EXHIBIT 1.1
CONSECO, INC.
COMMON STOCK
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UNDERWRITING AGREEMENT
, 2004
Goldman, Sachs & Co.,
Morgan Stanley & Co. Incorporated
As representatives of the several Underwriters
named in Schedule I hereto
c/o Goldman, Sachs & Co
85 Broad Street
New York, New York 10004
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Ladies and Gentlemen:
Conseco, Inc., a Delaware corporation (the "COMPANY"), proposes,
subject to the terms and conditions stated herein, to issue and sell to the
Underwriters named in Schedule I hereto (the "UNDERWRITERS") an aggregate of /-/
shares (the "FIRM SHARES") and, at the election of the Underwriters, up to /-/
additional shares (the "OPTIONAL SHARES") of common stock, $0.01 par value per
share ("STOCK"), of the Company (the Firm Shares and the Optional Shares that
the Underwriters elect to purchase pursuant to Section 2 hereof being
collectively called the "SHARES").
1. The Company represents and warrants to, and agrees with, each of the
Underwriters that:
(a) A registration statement on Form S-1 (File No. 333-112312) (the
"INITIAL REGISTRATION STATEMENT") in respect of the Shares has been filed with
the Securities and Exchange Commission (the "COMMISSION"); the Initial
Registration Statement and any post-effective amendment thereto, each in the
form heretofore delivered to you for each of the other Underwriters, and
excluding exhibits thereto, have been declared effective by the Commission in
such form; other than a registration statement, if any, increasing the size of
the offering (a "RULE 462(b) REGISTRATION STATEMENT"), filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended (the "ACT"), which became or
will become effective upon filing, no other document with respect to the Initial
Registration Statement has heretofore been filed with the Commission; and no
stop order suspending the effectiveness of the Initial Registration Statement,
any post-effective amendment thereto or the Rule 462(b) Registration Statement,
if any, has been issued and no proceeding for that purpose has been initiated or
threatened by the Commission (any preliminary prospectus included in the Initial
Registration
Statement or filed with the Commission pursuant to Rule 424(a) of the rules and
regulations of the Commission under the Act is hereinafter called a "PRELIMINARY
PROSPECTUS"); the various parts of the Initial Registration Statement and the
Rule 462(b) Registration Statement, if any, including all exhibits thereto and
including the information contained in the form of final prospectus filed with
the Commission pursuant to Rule 424(b) under the Act in accordance with Section
5(a) hereof and deemed by virtue of Rule 430A under the Act to be part of the
Initial Registration Statement at the time it was declared effective, each as
amended at the time such part of the Initial Registration Statement became
effective or such part of the Rule 462(b) Registration Statement, if any, became
or hereafter becomes effective, are hereinafter collectively called the
"REGISTRATION STATEMENT"; such final prospectus, in the form first filed
pursuant to Rule 424(b) under the Act, is hereinafter called the "PROSPECTUS";
(b) No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission, and each Preliminary Prospectus,
at the time of filing thereof, conformed in all material respects to the
requirements of the Act and the rules and regulations of the Commission
thereunder, and did not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that this representation and warranty
shall not apply to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Company by an
Underwriter through the Representatives expressly for use therein;
(c) The Company's Annual Report on Form 10-K most recently filed with
the Commission and all subsequent reports (collectivley, the "Exchange Act
Reports") which have been filed by the Company with the Commission or sent to
stockholders pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), when they were filed with the Commission, conformed in all
material respects to the requirements of the Act or the Exchange Act, as
applicable, and the rules and regulations of the Commission thereunder, and none
of such documents contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading; and any further documents so filed, when such
documents become effective or are filed with the Commission, as the case may be,
will conform in all material respects to the requirements of the Act or the
Exchange Act, as applicable, and the rules and regulations of the Commission
thereunder and will not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that this representation
and warranty shall not apply to any statements or omissions made in reliance
upon and in conformity with information furnished in writing to the Company by
an Underwriter through the Representatives expressly for use therein;
(d) The Registration Statement conforms, and the Prospectus and any
further amendments or supplements to the Registration Statement or the
Prospectus when filed with the Commission will conform, in all material respects
to the requirements of the Act and the rules and regulations of the Commission
thereunder and do not and will not, as of the applicable effective date as to
the Registration Statement and any amendment thereto, and as of the applicable
filing date as to the Prospectus and any amendment or supplement thereto,
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading; provided, however, that this representation and warranty shall not
apply to any statements or omissions made in reliance upon and in conformity
with information furnished in writing to the Company by an Underwriter through
the Representatives expressly for use therein;
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(e) Neither the Company nor any of its subsidiaries has sustained since
the date of the latest audited financial statements included in the Prospectus
any loss or interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree, except to the extent that any
such loss or interference would not, individually or in the aggregate, have a
material adverse effect on the current or future business, consolidated
financial position, stockholders' equity or results of operations of the Company
and its subsidiaries, taken as a whole (a "MATERIAL ADVERSE EFFECT"), or
otherwise than as set forth or contemplated in the Prospectus; and, since the
respective dates as of which information is given in the Registration Statement
and the Prospectus, there has not been any change in the capital stock or
increase in long-term debt of the Company or any of its subsidiaries in excess
of $50.0 million or any material adverse change, or any development involving a
prospective material adverse change, in or affecting the general affairs,
management, financial position, stockholders' equity or results of operations of
the Company and its subsidiaries taken as a whole, in each case otherwise than
as set forth or contemplated in the Prospectus;
(f) The Company and its subsidiaries have good and marketable title in
fee simple to all real property and good and marketable title to all personal
property owned by them, in each case free and clear of all liens, encumbrances
and defects except such as are described in the Prospectus or such as would not,
individually or in the aggregate, have a Material Adverse Effect; and any real
property and buildings held under lease by the Company and its subsidiaries are
held by them under valid, subsisting and enforceable leases with such exceptions
as would not, individually or in the aggregate, have a Material Adverse Effect;
(g) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware, with power
and authority (corporate and other) to own its properties and conduct its
business as described in the Prospectus, and has been duly qualified as a
foreign corporation for the transaction of business and is in good standing
under the laws of each other jurisdiction in which it owns or leases properties
or conducts any business so as to require such qualification, except to the
extent that the failure to be so qualified or in good standing in any such
jurisdiction would not, individually or in the aggregate, have a Material
Adverse Effect; and each subsidiary of the Company has been duly incorporated
and is validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation, except to the extent that the failure to be in
good standing would not, individually or in the aggregate, have a Material
Adverse Effect;
(h) The Company has an authorized capitalization as set forth in the
Prospectus under the caption "Description of Capital Stock", and all of the
issued shares of capital stock of the Company have been duly and validly
authorized and issued, are fully paid and non-assessable and conform in all
material respects to the description of the capital stock contained in the
Prospectus under the caption "Description of Capital Stock"; and all of the
issued shares of capital stock of each subsidiary of the Company have been duly
and validly authorized and issued, are fully paid and non-assessable and (except
for directors' qualifying shares) are owned directly or indirectly by the
Company, free and clear of all liens, encumbrances, equities or claims, except
for liens, encumbrances, equities or claims that exist pursuant to that certain
Credit Agreement dated as of September 10, 2003 among the Company, Bank of
America, N.A., as agent and the other financial institutions party thereto (the
"Credit Agreement");
(i) The unissued Shares to be issued and sold by the Company to the
Underwriters hereunder have been duly and validly authorized and, when issued
and delivered against payment therefor as provided herein, will be duly and
validly issued and fully paid and non-assessable and will conform in all
material respects to the description of the Stock contained in the Prospectus;
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(j) The issue and sale of the Shares by the Company, the issue and sale
of the Class B Mandatorily Convertible Preferred Stock pursuant to an
underwriting agreement of even date herewith, the compliance by the Company with
all of the provisions of this Agreement and the consummation of the transactions
herein contemplated will not (i) result in any violation of any provisions of
the Certificate of Incorporation or By-Laws of the Company; (ii) conflict with
or result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries is
bound or to which any of the property or assets of the Company or any of its
subsidiaries is subject; or (iii) result in any violation of the provisions of
any statute or any order, rule or regulation of any court or governmental agency
or body having jurisdiction over the Company or any of its subsidiaries or any
of their properties, except, with respect to clauses (ii) and (iii), for such
conflicts, breaches, violations, or defaults which would not, individually or in
the aggregate, have a Material Adverse Effect; and no consent, approval,
authorization, order, registration or qualification of or with any such court or
governmental agency or body is required for the issue and sale of the Shares and
the Class B Mandatorily Convertible Preferred Stock of the Company or the
consummation by the Company of the transactions contemplated by this Agreement,
except the registration under the Act of the Shares and the Class B Mandatorily
Convertible Preferred Stock and such consents, approvals, authorizations,
registrations or qualifications as may be required under state securities or
Blue Sky laws in connection with the purchase and distribution of the Shares and
the Class B Mandatorily Convertible Preferred Stock by the Underwriters and
except for such consents, approvals, authorizations, orders, registrations, or
qualifications the absence of which would not have a Material Adverse Effect or
would not materially impede the ability of the Company to consummate the
transactions contemplated herein or perform its obligations hereunder;
(k) Neither the Company nor any of its subsidiaries is (i) in violation
of its Certificate of Incorporation or By-laws or (ii) in default in the
performance or observance of any obligation, agreement, covenant or condition
contained in any indenture, mortgage, deed of trust, loan agreement, lease or
other agreement or instrument to which it is a party or by which it or any of
its properties may be bound, except, with respect to clause (ii), for such
defaults that would not, individually or in the aggregate, have a Material
Adverse Effect;
(l) The statements set forth in the Prospectus under the caption
"Description of Capital Stock", insofar as they purport to constitute a summary
of the terms of the Stock, under the captions "Business - Government Regulation"
and under the caption "Underwriting", insofar as they purport to describe the
provisions of the federal laws of the United States and documents referred to
therein, are accurate and complete in all material respects;
(m) Other than as set forth in the Prospectus, there are no legal or
governmental proceedings pending to which the Company, any of its subsidiaries
or any of its directors, officers or employees is a party or of which any
property of the Company or any of its subsidiaries is the subject which could
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect; and, to the Company's knowledge, no such proceedings are
threatened or contemplated by governmental authorities or threatened by others;
(n) The Company is not and, after giving effect to the offering and
sale of the Shares and the concurrent offering and sale of the Class B
Mandatorily Convertible Preferred Stock pursuant to an underwriting agreement of
even date herewith, will not be an "investment company", as such term is defined
in the Investment Company Act of 1940, as amended (the "INVESTMENT COMPANY
ACT");
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(o) PricewaterhouseCoopers LLP, who have audited certain financial
statements of the Company (including its predecessor, Conseco, Inc., an Indiana
corporation) and its subsidiaries, are independent public accountants as
required by the Act and the rules and regulations of the Commission thereunder;
(p) The financial statements included in the Registration Statement and
Prospectus present fairly the financial position of the Company (including its
predecessor, Conseco, Inc., an Indiana corporation) and its consolidated
subsidiaries as of the dates shown and their results of operations and cash
flows for the periods shown, and such financial statements have been prepared in
conformity with the generally accepted accounting principles in the United
States applied on a consistent basis; and any schedules included in the
Registration Statement present fairly the information required to be stated
therein.
(q) The Company and its subsidiaries (i) are in compliance with any and
all applicable foreign, federal, state and local laws and regulations relating
to the protection of human health and safety, the environment or hazardous or
toxic substances or wastes, pollutants or contaminants ("ENVIRONMENTAL LAWS"),
(ii) have received all permits, licenses or other approvals required of them
under applicable Environmental Laws to conduct their respective businesses and
(iii) are in compliance with all terms and conditions of any such permit,
license or approval, except where such noncompliance with Environmental Laws,
failure to receive required permits, licenses or other approvals or failure to
comply with the terms and conditions of such permits, licenses or approvals
would not, individually or in the aggregate, have a Material Adverse Effect.
(r) There are no costs or liabilities associated with Environmental
Laws (including, without limitation, any capital or operating expenditures
required for clean-up, closure of properties or compliance with Environmental
Laws or any permit, license or approval, any related constraints on operating
activities and any potential liabilities to third parties) which would,
individually or in the aggregate, have a Material Adverse Effect.
(s) No labor dispute with the employees of the Company or any
subsidiary exists or, to the knowledge of the Company, is imminent that would
reasonably be expected to have a Material Adverse Effect.
(t) The Company and its subsidiaries own, possess or can acquire on
reasonable terms, adequate trademarks, trade names and other rights to
inventions, know-how, patents, copyrights, confidential information and other
intellectual property (collectively, "INTELLECTUAL PROPERTY RIGHTS") necessary
to conduct the business now operated by them, or presently employed by them, and
have not received any notice of infringement of or conflict with asserted rights
of others with respect to any intellectual property rights that, if determined
adversely to the Company or any of its subsidiaries, would individually or in
the aggregate have a Material Adverse Effect.
(u) The Company and each of its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary to permit preparation
of financial statements in conformity with generally accepted accounting
principles and to maintain asset accountability; and (iii) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any
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differences. The Company maintains disclosure controls and procedures (as such
term is defined in Rule 13a-14 under the Exchange Act) that are effective in
ensuring that information required to be disclosed by the Company in the reports
that it files or submits under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the rules and
forms of the Commission, including, without limitation, controls and procedures
designed to ensure that information required to be disclosed by the Company in
the reports that it files or submits under the Exchange Act is accumulated and
communicated to the Company's management, including its principal executive
officer or officers and its principal financial officer or officers, as
appropriate to allow timely decisions regarding required disclosure.
(v) Each of the Company and its subsidiaries that is required to be
organized or licensed as an insurance company in its jurisdiction of
incorporation (each an "INSURANCE SUBSIDIARY") has all necessary consents,
licenses, authorizations, approvals, exemptions, orders, certificates and
permits (collectively, the "CONSENTS") of and from, and has made all filings and
declarations (collectively, the "FILINGS") with, all insurance regulatory
authorities, all Federal, state, local and other governmental authorities
(including, without limitation, the Commissioner of Insurance of the State of
Texas pursuant to the Company's amended and restated letter agreement dated
November 18, 2003), all self-regulatory organizations and all courts and other
tribunals, necessary to own, lease, license and use its properties and assets
and to conduct its business in the manner described in the Prospectus, except
where the failure to have such Consents or to make such Filings would not,
individually or in the aggregate, have a Material Adverse Effect; all such
Consents and Filings are in full force and effect, the Company and its Insurance
Subsidiaries are in compliance with such Consents and neither the Company nor
any of its Insurance Subsidiaries has received any notice of any inquiry,
investigation or proceeding that would reasonably be expected to result in the
suspension, revocation or limitation of any such Consent or otherwise impose any
limitation on the conduct of the business of the Company or any of its
respective Insurance Subsidiaries, except as set forth in the Prospectus or
except as any such failure to be in full force and effect, failure to be in
compliance with, suspension, revocation or limitation would not, individually or
in the aggregate, have a Material Adverse Effect; each of the Company and its
Insurance Subsidiaries is in compliance with, and conducts its businesses in
conformity with, all applicable insurance laws and regulations, except where the
failure to so comply or conform would not, individually or in the aggregate,
have a Material Adverse Effect.
(w) The 2003 statutory annual statements of each Insurance Subsidiary
and the statutory balance sheets and income statements included in such
statutory annual statements together with related schedules and notes, have been
prepared, in all material respects, in conformity with statutory accounting
principles and practices required or permitted by the appropriate insurance
regulator of the jurisdiction of domicile of each such Insurance Subsidiary, and
such statutory accounting principles and practices have been applied on a
consistent basis throughout the periods involved, except as may otherwise be
indicated therein or in the notes thereto, and present fairly, in all material
respects, the statutory financial position of such Insurance Subsidiaries as of
the dates thereof, and the statutory basis results of operations of such
Insurance Subsidiaries for the periods covered thereby.
(x) The Sixth Amended Joint Plan of Reorganization Pursuant to Chapter
11 of the United States Bankruptcy Code (the "PLAN OF REORGANIZATION") of
Conseco, Inc., CIHC, Incorporated, CTIHC, Inc. and Partners Health Group, Inc.
(collectively, the "REORGANIZING DEBTORS") was confirmed on September 9, 2003
and no party has appealed such confirmation order. Except as
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provided in the Plan of Reorganization, all Filed Claims (as defined in the Plan
of Reorganization) against, and Equity Interests (as defined in the Plan of
Reorganization) in, the Reorganizing Debtors have been discharged in full.
(y) There are no contracts, agreements or understandings between the
Company and any person granting such person the right to require the Company to
file a registration statement under the Securities Act with respect to any
securities of the Company or to require the Company to include such securities
with the Shares registered pursuant to the Registration Statement, except for
(i) the Registration Rights Agreement entered into as of September 10, 2003 by
and between Conseco, Inc. and the holders of Conseco, Inc.'s common stock listed
therein (the "COMMON STOCK REGISTRATION RIGHTS AGREEMENT") and (ii) the
Registration Rights Agreement entered into as of September 10, 2003 by and
between Conseco, Inc. and the holders of Conseco, Inc.'s Class A convertible
exchangeable preferred stock listed therein (the "CLASS A PREFERRED STOCK
REGISTRATION RIGHTS AGREEMENT"). No beneficiary of the foregoing rights has
exercised its right to include any securities on the Registration Statement.
2. Subject to the terms and conditions herein set forth, (a) the
Company agrees to issue and sell to each of the Underwriters, and each of the
Underwriters agrees, severally and not jointly, to purchase from the Company, at
a purchase price per share of $/-/, the number of Firm Shares set forth opposite
the name of such Underwriter in Schedule I hereto and (b) in the event and to
the extent that the Underwriters shall exercise the election to purchase
Optional Shares as provided below, the Company agrees to issue and sell to each
of the Underwriters, and each of the Underwriters agrees, severally and not
jointly, to purchase from the Company, at the purchase price per share set forth
in clause (a) of this Section 2, that portion of the number of Optional Shares
as to which such election shall have been exercised (to be adjusted by you so as
to eliminate fractional shares) determined by multiplying such number of
Optional Shares by a fraction, the numerator of which is the maximum number of
Optional Shares which such Underwriter is entitled to purchase as set forth
opposite the name of such Underwriter in Schedule I hereto and the denominator
of which is the maximum number of Optional Shares that all of the Underwriters
are entitled to purchase hereunder.
The Company hereby grants to the Underwriters the right to purchase at
their election up to /-/ Optional Shares, at the purchase price per share set
forth in the paragraph above, for the sole purpose of covering sales of shares
in excess of the number of Firm Shares, provided that the purchase price per
Optional Share shall be reduced by an amount per share equal to any dividends or
distributions declared by the Company and payable on the Firm Shares but not
payable on the Optional Shares. Any such election to purchase Optional Shares
may be exercised only by written notice from you to the Company, given within a
period of 30 calendar days after the date of this Agreement, setting forth the
aggregate number of Optional Shares to be purchased and the date on which such
Optional Shares are to be delivered, as determined by you but in no event
earlier than the next New York Business Day following the First Time of Delivery
(as defined in Section 4 hereof) or earlier than two or later than ten business
days after the date of such notice, unless in each case you and the Company
otherwise agree in writing.
3. Upon the authorization by you of the release of the Firm Shares, the
several Underwriters propose to offer the Firm Shares for sale upon the terms
and conditions set forth in the Prospectus.
4. (a) The Shares to be purchased by each Underwriter hereunder, in
definitive form, and in such authorized denominations and registered in such
names as the Representatives may request
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upon at least forty-eight hours' prior notice to the Company, shall be delivered
by or on behalf of the Company to the Representatives, through the facilities of
the Depository Trust Company ("DTC"), for the account of such Underwriter,
against payment by or on behalf of such Underwriter of the purchase price
therefor by wire transfer of Federal (same-day) funds to the account specified
by the Company to the Representatives at least forty-eight hours in advance. The
Company will cause the certificates representing the Shares to be made available
for checking and packaging at least twenty-four hours prior to the Time of
Delivery (as defined below) with respect thereto at the office of DTC or its
designated custodian (the "DESIGNATED OFFICE"). The time and date of such
delivery and payment shall be, with respect to the Firm Shares, 9:30 a.m., New
York City time, on /-/, 2004 or such other time and date as the Representatives
and the Company may agree upon in writing, and, with respect to the Optional
Shares, 9:30 a.m., New York time, on the date specified by the Representatives
in the written notice given by the Representatives of the Underwriters' election
to purchase such Optional Shares, or such other time and date as the
Representatives and the Company may agree upon in writing. Such time and date
for delivery of the Firm Shares is herein called the "FIRST TIME OF DELIVERY",
such time and date for delivery of the Optional Shares, if not the First Time of
Delivery, is herein called the "SECOND TIME OF DELIVERY", and each such time and
date for delivery is herein called a "TIME OF DELIVERY".
(b) The documents to be delivered at each Time of Delivery by or
on behalf of the parties hereto pursuant to Section 7 hereof, including the
cross receipt for the Shares and any additional documents requested by the
Underwriters pursuant to Section 7 hereof, will be delivered at the offices of
Cravath, Swaine & Moore LLP, 825 Eighth Avenue, New York, New York, 10019 (the
"CLOSING LOCATION"), and the Shares will be delivered at the Designated Office,
all at such Time of Delivery. A meeting will be held at the Closing Location at
5 p.m., New York City time, on the New York Business Day next preceding such
Time of Delivery, at which meeting the final drafts of the documents to be
delivered pursuant to the preceding sentence will be available for review by the
parties hereto. For the purposes of this Section 4, "New York Business Day"
shall mean each Monday, Tuesday, Wednesday, Thursday and Friday which is not a
day on which banking institutions in New York are generally authorized or
obligated by law or executive order to close.
5. The Company agrees with each of the Underwriters:
(a) To prepare the Prospectus in a form approved by you and to file
such Prospectus pursuant to Rule 424(b) under the Act not later than the
Commission's close of business on the second business day following the
execution and delivery of this Agreement, or, if applicable, such earlier time
as may be required by Rule 430A(a)(3) under the Act; to make no further
amendment or any supplement to the Registration Statement or Prospectus prior to
the last Time of Delivery which shall be disapproved by you promptly after
reasonable notice thereof; to advise you, promptly after it receives notice
thereof, of the time when any amendment to the Registration Statement has been
filed or becomes effective or any supplement to the Prospectus or any amended
Prospectus has been filed and to furnish you with copies thereof; to file
promptly all reports and any definitive proxy or information statements required
to be filed by the Company with the Commission pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of the Prospectus and for
so long as the delivery of a prospectus is required in connection with the
offering or sale of the Shares; to advise you, promptly after it receives notice
thereof, of the issuance by the Commission of any stop order or of any order
preventing or suspending the use of any Preliminary Prospectus or prospectus, of
the suspension of the qualification of the Shares for offering or sale in any
jurisdiction, of the initiation or threatening of any proceeding for any such
purpose, or of any request by the Commission for the amending or supplementing
of the Registration Statement or Prospectus or for additional
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information; and, in the event of the issuance of any stop order or of any order
preventing or suspending the use of any Preliminary Prospectus or prospectus or
suspending any such qualification, promptly to use its best efforts to obtain
the withdrawal of such order;
(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Shares for offering and sale under the
securities laws of such jurisdictions as you may request and to comply with such
laws so as to permit the continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the distribution of
the Shares, provided that in connection therewith the Company shall not be
required to qualify as a foreign corporation or to file a general consent to
service of process in any jurisdiction;
(c) Prior to 12:00 noon, New York City time, on the New York
Business Day next succeeding the date of this Agreement and from time to time,
to furnish the Underwriters with written and electronic copies of the Prospectus
in New York City in such quantities as you may reasonably request, and, if the
delivery of a prospectus is required at any time prior to the expiration of nine
months after the time of issue of the Prospectus in connection with the offering
or sale of the Shares and if at such time any event shall have occurred as a
result of which the Prospectus as then amended or supplemented would include an
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in the light of the circumstances under
which they were made when such Prospectus is delivered, not misleading, or, if
for any other reason it shall be necessary during such period to amend or
supplement the Prospectus in order to comply with the Act or the Exchange Act,
to notify you and upon your request to file such document and to prepare and
furnish without charge to each Underwriter and to any dealer in securities as
many written and electronic copies as you may from time to time reasonably
request of an amended Prospectus or a supplement to the Prospectus which will
correct such statement or omission or effect such compliance, and in case any
Underwriter is required to deliver a prospectus in connection with sales of any
of the Shares at any time nine months or more after the time of issue of the
Prospectus, upon your request but at the expense of such Underwriter, to prepare
and deliver to such Underwriter as many written and electronic copies as you may
request of an amended or supplemented Prospectus complying with Section 10(a)(3)
of the Act;
(d) To make generally available to its securityholders as soon
as practicable, but in any event not later than eighteen months after the
effective date of the Registration Statement (as defined in Rule 158(c) under
the Act), an earnings statement of the Company and its subsidiaries (which need
not be audited) complying with Section 11(a) of the Act and the rules and
regulations thereunder (including, at the option of the Company, Rule 158);
(e) During the period beginning from the date hereof and
continuing to and including the date 180 days after the date of the Prospectus,
not to offer, sell, contract to sell or otherwise dispose of, except as provided
hereunder any securities of the Company that are substantially similar to the
Shares, including but not limited to any securities that are convertible into or
exchangeable for, or that represent the right to receive, Stock or any such
substantially similar securities (other than pursuant to employee stock option
plans existing on, or upon the conversion or exchange of convertible or
exchangeable securities outstanding as of, the date of this Agreement, and other
than the offer and sale of the Class B Mandatorily Convertible Preferred Stock
of the Company made concurrently with the offering of the Shares pursuant to an
underwriting agreement of even date herewith and any additional shares of Class
B Mandatorily Convertible Preferred Stock of the Company that may be sold
pursuant to such underwriting agreement), without your prior written consent;
9
(f) To furnish or otherwise make available through electronic
means to stockholders as soon as practicable after the end of each fiscal year
an annual report (including a balance sheet and statements of income,
stockholders' equity and cash flows of the Company and its consolidated
subsidiaries certified by independent public accountants) and, as soon as
practicable after the end of each of the first three quarters of each fiscal
year (beginning with the fiscal quarter ending after the effective date of the
Registration Statement), to make available to its stockholders consolidated
summary financial information of the Company and its subsidiaries for such
quarter in reasonable detail;
(g) During a period of five years from the effective date of the
Registration Statement, to furnish to you copies of all reports or other
communications (financial or other) furnished to stockholders, and to deliver to
you (i) as soon as they are available, copies of any reports and financial
statements furnished to or filed with the Commission or any national securities
exchange on which any class of securities of the Company is listed, provided
that the Company shall not be required to furnish or deliver to you any
communications, reports or financial statements that are available through
electronic means; and (ii) such additional non-confidential information
concerning the business and financial condition of the Company as you may from
time to time reasonably request (such financial statements to be on a
consolidated basis to the extent the accounts of the Company and its
subsidiaries are consolidated in reports furnished to its stockholders generally
or to the Commission);
(h) To use the net proceeds received by it from the sale of the
Shares pursuant to this Agreement, from the sale of the Class B Mandatorily
Convertible Preferred Stock pursuant to an underwriting agreement of even date
herewith and from the sale of any additional shares of Class B Mandatorily
Convertible Preferred Stock of the Company that may be sold pursuant to such
underwriting agreement, in the manner specified in the Prospectus under the
caption "Use of Proceeds";
(i) To use its best efforts to list, subject to notice of
issuance, the Shares on the New York Stock Exchange (the "NYSE");
(j) If the Company elects to rely upon Rule 462(b), the Company
shall file a Rule 462(b) Registration Statement with the Commission in
compliance with Rule 462(b) by 10:00 P.M., Washington, D.C. time, on the date of
this Agreement, and the Company shall at the time of filing either pay to the
Commission the filing fee for the Rule 462(b) Registration Statement or give
irrevocable instructions for the payment of such fee pursuant to Rule 111(b)
under the Act; and
(k) Upon request of any Underwriter, to furnish, or cause to be
furnished, to such Underwriter an electronic version of the Company's
trademarks, servicemarks and corporate logo for use on the website, if any,
operated by such Underwriter for the purpose of facilitating the on-line
offering of the Shares (the "LICENSE"); provided, however, that the License
shall be used solely for the purpose described above, is granted without any fee
and may not be assigned or transferred.
6. The Company covenants and agrees with the several Underwriters that
the Company will pay or cause to be paid the following: (i) the fees,
disbursements and expenses of the Company's counsel and accountants in
connection with the registration of the Shares under the Act and all other
expenses in connection with the preparation, printing and filing of the
Registration Statement, any Preliminary Prospectus and the Prospectus and
amendments and supplements thereto and the mailing and delivering of copies
thereof to the Underwriters and dealers; (ii) the cost of printing or producing
any Agreement among Underwriters, this Agreement, the Blue Sky Memorandum,
closing documents (including any compilations thereof) and any other documents
in connection with the
10
offering, purchase, sale and delivery of the Shares; (iii) all expenses in
connection with the qualification of the Shares for offering and sale under
state securities laws as provided in Section 5(b) hereof, including the fees and
disbursements of counsel for the Underwriters in connection with such
qualification and in connection with the Blue Sky survey (such fees and
disbursements not to exceed $5,000) (iv) all fees and expenses in connection
with listing the Shares on the NYSE; (v) the filing fees incident to, and the
reasonable fees and disbursements of counsel for the Underwriters in connection
with, securing any required review by the National Association of Securities
Dealers, Inc. of the terms of the sale of the Shares; (vi) the cost of preparing
stock certificates; (vii) the cost and charges of any transfer agent or
registrar; and (viii) all other costs and expenses incident to the performance
of its obligations hereunder which are not otherwise specifically provided for
in this Section. It is understood, however, that, except as provided in this
Section, and Sections 8 and 11 hereof, the Underwriters will pay all of their
own costs and expenses, including the fees of their counsel, stock transfer
taxes on resale of any of the Shares by them, and any advertising expenses
connected with any offers they may make.
7. The obligations of the Underwriters hereunder, as to the Shares to
be delivered at each Time of Delivery, shall be subject, in their discretion, to
the condition that all representations and warranties and other statements of
the Company herein are, at and as of such Time of Delivery, true and correct,
the condition that the Company shall have performed all of its obligations
hereunder theretofore to be performed, and the following additional conditions:
(a) The Prospectus shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period prescribed
for such filing by the rules and regulations under the Act and in
accordance with Section 5(a) hereof; if the Company has elected to rely
upon Rule 462(b), the Rule 462(b) Registration Statement shall have
become effective by 10:00 P.M., Washington, D.C. time, on the date of
this Agreement; no stop order suspending the effectiveness of the
Registration Statement or any part thereof shall have been issued and
no proceeding for that purpose shall have been initiated or threatened
by the Commission; and all requests for additional information on the
part of the Commission shall have been complied with to your reasonable
satisfaction;
(b) Cravath Swaine & Moore LLP, counsel for the Underwriters,
shall have furnished to you such written opinion or opinions (a draft
of each such opinion is attached as Annex II(a) hereto), dated such
Time of Delivery, with respect to the matters covered in paragraphs
(i), (ii), (iv), (vii) and (ix) of subsection (c) below as well as such
other related matters as you may reasonably request, and such counsel
shall have received such papers and information as they may reasonably
request to enable them to pass upon such matters;
(c) Kirkland & Ellis LLP, counsel for the Company, shall have
furnished to you their written opinion (a draft of such opinion is
attached as Annex II(b) hereto), dated such Time of Delivery, in form
and substance satisfactory to you, to the effect that:
(i) The Company has been duly incorporated and is
existing as a corporation in good standing under the laws of
the State of Delaware, with corporate power to own its
properties and conduct its business as described in the
Prospectus;
(ii) The Company has an authorized capitalization as set
forth in the Prospectus under the caption "Description of
Capital Stock", and all of the issued shares of capital
stock of the Company have been duly authorized and issued
and are fully paid and non-assessable; the issuance of the
Shares to be sold by the Company has been duly authorized
11
and, when appropriate certificates representing such Shares
are duly countersigned by the Company's transfer agent and
registrar and delivered against payment of the agreed
consideration therefor in accordance with the terms of this
Agreement, will be validly issued, fully paid and
nonassessable; and the Shares conform as to legal matters to
the description of the Stock contained in the Prospectus
under the caption "Description of Capital Stock";
(iii) To such counsel's knowledge, no legal or
governmental investigations or proceedings are pending or
threatened to which the Company or any of its subsidiaries
is a party or to which the property or assets of the Company
or any of its subsidiaries is subject (i) that would be
required under Item 103 of Regulation S-K under the Act to
be disclosed in a registration statement or prospectus
delivered at the time of confirmation of the sale of any
offering of securities registered under the Act that are not
described in the Prospectus or (ii) that seeks to restrain,
enjoin or prevent the consummation of or otherwise challenge
the issuance or sale of the Shares or the consummation of
the other transactions contemplated by this Agreement;
(iv) This Agreement has been duly authorized, executed
and delivered by the Company;
(v) The issue and sale of the Shares to be sold by the
Company in accordance with the provisions of this Agreement
and the consummation by the Company of the transactions
herein contemplated will not (i) violate the Certificate of
Incorporation or Bylaws of the Company or any of its
subsidiaries, (ii) constitute a violation by the Company or
any of its subsidiaries of any applicable provisions of any
law, statute, order, rule or regulation (except with respect
to compliance with any disclosure requirement or any
prohibition against fraud or misrepresentation, as to which
such counsel need not express any opinion) or (iii) conflict
with, breach, or result in a default under, any existing
obligation of the Company and its subsidiaries under any of
its Other Specified Agreements (a list of which shall be
attached to such counsel's opinion);
(vi) No consent, approval, authorization, order,
registration or qualification of or with any court or
governmental agency or body is required for the issue and
sale of the Shares or consummation by the Company of the
transactions contemplated by this Agreement, except for the
registration under the Act of the Shares, and such consents,
approvals, authorizations, orders, registrations or
qualifications (i) as may be required under state or foreign
securities or Blue Sky laws in connection with the purchase
and distribution of the Shares by the Underwriters or (ii)
the failure of which to obtain would not, individually or in
the aggregate, have a Material Adverse Effect or materially
impede the ability of the Company to consummate the
transactions contemplated herein or perform its obligations
hereunder;
(vii) The statements set forth in the Prospectus under
the caption "Description of Capital Stock", insofar as they
purport to constitute a summary of the terms of the Stock
and under the caption "Underwriting", insofar as they
purport to describe the provisions of the federal laws of
the United States and documents referred to therein, are
true and correct in all material respects;
(viii)The Company is not an "investment company", as
such term is defined in the Investment Company Act;
12
(ix) Based upon such counsel's participation in
conferences and its review of documents relating to the
transactions contemplated by this Agreement, such counsel's
understanding of applicable law and the experience such
counsel has gained in practice thereunder, and, to the
extent such counsel has considered reasonable and necessary,
relying as to factual matters upon the statements of
officers and other representatives of the Company, such
counsel can advise that nothing has come to its attention
that has caused it to conclude that (i) the Registration
Statement or any further amendment or supplement thereto
made by the Company prior to the date of such opinion (other
than financial statements and related notes and other
financial and accounting data included in the Registration
Statement, as to which such counsel need not express any
advice or opinion) at its effective date and at the date of
such opinion contained an untrue statement of material fact
or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading or (ii) the Prospectus or any further amendment
or supplement thereto made by the Company prior to the date
of such opinion (other than financial statements and related
notes and other financial and accounting data included in
the Registration Statement, as to which such counsel need
not express any advice or opinion) at the date it bears and
at the date of such opinion contained an untrue statement of
material fact or omitted to state a material fact necessary
in order to make the statement therein, in light of the
circumstances under which they were made, not misleading.
Subject to the foregoing, such counsel also advises you that
each of the Registration Statement, as of the effective date
and the date of such opinion, and the Prospectus (other than
financial statements and related notes and other financial
and accounting data included in the Registration Statement,
as to which such counsel need not express any advice or
opinion), as of the date it bears and the date of such
opinion, appeared or appears on its face to be responsive in
all material respect to the requirements of Form S-1; and
(xiii)The Plan of Reorganization of the Reorganizing
Debtors was confirmed on September 9, 2003 and no party has
appealed such confirmation order. Except as provided in the
Plan of Reorganization, all Filed Claims (as defined in the
Plan of Reorganization) against, and Equity Interests (as
defined in the Plan of Reorganization) in, the Reorganizing
Debtors have been discharged in full.
(d) Karl W. Kindig, Assistant Secretary for the Company, shall
have furnished to you his written opinion (a draft of such opinion is
attached as Annex II(c) hereto), dated such Time of Delivery, in form
and substance satisfactory to you, to the effect that:
(i) The Company has been duly qualified as a foreign
corporation for the transaction of business and is in good
standing under the laws of each other jurisdiction in which
it owns or leases properties or conducts any business so as
to require such qualification, except to the extent that
such failure to qualify would not, individually or in the
aggregate, have a Material Adverse Effect (such counsel
being entitled to rely in respect of the opinion in this
clause upon opinions of local counsel and in respect of
matters of fact upon certificates of officers of the
Company, provided that such counsel shall state that they
have no reason to believe such reliance is unwarranted);
13
(ii) Each material subsidiary of the Company has been
duly incorporated or organized, as the case may be, and is
validly existing as a corporation or limited liability
company, as the case may be, in good standing under the laws
of its jurisdiction of incorporation or organization, as the
case may be; and all of the issued shares of capital stock
of each such subsidiary have been duly and validly
authorized and issued, are fully paid and non-assessable,
and (except for directors' qualifying shares) are owned
directly or indirectly by the Company and, to such counsel's
knowledge, free and clear of all liens, encumbrances,
equities or claims, except for liens, encumbrances, equities
or claims that exist pursuant to that certain Credit
Agreement dated as of September 10, 2003 among the Company,
Bank of America, N.A., as agent and the other financial
institutions party thereto (the "Credit Agreement") (such
counsel being entitled to rely in respect of the opinion in
this clause upon opinions of local counsel and in respect to
matters of fact upon certificates of officers of the Company
or its subsidiaries, provided that such counsel shall state
that they have no reason to believe such reliance is
unwarranted);
(iii) To such counsel's knowledge and other than as set
forth in the Prospectus, there are no legal or governmental
proceedings pending to which the Company, any of its
subsidiaries or any of its directors, officers or employees
is a party or of which any property of the Company or any of
its subsidiaries is the subject which could reasonably be
expected to have, individually or in the aggregate, a
Material Adverse Effect; and, to such counsel's knowledge,
no such proceedings are threatened or contemplated by
governmental authorities or threatened by others;
(iv) Neither the Company nor any of its subsidiaries is
(A) in violation of its Certificate of Incorporation or
By-laws or (B) in default in the performance or observance
of any material obligation, agreement, covenant or condition
contained in any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which
it is a party or by which it or any of its properties may be
bound, except, with respect to clause (B), for such defaults
that would not, individually or in the aggregate, have a
Material Adverse Effect;
(v) The statements set forth in the Prospectus under
the caption "Business - Government Regulation", insofar as
they purport to describe the provisions of the laws and
documents referred to therein, are true and correct in all
material respects;
(vi) Each of the Company and its subsidiaries has all
necessary Consents of and from, and has made all Filings
with, all insurance regulatory authorities, all Federal,
state, local and other governmental authorities, all
self-regulatory organizations and all courts and other
tribunals, necessary to own, lease, license and use its
properties and assets and to conduct its business in the
manner described in the Prospectus, except where the failure
to have such Consents or to make such Filings would not,
individually or in the aggregate, have a Material Adverse
Effect; all such Consents and Filings are in full force and
effect, the Company and its subsidiaries are in compliance
with such Consents and neither the Company nor any of its
subsidiaries has received any notice of any inquiry,
investigation or proceeding that would reasonably be
expected to result in the suspension, revocation or
limitation of any such Consent or otherwise impose any
limitation on the conduct of the business of the Company or
any of its respective subsidiaries, except as set forth in
the Prospectus or any such failure to be in full force and
effect, failure to be
14
in compliance with, suspension, revocation or limitation
which would not, individually or in the aggregate, have a
Material Adverse Effect; the Company and each of it
subsidiaries are in compliance with, and conducts its
businesses in conformity with, all applicable insurance laws
and regulations, except where the failure to so comply or
conform would not have a Material Adverse Effect; and
(vii) The Registration Statement and the Prospectus and
any further amendments and supplements thereto made by the
Company prior to such Time of Delivery (other than the
financial statements and related schedules therein, as to
which such counsel need express no opinion) comply as to
form in all material respects with the requirements of the
Act and the rules and regulations thereunder; although such
counsel does not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the
Registration Statement or the Prospectus, except for those
referred to in the opinion in subsection (iii) of this
section 7(d), such counsel has no reason to believe that, as
of its effective date, the Registration Statement or any
further amendment thereto made by the Company prior to such
Time of Delivery (other than the financial statements and
related schedules therein, as to which such counsel need
express no opinion) contained an untrue statement of a
material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements
therein not misleading or that, as of its date, the
Prospectus or any further amendment or supplement thereto
made by the Company prior to such Time of Delivery (other
than the financial statements and related schedules therein,
as to which such counsel need express no opinion) contained
an untrue statement of a material fact or omitted to state a
material fact necessary to make the statements therein, in
the light of the circumstances under which they were made,
not misleading or that, as of such Time of Delivery, either
the Registration Statement or the Prospectus or any further
amendment or supplement thereto made by the Company prior to
such Time of Delivery (other than the financial statements
and related schedules therein, as to which such counsel need
express no opinion) contains an untrue statement of a
material fact or omits to state a material fact necessary to
make the statements therein, in the light of the
circumstances under which they were made, not misleading;
and such counsel does not know of any amendment to the
Registration Statement required to be filed or of any
contracts or other documents of a character required to be
filed as an exhibit to the Registration Statement or
required to be described in the Registration Statement or
the Prospectus which are not filed or described as required;
(e) On the date of the Prospectus at a time prior to the
execution of this Agreement, at 9:30 a.m., New York City time, on the
effective date of any post-effective amendment to the Registration
Statement filed subsequent to the date of this Agreement and also at
each Time of Delivery, PricewaterhouseCoopers LLP shall have furnished
to you a letter or letters, dated the respective dates of delivery
thereof, in form and substance satisfactory to you, to the effect set
forth in Annex I hereto;
(f) (i) Neither the Company nor any of its subsidiaries shall
have sustained since the date of the latest audited financial
statements included in the Prospectus any loss or interference with its
business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus, and (ii) since the
15
respective dates as of which information is given in the Prospectus
there shall not have been any change in the capital stock or long-term
debt of the Company or any of its subsidiaries or any change, or any
development involving a prospective change, in or affecting the general
affairs, management, financial position, stockholders' equity or
results of operations of the Company and its subsidiaries, otherwise
than as set forth or contemplated in the Prospectus, the effect of
which, in any such case described in clause (i) or (ii), is in the
judgment of the Representatives so material and adverse as to make it
impracticable or inadvisable to proceed with the public offering or the
delivery of the Shares being delivered at such Time of Delivery on the
terms and in the manner contemplated in the Prospectus;
(g) On or after the date hereof (i) no downgrading shall have
occurred in the rating accorded the Company's debt securities or
preferred stock or the Company's financial strength or claims paying
ability by any "nationally recognized statistical rating organization",
as that term is defined by the Commission for purposes of Rule
436(g)(2) under the Act, and (ii) no such organization shall have
publicly announced that it has under surveillance or review, with
possible negative implications, its rating of any of the Company's debt
securities or preferred stock or the Company's financial strength or
claims paying ability;
(h) On or after the date hereof there shall not have occurred any
of the following: (i) a suspension or material limitation in trading in
securities generally on the NYSE; (ii) a suspension or material
limitation in trading in the Company's securities on the NYSE; (iii) a
general moratorium on commercial banking activities declared by either
Federal or New York State authorities or a material disruption in
commercial banking or securities settlement or clearance services in
the United States; (iv) the outbreak or escalation of hostilities
involving the United States or the declaration by the United States of
a national emergency or war or (v) the occurrence of any other calamity
or crisis or any change in financial, political or economic conditions
in the United States or elsewhere, if the effect of any such event
specified in clause (iv) or (v) in the judgment of the Representatives
makes it impracticable or inadvisable to proceed with the public
offering or the delivery of the Shares being delivered at such Time of
Delivery on the terms and in the manner contemplated in the Prospectus;
(i) The Shares to be sold at such Time of Delivery shall have
been duly listed, subject to notice of issuance, on the NYSE;
(j) The Company has obtained and delivered to the Underwriters
executed copies of an agreement from each director and officer of the
Company, substantially to the effect set forth in Subsection 5(e)
hereof in form and substance satisfactory to you;
(k) The Company shall have complied with the provisions of
Section 5(c) hereof with respect to the furnishing of prospectuses on
the New York Business Day next succeeding the date of this Agreement;
and
(l) The Company shall have furnished or caused to be furnished to
you at such Time of Delivery certificates of officers of the Company
satisfactory to you as to the accuracy of the representations and
warranties of the Company herein at and as of such Time of Delivery, as
to the performance by the Company of all of its obligations hereunder
to be performed at or prior to such Time of Delivery, as to the matters
set forth in subsections (a) and (e) of this Section and as to such
other matters as you may reasonably request.
8. (a) The Company will indemnify and hold harmless each Underwriter
against any losses, claims, damages or liabilities, joint or several, to which
such Underwriter may become subject,
16
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Registration Statement or the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse each Underwriter for any legal or other expenses reasonably incurred
by such Underwriter in connection with investigating or defending any such
action or claim as such expenses are incurred; provided, however, that the
Company shall not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in any Preliminary
Prospectus, the Registration Statement or the Prospectus or any such amendment
or supplement in reliance upon and in conformity with written information
furnished to the Company by any Underwriter through the Representatives
expressly for use therein.
(b) Each Underwriter will indemnify and hold harmless the Company
against any losses, claims, damages or liabilities to which the Company may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus, the Registration Statement or the
Prospectus, or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in any
Preliminary Prospectus, the Registration Statement or the Prospectus or any such
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by such Underwriter through the
Representatives expressly for use therein; and will reimburse the Company for
any legal or other expenses reasonably incurred by the Company in connection
with investigating or defending any such action or claim as such expenses are
incurred.
(c) Promptly after receipt by an indemnified party under subsection (a)
or (b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party shall
not relieve it from any liability which it may have to any indemnified party
otherwise than under such subsection. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party), and,
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party under such subsection for any legal expenses of
other counsel or any other expenses, in each case subsequently incurred by such
indemnified party, in connection with the defense thereof other than reasonable
costs of investigation. No indemnifying party shall, without the written consent
of the indemnified party, effect the settlement or compromise of, or consent to
the entry of any judgment with respect to, any pending or threatened action or
claim in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified party is an actual or potential party
to such action or claim) unless such settlement, compromise or judgment (i)
includes an unconditional release of the indemnified party from all liability
arising out of such action or claim and
17
(ii) does not include a statement as to or an admission of fault, culpability or
a failure to act, by or on behalf of any indemnified party.
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the Underwriters
on the other from the offering of the Shares. If, however, the allocation
provided by the immediately preceding sentence is not permitted by applicable
law or if the indemnified party failed to give the notice required under
subsection (c) above, then each indemnifying party shall contribute to such
amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company on the one hand and the Underwriters on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities (or actions in respect thereof), as well as any
other relevant equitable considerations. The relative benefits received by the
Company on the one hand and the Underwriters on the other shall be deemed to be
in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company bear to the total underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table on the cover page of the Prospectus. The relative fault shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company on the one hand
or the Underwriters on the other and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The Company and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this subsection (d) were determined by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to above in this subsection (d). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to above
in this subsection (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
subsection (d), no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Shares underwritten
by it and distributed to the public were offered to the public exceeds the
amount of any damages which such Underwriter has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Underwriters'
obligations in this subsection (d) to contribute are several in proportion to
their respective underwriting obligations and not joint.
(e) The obligations of the Company under this Section 8 shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls any
Underwriter within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, and each affiliate of any Underwriter within the
meaning of Rule 405 under the Act; and the obligations of the Underwriters under
this Section 8 shall be in addition to any liability which the respective
Underwriters may otherwise have and shall extend,
18
upon the same terms and conditions, to each officer and director of the Company
and to each person, if any, who controls the Company within the meaning of the
Act.
(f) The Company will indemnify and hold harmless each Underwriter
against any losses, claims, damages or liabilities, joint or several, to which
such Underwriter may become subject, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
failure or alleged failure by the Company to comply with the terms of the Common
Stock Registration Rights Agreement or the Class A Preferred Stock Registration
Rights Agreement in connection with the transactions contemplated by this
Agreement or any advice given by the Representatives or action taken by the
Company or Representatives pursuant to Section 2.4 of the Common Stock
Registration Rights Agreement or the Class A Preferred Stock Registration Rights
Agreement in connection with the transactions contemplated by this Agreement.
9. (a) If any Underwriter shall default in its obligation to purchase
the Shares which it has agreed to purchase hereunder at a Time of Delivery, you
may in your discretion arrange for you or another party or other parties to
purchase such Shares on the terms contained herein. If within thirty-six hours
after such default by any Underwriter you do not arrange for the purchase of
such Shares, then the Company shall be entitled to a further period of
thirty-six hours within which to procure another party or other parties
satisfactory to you to purchase such Shares on such terms. In the event that,
within the respective prescribed periods, you notify the Company that you have
so arranged for the purchase of such Shares, or the Company notifies you that it
has so arranged for the purchase of such Shares, you or the Company shall have
the right to postpone such Time of Delivery for a period of not more than seven
days, in order to effect whatever changes may thereby be made necessary in the
Registration Statement or the Prospectus, or in any other documents or
arrangements, and the Company agrees to file promptly any amendments to the
Registration Statement or the Prospectus which in your opinion may thereby be
made necessary. The term "Underwriter" as used in this Agreement shall include
any person substituted under this Section with like effect as if such person had
originally been a party to this Agreement with respect to such Shares.
(b) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters by you and the Company as
provided in subsection (a) above, the aggregate number of such Shares which
remains unpurchased does not exceed one-eleventh of the aggregate number of all
the Shares to be purchased at such Time of Delivery, then the Company shall have
the right to require each non-defaulting Underwriter to purchase the number of
shares which such Underwriter agreed to purchase hereunder at such Time of
Delivery and, in addition, to require each non-defaulting Underwriter to
purchase its pro rata share (based on the number of Shares which such
Underwriter agreed to purchase hereunder) of the Shares of such defaulting
Underwriter or Underwriters for which such arrangements have not been made; but
nothing herein shall relieve a defaulting Underwriter from liability for its
default.
(c) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters by you and the Company as
provided in subsection (a) above, the aggregate number of such Shares which
remains unpurchased exceeds one-eleventh of the aggregate number of all the
Shares to be purchased at such Time of Delivery, or if the Company shall not
exercise the right described in subsection (b) above to require non-defaulting
Underwriters to purchase Shares of a defaulting Underwriter or Underwriters,
then this Agreement (or, with respect to the Second Time of Delivery, the
obligations of the Underwriters to purchase and of the Company to sell the
Optional Shares) shall thereupon terminate, without liability on the part of any
non-defaulting Underwriter or the Company, except for the expenses to be borne
by the Company and the
19
Underwriters as provided in Section 6 hereof and the indemnity and contribution
agreements in Section 8 hereof; but nothing herein shall relieve a defaulting
Underwriter from liability for its default.
10. The respective indemnities, agreements, representations, warranties
and other statements of the Company and the several Underwriters, as set forth
in this Agreement or made by or on behalf of them, respectively, pursuant to
this Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of any Underwriter or any controlling person of any Underwriter, or the Company,
or any officer or director or controlling person of the Company, and shall
survive delivery of and payment for the Shares.
11. If this Agreement shall be terminated pursuant to Section 9 hereof,
the Company shall not then be under any liability to any Underwriter except as
provided in Sections 6 and 8 hereof; but, if for any other reason, any Shares
are not delivered by or on behalf of the Company as provided herein, the Company
will reimburse the Underwriters through you for all out-of-pocket expenses
approved in writing by you, including fees and disbursements of counsel,
reasonably incurred by the Underwriters in making preparations for the purchase,
sale and delivery of the Shares not so delivered, but the Company shall then be
under no further liability to any Underwriter except as provided in Sections 6
and 8 hereof.
12. In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Underwriter made or
given by you jointly or by the Representatives.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to you as the representatives at in care of Goldman,
Sachs & Co., 85 Broad Street, New York, New York 10004, Attention: Registration
Department and in care of Morgan Stanley & Co. Incorporated, 1585 Broadway, New
York, New York 10036, Attention: Corporate Finance Execution; and if to the
Company shall be delivered or sent by mail to the address of the Company set
forth in the Registration Statement, Attention: Secretary; provided, however,
that any notice to an Underwriter pursuant to Section 8(c) hereof shall be
delivered or sent by mail, telex or facsimile transmission to such Underwriter
at its address set forth in its Underwriters' Questionnaire, or telex
constituting such Questionnaire, which address will be supplied to the Company
by you upon request. Any such statements, requests, notices or agreements shall
take effect upon receipt thereof.
13. This Agreement shall be binding upon, and inure solely to the
benefit of, the Underwriters, the Company and, to the extent provided in
Sections 8 and 10 hereof, the officers and directors of the Company and each
person who controls the Company or any Underwriter or is an affiliate of any
Underwriter, and their respective heirs, executors, administrators, successors
and assigns, and no other person shall acquire or have any right under or by
virtue of this Agreement. No purchaser of any of the Shares from any Underwriter
shall be deemed a successor or assign by reason merely of such purchase.
14. Time shall be of the essence of this Agreement. As used herein, the
term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
15. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
20
16. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.
If the foregoing is in accordance with your understanding, please sign
and return to us one for the Company and each of the Representatives plus one
for each counsel counterparts hereof, and upon the acceptance hereof by you, on
behalf of each of the Underwriters, this letter and such acceptance hereof shall
constitute a binding agreement between each of the Underwriters and the Company.
It is understood that your acceptance of this letter on behalf of each of the
Underwriters is pursuant to the authority set forth in a form of Agreement among
Underwriters, the form of which shall be submitted to the Company for
examination upon request, but without warranty on your part as to the authority
of the signers thereof.
Very truly yours,
Conseco, Inc.
By: ..................................
Name:
Title:
Accepted as of the date hereof:
Goldman, Sachs & Co.
Morgan Stanley & Co. Incorporated
......................................
(Goldman, Sachs & Co.)
Morgan Stanley & Co. Incorporated
by:.............................
Name:
Title:
As Representatives on behalf of each of the Underwriters
21
SCHEDULE I
NUMBER OF OPTIONAL
SHARES TO BE
TOTAL NUMBER OF PURCHASED IF
FIRM SHARES MAXIMUM OPTION
UNDERWRITER TO BE PURCHASED EXERCISED
Goldman, Sachs & Co.......................
Morgan Stanley & Co. Incorporated.........
Banc of America Securities LLC............
Credit Suisse First Boston LLC
Deutsche Bank Securities Inc.
J.P. Morgan Securities Inc.
Lazard Freres & Co. LLC
Advest, Inc.
Keefe, Bruyette & Woods, Inc.
---------------- ------------------
==================
==================
Total.................================ ==================
22
ANNEX I
FORM OF COMFORT LETTER
Pursuant to Section 7(e) of the Underwriting Agreement, the accountants
shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with
respect to the Company, including its predecessor, Conseco, Inc., an
Indiana corporation, and its subsidiaries within the meaning of the Act
and the applicable published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any
supplementary financial information and schedules (and, if applicable,
financial forecasts and/or pro forma financial information) examined by
them and included in the Registration Statement or the Prospectus
comply as to form in all material respects with the applicable
accounting requirements of the Act or the Exchange Act, as applicable,
and the related published rules and regulations thereunder; and, if
applicable, they have made a review in accordance with standards
established by the American Institute of Certified Public Accountants
of the consolidated interim financial statements, selected financial
data, pro forma financial information, financial forecasts and/or
condensed financial statements derived from audited financial
statements of the Company for the periods specified in such letter, as
indicated in their reports thereon, copies of which have been furnished
to the Representatives;
(iii) The unaudited selected financial information with respect
to the consolidated results of operations and financial position of the
Company for the five most recent fiscal years included in the
Prospectus and included in Item 6 of the Company's Annual Report on
Form 10-K for the most recent fiscal year agrees with the corresponding
amounts (after restatement where applicable) in the audited
consolidated financial statements for such five fiscal years which were
included in the Company's Annual Reports on Form 10-K for such fiscal
years;
(iv) They have compared the information in the Prospectus under
selected captions with the disclosure requirements of Regulation S-K
and on the basis of limited procedures specified in such letter nothing
came to their attention as a result of the foregoing procedures that
caused them to believe that this information does not conform in all
material respects with the disclosure requirements of Items 301, 302,
402 and 503(d), respectively, of Regulation S-K;
(v) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and other
information referred to below, a reading of the latest available
interim financial statements of the Company and its subsidiaries,
inspection of the minute books of the Company and its subsidiaries
since the date of the latest audited financial statements included in
the Prospectus, inquiries of officials of the Company and its
subsidiaries responsible for financial and accounting matters and such
other inquiries and procedures as may be specified in such letter,
nothing came to their attention that caused them to believe that:
(A) any unaudited pro forma consolidated condensed
financial statements, if any, included in the Prospectus do
not comply as to form in all material respects with the
applicable accounting requirements of the Act and the
published rules and regulations thereunder or the pro forma
adjustments have not been properly applied to the historical
amounts in the compilation of those statements;
(B) as of a specified date not more than five days
prior to the date of such letter, there have been any
changes in the consolidated capital stock (other than
issuances of capital stock upon exercise of options and
stock appreciation rights, upon earn-outs of performance
shares and upon conversions of convertible securities, in
each case which were outstanding on the date of the latest
balance sheet included in the Prospectus) or any increase in
the consolidated long-term debt of the Company and its
subsidiaries, or any decreases in consolidated net current
assets or stockholders' equity or other items specified by
the Representatives, or any increases in any items specified
by the Representatives, in each case as compared with
amounts shown in the latest balance sheet included in the
Prospectus, except in each case for changes, increases or
decreases which are described in such letter; and
(C) for the period from the date of the latest
financial statements included in the Prospectus to the
specified date referred to in clause (B) there were any
decreases in consolidated net revenues or operating profit
or the total or per share amounts of consolidated net income
or other items specified by the Representatives, or any
increases in any items specified by the Representatives, in
each case as compared with the comparable period of the
preceding year and with any other period of corresponding
length specified by the Representatives, except in each case
for increases or decreases which the Prospectus discloses
have occurred or may occur or which are described in such
letter; and
(vi) In addition to the examination referred to in their
report(s) included in the Prospectus and the limited procedures,
inspection of minute books, inquiries and other procedures referred to
in paragraphs (iii) and (vi) above, they have carried out certain
specified procedures, not constituting an examination in accordance
with generally accepted auditing standards, with respect to certain
amounts, percentages and financial information specified by the
Representatives which are derived from the general accounting records
of the Company and its subsidiaries, which appear in the Prospectus or
in Part II of, or in exhibits and schedules to, the Registration
Statement specified by the Representatives or in documents incorporated
by reference in the Prospectus specified by the Representatives, and
have compared certain of such amounts, percentages and financial
information with the accounting records of the Company and its
subsidiaries and have found them to be in agreement.
F-2