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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): January 20, 2009
Conseco, Inc.
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(Exact Name of Registrant as Specified in its Charter)
Delaware
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(State or Other Jurisdiction of Incorporation)
001-31792 75-3108137
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(Commission File Number) (I.R.S. Employer
Identification No.)
11825 North Pennsylvania Street
Carmel, Indiana 46032
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(Address of Principal Executive Offices) (Zip Code)
(317) 817-6100
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(Registrant's Telephone Number, Including Area Code)
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(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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Item 1.01. Entry into a Material Definitive Agreement.
On January 20, 2009 the Board of Directors of Conseco, Inc. (the
"Company") declared a dividend of one preferred share purchase right (a "Right")
for each outstanding share of Common Stock, par value $0.01 per share, of the
Company (the "Common Stock"). The dividend is payable on January 30, 2009 (the
"Record Date") to the stockholders of record as of the close of business on that
date. Each Right entitles the registered holder to purchase from the Company one
one-thousandth of a share of Series A Junior Participating Preferred Stock, par
value $0.01 per share (the "Preferred Stock") of the Company at a price of
$20.00 per one one-thousandth of a share of Preferred Stock (as the same may be
adjusted, the "Purchase Price"). The description and terms of the Rights are set
forth in a Section 382 Rights Agreement dated as of January 20, 2009 (as the
same may be amended from time to time, the "Rights Agreement"), between the
Company and American Stock Transfer & Trust Company, LLC, as Rights Agent (the
"Rights Agent").
The Rights Agreement is intended to help protect the Company's
tax net operating loss carryforwards. The Board of Directors may redeem the
Rights, as discussed more fully below. The Rights Agreement is intended to act
as a deterrent to any person (other than an Exempted Entity (as defined below)
or any person who has the status of a 5% Shareholder (as defined below) on the
date of the Rights Agreement so long as such person does not increase its
ownership above an additional 1% of Common Stock then outstanding) from becoming
or obtaining the right to become, a "5-percent shareholder" (as such term is
used in Section 382 of the Internal Revenue Code of 1986, as amended (the
"Code"), and the Treasury Regulations promulgated thereunder) (a "5%
Shareholder"), without the approval of the Board of Directors.
Until the close of business on the earlier of (i) the tenth
business day after the first date of a public announcement that a person (other
than an Exempted Entity (as defined below) or Grandfathered Persons (as defined
below)) or group of affiliated or associated persons (an "Acquiring Person") has
become a 5% Shareholder or (ii) the tenth business day (or such later date as
may be determined by action of the Board of Directors prior to such time as any
person or group of affiliated persons becomes an Acquiring Person) after the
date of commencement of, or the first public announcement of an intention to
commence, a tender offer or exchange offer, the consummation of which would
result in any Person (other than an Exempted Entity) becoming an Acquiring
Person (the earlier of such dates being herein referred to as the "Distribution
Date"), the Rights will be evidenced by the shares of Common Stock represented
by the certificates for Common Stock or uncertificated book entry shares
outstanding as of the Record Date, together with a copy of the summary of rights
disseminated in connection with the original dividend of Rights.
"Exempted Entity" shall mean (1) the Company, (2) any Subsidiary
(as defined below) of the Company, (in the case of subclauses (1) and (2)
including, without limitation, in its fiduciary capacity), (3) any employee
benefit plan of the Company or of any Subsidiary of the Company, (4) any entity
or trustee holding Common Stock for or pursuant to the terms of any
such plan or for the purpose of funding any such plan or funding other employee
benefits for employees of the Company or of any Subsidiary of the Company or (5)
any Person (together with its Affiliates and Associates) whose status as a 5%
Shareholder will, in the sole judgment of the Board of Directors, not jeopardize
or endanger the availability to the Company of its net operating loss
carryforwards to be used to offset its taxable income in such year or future
years (but in the case of any Person determined by the Board of Directors to be
an Exempted Entity pursuant to this subparagraph (5) only for so long as such
Person's status as a 5% Shareholder continues not to jeopardize or endanger the
availability of such net operating loss carryforwards, as determined by the
Board of Directors in its good faith discretion).
"Grandfathered Person" shall mean any Person who would otherwise
qualify as an Acquiring Person as of the date of this Rights Agreement, unless
and until such time as such Person after the date of this Rights Agreement
acquires beneficial ownership of additional shares of Common Stock representing
more than 1% of the shares of Common Stock then outstanding.
The Rights Agreement provides that, until the Distribution Date
(or earlier expiration of the Rights), new Common Stock certificates issued
after the Record Date will contain a notation incorporating the Rights Agreement
by reference and, with respect to any uncertificated book entry shares issued
after the Record Date, proper notice will be provided that incorporates the
Rights Agreement by reference. Until the Distribution Date (or earlier
redemption or expiration of the Rights), the Rights will be transferable only in
connection with the transfer of Common Stock. Until the Distribution Date (or
earlier redemption or expiration of the Rights), the surrender for transfer of
any certificates for shares of Common Stock (or uncertificated book entry
shares) outstanding as of the Record Date, even without a notation incorporating
the Rights Agreement by reference (or such notice, in the case of uncertificated
book entry shares) or a copy of this Summary of Rights, will also constitute the
transfer of the Rights associated with the shares of Common Stock represented by
such certificate or uncertificated book entry shares, as the case may be. As
soon as practicable following the Distribution Date, separate certificates
evidencing the Rights ("Right Certificates") will be mailed to holders of record
of the Common Stock as of the close of business on the Distribution Date and
such separate Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date and
will expire at the earlier of (i) the close of business on January 20, 2012,
(ii) the first anniversary of adoption of the Rights Agreement if shareholder
approval of the Rights Agreement has not been received by or on such date, (iii)
at the adjournment of the first annual meeting of the stockholders of the
Company following the date hereof if stockholder approval of the Rights
Agreement has not been received prior to such time, (iv) the repeal of Section
382 or any successor statute if the Board determines that the Rights Agreement
is no longer necessary for the preservation of tax benefits or (v) the beginning
of a taxable year of the Company to which the Board determines that no tax
benefits may be carried forward (the "Final Expiration Date"), subject to (x)
the extension of Rights Agreement by the Board of Directors by the amendment of
the Rights Agreement or (y) the redemption or exchange of the Rights by the
Company, as described below.
The Purchase Price payable, and the number of shares of Preferred
Stock or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend on, or a subdivision, combination or
reclassification of, the Preferred Stock, (ii) upon the grant to holders of the
Preferred Stock of certain rights or warrants to subscribe for or purchase
Preferred Stock at a price, or securities convertible into Preferred Stock with
a conversion price, less than the then-current market price of the Preferred
Stock or (iii) upon the distribution to holders of the Preferred Stock of
evidences of indebtedness or assets (excluding regular periodic cash dividends
or dividends payable in Preferred Stock) or of subscription rights or warrants
(other than those referred to above).
The Rights are also subject to adjustment in the event of a stock
dividend on the Common Stock payable in shares of Common Stock or subdivisions,
consolidations or combinations of the Common Stock occurring, in any such case,
prior to the Distribution Date.
Shares of Preferred Stock purchasable upon exercise of the Rights
will not be redeemable. Each share of Preferred Stock will be entitled, when, as
and if declared, to a minimum preferential quarterly dividend payment of the
greater of (a) $1 per share and (b) an amount equal to 1,000 times the dividend
declared per share of Common Stock. In the event of liquidation, dissolution or
winding up of the Company, the holders of the Preferred Stock will be entitled
to a minimum preferential liquidation payment of $1,000 per share (plus any
accrued but unpaid dividends) but will be entitled to an aggregate 1,000 times
the payment made per share of Common Stock. Each share of Preferred Stock will
have 1,000 votes, voting together with the Common Stock. Finally, in the event
of any merger, consolidation or other transaction in which shares of Common
Stock are converted or exchanged, each share of Preferred Stock will be entitled
to receive 1,000 times the amount received per share of Common Stock. These
rights are protected by customary antidilution provisions.
Because of the nature of the Preferred Stock's dividend,
liquidation and voting rights, the value of the one one-thousandth interest in a
share of Preferred Stock purchasable upon exercise of each Right should
approximate the value of one share of Common Stock.
In the event that any person or group of affiliated or associated
persons becomes an Acquiring Person, each holder of a Right, other than Rights
beneficially owned by the Acquiring Person (which will thereupon become void),
will thereafter have the right to receive upon exercise of a Right and payment
of the Purchase Price, that number of shares of Common Stock having a market
value of two times the Purchase Price.
In the event that, after a person or group has become an
Acquiring Person, the Company is acquired in a merger or other business
combination transaction or 50% or more of its consolidated assets or earning
power are sold, proper provision will be made so that each holder of a Right
(other than Rights beneficially owned by an Acquiring Person which will have
become void) will thereafter have the right to receive, upon the exercise
thereof at the then-current exercise price of the Right, that number of shares
of common stock of the person with whom the Company has engaged in the foregoing
transaction (or its parent), which number of shares at the time of such
transaction will have a market value of two times the Purchase Price.
At any time after any person or group becomes an Acquiring Person
and prior to the acquisition by such person or group of 50% or more of the
outstanding shares of Common Stock or the occurrence of an event described in
the prior paragraph, the Board of Directors of the Company may exchange the
Rights (other than Rights owned by such person or group which
will have become void), in whole or in part, at an exchange ratio of one share
of Common Stock, or a fractional share of Preferred Stock (or of a share of a
similar class or series of the Company's preferred stock having similar rights,
preferences and privileges) of equivalent value, per Right (subject to
adjustment).
With certain exceptions, no adjustment in the Purchase Price will
be required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional shares of Preferred Stock will be issued
(other than fractions which are integral multiples of one one-thousandth of a
share of Preferred Stock, which may, at the election of the Company, be
evidenced by depositary receipts) and in lieu thereof, an adjustment in cash
will be made based on the market price of the Preferred Stock on the last
trading day prior to the date of exercise.
At any time prior to the time an Acquiring Person becomes such,
the Board of Directors of the Company may redeem the Rights in whole, but not in
part, at a price of $0.01 per Right, appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the date of
adoption of the Rights Agreement (the "Redemption Price"). The redemption of the
Rights may be made effective at such time, on such basis and with such
conditions as the Board of Directors in its sole discretion may establish.
Immediately upon any redemption of the Rights, the right to exercise the Rights
will terminate and the only right of the holders of Rights will be to receive
the Redemption Price.
For so long as the Rights are then redeemable, the Company may,
except with respect to the Redemption Price, amend the Rights Agreement in any
manner. After the Rights are no longer redeemable, the Company may, except with
respect to the Redemption Price, amend the Rights Agreement in any manner that
does not adversely affect the interests of holders of the Rights.
Until a Right is exercised or exchanged, the holder thereof, as
such, will have no rights as a stockholder of the Company, including, without
limitation, the right to vote or to receive dividends.
A copy of the Rights Agreement is filed as Exhibit 4.1 to this
Form 8-K, and a copy of the press release relating to the adoption of the Rights
Plan is filed as Exhibit 99.1 to this Form 8-K. The foregoing summary
description of the Rights Agreement is qualified in its entirety by reference to
such exhibits.
Item 3.03. Material Modification to Rights of Security Holders.
The information set forth under "Item 1.01. Entry into a Material
Definitive Agreement" of this Current Report on Form 8-K is incorporated into
this Item 3.03 by reference.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits:
4.1 Section 382 Rights Agreement, dated as of January 20, 2009,
between the Corporation and American Stock Transfer & Trust
Company, LLC, as Rights Agent, which includes the Certificate of
Designations for the Series A Junior Participating Preferred
Stock as Exhibit A, the Form of Right Certificate as Exhibit B
and the Summary of Rights to Purchase Preferred Shares as Exhibit
C.
99.1 Press Release dated January 20, 2009.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
CONSECO, INC.
DATED: January 20, 2009 By: /s/ John R. Kline
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Name: John R. Kline
Title: Senior Vice President
and Chief Accounting Officer
EXHIBIT INDEX
Exhibit No. Description
4.1 Section 382 Rights Agreement, dated as of January 20, 2009,
between the Corporation and American Stock Transfer & Trust
Company, LLC, as Rights Agent, which includes the Certificate of
Designations for the Series A Junior Participating Preferred
Stock as Exhibit A, the Form of Right Certificate as Exhibit B
and the Summary of Rights to Purchase Preferred Shares as Exhibit
C.
99.1 Press Release dated January 20, 2009.