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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF THE
SECURITIES EXCHANGE ACT OF 1934
Conseco, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 75-3108137
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(State of incorporation or organization) (I.R.S. Employer Identification No.)
11825 North Pennsylvania Street
Carmel, Indiana 46032
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(Address of principal executive offices) (Zip Code)
If this form relates to the registration of a class of securities pursuant
to Section 12(b) of the Exchange Act and is effective pursuant to General
Instruction A.(c), check the following box [x]
If this form relates to the registration of a class of securities pursuant
to Section 12(g) of the Exchange Act and is effective pursuant to General
Instruction A .(d), check the following box [ ]
Securities Act registration statement file number to which the form relates:
(if applicable).
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Securities to be registered pursuant to Section 12(b) of the Act:
Title Of Each Class Name of Each Exchange On Which
To Be So Registered Each Class Is To Be Registered
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Preferred Share Purchase NYSE
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Rights
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Securities to be registered pursuant to Section 12(g) of the Act:
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Item 1. Description of Registrant's Securities to be Registered
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 1 to this Form
8-A and a copy of the press release relating to the adoption of the Rights Plan
is filed as Exhibit 2 to this Form 8-A. The foregoing summary description of the
Rights Agreement is qualified in its entirety by reference to such exhibits.
Item 2. Exhibits
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.
2. Press Release dated January 20, 2009.
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, the registrant has duly caused this registration statement
to be signed on its behalf by the undersigned, thereto 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
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.
2 Press Release dated January 20, 2009.
Exhibit 1
SECTION 382 RIGHTS AGREEMENT
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CONSECO, INC.
and
AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC
as Rights Agent
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Dated as of January 20, 2009
TABLE OF CONTENTS
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Page
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Section 1. Certain Definitions....................................................................................1
Section 2. Appointment of Rights Agent............................................................................4
Section 3. Issuance of Right Certificates.........................................................................4
Section 4. Form of Right Certificates.............................................................................6
Section 5. Countersignature and Registration......................................................................6
Section 6. Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated, Destroyed, Lost or
Stolen Right Certificates..............................................................................7
Section 7. Exercise of Rights, Purchase Price; Expiration Date of Rights..........................................8
Section 8. Cancellation and Destruction of Right Certificates.....................................................9
Section 9. Availability of Shares of Preferred Stock..............................................................9
Section 10. Preferred Stock Record Date..........................................................................10
Section 11. Adjustment of Purchase Price, Number and Kind of Shares and Number of Rights.........................10
Section 12. Certificate of Adjusted Purchase Price or Number of Shares...........................................18
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earnings Power................................18
Section 14. Fractional Rights and Fractional Shares..............................................................22
Section 15. Rights of Action.....................................................................................23
Section 16. Agreement of Right Holders...........................................................................23
Section 17. Right Certificate Holder Not Deemed a Stockholder....................................................24
Section 18. Concerning the Rights Agent..........................................................................24
Section 19. Merger or Consolidation or Change of Name of Rights Agent............................................25
Section 20. Duties of Rights Agent...............................................................................25
Section 21. Change of Rights Agent...............................................................................27
Section 22. Issuance of New Right Certificates...................................................................28
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Page
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Section 23. Redemption...........................................................................................28
Section 24. Exchange.............................................................................................29
Section 25. Notice of Certain Events.............................................................................30
Section 26. Notices..............................................................................................31
Section 27. Supplements and Amendments...........................................................................31
Section 28. Successors...........................................................................................32
Section 29. Benefits of this Rights Agreement....................................................................32
Section 30. Determinations and Actions by the Board of Directors.................................................32
Section 31. Severability.........................................................................................32
Section 32. Governing Law........................................................................................33
Section 33. Counterparts.........................................................................................33
Section 34. Descriptive Headings.................................................................................33
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INDEX OF DEFINED TERMS
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Page Page
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5% Shareholder......................................1 NYSE................................................3
Acquiring Person....................................1 Percentage Stock Ownership..........................3
Affiliate...........................................2 Person..............................................3
Associate...........................................2 Preferred Stock.....................................3
Authorized Officer.................................25 Principal Party....................................19
Beneficial Owner....................................2 Purchase Price......................................8
Beneficial Ownership................................2 Record Date.........................................1
beneficially own....................................2 Redemption Date.....................................8
Book Entry..........................................2 Redemption Price...................................28
Business Day........................................2 Right...............................................1
close of business...................................2 Right Certificate...................................5
Code................................................2 Rights Agent........................................1
Common Stock........................................2 Rights Agreement....................................1
Common Stock equivalents...........................12 Section 11(a)(ii) Trigger Date.....................13
Company.............................................1 Section 382.........................................3
Current Value......................................12 Securities Act......................................3
Distribution Date...................................4 Security...........................................14
equivalent preferred shares........................13 Spread.............................................12
Exchange Act........................................2 Stock Acquisition Date..............................3
Exchange Ratio.....................................29 Subsidiary..........................................4
Exempted Entity.....................................2 Substitution Period................................13
Expiration Date.....................................8 Summary of Rights...................................5
Final Expiration Date...............................3 Tax Benefits........................................4
Grandfathered Person.............................3, 1 Trading Day........................................15
invalidation time..................................11 Treasury Regulations................................4
NOLs................................................3 Trust..............................................29
Trust Agreement....................................29
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SECTION 382 RIGHTS AGREEMENT
This Section 382 Rights Agreement, dated as of January 20, 2009
(as amended, supplemented or otherwise modified from time to time, the "Rights
Agreement") between CONSECO, INC., a Delaware corporation (the "Company"), and
American Stock Transfer & Trust Company, LLC (the "Rights Agent").
WHEREAS, (a) the Company and certain of its Subsidiaries have
generated net operating losses for United States federal income tax purposes
("NOLs"); (b) such NOLs may potentially provide valuable Tax Benefits (as
defined below) to the Company; (c) the Company desires to avoid an "ownership
change" within the meaning of Section 382 (as defined below), and thereby
preserve the ability to utilize such NOLs; and (d) in furtherance of such
objective, the Company desires to enter into this Rights Agreement; and
WHEREAS, the Board of Directors of the Company has on January 20,
2009 authorized and declared a dividend of one preferred share purchase right (a
"Right") for each share of Common Stock (as defined below) of the Company
outstanding as of the close of business (as defined below) on January 30, 2009
(the "Record Date"), each Right representing the right to purchase one
one-thousandth (subject to adjustment) of a share of Preferred Stock (as defined
below), upon the terms and subject to the conditions herein set forth, and the
Board of Directors has further authorized and directed the issuance of one Right
(subject to adjustment as provided herein) with respect to each share of Common
Stock that shall become outstanding between the Record Date and the earlier of
the Distribution Date and the Expiration Date (as such terms are hereinafter
defined); provided, however, that Rights may be issued with respect to shares of
Common Stock that shall become outstanding after the Distribution Date and prior
to the Expiration Date in accordance with Section 22.
NOW THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Rights
Agreement, the following terms have the meaning indicated:
(a) "5% Shareholder" shall mean a Person or group of Persons that
is a "5-percent shareholder" of the Corporation pursuant to Treasury Regulation
ss. 1.382-2T(g).
(b) "Acquiring Person" shall mean any Person (as defined below)
who is or shall have become a 5% Shareholder, whether or not such Person
continues to be a 5% Shareholder, but shall not include (i) an Exempted Entity
(as defined below), or (ii) any Grandfathered Person (as defined below);
provided, however, that a Person will not be deemed to have become an Acquiring
Person solely as a result of (x) a reduction in the number of shares of Common
Stock outstanding, (y) the exercise of any options, warrants, rights or similar
interests (including restricted stock) granted by the Company to its directors,
officers and employees, or (z) any unilateral grant of any security by the
Company, unless and until such time as such Person thereafter acquires
beneficial ownership of any additional shares of Common Stock. Notwithstanding
the foregoing, the Board may, in its sole discretion, determine that any Person
shall not be deemed to be an "Acquiring Person" for any purposes of this
Agreement.
(c) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act, and to the extent not included within the
foregoing clause of this Section 1(c), shall also include, with respect to any
Person, any other Person whose Common Stock would be deemed constructively owned
by such first Person pursuant to the provisions of Section 382 and the Treasury
Regulations promulgated thereunder; provided, however, that no Exempted Entity
shall be deemed an Affiliate or an Associate.
(d) Except as may expressly be set forth elsewhere herein, a
Person shall be deemed the "Beneficial Owner" of, shall be deemed to have
"Beneficial Ownership" of and shall be deemed to "beneficially own" any
securities which such Person directly owns, or would be deemed to constructively
own, pursuant to Section 382 and the Treasury Regulations promulgated
thereunder.
(e) "Book Entry" shall mean an uncertificated book entry for the
shares of Common Stock.
(f) "Business Day" shall mean any day other than a Saturday, a
Sunday, or a day on which banking institutions in the State of Indiana, or the
State in which the principal office of the Rights Agent is located, are
authorized or obligated by law or executive order to close.
(g) "close of business" on any given date shall mean 5:00 P.M.,
New York, New York time, on such date; provided, however, that if such date is
not a Business Day it shall mean 5:00 P.M., New York, New York time, on the next
succeeding Business Day.
(h) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(i) "Common Stock" when used with reference to the Company shall
mean the common stock, par value $0.01 per share, of the Company. "Common Stock"
when used with reference to any Person other than the Company shall mean the
capital stock (or, in the case of an entity other than a corporation, the
equivalent equity interest) with the greatest voting power of such other Person
or, if such other Person is a subsidiary of another Person, the Person or
Persons which ultimately control such first-mentioned Person.
(j) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
(k) "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 (k)(5) only for so long as such Person's status as
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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).
(l) "Final Expiration Date" shall mean the earliest to occur of
(i) the close of business on January 20, 2012, (ii) the first anniversary of
adoption of this Rights Agreement if stockholder approval of this Rights
Agreement has not been received by or on such date, (iii) the adjournment of the
first annual meeting of the stockholders of the Company following the date
hereof if stockholder approval of this Rights Agreement has not been received
prior to such time, (iv) the repeal of Section 382 or any successor statute if
the Board of Directors determines that this 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 of Directors determines that no Tax
Benefits may be carried forward.
(m) "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.
(n) "NOLs" shall have the meaning set forth in the recitals to
this Rights Agreement.
(o) "NYSE" shall mean the New York Stock Exchange, Inc.
(p) "Percentage Stock Ownership" shall mean the percentage stock
ownership interest as determined in accordance with Treasury Regulation ss.
1.382-2T(g), (h), (j) and (k).
(q) "Person" shall mean any individual, firm, corporation,
business trust, joint stock company, partnership, trust association, limited
liability company, limited partnership, or other entity, or any group of Persons
making a "coordinated acquisition" of shares or otherwise treated as an entity
within the meaning of Treasury Regulation ss. 1.382-3(a)(1), or otherwise and
shall include any successor (by merger or otherwise) of any such entity.
(r) "Preferred Stock" shall mean the Series A Junior
Participating Preferred Stock, par value $0.01 per share, of the Company having
the rights and preferences set forth in the Form of Certificate of Designations
attached to this Rights Agreement as Exhibit A and, to the extent that there is
a not sufficient number of shares of the Series A Junior Participating Preferred
Stock authorized to permit the full exercise of the Rights, any other series of
preferred stock of the Company designated for such purpose containing terms
substantially similar to the terms of the Series A Junior Participating
Preferred Stock.
(s) "Section 382" shall mean Section 382 of the Code, or any
comparable successor provision.
(t) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(u) "Stock Acquisition Date" shall mean the first date of public
announcement (which for purposes of this definition shall include, without
limitation, a report filed pursuant to
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Section 13(d) of the Exchange Act) by the Company or an Acquiring Person that an
Acquiring Person has become such or such earlier date as a majority of the Board
of Directors shall become aware of the existence of an Acquiring Person.
(v) "Subsidiary" of any Person shall mean any corporation or
other entity of which securities or other ownership interests having ordinary
voting power sufficient to elect a majority of the board of directors or other
persons performing similar functions are beneficially owned, directly or
indirectly, by such Person, and any corporation or other entity that is
otherwise controlled by such Person.
(w) "Tax Benefits" shall mean the net operating loss carryovers,
capital loss carryovers, general business credit carryovers, alternative minimum
tax credit carryovers and foreign tax credit carryovers, as well as any loss or
deduction attributable to a "net unrealized built-in loss" within the meaning of
Section 382, and the Treasury Regulations promulgated thereunder, of the Company
or any of its Subsidiaries.
(x) "Treasury Regulations" shall mean any income tax regulations
promulgated under the Code, including any amendments thereto.
Any determination required by the definitions in this Agreement shall be made by
the Board of Directors in its good faith judgment, which determination shall be
binding on the Rights Agent and the holders of Rights.
Section 2. Appointment of Rights Agent. The Company hereby
appoints the Rights Agent to act as agent for the Company and the holders of the
Rights (who, in accordance with Section 3 hereof, shall prior to the
Distribution Date also be the holders of Common Stock) in accordance with the
terms and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint such co-Rights Agents as
it may deem necessary or desirable upon ten (10) days' prior notice to the
Rights Agent. The Rights Agent shall have no duty to supervise, and shall in no
event be liable for the acts or omissions of any such co-Rights Agent.
Section 3. Issuance of Right Certificates. (a) Until the
close of business on the earlier of (i) the tenth Business Day after the Stock
Acquisition Date (or, if the Stock Acquisition Date occurs before the Record
Date, the close of business on the Record Date) 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 becomes an Acquiring Person) after the date of
the commencement by any Person (other than an Exempted Entity) of, or of the
first public announcement of the intention of such Person (other than an
Exempted Entity) to commence, a tender or exchange offer the consummation of
which would result in any Person (other than an Exempted Entity) becoming an
Acquiring Person (irrespective of whether any shares are actually purchased
pursuant to any such offer) (including, in the case of both clause (i) and (ii),
any such date which is after the date of this Rights Agreement and prior to the
issuance of the Rights) (the earlier of such dates being herein referred to as
the "Distribution Date"), (x) the Rights will be evidenced (subject to the
provisions of Section 3(b) hereof) by the certificates for Common Stock
registered in the names of the holders thereof, and not by separate Right
Certificates (as defined below), and (y) the Rights will be transferable only in
connection with the transfer of Common Stock.
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As soon as practicable after the Distribution Date, the Company will prepare and
execute, the Rights Agent will countersign, and the Company will send or cause
to be sent (and the Rights Agent will, if requested, send) by first-class,
postage-prepaid mail, to each record holder of Common Stock as of the close of
business on the Distribution Date (other than any Acquiring Person or any
Associate or Affiliate of an Acquiring Person), at the address of such holder
shown on the records of the Company, a Right Certificate, in substantially the
form of Exhibit B hereto (a "Right Certificate"), evidencing one Right (subject
to adjustment as provided herein) for each share of Common Stock so held. In the
event that an adjustment in the number of Rights per share of Common Stock has
been made pursuant to Section 11 or 13 hereof, at the time of distribution of
the Rights Certificates, the Company shall make the necessary and appropriate
rounding adjustments (in accordance with Section 14(a) hereof), so that Rights
Certificates representing only whole numbers of Rights are distributed and cash
is paid in lieu of any fractional Rights. As of and after the Distribution Date,
the Rights will be evidenced solely by such Right Certificates.
(b) As promptly as practicable following the Record Date, the
Company will send a copy of a Summary of Rights to Purchase Shares of Preferred
Stock, in substantially the form of Exhibit C hereto (the "Summary of Rights"),
by first-class, postage-prepaid mail, to each record holder of Common Stock and
holder of Book Entry shares as of the close of business on the Record Date, at
the address of such holder shown on the records of the Company as the address at
which such holder has consented to receive notice. With respect to shares of
Common Stock outstanding as of the Record Date, until the Distribution Date, the
Rights associated with such shares will be evidenced by the share certificate
for such shares of Common Stock registered in the names of the holders thereof
or the Book Entry shares, in each case together with the Summary of Rights.
Until the Distribution Date (or, if earlier, the Expiration Date), the surrender
for transfer of any certificate for Common Stock or Book Entry shares
outstanding on the Record Date, with or without a copy of the Summary of Rights,
shall also constitute the transfer of the Rights associated with the shares of
Common Stock represented by such certificate or Book Entry shares.
(c) Rights shall be issued in respect of all shares of Common
Stock issued or disposed of (including, without limitation, upon disposition of
Common Stock out of treasury stock or issuance or reissuance of Common Stock out
of authorized but unissued shares) after the Record Date but prior to the
earlier of the Distribution Date and the Expiration Date, or in certain
circumstances provided in Section 22 hereof, after the Distribution Date.
Certificates issued for Common Stock (including, without limitation, upon
transfer of outstanding Common Stock, disposition of Common Stock out of
treasury stock or issuance or reissuance of Common Stock out of authorized but
unissued shares) after the Record Date but prior to the earlier of the
Distribution Date and the Expiration Date shall have impressed on, printed on,
written on or otherwise affixed to them the following legend:
This certificate also evidences and entitles the holder hereof to
certain rights as set forth in a Section 382 Rights Agreement
between Conseco, Inc. and American Stock Transfer & Trust
Company, LLC, as Rights Agent, dated as of January 20, 2009 as
the same may be amended, supplemented or otherwise modified from
time to time (the "Rights Agreement"), the terms of which
-5-
are hereby incorporated herein by reference and a copy of which
is on file at the principal executive offices of Conseco, Inc.
Under certain circumstances, as set forth in the Rights
Agreement, such Rights will be evidenced by separate certificates
and will no longer be evidenced by this certificate. Conseco,
Inc. will mail to the holder of this certificate a copy of the
Rights Agreement without charge after receipt of a written
request therefor. Under certain circumstances, as set forth in
the Rights Agreement, Rights owned by or transferred to any
Person who is or becomes an Acquiring Person (as defined in the
Rights Agreement) and certain transferees thereof will become
null and void and will no longer be transferable.
With respect to any Book Entry shares of Common Stock, such legend shall be
included in a notice to the registered holder of such shares in accordance with
applicable law. With respect to such certificates containing the foregoing
legend, or any notice of the foregoing legend delivered to holders of Book Entry
shares, until the Distribution Date, the Rights associated with the Common Stock
represented by such certificates or Book Entry shares shall be evidenced by such
certificates or Book Entry shares alone, and the surrender for transfer of any
such certificate or Book Entry share, except as otherwise provided herein, shall
also constitute the transfer of the Rights associated with the Common Stock
represented thereby. In the event that the Company purchases or otherwise
acquires any Common Stock after the Record Date but prior to the Distribution
Date, any Rights associated with such Common Stock shall be deemed cancelled and
retired so that the Company shall not be entitled to exercise any Rights
associated with the shares of Common Stock which are no longer outstanding.
Notwithstanding this paragraph (c), neither the omission of a
legend nor the failure to deliver the notice of such legend required hereby
shall affect the enforceability of any part of this Rights Agreement or the
rights of any holder of the Rights.
Section 4. Form of Right Certificates. The Right Certificates
(and the forms of election to purchase shares and of assignment to be printed on
the reverse thereof) shall be substantially in the form set forth in Exhibit B
hereto and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Rights
Agreement, or as may be required to comply with any applicable law or with any
rule or regulation made pursuant thereto or with any rule or regulation of the
NYSE or of any other stock exchange or automated quotation system on which the
Rights may from time to time be listed, or to conform to usage. Subject to the
provisions of this Agreement, the Right Certificates shall entitle the holders
thereof to purchase such number of one one-thousandths of a share of Preferred
Stock as shall be set forth therein at the Purchase Price (as determined
pursuant to Section 7), but the amount and type of securities purchasable upon
the exercise of each Right and the Purchase Price thereof shall be subject to
adjustment as provided herein.
Section 5. Countersignature and Registration. (a) The Right
Certificates shall be executed on behalf of the Company by the Chief Executive
Officer, the President, any of the Vice Presidents or the Treasurer of the
Company, either manually or by facsimile signature, shall
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have affixed thereto the Company's seal or a facsimile thereof and shall be
attested by the Secretary or an Assistant Secretary of the Company, either
manually or by facsimile signature. The Right Certificates shall be
countersigned by the Rights Agent, either manually or by facsimile signature,
and shall not be valid for any purpose unless countersigned. In case any officer
of the Company who shall have signed any of the Right Certificates shall cease
to be such officer of the Company before countersignature by the Rights Agent
and issuance and delivery by the Company, such Right Certificates, nevertheless,
may be countersigned by the Rights Agent and issued and delivered by the Company
with the same force and effect as though the Person who signed such Right
Certificates had not ceased to be such officer of the Company; and any Right
Certificate may be signed on behalf of the Company by any Person who, at the
actual date of the execution of such Right Certificate, shall be a proper
officer of the Company to sign such Right Certificate, although at the date of
the execution of this Rights Agreement any such Person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep
or cause to be kept, at an office or agency designated for such purpose, books
for registration and transfer of the Right Certificates issued hereunder. Such
books shall show the names and addresses of the respective holders of the Right
Certificates, the number of Rights evidenced on its face by each of the Right
Certificates and the date of each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates. (a)
Subject to the provisions of this Rights Agreement, at any time after the close
of business on the Distribution Date, and prior to the close of business on the
Expiration Date, any Right Certificate or Right Certificates may be transferred,
split up, combined or exchanged for another Right Certificate or Right
Certificates, entitling the registered holder to purchase a like number of one
one-thousandths of a share of Preferred Stock (or, following such time, other
securities, cash or assets as the case may be) as the Right Certificate or Right
Certificates surrendered then entitled such holder to purchase. Any registered
holder desiring to transfer, split up, combine or exchange any Right Certificate
or Right Certificates shall make such request in writing delivered to the Rights
Agent, and shall surrender the Right Certificate or Right Certificates to be
transferred, split up, combined or exchanged at the office or agency of the
Rights Agent designated for such purpose. Thereupon the Rights Agent, subject to
the provisions of this Rights Agreement, shall countersign and deliver to the
Person entitled thereto a Right Certificate or Right Certificates, as the case
may be, as so requested. The Company may require payment of a sum sufficient to
cover any tax or governmental charge that may be imposed in connection with any
transfer, split up, combination or exchange of Right Certificates.
(b) Subject to the provisions of this Rights Agreement, at any
time after the Distribution Date and prior to the Expiration Date, upon receipt
by the Company and the Rights Agent of evidence reasonably satisfactory to them
of the loss, theft, destruction or mutilation of a Right Certificate, and, in
case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to them, and, at the Company's request, reimbursement to the
Company and the Rights Agent of all reasonable expenses incidental thereto, and
upon surrender to the Rights Agent and cancellation of the Right Certificate if
mutilated, the Company will make and deliver a new Right Certificate of like
tenor to the Rights Agent for delivery to the registered holder in lieu of the
Right Certificate so lost, stolen, destroyed or mutilated.
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Section 7. Exercise of Rights, Purchase Price; Expiration Date of
Rights. (a) Except as otherwise provided herein, the Rights shall become
exercisable on the Distribution Date, and thereafter the registered holder of
any Right Certificate may, subject to Section 11(a)(ii) hereof and except as
otherwise provided herein, exercise the Rights evidenced thereby in whole or in
part upon surrender of the Right Certificate, with the form of election to
purchase on the reverse side thereof duly executed, to the Rights Agent at the
office or agency of the Rights Agent designated for such purpose, together with
payment of the Purchase Price for each one-thousandth of a share of Preferred
Stock (or other securities, cash or assets, as the case may be) as to which the
Rights are exercised, at any time which is both after the Distribution Date and
prior to the time (the "Expiration Date") that is the earliest of (i) the Final
Expiration Date, (ii) the time at which the Rights are redeemed as provided in
Section 23 hereof (the "Redemption Date") or (iii) the time at which such Rights
are exchanged as provided in Section 24 hereof.
(b) The purchase price (the "Purchase Price") shall be initially
$20.00 for each one-thousandth of a share of Preferred Stock purchasable upon
the exercise of a Right. The Purchase Price and the number of shares of
Preferred Stock or other securities or property to be acquired upon exercise of
a Right shall be subject to adjustment from time to time as provided in Sections
11 and 13 hereof and shall be payable in lawful money of the United States of
America in accordance with paragraph (c) of this Section 7.
(c) Except as otherwise provided herein, upon receipt of a Right
Certificate representing exercisable Rights, with the form of election to
purchase duly executed, accompanied by payment of the aggregate Purchase Price
for the number of shares of Preferred Stock to be purchased and an amount equal
to any applicable transfer tax required to be paid by the holder of such Right
Certificate in accordance with Section 6 hereof, in cash or by certified check,
cashier's check or money order payable to the order of the Company, the Rights
Agent shall thereupon promptly (i) (A) requisition from any transfer agent of
the Preferred Stock, or make available if the Rights Agent is the transfer agent
for the Preferred Stock, certificates for the number of shares of Preferred
Stock to be purchased (and the Company hereby irrevocably authorizes its
transfer agent to comply with all such requests), or (B) requisition from the
depositary agent appointed by the Company depositary receipts representing
interests in such number of shares of Preferred Stock as are to be purchased, in
which case certificates for the Preferred Stock represented by such receipts
shall be deposited by the transfer agent with the depositary agent (and the
Company hereby directs the depositary agent to comply with such request), (ii)
when appropriate, requisition from the Company the amount of cash to be paid in
lieu of issuance of fractional shares in accordance with Section 14 hereof,
(iii) promptly after receipt of such certificates or depositary receipts, cause
the same to be delivered to or upon the order of the registered holder of such
Right Certificate, registered in such name or names as may be designated by such
holder and (iv) when appropriate, after receipt of the cash requisitioned from
the Company, promptly deliver such cash to or upon the order of the registered
holder of such Right Certificate.
(d) Except as otherwise provided herein, in case the registered
holder of any Right Certificate shall exercise less than all the Rights
evidenced thereby, a new Right Certificate evidencing Rights equivalent to the
exercisable Rights remaining unexercised shall be issued by the Rights Agent to
the registered holder of such Right Certificate or to his duly authorized
assigns, subject to the provisions of Section 14 hereof.
-8-
(e) Notwithstanding anything in this Rights Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a registered holder of Rights upon the
occurrence of any purported transfer or exercise of Rights pursuant to Section 6
hereof or this Section 7 unless such registered holder shall have (i) completed
and signed the certificate contained in the form of assignment or election to
purchase set forth on the reverse side of the Right Certificate surrendered for
such transfer or exercise and (ii) provided such additional evidence of the
identity of the Beneficial Owner (for the purposes of this Section 7(e), as such
term is defined in Rule 13d-3 or 13d-5 of the General Rules and Regulations
under the Exchange Act, former Beneficial Owner and/or Affiliates or Associates
thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Right Certificates.
All Right Certificates surrendered for the purpose of exercise, transfer, split
up, combination or exchange shall, if surrendered to the Company or to any of
its agents, be delivered to the Rights Agent for cancellation or in cancelled
form, or, if surrendered to the Rights Agent, shall be cancelled by it, and no
Right Certificates shall be issued in lieu thereof except as expressly permitted
by any of the provisions of this Rights Agreement. The Company shall deliver to
the Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all cancelled Right Certificates to the Company, or shall, at the written
request of the Company, destroy or cause to be destroyed such cancelled Right
Certificates, and in such case shall deliver a certificate of destruction
thereof to the Company.
Section 9. Availability of Shares of Preferred Stock. (a) The
Company covenants and agrees that it will cause to be reserved and kept
available out of its authorized and unissued shares of Preferred Stock or any
shares of Preferred Stock held in its treasury, the number of shares of
Preferred Stock that will be sufficient to permit the exercise in full of all
outstanding Rights.
(b) So long as the shares of Preferred Stock (and, following the
time that a Person becomes an Acquiring Person, shares of Common Stock and other
securities) issuable upon the exercise of Rights may be listed or admitted to
trading on the NYSE or listed on any other national securities exchange or
quotation system, the Company shall use its best efforts to cause, from and
after such time as the Rights become exercisable, all shares reserved for such
issuance to be listed or admitted to trading on the NYSE or listed on any other
national securities exchange or quotation system upon official notice of
issuance upon such exercise.
(c) From and after such time as the Rights become exercisable,
the Company shall use its best efforts, if then necessary to permit the issuance
of shares of Preferred Stock (and following the time that a Person first becomes
an Acquiring Person, shares of Common Stock and other securities) upon the
exercise of Rights, to register and qualify such shares of Preferred Stock (and
following the time that a Person first becomes an Acquiring Person, shares of
Common Stock and other securities) under the Securities Act and any applicable
state securities or "Blue Sky" laws (to the extent exemptions therefrom are not
available), cause such registration statement and qualifications to become
effective as soon as possible after such filing and keep such registration and
qualifications effective until the earlier of (x) the date as of which the
Rights are no longer exercisable for such securities and (y) the Expiration
Date. The
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Company may temporarily suspend, for a period of time not to exceed ninety (90)
days, the exercisability of the Rights in order to prepare and file a
registration statement under the Securities Act and permit it to become
effective. Upon any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the suspension is no
longer in effect. Notwithstanding any provision of this Rights Agreement to the
contrary, the Rights shall not be exercisable in any jurisdiction unless the
requisite qualification or exemption in such jurisdiction shall have been
obtained and until a registration statement under the Securities Act (if
required) shall have been declared effective.
(d) The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all shares of Preferred Stock (and,
following the time that a Person becomes an Acquiring Person, shares of Common
Stock and other securities) delivered upon exercise of Rights shall, at the time
of delivery of the certificates therefor (subject to payment of the Purchase
Price), be duly and validly authorized and issued and fully paid and
nonassessable shares.
(e) The Company further covenants and agrees that it will pay
when due and payable any and all federal and state transfer taxes and charges
which may be payable in respect of the issuance or delivery of the Right
Certificates or of any shares of Preferred Stock (or shares of Common Stock or
other securities) upon the exercise of Rights. The Company shall not, however,
be required to pay any transfer tax or charge which may be payable in respect of
any transfer or delivery of Right Certificates to a Person other than, or the
issuance or delivery of certificates or depositary receipts for the Preferred
Stock (or shares of Common Stock or other securities) in a name other than that
of, the registered holder of the Right Certificate evidencing Rights surrendered
for exercise or to issue or deliver any certificates or depositary receipts for
Preferred Stock (or shares of Common Stock or other securities) upon the
exercise of any Rights until any such tax or charge shall have been paid (any
such tax or charge being payable by that holder of such Right Certificate at the
time of surrender) or until it has been established to the Company's reasonable
satisfaction that no such tax or charge is due.
Section 10. Preferred Stock Record Date. Each Person in whose
name any certificate for Preferred Stock is issued upon the exercise of Rights
shall for all purposes be deemed to have become the holder of record of the
shares of Preferred Stock represented thereby on, and such certificate shall be
dated, the date upon which the Right Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and any applicable transfer taxes
or charges) was made; provided, however, that if the date of such surrender and
payment is a date upon which the Preferred Stock transfer books of the Company
are closed, such Person shall be deemed to have become the record holder of such
shares on, and such certificate shall be dated, the next succeeding Business Day
on which such transfer books are open. Prior to the exercise of the Rights
evidenced thereby, the holder of a Right Certificate shall not be entitled to
any rights of a holder of Preferred Stock for which the Rights shall be
exercisable, including, without limitation, the right to vote or to receive
dividends or other distributions, and shall not be entitled to receive any
notice of any proceedings of the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number and Kind of
Shares and Number of Rights. The Purchase Price, the number of shares of
Preferred Stock or other
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securities or property purchasable upon exercise of each Right and the number of
Rights outstanding are subject to adjustment from time to time as provided in
this Section 11.
(a) (i) In the event the Company shall at any time after the date
of this Agreement (A) declare a dividend on the Preferred Stock payable in
shares of Preferred Stock, (B) subdivide the outstanding shares of Preferred
Stock, (C) combine the outstanding shares of Preferred Stock into a smaller
number of shares of Preferred Stock or (D) issue any shares of its capital stock
in a reclassification of the shares of Preferred Stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), except as otherwise
provided in this Section 11(a), the Purchase Price in effect at the time of the
record date for such dividend or of the effective date of such subdivision,
combination or reclassification, as the case may be, and the number and kind of
shares of capital stock issuable on such date, shall be proportionately adjusted
so that the holder of any Right exercised after such time shall be entitled to
receive the aggregate number and kind of shares of capital stock which, if such
Right had been exercised immediately prior to such date and at a time when the
Preferred Stock transfer books of the Company were open, the holder would have
owned upon such exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification; provided, however, that
in no event shall the consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the shares of capital stock of the Company
issuable upon exercise of one Right.
(ii) Subject to Section 24 of this Rights Agreement and except as
otherwise provided in this Section 11(a)(ii) and Section 11(a)(iii),
in the event that any Person becomes an Acquiring Person, each holder
of a Right shall thereafter have the right to receive, upon exercise
thereof at a price equal to the then-current Purchase Price, in
accordance with the terms of this Rights Agreement and in lieu of
shares of Preferred Stock, such number of shares of Common Stock (or
at the option of the Company, such number of one-thousandths of a
share of Preferred Stock) as shall equal the result obtained by (x)
multiplying the then-current Purchase Price by the number of
one-thousandths of a share of Preferred Stock for which a Right is
then exercisable and dividing that product by (y) 50% of the
then-current per share market price of the Company's Common Stock
(determined pursuant to Section 11(d) hereof) on the date of the
occurrence of such event; provided, however, that the Purchase Price
(as so adjusted) and the number of shares of Common Stock so
receivable upon exercise of a Right shall thereafter be subject to
further adjustment as appropriate in accordance with this Section 11.
Notwithstanding anything in this Rights Agreement to the contrary,
however, from and after the time (the "Invalidation Time") when any
Person first becomes an Acquiring Person, any Rights that are
beneficially owned by (x) any Acquiring Person (or any Affiliate or
Associate of any Acquiring Person), (y) a transferee of any Acquiring
Person (or any such Affiliate or Associate) who becomes a transferee
after the Invalidation Time or (z) a transferee of any Acquiring
Person (or any such Affiliate or Associate) who became a transferee
prior to or concurrently with the Invalidation Time pursuant to either
(I) a transfer from the Acquiring Person to holders of its equity
securities or to any Person with whom it has any continuing agreement,
arrangement or understanding, written or otherwise, regarding the
transferred Rights or (II) a transfer that the Board of Directors has
determined is part of a plan, arrangement or understanding, written or
otherwise, which has the purpose or effect of avoiding the provisions
of this paragraph, and
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subsequent transferees of such Persons, shall be void without any
further action and any holder of such Rights shall thereafter have no
rights whatsoever with respect to such Rights under any provision of
this Rights Agreement. The Company shall use all reasonable efforts to
ensure that the provisions of this Section 11(a)(ii) are complied
with, but shall have no liability to any holder of Right Certificates
or other Person as a result of its failure to make any determinations
with respect to an Acquiring Person or its Affiliates, Associates or
transferees hereunder. From and after the Invalidation Time, no Right
Certificate shall be issued pursuant to Section 3 or Section 6 hereof
that represents Rights that are or have become void pursuant to the
provisions of this paragraph, and any Right Certificate delivered to
the Rights Agent that represents Rights that are or have become void
pursuant to the provisions of this paragraph shall be cancelled. From
and after the occurrence of an event specified in Section 13(a)
hereof, any Rights that theretofore have not been exercised pursuant
to this Section 11(a)(ii) shall thereafter be exercisable only in
accordance with Section 13 and not pursuant to this Section 11(a)(ii).
(iii) The Company may at its option substitute for a share of
Common Stock issuable upon the exercise of Rights in accordance with
the foregoing subparagraph (ii) such number or fractions of shares of
Preferred Stock having an aggregate current market value equal to the
current per share market price of a share of Common Stock. In the
event that there shall be an insufficient number of shares of Common
Stock authorized but unissued (and unreserved) to permit the exercise
in full of the Rights in accordance with the foregoing subparagraph
(ii), the Board of Directors shall, with respect to such deficiency,
to the extent permitted by applicable law and any material agreements
then in effect to which the Company is a party (A) determine the
excess of (x) the value of the shares of Common Stock issuable upon
the exercise of a Right in accordance with the foregoing subparagraph
(ii) (the "Current Value") over (y) the then-current Purchase Price
multiplied by the number of one-thousandths of a share of Preferred
Stock for which a Right was exercisable immediately prior to the time
that the Acquiring Person became such (such excess, the "Spread"), and
(B) with respect to each Right (other than Rights which have become
void pursuant to Section 11(a)(ii)), make adequate provision to
substitute for the shares of Common Stock issuable in accordance with
subparagraph (ii) upon exercise of the Right and payment of the
applicable Purchase Price, (1) cash, (2) a reduction in such Purchase
Price, (3) shares of Preferred Stock or other equity securities of the
Company (including, without limitation, shares or fractions of shares
of preferred stock which, by virtue of having dividend, voting and
liquidation rights substantially comparable to those of the shares of
Common Stock, are deemed in good faith by the Board of Directors to
have substantially the same value as the shares of Common Stock (such
shares of preferred stock and shares or fractions of shares of
preferred stock are hereinafter referred to as "Common Stock
equivalents")), (4) debt securities of the Company, (5) other assets
or (6) any combination of the foregoing, having a value which, when
added to the value of the shares of Common Stock actually issued upon
exercise of such Right, shall have an aggregate value equal to the
Current Value (less the amount of any reduction in such Purchase
Price), where such aggregate value has been determined by the Board of
Directors upon the advice of a nationally recognized investment
banking firm selected in good faith by the Board of Directors;
provided, however, if the Company shall not make adequate provision to
deliver value pursuant to clause (B) above within thirty (30) days
following the date that the Acquiring Person became such (the "Section
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11(a)(ii) Trigger Date"), then the Company shall be obligated to
deliver, to the extent permitted by applicable law and any material
agreements then in effect to which the Company is a party, upon the
surrender for exercise of a Right and without requiring payment of the
Purchase Price, shares of Common Stock (to the extent available), and
then, if necessary, such number or fractions of shares of Preferred
Stock (to the extent available) and then, if necessary, cash, which
shares and/or cash have an aggregate value equal to the Spread. If
within the thirty (30) day period referred to above the Board of
Directors shall determine in good faith that it is likely that
sufficient additional shares of Common Stock could be authorized for
issuance upon exercise in full of the Rights, then, if the Board of
Directors so elects, such thirty (30) day period may be extended to
the extent necessary, but not more than ninety (90) days after the
Section 11(a)(ii) Trigger Date, in order that the Company may seek
stockholder approval for the authorization of such additional shares
(such thirty (30) day period, as it may be extended, is hereinafter
called the "Substitution Period"). To the extent that the Company
determines that some action need be taken pursuant to the second
and/or third sentence of this Section 11(a)(iii), the Company (x)
shall provide, subject to Section 11(a)(ii) hereof and the last
sentence of this Section 11(a)(iii) hereof, that such action shall
apply uniformly to all outstanding Rights and (y) may suspend the
exercisability of the Rights until the expiration of the Substitution
Period in order to seek any authorization of additional shares and/or
to decide the appropriate form of distribution to be made pursuant to
such second sentence and to determine the value thereof. In the event
of any such suspension, the Company shall issue a public announcement
stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the
suspension is no longer in effect. For purposes of this Section
11(a)(iii), the value of the shares of Common Stock shall be the
current per share market price (as determined pursuant to Section
11(d)(i)) on the Section 11(a)(ii) Trigger Date and the per share or
fractional value of any Common Stock equivalent shall be deemed to
equal the current per share market price of the Common Stock on such
date. The Board of Directors of the Company may, but shall not be
required to, establish procedures to allocate the right to receive
shares of Common Stock upon the exercise of the Rights among holders
of Rights pursuant to this Section 11(a)(iii).
(b) In case the Company shall fix a record date for the issuance
of rights, options or warrants to all holders of Preferred Stock entitling them
(for a period expiring within 45 calendar days after such record date) to
subscribe for or purchase Preferred Stock (or shares having similar rights,
privileges and preferences as the Preferred Stock ("equivalent preferred
shares")) or securities convertible into Preferred Stock or equivalent preferred
shares at a price per share of Preferred Stock or equivalent preferred shares
(or having a conversion price per share, if a security convertible into shares
of Preferred Stock or equivalent preferred shares) less than the then-current
per share market price of the Preferred Stock (determined pursuant to Section
11(d) hereof) on such record date, the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the number of shares of Preferred Stock and equivalent preferred shares
outstanding on such record date plus the number of shares of Preferred Stock and
equivalent preferred shares which the aggregate offering price of the total
number of such shares so to be offered (and/or the aggregate initial conversion
price of the convertible securities so to be offered) would purchase at such
current market price, and the
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denominator of which shall be the number of shares of Preferred Stock and
equivalent preferred shares outstanding on such record date plus the number of
additional shares of Preferred Stock and/or equivalent preferred shares to be
offered for subscription or purchase (or into which the convertible securities
so to be offered are initially convertible); provided, however, that in no event
shall the consideration to be paid upon the exercise of one Right be less than
the aggregate par value of the shares of capital stock of the Company issuable
upon exercise of one Right. In case such subscription price may be paid in a
consideration part or all of which shall be in a form other than cash, the value
of such consideration shall be as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent and which shall be binding on the Rights Agent.
Shares of Preferred Stock and equivalent preferred shares owned by or held for
the account of the Company shall not be deemed outstanding for the purpose of
any such computation. Such adjustment shall be made successively whenever such a
record date is fixed; and in the event that such rights, options or warrants are
not so issued, the Purchase Price shall be adjusted to be the Purchase Price
which would then be in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for the making of
a distribution to all holders of the Preferred Stock (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of indebtedness
or assets (other than a regular quarterly cash dividend or a dividend payable in
Preferred Stock) or subscription rights or warrants (excluding those referred to
in Section 11(b) hereof), the Purchase Price to be in effect after such record
date shall be determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be the
then-current per share market price of the Preferred Stock (determined pursuant
to Section 11(d) hereof) on such record date, less the fair market value (as
determined in good faith by the Board of Directors of the Company whose
determination shall be described in a statement filed with the Rights Agent and
shall be binding on the Rights Agent) of the portion of such assets or evidences
of indebtedness so to be distributed or of such subscription rights or warrants
applicable to one share of Preferred Stock, and the denominator of which shall
be such current per share market price of the Preferred Stock; provided,
however, that in no event shall the consideration to be paid upon the exercise
of one Right be less than the aggregate par value of the shares of capital stock
of the Company to be issued upon exercise of one Right. Such adjustments shall
be made successively whenever such a record date is fixed; and in the event that
such distribution is not so made, the Purchase Price shall again be adjusted to
be the Purchase Price that would then be in effect if such record date had not
been fixed.
(d) (i) Except as otherwise provided herein, for the purpose of
any computation hereunder, the "current per share market price" of any security
(a "Security" for the purpose of this Section 11(d)(i)) on any date shall be
deemed to be the average of the daily closing prices per share of such Security
for the 30 consecutive Trading Days (as such term is hereinafter defined)
immediately prior to such date; provided, however, that in the event that the
current per share market price of the Security is determined during a period
following the announcement by the issuer of such Security of (A) a dividend or
distribution on such Security payable in shares of such Security or securities
convertible into such shares, or (B) any subdivision, combination or
reclassification of such Security, and prior to the expiration of 30 Trading
Days after the ex-dividend date for such dividend or distribution, or the record
date for such subdivision,
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combination or reclassification, then, and in each such case, the current per
share market price shall be appropriately adjusted to reflect the current market
price per share equivalent of such Security. The closing price for each day
shall be the last sale price, regular way, or, in case no such sale takes place
on such day, the average of the closing bid and asked prices, regular way, in
either case as reported by (w) the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the NYSE or,
(x) if the Security is not listed or admitted to trading on the NYSE, as
reported in the principal consolidated transaction reporting system with respect
to securities listed on the principal national securities exchange on which the
Security is listed or admitted to trading or, (y) if the Security is not listed
or admitted to trading on any national securities exchange, the last quoted
price or, if not so quoted, the average of the high bid and low asked prices in
the over-the-counter market, as reported by the system then in use, or, (z) if
on any such date the Security is not so quoted or reported, the average of the
closing bid and asked prices as furnished by a professional market maker making
a market in the Security selected by the Board of Directors of the Company. The
term "Trading Day" shall mean a day on which the principal national securities
exchange on which the Security is listed or admitted to trading is open for the
transaction of business or, if the Security is not listed or admitted to trading
on any national securities exchange, a Business Day.
(ii) For the purpose of any computation hereunder, if the
Preferred Stock is publicly traded, the "current per share market
price" of the Preferred Stock shall be determined in accordance with
the method set forth in Section 11(d)(i). If the Preferred Stock is
not publicly traded but the Common Stock is publicly traded, the
"current per share market price" of the Preferred Stock shall be
conclusively deemed to be the current per share market price of the
Common Stock, as determined pursuant to Section 11(d)(i), multiplied
by one thousand (appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the date
hereof). If neither the Common Stock nor the Preferred Stock is
publicly traded, "current per share market price" shall mean the fair
value per share as determined in good faith by the Board of Directors
of the Company, whose determination shall be described in a statement
filed with the Rights Agent and shall be binding on the Rights Agent.
(e) No adjustment in the Purchase Price shall be required unless
such adjustment would require an increase or decrease of at least 1% in the
Purchase Price; provided, however, that any adjustments not required to be made
by reason of this Section 11(e) shall be carried forward and taken into account
in any subsequent adjustment. All calculations under this Section 11 shall be
made to the nearest cent or to the nearest one ten-thousandth of a share of
Preferred Stock or share of Common Stock or other share or security as the case
may be. Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the earlier of (i) three
years from the date of the transaction which requires such adjustment or (ii)
the Expiration Date. If as a result of an adjustment made pursuant to Section
11(a) hereof, the holder of any Right thereafter exercised shall become entitled
to receive any shares of capital stock of the Company other than the Preferred
Stock, thereafter the Purchase Price and the number of such other shares so
receivable upon exercise of a Right shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Preferred Stock contained in Sections 11(a),
11(b), 11(c), 11(e), 11(h), 11(i) and 11(m) and the provisions of Sections 7, 9,
10,
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13 and 14 hereof with respect to the Preferred Stock shall apply on like terms
to any such other shares.
(f) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one-thousandths of a
share of Preferred Stock purchasable from time to time hereunder upon exercise
of the Rights, all subject to further adjustment as provided herein.
(g) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price as a
result of the calculations made in Section 11(b) and (c), each Right outstanding
immediately prior to the making of such adjustment shall thereafter evidence the
right to purchase, at the adjusted Purchase Price, that number of one
one-thousandths of a share of Preferred Stock (calculated to the nearest
ten-thousandth of a share of Preferred Stock) obtained by (i) multiplying (x)
the number of one-thousandths of a share of Preferred Stock purchasable upon the
exercise of a Right immediately prior to such adjustment by (y) the Purchase
Price in effect immediately prior to such adjustment of the Purchase Price and
(ii) dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
(h) The Company may elect on or after the date of any adjustment
of the Purchase Price or any adjustment to the number of shares of Preferred
Stock for which a Right may be exercised made pursuant to Section 11(a)(i),
11(b) or 11(c) hereof to adjust the number of Rights, in substitution for any
adjustment in the number of one one-thousandths of a share of Preferred Stock
purchasable upon the exercise of a Right. Each of the Rights outstanding after
such adjustment of the number of Rights shall be exercisable for the number of
one-thousandths of a share of Preferred Stock for which a Right was exercisable
immediately prior to such adjustment. Each Right held of record prior to such
adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest ten-thousandth) obtained by dividing the Purchase
Price in effect immediately prior to adjustment of the Purchase Price by the
Purchase Price in effect immediately after adjustment of the Purchase Price. The
Company shall make a public announcement of its election to adjust the number of
Rights, indicating the record date for the adjustment, and, if known at the
time, the amount of the adjustment to be made. This record date may be the date
on which the Purchase Price is adjusted or any day thereafter, but, if the Right
Certificates have been issued, shall be at least 10 days later than the date of
the public announcement. If Right Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section 11(i), the Company
may, as promptly as practicable, cause to be distributed to holders of record of
Right Certificates on such record date Right Certificates evidencing, subject to
Section 14 hereof, the additional Rights to which such holders shall be entitled
as a result of such adjustment, or, at the option of the Company, shall cause to
be distributed to such holders of record in substitution and replacement for the
Right Certificates held by such holders prior to the date of adjustment, and
upon surrender thereof, if required by the Company, new Right Certificates
evidencing all the Rights to which such holders shall be entitled as a result of
such adjustment. Right Certificates so to be distributed shall be issued,
executed and countersigned in the manner provided for herein and shall be
registered in the names of the holders of record of Right Certificates on the
record date specified in the public announcement.
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(i) Irrespective of any adjustment or change in the Purchase
Price or the number of one-thousandths of a share of Preferred Stock issuable
upon the exercise of the Rights, the Right Certificates theretofore and
thereafter issued may continue to express the Purchase Price and the number of
one-thousandths of a share of Preferred Stock which were expressed in the
initial Right Certificates issued hereunder.
(j) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then par value, if any, of the shares of
Preferred Stock or other shares of capital stock issuable upon exercise of the
Rights, the Company shall take any corporate action which may, in the opinion of
its counsel, be necessary in order that the Company may validly and legally
issue fully paid and nonassessable shares of Preferred Stock or other such
shares at such adjusted Purchase Price.
(k) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Right exercised after such record date
the Preferred Stock, Common Stock or other capital stock or securities of the
Company, if any, issuable upon such exercise over and above the Preferred Stock,
Common Stock or other capital stock or securities of the Company, if any,
issuable upon such exercise on the basis of the Purchase Price in effect prior
to such adjustment; provided, however, that the Company shall deliver to such
holder a due bill or other appropriate instrument evidencing such holder's right
to receive such additional shares upon the occurrence of the event requiring
such adjustment.
(l) Notwithstanding anything in this Section 11 to the contrary,
the Company shall be entitled to make such adjustments in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that the Board of Directors in its sole discretion shall determine to
be advisable in order that any consolidation or subdivision of the Preferred
Stock, issuance (wholly for cash) of any shares of Preferred Stock at less than
the current market price, issuance (wholly for cash) of Preferred Stock or
securities which by their terms are convertible into or exchangeable for
Preferred Stock, dividends on Preferred Stock payable in shares of Preferred
Stock or issuance of rights, options or warrants referred to hereinabove in
Section 11(b), hereafter made by the Company to holders of its Preferred Stock
shall not be taxable to such stockholders.
(m) Notwithstanding anything in this Rights Agreement to the
contrary, in the event that at any time after the date of this Rights Agreement
and prior to the Distribution Date, the Company shall (i) declare or pay any
dividend on the Common Stock payable in Common Stock or (ii) effect a
subdivision, combination or consolidation of the Common Stock (by
reclassification or otherwise than by payment of a dividend payable in Common
Stock) into a greater or lesser number of shares of Common Stock, then in any
such case, the number of Rights associated with each share of Common Stock then
outstanding, or issued or delivered thereafter, shall be proportionately
adjusted so that the number of Rights thereafter associated with each share of
Common Stock following any such event shall equal the result obtained by
multiplying the number of Rights associated with each share of Common Stock
immediately prior to such event by a fraction the numerator of which shall be
the total number of shares of Common Stock outstanding immediately prior to the
occurrence of the event and the
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denominator of which shall be the total number of shares of Common Stock
outstanding immediately following the occurrence of such event.
(n) The Company agrees that, after the earlier of the
Distribution Date or the Stock Acquisition Date, it will not, except as
permitted by Section 23, 24 or 27 hereof, take (or permit any Subsidiary to
take) any action if at the time such action is taken it is reasonably
foreseeable that such action will diminish substantially or eliminate the
benefits intended to be afforded by the Rights.
Section 12. Certificate of Adjusted Purchase Price or Number of
Shares. Whenever an adjustment is made as provided in Section 11 or 13 hereof,
the Company shall promptly (a) prepare a certificate setting forth such
adjustment, and a brief statement of the facts accounting for such adjustment,
(b) file with the Rights Agent and with each transfer agent for the Common Stock
or the Preferred Stock a copy of such certificate and (c) mail a brief summary
thereof to each holder of a Right Certificate (or if prior to the Distribution
Date, to each holder of a certificate representing shares of Common Stock) in
accordance with Section 26 hereof. Notwithstanding the foregoing sentence, the
failure of the Company to give such notice shall not affect the validity of or
the force or effect of or the requirement for such adjustment. The Rights Agent
shall be fully protected in relying on any such certificate and on any
adjustment therein contained and shall not be deemed to have knowledge of any
such adjustment unless and until it shall have received such certificate. Any
adjustment to be made pursuant to Section 11 or 13 hereof shall be effective as
of the date of the event giving rise to such adjustment.
Section 13. Consolidation, Merger or Sale or Transfer of Assets
or Earnings Power. (a) In the event, directly or indirectly, at any time after
any Person has become an Acquiring Person, (i) the Company shall merge with and
into any other Person (other than one or more of its wholly-owned Subsidiaries),
(ii) any Person (other than one or more of its wholly-owned Subsidiaries) shall
consolidate with the Company, or any Person (other than one or more of its
wholly-owned Subsidiaries) shall merge with and into the Company and the Company
shall be the continuing or surviving corporation of such merger and, in
connection with such merger, all or part of the Common Stock shall be changed
into or exchanged for stock or other securities of any other Person (or of the
Company) or cash or any other property, or (iii) the Company shall sell or
otherwise transfer (or one or more of its Subsidiaries shall sell or otherwise
transfer), in one or more transactions, assets or earning power aggregating to
50% or more of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to any other Person (other than the Company or one or more of
its wholly-owned Subsidiaries), then, and in each such case, proper provision
shall be made so that:
(A) each holder of record of a Right (other than Rights which
have become void pursuant to Section 11(a)(ii)) shall thereafter have the right
to receive, upon the exercise thereof at a price equal to the then-current
Purchase Price multiplied by the number of one-thousandths of a share of
Preferred Stock for which a Right was exercisable (whether or not such Right was
then exercisable) immediately prior to the time that any Person first became an
Acquiring Person (each as subsequently adjusted thereafter pursuant to Sections
11(a)(i), 11(b), 11(c), 11(f), 11(h), 11(i) and 11(m)), in accordance with the
terms of this Rights Agreement and in lieu of Preferred Stock, such number of
validly issued, fully paid and non-assessable and freely tradeable shares of
Common Stock of the Principal Party (as defined below) not subject to any liens,
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encumbrances, rights of first refusal or other adverse claims, as shall be equal
to the result obtained by (1) multiplying the then-current Purchase Price by the
number of one one-thousandths of a share of Preferred Stock for which a Right
was exercisable immediately prior to the time that any Person first became an
Acquiring Person (as subsequently adjusted thereafter pursuant to Sections
11(a)(i), 11(b), 11(c), 11(f), 11(h), 11(i) and 11(m)) and (2) dividing that
product by 50% of the then-current per share market price of the Common Stock of
such Principal Party (determined pursuant to Section 11(d)(i) hereof) on the
date of consummation of such consolidation, merger, sale or transfer; provided,
that the Purchase Price and the number of shares of Common Stock of such
Principal Party issuable upon exercise of each Right shall be further adjusted
as provided in Section 11(f) of this Rights Agreement to reflect any events
occurring in respect of such Principal Party after the date of such
consolidation, merger, sale or transfer;
(B) such Principal Party shall thereafter be liable for, and
shall assume, by virtue of such consolidation, merger, sale or transfer, all the
obligations and duties of the Company pursuant to this Rights Agreement;
(C) the term "Company" as used herein shall thereafter be deemed
to refer to such Principal Party; and
(D) such Principal Party shall take such steps (including, but
not limited to, the reservation of a sufficient number of its shares of its
Common Stock) in connection with such consummation of any such transaction as
may be necessary to assure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be, in relation to the shares of its
Common Stock thereafter deliverable upon the exercise of the Rights; provided,
that upon the subsequent occurrence of any consolidation, merger, sale or
transfer of assets or other extraordinary transaction in respect of such
Principal Party, each holder of a Right shall thereupon be entitled to receive,
upon exercise of a Right and payment of the Purchase Price as provided in this
Section 13(a), such cash, shares, rights, warrants and other property which such
holder would have been entitled to receive had such holder, at the time of such
transaction, owned the Common Stock of the Principal Party receivable upon the
exercise of a Right pursuant to this Section 13(a), and such Principal Party
shall take such steps (including, but not limited to, reservation of shares of
stock) as may be necessary to permit the subsequent exercise of the Rights in
accordance with the terms hereof for such cash, shares, rights, warrants and
other property.
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in clauses (i) or
(ii) of the first sentence of Section 13(a) hereof: (A) the Person
that is the issuer of the securities into which the shares of Common
Stock are converted in such merger or consolidation, or, if there is
more than one such issuer, the issuer of the shares of Common Stock of
which have the greatest aggregate market value of shares outstanding,
or (B) if no securities are so issued, (x) the Person that is the
other party to the merger, if such Person survives said merger, or, if
there is more than one such Person, the Person the shares of Common
Stock of which have the greatest aggregate market value of shares
outstanding or (y) if the Person that is the other party to the merger
does not survive the merger, the Person that
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does survive the merger (including the Company if it survives) or (z)
the Person resulting from the consolidation; and
(ii) in the case of any transaction described in clause (iii) of
the first sentence in Section 13(a) hereof, the Person that is the
party receiving the greatest portion of the assets or earning power
transferred pursuant to such transaction or transactions, or, if each
Person that is a party to such transaction or transactions receives
the same portion of the assets or earning power so transferred or if
the Person receiving the greatest portion of the assets or earning
power cannot be determined, whichever of such Persons is the issuer of
Common Stock having the greatest aggregate market value of shares
outstanding;
provided, however, that in any such case described in the foregoing clause
(b)(i) or (b)(ii), if the Common Stock of such Person is not at such time or has
not been continuously over the preceding 12-month period registered under
Section 12 of the Exchange Act, then (1) if such Person is a direct or indirect
Subsidiary of another Person the Common Stock of which is and has been so
registered, the term "Principal Party" shall refer to such other Person, or (2)
if such Person is a Subsidiary, directly or indirectly, of more than one Person,
and the Common Stock of all of such persons have been so registered, the term
"Principal Party" shall refer to whichever of such Persons is the issuer of
Common Stock having the greatest aggregate market value of shares outstanding,
or (3) if such Person is owned, directly or indirectly, by a joint venture
formed by two or more Persons that are not owned, directly or indirectly, by the
same Person, the rules set forth in clauses (1) and (2) above shall apply to
each of the owners having an interest in the venture as if the Person owned by
the joint venture was a Subsidiary of both or all of such joint venturers, and
the Principal Party in each such case shall bear the obligations set forth in
this Section 13 in the same ratio as its interest in such Person bears to the
total of such interests.
(c) The Company shall not consummate any consolidation, merger,
sale or transfer referred to in Section 13(a) hereof unless prior thereto the
Company and the Principal Party involved therein shall have executed and
delivered to the Rights Agent an agreement confirming that the requirements of
Sections 13(a) and (b) hereof shall promptly be performed in accordance with
their terms and that such consolidation, merger, sale or transfer of assets
shall not result in a default by the Principal Party under this Rights Agreement
as the same shall have been assumed by the Principal Party pursuant to Sections
13(a) and (b) hereof and providing that, as soon as practicable after executing
such agreement pursuant to this Section 13, the Principal Party will:
(i) prepare and file a registration statement under the
Securities Act, if necessary, with respect to the Rights and the
securities purchasable upon exercise of the Rights on an appropriate
form, use its best efforts to cause such registration statement to
become effective as soon as practicable after such filing and use its
best efforts to cause such registration statement to remain effective
(with a prospectus at all times meeting the requirements of the
Securities Act) until the Expiration Date, and similarly comply with
applicable state securities laws;
(ii) use its best efforts, if the Common Stock of the Principal
Party shall be listed or admitted to trading on the NYSE or on another
national securities exchange, to
-20-
list or admit to trading (or continue the listing of) the Rights and
the securities purchasable upon exercise of the Rights on the NYSE or
such securities exchange, or, if the Common Stock of the Principal
Party shall not be listed or admitted to trading on the NYSE or a
national securities exchange, to cause the Rights and the securities
receivable upon exercise of the Rights to be reported by such other
system then in use;
(iii) deliver to holders of the Rights historical financial
statements for the Principal Party which comply in all respects with
the requirements for registration on Form 10 (or any successor form)
under the Exchange Act; and
(iv) obtain waivers of any rights of first refusal or preemptive
rights in respect of the Common Stock of the Principal Party subject
to purchase upon exercise of outstanding Rights.
In the event that any of the transactions described in Section 13(a) hereof
shall occur at any time after the occurrence of a transaction described in
Section 11(a)(ii) hereof, the Rights which have not theretofore been exercised
shall thereafter be exercisable in the manner described in Section 13(a).
(d) In case the Principal Party has a provision in any of its
authorized securities or in its certificate of incorporation or by-laws or other
instrument governing its affairs, which provision would have the effect of (i)
causing such Principal Party to issue (other than to holders of Rights pursuant
to this Section 13), in connection with, or as a consequence of, the
consummation of a transaction referred to in this Section 13, shares of Common
Stock or Common Stock equivalents of such Principal Party at less than the
then-current market price per share thereof (determined pursuant to Section
11(d) hereof) or securities exercisable for, or convertible into, Common Stock
or Common Stock equivalents of such Principal Party at less than such
then-current market price, or (ii) providing for any special payment, tax or
similar provision in connection with the issuance of the Common Stock of such
Principal Party pursuant to the provisions of Section 13, then, in such event,
the Company hereby agrees with each holder of Rights that it shall not
consummate any such transaction unless prior thereto the Company and such
Principal Party shall have executed and delivered to the Rights Agent a
supplemental agreement providing that the provision in question of such
Principal Party shall have been canceled, waived or amended, or that the
authorized securities shall be redeemed, so that the applicable provision will
have no effect in connection with, or as a consequence of, the consummation of
the proposed transaction.
(e) The Company covenants and agrees that it shall not, at any
time after a Person first becomes an Acquiring Person, enter into any
transaction of the type contemplated by Sections 13(a)(i)-(iii) hereof if (x) at
the time of or immediately after such consolidation, merger, sale, transfer or
other transaction there are any rights, warrants or other instruments or
securities outstanding or agreements in effect which would substantially
diminish or otherwise eliminate the benefits intended to be afforded by the
Rights, (y) prior to, simultaneously with or immediately after such
consolidation, merger, sale, transfer or other transaction, the stockholders of
the Person who constitutes, or would constitute, the Principal Party for
purposes of Section 13(b) hereof shall have received a distribution of Rights
previously owned by such Person or any
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of its Affiliates or Associates or (z) the form or nature of organization of the
Principal Party would preclude or limit the exercisability of the Rights.
Section 14. Fractional Rights and Fractional Shares. (a) The
Company shall not be required to issue fractions of Rights (except prior to the
Distribution Date in accordance with Section 11(n) hereof) or to distribute
Right Certificates which evidence fractional Rights. In lieu of such fractional
Rights, there shall be paid to the registered holders of the Right Certificates
with regard to which such fractional Rights would otherwise be issuable, an
amount in cash equal to the same fraction of the current market value of a whole
Right. For the purposes of this Section 14(a), the current market value of a
whole Right shall be the closing price of the Rights for the Trading Day
immediately prior to the date on which such fractional Rights would have been
otherwise issuable. The closing price for any day shall be the last sale price,
regular way, or, in case no such sale takes place on such day, the average of
the closing bid and asked prices, regular way, in either case as reported by (w)
the principal consolidated transaction reporting system with respect to
securities listed or admitted to trading on the NYSE or, (x) if the Rights are
not listed or admitted to trading on the NYSE, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which the Rights are listed or
admitted to trading or, (y) if the Rights are not listed or admitted to trading
on any national securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter market,
as reported by such system then in use or, (z) if on any such date the Rights
are not so quoted or reported, the average of the closing bid and asked prices
as furnished by a professional market maker making a market in the Rights
selected by the Board of Directors of the Company. If on any such date no such
market maker is making a market in the Rights, the fair value of the Rights on
such date as determined in good faith by the Board of Directors of the Company
shall be used.
(b) The Company shall not be required to issue fractions of
shares of Preferred Stock (other than fractions which are integral multiples of
one one-thousandth of a share of Preferred Stock) upon exercise of the Rights or
to distribute certificates which evidence fractional shares of Preferred Stock
(other than fractions which are integral multiples of one one-thousandth of a
share of Preferred Stock). Interests in fractions of Preferred Stock in integral
multiples of one one-thousandth of a share of Preferred Stock may, at the
election of the Company, be evidenced by depositary receipts, pursuant to an
appropriate agreement between the Company and a depositary selected by it;
provided, that such agreement shall provide that the holders of such depositary
receipts shall have all the rights, privileges and preferences to which they are
entitled as beneficial owners(for the purposes of this Section 14(b), as such
term is defined in Rule 13d-3 or 13d-5 of the General Rules and Regulations
under the Exchange Act) of the Preferred Stock represented by such depositary
receipts. In lieu of fractional shares of Preferred Stock that are not integral
multiples of one one-thousandth of a share of Preferred Stock, the Company shall
pay to the registered holders of Right Certificates at the time such Rights are
exercised for shares of Preferred Stock as herein provided an amount in cash
equal to the same fraction of the current market value of one share of Preferred
Stock. For the purposes of this Section 14(b), the current market value of a
share of Preferred Stock shall be the closing price of a share of Preferred
Stock (as determined pursuant to Section 11(d)(ii) hereof) for the Trading Day
immediately prior to the date of such exercise.
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(c) The Company shall not be required to issue fractions of
shares of Common Stock or to distribute certificates which evidence fractional
shares of Common Stock upon the exercise or exchange of Rights. In lieu of such
fractional shares of Common Stock, the Company shall pay to the registered
holders of the Right Certificates at the time such Rights are exercised or
exchanged for shares of Common Stock as herein provided an amount in cash equal
to the same fraction of the current market value of a whole share of Common
Stock (as determined in accordance with Section 11(d)(i) hereof) for the Trading
Day immediately prior to the date of such exercise or exchange.
(d) The holder of a Right by the acceptance of the Right
expressly waives the right to receive any fractional Rights or any fractional
shares upon exercise or exchange of a Right (except as provided above).
Section 15. Rights of Action. All rights of action in respect of
this Rights Agreement, excepting the rights of action given to the
Rights Agent under Section 18 hereof, are vested in the respective
registered holders of the Right Certificates (and, prior to the
Distribution Date, the registered holders of the Common Stock); and
any registered holder of any Right Certificate (or, prior to the
Distribution Date, of the Common Stock), without the consent of the
Rights Agent or of the holder of any other Right Certificate (or,
prior to the Distribution Date, of the Common Stock), on such holder's
own behalf and for such holder's own benefit, may enforce, and may
institute and maintain any suit, action or proceeding against the
Company to enforce, or otherwise act in respect of, such holder's
right to exercise the Rights evidenced by such Right Certificate (or,
prior to the Distribution Date, such Common Stock) in the manner
provided in such Right Certificate and in this Rights Agreement.
Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the holders of
Rights would not have an adequate remedy at law for any breach of this
Rights Agreement and will be entitled to specific performance of the
obligations under, and injunctive relief against actual or threatened
violations of the obligations of any Person subject to, this Rights
Agreement.
Section 16. Agreement of Right Holders. Every holder of a Right,
by accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(i) prior to the Distribution Date, the Rights will not be
evidenced by a Right Certificate and will be transferable only in
connection with the transfer of the Common Stock;
(ii) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if
surrendered at the office or agency of the Rights Agent designated for
such purpose, duly endorsed or accompanied by a proper instrument of
transfer;
(iii) the Company and the Rights Agent may deem and treat the
Person in whose name the Right Certificate (or, prior to the
Distribution Date, the Common Stock (or Book Entry shares of Common
Stock)) is registered as the absolute owner thereof and
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of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Right Certificates or the Common Stock
certificate (or notices provided to holders of Book Entry shares of
Common Stock) made by anyone other than the Company or the Rights
Agent) for all purposes whatsoever, and neither the Company nor the
Rights Agent, subject to Section 7(e) hereof, shall be affected by any
notice to the contrary; and
(iv) notwithstanding anything in this Rights Agreement to the
contrary, neither the Company nor the Rights Agent shall have any
liability to any holder of a Right or other Person as a result of its
inability to perform any of its obligations under this Rights
Agreement by reason of any preliminary or permanent injunction or
other order, judgment, decree or ruling (whether interlocutory or
final) issued by a court or by a governmental, regulatory,
self-regulatory or administrative agency or commission, or any
statute, rule, regulation or executive order promulgated or enacted by
any governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, that the Company
must use its reasonable best efforts to have any such injunction,
order, judgment, decree or ruling lifted or otherwise overturned as
soon as possible.
Section 17. Right Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Preferred Stock or any
other securities of the Company which may at any time be issuable on the
exercise or exchange of the Rights represented thereby, nor shall anything
contained herein or in any Right Certificate be construed to confer upon the
holder of any Right Certificate, as such, any of the rights of a stockholder of
the Company or any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or other
actions affecting stockholders (except as provided in this Rights Agreement), or
to receive dividends or subscription rights, or otherwise, until the Rights
evidenced by such Right Certificate shall have been exercised or exchanged in
accordance with the provisions hereof.
Section 18. Concerning the Rights Agent. (a) The Company agrees
to pay to the Rights Agent reasonable compensation for all services rendered by
it hereunder and, from time to time, on demand of the Rights Agent, its
reasonable expenses and counsel fees and other disbursements incurred in the
administration and execution of this Rights Agreement and the exercise and
performance of its duties hereunder. The Company also agrees to indemnify the
Rights Agent for, and to hold it harmless against, any loss, liability or
expense, incurred without gross negligence, bad faith or willful misconduct on
the part of the Rights Agent, for anything done or omitted by the Rights Agent
in connection with the acceptance and administration of this Rights Agreement,
including the costs and expenses of defending against any claim of liability
arising therefrom, directly or indirectly.
(b) The Rights Agent shall be protected and shall incur no
liability for, or in respect of any action taken, suffered or omitted by it in
connection with, its administration of this Rights Agreement in reliance upon
any Right Certificate or certificate for the Preferred Stock or Common Stock or
for other securities of the Company, instrument of assignment or transfer, power
of attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document reasonably believed by it to
be genuine and to be signed, executed
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and, where necessary, verified or acknowledged, by the proper Person or Persons,
or otherwise upon the advice of counsel as set forth in Section 20 hereof.
Section 19. Merger or Consolidation or Change of Name of Rights
Agent. (a) Any corporation or entity into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be consolidated, or
any corporation or entity resulting from any merger or consolidation to which
the Rights Agent or any successor Rights Agent shall be a party, or any
corporation or entity succeeding to the stock transfer or corporate trust powers
of the Rights Agent or any successor Rights Agent, shall be the successor to the
Rights Agent under this Rights Agreement without the execution or filing of any
paper or any further act on the part of any of the parties hereto; provided,
that such corporation or entity would be eligible for appointment as a successor
Rights Agent under the provisions of Section 21 hereof. In case at the time such
successor Rights Agent shall succeed to the agency created by this Rights
Agreement, any of the Right Certificates shall have been countersigned but not
delivered, such successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Right Certificates so countersigned;
and in case at that time any of the Right Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Right
Certificates either in the name of the predecessor Rights Agent or in the name
of such successor Rights Agent; and in all such cases such Right Certificates
shall have the full force provided in the Right Certificates and in this Rights
Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered the Rights Agent may adopt the countersignature
under its prior name and deliver Right Certificates so countersigned; and in
case at that time any of the Right Certificates shall not have been
countersigned, the Rights Agent may countersign such Right Certificates either
in its prior name or in its changed name and in all such cases such Right
Certificates shall have the full force provided in the Right Certificates and in
this Rights Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes
the duties and obligations imposed by this Rights Agreement upon the following
terms and conditions, by all of which the Company and the holders of Right
Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be
legal counsel for the Company), and the opinion of such counsel shall be full
and complete authorization and protection to the Rights Agent as to any action
taken or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Rights
Agreement the Rights Agent shall deem it necessary or desirable that any fact or
matter be proved or established by the Company prior to taking or suffering any
action hereunder, such fact or matter (unless other evidence in respect thereof
be herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by any one of the Chief Executive Officer,
President, any Vice President, the Treasurer or the Secretary of the Company
(each, an "Authorized Officer") and delivered to the Rights Agent; and such
certificate shall be full
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authorization to the Rights Agent for any action taken or suffered in good faith
by it under the provisions of this Rights Agreement in reliance upon such
certificate.
(c) The Rights Agent shall be liable hereunder to the Company and
any other Person only for its own gross negligence, bad faith or willful
misconduct.
(d) The Rights Agent shall not be liable for or by reason of any
of the statements of fact or recitals contained in this Rights Agreement or in
the Right Certificates (except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be deemed to
have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Rights Agreement or the execution and delivery
hereof (except the due execution hereof by the Rights Agent) or in respect of
the validity or execution of any Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Rights Agreement or in any Right
Certificate; nor shall it be responsible for any change in the exercisability of
the Rights (including the Rights becoming void pursuant to Section 11(a)(ii)
hereof) or any adjustment in the terms of the Rights (including the manner,
method or amount thereof) provided for in Sections 3, 11, 13, 23 and 24, or the
ascertaining of the existence of facts that would require any such change or
adjustment (except with respect to the exercise of Rights evidenced by Right
Certificates after receipt of a certificate furnished pursuant to Section 12,
describing such change or adjustment); nor shall it by any act hereunder be
deemed to make any representation or warranty as to the authorization or
reservation of any shares of Preferred Stock or other securities to be issued
pursuant to this Rights Agreement or any Right Certificate or as to whether any
shares of Preferred Stock or other securities will, when issued, be validly
authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Rights Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
person reasonably believed by the Rights Agent to be one of the Authorized
Officers, and to apply to such Authorized Officers for advice or instructions in
connection with its duties, and it shall not be liable for any action taken or
suffered by it in good faith in accordance with instructions of any such
Authorized Officer or for any delay in acting while waiting for those
instructions. Any application by the Rights Agent for written instructions from
the Company may, at the option of the Rights Agent, set forth in writing any
action proposed to be taken or omitted by the Rights Agent under this Rights
Agreement and the date on and/or after which such action shall be taken or such
omission shall be effective. The Rights Agent shall not be liable for any action
taken by, or omission of, the Rights Agent in accordance with a proposal
included in any such application on or after the date specified in such
application (which date shall not be less than five Business Days after the date
any Authorized Officer of the Company actually receives such application, unless
any such Authorized Officer shall have consented in writing to an earlier date)
unless, prior to taking any such action (or the effective date in the case of an
omission), the Rights Agent shall have
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received written instructions in response to such application specifying the
action to be taken or omitted.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent
under this Rights Agreement. Nothing herein shall preclude the Rights Agent from
acting in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights
or powers hereby vested in it or perform any duty hereunder either itself or by
or through its attorneys or agents, and the Rights Agent shall not be answerable
or accountable for any act, default, neglect or misconduct of any such attorneys
or agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided, that reasonable care was exercised in the
selection and continued employment thereof.
(j) If, with respect to any Right Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate contained in the form of
assignment or the form of election to purchase set forth on the reverse thereof,
as the case may be, has not been completed to certify the holder is not an
Acquiring Person (or an Affiliate or Associate thereof) or a transferee thereof,
the Rights Agent shall not take any further action with respect to such
requested exercise or transfer without first consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Rights Agreement upon 30 days' notice in writing mailed to the Company and to
each transfer agent of the Common Stock or Preferred Stock by registered or
certified mail, and, following the Distribution Date, to the holders of the
Right Certificates by first-class mail. The Company may remove the Rights Agent
or any successor Rights Agent upon 30 days' notice in writing, mailed to the
Rights Agent or successor Rights Agent, as the case may be, and to each transfer
agent of the Common Stock or Preferred Stock by registered or certified mail,
and, following the Distribution Date, to the holders of the Right Certificates
by first-class mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a successor to
the Rights Agent. If the Company shall fail to make such appointment within a
period of 30 days after giving notice of such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Right Certificate (who shall,
with such notice, submit his Right Certificate for inspection by the Company),
then the registered holder of any Right Certificate may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent. Any successor
Rights Agent, whether appointed by the Company or by such a court, shall be (A)
a corporation or other entity organized and doing business under the laws of the
United States or any State thereof, which is authorized under such laws to
exercise corporate trust or stock transfer powers and is subject to supervision
or examination by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least $50
million or (B) an affiliate of a corporation or entity described in clause (A)
of this sentence. After appointment, the successor Rights Agent shall be vested
with the same powers, rights, duties and
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responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
the purpose. Not later than the effective date of any such appointment the
Company shall file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Stock or Preferred Stock, and, following
the Distribution Date, mail a notice thereof in writing to the registered
holders of the Right Certificates. Failure to give any notice provided for in
this Section 21, however, or any defect therein, shall not affect the legality
or validity of the resignation or removal of the Rights Agent or the appointment
of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding
any of the provisions of this Rights Agreement or of the Rights to the contrary,
the Company may, at its option, issue new Right Certificates evidencing Rights
in such forms as may be approved by its Board of Directors to reflect any
adjustment or change in the Purchase Price and the number or kind or class of
shares or other securities or property purchasable under the Right Certificates
made in accordance with the provisions of this Rights Agreement. In addition, in
connection with the issuance or sale of Common Stock following the Distribution
Date and prior to the Expiration Date, the Company may with respect to shares of
Common Stock so issued or sold pursuant to (i) the exercise of stock options,
(ii) under any employee plan or arrangement, (iii) the exercise, conversion or
exchange of securities, notes or debentures issued by the Company or (iv) a
contractual obligation of the Company, in each case existing prior to the
Distribution Date, issue Right Certificates representing the appropriate number
of Rights in connection with such issuance or sale.
Section 23. Redemption. (a) The Board of Directors of the Company
may, at any time prior to such time as any Person first becomes an Acquiring
Person, redeem all but not less than all the then-outstanding Rights at a
redemption price of $0.01 per Right, appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the date hereof
(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. The Company may, at its option, pay the
Redemption Price in cash, shares of Common Stock (based on the current market
price of the Common Stock at the time of redemption as determined pursuant to
Section 11(d)(i) hereof) or any other form of consideration deemed appropriate
by the Board of Directors.
(b) Immediately upon the action of the Board of Directors
ordering the redemption of the Rights pursuant to paragraph (a) of this Section
23 (or at such later time as the Board of Directors may establish for the
effectiveness of such redemption), and without any further action and without
any notice, the right to exercise the Rights will terminate and the only right
thereafter of the holders of Rights shall be to receive the Redemption Price.
The Company shall promptly give public notice of any such redemption; provided,
however, that the failure to give, or any defect in, any such notice shall not
affect the validity of such redemption. Within 10 days after such action of the
Board of Directors ordering the redemption of the Rights (or such later time as
the Board of Directors may establish for the effectiveness of such redemption),
the Company shall mail a notice of redemption to all the holders of the
then-outstanding Rights at their last addresses as they appear upon the registry
books of the Rights Agent or, prior to the
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Distribution Date, on the registry books of the transfer agent for the Common
Stock. Any notice which is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives the notice. Each such notice of
redemption shall state the method by which the payment of the Redemption Price
will be made. The failure to give notice required by this Section 23(b) or any
defect therein shall not affect the validity of the action taken by the Company.
(c) In the case of a redemption under Section 23(a) hereof, the
Company may, at its option, discharge all of its obligations with respect to the
Rights by (i) issuing a press release announcing the manner of redemption of the
Rights and (ii) mailing payment of the Redemption Price to the registered
holders of the Rights at their last addresses as they appear on the registry
books of the Rights Agent or, prior to the Distribution Date, on the registry
books of the transfer agent of the Common Stock, and upon such action, all
outstanding Right Certificates shall be void without any further action by the
Company.
Section 24. Exchange. (a) The Board of Directors of the Company
may, at its option, at any time after any Person first becomes an Acquiring
Person, exchange all or part of the then-outstanding Rights (which shall not
include Rights that have not become effective or that have become void pursuant
to the provisions of Section 11(a)(ii) hereof) for shares of Common Stock at an
exchange ratio of one share of Common Stock (or one-thousandth of a share of
Preferred Stock) per Right, appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the date hereof (such
amount per Right being hereinafter referred to as the "Exchange Ratio").
Notwithstanding the foregoing, the Board of Directors shall not be empowered to
effect such exchange at any time after an Acquiring Person becomes the
Beneficial Owner of shares of Common Stock aggregating 50% or more of the shares
of Common Stock then outstanding. From and after the occurrence of an event
specified in Section 13(a) hereof, any Rights that theretofore have not been
exchanged pursuant to this Section 24(a) shall thereafter be exercisable only in
accordance with Section 13 and may not be exchanged pursuant to this Section
24(a). The exchange of the Rights by the Board of Directors 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. Prior to effecting an exchange
pursuant to this Section 24, the Board of Directors may direct the Company to
enter into a Trust Agreement in such form and with such terms as the Board of
Directors shall then approve (the "Trust Agreement"). If the Board of Directors
so directs, the Company shall enter into the Trust Agreement and shall issue to
the trust created by such agreement (the "Trust") all of the shares of Common
Stock issuable pursuant to the exchange, and all stockholders entitled to
receive shares pursuant to the exchange shall be entitled to receive such shares
(and any dividends or distributions made thereon after the date on which such
shares are deposited in the Trust) only from the Trust and solely upon
compliance with the relevant terms and provisions of the Trust Agreement.
(b) Immediately upon the effectiveness of the action of the Board
of Directors of the Company ordering the exchange of any Rights pursuant to
paragraph (a) of this Section 24 and without any further action and without any
notice, the right to exercise such Rights shall terminate and the only right
thereafter of a holder of such Rights shall be to receive that number of shares
of Common Stock equal to the number of such Rights held by such holder
multiplied by the Exchange Ratio. The Company shall promptly give public notice
of any such exchange and shall promptly mail a notice of any such exchange to
all of the holders of the Rights so
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exchanged at their last addresses as they appear upon the registry books of the
Rights Agent; provided, however, that the failure to give, or any defect in,
such notice shall not affect the validity of such exchange. Any notice which is
mailed in the manner herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of exchange will state the method
by which the exchange of the shares of Common Stock for Rights will be effected
and, in the event of any partial exchange, the number of Rights which will be
exchanged. Any partial exchange shall be effected pro rata based on the number
of Rights (other than Rights which have become void pursuant to the provisions
of Section 11(a)(ii) hereof) held by each holder of Rights.
(c) The Company may at its option substitute and, in the event
that there shall not be sufficient shares of Common Stock issued but not
outstanding or authorized but unissued (and unreserved) to permit an exchange of
Rights as contemplated in accordance with this Section 24, the Company shall
substitute to the extent of such insufficiency, for each share of Common Stock
that would otherwise be issuable upon exchange of a Right, a number of shares of
Preferred Stock or fractions thereof (or equivalent preferred shares as such
term is defined in Section 11(b)) such that the current per share market price
(determined pursuant to Section 11(d) hereof) of one share of Preferred Stock
(or equivalent preferred share) multiplied by such number or fraction is equal
to the current per share market price of one share of Common Stock (determined
pursuant to Section 11(d) hereof) as of the date of such exchange.
Section 25. Notice of Certain Events. (a) In case the Company
shall at any time after the earlier of the Distribution Date or the Stock
Acquisition Date propose (i) to pay any dividend payable in stock of any class
to the holders of its Preferred Stock or to make any other distribution to the
holders of its Preferred Stock (other than a regular quarterly cash dividend),
(ii) to offer to the holders of its Preferred Stock rights or warrants to
subscribe for or to purchase any additional shares of Preferred Stock or shares
of stock of any class or any other securities, rights or options, (iii) to
effect any reclassification of its Preferred Stock (other than a
reclassification involving only the subdivision or combination of outstanding
Preferred Stock), (iv) to effect the liquidation, dissolution or winding up of
the Company, or (v) to declare or pay any dividend on the Common Stock payable
in Common Stock or to effect a subdivision, combination or consolidation of the
Common Stock (by reclassification or otherwise than by payment of dividends in
Common Stock), then, in each such case, the Company shall give to each holder of
a Right Certificate, in accordance with Section 26 hereof, a notice of such
proposed action, which shall specify the record date for the purposes of such
stock dividend, or distribution or offering of rights or warrants, or the date
on which such liquidation, dissolution, reclassification, subdivision,
combination, consolidation or winding up is to take place and the date of
participation therein by the holders of the Common Stock and/or Preferred Stock,
if any such date is to be fixed, and such notice shall be so given in the case
of any action covered by clause (i) or (ii) above at least 10 days prior to the
record date for determining holders of the Preferred Stock for purposes of such
action, and in the case of any such other action, at least 10 days prior to the
date of the taking of such proposed action or the date of participation therein
by the holders of the Common Stock and/or Preferred Stock, whichever shall be
the earlier.
(b) In case any event described in Section 11(a)(ii) or Section
13 shall occur then the Company shall as soon as practicable thereafter give to
each holder of a Right Certificate (or if occurring prior to the Distribution
Date, the holders of the Common Stock) in accordance with
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Section 26 hereof, a notice of the occurrence of such event, which notice shall
describe such event and the consequences of such event to holders of Rights
under Section 11(a)(ii) and Section 13 hereof.
(c) The failure to give notice required by this Section 25 or any
defect therein shall not affect the validity of the action taken by the Company
or the vote upon any such action.
Section 26. Notices. Notices or demands authorized by this Rights
Agreement to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
Conseco, Inc.
11825 North Pennsylvania Street
Carmel, Indiana 46032
Attn: Chief Financial Officer
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Rights Agreement to be given or made by the Company or by the holder of
any Right Certificate to or on the Rights Agent shall be sufficiently given or
made if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Company) as follows:
American Stock Transfer & Trust Company, LLC
59 Maiden Lane,
New York, NY 10038
Attn: Corporate Trust Department
Notices or demands authorized by this Rights Agreement to be given or made by
the Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 27. Supplements and Amendments(a) . Except as otherwise
provided in this Section 27, for so long as the Rights are then redeemable, the
Company may in its sole and absolute discretion, and the Rights Agent shall if
the Company so directs, supplement or amend any provision of this Rights
Agreement in any respect without the approval of any holders of the Rights. At
any time when the Rights are no longer redeemable, except as otherwise provided
in this Section 27, the Company may, and the Rights Agent shall, if the Company
so directs, supplement or amend this Rights Agreement without the approval of
any holders of Rights in order to (i) cure any ambiguity, (ii) correct or
supplement any provision contained herein which may be defective or inconsistent
with any other provisions herein, (iii) shorten or lengthen any time period
hereunder, or (iv) change or supplement the provisions hereunder in any manner
which the Company may deem necessary or desirable; provided, however, that no
such supplement or amendment shall adversely affect the interests of the holders
of Rights as such (other than an Acquiring Person or an Affiliate or Associate
of an Acquiring Person), and no such amendment may cause the Rights again to
become redeemable or cause this Rights Agreement again to become amendable other
than in accordance with this sentence.
-31-
Notwithstanding anything contained in this Rights Agreement to the contrary, no
supplement or amendment shall be made which decreases the Redemption Price. Upon
the delivery of a certificate from an appropriate officer of the Company which
states that the supplement or amendment is in compliance with the terms of this
Section 27, the Rights Agent shall execute such supplement or amendment;
provided, that any supplement or amendment that does not amend Section 18, 19,
20 or 21 hereof in a manner adverse to the Rights Agent shall become effective
immediately upon execution by the Company, whether or not also executed by the
Rights Agent.
Section 28. Successors. All the covenants and provisions of this
Rights Agreement by or for the benefit of the Company or the Rights Agent shall
bind and inure to the benefit of their respective successors and assigns
hereunder.
Section 29. Benefits of this Rights Agreement. Nothing in this
Rights Agreement shall be construed to give to any Person other than the
Company, the Rights Agent and the registered holders of the Right Certificates
(and, prior to the Distribution Date, the Common Stock) any legal or equitable
right, remedy or claim under this Rights Agreement; but this Rights Agreement
shall be for the sole and exclusive benefit of the Company, the Rights Agent and
the registered holders of the Right Certificates (and, prior to the Distribution
Date, the Common Stock).
Section 30. Determinations and Actions by the Board of Directors.
The Board of Directors of the Company shall have the exclusive power and
authority to administer this Rights Agreement and to exercise the rights and
powers specifically granted to the Board of Directors of the Company or to the
Company, or as may be necessary or advisable in the administration of this
Rights Agreement, including, without limitation, the right and power to (i)
interpret the provisions of this Rights Agreement and (ii) make all
determinations deemed necessary or advisable for the administration of this
Rights Agreement (including, without limitation, a determination to redeem or
not redeem the Rights or to amend this Rights Agreement). All such actions,
calculations, interpretations and determinations that are done or made by the
Board of Directors of the Company in good faith, shall be final, conclusive and
binding on the Company, the Rights Agent, the holders of the Rights, as such,
and all other parties.
Section 31. Severability. If any term, provision, covenant or
restriction of this Rights Agreement or applicable to this Rights Agreement is
held by a court of competent jurisdiction or other authority to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Rights Agreement shall remain in full force and effect and
shall in no way be affected, impaired or invalidated; provided, however, that
notwithstanding anything in this Agreement to the contrary, if any such term,
provision, covenant or restriction is held by such court or authority to be
invalid, void or unenforceable and the Board determines in its good faith
judgment that severing the invalid language from this Agreement would adversely
affect the purpose or effect of this Agreement, the right of redemption set
forth in Section 23 hereof shall be reinstated (with prompt notice to the Rights
Agent) and shall not expire until the close of business on the tenth Business
Day following the date of such determination by the Board. Without limiting the
foregoing, if any provision requiring a specific group of Directors of the
Company to act is held by any court of competent
-32-
jurisdiction or other authority to be invalid, void or unenforceable, such
determination shall then be made by the Board in accordance with applicable law
and the Company's Certificate of Incorporation and Bylaws.
Section 32. Governing Law. This Rights Agreement and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts to
be made and performed entirely within such State.
Section 33. Counterparts. This Rights Agreement may be executed
in any number of counterparts and each of such counterparts shall for all
purposes be deemed to be an original, and all such counterparts shall together
constitute but one and the same instrument.
Section 34. Descriptive Headings. Descriptive headings of the
several sections of this Rights Agreement are inserted for convenience only and
shall not control or affect the meaning or construction of any of the provisions
hereof.
-33-
IN WITNESS WHEREOF, the parties hereto have caused this Rights
Agreement to be duly executed and attested, all as of the day and year first
above written.
CONSECO, INC.
Attest: /s/ Karl W. Kindig By: /s/ Thomas D. Barta
--------------------- -------------------------
Secretary Name: Thomas D. Barta
Title: Senior Vice President
AMERICAN STOCK TRANSFER & TRUST
COMPANY, LLC
Attest: /s/ Susan Silber By: /s/ Herbert J. Lemmer
---------------------- -------------------------
Assistant Secretary Name: Herbert J. Lemmer
Title: Vice President
EXHIBIT A
---------
FORM
OF
CERTIFICATE OF DESIGNATIONS
OF
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
OF
CONSECO, INC.
(Pursuant to Section 151 of the
General Corporation Law of the State of Delaware)
-------------------
Conseco, Inc., a corporation organized and existing under the
General Corporation Law of the State of Delaware (the "Company"), hereby
certifies that the following resolution was duly adopted by the Board of
Directors of the Company (hereinafter being referred to as the "Board of
Directors" or the "Board") as required by Section 151 of the General Corporation
Law of the State of Delaware on January 20, 2009:
RESOLVED, that pursuant to the authority vested in the Board of
Directors of the Company in accordance with the provisions of the Company's
Amended and Restated Certificate of Incorporation, (hereinafter being referred
to as the "Certificate of Incorporation"), the Board of Directors hereby creates
a series of preferred stock, par value $0.01 per share, of the Company, to be
designated the "Series A Junior Participating Preferred Stock" and hereby adopts
the resolution establishing the designations, number of shares, preferences,
voting powers and other rights, and the restrictions and limitations thereof, of
the shares of such series as set forth below:
Section 1. Designation and Amount. The shares of such series
shall be designated as "Series A Junior Participating Preferred Stock" (the
"Series A Preferred Stock") and the number of shares constituting the Series A
Preferred Stock shall be 1,000,000. Such number of shares may be increased or
decreased by resolution of the Board of Directors; provided, that no decrease
shall reduce the number of shares of Series A Preferred Stock to a number less
than the number of shares then outstanding plus the number of shares reserved
for issuance upon the exercise of outstanding options, rights or warrants or
upon the conversion of any outstanding securities issued by the Company
convertible into Series A Preferred Stock.
Section 2. Dividends and Distributions
(A) Subject to the rights of the holders of any shares of any
series of Preferred Stock of the Company (the "Preferred Stock") (or
any similar stock) ranking prior and superior to the Series A
Preferred Stock with respect to dividends, the holders of shares
A-1
of Series A Preferred Stock, in preference to the holders of Common
Stock, par value $0.01 per share, of the Company (the "Common Stock")
and of any other stock of the Company ranking junior to the Series A
Preferred Stock, shall be entitled to receive, when, as and if
declared by the Board of Directors out of funds legally available for
the purpose, quarterly dividends payable in cash on the last day of
January, April, July, and October in each year (each such date being
referred to herein as a "Dividend Payment Date"), commencing on the
first Dividend Payment Date after the first issuance of a share or
fraction of a share of Series A Preferred Stock (the "Issue Date"), in
an amount per share (rounded to the nearest cent) equal to the greater
of (a) $1 or (b) subject to the provision for adjustment hereinafter
set forth, 1,000 times the aggregate per share amount of all cash
dividends, and 1,000 times the aggregate per share amount (payable in
kind) of all non-cash dividends or other distributions other than a
dividend payable in shares of Common Stock, declared on the Common
Stock since the immediately preceding Dividend Payment Date or, with
respect to the first Dividend Payment Date, since the first issuance
of any share or fraction of a share of Series A Preferred Stock. In
the event the Company shall at any time after the Issue Date declare
and pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise
than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such
case the amount to which holders of shares of Series A Preferred Stock
were entitled immediately prior to such event under clause (b) of the
preceding sentence shall be adjusted by multiplying such amount by a
fraction, the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding
immediately prior to such event.
(B) The Company shall declare a dividend or distribution on the
Series A Preferred Stock as provided in paragraph (A) of this Section
immediately after it declares a dividend or distribution on the Common
Stock (other than a dividend payable in shares of Common Stock);
provided that, in the event no dividend or distribution shall have
been declared on the Common Stock during the period between any
Dividend Payment Date and the next subsequent Dividend Payment Date, a
dividend of $1 per share on the Series A Preferred Stock shall
nevertheless be payable, when, as and if declared, on such subsequent
Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative, whether or
not earned or declared, on outstanding shares of Series A Preferred
Stock from the Dividend Payment Date next preceding the date of issue
of such shares, unless the date of issue of such shares is prior to
the record date for the first Dividend Payment Date, in which case
dividends on such shares shall begin to accrue from the date of issue
of such shares, or unless the date of issue is a Dividend Payment Date
or is a date after the record date for the determination of holders of
shares of Series A Preferred Stock entitled to receive a quarterly
dividend and before such Dividend Payment Date, in either of which
events such dividends shall begin to accrue and be cumulative from
such Dividend Payment Date. Accrued but unpaid dividends shall not
bear interest. Dividends paid on the shares of Series A Preferred
Stock in an amount less than the total amount of such dividends at
A-2
the time accrued and payable on such shares shall be allocated pro
rata on a share-by-share basis among all such shares at the time
outstanding. The Board of Directors may fix a record date for the
determination of holders of shares of Series A Preferred Stock
entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be not more than 60 days prior to the
date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series A
Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth
and except as otherwise provided in the Certificate of Incorporation
or required by law, each share of Series A Preferred Stock shall
entitle the holder thereof to 1,000 votes on all matters upon which
the holders of the Common Stock of the Company are entitled to vote.
In the event the Company shall at any time after the Issue Date
declare or pay any dividend on the Common Stock payable in shares of
Common Stock, or effect a subdivision or combination or consolidation
of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock)
into a greater or lesser number of shares of Common Stock, then in
each such case the number of votes per share to which holders of
shares of Series A Preferred Stock were entitled immediately prior to
such event shall be adjusted by multiplying such number by a fraction,
the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which
is the number of shares of Common Stock that were outstanding
immediately prior to such event.
(B) Except as otherwise provided herein, in the Certificate of
Incorporation or in any other Certificate of Designations creating a
series of Preferred Stock or any similar stock, and except as
otherwise required by law, the holders of shares of Series A Preferred
Stock and the holders of shares of Common Stock and any other capital
stock of the Company having general voting rights shall vote together
as one class on all matters submitted to a vote of stockholders of the
Company.
(C) Except as set forth herein, or as otherwise provided by law,
holders of Series A Preferred Stock shall have no special voting
rights and their consent shall not be required (except to the extent
they are entitled to vote with holders of Common Stock as set forth
herein) for taking any corporate action.
(D) If, at the time of any annual meeting of stockholders for the
election of directors, the equivalent of six quarterly dividends
(whether or not consecutive) payable on any share or shares of Series
A Preferred Stock are in default, the number of directors constituting
the Board of Directors of the Company shall be increased by two. In
addition to voting together with the holders of Common Stock for the
election of other directors of the Company, the holders of record of
the Series A Preferred Stock, voting separately as a class to the
exclusion of the holders of Common Stock shall be entitled at said
meeting of stockholders (and at each subsequent annual meeting of
stockholders), unless all dividends in arrears on the Series A
Preferred Stock have been paid or declared and set apart for payment
prior thereto, to vote for the election of two directors of the
Company, the holders of any Series A Preferred Stock being entitled to
cast a number of votes per
A-3
share of Series A Preferred Stock as is specified in paragraph (A) of
this Section 3. Each such additional director shall serve until the
next annual meeting of stockholders for the election of directors, or
until his successor shall be elected and shall qualify, or until his
right to hold such office terminates pursuant to the provisions of
this Section 3(D). Until the default in payments of all dividends
which permitted the election of said directors shall cease to exist,
any director who shall have been so elected pursuant to the provisions
of this Section 3(D) may be removed at any time, without cause, only
by the affirmative vote of the holders of the shares of Series A
Preferred Stock at the time entitled to cast a majority of the votes
entitled to be cast for the election of any such director at a special
meeting of such holders called for that purpose, and any vacancy
thereby created may be filled by the vote of such holders. If and when
such default shall cease to exist, the holders of the Series A
Preferred Stock shall be divested of the foregoing special voting
rights, subject to revesting in the event of each and every subsequent
like default in payments of dividends. Upon the termination of the
foregoing special voting rights, the terms of office of all persons
who may have been elected directors pursuant to said special voting
rights shall forthwith terminate, and the number of directors
constituting the Board of Directors shall be reduced by two. The
voting rights granted by this Section 3(D) shall be in addition to any
other voting rights granted to the holders of the Series A Preferred
Stock in this Section 3.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as provided in
Section 2 are in arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not earned or declared, on
shares of Series A Preferred Stock outstanding shall have been paid in
full, the Company shall not:
(i) declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior (either as
to dividends or upon liquidation, dissolution or winding up) to
the Series A Preferred Stock;
(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity (either
as to dividends or upon liquidation, dissolution or winding up)
with the Series A Preferred Stock, except dividends paid ratably
on the Series A Preferred Stock and all such parity stock on
which dividends are payable or in arrears in proportion to the
total amounts to which the holders of all such shares are then
entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Series A Preferred Stock, provided that the Company may at any
time redeem, purchase or otherwise acquire shares of any such
junior stock in exchange for shares of any stock of the Company
ranking junior (as to dividends and upon dissolution, liquidation
or winding up) to the Series A Preferred Stock or rights,
warrants or options to acquire such junior stock; or
A-4
(iv) redeem or purchase or otherwise acquire for
consideration any shares of Series A Preferred Stock, or any
shares of stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series A
Preferred Stock, except in accordance with a purchase offer made
in writing or by publication (as determined by the Board of
Directors) to all holders of such shares upon such terms as the
Board of Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of the
respective series and classes, shall determine in good faith will
result in fair and equitable treatment among the respective
series or classes.
(B) The Company shall not permit any subsidiary of the Company to
purchase or otherwise acquire for consideration any shares of stock of
the Company unless the Company could, under paragraph (A) of this
Section 4, purchase or otherwise acquire such shares at such time and
in such manner.
Section 5. Reacquired Shares. Any shares of Series A Preferred
Stock purchased or otherwise acquired by the Company in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof. All such
shares shall upon their retirement become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
to be created by resolution or resolutions of the Board of Directors, subject to
any conditions and restrictions on issuance set forth herein.
Section 6. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Company, no distribution shall be
made (A) to the holders of the Common Stock or of shares of any other stock of
the Company ranking junior, upon liquidation, dissolution or winding up, to the
Series A Preferred Stock unless, prior thereto, the holders of shares of Series
A Preferred Stock shall have received $1,000 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not earned or
declared, to the date of such payment, provided that the holders of shares of
Series A Preferred Stock shall be entitled to receive an aggregate amount per
share, subject to the provision for adjustment hereinafter set forth, equal to
1,000 times the aggregate amount to be distributed per share to holders of
shares of Common Stock, or (B) to the holders of shares of stock ranking on a
parity upon liquidation, dissolution or winding up with the Series A Preferred
Stock, except distributions made ratably on the Series A Preferred Stock and all
such parity stock in proportion to the total amounts to which the holders of all
such shares are entitled upon such liquidation, dissolution or winding up. In
the event, however, that there are not sufficient assets available to permit
payment in full of the Series A liquidation preference and the liquidation
preferences of all other classes and series of stock of the Company, if any,
that rank on a parity with the Series A Preferred Stock in respect thereof, then
the assets available for such distribution shall be distributed ratably to the
holders of the Series A Preferred Stock and the holders of such parity shares in
the proportion to their respective liquidation preferences. In the event the
Company shall at any time after the Issue Date declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the aggregate amount to which holders of shares of Series A Preferred
Stock were entitled immediately prior to such event under the proviso in clause
(A) of
A-5
the preceding sentence shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
Neither the merger or consolidation of the Company into or with
another entity nor the merger or consolidation of any other entity into or with
the Company (nor the sale of all or substantially all of the assets of the
Company) shall be deemed to be a liquidation, dissolution or winding up of the
Company within the meaning of this Section 6.
Section 7. Consolidation, Merger, etc. In case the Company shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are converted into, exchanged for or changed into
other stock or securities, cash and/or any other property, then in any such case
each share of Series A Preferred Stock shall at the same time be similarly
converted into, exchanged for or changed into an amount per share (subject to
the provision for adjustment hereinafter set forth) equal to 1,000 times the
aggregate amount of stock, securities, cash and/or any other property (payable
in kind), as the case may be, into which or for which each share of Common Stock
is converted, exchanged or converted. In the event the Company shall at any time
after the Issue Date declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or consolidation
of the outstanding shares of Common Stock (by reclassification or otherwise than
by payment of a dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then in each such case the amount set forth in
the preceding sentence with respect to the conversion, exchange or change of
shares of Series A Preferred Stock shall be adjusted by multiplying such amount
by a fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
Section 8. No Redemption. The shares of Series A Preferred Stock
shall not be redeemable from any holder.
Section 9. Rank. The Series A Preferred Stock shall rank, with
respect to the payment of dividends and the distribution of assets upon
liquidation, dissolution or winding up of the Company, junior to all other
series of Preferred Stock and senior to the Common Stock.
Section 10. Amendment. If any proposed amendment to the
Certificate of Incorporation (including this Certificate of Designations) would
alter, change or repeal any of the preferences, powers or special rights given
to the Series A Preferred Stock so as to affect the Series A Preferred Stock
adversely, then the holders of the Series A Preferred Stock shall be entitled to
vote separately as a class upon such amendment, and the affirmative vote of
two-thirds of the outstanding shares of the Series A Preferred Stock, voting
separately as a class, shall be necessary for the adoption thereof, in addition
to such other vote as may be required by the General Corporation Law of the
State of Delaware.
Section 11. Fractional Shares. Series A Preferred Stock may be
issued in fractions of a share that shall entitle the holder, in proportion to
such holder's fractional shares,
A-6
to exercise voting rights, receive dividends, participate in distributions and
to have the benefit of all other rights of holders of Series A Preferred Stock.
A-7
IN WITNESS WHEREOF, this Certificate of Designations is executed
on behalf of the Company by its _____________________ and attested by its
Secretary this 20th day of January, 2009.
-----------------------------
Name:
Title:
Attest:
- ----------------------
Secretary
A-8
EXHIBIT B
---------
FORM OF RIGHT CERTIFICATE
Certificate No. R- Rights
---------- ---------
NOT EXERCISABLE AFTER JANUARY 20, 20012, OR SUCH EARLIER DATE AS
PROVIDED BY THE RIGHTS AGREEMENT OR IF REDEMPTION OR EXCHANGE OCCURS.
THE RIGHTS ARE SUBJECT TO REDEMPTION AT $0.01 PER RIGHT AND TO
EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS OWNED BY
OR TRANSFERRED TO ANY PERSON WHO IS OR BECOMES AN ACQUIRING PERSON (AS
DEFINED IN THE RIGHTS AGREEMENT) AND CERTAIN TRANSFEREES THEREOF WILL
BECOME NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.
Right Certificate
CONSECO, INC.
This certifies that [___________] or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the
Section 382 Rights Agreement, dated as of January 20, 2009, as the same may be
amended from time to time (the "Rights Agreement"), between Conseco, Inc., a
Delaware corporation (the "Company"), and American Stock Transfer & Trust
Company, LLC (the "Rights Agent"), to purchase from the Company at any time
after the Distribution Date (as such term is defined in the Rights Agreement)
and prior to 5:00 P.M., New York City time, on January 20, 2012, or such earlier
date as provided by the Rights Agreement at the office or agency of the Rights
Agent designated for such purpose, or of its successor as Rights Agent,
one-thousandth of a fully paid non-assessable share of Junior Participating
Preferred Stock, par value $0.01 per share (the "Preferred Stock"), of the
Company, at a purchase price of $20.00 per one-thousandth of a share of
Preferred Stock (the "Purchase Price"), upon presentation and surrender of this
Right Certificate with the Form of Election to Purchase duly executed. The
number of Rights evidenced by this Rights Certificate (and the number of one
one-thousandths of a share of Preferred Stock which may be purchased upon
exercise hereof) set forth above, and the Purchase Price set forth above, are
the number and Purchase Price as of January 30, 2009, based on the Preferred
Stock as constituted at such date. As provided in the Rights Agreement, the
Purchase Price, the number of one one-thousandths of a share of Preferred Stock
(or other securities or property) which may be purchased upon the exercise of
the Rights and the number of Rights evidenced by this Right Certificate are
subject to modification and adjustment upon the happening of certain events.
This Right Certificate is subject to all of the terms, provisions
and conditions of the Rights Agreement, which terms, provisions and conditions
are hereby incorporated herein by
B-1
reference and made a part hereof and to which Rights Agreement reference is
hereby made for a full description of the rights, limitations of rights,
obligations, duties and immunities hereunder of the Rights Agent, the Company
and the holders of the Right Certificates. Copies of the Rights Agreement are on
file at the principal executive offices of the Company. The Company will mail to
the holder of this Right Certificate a copy of the Rights Agreement without
charge after receipt of a written request therefor.
This Right Certificate, with or without other Right Certificates,
upon surrender at the office or agency of the Rights Agent designated for such
purpose, may be exchanged for another Right Certificate or Right Certificates of
like tenor and date evidencing Rights entitling the holder to purchase a like
aggregate number of shares of Preferred Stock as the Rights evidenced by the
Right Certificate or Right Certificates surrendered shall have entitled such
holder to purchase. If this Right Certificate shall be exercised in part, the
holder shall be entitled to receive upon surrender hereof another Right
Certificate or Right Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate (i) may be redeemed by the Company at a redemption
price of $0.01 per Right or (ii) may be exchanged in whole or in part for shares
of Preferred Stock or shares of the Company's Common Stock, par value $0.01 per
share.
No fractional shares of Preferred Stock or Common Stock will be
issued upon the exercise or exchange of any Right or Rights evidenced hereby
(other than fractions of Preferred Stock 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), but in lieu thereof a cash
payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate, as such, shall be entitled
to vote or receive dividends or be deemed for any purpose the holder of the
Preferred Stock or of any other securities of the Company which may at any time
be issuable on the exercise or exchange hereof, nor shall anything contained in
the Rights Agreement or herein be construed to confer upon the holder hereof, as
such, any of the rights of a stockholder of the Company or any right to vote for
the election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement) or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Right
certificate shall have been exercised or exchanged as provided in the Rights
Agreement.
This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
B-2
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal. Dated as of
--------------- --, ----.
ATTEST: CONSECO, INC.
By: By:
------------------------- --------------------------
Countersigned:
- ---------------------------,
as Rights Agent
By:
------------------------
Authorized Signatory
B-3
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate)
FOR VALUE RECEIVED hereby sells,
------------
assigns and transfer unto
---------------------------
------------------------------------------------------------
(Please print name and address of transferee)
------------------------------------------------------------
Rights represented by this Right Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and appoint
Attorney, to transfer said Rights on the books of the
- -----------------
within-named Company, with full power of substitution.
Dated:
----------- --, ----
------------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by a bank, trust company, broker,
dealer or other eligible institution participating in a recognized signature
guarantee medallion program.
The undersigned hereby certifies that the Rights evidenced by
this Right Certificate are not beneficially owned by, were not acquired by the
undersigned from, and are not being sold, assigned or transferred to, an
Acquiring Person or an Affiliate or Associate thereof (as defined in the Rights
Agreement).
------------------------------
Signature
- -------------------------------------------------------------------------------
B-4
Form of Reverse Side of Right Certificate -- continued
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights represented by the Rights Certificate)
To the Rights Agent:
The undersigned hereby irrevocably elects to exercise
Rights represented by this Right Certificate to purchase the
- ------------------
shares of Preferred Stock (or other securities or property) issuable upon the
exercise of such Rights and requests that certificates for such shares of
Preferred Stock (or such other securities) be issued in the name of:
- --------------------------------------------------------------
(Please print name and address)
- --------------------------------------------------------------
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number:
------------------------------
- --------------------------------------------------------------
(Please print name and address)
- --------------------------------------------------------------
Dated:
------------ --, ----
---------------------------------
Signature
(Signature must conform to holder
specified on Right Certificate)
Signature Guaranteed:
Signatures must be guaranteed by a bank, trust company, broker,
dealer or other eligible institution participating in a recognized signature
guarantee medallion program.
The undersigned hereby certifies that the Rights evidenced by
this Right Certificate are not beneficially owned by, were not acquired by the
undersigned from, and are not being sold, assigned or transferred to, an
Acquiring Person or an Affiliate or Associate thereof (as defined in the Rights
Agreement).
------------------------------
Signature
B-5
Form of Reverse Side of Right Certificate -- continued
- -------------------------------------------------------------------------------
NOTICE
------
The signature in the Form of Assignment or Form of Election to
Purchase, as the case may be, must conform to the name as written upon the face
of this Right Certificate in every particular, without alteration or enlargement
or any change whatsoever.
In the event the certification set forth above in the Form of
Assignment or the Form of Election to Purchase, as the case may be, is not
completed, such Assignment or Election to Purchase will not be honored.
- -------------------------------------------------------------------------------
B-6
EXHIBIT C
---------
UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT,
RIGHTS OWNED BY OR TRANSFERRED TO ANY PERSON WHO IS OR BECOMES AN
ACQUIRING PERSON (AS DEFINED IN THE RIGHTS AGREEMENT) AND CERTAIN
TRANSFEREES THEREOF WILL BECOME NULL AND VOID AND WILL NO LONGER BE
TRANSFERABLE.
SUMMARY OF RIGHTS TO PURCHASE
Shares of Preferred Stock
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.
C-1
"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.
C-2
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.
C-3
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 has been filed with the Securities
and Exchange Commission as an Exhibit to a Registration Statement on Form 8-A
dated January 20, 2009. A copy of the Rights Agreement is available free of
charge from the Company. This summary description of the Rights does not purport
to be complete and is qualified in its entirety by reference to the Rights
Agreement, as the same may be amended from time to time, which is hereby
incorporated herein by reference.
C-4
Exhibit 2
NEWS
For Release Immediate
Contacts (News Media) Tony Zehnder, Corporate Communications 312.396.7086
(Investors) Scott Galovic, Investor Relations 317.817.3228
Conseco adopts stockholder rights plan
Carmel, IN, January 20, 2009 - Conseco, Inc. (NYSE: CNO) today announced its
Board of Directors has adopted a stockholder rights plan designed to protect
stockholder value by preserving the value of certain tax assets primarily
associated with tax net operating loss carryforwards under Section 382 of the
Internal Revenue Code. Section 382 would limit the value of those tax assets
upon an "ownership change." The rights plan was adopted to reduce the likelihood
of this occurring by deterring the acquisition of stock that would create
"5-percent shareholders" as defined in Section 382.
Under the rights plan, one right will be distributed for each share of common
stock of Conseco outstanding as of the close of business on January 30, 2009.
Effective January 20, 2009 if any person or group (subject to certain
exemptions) becomes a "5-percent shareholder" of Conseco without the approval of
the Board of Directors, there would be a triggering event causing significant
dilution in the voting power and economic ownership of that person or group.
Existing stockholders who currently are "5-percent shareholders" will trigger a
dilutive event only if they acquire additional shares that would increase their
percentage ownership of Conseco by more than 1 percent without prior approval
from the Board.
"The stockholder rights plan protects the interests of all stockholders from the
possibility of losing substantial value through further limitations on the
company's ability to utilize its net operating loss carryforwards under Section
382," said Conseco CEO Jim Prieur. "The rights plan, similar to those adopted by
other publicly-held companies, is not intended for defensive or anti-takeover
purposes, but to preserve stockholder value, and is in the best interests of
Conseco's stockholders."
The rights plan will continue in effect until January 20, 2012, unless earlier
terminated or redeemed by the Board of Directors. Conseco's Audit Committee will
review the company's NOL assets annually and will recommend amending or
terminating the rights plan based on its review. Additionally, the Board has
resolved to submit the continuation of the rights plan to a vote at the next
annual meeting of the stockholders in May 2009. If stockholders do not approve
the plan, it will be terminated. In this regard, the rights plan was drafted to
conform to previous plans approved by RiskMetrics Group (formerly Institutional
Shareholder Services).
A complete copy of the rights plan, including additional information regarding
terms and conditions, will be included in a Current Report on Form 8-K to be
filed by Conseco with the Securities and Exchange Commission. In addition,
Conseco stockholders of record will be mailed a detailed summary of the rights
plan.
Conseco, Inc.'s insurance companies help protect working American families and
seniors from financial adversity: Medicare supplement, long-term care, cancer,
heart/stroke and accident policies protect people against major unplanned
expenses; annuities and life insurance products help people plan for their
financial futures. For more information, visit Conseco's web site at
http://www.conseco.com/ .
Cautionary Statement Regarding Forward-Looking Statements. Our statements, trend
analyses and other information contained in these materials relative to markets
for Conseco's products and trends in Conseco's operations or financial results,
as well as other statements, contain forward-looking statements within the
meaning of the federal securities laws and the Private Securities Litigation
Reform Act of 1995. Forward-looking statements typically are identified by the
use of terms such as "anticipate," "believe," "plan," "estimate," "expect,"
"project," "intend," "may," "will," "would," "contemplate," "possible,"
"attempt," "seek," "should," "could," "goal," "target," "on track," "comfortable
with," "optimistic" and similar words, although some forward-looking statements
are expressed differently. You should consider statements that contain these
words carefully because they describe our expectations, plans, strategies and
goals and our beliefs concerning future business conditions, our results of
operations, financial position, and our business outlook or they state other
"forward-looking" information based on currently available information.
Assumptions and other important factors that could cause our actual results to
differ materially from those anticipated in our forward-looking statements
include, among other things: (i) general economic, market and political
conditions, including the performance and fluctuations of the financial markets
which may affect our ability to raise capital or refinance our existing
indebtedness; (ii) our ability to obtain adequate and timely rate increases on
our supplemental health products including our long-term care business; (iii)
mortality, morbidity, the increased cost and usage of health care services,
persistency, the adequacy of our previous reserve estimates and other factors
which may affect the profitability of our insurance products; (iv) changes in
our assumptions related to the cost of policies produced or the value of
policies in force at the effective date of our emergence from bankruptcy; (v)
the recoverability of our deferred tax asset and the effect of potential tax
rate changes on its value; (vi) changes in accounting principles and the
interpretation thereof; (vii) our ability to achieve anticipated expense
reductions and levels of operational efficiencies including improvements in
claims adjudication and continued automation and rationalization of operating
systems; (viii) performance and valuation of our investments, including the
impact of realized losses (including other-than-temporary impairment charges);
(ix) our ability to identify products and markets in which we can compete
effectively against competitors with greater market share, higher ratings,
greater financial resources and stronger brand recognition; (x) the ultimate
outcome of lawsuits filed against us and other legal and regulatory proceedings
to which we are subject; (xi) our ability to remediate the material weakness in
internal controls over the actuarial reporting process that we identified at
year-end 2006 and to maintain effective controls over financial reporting; (xii)
our ability to continue to recruit and retain productive agents and distribution
partners and customer response to new products, distribution channels and
marketing initiatives; (xiii) our ability to achieve eventual upgrades of the
financial strength ratings of Conseco and our insurance company subsidiaries as
well as the potential impact of rating downgrades on our business; (xiv) the
risk factors or uncertainties listed from time to time in our filings with the
Securities and Exchange Commission; (xv) our ability to continue to satisfy the
financial ratio and balance requirements and other covenants of our debt
agreements; (xvi) regulatory changes or actions, including those relating to
regulation of the financial affairs of our insurance companies, such as the
payment of dividends to us, regulation of financial services affecting (among
other things) bank sales and underwriting of insurance products, regulation of
the sale, underwriting and pricing of products, and health care regulation
affecting health insurance products; and (xvii) changes in the Federal income
tax laws and regulations which may affect or eliminate the relative tax
advantages of some of our products. Other factors and assumptions not identified
above are also relevant to the forward-looking statements, and if they prove
incorrect, could also cause actual results to differ materially from those
projected. All written or oral forward-looking statements attributable to us are
expressly qualified in their entirety by the foregoing cautionary statement. Our
forward-looking statements speak only as of the date made. We assume no
obligation to update or to publicly announce the results of any revisions to any
of the forward-looking statements to reflect actual results, future events or
developments, changes in assumptions or changes in other factors affecting the
forward-looking statements.
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