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission pursuant to
EDGAR, except to the extent permitted by Regulation S-T.
(e) The Company has delivered to each Underwriter, without charge, as
many copies of any preliminary prospectus as such Underwriter reasonably
requested, and the Company hereby consents to the use of such copies for
purposes permitted by the 1933 Act. The Company will furnish to each
Underwriter, without charge, during the period when the Prospectus is required
to be delivered under the 1933 Act or the 1934 Act, such number of copies of the
Prospectus (as amended or supplemented) as such Underwriter may reasonably
request. If applicable, the Prospectus and any amendments or supplements thereto
furnished to the Underwriter will be identical to the electronically transmitted
copies thereof filed with the Commission pursuant to EDGAR, except to the extent
permitted by Regulation S-T.
(f) The Offerors will comply with the 1933 Act and the 1933 Act
Regulations and the 1934 Act and the 1934 Act Regulations so as to permit the
completion of the distribution of the Preferred Securities as contemplated in
this Agreement and in the Registration Statement and the Prospectus. If at any
time when the Prospectus is required by the 1933 Act or the 1934 Act to be
delivered in connection with sales of the Securities, any event shall occur or
condition shall exist as a result of which it is necessary, in the opinion of
counsel for the Underwriters or for the Offerors, to amend the Registration
Statement in order that the Registration Statement will not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading or to
amend or supplement the Prospectus in order that the Prospectus will not include
an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein not misleading in the light of
the circumstances existing at the time it is delivered to a purchaser, or if it
shall be necessary, in the opinion of such counsel, at any such time to amend
the Registration Statement or amend or supplement the Prospectus in order to
comply with the requirements of the 1933 Act or the 1933 Act Regulations, the
Company will promptly prepare and file with the Commission, subject to Section
3(c), such amendment or supplement as may be necessary to correct such statement
or omission or to make the Registration Statement or the Prospectus comply with
such requirements, and the Offerors will furnish to the Underwriters, without
charge, such number of copies of such amendment or supplement as the
Underwriters may reasonably request.
(g) The Offerors will use their best efforts, in cooperation with the
Underwriters, to qualify the Securities for offering and sale under the
applicable securities laws of such states and other jurisdictions (domestic or
foreign) as Merrill Lynch may designate; provided, however, that the Company
shall not be obligated to qualify as a foreign corporation in any jurisdiction
in which it is not so qualified or subject itself to taxation in respect of
doing business in any jurisdiction in which it is not otherwise so subject.
- 12 -
(h) The Company will make generally available to its securityholders as
soon as practicable, but not later than 45 days (or 90 days, in the case of a
period that is also the Company's fiscal year) after the close of the period
covered thereby, an earnings statement of the Company and its subsidiaries (in
form complying with the provisions of Rule 158 of the 1933 Act Regulations)
covering a twelve-month period beginning not later than the first day of the
Company's fiscal quarter next following the "effective date" (as defined in said
Rule 158) of the Registration Statement.
(i) The Company and the Trust will use the net proceeds received by
them from the sale of the Securities in the manner specified in the Prospectus
under "Use of Proceeds."
(j) If, at the time that the Registration Statement became (or in the
case of a post-effective amendment becomes) effective, any information shall
have been omitted therefrom in reliance upon Rule 430A or Rule 434 of the 1933
Act Regulations, then immediately following the execution of this Agreement, the
Company will prepare, and file or transmit for filing with the Commission in
accordance with such Rule 430A or Rule 434 and Rule 424(b) of the 1933 Act
Regulations, copies of an amended Prospectus, or Term Sheet, or, if required by
such Rule 430A, a post-effective amendment to the Registration Statement
(including an amended Prospectus), containing all information so omitted.
(k) If the Offerors elect to rely upon Rule 462(b), the Offerors shall
file a Rule 462(b) Registration Statement with the Commission in compliance with
Rule 462(b) and pay the applicable fees in accordance with Rule 111 of the 1933
Act Regulations by the earlier of (i) 10:00 p.m. New York City time on the date
of this Agreement and (ii) the time confirmations are sent or given, as
specified by Rule 462(b)(2).
(l) The Company, during the period when the Prospectus is required to
be delivered under the 1933 Act, will file all documents required to be filed
with the Commission pursuant to Section 13, 14 or 15 of the 1934 Act within the
time periods required by the 1934 Act and the 1934 Act Regulations.
(m) The Offerors will use their best efforts to effect the listing of
the Preferred Securities on the New York Stock Exchange and to cause the
Preferred Securities to be registered under the 1934 Act.
(n) During a period of 30 days from the date hereof, neither the Trust
nor the Company will, without the prior written consent of Merrill Lynch,
directly or indirectly, issue, sell, offer or contract to sell, grant any option
for the sale of, or otherwise transfer or dispose of, any Preferred Securities
or any securities substantially similar to the Preferred Securities, any
security convertible into or exchangeable or exercisable for Preferred
Securities or any securities substantially similar to the Preferred Securities,
or any debt securities of the Company (other than the Securities or commercial
paper in the ordinary course of business).
(o) The Trust and the Company, during a period of one year from the
Closing Time, will make generally available to the Underwriters copies of all
reports and other communications (financial or other) mailed to stockholders,
and deliver to the Underwriters promptly after they are available, copies of any
reports and financial statements furnished to or filed with the Commission or
any national securities exchange on which any class of securities of the Company
is listed (such financial statements to be on a consolidated basis to the extent
the accounts of the Company and its subsidiaries are consolidated in reports
furnished to its stockholders generally or to the Commission).
- 13 -
(p) Neither the Trust, the Company nor its subsidiaries will take,
directly or indirectly, any action resulting in a violation of Regulation M
under the 1934 Act, or designed to cause or result in, or that reasonably might
be expected to constitute, the stabilization or manipulation of the price of any
security of the Trust or the Company to facilitate the sale or resale of the
Securities or the Common Stock of the Company, in each case in violation of
applicable law.
SECTION 4. Payment of Expenses. The Company will pay all expenses
incident to the performance of its obligations under this Agreement including,
without limitation, expenses related to the following, if incurred: (i) the
preparation, delivery, printing and filing of the Registration Statement and
Prospectus as originally filed (including financial statements and exhibits) and
of each amendment thereto; (ii) the preparation, printing and delivery to the
Underwriters of this Agreement, any Agreement Among Underwriters, the Indenture
and such other documents as may be required in connection with the offering,
purchase, sale and delivery of the Securities; (iii) the preparation, issuance
and delivery of the certificates for the Preferred Securities; (iv) the fees and
disbursements of the Company's counsel, accountants and other advisors or agents
(including the transfer agents and registrars), as well as fees and
disbursements of the Trustees and any Depositary, and their respective counsel
(except as provided for in the Prospectus); (v) the qualification of the
Securities under securities laws in accordance with the provisions of Section
3(g), including filing fees and the reasonable fees and disbursements of counsel
for the Underwriters in connection therewith and in connection with the
preparation of any Blue Sky Survey and any Legal Investment Survey; (vi) the
printing and delivery to the Underwriters of copies of the Registration
Statement as originally filed and of each amendment thereto, of each preliminary
prospectus, any Term Sheet and of the Prospectus and any amendments or
supplements thereto; (vii) the printing and delivery to the Underwriters of
copies of any Blue Sky Survey and any Legal Investment Survey; (viii) any fees
payable in connection with the rating of the Preferred Securities by nationally
recognized statistical rating organizations; (ix) the filing fees incident to,
and the fees and disbursements of counsel to the Underwriters in connection
with, the review, if any, by the National Association of Securities Dealers,
Inc. (the "NASD") of the terms of the sale of the Preferred Securities; (x) any
fees payable in connection with any listing of Securities on any securities
exchange or quotation system; and (xi) any fees payable to the Commission.
If this Agreement is terminated by the Underwriters in
accordance with the provisions of Section 5 or Section 9(a)(i) hereof, the
Company shall reimburse the Underwriters for all of their out-of-pocket
expenses, including the reasonable fees and disbursements of LeBoeuf, Lamb,
Greene & MacRae, L.L.P., counsel for the Underwriters.
SECTION 5. Conditions of Underwriters' Obligations. The obligations
of the Underwriters to purchase and pay for the Securities pursuant to this
Agreement are subject to the accuracy of the representations and warranties of
the Offerors herein contained or in certificates of any officer of the Company
or any subsidiary or the trustees of the Trust delivered pursuant to the
provisions hereof, to the performance by the Offerors of their obligations
hereunder, and to the following further conditions:
(a) The Registration Statement, including any Rule 462(b) Registration
Statement, shall have become effective under the 1933 Act not later than 5:30
p.m., New York City time, on the date hereof and on the date hereof and at the
Closing Time, no stop order suspending the effectiveness of the Registration
Statement or any part thereof shall have been issued under the 1933 Act or
proceedings therefor initiated or threatened by the Commission, and any request
on the part of the Commission for additional information shall have been
complied with to the satisfaction of counsel to the Underwriters. A prospectus
containing information relating to the description of the Securities, the
specific method of distribution and similar
- 14 -
matters shall have been filed with the Commission in accordance with Rule
424(b)(1), (2), (3), (4) or (5), as applicable (or any required post-effective
amendment providing such information shall have been filed and declared
effective in accordance with the requirements of Rule 430A), or, if the Company
has elected to rely upon Rule 434 of the 1933 Act Regulations, a Term Sheet
including the Rule 434 Information shall have been filed with the Commission in
accordance with Rule 424(b)(7).
(b) At the Closing Time the Underwriters shall have received:
(1) The favorable opinion, dated as of the Closing Time, of
Mr. John J. Sabl, Executive Vice President, General Counsel and Secretary of the
Company, in form and substance reasonably satisfactory to counsel for the
Underwriters, to the effect that:
(i) The Company has been duly incorporated and is
validly existing as a corporation under the laws of the State of
Indiana.
(ii) The Company has corporate power and authority to
own, lease and operate its properties and to conduct its business as
described in the Prospectus;
(iii) The Company is qualified as a foreign corporation
to transact business and is in good standing in each jurisdiction in
which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except
where the failure to so qualify or be in good standing would not result
in a Material Adverse Effect.
(iv) The authorized, issued and outstanding capital
stock of the Company is as set forth in the Prospectus (including
information which is incorporated by reference therein) (except for
subsequent issuances, if any, pursuant to (x) incentive compensation
plan, employee or agent benefit plan or dividend reinvestment and stock
purchase plan transactions, including, without limitation, the purchase
of shares of Common Stock of the Company or cancellation of options in
connection therewith, or (y) the exercise of conversion or exchange
rights with respect to securities outstanding as of the date of the
Prospectus), and all the issued and outstanding capital stock of the
Company has been authorized and validly issued and is fully paid and
non-assessable and conforms to the descriptions thereof contained in
the Prospectus.
(v) Each Significant Subsidiary of the Company has been
duly incorporated and is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation, has
the corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Prospectus,
and is duly qualified as a foreign corporation to transact business and
is in good standing in each jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or
the conduct of business, except where the failure to so qualify or be
in good standing would not have a Material Adverse Effect; all of the
issued and outstanding capital stock of each such Significant
Subsidiary of the Company has been authorized and validly issued, is
fully paid and non-assessable and, except as set forth in the
Prospectus, all such shares are owned by the Company, directly or
through its subsidiaries, free and clear of any material security
interest, mortgage, pledge, lien, encumbrance, claim or equity.
(vi) All legally required proceedings in connection
with the authorization and valid issuance of the Securities and the
sale of the Securities in accordance with this
- 15 -
Agreement (other than the filing of post-issuance reports, the
non-filing of which would not render the Securities invalid) have been
taken and all legally required orders, consents or other authorizations
or approvals of any other public boards or bodies (including, without
limitation, any insurance regulatory agency or body) in connection with
the authorization and valid issuance of the Securities and the sale of
the Securities in accordance with this Agreement (other than in
connection with or in compliance with the provisions of the securities
or Blue Sky laws of any jurisdictions, as to which no opinion need be
expressed) have been obtained and are in full force and effect.
(vii) The Registration Statement is effective under the
1933 Act and, to the knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement has been
issued under the 1933 Act, and no proceedings therefor have been
initiated or threatened by the Commission.
(viii) The Registration Statement as of its effective
date, and the Prospectus and each amendment or supplement thereto as of
its issue date (in each case, other than the financial statements and
the notes thereto, the financial schedules, and any other financial
data included or incorporated by reference therein, as to which such
counsel need express no belief), complied as to form in all material
respects with the requirements of the 1933 Act and the 1933 Act
Regulations; and the Declaration, the Indenture and the Preferred
Securities Guarantee Agreement filed with the Commission as part of the
Registration Statement complied as to form in all material respects
with the requirements of the 1939 Act and the 1939 Act Regulations.
(ix) Each of the documents incorporated by reference in
the Registration Statement or the Prospectus at the time they were
filed or last amended (other than the financial statements and the
notes thereto, the financial schedules, and any other financial data
included or incorporated by reference therein and the Statements of
Eligibility on Form T-1 filed with the Commission as part of the
Registration Statement, as to which such counsel need express no
belief), complied as to form in all material respects with the
requirements of the 1934 Act and the 1934 Act Regulations, as
applicable.
(x) The Common Securities, the Preferred Securities,
the Subordinated Debentures, each of the Guarantees, the Declaration,
the Indenture and each of the Guarantee Agreements conform in all
material respects to the descriptions thereof contained in the
Prospectus.
(xi) The information in the Prospectus under the
captions "Description of Securities," "Certain Terms of the Preferred
Securities" and "Certain Terms of the Debentures," to the extent that
they involve matters of law, summaries of legal matters, the Company's
charter and By-Laws, the Declaration or legal proceedings, or legal
conclusions, has been reviewed by such counsel and is correct in all
material respects.
(xii) To such counsel's knowledge, all of the issued
and outstanding Common Securities of the Trust are directly owned by
the Company free and clear of any security interest, mortgage, pledge,
lien, encumbrance, claim or equitable right.
(xiii) This Agreement has been duly authorized,
executed and delivered by each of the Trust and the Company.
- 16 -
(xiv) Each of the Guarantee Agreements has been duly
authorized, executed and delivered by the Company; the Preferred
Securities Guarantee Agreement, assuming it is duly authorized,
executed, and delivered by the Guarantee Trustee, constitutes a valid
and legally binding obligation of the Company, enforceable against the
Company in accordance with its terms, except to the extent that
enforcement thereof may be limited by Bankruptcy Exceptions; and the
Preferred Securities Guarantee Agreement has been duly qualified under
the 1939 Act.
(xv) The Indenture has been duly authorized, executed
and delivered by the Company and, assuming authorization, execution,
and delivery thereof by the Debt Trustee, constitutes a valid and
legally binding obligation of the Company, enforceable against the
Company in accordance with its terms, except to the extent that
enforcement thereof may be limited by the Bankruptcy Exceptions; and
the Indenture has been duly qualified under the 1939 Act.
(xvi) The Subordinated Debentures are in the form
contemplated by the Indenture, have been duly authorized, executed and
delivered by the Company and, when authenticated by the Debt Trustee in
the manner provided for in the Indenture and delivered against payment
therefor by the Company, will constitute valid and legally binding
obligations of the Company, enforceable against the Company in
accordance with their terms, except to the extent that enforcement
thereof may be limited by the Bankruptcy Exceptions.
(xvii) The offer of the Preferred Securities as
contemplated herein and in the Prospectus, the execution, delivery and
performance of this Agreement, the Declaration, the Preferred
Securities, the Common Securities, the Indenture, the Subordinated
Debentures, the Guarantee Agreements and the Guarantees and the
consummation of the transactions contemplated herein, therein and in
the Registration Statement (including the issuance and sale of the
Preferred Securities and the use of proceeds from the sale of the
Securities as described in the prospectus under the caption "Use of
Proceeds") and compliance by the Company with its obligations hereunder
and thereunder have been authorized by all necessary corporate action
and do not and will not, whether with or without the giving of notice
or passage of time or both, conflict with or constitute a breach of any
of the terms or provisions of, or constitute a default or Repayment
Event under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or any
Significant Subsidiary pursuant to, the Agreements and Instruments
(except for such conflicts, breaches or defaults or liens, charges or
encumbrances that would not result in a Material Adverse Effect), nor
will such action result in any violation of any applicable law,
statute, rule, regulation, judgment, order, writ or decree of any
government, government instrumentality or court, domestic or foreign,
having jurisdiction over the Company or any Significant Subsidiary or
any of their assets, properties, or operations (except for such
violations that would not result in a Material Adverse Effect), nor
will such action result in any violation of the provisions of the
charter or by-laws of the Company or any Significant Subsidiary.
(xviii) To such counsel's knowledge, there are no
statutes required to be described in or incorporated by reference in
the Registration Statement which are not described or incorporated by
reference; and there are no legal or governmental proceedings pending
or, to such counsel's knowledge, threatened which are required to be
disclosed or incorporated by reference in the Registration Statement
other than those disclosed or incorporated by reference therein.
- 17 -
(xix) To such counsel's knowledge, there are no
contracts, indentures, mortgages, agreements, notes, leases or other
instruments required to be described or referred to or incorporated by
reference in the Registration Statement or to be filed as exhibits
thereto other than those described or referred to or incorporated by
reference therein or filed as exhibits thereto; and the descriptions
thereof or references thereto are true and correct in all material
respects.
(xx) No authorization, approval, consent, order,
registration or qualification of or with any court or federal or state
governmental authority or agency (including, without limitation, any
insurance regulatory agency or body) is required for the issuance and
sale of the Securities by the Company to the Underwriters or the
performance by the Company of its obligations in this Agreement, the
Indenture, the Subordinated Debentures, the Preferred Securities
Guarantee Agreement, the Preferred Securities Guarantee, the
Declaration and the Preferred Securities except such as has been
obtained and made under the federal securities laws or such as may be
required under state or foreign securities or Blue Sky laws.
(xxi) The Company and its subsidiaries possess such
permits, licenses, approvals, consents and other authorizations issued
by the appropriate federal, state, local or foreign regulatory agencies
or bodies (including, without limitation, the Insurance Licenses) that
are material to the Company and its subsidiaries taken as a whole and
are necessary to conduct the business now operated by them; the Company
and its subsidiaries are in compliance with the terms and conditions of
all such Insurance Licenses, except where the failure so to comply
would not, singly or in the aggregate, result in a Material Adverse
Effect; all of the Insurance Licenses are valid and in full force and
effect, except where the invalidity of such Insurance Licenses or the
failure of such Insurance Licences to be in full force and effect would
not result in a Material Adverse Effect; and neither the Company nor
any of its subsidiaries has received any notice of proceedings relating
to the revocation or modification of any such Insurance Licenses which,
singly or in the aggregate, may reasonably be expected to result in a
Material Adverse Effect.
(xxii) None of the Trust or the Company or any of its
subsidiaries is, and upon the issuance and sale of the Securities as
herein contemplated and the application of the net proceeds therefrom
as described in the Prospectus will be, an "investment company" as such
term is defined in the 1940 Act.
Moreover, such counsel shall confirm that nothing has come to such
counsel's attention that causes such counsel to believe that the
Registration Statement including any information provided pursuant to
Rule 430A and related schedules and Rule 434 (except for financial
statements and the notes thereto, the financial schedules and any other
financial data included or incorporated by reference therein, and the
Statements of Eligibility on Form T-1 filed with the Commission as part
of the Registration Statement as to which such counsel need express no
opinion), at the time it became effective or at the Representation
Date, contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading or that the Prospectus
(except for financial statements and the notes thereto, the financial
schedules, and any other financial data included or incorporated by
reference therein, as to which such counsel need express no opinion),
at the Representation Date (unless the term "Prospectus" refers to a
prospectus which has been provided to the Underwriters by the Company
for use in connection with the offering of the Securities which differs
from the Prospectus on file at the Commission at the time the
Registration Statement became effective, in which case at the time it
is first provided to the Underwriters for such use) or at the Closing
Time, included (or
- 18 -
includes) an untrue statement of a material fact or omitted or omits to
state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading.
(2) The favorable opinion, dated as of the Closing Time, of
Leagre Chandler & Millard LLP, special counsel to the Company, in form and
substance reasonably satisfactory to counsel for the Underwriters, to the effect
that the statements in the Prospectus under the caption "Certain United States
Federal Income Tax Consequences" have been reviewed by such counsel and, insofar
as they constitute legal conclusions or matters of law, fairly summarize the
matters referred to therein. Moreover, such counsel shall confirm that nothing
has come to such counsel's attention that causes such counsel to believe that
the Registration Statement, including any information provided pursuant to Rule
434 (except for financial statements and the notes thereto, the financial
schedules and any other financial data included or incorporated by reference
therein, and the Statements of Eligibility on Form T-1 filed with the Commission
as part of the Registration Statement as to which counsel need express no
opinion), at the time it became effective or at the Representation Date,
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading or that the Prospectus (except for financial statements and the
notes thereto, the financial schedules, and any other financial data included or
incorporated by reference therein, as to which counsel need express no opinion),
at the Representation Date (unless the term "Prospectus" refers to a prospectus
which has been provided to the Underwriters by the Company for use in connection
with the offering of the Securities which differs from the Prospectus on file at
the Commission at the time the Registration Statement became effective, in which
case at the time it is first provided to the Underwriters for such use) or at
the Closing Time, included (or includes) an untrue statement of a material fact
or omitted or omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(3) The favorable opinion, dated as of Closing Time, of
Richards, Layton & Finger, P.A., special Delaware counsel to the Offerors, in
form and substance satisfactory to counsel for the Underwriters, to the effect
that:
(i) The Trust has been duly created and is validly
existing in good standing as a business trust under the Delaware Act,
and all filings required under the laws of the State of Delaware with
respect to the creation and valid existence of the Trust as a business
trust have been made.
(ii) Under the Delaware Act and the Declaration, the
Trust has the business trust power and authority to own property and
conduct its business, all as described in the Prospectus.
(iii) The Declaration constitutes a valid and binding
obligation of the Company and the Trustees and is enforceable against
the Company and the Trustees, in accordance with its terms, subject, as
to enforcement, to (i) bankruptcy, insolvency, moratorium,
receivership, reorganization, liquidation, fraudulent conveyance and
other similar laws relating to or affecting the rights and remedies of
creditors generally, (ii) principles of equity, including applicable
law relating to fiduciary duties (regardless of whether considered and
applied in a proceeding in equity or at law), and (iii) the effect of
applicable public policy on the enforceability of provisions relating
to indemnification or contribution.
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(iv) Under the Delaware Act and the Declaration, the
Trust has the business trust power and authority to (i) execute and
deliver, and to perform its obligations under, this Agreement and (ii)
issue, and perform its obligations under, the Trust Securities.
(v) Under the Delaware Act and the Declaration, the
execution and delivery by the Trust of this Agreement, and the
performance by the Trust of its obligations hereunder, have been duly
authorized by all necessary action on the part of the Trust.
(vi) Under the Delaware Act, the certificate attached
to the Declaration as Exhibit A-1 is an appropriate form of certificate
to evidence ownership of the Preferred Securities; the Preferred
Securities have been duly authorized by the Declaration and are duly
and validly issued and, subject to qualifications hereinafter expressed
in this paragraph (vi), fully paid and non-assessable undivided
beneficial interests in the assets of the Trust; the holders of the
Preferred Securities, as beneficial owners of the Trust, will be
entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the
General Corporation Law of the State of Delaware; said counsel may note
that the holders of the Preferred Securities may be obligated to make
payments as set forth in the Declaration.
(vii) The Common Securities have been duly authorized
by the Declaration and are duly and validly issued and represent
undivided beneficial interests in the assets of the Trust.
(viii) Under the Delaware Act and the Declaration, the
issuance of the Trust Securities is not subject to preemptive rights.
(ix) The issuance and sale by the Trust of the Trust
Securities, the purchase by the Trust of the Subordinated Debentures,
the execution, delivery and performance by the Trust of this Agreement,
the consummation by the Trust of the transactions contemplated hereby
and compliance by the Trust with its obligations hereunder and
thereunder will not violate (i) any of the provisions of the
Certificate of Trust or the Declaration or (ii) any applicable Delaware
law or Delaware administrative regulation.
(4) The favorable opinion, dated as of Closing Time, of Reid &
Riege, P.C., counsel to State Street Bank and Trust Company as Debt Trustee
under the Indenture, Property Trustee under the Declaration, and Guarantee
Trustee under the Preferred Securities Guarantee Agreements, in form and
substance satisfactory to counsel for the Underwriters, to the effect that:
(i) State Street Bank and Trust Company is a
Massachusetts charter trust company with trust powers, formed and
authorized to transact the business of banking under the laws of the
Commonwealth of Massachusetts with all necessary power and authority to
execute and deliver, and to carry out and perform its obligations under
the terms of the Indenture, the Declaration and the Preferred
Securities Guarantee Agreement.
(ii) The execution, delivery and performance by the
Debt Trustee of the Indenture, the Property Trustee of the Declaration
and the execution, delivery and performance by the Guarantee Trustee of
the Preferred Securities Guarantee Agreement have been duly authorized
by all necessary corporate action on the part of the Debt Trustee, the
Property Trustee and the Guarantee Trustee, respectively. The
Indenture, the Declaration and the Preferred Securities
- 20 -
Guarantee Agreement have been duly executed and delivered by the Debt
Trustee, the Property Trustee and the Guarantee Trustee, respectively,
and constitute the legal, valid and binding obligations of the Debt
Trustee, the Property Trustee and the Guarantee Trustee, respectively,
enforceable against the Debt Trustee, the Property Trustee and the
Guarantee Trustee, respectively, in accordance with their terms, except
to the extent the enforcement thereof may be limited by the Bankruptcy
Exceptions.
(iii) The execution, delivery and performance of the
Indenture, the Declaration and the Preferred Securities Guarantee
Agreement by the Debt Trustee, the Property Trustee and the Guarantee
Trustee, respectively, do not conflict with or constitute a breach of
the Articles of Organization or By-laws of the Debt Trustee, the
Property Trustee and the Guarantee Trustee, respectively.
(iv) No consent, approval or authorization of, or
registration with or notice to, any federal banking authority is
required for the execution, delivery or performance by the Debt
Trustee, the Property Trustee and the Guarantee Trustee of the
Indenture, the Declaration and the Preferred Securities Guarantee
Agreement.
(5) The favorable opinion, dated as of the Closing Time, of
LeBoeuf, Lamb, Greene & MacRae, L.L.P., counsel for the Underwriters, in form
and substance satisfactory to the Underwriters, with respect to the issuance and
sale of the Preferred Securities, and other related matters as the Underwriters
may reasonably require, and the Company shall have furnished to such counsel
such documents as they request for the purpose of enabling them to pass upon
such matters. In rendering such opinion LeBoeuf, Lamb, Greene & MacRae, L.L.P.
may rely as to matters governed by the laws of Indiana and Delaware upon the
opinions referred to in Sections 5(b)(1) and 5(b)(3) hereto.
(c) Between the date of this Agreement and prior to the Closing Time,
no material adverse change shall have occurred in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of the
Trust or the Company and its subsidiaries considered as one enterprise, whether
or not in the ordinary course of business.
(d) At the Closing Time, the Underwriters shall have received a
certificate of a Regular Trustee of the Trust and a certificate of the President
or a Vice-President of the Company and of the Chief Financial Officer or Chief
Accounting Officer of the Company, dated as of the Closing Time, to the effect
that (i) there has been no material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business prospects of the
Trust or the Company and its subsidiaries considered as one enterprise, whether
or not in the ordinary course of business, (ii) the representations and
warranties in Section 1 hereof are true and correct as though expressly made at
and as of the Closing Time, (iii) the Trust and the Company have complied with
all agreements and satisfied all conditions on their part to be performed or
satisfied at or prior to the Closing Time, and (iv) no stop order suspending the
effectiveness of the Registration Statement has been issued and no proceedings
for that purpose have been initiated or, to the knowledge of such officers,
threatened by the Commission.
(e) At the time of the execution of this Agreement, the Underwriters
shall have received from PricewaterhouseCoopers LLP a "comfort letter," with
respect to the financial information of the Company, dated such date in form and
substance satisfactory to the Underwriters and counsel to the Underwriters.
- 21 -
(f) At the time of the execution of this Agreement, the Underwriters
shall have received from KPMG Peat Marwick LLP a "comfort letter" with respect
to the financial information of Green Tree, dated such date in form and
substance satisfactory to the Underwriters and counsel to the Underwriters.
(g) At the Closing Time, the Underwriters shall have received from each
of PricewaterhouseCoopers LLP, with respect to the Company, and KPMG Peat
Marwick LLP, with respect to Green Tree, a letter, dated as of the Closing Time,
to the effect that they reaffirm the statements made in the letters furnished
pursuant to subsections (e) and (f) of this Section, and other customary
matters, except that (i) such statements shall include any financial statements
and pro forma financial information incorporated by reference in the
Registration Statement and the Prospectus which are filed subsequent to the date
of this Agreement and prior to the Closing Time and (ii) the specified date
referred to shall be a date not more than five days prior to the Closing Time.
(h) At the Closing Time, counsel for the Underwriters shall have been
furnished with such documents and opinions as they may require for the purpose
of enabling them to pass upon the issuance and sale of the Securities as herein
contemplated and related proceedings, or in order to evidence the accuracy of
any of the representations or warranties, or the fulfillment of any of the
conditions herein contained; and all proceedings taken by the Company in
connection with the issuance and sale of the Securities as herein contemplated
shall be satisfactory in form and substance to the Underwriters and counsel for
the Underwriters.
(i) At the Closing Time, (i) the Preferred Securities shall be rated at
least BBB- by Standard & Poor's Ratings Service and BBB- by Duff & Phelps Credit
Rating Co., and the Trust shall have delivered to the Underwriters a letter,
dated the Closing Time, from each such rating agency, or other evidence
satisfactory to the Underwriters, confirming that the Preferred Securities have
such ratings; (ii) there shall not have occurred any decrease in the rating
assigned to the Preferred Securities or any securities of the Company or of the
financial strength or claims paying ability of the Company by any "nationally
recognized statistical rating organization," as defined for purposes of Rule
436(g)(2) under the 1933 Act Regulations, and (iii) no such organization shall
have publicly announced that it has under surveillance or review, without
indicating an improvement, its rating of the Preferred Securities or any
securities of the Company or of the financial strength or claims paying ability
of the Company.
(j) In the event that the Underwriters exercise their option provided
in Section 2(b) hereof to purchase all or any portion of the Optional
Securities, the representations and warranties of the Offerors contained herein
and the statements in any certificates furnished by the Offerors hereunder shall
be true and correct as of, and as if made on, each Date of Delivery, and at the
relevant Date of Delivery, the Underwriters shall have received:
(1) A certificate, dated such Date of Delivery, of the
President or a Vice-President of the Company and the Chief Financial Officer or
Chief Accounting Officer of the Company and a certificate of a Regular Trustee
of the Trust confirming that the certificate delivered at the Closing Time
pursuant to Section 5(d) hereof is true and correct as of, and as if made on,
such Date of Delivery.
(2) The favorable opinion of John J. Sabl, Esq., Executive
Vice President, General Counsel and Secretary for the Company, in form and
substance satisfactory to counsel for the Underwriters, dated such Date of
Delivery, relating to the Optional Securities and otherwise to the same effect
as the opinion required by Section 5(b)(1) hereof.
- 22 -
(3) The favorable opinion of Leagre Chandler & Millard LLP,
special counsel to the Company, in form and substance satisfactory to counsel
for the Underwriters, dated such Date of Delivery, relating to the Optional
Securities and otherwise to the same effect as the opinion required by Section
5(b)(2) hereof.
(4) The favorable opinion of Richards, Layton & Finger, P.A.,
special Delaware counsel to the Offerors, in form and substance satisfactory to
counsel for the Underwriters, dated such Date of Delivery, relating to the
Optional Securities and otherwise to the same effect as the opinion required by
Section 5(b)(3) hereof.
(5) The favorable opinion of Reid & Riege, P.C., counsel to
State Street Bank and Trust Company as Debt Trustee under the Indenture,
Property Trustee under the Declaration, and Guarantee Trustee under the
Preferred Securities Guarantee Agreements, in form and substance satisfactory to
counsel for the Underwriters, dated such Date of Delivery, relating to the
Optional Securities and otherwise to the same effect as the opinion required by
Section 5(b)(4) hereof.
(6) The favorable opinion of LeBoeuf, Lamb, Greene & MacRae,
L.L.P., counsel to the Underwriters, dated such Date of Delivery, relating to
the Optional Securities and otherwise to the same effect as the opinion required
by Section 5(b)(5) hereof.
(7) A "comfort letter" from PricewaterhouseCoopers LLP in form
and substance satisfactory to the Underwriters and dated such Date of Delivery,
substantially in the same form and substance as the letter furnished to the
Underwriters pursuant to Section 5(e) hereof, except that the "specified date"
in the letter furnished pursuant to this Section shall be a date no more than
five days prior to such Date of Delivery.
(8) A "comfort letter" from KPMG Peat Marwick LLP with respect
to the financial information of Green Tree, in form and substance satisfactory
to the Underwriters and dated such Date of Delivery, substantially in the same
form and substance as the letter furnished to the Underwriters pursuant to
Section 5(f) hereof, except that the "specified date" in the letter furnished
pursuant to this Section shall be a date no more than five days prior to such
Date of Delivery.
At the Date of Delivery, counsel for the Underwriters shall
have been furnished with such documents and opinions as they may require for the
purpose of enabling them to pass upon the issuance and sale of the Securities as
herein contemplated and related proceedings, or in order to evidence the
accuracy of any of the representations or warranties, or the fulfillment of any
of the conditions herein contained; and all proceedings taken by the Company in
connection with the issuance and sale of the Optional Securities as herein
contemplated shall be satisfactory in form and substance to the Underwriters and
counsel for the Underwriters.
At the Date of Delivery, (i) the Preferred Securities shall be
rated at least BBB- by Standard & Poor's Ratings Service and BBB- by Duff &
Phelps Credit Rating Co., and the Trust shall have delivered to the Underwriters
a letter, dated such Date of Delivery, from each such rating agency, or other
evidence satisfactory to the Underwriters, confirming that the Preferred
Securities have such ratings; (ii) there shall not have occurred any decrease in
the rating assigned to the Preferred Securities or any securities of the Company
or of the financial strength or claims paying ability of the Company by any
"nationally recognized statistical rating organization," as defined for purposes
of Rule 436(g)(2) under the 1933 Act Regulations, and (iii) no such organization
shall have publicly announced that it has under
- 23 -
surveillance or review, without indicating an improvement, its rating of the
Preferred Securities or any securities of the Company or of the financial
strength or claims paying ability of the Company.
If any condition specified in this Section 5 shall not have been fulfilled when
and as required to be fulfilled, this Agreement, or, in the case of any
condition to the purchase of the Optional Securities on a Date of Delivery which
is after the Closing Time, the obligations of the several Underwriters to
purchase the relevant Optional Securities, may be terminated by the Underwriters
by notice to the Company at any time at or prior to the Closing Time, or such
Date of Delivery, as the case may be, and such termination shall be without
liability of any party to any other party except as provided in Section 4 and
except that Sections 1, 6, 7 and 8 shall survive any such termination and remain
in full force and effect.
SECTION 6. Indemnification.
(a) The Company agrees to indemnify and hold harmless each Underwriter
and each person, if any, who controls any Underwriter within the meaning of
Section 15 of the 1933 Act or Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, arising out of any untrue
statement or alleged untrue statement of a material fact contained in
the Registration Statement (or any amendment thereto), including the
Rule 434 Information deemed to be part thereof, if applicable, or the
omission or alleged omission therefrom of a material fact required to
be stated therein or necessary to make the statements therein not
misleading or arising out of any untrue statement or alleged untrue
statement of a material fact included in any preliminary prospectus or
the Prospectus (or any amendment or supplement thereto), or the
omission or alleged omission therefrom of a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, to the extent of the aggregate
amount paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened,
or of any claim whatsoever arising out of or based upon any such untrue
statement or omission, or any such alleged untrue statement or
omission, provided, that (subject to Section 6(d) below) any such
settlement is effected with the written consent of the Company; and
(iii) against any and all expense whatsoever, as
incurred (including the fees and disbursements of counsel chosen by
Merrill Lynch), reasonably incurred in investigating, preparing or
defending against any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever arising out of or based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, to the
extent that any such expense is not paid under (i) or (ii) above;
provided, however, that the foregoing indemnity agreement shall not
apply to any loss, liability, claim, damage or expense to the extent
arising out of or based upon any untrue statement or omission or
alleged untrue statement or omission (A) made in reliance upon and in
conformity with written information furnished to the Company by any
Underwriter through Merrill Lynch expressly for use in the Registration
Statement (or any amendment thereto), including the Rule 434
Information deemed to be a part thereof, if applicable, or any
preliminary prospectus or the Prospectus (or any amendment or
supplement thereto), (B) made in any Statement of Eligibility on Form
T-1 filed as
- 24 -
an exhibit to the Registration Statement or (C) made in any preliminary
prospectus supplement and corrected in the Prospectus, as supplemented,
where the person asserting any such loss, liability, claim, damage or
expense purchased the Preferred Securities that are the subject
thereof, and it shall have been established (i) that there was not sent
or given, at or prior to the written confirmation of such sale, a copy
of the Prospectus (excluding documents incorporated by reference) in
any case where such delivery is required by the 1933 Act and (ii) the
Company shall have previously furnished copies thereof in sufficient
quantities to such Underwriter.
(b) Each Underwriter severally agrees to indemnify and hold harmless
the Company, its directors, each of its officers who signed the Registration
Statement, and each person, if any, who controls the Company within the meaning
of Section 15 of the 1933 Act or Section 20 of the 1934 Act, and the Trust and
each of the Regular Trustees of the Trust, against any and all loss, liability,
claim, damage and expense described in the indemnity contained in subsection (a)
of this Section, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Registration
Statement (or any amendment thereto), including the Rule 434 Information deemed
to be a part thereof, if applicable, or any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Company by such Underwriter
through Merrill Lynch expressly for use in the Registration Statement (or any
amendment thereto) or such preliminary prospectus or the Prospectus (or any
amendment or supplement thereto).
(c) Each indemnified party shall give notice as promptly as reasonably
practicable to each indemnifying party of any action commenced against it in
respect of which indemnity may be sought hereunder, but failure to so notify an
indemnifying party shall not relieve such indemnifying party from any liability
hereunder to the extent it is not materially prejudiced as a result thereof and
in any event shall not relieve it from any liability which it may have otherwise
than on account of this indemnity agreement. In the case of parties indemnified
pursuant to Section 6(a) above, counsel to the indemnified parties shall be
selected by Merrill Lynch, and, in the case of parties indemnified pursuant to
Section 6(b) above, counsel to the indemnified parties shall be selected by the
Company. An indemnifying party may participate at its own expense in the defense
of any such action; provided, however, that counsel to the indemnifying party
shall not (except with the consent of the indemnified party) also be counsel to
the indemnified party. In no event shall the indemnifying parties be liable for
fees and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances. No
indemnifying party shall, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of any judgment with
respect to any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever in
respect of which indemnification or contribution could be sought under this
Section 6 or Section 7 hereof (whether or not the indemnified parties are actual
or potential parties thereto), unless such settlement, compromise or consent (i)
includes an unconditional release of each indemnified party from all liability
arising out of such litigation investigation, proceeding or claim and (ii) does
not include a statement as to or an admission of fault, culpability or a failure
to act by or on behalf of any indemnified party.
(d) If at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel, such indemnifying party agrees that it shall be liable for any
settlement of the nature contemplated by Section 6(a)(ii) effected without its
written consent if (i) such settlement is entered into more than 45 days after
receipt by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall have received notice of the terms of such settlement at
- 25 -
least 30 days prior to such settlement being entered into and (iii) such
indemnifying party shall not have reimbursed such indemnified party in
accordance with such request prior to the date of such settlement.
Notwithstanding the immediately preceding sentence, if at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, an indemnifying party shall
not be liable for any settlement of the nature contemplated by Section 6(a)(ii)
affected without its consent if such indemnifying party (i) reimburses such
indemnified party in accordance with such request to the extent it considers
such request to be reasonable and (ii) provides written notice to the
indemnified party substantiating the unpaid balance as unreasonable, in each
case prior to the date of such settlement.
SECTION 7. Contribution. If the indemnification provided for in
Section 6 hereof is for any reason unavailable to or insufficient to hold
harmless an indemnified party in respect of any losses, liabilities, claims,
damages or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount of such losses, liabilities, claims, damages
and expenses incurred by such indemnified party, as incurred, (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand, and the Underwriters, on the other hand, from the
offering of the Preferred Securities pursuant to this Agreement or (ii) if the
allocation provided by clause (i) is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company on the one
hand, and the Underwriters, on the other hand, in connection with the statements
or omissions which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations.
The relative benefits received by Company on the one hand, and the
Underwriters, on the other hand, in connection with the offering of the
Preferred Securities pursuant to this Agreement shall be deemed to be in the
same respective proportions as the total net proceeds from the offering of such
Preferred Securities (before deducting expenses) received by the Company and the
total underwriting discount received by the Underwriters, in each case as set
forth on the cover of the Prospectus, or, if Rule 434 is used, the corresponding
location on the Term Sheet bear to the aggregate initial public offering price
of such Preferred Securities as set forth on such cover.
The relative fault of the Company, on the one hand, and the
Underwriters, on the other hand, shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company or by the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 7. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 7 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no Underwriter shall
be required to contribute any amount in excess of the amount by which the total
price at which the Preferred Securities underwritten
- 26 -
by it and distributed to the public were offered to the public exceeds the
amount of any damages which such Underwriter has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter, and
each director of the Company, each officer of the Company who signed the
Registration Statement, and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall
have the same rights to contribution as the Company. The Underwriters'
respective obligations to contribute pursuant to this Section 7 are several in
proportion to the number of Preferred Securities set forth opposite their
respective names in Schedule A to this Agreement, and not joint.
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement or contained in certificates of officers of the Company and the Trust
submitted pursuant hereto, shall remain operative and in full force and effect,
regardless of any investigation made by or on behalf of any Underwriter or
controlling person, or by or on behalf of the Company, and shall survive
delivery of and payment for the Preferred Securities to the Underwriters.
SECTION 9. Termination of Agreement.
(a) The Underwriters may terminate this Agreement, by notice to the
Company at any time at or prior to the Closing Time or at or prior to any Date
of Delivery, if (i) there has been, since the date of this Agreement or since
the respective dates as of which information is given in the Prospectus, any
material adverse change or any development which could reasonably be expected to
result in a prospective material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, or (ii) there has occurred any
material adverse change in the financial markets in the United States or any
outbreak of hostilities or escalation of hostilities or other calamity or
crisis, or any change or development involving a prospective change in national
or international political, financial or economic conditions the effect of which
is such as to make it, in the judgment of Merrill Lynch impracticable to market
the Securities or to enforce contracts for the sale of the Securities, or (iii)
if trading in the Common Stock or any other security of the Company has been
suspended or limited by the Commission, NASD or the New York Stock Exchange, or
if trading generally on either the American Stock Exchange, the New York Stock
Exchange or in the over-the-counter market has been suspended or limited, or
minimum or maximum prices for trading have been fixed, or maximum ranges for
prices for securities have been required, by either of said exchanges or by such
system or by order of the Commission, NASD or any other governmental authority,
or (iv) if a banking moratorium has been declared by either Federal, New York or
Indiana authorities.
(b) If this Agreement is terminated pursuant to this Section 9, such
termination shall be without liability of any party to any other party except as
provided in Section 4, and provided, further, that Sections 1, 6, 7 and 8 shall
survive such termination and remain in full force and effect.
- 27 -
SECTION 10. Default by One or More of the Underwriters. If one or more
of the Underwriters shall fail at the Closing Time to purchase the Preferred
Securities which it or they are obligated to purchase under this Agreement (the
"Defaulted Securities"), Merrill Lynch shall have the right, within 24 hours
thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase all, but not less than all,
of the Defaulted Securities in such amounts as may be agreed upon and upon the
terms herein set forth; if, however, Merrill Lynch shall not have completed such
arrangements within such 24-hour period, then:
(a) if the number of Defaulted Securities does not exceed 10% of
the total number of Preferred Securities, the non-defaulting Underwriters shall
be obligated, severally and not jointly, to purchase the full number thereof in
the proportions that their respective underwriting obligations hereunder bear to
the underwriting obligations of all non-defaulting Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the
total number of the Defaulted Securities to be purchased on such date, this
Agreement shall terminate without liability on the part of any non-defaulting
Underwriter.
No action taken pursuant to this Section 10 shall relieve any
defaulting Underwriter from liability in respect of its default.
In the event of any such default which does not result in a
termination of this Agreement, or, in the case of a Date of Delivery which is
after the Closing Time, which does not result in a termination of the obligation
of the Underwriters to purchase and the Company to sell the relevant Optional
Securities, as the case may be, either Merrill Lynch or the Company shall have
the right to postpone the Closing Time or the relevant Date of Delivery, as the
case may be, for a period not exceeding seven days in order to effect any
required changes in the Registration Statement or the Prospectus or in any other
documents or arrangements. As used herein, the term "Underwriter" includes any
person substituted for an Underwriter under this Section 10.
SECTION 11. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to the Underwriters c/o Merrill Lynch & Co., 5500
Sears Tower, Chicago, Illinois 60606, Attention of Marcia Sterling, with a copy
to LeBoeuf, Lamb, Greene & MacRae, L.L.P., Attention of Michael Groll, Esq.;
notices to the Company or the Trust shall be directed to the Company or the
Trust at, or in care of, Conseco, Inc., 11825 N. Pennsylvania Street, Carmel,
Indiana 46032, Attention of John J. Sabl, Esq., Executive Vice President,
General Counsel and Secretary.
SECTION 12. Parties. This Agreement shall inure to the benefit of and
be binding upon the Offerors and the Underwriters and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Underwriters and the Offerors and their respective successors and the
controlling persons and officers and directors referred to in Sections 6 and 7
and their heirs and legal representatives, any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision herein or
therein contained. This Agreement and all conditions and provisions hereof are
intended to be for the sole and exclusive benefit of the parties hereto and
their respective successors and legal representatives, and said controlling
persons and officers and directors and their heirs and legal representatives,
and for the benefit of no other
- 28 -
person, firm or corporation. No purchaser of Securities from any Underwriter
shall be deemed to be a successor by reason merely of such purchase.
SECTION 13. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. SPECIFIED
TIMES OF DAY REFER TO NEW YORK CITY TIME UNLESS OTHERWISE INDICATED.
SECTION 14. Effect of Headings. The Article and Section headings herein
are for convenience only and shall not affect the construction hereof.
SECTION 15. Counterparts. This Agreement may be executed in one or
more counterparts and, if executed in more than one counterpart, the executed
counterparts hereof shall constitute a single instrument.
- 29 -
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Trust a counterpart hereof, whereupon
this instrument, along with all counterparts, shall become a binding agreement
among the Offerors and the Underwriters in accordance with its terms.
Very truly yours,
CONSECO, INC.
By: /S/ ROLLIN M. DICK
------------------------
Name: Rollin M. Dick
Title: Executive Vice President
CONSECO FINANCING TRUST VII
By: /S/ ROLLIN M. DICK
------------------------
Name: Rollin M. Dick
Title: Trustee
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
A.G. EDWARDS & SONS, INC.
LEHMAN BROTHERS INC.
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
CIBC WORLD MARKETS CORP.
CREDIT SUISSE FIRST BOSTON CORPORATION
as Representatives of the several Underwriters
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: /S/ TITO CITARELLA
--------------------------
Name: Tito Citarella
Title: Vice President
SCHEDULE A
Number of Preferred Securities
Underwriters To Be Purchased
------------ ---------------
Merrill Lynch, Pierce, Fenner & Smith Incorporated 1,380,000
A.G. Edwards & Sons, Inc. 1,380,000
Lehman Brothers Inc. 1,380,000
PaineWebber Incorporated 1,380,000
Prudential Securities Incorporated 1,380,000
CIBC World Markets Corp. 600,000
Credit Suisse First Boston Corporation 600,000
ABN AMRO Incorporated 120,000
Banc of America Securities LLC 120,000
Robert W. Baird & Co. Incorporated 120,000
Bear, Stearns & Co. Inc. 120,000
Dain Rauscher Incorporated 120,000
Deutsche Bank Securities Inc. 120,000
Donaldson, Lufkin & Jenrette Securities Corporation 120,000
EVEREN Securities, Inc. 120,000
Fahnestock & Co. Inc. 120,000
First Union Capital Markets Corp. 120,000
Fleet Securities, Inc. 120,000
Goldman, Sachs & Co. 120,000
Legg Mason Wood Walker, Incorporated 120,000
McDonald Investments Inc. 120,000
Raymond James & Associates, Inc. 120,000
The Robinson-Humphrey Company, LLC 120,000
SG Cowen SecuritiesCorporation 120,000
Stephens Inc. 120,000
Tucker Anthony Incorporated 120,000
U.S. Bancorp Piper Jaffray Inc. 120,000
Warburg Dillon Reed LLC 120,000
Advest, Inc. 60,000
BB&T Capital Markets, a division of Scott & Stringfellow 60,000
J.C. Bradford & Co. 60,000
Crowell, Weedon & Co. 60,000
D. A. Davidson & Co. 60,000
Fifth Third Securities, Inc. 60,000
First Albany Corporation 60,000
A-1
Number of Preferred Securities
Underwriters To Be Purchased
------------ ---------------
Gibraltar Securities Co. 60,000
Gruntal & Co., L.L.C. 60,000
J.J.B. Hilliard, W.L. Lyons, Inc. 60,000
Wayne Hummer Investments LLC 60,000
Janney Montgomery Scott Inc. 60,000
Kirkpatrick, Pettis, Smith, Polian Inc. 60,000
Mesirow Financial, Inc. 60,000
Morgan Keegan & Company, Inc. 60,000
David A. Noyes & Company 60,000
Parker/Hunter Incorporated 60,000
Sands Brothers & Co., Ltd. 60,000
Stifel, Nicolaus & Company, Incorporated 60,000
Stone & Youngberg 60,000
TD Securities (USA) Inc. 60,000
Trilon International Inc. 60,000
Utendahl Capital Partners, L.P. 60,000
----------
TOTAL: 12,000,000
==========
A-2
SCHEDULE B
Significant Subsidiaries
Conseco Life Insurance Company of Texas
CIHC, Incorporated
Bankers Life
Insurance Company of Illinois
Bankers Life and Casualty Company
Conseco Annuity Assurance Company
Conseco Senior Health Insurance Company
Conseco Life Insurance Company
Conseco Health Insurance Company
Green Tree Financial Corporation
Pioneer Life Insurance Company
Wabash Life Insurance Company
B-1