Exhibit 10.45.2
EXCHANGE AGREEMENT
This Exchange Agreement (this "Agreement") is made and entered into as
of January 30, 2002, between Xxxxxx Brothers Holdings Inc., a corporation duly
incorporated under the laws of the State of Delaware ( the "Holder"), and
Conseco, Inc., a corporation duly incorporated under the laws of the State of
Indiana (the "Company").
WHEREAS, pursuant to the terms of this Agreement, the Company will
authorize and validly reserve for issuance $50,000,000 aggregate stated value of
a series of convertible preferred stock designated as the Series G Convertible
Redeemable Preferred Stock, no par value, stated value $100 per share (the
"Preferred Stock"), the terms of which are set forth in the form of Articles of
Amendment to the Amended and Restated Articles of Incorporation of the Company
(the "Articles") attached as Exhibit A hereto; and
WHEREAS, as consideration for the Holder's efforts to restructure
certain obligations of the Company, the Company will irrevocably and
unconditionally agree, upon the terms and subject to the conditions set forth
herein, to issue the Preferred Stock to the Holder in exchange for the Holder's
surrender to the Company of a warrant that entitles the owner and holder thereof
to purchase from Conseco Finance Corp., a corporation duly incorporated under
the laws of the State of Delaware ("Conseco Finance"), 5.42 shares of Common
Stock of Conseco Finance, in whole or in part, including fractional parts, at a
purchase price of $0.01 per share (the "Warrant"), a copy of which is attached
as Exhibit B hereto.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto, intending to be
legally and validly bound, hereby execute and deliver this Agreement and agree
as follows:
Section 1. Representations and Warranties. The Company hereby
represents and warrants to the Holder that:
(a) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Indiana and has
corporate power and authority to own, lease and operate its properties and to
conduct its business and to enter into and perform its obligations under this
Agreement; and the Company is duly qualified as a foreign corporation to
transact business and is in good standing in each other jurisdiction in which
such qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure so to qualify or
to be in good standing would not result in a Material Adverse Effect (as defined
below). As used herein, "Material Adverse Effect" means a material adverse
change or any development involving a prospective material adverse change in the
condition, financial or otherwise, or in the earnings or business affairs of the
Company and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business.
(b) Each subsidiary of the Company has been duly organized and is
validly existing and in good standing under the laws of the jurisdiction of its
incorporation or organization, has corporate power and authority to own, lease
and operate its properties and to conduct its business and is duly qualified as
a foreign corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except where the
failure so to qualify or to be in good standing would not result in a Material
Adverse Effect. All of the issued and outstanding capital stock of each such
subsidiary has been duly authorized and validly issued, is fully paid and
non-assessable and, except with respect to the Warrant, is owned by the Company,
directly or through subsidiaries. None of the outstanding shares of capital
stock of any such subsidiary was issued in violation of the preemptive or
similar rights of any securityholder of such subsidiary.
(c) The shares of issued and outstanding capital stock of the Company
have been duly authorized and validly issued and are fully paid and
non-assessable and none of the outstanding shares of capital stock was issued in
violation of the preemptive or other similar rights of any securityholder of the
Company.
(d) The Warrant is exchangeable for shares of Preferred Stock in
accordance with the terms of this Agreement and, after the vote of the holders
of the Series E Preferred Stock and the Series F Preferred Stock with respect to
the creation of the Preferred Stock and the action of the Board to authorize and
reserve the Preferred Stock for issuance and file the Articles after the vote of
the holders of the Series E Preferred Stock and Series F Preferred Stock (the
"Required Actions"), the shares of Preferred Stock will have been duly
authorized and validly reserved for issuance upon such exchange by all necessary
corporate action and such shares, when issued upon such exchange, will be
validly issued and will be fully paid and non-assessable. The issuance of the
Preferred Stock will not be subject to preemptive or other similar rights.
(e) The shares of the Company's common stock, no par value (the
"Common Stock"), issuable upon conversion of the Preferred Stock have been duly
authorized and reserved for issuance upon such conversion by all necessary
corporate action and such shares, when issued upon such conversion, will be
validly issued and will be fully paid and non-assessable; no holder of such
shares will be subject to personal liability by reason of being such a holder;
and the issuance of such shares upon such conversion will not be subject to the
preemptive or other similar rights of any securityholder of the Company. The
form of certificate used to evidence the Common Stock will be in due and proper
form and comply in all material respects with all applicable statutory
requirements, with any applicable requirements of any security exchange on which
the Common Stock is then listed.
(f) This Agreement has been duly and validly authorized, executed and
delivered by the Company and constitutes a valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, except as
may be limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws relating to or affecting creditors' rights generally (including, without
limitation, fraudulent conveyance laws), and by general principles of equity,
including, without limitation, concepts of materiality, reasonableness, good
faith and fair dealing, and the possible unavailability of specific performance
or injunctive relief, regardless of whether considered in a proceeding at equity
or in law.
(g) Other than the filing of the Articles, no filing with, or
authorization, approval, consent, license, order, registration, qualification or
decree of, any court or governmental authority or agency is necessary or
required in connection with the reservation for issuance of the Preferred Stock,
the exchange of the Warrant for the shares of Preferred Stock, the issuance of
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shares of Common Stock upon conversion of the Preferred Stock or the
consummation of the transactions contemplated by this Agreement, except such as
have been obtained.
(h) Neither the Company nor any of its subsidiaries is in violation of
its charter or by-laws or in default in the performance or observance of any
obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, deed of trust, loan or credit agreement, note, lease or
other agreement or instrument to which the Company or any of its subsidiaries is
a party or by which it or any of them may be bound, or to which any of the
property or assets of the Company or any subsidiary is subject (collectively,
"Agreements and Instruments") except for such violations or defaults that have
not and would not result in a Material Adverse Effect; and the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated in this Agreement (including the exchange of the
Warrant for the Preferred Stock and the issuance of shares of Common Stock upon
conversion of the Preferred Stock) and compliance by the Company with its
obligations under this Agreement have been duly authorized by all necessary
corporate action and all Required Actions taken except for the approval of the
holders of the Series F Preferred Stock, and do not and will not, whether with
or without the giving of notice or passage of time or both, conflict with or
constitute a breach of, or default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of the
Company or any of its subsidiaries pursuant to, the Agreements and Instruments
(except for such conflicts, breaches or defaults or liens, charges or
encumbrances that would not result in a Material Adverse Effect), nor will such
action result in any violation of the provisions of (A) the charter or by-laws
of the Company or any of its subsidiaries or (B) any applicable law, statute,
rule, regulation, judgment, order, writ or decree of any government, government
instrumentality or court, domestic or foreign, having jurisdiction over the
Company or any of its subsidiaries or any of their assets, properties or
operations except for such violations, in the case of clause (B) only, that
would not result in a Material Adverse Effect.
(i) There is no action, suit, proceeding, inquiry or investigation
before or brought by any court or governmental agency or body, domestic or
foreign, now pending, or, to the knowledge of the Company, threatened, against
or affecting the Company or any of its subsidiaries, which would reasonably be
expected to materially and adversely affect the consummation of the transactions
contemplated in this Agreement or the performance by the Company of its
obligations hereunder.
(j) The Company is not an "investment company" within the meaning of
the Investment Company Act of 1940, as amended (the "1940 Act").
(k) Assuming the accuracy of the representations of the Holder under
Sections 2 (b) and (c), it is not necessary in connection with the exchange of
the Preferred Stock to the Holder in the manner contemplated by this Agreement
to register the Preferred Stock under the Securities and Exchange Act of 1933,
as amended.
Section 2. Representations and Warranties of the Holder. The Holder
represents and warrants to the Company that:
(a) This Agreement has been duly and validly authorized, executed and
delivered by the Holder and constitutes a valid and binding obligation of the
Holder, enforceable against the Holder in accordance with its terms, except as
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may be limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws relating to or affecting creditors' rights generally (including, without
limitation, fraudulent conveyance laws), and by general principles of equity,
including, without limitation, concepts of materiality, reasonableness, good
faith and fair dealing, and the possible unavailability of specific performance
or injunctive relief, regardless of whether considered in a proceeding at equity
or in law.
(b) It is a "qualified institutional buyer" within the meaning of Rule
144A of the Securities Act of 1933, as amended (the "Securities Act"), and an
"accredited investor" within the meaning of Regulation D under the Securities
Act.
(c) The Holder represents that, if acquired in exchange for the
Warrant pursuant to this Agreement, the Preferred Stock is being acquired for
investment and not with a view to distribution or resale, except as otherwise
provided by this Agreement.
Section 3. Covenants of the Company. The Company covenants with the
Holder as follows:
(a) The Company shall use its commercially reasonable best efforts to
obtain the consent of the holders of the Series F Preferred Stock to the
transactions contemplated hereunder and to file the Articles promptly
thereafter, but not more than 60 days from the date hereof; provided, however,
that, in the event that such approval cannot be obtained within such period of
time, the Preferred Stock shall rank pari passu with the Series E Preferred
Stock and the Company shall file the Articles on such basis; and
(b) On the date that the Preferred Stock is duly authorized and
validly issued as provided in Section 5, the Company shall enter into and
execute the registration rights agreement in substantially the form attached
hereto as Exhibit C (the "Registration Rights Agreement").
Section 4. Agreements of the Parties.
(a) Absent registration under the Securities Act as contemplated under
the Registration Rights Agreement, the Preferred Stock and the Common Stock
issuable upon the conversion of the Preferred Stock shall be subject to
restrictions on transferability. Each certificate representing the shares of
Preferred Stock or Common Stock issuable upon conversion thereof shall bear,
except if such transfer is made pursuant to Rule 144 or pursuant to an effective
registration statement, the restrictive legend set forth in clause (b) below,
except that such certificate shall not bear such restrictive legend if, in the
opinion of counsel for the Holder and counsel for the Company, such legend is
not required in order to establish or ensure compliance with the provisions of
the Securities Act.
(b) Each certificate representing the Preferred Stock and the Common
Stock issuable upon the conversion of the Preferred Stock, shall be stamped or
otherwise imprinted with the following or similar legend:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO AN AVAILABLE EXEMPTION FROM
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REGISTRATION UNDER THE SECURITIES ACT AND IN ACCORDANCE WITH ALL
APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND
OTHER JURISDICTIONS.
The Holder consents to the making of a notation by the Company on its records
and the giving of instructions to any transfer agent of its capital stock in
order to implement the restrictions on transfer established in this Agreement.
Section 5. Exchange.
(a) The Holder may exchange the Warrant for the Preferred Stock upon
30 days written notice (the "Exchange Notice") to the Company directing such
exchange. The Holder's right to exchange the Warrant shall expire on May 11,
2003 (the "Expiration Date"). Any Exchange Notice submitted by the Holder after
the Expiration Date shall be null and void. Subject to Section 5(c) below, upon
the receipt by the Company of such Exchange Notice, the Company shall be
unconditionally obligated to issue to the Holder, upon surrender of all
certificates representing the Warrant (the "Warrant Certificates") to the
Company, certificates representing the Preferred Stock (the "Preferred Stock
Certificates").
(b) The Exchange Notice shall state (i) the date, time and place for
such exchange and (ii) the denominations and the Holder's name or names of the
nominees in which the Holder wishes the Preferred Stock Certificates to be
registered.
(c) After completion of the actions specified in Section 3(a), the
Company shall issue the Preferred Stock in exchange for the Warrant unless such
performance would violate the terms and provisions of Section 4.04 of the
Conseco, Inc. 10 3/4% Senior Notes due 2008 issued under the First Senior
Supplemental Indenture, dated as of June 29, 2001, to the Senior Indenture,
dated as of November 13, 1997. The Company agrees to use its commercially
reasonable best efforts to take all action necessary to effect such exchange.
(d) If required by the Company, Warrant Certificates surrendered for
exchange shall be endorsed or accompanied by a written instrument or instruments
for transfer, in form satisfactory to the Company, duly executed by the
registered holder or such holder's attorney duly authorized in writing. The date
of receipt of such Warrant Certificates by the Company shall be the exchange
date (the "Exchange Date") and the exchange shall be deemed effective as of the
close of business on the Exchange Date. Subject to Section 3(c), the Company
shall, as soon as practicable after the Exchange Date, issue and deliver to the
Holder, or to his or its nominee, the Preferred Stock Certificates.
Section 6. Independent Obligations. The Company acknowledges that its
obligations hereunder are independent of the obligations of the Company with
respect to the Preferred Stock once issued in accordance with this Agreement.
Section 7. Successors and Assigns. This Agreement shall bind the
successors, assigns, receivers, trustees and representatives of the Company and
shall inure to the benefit of the Holder. Except in connection with a permitted
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merger or consolidation of the Company with or into another entity or a
permitted sale, transfer or lease of the Company's assets to another entity in
which the surviving organization, if other than the Company, assumes the
Company's obligations under this Agreement, the Company may not assign its
rights or delegate its obligations under this Agreement without the prior
approval of the Holder. The Holder may not assign its rights or delegate its
obligations under this Agreement to any party other than an affiliate of the
Holder without the prior approval of the Company.
Section 8. Amendments. This Agreement may be amended by the parties
hereto only with the prior approval of the Company and the Holder.
Section 9. Notices. All notices provided for in this Agreement shall
be in writing, duly signed by the party giving such notice, and shall be
delivered, telecopied or mailed by first class mail, as follows:
(a) If given to the Company, at the Company's mailing address set
forth below (or such other address as the Company may give notice of to the
Holder):
Conseco, Inc.
0000 X. Xxxxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxx
00000 Attention: Xxxxx X. Xxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
(b) If given to the Holder, at the Holder's mailing address set forth
below (or such other address as the Holder may give notice of to the Company):
Xxxxxx Brothers Holdings, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Corporate Secretary
Telephone:
Fax:
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
Section 10. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO CONFLICTS OF LAW PRINCIPLES THEREOF.
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Section 11. Termination.
This Agreement shall terminate (except with respect to the right of
the Holder to receive the Preferred Stock and the obligation of the Company to
exchange the Preferred Stock for the Warrant, in the case of the receipt by the
Company of an Exchange Notice all in accordance with Section 5) upon the earlier
of (i) June 10, 2003 and (ii) the Exchange Date.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
CONSECO, INC.
By: /s/ Xxxxxxx X. Xxxx
-----------------------------------
Name: Xxxxxxx X. Xxxx
Title: President
XXXXXX BROTHERS HOLDINGS, INC.
By: /s/ Xxxxx Xxxxxx
-----------------------------------
Name: Xxxxx Xxxxxx
Title: Senior Vice President
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Exhibit A
ARTICLES OF AMENDMENT TO THE
AMENDED AND RESTATED ARTICLES OF INCORPORATION OF
CONSECO, INC.
Date of Incorporation: August 28, 1979
CONSECO, INC. (hereinafter referred to as the "Corporation"), an
Indiana corporation existing pursuant to the provisions of the Indiana Business
Corporation Law, as amended (hereinafter referred to as the "Act"), desiring to
give notice of corporate action effectuating amendment of its Amended and
Restated Articles of Incorporation (the "Articles of Incorporation"), certifies
the following facts:
ARTICLE I
THE AMENDMENT
Creation of New Article XII. There is hereby created a new Article XII
of the Articles of Incorporation the exact text of which is as follows:
"ARTICLE XII
Designations, Rights and Preferences of
Series G Convertible Redeemable Preferred Stock
The designations, rights, preferences, limitations and restrictions of
the shares of Preferred Stock, without par value, to be designated as Series G
Convertible Redeemable Preferred Stock (in addition to those set forth elsewhere
in the Corporation's Articles of Incorporation) are hereby fixed as follows.
Section 1. Designation; Number of Shares; Stated Value; No Dividends.
Five Hundred Thousand Shares (500,000) shares of Preferred Stock shall be
designated Series G Convertible Redeemable Preferred Stock (hereinafter referred
to as the "Series G Preferred Stock"). Shares of the Series G Preferred Stock
shall have a stated value of One Hundred Dollars ($100.00) per share. Dividends
shall not be payable on shares of the Series G Preferred Stock.
Section 2. Conversion.
(a) Each issued and outstanding share of Series G Preferred Stock
shall be convertible, at the option of the holder thereof, at any time after the
date of issuance and without the payment of any additional consideration
therefor, into fully paid and nonassessable shares of Common Stock at a rate of
ten (10) shares of Common Stock for each share of Series G Preferred Stock (the
"Conversion Rate"), subject to adjustment as set forth below.
(b) In order for a holder to convert shares of Series G Preferred
Stock into shares of Common Stock, such holder shall surrender the certificate
or certificates for such shares of Series G Preferred Stock, at the office of
the transfer agent for the Series G Preferred Stock (or at the principal office
of the Corporation if the Corporation serves as its own transfer agent),
together with written notice that such holder elects to convert all or any
number of the shares of the Series G Preferred Stock represented by such
certificate or certificates. Such notice shall state such holder's name or the
names of the nominees in which such holder wishes the certificate or
certificates for shares of Common Stock to be issued and the number of shares of
Series G Preferred Stock to be converted. If required by the Corporation,
certificates surrendered for conversion shall be endorsed or accompanied by a
written instrument or instruments of transfer, in form satisfactory to the
Corporation, duly executed by the registered holder or such holder's attorney
duly authorized in writing accompanied by the payment of any applicable transfer
taxes. The date of receipt of such certificates and notice by the transfer agent
(or by the Corporation if the Corporation serves as its own transfer agent)
shall be the conversion date (the "Conversion Date") and the conversion shall be
deemed effective as of the close of business on the Conversion Date. The
Corporation shall, as soon as practicable after the Conversion Date, issue and
deliver at such office to such holder of Series G Preferred Stock, or to his or
its nominees, a certificate or certificates for the number of shares of Common
Stock to which such holder shall be entitled, together with cash in lieu of any
fraction of a share.
(c) The Conversion Rate shall be subject to adjustment from time to
time as provided below in this section (c).
(i) If the Corporation shall, after the first date any shares of
Series G Preferred Stock are issued:
(A) pay a stock dividend or make a distribution with respect to
its Common Stock in shares of such Common Stock,
(B) subdivide or split its outstanding Common Stock into a
greater number of shares,
(C) combine its outstanding shares of Common Stock into a
smaller number of shares, or
(D) issue by reclassification of its shares of Common Stock any
shares of common stock of the Corporation,
then, in any such event, the Conversion Rate in effect
immediately prior to such event shall be adjusted so that
the holder of any shares of Series G Preferred Stock shall
thereafter be entitled to receive, upon conversion, the
number of shares of Common Stock of the Corporation which
such holder would have owned or been entitled to receive
immediately following any event described above had such
shares of Series G Preferred Stock been converted
immediately prior to such event or any record date with
respect thereto. Such adjustment shall become effective at
the opening of business on the business day next following
the record date for determination of shareholders entitled
to receive such dividend or distribution, in the case of a
dividend or distribution, and shall become effective
immediately after the effective date, in the case of a
subdivision, split, combination or reclassification. Such
adjustment shall be made successively.
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(ii) The Corporation shall also be entitled to make upward adjustments
in the Conversion Rate, as it in its sole discretion shall
determine to be advisable, in order that any stock dividends,
subdivisions of shares, distribution of rights to purchase stock
or securities, or distribution of securities convertible into or
exchangeable for stock (or any transaction which could be treated
as any of the foregoing transactions pursuant to Section 305 of
the Internal Revenue Code of 1986, as amended) made by the
Corporation to its shareholders after the first date any shares
of Series G Preferred Stock are issued shall not be taxable.
(iii) In any case in which this subsection 2(c) shall require that an
adjustment become effective at the opening of business on the
business day next following a record date and the date fixed for
conversion pursuant to subsection 2(a) occurs after such record
date, but before the occurrence of such event, the Corporation
may, in its sole discretion, elect to defer the following until
after the occurrence of such event: (A) issuing to the holder of
any converted shares of Series G Preferred Stock the additional
shares of Common Stock issuable upon such conversion over the
shares of Common Stock issuable before giving effect to such
adjustments and (B) paying to such holder any amount in cash in
lieu of a fractional share of Common Stock pursuant to subsection
2(h).
(iv) All adjustments to the Conversion Rate shall be calculated to the
nearest 1/100th of a share of Common Stock. No adjustment in the
Conversion Rate shall be required unless such adjustment would
require an increase or decrease of at least one percent therein;
provided, however, that any adjustment which by reason of this
subsection (iv) is not required to be made shall be carried
forward and taken into account in any subsequent adjustment.
(d) Adjustment for Consolidation or Merger. In case of any
consolidation or merger to which the Corporation is a party (other than a merger
or consolidation in which the Corporation is the surviving or continuing
corporation and in which the Common Stock outstanding immediately prior to the
merger or consolidation remains unchanged), or in case of any sale or transfer
to another entity of the property of the Corporation as an entirety or
substantially as an entirety, or in case of any statutory exchange of securities
with another entity (other than in connection with a merger or acquisition),
proper provision shall be made so that each share of Series G Preferred Stock
shall, after consummation of such transaction, be subject to conversion at the
option of the holder into the kind and amount of securities, cash or other
property receivable upon consummation of such transaction by a holder of the
number of shares of Common Stock into which such share of Series G Preferred
Stock might have been converted immediately prior to consummation of such
transaction. The kind and amount of securities into or for which the shares of
Series G Preferred Stock shall be convertible after consummation of such
transaction shall be subject to adjustment as described in the immediately
preceding paragraph following the date of consummation of such transaction.
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For purposes of the immediately preceding paragraph and subsection
2(f)(iii), any sale or transfer to another corporation of property of the
Corporation which did not account for at least 50% of the consolidated net
income of the Corporation for its most recent fiscal year ending prior to the
consummation of such transaction shall not in any event be deemed to be a sale
or transfer of the property of this Corporation as an entirety or substantially
as an entirety.
(e) Notice of Adjustments. Whenever the Conversion Rate is adjusted as
herein provided, the Corporation shall:
(i) forthwith compute the adjusted Conversion Rate in accordance
herewith and prepare a certificate signed by an officer of the
Corporation setting forth the adjusted Conversion Rate, the
method of calculation thereof in reasonable detail and the facts
requiring such adjustment and upon which such adjustment is
based, which certificate shall be conclusive, final and binding
evidence of the correctness of the adjustment, and file such
certificate forthwith with the transfer agent for the shares of
Series G Preferred Stock and the Common Stock; and
(ii) mail a notice to the holders of the outstanding shares of Series
G Preferred Stock stating that the Conversion Rate had been
adjusted, the facts requiring such adjustment and upon which such
adjustment is based and setting forth the adjusted Conversion
Rate, such notice to be mailed within 45 days of the end of the
fiscal quarter during which the facts requiring such adjustment
occurred.
(f) Notices. In case, at any time while any of the shares of Series G
Preferred Stock are outstanding,
(i) the Corporation shall declare a dividend (or any other
distribution) on its Common Stock, excluding any cash dividends;
or
(ii) the Corporation shall authorize the issuance to all holders of
its Common Stock of rights or warrants to subscribe for or
purchase shares of its Common Stock or of any other subscription
rights or warrants; or
(iii) the Corporation shall authorize any reclassification of its
Common Stock (other than a subdivision or combination thereof) or
any consolidation or merger to which the Corporation is a party
and for which approval of any shareholders of the Corporation is
required (except for a merger of the Corporation into one of its
subsidiaries solely for the purpose of changing the corporate
domicile of the Corporation to another state of the United States
and in connection with which there is no substantive change in
the rights or privileges of any securities of the Corporation
other than changes resulting from differences in the corporate
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statutes of the then existing and the new state of domicile), or
the sale or transfer to another corporation of the property of
the Corporation as an entirety or substantially as an entirety;
or
(iv) the Corporation shall authorize the voluntary or involuntary
dissolution, liquidation or winding up of the Corporation;
then the Corporation shall cause to be filed at each office or agency maintained
for the purpose of conversion of the shares of Series G Preferred Stock, and
shall cause to be mailed to the holders of shares of Series G Preferred Stock at
their last addresses as they shall appear on the stock register, at least 10
days before the date hereinafter specified (or the earlier of the dates
hereinafter specified, in the event that more than one date is specified), a
notice stating (A) the date on which a record is to be taken for the purpose of
such dividend, distribution, rights or warrants, or, if a record is not to be
taken, the date as of which the holders of Common Stock of record to be entitled
to such dividend, distribution, rights or warrants are to be determined, or (B)
the date on which any such reclassification, consolidation, merger, sale,
transfer, dissolution, liquidation or winding up is expected to become
effective, and the date as of which it is expected that holders of Common Stock
of record shall be entitled to exchange their Common Stock for securities or
other property (including cash), if any, deliverable upon such reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or winding up.
The failure to give or receive the notice required by this subsection (f) or any
defect therein shall not affect the legality or validity of such dividend,
distribution, right or warrant or other action.
(g) All certificates evidencing shares of Series G Preferred Stock
that are required to be surrendered for conversion in accordance with the
provisions hereof, from and after the date such certificates are so required to
be surrendered shall represent the shares of Common Stock into which the shares
of Series G Preferred Stock previously represented thereby shall have been
converted for all purposes, notwithstanding the failure of the holder or holders
thereof to surrender such certificates on or prior to such date. The Corporation
from time to time thereafter shall take appropriate action to reduce the
authorized Series G Preferred Stock accordingly.
(h) No fractional shares of Common Stock shall be issued upon
conversion of the Series G Preferred Stock. In lieu of any fractional shares to
which the holder would otherwise be entitled, the Corporation shall pay cash
equal to the product of such fraction multiplied by the Closing Price of the
Common Stock on the date of conversion. The term "Closing Price" on any day
shall mean the last reported sales price per share of Common Stock on such day
or, in case no such sale takes place on such day, the average of the reported
closing high and low quotations, in each case on the New York Stock Exchange or,
if the Common Stock is not listed on the New York Stock Exchange, on the
principal national securities market or quotation system on which the Common
Stock is then traded or quoted, or, if the Common Stock is then not so traded or
quoted, on the Nasdaq National Market, or, if the Common Stock is not listed on
the Nasdaq National Market, the average of the high bid and low-asked quotations
of the Common Stock in the over-the-counter market on the day in question as
reported by the National Quotation Bureau Incorporated, or a similarly generally
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accepted reporting service, or, if no such quotations are available, the fair
market value of the Common Stock as determined by any New York Stock Exchange
member firm selected from time to time by the Board of Directors for such
purpose.
(i) The Corporation shall at all times when the Series G Preferred
Stock shall be outstanding, reserve and keep available out of its authorized but
unissued stock, for the purpose of effecting the conversion of the Series G
Preferred Stock, such number of its duly authorized shares of Common Stock as
shall from time to time be sufficient to effect the conversion of all
outstanding Series G Preferred Stock.
(j) All shares of Series G Preferred Stock surrendered for conversion
as herein provided shall no longer be deemed to be outstanding and all rights
with respect to such shares, including the rights, if any, to receive notices
and to vote shall immediately cease and terminate at the close of business on
the Conversion Date (except only the right of the holders thereof to receive
shares of Common Stock in exchange therefor), and any shares of Series G
Preferred Stock so converted shall be retired and canceled by the Corporation.
(k) All dollar amounts set forth herein shall be subject to equitable
adjustment whenever there shall occur a stock split, subdivision, combination,
reclassification, dividend (other than regular cash dividend), issuance of
rights or warrants to holders of stock to purchase shares of stock,
consolidation, merger, or sale or transfer of the property of the Corporation as
an entirety or substantially as an entirety or other similar event. Any such
adjustment shall be made by the Board of Directors of the Corporation (whose
determination shall be conclusive, final and binding). Promptly after the making
of any such adjustment, the Corporation shall send notice thereof to the holders
of Series G Preferred Stock and to the transfer agent for the Series G Preferred
Stock.
Section 3. Mandatory Redemption.
(a) On February 1, 2012 (the "Redemption Date"), if all the shares of
Series G Preferred Stock have not been converted in accordance with Section 2,
to the extent that the Corporation has sufficient funds legally available
therefor and to the extent permitted by the Articles of Incorporation, the
Corporation shall redeem, at the stated value per share, as adjusted for any
stock dividends, combinations, splits, recapitalizations and the like with
respect to the shares of Series G Preferred Stock (the "Redemption Price"), all
shares of Series G Preferred Stock outstanding on the Redemption Date.
(c) The Corporation shall, on or prior to the Redemption Date, deposit
with a redemption agent selected by the Board of Directors of the Corporation,
as a trust fund, a sum sufficient to redeem the shares of Series G Preferred
Stock, with irrevocable instructions and authority to such redemption agent to
pay the holders of such shares, as evidenced by a list of such holders certified
by an officer of the Corporation, the Redemption Price upon surrender of their
respective share certificates. Such deposit shall be deemed to constitute full
payment of such shares to their holders. From and after the Redemption Date,
notwithstanding that any certificates for such shares shall not have been
surrendered for cancellation, the shares represented thereby shall no longer be
deemed to be outstanding and all rights of the holders of the shares of Series G
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Preferred Stock with respect to such shares, including the rights, if any, to
receive notices and to vote, shall immediately cease and terminate, except the
right to receive the Redemption Price, without interest, which payment shall be
made upon surrender of their respective certificates. In case the holders of any
shares of Series G Preferred Stock shall not, within six years after such
deposit, claim the amount deposited for redemption thereof, the redemption agent
shall, upon demand, pay over to the Corporation the balance of such amount
deposited. Thereupon, the redemption agent shall be relieved of all
responsibility to the holders thereof and the sole right of such holders shall
be as general creditors of the Corporation. Any interest accrued on any funds so
deposited shall belong to the Corporation and shall be paid to it from time to
time on demand.
Section 4. Voting.
(a) The shares of Series G Preferred Stock shall have the right to
vote on an as-converted basis together with all other classes entitled to vote
thereon, on all matters which from time to time may be brought for action by the
common shareholders of the Corporation.
(b) For as long as any shares of Series G Preferred Stock remain
outstanding, the affirmative consent of the holders of at least a majority of
the Series G Preferred Stock and the Series F Common-Linked Convertible
Preferred Stock (the "Series F Preferred Stock"), voting together as a single
class, given in person or by proxy, at any annual meeting or special meeting of
the shareholders called for such purpose, shall be necessary to amend, alter or
repeal any of the provisions of the Articles of Incorporation of the Corporation
which would adversely affect the powers, preferences or rights of the holders of
the shares of Series G Preferred Stock then outstanding (including, without
limitation, by any merger, consolidation or reorganization), except as otherwise
provided by the Articles of Incorporation, as amended.1
For as long as any shares of Series G Preferred Stock remain
outstanding, the affirmative consent of the holders of at least a majority of
the Series G Preferred Stock and the Series E Redeemable Preferred Stock (the
"Series E Preferred Stock"), voting together as a single class, given in person
or by proxy, at any annual meeting or special meeting of the shareholders called
for such purpose, shall be necessary to amend, alter or repeal any of the
provisions of the Articles of Incorporation of the Corporation which would
adversely affect the powers, preferences or rights of the holders of the shares
of Series G Preferred Stock then outstanding (including, without limitation, by
any merger, consolidation or reorganization), except as otherwise provided by
the Articles of Incorporation, as amended.2
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1 This provision to be used if the proper consents of the holders of the Series
E Preferred Stock and Series F Preferred Stock are both obtained.
2 This provision to be used if the proper consent of the holders of the Series E
Preferred Stock is obtained but not the proper consent of the holders of the
Series F Preferred Stock.
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Section 5. Liquidation Rights.
(a) Upon the dissolution, liquidation or winding-up of the
Corporation, whether voluntary or involuntary, the holders of the shares of the
Series G Preferred Stock shall be entitled to receive, before any payment or
distribution of the assets of the Corporation or proceeds thereof (whether
capital or surplus) shall be made to or set apart for the holders of the Common
Stock or any other class or series of stock ranking junior to the Series G
Preferred Stock upon liquidation, dissolution or winding-up, the greater amount
of (i) the stated value (as adjusted for any stock dividends, combinations,
splits, recapitalizations and the like) and (ii) the amount the holder would
have received upon such final distribution, if the shares of Series G Preferred
Stock had been converted into shares of Common Stock pursuant to Section 2 of
this Article. If, upon any liquidation, dissolution or winding-up of the
Corporation, the assets of the Corporation, or proceeds thereof, distributable
among the holders of shares of the Series G Preferred Stock and any other class
or series of Preferred Stock ranking on a parity with the Series G Preferred
Stock as to payments upon liquidation, dissolution or winding-up shall be
insufficient to pay in full the preferential amount aforesaid, then such assets
or the proceeds thereof shall be distributed among such holders ratably in
accordance with the respective amounts which would be payable on such shares if
all amounts payable thereon were paid in full.
(b) For the purposes of this Section 5, neither of the following
events shall be deemed to be a voluntary or involuntary liquidation, dissolution
or winding up of the Corporation:
(i) the sale, lease, transfer or exchange of all or substantially all
of the assets of the Corporation; or
(ii) the consolidation or merger of the Corporation with one or more
other corporations (whether or not the Corporation is the
corporation surviving such consolidation or merger).
Section 6. No Purchase, Retirement or Sinking Fund. The shares of the
Series G Preferred Stock shall not be subject to the operation of any purchase,
retirement or sinking fund.
Section 7. Status. Shares of the Series G Preferred Stock which have
been issued and reacquired in any manner by the Corporation (excluding, until
the Corporation elects to retire them, shares which are held as treasury shares,
but including shares cancelled, redeemed purchased and retired) shall, upon
compliance with any applicable provisions of the Act, have the status of
authorized and unissued shares of Preferred Stock and may be reissued as a part
of a new series of Preferred Stock to be established by the Board of Directors
or as part of any other series of Preferred Stock the terms of which do not
prohibit such reissue.
Section 8. Priority. The Series G Preferred Stock shall rank (i)
senior to the Common Stock and the Series E Redeemable Preferred Stock of the
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Corporation and (ii) on parity with the Series F Preferred Stock, in each case
as to distribution of assets upon liquidation, dissolution or winding-up.3
The Series G Preferred Stock shall rank (i) senior to the Common
Stock, (ii) on parity with the Series E Preferred Stock of the Corporation and
(ii) junior to the Series F Common-Linked Convertible Preferred Stock, in each
case as to distribution of assets upon liquidation, dissolution or winding-up.4
Section 9. Relative Rights of Series G Preferred Stock. So long as any
of the Series G Preferred Stock is outstanding, the Corporation will not
declare, or pay, or set apart for payment, any dividends (other than dividends
or distributions payable in stock ranking junior to the Series G Preferred Stock
upon liquidation, dissolution or winding-up) or make any distribution in cash or
other property on any other class or series of stock of the Corporation ranking
junior to the Series G Preferred Stock either upon liquidation, dissolution or
winding-up, and will not redeem, purchase or otherwise acquire any shares of any
such junior class or series of stock if at the time of making such declaration,
payment or setting apart for payment, distribution, redemption, purchase or
acquisition the Corporation shall be in default with respect to any
distributions payable on shares of Series G Preferred Stock."
ARTICLE II
The foregoing amendment was adopted on __________, 2002.
ARTICLE III
MANNER OF ADOPTION AND VOTE
The amendment set forth above was adopted by the Board of Directors of
the Corporation and shareholder action was not required.
ARTICLE IV
COMPLIANCE WITH LEGAL REQUIREMENTS
The manner of the adoption of the Articles of Amendment and the vote
by which they were adopted constitute full legal compliance with the provisions
of the Act, the Articles of Incorporation, and the Bylaws of the Corporation.
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3 This provision to be used if the proper consents of the holders of the Series
E Preferred Stock and Series F Preferred Stock are both obtained.
4 This provision to be used if the proper consent of the holders of the Series E
Preferred Stock is obtained but not the proper consent of the holders of the
Series F Preferred Stock.
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IN WITNESS WHEREOF, the undersigned Corporation has caused these
Articles of Amendment to be signed and verified by a duly authorized officer,
acting for and on behalf of such Corporation; and the undersigned verifies
subject to the penalties of perjury that the facts contained herein are true
this ___ day of _________, 2002.
CONSECO, INC.
By:__________________________________
Name:
Title:
