EXHIBIT 1.2
CONSECO, INC.
/-/% CLASS B MANDATORILY CONVERTIBLE PREFERRED STOCK
---------------------
UNDERWRITING AGREEMENT
, 2004
Goldman, Sachs & Co.,
Morgan Stanley & Co. Incorporated
As representatives of the several Underwriters
named in Schedule I hereto
c/o Goldman, Sachs & Co
85 Broad Street
New York, New York 10004
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Ladies and Gentlemen:
Conseco, Inc., a Delaware corporation (the "COMPANY"), proposes,
subject to the terms and conditions stated herein, to issue and sell to the
Underwriters named in Schedule I hereto (the "UNDERWRITERS") an aggregate of /-/
shares of the /-/% Mandatorily Convertible Preferred Stock, Class B of the
Company, convertible into common stock, $0.01 par value per share ("STOCK"), of
the Company (the "FIRM SHARES") and, at the election of the Underwriters, up to
/-/ additional shares (the "OPTIONAL SHARES") (the Firm Shares and the Optional
Shares that the Underwriters elect to purchase pursuant to Section 2 hereof
being collectively called the "SECURITIES").
1. The Company represents and warrants to, and agrees with, each of the
Underwriters that:
(a) A registration statement on Form S-1 (File No. 333-112312) (the
"INITIAL REGISTRATION STATEMENT") in respect of the Securities has been filed
with the Securities and Exchange Commission (the "COMMISSION"); the Initial
Registration Statement and any post-effective amendment thereto, each in the
form heretofore delivered to you for each of the other Underwriters, and
excluding exhibits thereto, have been declared effective by the Commission in
such form; other than a registration statement, if any, increasing the size of
the offering (a "RULE 462(b) REGISTRATION STATEMENT"), filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended (the "ACT"), which became or
will become effective upon filing, no other document with respect to the Initial
Registration Statement has heretofore been filed with the Commission; and no
stop order suspending the effectiveness of the Initial Registration Statement,
any post-effective amendment thereto or the Rule 462(b) Registration Statement,
if any, has been issued and no proceeding for that purpose has been initiated or
threatened by the Commission (any preliminary prospectus included in the Initial
Registration Statement or filed with the Commission pursuant to Rule 424(a) of
the rules and regulations of the Commission under the Act is hereinafter called
a "Preliminary Prospectus"); the various parts of the Initial Registration
Statement and the Rule 462(b) Registration Statement, if any, including all
exhibits thereto and including (i) the information contained in the form of
final prospectus filed with the Commission pursuant to Rule 424(b) under the Act
in accordance with Section 5(a) hereof and deemed by virtue of Rule 430A under
the Act to be part of the Initial Registration Statement at the time it was
declared effective, each as amended at the time such part of the Initial
Registration Statement became effective or such part of the Rule 462(b)
Registration Statement, if any, became or hereafter becomes effective, are
hereinafter collectively called the "Registration Statement"; such final
prospectus, in the form first filed pursuant to Rule 424(b) under the Act, is
hereinafter called the "PROSPECTUS";
(b) No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission, and each Preliminary Prospectus,
at the time of filing thereof, conformed in all material respects to the
requirements of the Act and the rules and regulations of the Commission
thereunder, and 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
made, 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 the Representatives expressly for use therein;
(c) The Company's Annual Report on Form 10-K most recently filed with
the Commission and all subsequent reports (collectivley, the "EXCHANGE ACT
REPORTS") which have been filed by the Company with the Commission or sent to
stockholders pursuant to the Securities Exchange Act of 1934, as amended (the
"EXCHANGE Act"), when they were filed with the Commission, conformed in all
material respects to the requirements of the Act or the Exchange Act, as
applicable, and the rules and regulations of the Commission thereunder, and none
of such documents 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; and any further documents so filed, when such
documents become effective or are filed with the Commission, as the case may be,
will conform in all material respects to the requirements of the Act or the
Exchange Act, as applicable, and the rules and regulations of the Commission
thereunder 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 the Representatives expressly for use therein;
(d) The Registration Statement conforms, and the Prospectus and any further
amendments or supplements to the Registration Statement or the Prospectus when
filed with the Commission will conform, in all material respects to the
requirements of the Act and the rules and regulations of the Commission
thereunder and do not and will not, as of the applicable effective date as to
the Registration Statement and any amendment thereto, and as of the applicable
filing date as to the Prospectus and any amendment or supplement thereto,
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
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statements or omissions made in reliance upon and in conformity with information
furnished in writing to the Company by an Underwriter through the
Representatives expressly for use therein;
(e) Neither the Company nor any of its subsidiaries has sustained since
the date of the latest audited financial statements included in the Prospectus
any loss or interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree, except to the extent that any
such loss or interference would not, individually or in the aggregate, have a
material adverse effect on the current or future business, consolidated
financial position, stockholders' equity or results of operations of the Company
and its subsidiaries, taken as a whole (a "MATERIAL ADVERSE EFFECT"), or
otherwise than as set forth or contemplated in the Prospectus; and, since the
respective dates as of which information is given in the Registration Statement
and the Prospectus, there has not been any change in the capital stock or
long-term debt of the Company or any of its subsidiaries in excess of $50.0
million or any material adverse change, or any development involving a
prospective material adverse change, in or affecting the general affairs,
management, financial position, stockholders' equity or results of operations of
the Company and its subsidiaries taken as a whole, in each case otherwise than
as set forth or contemplated in the Prospectus;
(f) The Company and its subsidiaries have good and marketable title in
fee simple to all real property and good and marketable title to all personal
property owned by them, in each case free and clear of all liens, encumbrances
and defects except such as are described in the Prospectus or such as would not,
individually or in the aggregate, have a Material Adverse Effect; and any real
property and buildings held under lease by the Company and its subsidiaries are
held by them under valid, subsisting and enforceable leases with such exceptions
as would not, individually or in the aggregate, have a Material Adverse Effect;
(g) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware, with power
and authority (corporate and other) to own its properties and conduct its
business as described in the Prospectus, and has been duly qualified as a
foreign corporation for the transaction of business and is in good standing
under the laws of each other jurisdiction in which it owns or leases properties
or conducts any business so as to require such qualification, except to the
extent that the failure to be so qualified or in good standing in any such
jurisdiction would not, individually or in the aggregate, have a Material
Adverse Effect; and each subsidiary of the Company has been duly incorporated
and is validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation, except to the extent that the failure to be in
good standing would not, individually or in the aggregate, have a Material
Adverse Effect;
(h) The Company has an authorized capitalization as set forth in the Prospectus
under the caption "Description of Capital Stock", and all of the issued shares
of capital stock of the Company have been duly and validly authorized and
issued, are fully paid and non-assessable and conform in all material respects
to the description of the capital stock contained in the Prospectus under the
caption "Description of the Capital Stock"; the shares of Stock initially
issuable upon conversion of the Securities have been duly and validly authorized
and reserved for issuance and, when issued upon conversion of the Securities in
accordance with their terms, will be duly and validly issued, fully paid and
non-assessable and will conform to the description of the Stock contained in the
Prospectus; and all of the issued shares of capital stock of each subsidiary of
the Company have been duly and validly authorized and issued, are fully paid and
non-assessable and (except for directors' qualifying shares) are owned directly
or indirectly by the Company, free and clear of all liens, encumbrances,
equities or claims, except for liens, encumbrances, equities or claims that
exist pursuant to that certain Credit
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Agreement dated as of September 10, 2003 among the Company, Bank of America,
N.A., as agent and the other financial institutions party thereto (the "Credit
Agreement");
(i) The Securities have been duly and validly authorized and, when
issued and delivered against payment therefor as provided herein, will be duly
and validly issued and fully paid and non-assessable and will conform in all
material respects to the description of the Securities contained in the
Prospectus under the caption "Description of the Mandatorily Convertible
Preferred Stock";
(j) The issue and sale of the Securities by the Company and compliance
with the terms and provisions thereof, the issue and sale of the Stock by the
Company pursuant to an underwriting agreement of even date herewith, the
compliance by the Company with all of the provisions of this Agreement and the
consummation of the transactions herein contemplated will not (i) result in any
violation of any provisions of the Certificate of Incorporation or By-Laws of
the Company; (ii) conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument to which the
Company or any of its subsidiaries is a party or by which the Company or any of
its subsidiaries is bound or to which any of the property or assets of the
Company or any of its subsidiaries is subject; or (iii) result in any violation
of the provisions of any statute or any order, rule or regulation of any court
or governmental agency or body having jurisdiction over the Company or any of
its subsidiaries or any of their properties, except, with respect to clauses
(ii) and (iii), for such conflicts, breaches, violations, or defaults which
would not, individually or in the aggregate, have a Material Adverse Effect ;
and no consent, approval, authorization, order, registration or qualification of
or with any such court or governmental agency or body is required for the issue
and sale of the Securities and the Stock of the Company or the consummation by
the Company of the transactions contemplated by this Agreement, except the
registration under the Act of the Securities and the Stock and such consents,
approvals, authorizations, registrations or qualifications as may be required
under state securities or Blue Sky laws in connection with the purchase and
distribution of the Securities and the Stock by the Underwriters and except for
such consents, approvals, authorizations, orders, registrations, or
qualifications the absence of which would not have a Material Adverse Effect or
would not materially impede the ability of the Company to consummate the
transactions contemplated herein or perform its obligations hereunder;
(k) Neither the Company nor any of its subsidiaries is (i) in violation
of its Certificate of Incorporation or By-laws or (ii) in default in the
performance or observance of any obligation, agreement, covenant or condition
contained in any indenture, mortgage, deed of trust, loan agreement, lease or
other agreement or instrument to which it is a party or by which it or any of
its properties may be bound, except, with respect to clause (ii), for such
defaults that would not, individually or in the aggregate, have a Material
Adverse Effect;
(l) The statements set forth in the Prospectus under the captions
"Description of the Mandatorily Convertible Preferred Stock" and "Description of
Capital Stock", insofar as they purport to constitute a summary of the terms of
the Securities and the Stock, under the captions "Certain U.S. Federal Income
Tax Considerations" and "Business - Government Regulation" and under the caption
"Underwriting", insofar as they purport to describe the provisions of the
federal laws of the United States and documents referred to therein, are
accurate and complete in all material respects;
(m) Other than as set forth in the Prospectus, there are no legal or
governmental proceedings pending to which the Company, any of its subsidiaries
or any of its directors, officers or employees is a party or of which any
property of the Company or any of its subsidiaries is the subject which could
reasonably be expected to have, individually or in the aggregate, a Material
Adverse
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Effect; and, to the Company's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others;
(n) The Company is not and, after giving effect to the offering and
sale of the Securities and the concurrent offering and sale of the Stock
pursuant to an underwriting agreement of even date herewith, will not be an
"investment company", as such term is defined in the Investment Company Act of
1940, as amended (the "Investment Company Act");
(o) PricewaterhouseCoopers LLP, who have audited certain financial
statements of the Company (including its predecessor, Conseco, Inc., an Indiana
corporation) and its subsidiaries, are independent public accountants as
required by the Act and the rules and regulations of the Commission thereunder;
(p) The financial statements included in the Registration Statement and
Prospectus present fairly the financial position of the Company (including its
predecessor, Conseco, Inc., an Indiana corporation) and its consolidated
subsidiaries as of the dates shown and their results of operations and cash
flows for the periods shown, and such financial statements have been prepared in
conformity with the generally accepted accounting principles in the United
States applied on a consistent basis; and any schedules included in the
Registration Statement present fairly the information required to be stated
therein.
(q) The Company and its subsidiaries (i) are in compliance with any and
all applicable foreign, federal, state and local laws and regulations relating
to the protection of human health and safety, the environment or hazardous or
toxic substances or wastes, pollutants or contaminants ("ENVIRONMENTAL LAWS"),
(ii) have received all permits, licenses or other approvals required of them
under applicable Environmental Laws to conduct their respective businesses and
(iii) are in compliance with all terms and conditions of any such permit,
license or approval, except where such noncompliance with Environmental Laws,
failure to receive required permits, licenses or other approvals or failure to
comply with the terms and conditions of such permits, licenses or approvals
would not, individually or in the aggregate, have a Material Adverse Effect.
(r) There are no costs or liabilities associated with Environmental
Laws (including, without limitation, any capital or operating expenditures
required for clean-up, closure of properties or compliance with Environmental
Laws or any permit, license or approval, any related constraints on operating
activities and any potential liabilities to third parties) which would,
individually or in the aggregate, have a Material Adverse Effect.
(s) No labor dispute with the employees of the Company or any
subsidiary exists or, to the knowledge of the Company, is imminent that would
reasonably be expected to have a Material Adverse Effect.
(t) The Company and its subsidiaries own, possess or can acquire on
reasonable terms, adequate trademarks, trade names and other rights to
inventions, know-how, patents, copyrights, confidential information and other
intellectual property (collectively, "INTELLECTUAL PROPERTY RIGHTS") necessary
to conduct the business now operated by them, or presently employed by them, and
have not received any notice of infringement of or conflict with asserted rights
of others with respect to any intellectual property rights that, if determined
adversely to the Company or any of its subsidiaries, would individually or in
the aggregate have a Material Adverse Effect.
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(u) The Company and each of its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary to permit preparation
of financial statements in conformity with generally accepted accounting
principles and to maintain asset accountability; and (iii) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences. The
Company maintains disclosure controls and procedures (as such term is defined in
Rule 13a-14 under the Exchange Act) that are effective in ensuring that
information required to be disclosed by the Company in the reports that it files
or submits under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the rules and forms of the
Commission, including, without limitation, controls and procedures designed to
ensure that information required to be disclosed by the Company in the reports
that it files or submits under the Exchange Act is accumulated and communicated
to the Company's management, including its principal executive officer or
officers and its principal financial officer or officers, as appropriate to
allow timely decisions regarding required disclosure.
(v) Each of the Company and its subsidiaries that is required to be
organized or licensed as an insurance company in its jurisdiction of
incorporation (each an "INSURANCE SUBSIDIARY") has all necessary consents,
licenses, authorizations, approvals, exemptions, orders, certificates and
permits (collectively, the "CONSENTS") of and from, and has made all filings and
declarations (collectively, the "FILINGS") with, all insurance regulatory
authorities, all Federal, state, local and other governmental authorities
(including, without limitation, the Commissioner of Insurance of the State of
Texas pursuant to the Company's amended and restated letter agreement dated
November 18, 2003), all self-regulatory organizations and all courts and other
tribunals, necessary to own, lease, license and use its properties and assets
and to conduct its business in the manner described in the Prospectus, except
where the failure to have such Consents or to make such Filings would not,
individually or in the aggregate, have a Material Adverse Effect; all such
Consents and Filings are in full force and effect, the Company and its Insurance
Subsidiaries are in compliance with such Consents and neither the Company nor
any of its Insurance Subsidiaries has received any notice of any inquiry,
investigation or proceeding that would reasonably be expected to result in the
suspension, revocation or limitation of any such Consent or otherwise impose any
limitation on the conduct of the business of the Company or any of its
respective Insurance Subsidiaries, except as set forth in the Prospectus or
except as any such failure to be in full force and effect, failure to be in
compliance with, suspension, revocation or limitation would not, individually or
in the aggregate, have a Material Adverse Effect; each of the Company and its
Insurance Subsidiaries is in compliance with, and conducts its businesses in
conformity with, all applicable insurance laws and regulations, except where the
failure to so comply or conform would not, individually or in the aggregate,
have a Material Adverse Effect.
(w) The 2003 statutory annual statements of each Insurance Subsidiary
and the statutory balance sheets and income statements included in such
statutory annual statements together with related schedules and notes, have been
prepared, in all material respects, in conformity with statutory accounting
principles and practices required or permitted by the appropriate insurance
regulator of the jurisdiction of domicile of each such Insurance Subsidiary, and
such statutory accounting principles and practices have been applied on a
consistent basis throughout the periods involved, except as may otherwise be
indicated therein or in the notes thereto, and present fairly, in all material
respects, the statutory financial position of such Insurance Subsidiaries as of
the dates thereof, and
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the statutory basis results of operations of such Insurance Subsidiaries for the
periods covered thereby.
(x) There are no contracts, agreements or understandings between the
Company and any person granting such person the right to require the Company to
file a registration statement under the Securities Act with respect to any
securities of the Company or to require the Company to include such securities
with the Securities registered pursuant to the Registration Statement, except
for (i) the Registration Rights Agreement entered into as of September 10, 2003
by and between Conseco, Inc. and the holders of Conseco, Inc.'s common stock
listed therein (the "COMMON STOCK REGISTRATION RIGHTS AGREEMENT") and (ii) the
Registration Rights Agreement entered into as of September 10, 2003 by and
between Conseco, Inc. and the holders of Conseco, Inc.'s Class A convertible
exchangeable preferred stock (the "CLASS A PREFERRED STOCK") listed therein (the
"CLASS A PREFERRED STOCK REGISTRATION RIGHTS AGREEMENT"). No beneficiary of the
foregoing rights has exercised its right to include any securities on the
Registration Statement.
(y) The Sixth Amended Joint Plan of Reorganization Pursuant to Chapter
11 of the United States Bankruptcy Code (the "PLAN OF REORGANIZATION") of
Conseco, Inc., CIHC, Incorporated, CTIHC, Inc. and Partners Health Group, Inc.
(collectively, the "REORGANIZING DEBTORS") was confirmed on September 9, 2003
and no party has appealed such confirmation order. Except as provided in the
Plan of Reorganization, all Filed Claims (as defined in the Plan of
Reorganization) against, and Equity Interests (as defined in the Plan of
Reorganization) in, the Reorganizing Debtors have been discharged in full.
2. Subject to the terms and conditions herein set forth, (a) the
Company agrees to issue and sell to each of the Underwriters, and each of the
Underwriters agrees, severally and not jointly, to purchase from the Company, at
a purchase price per share of $/-/, the number of Firm Shares set forth opposite
the name of such Underwriter in Schedule I hereto and (b) in the event and to
the extent that the Underwriters shall exercise the election to purchase
Optional Shares as provided below, the Company agrees to issue and sell to each
of the Underwriters, and each of the Underwriters agrees, severally and not
jointly, to purchase from the Company, at the purchase price per share set forth
in clause (a) of this Section 2, that portion of the number of Optional Shares
as to which such election shall have been exercised (to be adjusted by you so as
to eliminate fractional shares) determined by multiplying such number of
Optional Shares by a fraction, the numerator of which is the maximum number of
Optional Shares which such Underwriter is entitled to purchase as set forth
opposite the name of such Underwriter in Schedule I hereto and the denominator
of which is the maximum number of Optional Shares that all of the Underwriters
are entitled to purchase hereunder.
The Company hereby grants to the Underwriters the right to purchase at their
election up to /-/ Optional Shares, at the purchase price per share set forth in
the paragraph above, for the sole purpose of covering sales of shares in excess
of the number of Firm Shares, provided that the purchase price per Optional
Share shall be reduced by an amount per share equal to any dividends or
distributions declared by the Company and payable on the Firm Shares but not
payable on the Optional Shares. Any such election to purchase Optional Shares
may be exercised only by written notice from you to the Company, given within a
period of 30 calendar days after the date of this Agreement, setting forth the
aggregate number of Optional Shares to be purchased and the date on which such
Optional Shares are to be delivered, as determined by you but in no event
earlier than the
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First Time of Delivery (as defined in Section 4 hereof) or, unless you and the
Company otherwise agree in writing, earlier than two or later than ten business
days after the date of such notice.
3. Upon the authorization by you of the release of the Firm Shares, the
several Underwriters propose to offer the Firm Shares for sale upon the terms
and conditions set forth in the Prospectus.
4. (a) The Securities to be purchased by each Underwriter hereunder, in
definitive form, and in such authorized denominations and registered in such
names as the Representatives may request upon at least forty-eight hours' prior
notice to the Company shall be delivered by or on behalf of the Company to the
Representatives, through the facilities of the Depository Trust Company ("DTC"),
for the account of such Underwriter, against payment by or on behalf of such
Underwriter of the purchase price therefor by wire transfer of Federal
(same-day) funds to the account specified by the Company to the Representatives
at least forty-eight hours in advance. The Company will cause the certificates
representing the Securities to be made available for checking and packaging at
least twenty-four hours prior to the Time of Delivery (as defined below) with
respect thereto at the office of DTC or its designated custodian (the
"DESIGNATED OFFICE"). The time and date of such delivery and payment shall be,
with respect to the Firm Shares, 9:30 a.m., New York City time, on March /-/,
2004 or such other time and date as the Representatives and the Company may
agree upon in writing, and, with respect to the Optional Shares, 9:30 a.m., New
York time, on the date specified by the Representatives in the written notice
given by the Representatives of the Underwriters' election to purchase such
Optional Shares, or such other time and date as the Representatives and the
Company may agree upon in writing. Such time and date for delivery of the Firm
Shares is herein called the "FIRST TIME OF DELIVERY", such time and date for
delivery of the Optional Shares, if not the First Time of Delivery, is herein
called the "SECOND TIME OF DELIVERY", and each such time and date for delivery
is herein called a "TIME OF DELIVERY".
(b) The documents to be delivered at each Time of Delivery by
or on behalf of the parties hereto pursuant to Section 7 hereof, including the
cross receipt for the Securities and any additional documents requested by the
Underwriters pursuant to Section 7 hereof, will be delivered at the offices of
Cravath, Swaine & Moore LLP, 825 Eighth Avenue, New York, New York, 10019 (the
"CLOSING LOCATION"), and the Securities will be delivered at the Designated
Office, all at such Time of Delivery. A meeting will be held at the Closing
Location at 5 p.m., New York City time, on the New York Business Day next
preceding such Time of Delivery, at which meeting the final drafts of the
documents to be delivered pursuant to the preceding sentence will be available
for review by the parties hereto. For the purposes of this Section 4, "New York
Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in New York are generally
authorized or obligated by law or executive order to close.
5. The Company agrees with each of the Underwriters:
(a) To prepare the Prospectus in a form approved by you and to
file such Prospectus pursuant to Rule 424(b) under the Act not later than the
Commission's close of business on the second business day following the
execution and delivery of this Agreement, or, if applicable, such earlier time
as may be required by Rule 430A(a)(3) under the Act; to make no further
amendment or any supplement to the Registration Statement or Prospectus prior to
the last Time of Delivery which shall be disapproved by you promptly after
reasonable notice thereof; to advise you, promptly after it receives notice
thereof, of the time when any amendment to the Registration Statement has been
filed or becomes effective or any supplement to the Prospectus or any amended
Prospectus has been filed and to furnish you with copies thereof; to file
promptly all reports and any definitive proxy or
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information statements required to be filed by the Company with the Commission
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to
the date of the Prospectus and for so long as the delivery of a prospectus is
required in connection with the offering or sale of the Securities; to advise
you, promptly after it receives notice thereof, of the issuance by the
Commission of any stop order or of any order preventing or suspending the use of
any Preliminary Prospectus or prospectus, of the suspension of the qualification
of the Securities or the shares of Stock issuable upon conversion of the
Securities for offering or sale in any jurisdiction, of the initiation or
threatening of any proceeding for any such purpose, or of any request by the
Commission for the amending or supplementing of the Registration Statement or
Prospectus or for additional information; and, in the event of the issuance of
any stop order or of any order preventing or suspending the use of any
Preliminary Prospectus or prospectus or suspending any such qualification,
promptly to use its best efforts to obtain the withdrawal of such order;
(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Securities and the shares of Stock issuable
upon conversion of the Securities for offering and sale under the securities
laws of such jurisdictions as you may request and to comply with such laws so as
to permit the continuance of sales and dealings therein in such jurisdictions
for as long as may be necessary to complete the distribution of the Securities,
provided that in connection therewith the Company shall not be required to
qualify as a foreign corporation or to file a general consent to service of
process in any jurisdiction;
(c) Prior to 12:00 noon, New York City time, on the New York
Business Day next succeeding the date of this Agreement and from time to time,
to furnish the Underwriters with written and electronic copies of the Prospectus
in New York City in such quantities as you may reasonably request, and, if the
delivery of a prospectus is required at any time prior to the expiration of nine
months after the time of issue of the Prospectus in connection with the offering
or sale of the Securities or the shares of Stock issuable upon conversion of the
Securities and if at such time any event shall have occurred as a result of
which the Prospectus as then amended or supplemented would include an untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made when such Prospectus is delivered, not misleading, or, if
for any other reason it shall be necessary during such period to amend or
supplement the Prospectus or to file under the Exchange Act any document
incorporated by reference in the Prospectus in order to comply with the Act or
the Exchange Act, to notify you and upon your request to file such document and
to prepare and furnish without charge to each Underwriter and to any dealer in
securities as many written and electronic copies as you may from time to time
reasonably request of an amended Prospectus or a supplement to the Prospectus
which will correct such statement or omission or effect such compliance, and in
case any Underwriter is required to deliver a prospectus in connection with
sales of any of the Securities or the shares of Stock issuable upon conversion
of the Securities at any time nine months or more after the time of issue of the
Prospectus, upon your request but at the expense of such Underwriter, to prepare
and deliver to such Underwriter as many written and electronic copies as you may
request of an amended or supplemented Prospectus complying with Section 10(a)(3)
of the Act;
(d) To make generally available to its securityholders as soon
as practicable, but in any event not later than eighteen months after the
effective date of the Registration Statement (as defined in Rule 158(c) under
the Act), an earnings statement of the Company and its subsidiaries (which need
not be audited) complying with Section 11(a) of the Act and the rules and
regulations thereunder (including, at the option of the Company, Rule 158);
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(e) During the period beginning from the date hereof and
continuing to and including the date 180 days after the date of the Prospectus,
not to offer, sell, contract to sell or otherwise dispose of, except as provided
hereunder any securities of the Company that are substantially similar to the
Securities or the Stock, including but not limited to any securities that are
convertible into or exchangeable for, or that represent the right to receive,
Stock or any such substantially similar securities (other than pursuant to
employee stock option plans existing on, or upon the conversion or exchange of
convertible or exchangeable securities outstanding as of, the date of this
Agreement, and other than the offer and sale of the Stock made concurrently with
the offering of the Securities pursuant to an underwriting agreement of even
date herewith and any additional shares of Stock that may be sold pursuant to
such underwriting agreement), without your prior written consent;
(f) To furnish or otherwise make available through electronic
means to holders of the Securities as soon as practicable after the end of each
fiscal year an annual report (including a balance sheet and statements of
income, stockholders' equity and cash flows of the Company and its consolidated
subsidiaries certified by independent public accountants) and, as soon as
practicable after the end of each of the first three quarters of each fiscal
year (beginning with the fiscal quarter ending after the effective date of the
Registration Statement), to make available to its stockholders consolidated
summary financial information of the Company and its subsidiaries for such
quarter in reasonable detail;
(g) During a period of five years from the effective date of
the Registration Statement, to furnish to you copies of all reports or other
communications (financial or other) furnished to stockholders, and to deliver to
you (i) as soon as 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, provided
that the Company shall not be required to furnish or deliver to you any
communications, reports or financial statements that are available through
electronic means; and (ii) such non-confidential additional information
concerning the business and financial condition of the Company as you may from
time to time reasonably request (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);
(h) To use the net proceeds received by it from the sale of
the Securities pursuant to this Agreement, from the sale of the Stock pursuant
to an underwriting agreement of even date herewith and from any additional
shares of Stock that may be sold pursuant to such underwriting agreements in the
manner specified in the Prospectus under the caption "Use of Proceeds",
including, without limitation, at the Time of Delivery, (i) to give notice to
each holder of its Class A Preferred Stock pursuant to paragraph e(ii)(A) of the
Certificate of Designations governing the Class A Preferred Stock and (ii) to
deposit in trust for the benefit of the holders of the Class A Preferred Stock
(with such funds not being revocable until two years after the proposed date of
redemption) the funds necessary for redemption of all the shares of the Class A
Preferred Stock.
(i) To reserve and keep available at all times, free of
preemptive rights, shares of Stock for the purpose of enabling the Company to
satisfy any obligations to issue shares of its Stock upon conversion of the
Securities;
(i) To use its best efforts to list, subject to notice of
issuance, the Securities and the Stock issuable upon the conversion of the
Securities on the New York Stock Exchange (the "NYSE");
(j) If the Company elects to rely upon Rule 462(b), the
Company shall file a Rule 462(b) Registration Statement with the Commission in
compliance with Rule 462(b) by 10:00 P.M.,
10
Washington, D.C. time, on the date of this Agreement, and the Company shall at
the time of filing either pay to the Commission the filing fee for the Rule
462(b) Registration Statement or give irrevocable instructions for the payment
of such fee pursuant to Rule 111(b) under the Act; and
(k) Upon request of any Underwriter, to furnish, or cause to
be furnished, to such Underwriter an electronic version of the Company's
trademarks, servicemarks and corporate logo for use on the website, if any,
operated by such Underwriter for the purpose of facilitating the on-line
offering of the Securities (the "LICENSE"); provided, however, that the License
shall be used solely for the purpose described above, is granted without any fee
and may not be assigned or transferred.
6. The Company covenants and agrees with the several Underwriters that
the Company will pay or cause to be paid the following: (i) the fees,
disbursements and expenses of the Company's counsel and accountants in
connection with the registration of the Securities and the shares of Stock
issuable upon conversion of the Securities under the Act and all other expenses
in connection with the preparation, printing and filing of the Registration
Statement, any Preliminary Prospectus and the Prospectus and amendments and
supplements thereto and the mailing and delivering of copies thereof to the
Underwriters and dealers; (ii) the cost of printing or producing any Agreement
among Underwriters, this Agreement, the Blue Sky Memorandum, closing documents
(including any compilations thereof) and any other documents in connection with
the offering, purchase, sale and delivery of the Securities; (iii) all expenses
in connection with the qualification of the Securities and the shares of Stock
issuable upon conversion of the Securities for offering and sale under state
securities laws as provided in Section 5(b) hereof, including the fees and
disbursements of counsel for the Underwriters in connection with such
qualification and in connection with the Blue Sky survey (such fees and
disbursements not to exceed $5,000) (iv) all fees and expenses in connection
with listing the Securities and the shares of Stock issuable upon conversion of
the Securities on the NYSE; (v) the filing fees incident to, and the reasonable
fees and disbursements of counsel for the Underwriters in connection with,
securing any required review by the National Association of Securities Dealers,
Inc. of the terms of the sale of the Securities; (vi) the cost of preparing
stock certificates; (vii) the cost and charges of any transfer agent or
registrar; and (viii) all other costs and expenses incident to the performance
of its obligations hereunder which are not otherwise specifically provided for
in this Section. It is understood, however, that, except as provided in this
Section, and Sections 8 and 11 hereof, the Underwriters will pay all of their
own costs and expenses, including the fees of their counsel, stock transfer
taxes on resale of any of the Securities by them, and any advertising expenses
connected with any offers they may make.
7. The obligations of the Underwriters hereunder, as to the Securities
to be delivered at each Time of Delivery, shall be subject, in their discretion,
to the condition that all representations and warranties and other statements of
the Company herein are, at and as of such Time of Delivery, true and correct,
the condition that the Company shall have performed all of its obligations
hereunder theretofore to be performed, and the following additional conditions:
(a) The Prospectus shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period prescribed
for such filing by the rules and regulations under the Act and in
accordance with Section 5(a) hereof; if the Company has elected to rely
upon Rule 462(b), the Rule 462(b) Registration Statement shall have
become effective by 10:00 P.M., Washington, D.C. time, on the date of
this Agreement; no stop order suspending the effectiveness of the
Registration Statement or any part thereof shall have been issued and
no proceeding for that purpose shall have been initiated or threatened
by the Commission; and all requests for additional information on the
part of the Commission shall have been complied with to your reasonable
satisfaction;
11
(b) Cravath Swaine & Moore LLP, counsel for the Underwriters,
shall have furnished to you such written opinion or opinions (a draft
of each such opinion is attached as Annex II(a) hereto), dated such
Time of Delivery, with respect to the matters covered in paragraphs
(i), (ii), (iii), (viii) and (x) of subsection (c) below as well as
such other related matters as you may reasonably request, and such
counsel shall have received such papers and information as they may
reasonably request to enable them to pass upon such matters;
(c) Kirkland & Ellis LLP, counsel for the Company, shall have
furnished to you their written opinion (a draft of such opinion is
attached as Annex II(b) hereto), dated such Time of Delivery, in form
and substance satisfactory to you, to the effect that:
(i) The Company has been duly incorporated and is
existing as a corporation in good standing under the laws of
the State of Delaware, with corporate power to own its
properties and conduct its business as described in the
Prospectus;
(ii) The Company has an authorized capitalization as
set forth in the Prospectus under the caption "Description
of Capital Stock", and all of the issued shares of capital
stock of the Company have been duly authorized and issued
and are fully paid and non-assessable; the issuance of the
Securities to be sold by the Company has been duly
authorized and, when appropriate certificates representing
such Securities are duly countersigned by the Company's
transfer agent and registrar and delivered against payment
of the agreed upon consideration therefor in accordance with
the terms of this Agreement, will be validly issued, fully
paid and nonassessable; and the Securities conform as to
legal matters to the "Description of the Mandatorily
Convertible Preferred Stock" contained in the Prospectus;
(iii) The shares of Stock initially issuable upon
conversion of the Securities have been duly and validly
authorized and reserved for issuance and, when issued upon
conversion of the Securities in accordance with their terms,
will be duly and validly issued, fully paid and
non-assessable and will conform to the description of the
Stock contained in the Prospectus under the caption
"Description of Capital Stock";
(iv) To such counsel's knowledge, no legal or
governmental investigations or proceedings are pending or
threatened to which the Company or any of its subsidiaries
is a party or to which the property or assets of the Company
or any of its subsidiaries is subject (i) that would be
required under Item 103 of Regulation S-K under the Act to
be disclosed in a registration statement or prospectus
delivered at the time of confirmation of the sale of any
offering of securities registered under the Act that are not
described in the Prospectus or (ii) that seeks to restrain,
enjoin or prevent the consummation of or otherwise challenge
the issuance or sale of the Securities or the consummation
of the other transactions contemplated this Agreement;
(v) This Agreement has been duly authorized, executed
and delivered by the Company;
(vi) The issue and sale of the Securities to be sold by
the Company in accordance with the provisions of this
Agreement and the consummation by the Company of the
transactions herein contemplated will not (i) violate the
Certificate of Incorporation or Bylaws of the Company or
any of its subsidiaries, (ii) constitute a violation by the
Company or any of its subsidiaries of any applicable
provisions of
12
any law, statute, order, rule or regulation (except with
respect to compliance with any disclosure requirement or any
prohibition against fraud or misrepresentation, as to which
such counsel need not express any opinion) or (iii) conflict
with, breach, or result in a default under, any existing
obligation of the Company and its subsidiaries under any of
its Other Specified Agreements (a list of which shall be
attached to such counsel's opinion);
(vii) No consent, approval, authorization, order,
registration or qualification of or with any court or
governmental agency or body is required for the issue and
sale of the Securities or consummation by the Company of the
transactions contemplated by this Agreement, except for the
registration under the Act of the Securities, and such
consents, approvals, authorizations, orders, registrations
or qualifications (i) as may be required under state or
foreign securities or Blue Sky laws in connection with the
purchase and distribution of the Shares by the Underwriters
or (ii) the failure of which to obtain would not,
individually or in the aggregate, have a Material Adverse
Effect or materially impede the ability of the Company to
consummate the transactions contemplated herein or perform
its obligations hereunder;
(viii)The statements set forth in the Prospectus under
the captions "Description of the Mandatorily Convertible
Preferred Stock" and "Description of Capital Stock", insofar
as they purport to constitute a summary of the terms of the
Securities and the Stock, under the caption "Certain U.S.
Federal Income Tax Considerations", and under the caption
"Underwriting", insofar as they purport to describe the
provisions of the federal laws of the United States and
documents referred to therein, are true and correct in all
material respects;
(ix) The Company is not an "investment company", as
such term is defined in the Investment Company Act;
(x) Based upon such counsel's participation in
conferences and its review of documents relating to the
transactions contemplated by this Agreement, such counsel's
understanding of applicable law and the experience such
counsel has gained in practice thereunder, and, to the
extent such counsel has considered reasonable and
necessary, relying as to factual matters upon the
statements of officers and other representatives of the
Company, such counsel can advise that nothing has come to
its attention that has caused it to conclude that (i) the
Registration Statement or any further amendment or
supplement thereto made by the Company prior to the date of
such opinion (other than financial statements and related
notes and other financial and accounting data included in
the Registration Statement, as to which such counsel need
not express any advice or opinion) at its effective date
and at the date of such opinion contained an untrue
statement of material fact or omitted to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading or (ii) the Prospectus or
any further amendment or supplement thereto made by the
Company prior to the date of such opinion (other than
financial statements and related notes and other financial
and accounting data included in the Registration Statement,
as to which such counsel need not express any advice or
opinion) at the date it bears and at the date of such
opinion contained an untrue statement of material fact or
omitted to state a material fact necessary in order to make
the statement therein, in light of the circumstances under
which they were made, not misleading. Subject to the
foregoing, such counsel also advises you that each of the
Registration Statement, as
13
of the effective date and the date of such opinion, and
the Prospectus (other than financial statements and related
notes and other financial and accounting data included in
the Registration Statement, as to which such counsel need
not express any advice or opinion), as of the date it bears
and the date of such opinion, appeared or appears on its
face to be responsive in all material respect to the
requirements of Form S-1; and
(xi) The Plan of Reorganization of the Reorganizing
Debtors was confirmed on September 9, 2003 and no party has
appealed such confirmation order. Except as provided in the
Plan of Reorganization, all Filed Claims (as defined in the
Plan of Reorganization) against, and Equity Interests (as
defined in the Plan of Reorganization) in the Reorganizing
Debtors have been discharged in full.
(d) Karl W. Kindig, Assistant Secretary of the Company, shall
have furnished to you his written opinion (a draft of such opinion is
attached as Annex II(c) hereto), dated such Time of Delivery, in form
and substance satisfactory to you, to the effect that:
(i) The Company has been duly qualified as a foreign
corporation for the transaction of business and is in good
standing under the laws of each other jurisdiction in which
it owns or leases properties or conducts any business so as
to require such qualification, except to the extent that
such failure to qualify would not, individually or in the
aggregate, have a Material Adverse Effect (such counsel
being entitled to rely in respect of the opinion in this
clause upon opinions of local counsel and in respect of
matters of fact upon certificates of officers of the
Company, provided that such counsel shall state that they
have no reason to believe such reliance is unwarranted);
(ii) Each material subsidiary of the Company has been
duly incorporated or organized, as the case may be, and is
validly existing as a corporation or limited liability
company, as the case may be, in good standing under the laws
of its jurisdiction of incorporation or organization, as the
case may be; and all of the issued shares of capital stock
of each such subsidiary have been duly and validly
authorized and issued, are fully paid and non-assessable,
and (except for directors' qualifying shares) are owned
directly or indirectly by the Company and, to such counsel's
knowledge, free and clear of all liens, encumbrances,
equities or claims, except for liens, encumbrances, equities
or claims that exist pursuant to that certain Credit
Agreement dated as of September 10, 2003 among the Company,
Bank of America, N.A., as agent and the other financial
institutions party thereto (the "Credit Agreement") (such
counsel being entitled to rely in respect of the opinion in
this clause upon opinions of local counsel and in respect to
matters of fact upon certificates of officers of the Company
or its subsidiaries, provided that such counsel shall state
that they have no reason to believe such reliance is
unwarranted);
(iii) To such counsel's knowledge and other than as set
forth in the Prospectus, there are no legal or governmental
proceedings pending to which the Company, any of its
subsidiaries or any of its directors, officers or employees
is a party or of which any property of the Company or any of
its subsidiaries is the subject which could reasonably be
expected to have, individually or in the aggregate, a
Material Adverse Effect; and, to such counsel's knowledge,
no such proceedings are threatened or contemplated by
governmental authorities or threatened by others;
14
(iv) Neither the Company nor any of its subsidiaries is
(A) in violation of its Certificate of Incorporation or
By-laws or (B) in default in the performance or observance
of any material obligation, agreement, covenant or condition
contained in any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which
it is a party or by which it or any of its properties may be
bound, except, with respect to clause (B), for such defaults
that would not, individually or in the aggregate, have a
Material Adverse Effect;
(v) The statements set forth in the Prospectus under
the caption "Business - Government Regulation", insofar as
they purport to describe the provisions of the laws and
documents referred to therein, are true and correct in all
material respects;
(vi) Each of the Company and its subsidiaries has all
necessary Consents of and from, and has made all Filings
with, all insurance regulatory authorities, all Federal,
state, local and other governmental authorities, all
self-regulatory organizations and all courts and other
tribunals, necessary to own, lease, license and use its
properties and assets and to conduct its business in the
manner described in the Prospectus, except where the failure
to have such Consents or to make such Filings would not,
individually or in the aggregate, have a Material Adverse
Effect; all such Consents and Filings are in full force and
effect, the Company and its subsidiaries are in compliance
with such Consents and neither the Company nor any of its
subsidiaries has received any notice of any inquiry,
investigation or proceeding that would reasonably be
expected to result in the suspension, revocation or
limitation of any such Consent or otherwise impose any
limitation on the conduct of the business of the Company or
any of its respective subsidiaries, except as set forth in
the Prospectus or any such failure to be in full force and
effect, failure to be in compliance with, suspension,
revocation or limitation which would not, individually or in
the aggregate, have a Material Adverse Effect; the Company
and each of it subsidiaries are in compliance with, and
conducts its businesses in conformity with, all applicable
insurance laws and regulations, except where the failure to
so comply or conform would not have a Material Adverse
Effect; and
(vii) The Registration Statement and the Prospectus and any
further amendments and supplements thereto made by the
Company prior to such Time of Delivery (other than the
financial statements and related schedules therein, as to
which such counsel need express no opinion) comply as to
form in all material respects with the requirements of the
Act and the rules and regulations thereunder; although such
counsel does not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the
Registration Statement or the Prospectus, except for those
referred to in the opinion in subsection (iii) of this
section 7(d), such counsel has no reason to believe that, as
of its effective date, the Registration Statement or any
further amendment thereto made by the Company prior to such
Time of Delivery (other than the financial statements and
related schedules therein, as to which such counsel need
express no opinion) 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, as of its date, the
Prospectus or any further amendment or supplement thereto
made by the Company prior to such Time of Delivery (other
than the financial statements and related schedules therein,
as to which such counsel need express no opinion)
15
contained an untrue statement of a material fact or
omitted to state a material fact necessary to make the
statements therein, in the light of the circumstances under
which they were made, not misleading or that, as of such
Time of Delivery, either the Registration Statement or the
Prospectus or any further amendment or supplement thereto
made by the Company prior to such Time of Delivery (other
than the financial statements and related schedules therein,
as to which such counsel need express no opinion) contains
an untrue statement of a material fact or omits to state a
material fact necessary to make the statements therein, in
the light of the circumstances under which they were made,
not misleading; and such counsel does not know of any
amendment to the Registration Statement required to be filed
or of any contracts or other documents of a character
required to be filed as an exhibit to the Registration
Statement or required to be described in the Registration
Statement or the Prospectus which are not filed or described
as required;
(e) On the date of the Prospectus at a time prior to the
execution of this Agreement, at 9:30 a.m., New York City time, on the
effective date of any post-effective amendment to the Registration
Statement filed subsequent to the date of this Agreement and also at
each Time of Delivery, PricewaterhouseCoopers LLP shall have furnished
to you a letter or letters, dated the respective dates of delivery
thereof, in form and substance satisfactory to you, to the effect set
forth in Annex I hereto;
(f) (i) Neither the Company nor any of its subsidiaries shall
have sustained since the date of the latest audited financial
statements included in the Prospectus any loss or interference with its
business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus, and (ii) since the respective dates as
of which information is given in the Prospectus there shall not have
been any change in the capital stock or long-term debt of the Company
or any of its subsidiaries or any change, or any development involving
a prospective change, in or affecting the general affairs, management,
financial position, stockholders' equity or results of operations of
the Company and its subsidiaries, otherwise than as set forth or
contemplated in the Prospectus, the effect of which, in any such case
described in clause (i) or (ii), is in the judgment of the
Representatives so material and adverse as to make it impracticable or
inadvisable to proceed with the public offering or the delivery of the
Securities being delivered at such Time of Delivery on the terms and in
the manner contemplated in the Prospectus;
(g) On or after the date hereof (i) no downgrading shall have
occurred in the rating accorded the Company's debt securities or
preferred stock or the Company's financial strength or claims paying
ability by any "nationally recognized statistical rating organization",
as that term is defined by the Commission for purposes of Rule
436(g)(2) under the Act, and (ii) no such organization shall have
publicly announced that it has under surveillance or review, with
possible negative implications, its rating of any of the Company's debt
securities or preferred stock or the Company's financial strength or
claims paying ability;
(h) On or after the date hereof there shall not have occurred any
of the following: (i) a suspension or material limitation in trading in
securities generally on the NYSE; (ii) a suspension or material
limitation in trading in the Company's securities on the NYSE; (iii) a
general moratorium on commercial banking activities declared by either
Federal or New York State authorities or a material disruption in
commercial banking or securities settlement or clearance services in
the United States; (iv) the outbreak or escalation of hostilities
involving
16
the United States or the declaration by the United States of a
national emergency or war or (v) the occurrence of any other calamity
or crisis or any change in financial, political or economic conditions
in the United States or elsewhere, if the effect of any such event
specified in clause (iv) or (v) in the judgment of the Representatives
makes it impracticable or inadvisable to proceed with the public
offering or the delivery of the Securities being delivered at such Time
of Delivery on the terms and in the manner contemplated in the
Prospectus;
(i) The Securities to be sold at such Time of Delivery shall have
been duly listed, subject to notice of issuance, on the NYSE;
(j) The shares of Stock to be issuable upon conversion of the
Securities shall have been duly listed, subject to notice of issuance,
on the NYSE;
(k) The Company has obtained and delivered to the Underwriters
executed copies of an agreement from each officer and director of the
Company, substantially to the effect set forth in Subsection 5(e)
hereof in form and substance satisfactory to you;
(l) The Company shall have complied with the provisions of
Section 5(c) hereof with respect to the furnishing of prospectuses on
the New York Business Day next succeeding the date of this Agreement;
(m) The Company shall have furnished or caused to be furnished to
you at such Time of Delivery certificates of officers of the Company
satisfactory to you as to the accuracy of the representations and
warranties of the Company herein at and as of such Time of Delivery, as
to the performance by the Company of all of its obligations hereunder
to be performed at or prior to such Time of Delivery, as to the matters
set forth in subsections (a) and (e) of this Section and as to such
other matters as you may reasonably request; and
(o) The Company shall have consummated the offering of Stock in
accordance with that certain underwriting agreement dated the date
herewith by and between the Company and the Representatives, prior to
or concurrently with the sale of the Securities on the First Time of
Delivery.
8. (a) The Company will indemnify and hold harmless each Underwriter
against any losses, claims, damages or liabilities, joint or several, to which
such Underwriter may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, the Registration
Statement or the Prospectus, or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse each Underwriter for any legal or
other expenses reasonably incurred by such Underwriter in connection with
investigating or defending any such action or claim as such expenses are
incurred; provided, however, that the Company shall not be liable in any such
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in any Preliminary Prospectus, the Registration Statement
or the Prospectus or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by any Underwriter
through the Representatives expressly for use therein.
(b) Each Underwriter will indemnify and hold harmless the Company
against any losses, claims, damages or liabilities to which the Company may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
17
based upon an untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus, the Registration Statement or the
Prospectus, or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in any
Preliminary Prospectus, the Registration Statement or the Prospectus or any such
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by such Underwriter through the
Representatives expressly for use therein; and will reimburse the Company for
any legal or other expenses reasonably incurred by the Company in connection
with investigating or defending any such action or claim as such expenses are
incurred.
(c) Promptly after receipt by an indemnified party under subsection (a)
or (b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party shall
not relieve it from any liability which it may have to any indemnified party
otherwise than under such subsection. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party), and,
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party under such subsection for any legal expenses of
other counsel or any other expenses, in each case subsequently incurred by such
indemnified party, in connection with the defense thereof other than reasonable
costs of investigation. No indemnifying party shall, without the written consent
of the indemnified party, effect the settlement or compromise of, or consent to
the entry of any judgment with respect to, any pending or threatened action or
claim in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified party is an actual or potential party
to such action or claim) unless such settlement, compromise or judgment (i)
includes an unconditional release of the indemnified party from all liability
arising out of such action 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 the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) 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 from the offering of the Securities. If, however, the allocation
provided by the immediately preceding sentence is not permitted by applicable
law or if the indemnified party failed to give the notice required under
subsection (c) above, then each indemnifying party shall contribute to such
amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company on the one hand and the Underwriters on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities (or actions in respect thereof), as well as any
other relevant equitable considerations. The relative benefits received by the
Company on the one hand and the
18
Underwriters on the other shall be deemed to be in the same proportion as the
total net proceeds from the offering (before deducting expenses) received by the
Company bear to the total underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the cover page of the
Prospectus. The relative fault 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 on the one hand or the Underwriters on the other 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 contributions pursuant to this
subsection (d) 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 subsection (d). The amount paid or payable by an indemnified
party as a result of the losses, claims, damages or liabilities (or actions in
respect thereof) referred to above in this subsection (d) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this subsection (d), no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations in this subsection
(d) to contribute are several in proportion to their respective underwriting
obligations and not joint.
(e) The obligations of the Company under this Section 8 shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls any
Underwriter within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, and each affiliate of any Underwriter within the
meaning of Rule 405 under the Act; and the obligations of the Underwriters under
this Section 8 shall be in addition to any liability which the respective
Underwriters may otherwise have and shall extend, upon the same terms and
conditions, to each officer and director of the Company and to each person, if
any, who controls the Company within the meaning of the Act.
(f) The Company will indemnify and hold harmless each Underwriter
against any losses, claims, damages or liabilities, joint or several, to which
such Underwriter may become subject, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
failure or alleged failure by the Company to comply with the terms of the Common
Stock Registration Rights Agreement or the Class A Preferred Stock Registration
Rights Agreement in connection with the transactions contemplated by this
Agreement or any advice given by the Representatives or action taken by the
Company or Representatives pursuant to Section 2.4 of the Common Stock
Registration Rights Agreement or the Class A Preferred Stock Registration Rights
Agreement in connection with the transactions contemplated by this Agreement.
9. (a) If any Underwriter shall default in its obligation to purchase
the Securities which it has agreed to purchase hereunder at a Time of Delivery,
you may in your discretion arrange for you or another party or other parties to
purchase such Securities on the terms contained herein. If within thirty-six
hours after such default by any Underwriter you do not arrange for the purchase
of such Securities, then the Company shall be entitled to a further period of
thirty-six hours within which to
19
procure another party or other parties satisfactory to you to purchase such
Securities on such terms. In the event that, within the respective prescribed
periods, you notify the Company that you have so arranged for the purchase of
such Securities, or the Company notifies you that it has so arranged for the
purchase of such Securities, you or the Company shall have the right to postpone
such Time of Delivery for a period of not more than seven days, in order to
effect whatever changes may thereby be made necessary in the Registration
Statement or the Prospectus, or in any other documents or arrangements, and the
Company agrees to file promptly any amendments to the Registration Statement or
the Prospectus which in your opinion may thereby be made necessary. The term
"Underwriter" as used in this Agreement shall include any person substituted
under this Section with like effect as if such person had originally been a
party to this Agreement with respect to such Securities.
(b) If, after giving effect to any arrangements for the purchase of the
Securities of a defaulting Underwriter or Underwriters by you and the Company as
provided in subsection (a) above, the aggregate number of such Securities which
remains unpurchased does not exceed one-eleventh of the aggregate number of all
the Securities to be purchased at such Time of Delivery, then the Company shall
have the right to require each non-defaulting Underwriter to purchase the number
of shares which such Underwriter agreed to purchase hereunder at such Time of
Delivery and, in addition, to require each non-defaulting Underwriter to
purchase its pro rata share (based on the number of Securities which such
Underwriter agreed to purchase hereunder) of the Securities of such defaulting
Underwriter or Underwriters for which such arrangements have not been made; but
nothing herein shall relieve a defaulting Underwriter from liability for its
default.
(c) If, after giving effect to any arrangements for the purchase of the
Securities of a defaulting Underwriter or Underwriters by you and the Company as
provided in subsection (a) above, the aggregate number of such Securities which
remains unpurchased exceeds one-eleventh of the aggregate number of all the
Securities to be purchased at such Time of Delivery, or if the Company shall not
exercise the right described in subsection (b) above to require non-defaulting
Underwriters to purchase Securities of a defaulting Underwriter or Underwriters,
then this Agreement (or, with respect to the Second Time of Delivery, the
obligations of the Underwriters to purchase and of the Company to sell the
Optional Shares) shall thereupon terminate, without liability on the part of any
non-defaulting Underwriter or the Company, except for the expenses to be borne
by the Company and the Underwriters as provided in Section 6 hereof and the
indemnity and contribution agreements in Section 8 hereof; but nothing herein
shall relieve a defaulting Underwriter from liability for its default.
10. The respective indemnities, agreements, representations, warranties
and other statements of the Company and the several Underwriters, as set forth
in this Agreement or made by or on behalf of them, respectively, pursuant to
this Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of any Underwriter or any controlling person of any Underwriter, or the Company,
or any officer or director or controlling person of the Company, and shall
survive delivery of and payment for the Securities.
11. If this Agreement shall be terminated pursuant to Section 9 hereof,
the Company shall not then be under any liability to any Underwriter except as
provided in Sections 6 and 8 hereof; but, if for any other reason, any
Securities are not delivered by or on behalf of the Company as provided herein,
the Company will reimburse the Underwriters through you for all out-of-pocket
expenses approved in writing by you, including fees and disbursements of
counsel, reasonably incurred by the Underwriters in making preparations for the
purchase, sale and delivery of the Securities not so
20
delivered, but the Company shall then be under no further liability to any
Underwriter except as provided in Sections 6 and 8 hereof.
12. In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Underwriter made or
given by you jointly or by the Representatives.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to you as the representatives at in care of Goldman,
Sachs & Co., 85 Broad Street, New York, New York 10004, Attention: Registration
Department and in care of Morgan Stanley & Co. Incorporated, 1585 Broadway, New
York, New York 10036, Attention: Corporate Finance Execution; and if to the
Company shall be delivered or sent by mail to the address of the Company set
forth in the Registration Statement, Attention: Secretary; provided, however,
that any notice to an Underwriter pursuant to Section 8(c) hereof shall be
delivered or sent by mail, telex or facsimile transmission to such Underwriter
at its address set forth in its Underwriters' Questionnaire, or telex
constituting such Questionnaire, which address will be supplied to the Company
by you upon request. Any such statements, requests, notices or agreements shall
take effect upon receipt thereof.
13. This Agreement shall be binding upon, and inure solely to the
benefit of, the Underwriters, the Company and, to the extent provided in
Sections 8 and 10 hereof, the officers and directors of the Company and each
person who controls the Company or any Underwriter or is an affiliate of any
Underwriter, and their respective heirs, executors, administrators, successors
and assigns, and no other person shall acquire or have any right under or by
virtue of this Agreement. No purchaser of any of the Securities from any
Underwriter shall be deemed a successor or assign by reason merely of such
purchase.
14. Time shall be of the essence of this Agreement. As used herein, the
term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
15. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
16. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.
21
If the foregoing is in accordance with your understanding, please sign
and return to us one for the Company and each of the Representatives plus one
for each counsel counterparts hereof, and upon the acceptance hereof by you, on
behalf of each of the Underwriters, this letter and such acceptance hereof shall
constitute a binding agreement between each of the Underwriters and the Company.
It is understood that your acceptance of this letter on behalf of each of the
Underwriters is pursuant to the authority set forth in a form of Agreement among
Underwriters, the form of which shall be submitted to the Company for
examination upon request, but without warranty on your part as to the authority
of the signers thereof.
Very truly yours,
Conseco, Inc.
By: .................................
Name:
Title:
Accepted as of the date hereof:
Goldman, Sachs & Co.
Morgan Stanley & Co. Incorporated
........................................
(Goldman, Sachs & Co.)
By: Morgan Stanley & Co. Incorporated
By:...............................
Name:
Title:
As Representatives on behalf of each of the Underwriters
22
SCHEDULE I
NUMBER OF OPTIONAL
SECURITIES TO BE
TOTAL NUMBER OF PURCHASED IF
FIRM SHARES MAXIMUM OPTION
UNDERWRITER TO BE PURCHASED EXERCISED
----------- --------------- ---------
Goldman, Sachs & Co...............................................
Morgan Stanley & Co. Incorporated.................................
J.P. Morgan Securities Inc........................................
Banc of America Securities LLC
Credit Suisse First Boston LLC
Lazard Freres & Co. LLC
---------------- -------------------------
=========================
-------------------------
=========================
-------------------------
Total..........................................
================ =========================
23
ANNEX I
FORM OF COMFORT LETTER
Pursuant to Section 7(e) of the Underwriting Agreement, the accountants
shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with
respect to the Company, including its predecessor, Conseco, Inc., an
Indiana corporation, and its subsidiaries within the meaning of the Act
and the applicable published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any
supplementary financial information and schedules (and, if applicable,
financial forecasts and/or pro forma financial information) examined by
them and included in the Registration Statement or the Prospectus
comply as to form in all material respects with the applicable
accounting requirements of the Act or the Exchange Act, as applicable,
and the related published rules and regulations thereunder; and, if
applicable, they have made a review in accordance with standards
established by the American Institute of Certified Public Accountants
of the consolidated interim financial statements, selected financial
data, pro forma financial information, financial forecasts and/or
condensed financial statements derived from audited financial
statements of the Company for the periods specified in such letter, as
indicated in their reports thereon, copies of which have been furnished
to the Representatives;
(iii)The unaudited selected financial information with respect
to the consolidated results of operations and financial position of the
Company for the five most recent fiscal years included in the
Prospectus and included in Item 6 of the Company's Annual Report on
Form 10-K for the most recent fiscal year agrees with the corresponding
amounts (after restatement where applicable) in the audited
consolidated financial statements for such five fiscal years which were
included in the Company's Annual Reports on Form 10-K for such fiscal
years;
(iv) They have compared the information in the Prospectus
under selected captions with the disclosure requirements of Regulation
S-K and on the basis of limited procedures specified in such letter
nothing came to their attention as a result of the foregoing procedures
that caused them to believe that this information does not conform in
all material respects with the disclosure requirements of Items 301,
302, 402 and 503(d), respectively, of Regulation S-K;
(v) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and other
information referred to below, a reading of the latest available
interim financial statements of the Company and its subsidiaries,
inspection of the minute books of the Company and its subsidiaries
since the date of the latest audited financial statements included in
the Prospectus, inquiries of officials of the Company and its
subsidiaries responsible for financial and accounting matters and such
other inquiries and procedures as may be specified in such letter,
nothing came to their attention that caused them to believe that:
(A) any unaudited pro forma consolidated condensed
financial statements, if any, included in the Prospectus do
not comply as to form in all material respects with the
applicable accounting requirements of the Act and the
published rules and regulations thereunder or the pro forma
adjustments have not been properly applied to the historical
amounts in the compilation of those statements;
(B) as of a specified date not more than five days
prior to the date of such letter, there have been any changes
in the consolidated capital stock (other than issuances of
capital stock upon exercise of options and stock appreciation
rights, upon earn-outs of performance shares and upon
conversions of convertible securities, in each case which were
outstanding on the date of the latest balance sheet included
in the Prospectus) or any increase in the consolidated
long-term debt of the Company and its subsidiaries, or any
decreases in consolidated net current assets or stockholders'
equity or other items specified by the Representatives, or any
increases in any items specified by the Representatives, in
each case as compared with amounts shown in the latest balance
sheet included in the Prospectus, except in each case for
changes, increases or decreases which are described in such
letter; and
(C) for the period from the date of the latest
financial statements included in the Prospectus to the
specified date referred to in clause (B) there were any
decreases in consolidated net revenues or operating profit or
the total or per share amounts of consolidated net income or
other items specified by the Representatives, or any increases
in any items specified by the Representatives, in each case as
compared with the comparable period of the preceding year and
with any other period of corresponding length specified by the
Representatives, except in each case for increases or
decreases which the Prospectus discloses have occurred or may
occur or which are described in such letter; and
(vi) In addition to the examination referred to in their report(s)
included in the Prospectus and the limited procedures, inspection of minute
books, inquiries and other procedures referred to in paragraphs (iii) and (vi)
above, they have carried out certain specified procedures, not constituting an
examination in accordance with generally accepted auditing standards, with
respect to certain amounts, percentages and financial information specified by
the Representatives which are derived from the general accounting records of the
Company and its subsidiaries, which appear in the Prospectus or in Part II of,
or in exhibits and schedules to, the Registration Statement specified by the
Representatives or in documents incorporated by reference in the Prospectus
specified by the Representatives, and have compared certain of such amounts,
percentages and financial information with the accounting records of the Company
and its subsidiaries and have found them to be in agreement.
F-2