10-K

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    Form 10-K

[ X ] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
                                  Act of 1934
                 For the fiscal year ended December 31, 2002 or

[   ] Transition report pursuant to Section 13 or 15(d) of the Securities
                     Exchange Act of 1934 [No Fee Required]
                 For the transition period from           to
                                                ----------   ----------

                         Commission file number: 1-9250
                                  Conseco, Inc.
                 (Debtor-In-Possession as of December 17, 2002)
               Indiana                                No. 35-1468632
       ----------------------              -------------------------------------
       State of Incorporation                  IRS Employer Identification No.

    11825 N. Pennsylvania Street
       Carmel, Indiana  46032                         (317) 817-6100
- --------------------------------------                --------------
Address of principal executive offices                   Telephone

           Securities registered pursuant to Section 12(b) of the Act:

                               Title of each class
                               -------------------
                         Common Stock, No Par Value (a)
                        8-1/8% Senior Notes due 2003 (a)
                        10-1/2% Senior Notes due 2004 (a)
                 9.16% Trust Originated Preferred Securities (a)
                 8.70% Trust Originated Preferred Securities (a)
                  9% Trust Originated Preferred Securities (a)
                 9.44% Trust Originated Preferred Securities (a)

- ----------------------

(a)  Prior to August 9, 2002, these securities were listed on the New York Stock
     Exchange ("NYSE"). On August 9, 2002, the NYSE suspended trading of these
     securities and the securities were subsequently removed from listing and
     registration on the NYSE on September 25, 2002.

           Securities registered pursuant to Section 12(g) of the Act:

                           Common Stock, No Par Value

     Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days: Yes [ X ] No [ ]

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

     Indicate by check mark whether the Registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes [X] No[ ]

     At June 28, 2002, the last business day of the Registrant's most recently
completed second fiscal quarter, the aggregate market value of the Registrant's
common equity held by nonaffiliates was approximately $668,600,000. This
calculation of market value has been made for the purposes of this report only
and should not be considered as an admission or conclusion by the Registrant
that any person is in fact an affiliate of the Registrant.

     Shares of common stock outstanding as of March 28, 2003: 346,007,133

     DOCUMENTS INCORPORATED BY REFERENCE: None.



                                     PART I
                                     ------

ITEM 1.  BUSINESS OF CONSECO.

     Conseco, Inc. ("CNC") is the top tier holding company for our two operating
businesses: insurance and finance. Our insurance business is operated through
subsidiaries owned directly and indirectly by CIHC, Incorporated ("CIHC"), an
intermediate holding company that is controlled by CNC. Our finance business has
been historically operated through Conseco Finance Corp. ("CFC"), a wholly-owned
subsidiary of CIHC, and its subsidiaries. Effective December 17, 2002 (the date
CFC filed a petition for relief under the Bankruptcy Code as further described
below), we began to account for our finance business as a discontinued
operation. Our subsidiaries operate throughout the United States. We sometimes
collectively refer to CNC, together with its consolidated subsidiaries, as "we,"
"Conseco" or the "Company."

     Our insurance subsidiaries develop, market and administer supplemental
health insurance, annuity, individual life insurance and other insurance
products. Our finance business has historically provided a variety of finance
products including manufactured housing and floor plan loans, home equity
mortgages, home improvement and consumer product loans and private label credit
cards.

     PROCEEDINGS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE

     On December 17, 2002 (the "Petition Date"), CNC, CIHC, CTIHC, Inc. and
Partners Health Group, Inc. (collectively, the "Debtors") filed voluntary
petitions for reorganization under Chapter 11 of Title 11 of the United States
Bankruptcy Code (the "Bankruptcy Code") in the United States Bankruptcy Court
(the "Bankruptcy Court") for the Northern District of Illinois. The following
discussion provides general background information regarding the Debtors'
Chapter 11 cases, but is not intended to be a comprehensive summary. For
additional information regarding the effect of these cases on the Debtors,
readers of this report should refer to the Bankruptcy Code, the Second Amended
Joint Plan of Reorganization (the "Plan"), and the Second Amended Disclosure
Statement approved by the Bankruptcy Court on March 18, 2003 (the "Disclosure
Statement"). The Plan and Disclosure Statement were filed with the Securities
and Exchange Commission (the "SEC") on March 21, 2003 as exhibits to CNC's
Current Report on Form 8-K dated March 18, 2003. The Debtors are currently
operating their business as debtors-in-possession pursuant to the Bankruptcy
Code. As debtors-in-possession, the Debtors are authorized to continue to
operate as ongoing businesses, but may not engage in transactions outside the
ordinary course of business without approval of the Bankruptcy Court, after
notice and an opportunity for a hearing. The Company's insurance subsidiaries
are separate legal entities and are not included in the petitions filed by the
Debtors.

     CFC and Conseco Finance Servicing Corp. also filed petitions under the
Bankruptcy Code with the Bankruptcy Court on the Petition Date. In addition, on
February 3, 2003, the following subsidiaries of CFC filed petitions under the
Bankruptcy Code with the Bankruptcy Court: Conseco Finance Corp. - Alabama,
Conseco Finance Credit Corp., Conseco Finance Consumer Discount Company, Conseco
Finance Canada Holding Company, Conseco Finance Canada Company, Conseco Finance
Loan Company, Rice Park Properties Corporation, Landmark Manufactured Housing,
Inc., Conseco Finance Net Interest Margin Finance Corp. I, Conseco Finance Net
Interest Margin Finance Corp. II, Green Tree Finance Corp. - Two, Green Tree
Floorplan Funding Corp., Conseco Agency of Nevada, Inc., Conseco Agency of New
York, Inc., Conseco Agency, Inc., Conseco Agency of Alabama, Inc., Conseco
Agency of Kentucky, Inc., Crum-Reed General Agency, Inc. The foregoing entities
are referred to as the "Finance Company Debtors." The Finance Company Debtors
filed a separate plan in connection with their bankruptcy proceedings. The
bankruptcy proceedings of the Debtors and the Finance Company Debtors are
referred to as the "Chapter 11 Cases".

     Since commencing operations in 1982, CNC pursued a strategy of growth
through acquisitions. Primarily as a result of these acquisitions and the
funding requirements necessary to operate and expand the acquired businesses,
CNC amassed outstanding indebtedness of approximately $6.0 billion as of June
30, 2002. In 2001 and early 2002, we undertook a series of steps designed to
reduce and extend the maturities of our parent company debt. Notwithstanding
these efforts, the Company's financial position continued to deteriorate,
principally due to our leveraged condition, losses experienced by our finance
business and losses in the value of our investment portfolio.

     As a result of these developments, on August 9, 2002, we announced that we
would seek to fundamentally restructure the Company's capital, and announced
that we had retained legal and financial advisors to assist us in these efforts.
We ultimately decided to seek to reorganize under Chapter 11 of the Bankruptcy
Code.

     Under the Bankruptcy Code, actions to collect prepetition indebtedness, as
well as most pending litigation, are stayed and other contractual obligations
against the Debtors generally may not be enforced. Absent an order of the
Bankruptcy Court, substantially all prepetition liabilities are subject to
settlement under a plan of reorganization to be voted upon by creditors and
other stakeholders and approved by the Bankruptcy Court. On March 18, 2003, the
Bankruptcy Court approved the Debtors' Plan, as summarized in the Disclosure
Statement, as containing adequate information, as such term is defined in
Section 1125 of the Bankruptcy Code, to permit the solicitation of votes from
creditors on whether or not to accept the Plan. The Debtors commenced
solicitation on April 4, 2003.

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The voting record date has been set as March 19, 2003 and the deadline for
returning completed ballots is May 14, 2003. A hearing to consider confirmation
of the Plan is scheduled to begin on May 28, 2003. The Debtors will emerge from
bankruptcy if and when the Plan receives the requisite stakeholder approval and
is approved by the Bankruptcy Court, and all conditions to the consummation of
the Plan, have been satisfied or waived.

     The United States Trustee has appointed a creditors committee representing
the unsecured creditors of the Debtors and a TOPrS committee representing the
claims of the holders of the Company-obligated mandatorily redeemable preferred
securities of subsidiary trusts ("Trust Preferred Securities"). Before the
Petition Date, the Company met with and provided materials to certain
prepetition committees and entered into extensive arms-length negotiations with
committees representing the holders of bank debt and publicly held notes of CNC.
Shortly before the Petition Date, the Company reached a non-binding agreement in
principle with respect to the general terms of a restructuring with certain
prepetition committees. However, there can be no assurance that the appointed
committees will support the Debtors' positions in the bankruptcy proceedings or
approve the Plan. The TOPrS committee has raised certain objections to the Plan
which are summarized in the Disclosure Statement. Disagreements between the
Debtors and the appointed committees could protract the bankruptcy proceedings,
could negatively impact the Company's ability to operate and the results of
those operations during bankruptcy, and could delay the Debtors' emergence from
bankruptcy.

     The Debtors previously filed with the Bankruptcy Court schedules of assets
and liabilities of the Debtors as reflected on our books and records. Subject to
certain limited exceptions, the Bankruptcy Court established a bar date of
February 21, 2003, for all prepetition claims against the Debtors. A bar date is
the date by which claims against the Debtors must be filed if the claimants wish
to receive any distribution in the bankruptcy proceedings. The Debtors notified
all known or potential claimants subject to the February 21, 2003 bar date of
their need to file a proof of claim with the Bankruptcy Court. Approximately
9,000 proofs of claim were filed on or before the February 21, 2003 bar date and
the Company has begun objecting to claims and otherwise reconciling claims that
differ from the Debtors' records. Any differences that cannot be resolved
through negotiations between the Debtors and the claimant will be resolved by
the Bankruptcy Court. Certain creditors have filed claims substantially in
excess of amounts reflected in the Debtors' records. Accordingly, the ultimate
number and amount of allowed claims is not presently known. Similarly, the
ultimate distribution with respect to allowed claims is not presently known.

     We have filed several motions in the Chapter 11 Cases pursuant to which the
Bankruptcy Court has granted us authority or approval with respect to various
items required by the Bankruptcy Code and/or necessary for our reorganization
efforts. We have obtained orders providing for, among other things: (i) payment
of prepetition and postpetition employee compensation and benefits; (ii)
continuing a key-employee retention plan; (iii) obtaining debtor-in-possession
financing for the Finance Company Debtors; and (iv) increasing the amount of the
servicing fee paid to the Finance Company Debtors as servicers of various
manufactured housing securitization trusts.

     Under the priority schedule established by the Bankruptcy Code, certain
postpetition and prepetition liabilities need to be satisfied before unsecured
creditors and holders of CNC's common and preferred stock and Trust Preferred
Securities are entitled to receive any distribution. The Plan (as summarized in
the Disclosure Statement) sets forth the Debtors' proposed treatment of claims
and equity interests. No assurance can be given as to what values, if any, will
be ascribed in the bankruptcy proceedings to each of these constituencies. Our
Plan would result in holders of CNC's common stock and preferred stock (other
than Series F Common-Linked Convertible Preferred Stock ("Series F Preferred
Stock")) receiving no value and the holders of CNC's Trust Preferred Securities
and Series F Preferred Stock receiving little value on account of the
cancellation of their interests. In addition, holders of unsecured claims
against the Debtors would, in most cases, receive less than full recovery for
the cancellation of their interests.

     At this time, it is not possible to predict with certainty the effect of
the Chapter 11 Cases on our business or various creditors, or when we will
emerge from Chapter 11. Our future results depend upon our confirming and
successfully implementing, on a timely basis, a plan of reorganization.

     The consolidated financial statements included in Item 8. "Financial
Statements and Supplementary Data" have been prepared on a going concern basis
which assumes continuity of operations and realization of assets and
satisfaction of liabilities in the ordinary course of business. Our Plan will
materially change amounts reported in the financial statements, which do not
give effect to all adjustments of the carrying value of assets and liabilities
that will be necessary as a consequence of a reorganization under Chapter 11 of
the Bankruptcy Code. The ability of Conseco to continue as a going concern is
predicated upon many issues, including various bankruptcy considerations and
risks related to our business and financial condition. Please refer to Item 7.
"Management's Discussion and Analysis of Results of Operations and Financial
Condition" and Item 8. "Financial Statements and Supplementary Data" for
additional information.

     DISCONTINUED FINANCE BUSINESS - PLANNED SALE OF CFC

     In October 2002, we announced that we had engaged financial advisors to
pursue various alternatives with respect to our finance business and that CNC's
board of directors had approved a plan to sell or seek new investors for our
finance business. On

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December 19, 2002, CFC entered into an Asset Purchase Agreement (the "Asset
Purchase Agreement") with CFN Investment Holdings LLC ("CFN"), an affiliate of
Fortress Investment Group LLC, J.C. Flowers & Co. LLC and Cerberus Capital
Management, L.P., pursuant to which CFC would, subject to the satisfaction of
certain conditions, sell all or substantially all of its assets (the "CFC
Assets") in a sale pursuant to Section 363 of the Bankruptcy Code as part of
CFC's Chapter 11 proceedings, subject to the right of CFN to exclude certain
assets from its purchase. In accordance with Section 363 of the Bankruptcy Code
and the terms of the Asset Purchase Agreement, CFC continued to seek alternative
transactions that would provide greater value to CFC and its creditors than the
transactions contemplated by the Asset Purchase Agreement.

     As a result of the formalization of the plans to sell the finance business
and the filing of petitions under the Bankruptcy Code by CFC and certain of its
subsidiaries, the finance business is being accounted for as a discontinued
operation.

     As part of CFC's efforts to seek alternative transactions that would
provide greater value to CFC, and in accordance with the bidding procedures
order approved by the Bankruptcy Court, CFC conducted an auction for the sale of
its businesses and assets. Potential bidders that submitted bids for the
purchase of the CFC Assets that, by their own terms or aggregated with other
bids, were for more than the purchase price payable under the Asset Purchase
Agreement, plus the amount of the break-up fee of $30 million, plus $5 million
in expense reimbursements, plus the profit sharing rights relating to the
manufactured housing business, were allowed to participate in the auction. The
auction, which commenced on February 28, 2003, promptly adjourned, and was
continued to March 4, 2003, ultimately concluding the morning of March 5, 2003.

     At the auction, CFC, with the assistance of its advisors, analyzed each of
the bids presented and determined that CFN's bid of $970 million in cash, plus
the assumption of certain liabilities, represented the highest and best bid. The
terms of the sale included an option for CFC to sell the assets of Mill Creek
Bank, Inc. ("Mill Creek Bank", formerly known as Conseco Bank, Inc.) to General
Electric Capital Corporation ("GE") for approximately $310 million in cash, plus
certain assumed liabilities, which option, if exercised, would provide CFN with
a credit of $270 million to its $970 million bid.

     On March 6, 2003, CFC received an offer from Berkadia Equity Holdings,
L.L.C. ("Berkadia") that purported to be a bid in the recently concluded
auction. Concurrently therewith, Berkadia filed an objection to the sale that
the Bankruptcy Court heard, and summarily dismissed, on March 7, 2003. After
further negotiations during the March 7-14, 2003 period, CFN and GE
significantly increased the amount of cash to be paid for the CFC Assets.
Ultimately, each of the major constituencies, including the CFC Committee, the
Ad Hoc Securitization Holders' Committee, U.S. Bank as securitization trustee
for the certificate holders of certain lower-rated securities that are senior in
payment priority to the interest-only securities (the "B-2 securities"), and
Federal National Mortgage Association, as a major B-2 securities certificate
holder, agreed to support the sale of CFC Assets to CFN and GE. The total value
to be received as part of the transactions with CFN and GE upon closing is
expected to be approximately $1.3 billion, representing approximately $1.1
billion in cash and approximately $200 million in assumed liabilities, subject
to certain purchase price adjustments. On March 14, 2003, the Bankruptcy Court
entered orders approving the terms of the sale of the CFC Assets free and clear
of all liens to each of CFN and GE. The closing of the sale of the CFC Assets is
subject to various closing conditions, but is currently expected to occur in the
second quarter of 2003.

     Overall, CFC is seeking to maximize the value obtainable from all
restructuring transactions it contemplates as part of its Chapter 11 filing.
However, there can be no assurance that any such transaction will be completed.
Moreover, if such a transaction is completed, no proceeds will be available to
satisfy any creditors, other than creditors of the Finance Company Debtors or
parties with a security interest in the Finance Company Debtors' assets.

     OTHER INFORMATION

     During the third quarter of 2002, Conseco entered into an agreement to sell
Conseco Variable Insurance Company ("CVIC"), one of its wholly-owned
subsidiaries and the primary writer of its variable annuity products. The sale
was completed in October 2002. The operating results of CVIC have been reported
as a discontinued operation in all periods presented in the accompanying
consolidated statement of operations. See the note to the consolidated financial
statements entitled "Financial Information Regarding CVIC."

     During 2001, we stopped renewing a large portion of our major medical lines
of business. These lines of business are in what we refer to as "run-off."
Unless otherwise noted, the collected premium information provided in Item 1
excludes amounts related to the business of CVIC that was sold and the major
medical lines of business that are no longer being sold and are not being
renewed when the contractual terms of the existing insurance policies expire.

     CNC was organized in 1979 as an Indiana corporation and commenced
operations in 1982. Our executive offices are located at 11825 N. Pennsylvania
Street, Carmel, Indiana 46032, and our telephone number is (317) 817-6100. Our
annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on
Form 8-K and amendments to those reports filed or furnished pursuant to Section
13(a) or 15(d) of the Securities Exchange Act are available free of charge on
our web site at www.conseco.com as soon as

                                       4

reasonably practicable after they are electronically filed with, or furnished
to, the SEC. These filings are also available to the public on the SEC's website
at www.sec.gov. In addition, the public may read and copy any document we file
at the SEC's Public Reference Room located at 450 Fifth Street, NW, Washington,
D.C. 20549. The public may obtain information on the operation of the Public
Reference Room by calling the SEC at 1-800-SEC-0330.

     Data in Item 1 are provided as of December 31, 2002, or for the year then
ended (as the context implies), unless otherwise indicated.

     MARKETING AND DISTRIBUTION

     Insurance

     Our insurance subsidiaries develop, market and administer supplemental
health insurance, annuity, individual life insurance and other insurance
products. We sell these products through three primary distribution channels:
career agents, professional independent producers (many of whom sell one or more
of our product lines exclusively) and direct marketing. We had over $4.8 billion
of annual premium and asset accumulation product collections during 2002 and
$5.0 billion of collections during 2001.

     Our insurance subsidiaries collectively hold licenses to market our
insurance products in all fifty states, the District of Columbia, and certain
protectorates of the United States. Sales to residents of the following states
accounted for at least 5 percent of our 2002 collected premiums: Florida (8.5
percent), California (7.5 percent), Illinois (7.3 percent), Texas (7.1 percent)
and Michigan (5.3 percent).

     We believe that people purchase most types of life insurance, accident and
health insurance and annuity products only after being contacted and solicited
by an insurance agent. Accordingly, the success of our distribution system is
largely dependent on our ability to attract and retain agents who are
experienced and highly motivated. A description of the primary distribution
channels is as follows:

     Professional Independent Producers. This distribution channel consists of a
general agency and insurance brokerage distribution system comprised of
independent licensed agents doing business in all fifty states, the District of
Columbia, and certain protectorates of the United States. In 2002, this channel
accounted for $2,430.2 million, or 51 percent, of our total collected premiums.
If a significant number of agents changed to other providers, it would have a
material adverse effect on our business.

     Professional independent producers are a diverse network of independent
agents, insurance brokers and marketing organizations. Marketing companies
typically recruit agents for Conseco by advertising our products and commission
structure through direct mail advertising or through seminars for insurance
agents and brokers. These organizations bear most of the costs incurred in
marketing our products. We compensate the marketing organizations by paying them
a percentage of the commissions earned on new sales generated by the agents
recruited by such organizations. Certain of these marketing organizations are
specialty organizations that have a marketing expertise or a distribution system
relating to a particular product, such as flexible-premium annuities for
educators. During 1999 and 2000, Conseco purchased four organizations that
specialize in marketing and distributing supplemental health products. In 2002,
these four organizations accounted for $244.9 million, or 5.1 percent, of our
total collected premiums.

     We have recently chosen to emphasize the sale of specified disease and
Medicare supplement insurance policies through this distribution channel. We are
de-emphasizing annuity and life insurance sales and eliminating long-term care
insurance sales through this channel of distribution.

     Career Agents. This agency force of approximately 3,800 agents working from
149 branch offices, permits one-on-one contacts with potential policyholders and
promotes strong personal relationships with existing policyholders. The career
agents sell primarily Medicare supplement and long-term care insurance policies,
senior life insurance and annuities. In 2002, this distribution channel
accounted for $1,939.1 million, or 41 percent, of our total collected premiums.
These agents sell only Conseco policies and typically visit the prospective
policyholder's home to conduct personalized "kitchen-table" sales presentations.
After the sale of an insurance policy, the agent serves as a contact person for
policyholder questions, claims assistance and additional insurance needs.

     Direct Marketing. This distribution channel is engaged primarily in the
sale of "graded benefit life" insurance policies. In 2002, this channel
accounted for $100.3 million, or 2 percent, of our total collected premiums.
During 2000, we reacquired the name "Colonial Penn" (the former brand name these
products were sold under prior to our acquisition of this business), which we
now use to market these products.

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     Finance

     As a result of the formalization of the plans to sell the finance business
and the filing of petitions under the Bankruptcy Code for CFC and certain of its
subsidiaries, the finance business is being accounted for as a discontinued
operation.

     CFC's finance business has historically provided a variety of finance
products to borrowers throughout the United States. These products included
manufactured housing and floor plan loans, home equity mortgages, home
improvement and consumer product loans and private label credit cards. At
December 31, 2002, CFC had managed receivables of $35.3 billion. Originations to
customers in the following states accounted for at least 5 percent of our 2002
originations: California (8.1 percent), Texas (6.9 percent), Minnesota (6.5
percent), Illinois (5.7 percent), Florida (5.5 percent) and North Carolina (5.0
percent). Unless otherwise noted, references to loans CFC has made may include
the purchase by CFC of credit contracts between dealers and buyers.

     During 2002, 26 percent of CFC's finance products came indirectly from
customers through intermediary channels such as dealers, contractors, retailers
and correspondents. The remaining products were marketed directly to CFC's
customers through its regional offices and service centers. A description of the
primary distribution channels is as follows:

     Dealers, Contractors, Retailers and Correspondents. Manufactured housing,
home improvement and home equity receivables are purchased from and originated
by selected dealers and contractors after being underwritten and analyzed via
one of CFC's automated credit scoring systems at one of its regional service
centers. During 2002, these marketing channels accounted for the following
percentages of total loan originations: 90 percent of manufactured housing, 97
percent of home improvement and 8 percent of home equity.

     Regional Service Centers, Retail Satellite Offices and Telemarketing
Center. CFC has historically marketed and originated manufactured housing loans
through 33 regional offices and 3 origination and processing centers. CFC
originated home equity loans through a system of 88 retail satellite offices and
3 regional centers. In March 2003, CFC discontinued the origination of home
equity loans and closed or will be closing all of its facilities that were
dedicated to the home equity business. CFC also marketed private label retail
credit products through selected retailers and processed the contracts through
Mill Creek Bank, a Utah industrial loan company, and through Green Tree Retail
Services Bank, Inc. ("Retail Bank"), a South Dakota limited purpose credit card
bank, both of which are subsidiaries of CFC. CFC also utilized direct mail to
originate home improvement loans and home equity loans. During 2002, these
marketing channels accounted for the following percentages of total loan
originations: 10 percent of manufactured housing, 3 percent of home improvement,
92 percent of home equity and 100 percent of retail credit contracts.

     Insurance Products

     Supplemental Health

     Supplemental health products include Medicare supplement, long-term care
and specified-disease insurance products distributed through our career agency
force and professional independent producers. During 2002, we collected Medicare
supplement premiums of $1,033.8 million, long-term care premiums of $917.4
million, specified-disease premiums of $368.7 million and other supplemental
health premiums of $104.3 million. Medicare supplement, long-term care,
specified disease and other supplemental health premiums represented 22 percent,
19 percent, 8 percent and 2 percent, respectively, of our total premiums
collected from continuing lines of business in 2002. Sales of certain
supplemental health products are affected by the financial strength ratings
assigned to our insurance subsidiaries by independent rating agencies. See
"Competition" below.

     The following describes the major supplemental health products:

     Medicare supplement. Medicare is a two-part federal health insurance
program for disabled persons and senior citizens (age 65 and older). Part A of
the program provides protection against the costs of hospitalization and related
hospital and skilled nursing home care, subject to an initial deductible,
related coinsurance amounts and specified maximum benefit levels. The deductible
and coinsurance amounts are subject to change each year by the federal
government. Part B of Medicare covers doctor's bills and a number of other
medical costs not covered by Part A, subject to deductible and coinsurance
amounts for "approved" charges.

     Medicare supplement policies provide coverage for many of the medical
expenses which the Medicare program does not cover, such as deductibles,
coinsurance costs (in which the insured and Medicare share the costs of medical
expenses) and specified losses which exceed the federal program's maximum
benefits. Our Medicare supplement plans automatically adjust coverage to reflect
changes in Medicare benefits. In marketing these products, we concentrate on
individuals who have recently become eligible for Medicare by reaching the age
of 65. We offer a higher first-year commission for sales to these policyholders
and competitive premium pricing. Approximately 26 percent of new sales of
Medicare supplement policies are to individuals who are reaching the age of 65.

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     Long-term care. Long-term care products provide coverage, within prescribed
limits, for nursing home, home healthcare, or a combination of both nursing home
and home healthcare expenses. The long-term care plans are sold primarily to
retirees and, to a lesser degree, to older self-employed individuals and others
in middle-income levels.

     Current nursing home care policies cover incurred and daily fixed-dollar
benefits available with an elimination period (which, similar to a deductible,
requires the insured to pay for a certain number of days of nursing home care
before the insurance coverage begins), subject to a maximum benefit. Home
healthcare policies cover the usual and customary charges after a deductible and
are subject to a daily or weekly maximum dollar amount, and an overall benefit
maximum. We monitor the loss experience on our long-term care products and, when
necessary, apply for rate increases in the jurisdictions in which we sell such
products. We depend on regulatory approval to increase our premiums on these
products. If we are unable to raise premiums, it would have a material adverse
effect on our business.

     We have decided to eliminate the sale of new long-term care insurance
products through our professional independent producer distribution channel. We
will continue to sell these products through Bankers Life and Casualty Company.

     Specified-disease products. These policies generally provide fixed or
limited benefits. Cancer insurance and heart/stroke products are guaranteed
renewable individual accident and health insurance policies. Payments under
cancer insurance policies are generally made directly to, or at the direction
of, the policyholder following diagnosis of, or treatment for, a covered type of
cancer. Heart/stroke policies provide for payments directly to the policyholder
for treatment of a covered heart disease, heart attack or stroke. The benefits
provided under the specified-disease policies do not necessarily reflect the
actual cost incurred by the insured as a result of the illness; benefits are not
reduced by any other medical insurance payments made to or on behalf of the
insured.

     Approximately 75 percent of our specified-disease policies inforce (based
on a count of policies) are sold with return of premium or cash value riders.
The return of premium rider generally provides that after a policy has been
inforce for a specified number of years or upon the policyholder reaching a
specified age, the Company will pay to the policyholder, or a beneficiary under
the policy, the aggregate amount of all premiums paid under the policy, without
interest, less the aggregate amount of all claims incurred under the policy.

     Annuities

     Annuity products include equity-indexed annuity, traditional fixed rate
annuity and market value-adjusted annuity products sold through both career
agents and professional independent producers. During 2002, we collected annuity
premiums of $1,092.8 million, or 23 percent of our total premiums collected from
continuing lines of business. We are taking actions to de-emphasize the sale of
annuity products through the professional independent producer distribution
channel. Sales of annuities are affected by the financial strength ratings
assigned to our insurance subsidiaries by independent rating agencies. See
"Competition" below.

     The following describes the major annuity products:

     Equity-indexed annuity products. These products accounted for $220.1
million, or 5 percent, of our total premiums collected in 2002. The accumulation
value of these annuities is credited with interest at an annual minimum
guaranteed average rate over the term of the contract of 3 percent (or,
including the effect of applicable sales loads, a 1.7 percent compound average
interest rate over the term of the contracts), but the annuities provide for
potentially higher returns based on a percentage (the "participation rate") of
the change in the Standard & Poor's Corporation ("S&P") 500 Index during each
year of their term. The Company has the discretionary ability to annually change
the participation rate which currently ranges from 50 percent to 100 percent and
may include a first-year "bonus", similar to the bonus interest described below
for traditional fixed rate annuity products, which generally ranges from 10
percent to 30 percent. The minimum guaranteed values are equal to: (i) 90
percent of premiums collected for annuities for which premiums are received in a
single payment (single premium deferred annuities "SPDAs"), or 75 percent of
first year and 87.5 percent of renewal premiums collected for annuities which
allow for more than one payment (flexible premium deferred annuities "FPDAs");
plus (ii) interest credited on such percentage of the premiums collected at an
annual rate of 3 percent. The annuity provides for penalty-free withdrawals of
up to 10 percent of premium in each year after the first year of the annuity's
term. Other withdrawals from SPDA products are generally subject to a surrender
charge of 9 percent over the eight year contract term at which time the contract
must be renewed or withdrawn. Other withdrawals from FPDA products are subject
to a surrender charge of 12 percent to 20 percent in the first year, declining
1.2 percent to 1.3 percent each year, to zero over a 10 to 15 year period,
depending on issue age. We purchase S&P 500 Index Call Options ("S&P 500 Call
Options") in an effort to hedge potential increases to policyholder benefits
resulting from increases in the S&P 500 Index to which the product's return is
linked.

     Other fixed rate annuity products. These products include SPDAs, FPDAs
(excluding the equity-indexed products) and single-premium immediate annuities
("SPIAs"). These products accounted for $872.7 million, or 18 percent, of our
total collected premiums in 2002. Our SPDAs and FPDAs typically have an interest
rate (the "crediting rate") that is guaranteed by the Company for the first

                                       7

policy year, after which we have the discretionary ability to change the
crediting rate to any rate not below a guaranteed minimum rate. The guaranteed
rate on annuities written recently ranges from 3 percent to 4 percent, and the
rate on all policies inforce ranges from 3 percent to 6 percent. The initial
crediting rate is largely a function of: (i) the interest rate we can earn on
invested assets acquired with the new annuity fund deposits; (ii) the costs
related to marketing and maintaining the annuity products; and (iii) the rates
offered on similar products by our competitors. For subsequent adjustments to
crediting rates, we take into account the yield on our investment portfolio,
annuity surrender assumptions, competitive industry pricing and the crediting
rate history for particular groups of annuity policies with similar
characteristics.

     Approximately 77 percent of our new annuity sales have been "bonus"
products. The initial crediting rate on these products specifies a bonus
crediting rate ranging from 1 percent to 6 percent of the annuity deposit for
the first policy year only. After the first year, the bonus interest portion of
the initial crediting rate is automatically discontinued, and the renewal
crediting rate is established. As of December 31, 2002, crediting rates on our
outstanding traditional annuities were at an average rate, excluding bonuses, of
4.3 percent.

     The policyholder is typically permitted to withdraw all or part of the
premium paid plus the accumulated interest credited to his or her account (the
"accumulation value"), subject in virtually all cases to the assessment of a
surrender charge for withdrawals in excess of specified limits. Most of our
traditional annuities provide for penalty-free withdrawals of up to 10 percent
of the accumulation value each year, subject to limitations. Withdrawals in
excess of allowable penalty-free amounts are assessed a surrender charge during
a penalty period which generally ranges from five to 12 years after the date a
policy is issued. The initial surrender charge is generally 6 percent to 12
percent of the accumulation value and generally decreases by approximately 1 to
2 percentage points per year during the penalty period. Surrender charges are
set at levels to protect the Company from loss on early terminations and to
reduce the likelihood of policyholders terminating their policies during periods
of increasing interest rates. This practice is intended to lengthen the
effective duration of policy liabilities and enable the Company to maintain
profitability on such policies.

     SPIAs accounted for $28.4 million, or .6 percent, of our total collected
premiums in 2002. SPIAs are designed to provide a series of periodic payments
for a fixed period of time or for life, according to the policyholder's choice
at the time of issue. Once the payments begin, the amount, frequency and length
of time for which they are payable are fixed. SPIAs often are purchased by
persons at or near retirement age who desire a steady stream of payments over a
future period of years. The single premium is often the payout from a terminated
annuity contract. The implicit interest rate on SPIAs is based on market
conditions when the policy is issued. The implicit interest rate on the
Company's outstanding SPIAs averaged 6.9 percent at December 31, 2002.

     The Company also offers its multibucket annuity product which provides for
different rates of cash value growth based on the experience of a particular
market strategy. Earnings are credited to this product based on the market
activity of a given strategy, less management fees, and funds may be moved
between cash value strategies. Portfolios available include high-yield bond,
investment-grade bond, convertible bond and guaranteed-rate portfolios. During
2002, this product accounted for $40.0 million, or .8 percent, of our total
collected premiums.

     As described above in "Other Information", in October 2002, we sold CVIC, a
company engaged in the variable annuity business. We no longer offer variable
annuity products.

     Life

     Life products include traditional, universal life and other life insurance
products. These products are currently sold through career agents, professional
independent producers and direct response marketing. During 2002, we collected
life insurance premiums of $637.0 million, or 13 percent, of our total collected
premiums from continuing lines of business. We have decided to take actions that
will de-emphasize new sales of life insurance products through professional
independent producers. These actions include eliminating certain products from
those offered by our insurance company subsidiaries. Sales of certain life
products are affected by the financial strength ratings assigned to our
insurance subsidiaries by independent rating agencies. See "Competition" below.

     Interest-sensitive life products. These products include universal life
products that provide whole life insurance with adjustable rates of return
related to current interest rates. They accounted for $373.3 million, or 7.8
percent, of our total collected premiums in 2002 and are marketed through
professional independent producers and, to a lesser extent, career agents. The
principal differences between universal life products and other
interest-sensitive life insurance products are policy provisions affecting the
amount and timing of premium payments. Universal life policyholders may vary the
frequency and size of their premium payments, and policy benefits may also
fluctuate according to such payments. Premium payments under other
interest-sensitive policies may not be varied by the policyholders, and as a
result, are designed to reduce the administrative costs typically associated
with monitoring universal life premium payments and policy benefits.

                                       8


     Traditional life. These products accounted for $263.7 million, or 5.5
percent, of our total collected premiums in 2002. Traditional life policies,
including whole life, graded benefit life and term life products, are marketed
through professional independent producers, career agents and direct response
marketing. Under whole life policies, the policyholder generally pays a level
premium over an agreed period or the policyholder's lifetime. The annual premium
in a whole life policy is generally higher than the premium for comparable term
insurance coverage in the early years of the policy's life, but is generally
lower than the premium for comparable term insurance coverage in the later years
of the policy's life. These policies, which continue to be marketed by the
Company on a limited basis, combine insurance protection with a savings
component that gradually increases in amount over the life of the policy. The
policyholder may borrow against the savings generally at a rate of interest
lower than that available from other lending sources. The policyholder may also
choose to surrender the policy and receive the accumulated cash value rather
than continuing the insurance protection. Term life products offer pure
insurance protection for a specified period of time - typically 5, 10 or 20
years.

     Traditional life products also include graded benefit life insurance
products. Graded benefit life products accounted for $152.4 million, or 3.2
percent, of our total collected premiums in 2002. Graded benefit life insurance
products are offered on an individual basis primarily to persons age 50 to 80,
principally in face amounts of $350 to $10,000, without medical examination or
evidence of insurability. Premiums are paid as frequently as monthly. Benefits
paid are less than the face amount of the policy during the first two years,
except in cases of accidental death. Graded benefit life policies are marketed
using direct response marketing techniques. New policyholder leads are generated
primarily from television and print advertisements.

     Group Major Medical

     Sales of our group major medical health insurance products are targeted to
self-employed individuals, small business owners, large employers and early
retirees. Various deductible and coinsurance options are available, and most
policies require certain utilization review procedures. The profitability of
this business depends largely on the overall persistency of the business
inforce, claim experience and expense management. During 2001, we decided to
discontinue a large block of major medical business by not renewing these
policies because this business was not profitable. During 2002, we collected
group major medical premiums of $315.6 million.

     Finance Products

     As described in Item 1. "Business of Conseco," we have agreed to sell our
finance business and it is being accounted for as a discontinued operation.

     Manufactured Housing. CFC has historically provided financing for consumer
purchases of manufactured housing. During 2002, CFC originated $1.0 billion of
contracts for manufactured housing purchases, or 14 percent of its total
originations. A manufactured home is a structure, transportable in one or more
sections, designed to be a dwelling with or without a permanent foundation.
Manufactured housing does not include either modular housing (which typically
involves more sections, greater assembly and a separate means of transporting
the sections) or recreational vehicles. At December 31, 2002, CFC's managed
receivables included $23.0 billion of contracts for manufactured housing
purchases, or 65 percent of total managed receivables. On November 25, 2002, CFC
discontinued the origination of manufactured housing loans as a result of
funding constraints and the unprofitable nature of these loans in light of its
financial condition and prevailing market conditions at that time.

     CFC had previously purchased manufactured housing contracts from dealers
located throughout the United States through its regional service centers.
Regional service center personnel solicited dealers in their region. If the
dealer wished to utilize CFC's financing, the dealer completed an application.
Upon approval, a dealer agreement was executed. CFC also originated manufactured
housing installment loan agreements directly with customers. For the year ended
December 31, 2002, 90 percent of CFC's manufactured housing loan originations
were purchased from dealers and 10 percent were originated directly by CFC.

     CFC's manufactured housing contracts are secured by either the manufactured
home or, in the case of land-and-home contracts, by a lien on the manufactured
home and a lien on the real estate where the manufactured home is permanently
affixed. In 2002, approximately 25 percent of CFC's manufactured housing
originations were for land-and-home contracts. Customers who financed their
homes with CFC were required to make a minimum down payment of 5 percent. For
manufactured housing originations, the average loan-to-value ratio was
approximately 90 percent in 2002.

     Customers' credit applications for new manufactured homes were reviewed in
CFC's service centers. If the application met CFC's guidelines, CFC generally
purchased the contract after the customer had moved into the manufactured home.
CFC used a proprietary automated credit scoring system to evaluate manufactured
housing credit applications. The scoring system is statistically based,
quantifying information using variables obtained from customer credit
applications and credit reports. CFC performed monthly audits on samples of new
loan originations to measure adherence to its underwriting policies and
procedures.

                                       9

     Mortgage Services. Products within this category include home equity and
home improvement loans. During 2002, CFC originated $2.5 billion of contracts
for these products, or 35 percent of its total originations. At December 31,
2002, CFC's managed receivables included $8.8 billion of contracts for home
equity and home improvement loans, or 25 percent of total managed receivables.

     CFC originates home equity loans through 88 retail satellite offices and 3
regional centers, and through a network of correspondent and broker originators
throughout the United States. The retail offices are responsible for
originating, processing and funding the loan transaction. Underwriting of the
application is handled through central locations. Subsequently, loans are
re-underwritten on a test basis by a third party to ensure compliance with CFC's
credit policy. After the loan has closed, the loan documents are forwarded to
CFC's loan servicing center. The servicing center is responsible for handling
customer service and performing document handling, custodial, quality control,
collection and other servicing functions.

     During 2002, approximately 92 percent of CFC's home equity finance loans
were originated directly with the borrower. The remaining finance volume was
originated through a few correspondent lenders. CFC has decreased the volume of
loans originated through the correspondent channel in recent years.

     Typically, home equity loans are secured by first or second liens. Homes
used for collateral in securing home equity loans may be either residential or
investor owned, one-to-four-family properties. During 2002, approximately 83
percent of the loans originated were secured by first liens. The average loan to
value for loans originated in 2002 was approximately 88 percent. Approximately
70 percent of CFC's home equity loan originations during 2002 were fixed rate
closed-end loans. In March 2003, CFC discontinued the origination of home equity
loans and closed or will be closing all of its facilities that were dedicated to
the home equity business.

     CFC originates the majority of its home improvement loan contracts
indirectly through a network of home improvement contractors located throughout
the United States. CFC reviews the financial condition, business experience and
qualifications of all contractors through which it obtains loans.

     CFC finances conventional home improvement contracts generally secured by
first, second or, to a lesser extent, third liens on the improved real estate.
On a limited basis, CFC has also financed unsecured conventional home
improvement loans (generally from $2,500 to $15,000).

     Typically, an approved contractor submits the customer's credit application
and construction contract to CFC's centralized service center where an analysis
of the creditworthiness of the customer is made using a proprietary credit
scoring system. If it is determined that the application meets CFC's
underwriting guidelines, CFC typically purchases the contract from the
contractor when the customer verifies satisfactory completion of the work.

     CFC also originates home improvement loans directly with borrowers. After
receiving a mail solicitation, the customer calls CFC's telemarketing center and
a CFC sales representative explains the available financing plans, terms and
rates depending on the customer's needs. The majority of the loans are secured
by a second or third lien on the real estate of the customer. Direct
distribution accounted for approximately 3 percent of the home improvement loan
originations during 2002.

     The types of home improvements CFC finances include exterior renovations
(such as windows, siding and roofing); pools and spas; kitchen and bath
remodeling; and room additions and garages. CFC may also extend additional
credit beyond the purchase price of the home improvement for the purpose of debt
consolidation.

     Private Label Credit Card. During 2002, CFC originated $3.2 billion of
private label credit card receivables primarily through its bank subsidiaries,
or 44 percent of its total originations. At December 31, 2002, CFC's managed
receivables included $2.3 billion of contracts for credit card loans, or 6.4
percent of total managed receivables.

     CFC originates private label credit card receivables through contractual
relationships with selected retailer and dealer partners. CFC's core
relationships are with retailers and dealers of home improvement products,
powersport vehicles (motorcycles, all-terrain-vehicles, snowmobiles and personal
watercraft) and outdoor power equipment.

     CFC performs an initial review on all retailer and dealer partners as well
as periodic monitoring of their financial condition. Credit card applications
are generated primarily through retail and dealer outlets and the internet. CFC
utilizes a proprietary automated credit scoring system to review the credit of
individual customers seeking credit cards. CFC periodically monitors payment
behavior trends within its credit card portfolio through the use of automated
portfolio management tools. If CFC makes poor credit decisions with respect to
its partners and borrowers, it could have a material adverse effect on its
business.

                                       10

     ACQUISITIONS

     Since 1982, Conseco has acquired 19 insurance groups and related businesses
and Green Tree Financial Corporation (renamed "Conseco Finance Corp.") These
acquisitions were responsible for the Company's growth in recent years. The
Company does not anticipate making additional acquisitions in the foreseeable
future, and is currently prohibited from doing so.

     INVESTMENTS

     Conseco Capital Management, Inc. ("CCM"), a registered investment adviser
and wholly-owned subsidiary of CNC, manages the investment portfolios of our
insurance subsidiaries. CCM had approximately $27.7 billion of assets (at fair
value) under management at December 31, 2002, of which $22.0 billion were assets
of CNC's subsidiaries, $3.8 billion were assets held by registered and
structured products and $1.9 billion were assets owned by other parties. Our
investment philosophy is to maintain a largely investment-grade fixed-income
portfolio, provide adequate liquidity for expected liability durations and other
requirements and maximize total return through active investment management. We
are subject to the risk that our investments will decline in value. This has
occurred in the past and may occur again. During 2002, we recognized net
realized investment losses of $597.0 million, compared to net realized
investment losses of $379.4 million during 2001. The net realized investment
losses during 2002 included: (i) $556.8 million of writedowns of fixed maturity
investments, equity securities and other invested assets as a result of
conditions which caused us to conclude a decline in fair value of the investment
was other than temporary; and (ii) $40.2 million of net losses from the sales of
investments (primarily fixed maturities) which generated proceeds of $19.5
billion. During 2002, we recognized other-than-temporary declines in value of
several of our investments including K-Mart Corp., Amerco, Inc., Global
Crossing, MCI Communications, Mississippi Chemical, United Airlines and
Worldcom, Inc.

     Investment activities are an integral part of our business; investment
income is a significant component of our total revenues. Profitability of many
of our insurance products is significantly affected by spreads between interest
yields on investments and rates credited on insurance liabilities. Although
substantially all credited rates on SPDAs and FPDAs may be changed annually
(subject to minimum guaranteed rates), changes in crediting rates may not be
sufficient to maintain targeted investment spreads in all economic and market
environments. In addition, competition and other factors, including the impact
of the level of surrenders and withdrawals, may limit our ability to adjust or
to maintain crediting rates at levels necessary to avoid narrowing of spreads
under certain market conditions. As of December 31, 2002, the average yield,
computed on the cost basis of our investment portfolio, was 6.7 percent, and the
average interest rate credited or accruing to our total insurance liabilities
(excluding interest rate bonuses for the first policy year only and excluding
the effect of credited rates attributable to multi-bucket or equity-indexed
products) was 5.1 percent.

     We manage the equity-based risk component of our equity-indexed annuity
products by: (i) purchasing S&P 500 Call Options in an effort to hedge such
risk; and (ii) adjusting the participation rate to reflect the change in the
cost of such options (such cost varies based on market conditions). Accordingly,
we are able to focus on managing the interest rate spread component of these
products.

     We seek to balance the duration of our invested assets with the expected
duration of benefit payments arising from our insurance liabilities. At December
31, 2002, the adjusted modified duration of fixed maturities and short-term
investments was approximately 6.6 years and the duration of our insurance
liabilities was approximately 6.0 years.

     For information regarding the composition and diversification of the
investment portfolio of our subsidiaries, see "Management's Discussion and
Analysis of Consolidated Financial Condition and Results of Operations -
Investments" and the notes to our consolidated financial statements.

     COMPETITION

     Each of the markets in which we operate is highly competitive, and our
highly leveraged position and our recent bankruptcy filings have had a material
adverse impact on our ability to compete in these markets. The financial
services industry consists of a large number of companies, some of which are
larger and have greater capital, technological and marketing resources, access
to capital and other sources of liquidity at a lower cost, broader and more
diversified product lines and larger staffs than those of Conseco. An expanding
number of banks, securities brokerage firms and other financial intermediaries
also market insurance products or offer competing products, such as mutual fund
products, traditional bank investments and other investment and retirement
funding alternatives. We also compete with many of these companies and others in
providing services for fees. In most areas, competition is based on a number of
factors, including pricing, service provided to distributors and policyholders
and ratings. Conseco's subsidiaries must also compete with their competitors to
attract and retain the allegiance of dealers, vendors, contractors,
manufacturers, retailers and agents.

     In the finance industry, operations are affected by consumer demand which
is influenced by regional trends, economic conditions and personal preferences.
Competition in the finance industry is primarily among finance companies,
commercial banks,

                                       11

thrifts, other financial institutions, mortgage brokers, credit unions and
manufacturers and vendors. Competition is based on a number of factors,
including service, the credit review process, the integration of financing
programs and the ability to manage the servicing portfolio in changing economic
environments.

     In the individual health insurance business, insurance companies compete
primarily on the basis of marketing, service and price. Pursuant to federal
regulations, the Medicare supplement products offered by all companies have
standardized policy features. This increases the comparability of such policies
and has intensified competition based on factors other than product features.
See "Insurance Underwriting" and "Governmental Regulation." In addition to the
products of other insurance companies, commercial banks, thrifts, mutual funds
and broker dealers, our insurance products compete with health maintenance
organizations, preferred provider organizations and other health care-related
institutions which provide medical benefits based on contractual agreements.

     An important competitive factor for life insurance companies is the ratings
they receive from nationally recognized rating organizations. Agents, insurance
brokers and marketing companies who market our products and prospective
purchasers of our products use the ratings of our insurance subsidiaries as one
factor in determining which insurer's products to market or purchase. Ratings
have the most impact on our annuity and interest-sensitive life insurance
products. Insurance financial strength ratings are opinions regarding an
insurance company's financial capacity to meet the obligations of its insurance
policies in accordance with their terms. They are not directed toward the
protection of investors, and such ratings are not recommendations to buy, sell
or hold securities.

     In July 2002, A.M. Best Company, a nationally recognized insurance company
ratings organization, lowered the financial strength ratings of our primary
insurance subsidiaries from "A- (Excellent)" to "B++ (Very good)" and placed the
ratings "under review with negative implications." In August 2002, A.M. Best
further downgraded the financial strength ratings of our primary insurance
subsidiaries to "B (Fair)". A.M. Best ratings for the industry currently range
from "A++ (Superior)" to "F (In Liquidation)" and some companies are not rated.
S&P has given our principal insurance subsidiaries a claims-paying ability
rating of "BB+ (Marginal)." These ratings have caused sales of our insurance
products to decline and policyholder redemptions and lapses to increase, which
has had a material adverse impact on our financial results. In some cases, the
ratings downgrades also caused defections among our sales force of agents and/or
increases in the commissions we had to pay to retain them. The effect of these
ratings downgrades is further discussed in the section of Management's
Discussion and Analysis of Financial Condition and Results of Operations
entitled "Consolidated Financial Condition."

     A.M. Best and S&P each reviews its ratings from time to time. We cannot
provide any assurance that the ratings of our insurance subsidiaries will remain
at their current levels or predict the impact additional downgrades could have
on our business.

     Conseco's leveraged condition and liquidity difficulties also severely
impacted the operations of CFC, which we have agreed to sell. For a more
complete discussion of the effect of our leveraged condition and liquidity
difficulties on CFC, see the section of Management's Discussion and Analysis of
Financial Condition and Results of Operations entitled "Results of the
Discontinued Finance Operations."

     INSURANCE UNDERWRITING

     Under regulations promulgated by the National Association of Insurance
Commissioners ("NAIC") (an association of state regulators and their staffs) and
adopted as a result of the Omnibus Budget Reconciliation Act of 1990, we are
prohibited from underwriting our Medicare supplement policies for certain
first-time purchasers. If a person applies for insurance within six months after
becoming eligible by reason of age, or disability in certain limited
circumstances, the application may not be rejected due to medical conditions.
Some states prohibit underwriting of all Medicare supplement policies. For other
prospective Medicare supplement policyholders, such as senior citizens who are
transferring to Conseco's products, the underwriting procedures are relatively
limited, except for policies providing prescription drug coverage.

     Before issuing long-term care or comprehensive major medical products to
individuals and groups, we generally apply detailed underwriting procedures
designed to assess and quantify the insurance risks. We require medical
examinations of applicants (including blood and urine tests, where permitted)
for certain health insurance products and for life insurance products which
exceed prescribed policy amounts. These requirements are graduated according to
the applicant's age and may vary by type of policy or product. We also rely on
medical records and the potential policyholder's written application. In recent
years, there have been significant regulatory changes with respect to
underwriting individual and group major medical plans. An increasing number of
states prohibit underwriting and/or charging higher premiums for substandard
risks. We monitor changes in state regulation that affect our products, and
consider these regulatory developments in determining where we market our
products.

     Most of our life insurance policies are underwritten individually, although
standardized underwriting procedures have been adopted for certain low
face-amount life insurance coverages. After initial processing, insurance
underwriters review each file and obtain the information needed to make an
underwriting decision (such as medical examinations, doctors' statements and
special

                                       12


medical tests). After collecting and reviewing the information, the underwriter
either: (i) approves the policy as applied for, or with an extra premium charge
because of unfavorable factors; or (ii) rejects the application. We underwrite
group insurance policies based on the characteristics of the group and its past
claim experience. Graded benefit life insurance policies are issued without
medical examination or evidence of insurability. There is minimal underwriting
on annuities.

     REINSURANCE

     Consistent with the general practice of the life insurance industry, our
subsidiaries enter into both facultative and treaty agreements of indemnity
reinsurance with other insurance companies in order to reinsure portions of the
coverage provided by our insurance products. Indemnity reinsurance agreements
are intended to limit a life insurer's maximum loss on a large or unusually
hazardous risk or to diversify its risk. Indemnity reinsurance does not
discharge the original insurer's primary liability to the insured. The Company's
reinsured business is ceded to numerous reinsurers. We believe the assuming
companies are able to honor all contractual commitments, based on our periodic
review of their financial statements, insurance industry reports and reports
filed with state insurance departments.

     As of December 31, 2002, the policy risk retention limit was generally $.8
million or less on the policies of our subsidiaries. Reinsurance ceded by
Conseco represented 27 percent of gross combined life insurance inforce and
reinsurance assumed represented 4.8 percent of net combined life insurance
inforce. At December 31, 2002, the total ceded business inforce of $26.4 billion
was primarily ceded to insurance companies rated "A- (Excellent)" or better by
A.M. Best. Our principal reinsurers at December 31, 2002 were American Founders
Life Insurance Company, General & Cologne Life Re of America, Lincoln National
Life Insurance Company, Munich American Reassurance Company, Reassure America
Life Insurance Company, RGA Reinsurance Company, Security Life of Denver Life
Insurance Company and Swiss Re Life and Health America Inc. No other single
reinsurer assumes greater than 4 percent of the total ceded business inforce.

     In the first quarter of 2002, we completed a reinsurance agreement pursuant
to which we ceded 80 percent of the inforce traditional life business of our
subsidiary, Bankers Life & Casualty Company, to Reassure America Life Insurance
Company (rated A++ by A.M. Best). The total insurance liabilities ceded pursuant
to the contract were approximately $400 million. The reinsurance agreement and
the related dividends of $110.5 million were approved by the appropriate state
insurance departments and were paid to CNC. The ceding commission approximated
the amount of the cost of policies purchased and cost of policies produced
related to the ceded business.

     On June 28, 2002, we completed a reinsurance transaction pursuant to which
we ceded 100 percent of the traditional life and interest-sensitive life
insurance business of our former subsidiary, CVIC, to Protective Life Insurance
Company (rated A+ by A.M. Best). The total insurance liabilities ceded pursuant
to the contract were approximately $470 million. CVIC, which was sold in the
fourth quarter of 2002, received a ceding commission of $49.5 million.

     During the second quarter of 2002, one of our subsidiaries, Colonial Penn
Life Insurance Company (formerly known as Conseco Direct Life Insurance
Company), ceded a block of graded benefit life insurance policies to an
unaffiliated company pursuant to a modified coinsurance agreement. Our
subsidiary received a ceding commission of $83.0 million. The cost of policies
purchased and the cost of policies produced were reduced by $123.0 million and
we recognized a loss of $39.0 million related to the transaction.

     EMPLOYEES

     At December 31, 2002, Conseco, Inc. and its subsidiaries had approximately
10,400 employees, of which 10,100 are full time employees, including: (i) 4,300
employees supporting our insurance operations; (ii) 5,400 employees of CFC (a
discontinued operation we are in the process of selling); and (iii) 400
employees supporting our holding company and shared services. None of our
employees is covered by a collective bargaining agreement. We believe that we
have satisfactory relations with our employees.

     GOVERNMENTAL REGULATION

     Our insurance businesses and CFC's finance business are subject to
extensive regulation and supervision in the jurisdictions in which they operate.
This regulation and supervision is primarily for the benefit and protection of
customers, and not for the benefit of investors or creditors.

                                       13

     Insurance

     Our insurance subsidiaries are subject to regulation and supervision by the
insurance regulatory agencies of the jurisdictions in which they transact
business. State laws generally establish supervisory agencies with broad
regulatory authority, including the power to: (i) grant and revoke business
licenses; (ii) regulate and supervise trade practices and market conduct; (iii)
establish guaranty associations; (iv) license agents; (v) approve policy forms;
(vi) approve premium rates for some lines of business; (vii) establish reserve
requirements; (viii) prescribe the form and content of required financial
statements and reports; (ix) determine the reasonableness and adequacy of
statutory capital and surplus; (x) perform financial, market conduct and other
examinations; (xi) define acceptable accounting principles; (xii) regulate the
type and amount of permitted investments; and (xiii) limit the amount of
dividends and of surplus debenture payments that can be paid without obtaining
regulatory approval. Because of limits on the payment of dividends and surplus
debenture payments from our insurance subsidiaries, not all of our consolidated
cash flows from operations are available to the parent company to service our
debt. Our insurance subsidiaries are subject to periodic examinations by state
regulatory authorities.

     Since the announcement of our restructuring efforts on August 9, 2002, we
have been working closely with insurance regulators in each of the states in
which our insurance subsidiaries are domiciled (Arizona, Illinois, Indiana, New
York, Pennsylvania and Texas) in connection with their monitoring of the
operations and financial position of our insurance subsidiaries. The
Commissioner of Insurance for the State of Texas has acted as the lead regulator
among these states and has principally coordinated the oversight and monitoring
efforts associated with our financial restructuring.

     On October 30, 2002, Bankers National Life Insurance Company and Conseco
Life Insurance Company of Texas (on behalf of itself and its subsidiaries), our
two insurance subsidiaries domiciled in Texas, each entered into consent orders
with the Commissioner of Insurance for the State of Texas whereby they agreed:
(i) not to request any dividends or other distributions before January 1, 2003
and, thereafter, not to pay any dividends or other distributions to parent
companies outside of the insurance system without the prior approval of the
Texas Insurance Commissioner; (ii) to continue to maintain sufficient
capitalization and reserves as required by the Texas Insurance Code; (iii) to
request approval from the Texas Insurance Commissioner before making any
disbursements not in the ordinary course of business; (iv) to complete any
pending transactions previously reported to the proper insurance regulatory
officials prior to and during Conseco's restructuring, unless not approved by
the Texas Insurance Commissioner; (v) to obtain a commitment from CNC and CIHC
to maintain their infrastructure, employees, systems and physical facilities
prior to and during Conseco's restructuring; and (vi) to continue to permit the
Texas Insurance Commissioner to examine its books, papers, accounts, records and
affairs. The consent orders do not prohibit the payment of fees in the ordinary
course of business pursuant to existing administrative, investment management
and marketing agreements with our non-insurance subsidiaries.

     In addition to the limitations imposed by the laws described above and the
Texas consent orders, most states have also enacted laws or regulations with
respect to the activities of insurance holding company systems, including
acquisitions, the payment of ordinary and extraordinary dividends by insurance
companies, the terms of surplus debentures, the terms of transactions between
insurance companies and their affiliates and other related matters. Various
notice and reporting requirements generally apply to transactions between
insurance companies and their affiliates within an insurance holding company
system, depending on the size and nature of the transactions. These requirements
may include prior regulatory approval or prior notice for certain material
transactions. Currently, the Company and its insurance subsidiaries have
registered as holding company systems pursuant to such laws and regulations in
the domiciliary states of the insurance subsidiaries, and they routinely report
to other jurisdictions.

     Most states have also enacted legislation or adopted administrative
regulations that affect the acquisition (or sale) of control of insurance
companies. The nature and extent of such legislation and regulations vary from
state to state. Generally, these regulations require an acquirer of control to
file detailed information concerning such acquirer and the plan of acquisition,
and to obtain administrative approval prior to the acquisition of control.
"Control" is generally defined as the direct or indirect power to direct or
cause the direction of the management and policies of a person and is rebuttably
presumed to exist if a person or group of affiliated persons directly or
indirectly owns or controls 10% or more of the voting securities of another
person.

     The affiliated party transaction and change of control laws and regulations
described in the preceding two paragraphs may require notices to and/or prior
approvals by certain of our insurance regulators before our plan of
reorganization pursuant to Chapter 11 of the Bankruptcy Code may be consummated.
The regulators for Texas and Pennsylvania are requiring the Company to request
an exemption from the change of control laws and regulations. The Illinois
Department of Insurance, the New York Department of Insurance and the Indiana
Department of Insurance have each indicated that they are requiring an
application of a change in control. Such requests and filings have been or soon
will be made and the exemptions or required approvals are expected to be
obtained for all states concurrently with the other voting and confirmation
procedures required for our plan of reorganization. Arizona has not indicated
whether or not an exemption from the change in control application requirement
or a change of control application is required.

                                       14



     On the basis of statutory statements filed with state regulators annually,
the NAIC calculates certain financial ratios to assist state regulators in
monitoring the financial condition of insurance companies. A "usual range" of
results for each ratio is used as a benchmark. In the past, variances in certain
ratios of our insurance subsidiaries have resulted in inquiries from insurance
departments, to which we have responded. These inquiries have not led to any
restrictions affecting our operations.

     In addition, the NAIC issues model laws and regulations, many of which have
been adopted by state insurance regulators, relating to: (i) investment reserve
requirements; (ii) risk-based capital ("RBC") standards; (iii) codification of
insurance accounting principles; (iv) additional investment restrictions; (v)
restrictions on an insurance company's ability to pay dividends; and (vi)
product illustrations.

     The NAIC's Risk-Based Capital for Life and/or Health Insurers Model Act
(the "Model Act") provides a tool for insurance regulators to determine the
levels of statutory capital and surplus an insurer must maintain in relation to
its insurance and investment risks and whether there is a need for possible
regulatory attention. The Model Act provides four levels of regulatory
attention, varying with the ratio of the insurance company's total adjusted
capital (defined as the total of its statutory capital and surplus, asset
valuation reserve and certain other adjustments) to its authorized control level
RBC ("ACLRBC"): (i) if a company's total adjusted capital is less than or equal
to 200 percent but greater than 150 percent of its ACLRBC (the "Company Action
Level"), the company must submit a comprehensive plan to the regulatory
authority proposing corrective actions aimed at improving its capital position;
(ii) if a company's total adjusted capital is less than or equal to 150 percent
but greater than 100 percent of its ACLRBC (the "Regulatory Action Level"), the
regulatory authority will perform a special examination of the company and issue
an order specifying the corrective actions that must be followed; (iii) if a
company's total adjusted capital is less than or equal to 100 percent but
greater than 70 percent of its ACLRBC (the "Authorized Control Level"), the
regulatory authority may take any action it deems necessary, including placing
the company under regulatory control; and (iv) if a company's total adjusted
capital is less than or equal to 70 percent of its ACLRBC (the "Mandatory
Control Level"), the regulatory authority must place the company under its
control. In addition the Model Law provides for an annual trend test if a
company's total adjusted capital is between 200 percent and 250 percent of its
ACLRBC at the end of the year. The trend test calculates the greater of the
decrease in the margin of total adjusted capital over ACLRBC: (i) between the
current year and the prior year; and (ii) for the average of the last 3 years.
It assumes that such decrease could occur again in the coming year. Any company
whose trended total adjusted capital is less than 190 percent of its ACLRBC
would trigger a requirement to submit a comprehensive plan as described above
for the Company Action Level.

     The 2002 statutory annual statements filed with the state insurance
regulators of each of our insurance subsidiaries reflected total adjusted
capital in excess of the levels subjecting the subsidiary to any regulatory
action. However, our ACLRBC ratios have declined significantly over the last
year and some of our subsidiaries are near the level which would require them to
submit a comprehensive plan aimed at improving their capital position.

     The aggregate ACLRBC ratio for our insurance subsidiaries was 332 percent
at December 31, 2002, compared to 480 percent at December 31, 2001. The ratios
for our insurance subsidiaries that are subject to the four levels of regulatory
attention described above ranged from 250 percent (just above the trend test
level) to 563 percent. We are taking actions intended to improve the ACLRBC
ratios of our insurance subsidiaries. Such actions include: (i) discontinuing or
reducing sales of products that create initial reductions in statutory surplus
because of the costs of selling the products; (ii) reducing operating expenses;
(iii) merging some of our insurance subsidiaries with other insurance
subsidiaries; and (iv) restructuring our investment portfolio to better match
the risk profile of the portfolio with the insurance subsidiary's earnings and
capital requirements. We have discussed these actions with insurance regulators
in each of the states in which our insurance subsidiaries are domiciled. The
audited financial statements of our insurance subsidiaries generally are not
completed until around June 1 of each year (the date such audited financial
statements are generally required to be filed with state insurance departments).
Any significant audit adjustments to the financial statements of our insurance
subsidiaries resulting in a reduction in capital could cause the ACLRBC ratio of
one or more of our insurance subsidiaries to fall below the trend test level
requiring the trended total adjusted capital to be calculated. In addition, the
Company has been and will be discussing the appropriate statutory accounting
treatment for certain investments with the state insurance regulators. If the
ultimate outcome of these discussions resulted in adjustments to the December
31, 2002 statutory financial statements of our insurance subsidiaries, some of
our subsidiaries could be required to complete the trend test. If a trend test
were required for any of our subsidiaries, such a test would likely result in
trended total adjusted capital which is less than 190 percent of ACLRBC.

     Our internal actuaries must annually render opinions concerning the
adequacy of our insurance reserves. Our actuaries rendered unqualified opinions
at December 31, 2002. Such opinions reference the Chapter 11 Cases and recent
downgrades of our insurance company ratings as being outside the scope of the
actuarial opinion, meaning that the actuaries did not believe it was appropriate
to calculate what impact, if any, such events would have on the life insurance
reserves. Regulators have raised the question as to whether or not such
references result in the actuarial opinions becoming qualified opinions. We
continue to believe the actuarial opinions are qualified opinions. If the
actuarial opinions were qualified opinions, more stringent rules would apply for
calculating ACLRBC which we believe would result in the ACLRBC for several of
our insurance subsidiaries falling below the trend test level.

                                       15



     The NAIC has adopted a revised manual of statutory accounting principles in
a process referred to as codification. These principles are summarized in the
Accounting Practices and Procedures Manual. The revised manual was effective
January 1, 2001. The domiciliary states of our insurance subsidiaries have
adopted the provisions of the revised manual or, with respect to some states,
adopted the manual with certain modifications. The revised manual has changed,
to some extent, prescribed statutory accounting practices and resulted in
changes to the accounting practices that our insurance subsidiaries use to
prepare their statutory-basis financial statements. The impact of these changes
increased our insurance subsidiaries' statutory-based capital and surplus by
approximately $198 million as of January 1, 2001.

     The NAIC has adopted model long-term care policy language providing
nonforfeiture benefits and has proposed a rate stabilization standard for
long-term care policies. Various bills are proposed from time to time in the
U.S. Congress which would provide for the implementation of certain minimum
consumer protection standards for inclusion in all long-term care policies,
including guaranteed renewability, protection against inflation and limitations
on waiting periods for pre-existing conditions. Federal legislation permits
premiums paid for qualified long-term care insurance to be treated as
tax-deductible medical expenses and for benefits received on such policies to be
excluded from taxable income.

     Our insurance subsidiaries are required under guaranty fund laws of most
states in which we transact business, to pay assessments up to prescribed limits
to fund policyholder losses or liabilities of insolvent insurance companies.
Assessments can be partially recovered through a reduction in future premium
taxes in some states.

     Most states mandate minimum benefit standards and loss ratios for accident
and health insurance policies. We are generally required to maintain, with
respect to our individual long-term care policies, minimum anticipated loss
ratios over the entire period of coverage of not less than 60 percent. With
respect to our Medicare supplement policies, we are generally required to attain
and maintain an actual loss ratio, after three years, of not less than 65
percent. We provide to the insurance departments of all states in which we
conduct business annual calculations that demonstrate compliance with required
minimum loss ratios for both long-term care and Medicare supplement insurance.
These calculations are prepared utilizing statutory lapse and interest rate
assumptions. In the event that we fail to maintain minimum mandated loss ratios,
our insurance subsidiaries could be required to provide retrospective refunds
and/or prospective rate reductions. We believe that our insurance subsidiaries
currently comply with all applicable mandated minimum loss ratios.

     NAIC model regulations, adopted in substantially all states, created 10
standard Medicare supplement plans (Plans A through J). Plan A provides the
least extensive coverage, while Plan J provides the most extensive coverage.
Under NAIC regulations, Medicare insurers must offer Plan A, but may offer any
of the other plans at their option. Our insurance subsidiaries currently offer
nine of the model plans. We have declined to offer Plan J, due in part to its
high benefit levels and, consequently, high costs to the consumer.

     The federal government does not directly regulate the insurance business.
However, federal legislation and administrative policies in several areas,
including pension regulation, age and sex discrimination, financial services
regulation, securities regulation, privacy laws and federal taxation, do affect
the insurance business. Legislation has been introduced from time to time in
Congress that could result in the federal government assuming some role in
regulating the companies or allowing combinations between insurance companies,
banks and other entities.

     Numerous proposals to reform the current health care system (including
Medicare) have been introduced in Congress and in various state legislatures.
Proposals have included, among other things, modifications to the existing
employer-based insurance system, a quasi-regulated system of "managed
competition" among health plans, and a single-payer, public program. Changes in
health care policy could significantly affect our business. For example, Federal
comprehensive major medical or long-term care programs, if proposed and
implemented, could partially or fully replace some of Conseco's current
products.

     During recent years, the health insurance industry has experienced
substantial changes, including those caused by healthcare legislation. Recent
federal and state legislation and legislative proposals relating to healthcare
reform contain features that could severely limit or eliminate our ability to
vary our pricing terms or apply medical underwriting standards with respect to
individuals which could have the effect of increasing our loss ratios and
adversely affecting our financial results. In particular, Medicare reform and
legislation concerning prescription drugs could affect our ability to price or
sell our products.

     In addition, proposals currently pending in Congress and some state
legislatures may also affect our financial results. These proposals include the
implementation of minimum consumer protection standards for inclusion in all
long-term care policies, including: guaranteed premium rates; protection against
inflation; limitations on waiting periods for pre-existing conditions; setting
standards for sales practices for long-term care insurance; and guaranteed
consumer access to information about insurers, including lapse and replacement
rates for policies and the percentage of claims denied. Enactment of any of
these proposals could affect our financial results.

                                       16

     The United States Department of Health and Human Services has issued
regulations under the Health Insurance Portability and Accountability Act
("HIPAA") relating to standardized electronic transaction formats, code sets and
the privacy of member health information. These regulations and any
corresponding state legislation, will affect the Company's administration of
health insurance.

     A number of states have passed or are considering legislation that would
limit the differentials in rates that insurers could charge for health care
coverages between new business and renewal business for similar demographic
groups. State legislation has also been adopted or is being considered that
would make health insurance available to all small groups by requiring coverage
of all employees and their dependents, by limiting the applicability of
pre-existing conditions exclusions, by requiring insurers to offer a basic plan
exempt from certain benefits as well as a standard plan, or by establishing a
mechanism to spread the risk of high risk employees to all small group insurers.
Congress and various state legislators have from time to time proposed changes
to the health care system that could affect the relationship between health
insurers and their customers, including external review. We cannot predict with
certainty the effect that any proposals, if adopted, or legislative developments
could have on our insurance businesses and operations.

     The asset management activities of CCM are subject to federal and state
securities, fiduciary (including the Employee Retirement Income Security Act of
1974, as amended) and other laws and regulations. The SEC, the National
Association of Securities Dealers, state securities commissions and the
Department of Labor are the principal regulators of our asset management
operations.

     Finance

     CFC's finance operations are subject to regulation by certain federal and
state regulatory authorities. A substantial portion of CFC's consumer loans and
assigned sales contracts are originated or purchased by finance subsidiaries
licensed under applicable state law. The licensed entities are subject to
examination by and reporting requirements of the state administrative agencies
issuing such licenses. CFC's subsidiaries are subject to state laws and
regulations, which in certain states: (i) limit the amount, duration and charges
for such loans and contracts; (ii) require disclosure of certain loan terms and
regulate the content of documentation; (iii) place limitations on collection
practices; and (iv) govern creditor remedies. The licenses granted are renewable
and may be subject to revocation by the respective issuing authority for
violation of such state's laws and regulations. Some states have adopted or are
considering the adoption of consumer protection laws or regulations that impose
requirements or restrictions on lenders who make certain types of loans secured
by real estate.

     In addition to the subsidiaries of CFC licensed under state law, Mill Creek
Bank and Retail Bank (both of which are wholly-owned subsidiaries of CFC), are
regulated and subject to examination by the Federal Deposit Insurance
Corporation. Mill Creek Bank is also regulated and examined by the Utah
Department of Financial Institutions. Retail Bank is regulated and examined by
the South Dakota Department of Banking. The ownership of these entities does not
subject CFC to regulation by the Federal Reserve Board as a bank holding
company. Mill Creek Bank has the authority to engage generally in the banking
business and may accept all types of deposits, other than demand deposits.
Retail Bank is limited by its charter to engage in the credit card business and
may issue only certificates of deposit in denominations of $100,000 or greater.
Mill Creek Bank and Retail Bank are subject to regulations relating to capital
adequacy, leverage, loans, loss reserves, deposits, consumer protection,
community reinvestment, payment of dividends and transactions with affiliates.

     A number of states have usury and other consumer protection laws which may
place limitations on the amount of interest and other charges and fees charged
on loans originated in such state. Generally, state law has been preempted by
federal law under the Depositary Institutions Deregulation and Monetary Control
Act of 1980 ("DIDA") which deregulates the rate of interest, discount points and
finance charges with respect to first lien residential loans, including
manufactured home loans and real estate secured mortgage loans. As permitted
under DIDA, a number of states enacted legislation timely opting out of coverage
of either or both of the interest rate and/or finance charge provisions of the
DIDA. States may no longer opt out of the interest rate provisions of the DIDA,
but could in the future opt out of the finance charge provisions. To be eligible
for federal preemption for manufactured home loans, CFC's licensed finance
subsidiaries must comply with certain restrictions providing protection to
consumers. In addition, another provision of DIDA applicable to state-chartered
insured depository institutions permits both Mill Creek Bank and Retail Bank to
export interest, finance charges and certain fees from the states where they are
located to all other states, with the exception of Iowa which opted out of the
DIDA during the permitted time period. Interest, finance charges and fees in
Utah and South Dakota are, for the most part, unregulated.

     CFC's operations are subject to regulation under other applicable federal
laws and regulations, the more significant of which include: the Truth in
Lending Act ("TILA"); the Equal Credit Opportunity Act ("ECOA"); the Fair Credit
Reporting Act ("FCRA"); the Real Estate Settlement and Procedures Act ("RESPA");
the Home Mortgage Disclosure Act ("HMDA"); the Home Owner Equity Protection Act
("HOEPA"); and certain rules and regulations of the Federal Trade Commission
("FTC Rules").

                                       17

     The TILA and related regulations require certain disclosures designed to
provide consumers with uniform, understandable information with respect to the
terms and conditions of extensions of credit and the ability to compare credit
terms. The TILA also provides consumers with certain substantive protection such
as a three day right to cancel certain credit transactions, including certain of
the loans originated by CFC.

     The ECOA requires certain disclosures to applicants for credit regarding
information that is used as a basis for denial of credit and prohibits
discrimination against applicants on the basis of sex, race, color, religion,
national origin, age, marital status, derivation of income from a public
assistance program or the good faith exercise of a right under the TILA. The
ECOA also requires that notices be given to applicants who are denied credit.

     The FCRA regulates the process of obtaining, using and reporting of credit
information on consumers. The FCRA also regulates the use of credit information
among affiliates.

     The RESPA regulates the disclosure of information to consumers on loans
involving a mortgage on real estate. The RESPA and related regulations also
govern payment for and disclosure of payments for settlement services in
connection with mortgage loans and prohibits the payment of fees for the
referral of a loan.

     The HMDA requires reporting of certain information to the Department of
Housing and Urban Development, including the race and sex of applicants in
connection with mortgage loan applications. A lender is required to obtain and
report such information if the application is made in person, but is not
required to obtain such information if the application is taken over the
telephone.

     The HOEPA provides for additional disclosure and regulation of certain
consumer mortgage loans which are defined as "covered loans". A covered loan is
a mortgage loan (other than a mortgage loan to finance the initial purchase of a
dwelling, a reverse mortgage transaction, or an open-end credit plan) which: (i)
has total origination fees in excess of the greater of eight percent of the loan
amount, or $488; or (ii) has an annual percentage interest rate that is more
than ten percent higher than comparably maturing United States treasury
obligations for second mortgage loans or has an annual percentage interest rate
that is more than eight percent higher than comparably maturing United States
treasury obligations for first mortgage loans. A number of CFC's home equity and
home improvement loans meet the requirements to be considered covered loans.

     The FTC Rules provide, among other things, that in connection with the
purchase of consumer sales finance contracts from dealers, the holder of the
contract is subject to all claims and defenses which the consumer could assert
against the dealer. However, the consumer's recovery under such provisions
cannot exceed the amount paid under the sales contract.

     In the judgment of the management of CFC, existing federal and state law
and regulations have not had a material adverse effect on CFC's operations. It
is possible that more restrictive laws, rules or regulations will be adopted in
the future and will place additional burdens on CFC.

     CFC's commercial lending operations are not subject to material regulation
in most states, although certain states do require licensing. In addition,
certain provisions of the ECOA apply to commercial loans to small businesses.

     CFC has designed internal controls to manage the risks associated with its
finance activities. However, there is a risk that one or more employees will
circumvent these controls, as has occurred at other financial institutions.

     FEDERAL INCOME TAXATION

     The annuity and life insurance products marketed and issued by our
insurance subsidiaries generally provide the policyholder with an income tax
advantage, as compared to other savings investments such as certificates of
deposit and bonds, in that income taxation on the increase in value of the
product is deferred until it is received by the policyholder. With other savings
investments, the increase in value is taxed as earned. Annuity benefits and life
insurance benefits, which accrue prior to the death of the policyholder, are
generally not taxable until paid. Life insurance death benefits are generally
exempt from income tax. Also, benefits received on immediate annuities (other
than structured settlements) are recognized as taxable income ratably, as
opposed to the methods used for some other investments which tend to accelerate
taxable income into earlier years. The tax advantage for annuities and life
insurance is provided in the Internal Revenue Code (the "Code"), and is
generally followed in all states and other United States taxing jurisdictions.
In addition, the interest paid on home equity and home improvement loans by
customers of CFC are generally tax deductible for individuals who itemize their
tax deductions.

     Recently, Congress enacted legislation to lower marginal tax rates, reduce
the federal estate tax gradually over a ten-year period, with total elimination
of the federal estate tax in 2010, and increase contributions that may be made
to individual retirement accounts and 401(k) accounts. While these tax law
changes will sunset at the beginning of 2011 absent future congressional action,
they could in the interim diminish the appeal of our annuity and life insurance
products. Additionally, Congress has considered, from

                                       18

time to time, other possible changes to the U.S. tax laws, including elimination
of the tax deferral on the accretion of value within certain annuities and life
insurance products. It is possible that further tax legislation will be enacted
which would contain provisions with possible adverse effects on our annuity and
life insurance products.

     Our insurance company subsidiaries are taxed under the life insurance
company provisions of the Code. Provisions in the Code require a portion of the
expenses incurred in selling insurance products to be deducted over a period of
years, as opposed to immediate deduction in the year incurred. This provision
increases the tax for statutory accounting purposes, which reduces statutory
earnings and surplus and, accordingly, decreases the amount of cash dividends
that may be paid by the life insurance subsidiaries.

     In certain securitization transactions historically used by CFC, a special
tax structure was used referred to as a Real Estate Mortgage Investment Conduit
("REMIC"). When this tax structure was used, CFC was required to account for the
transfer of the finance receivables into the securitization trust as a sale
(even when such transfers were accounted for as collateralized borrowings
pursuant to generally accepted accounting principles ("GAAP")). Additionally,
since CFC retained the residual interests of the REMIC, the REMIC tax rules
require CFC to pay a minimum amount of tax each year based on the taxable income
of the retained residual interest.

     At December 31, 2002, Conseco had net federal income tax loss carryforwards
of $1,757.4 million available (subject to various statutory restrictions) for
use on future tax returns (including $552.4 million of federal income tax
carryforwards attributable to discontinued operations). These carryforwards will
expire as follows: $2.3 million in 2003; $11.2 million in 2004, $4.9 million in
2005; $.6 million in 2006; $7.9 million in 2007; $7.5 million in 2008; $14.7
million in 2009; $30.7 million in 2010; $6.2 million in 2011; $10.1 million in
2012; $43.9 million in 2013; $6.9 million in 2014; $60.5 million in 2016; $90.0
million in 2017; $244.6 million in 2018; $159.1 million in 2019; $594.3 million
in 2020; and $462.0 million in 2022. The following restrictions exist with
respect to the utilization of portions of the loss carryforwards: (i) $145.2
million attributable to certain acquired companies may be used only to offset
the taxable income of those companies; and (ii) $1,612.2 million is available to
offset income from certain life insurance subsidiaries and other non-life
insurance subsidiaries.

     The Company is currently in bankruptcy and expects to restructure and
emerge from bankruptcy. As a result of the restructuring that is expected to
occur upon the anticipated emergence from bankruptcy, the aggregate outstanding
indebtedness will be substantially reduced. The cancellation of the indebtedness
is expected to result in the realization of cancellation of indebtedness income
("COD Income"). The COD Income will not be recognized as taxable income because
the Company is under the jurisdiction of a court in a Title 11 bankruptcy
proceeding. Instead, as a consequence of such exclusion from taxable income, the
Company must reduce its tax attributes by the amount of COD Income, which it
excluded from taxable income. Tax attributes are reduced in the following order:
(i) net operating loss carryforwards ("NOLs"); (ii) tax credits and capital loss
carryforwards; and (iii) tax basis in assets. Although it is expected that a
reduction of tax attributes will be required, because the determination of the
COD Income is dependent upon the fair market value of the various debt and
capital instruments at the Effective Date, the exact amount of the reduction
cannot be predicted.

     The restructuring will be accomplished by the formation of a new company
("New Conseco"), which will issue new debt, preferred stock and common stock, in
exchange for substantially all of the assets of the Company. The Company intends
to accomplish this transaction as a reorganization described in Code Section 368
(a)(1)(G) ("G Reorganization"). Assuming that the restructuring constitutes a G
Reorganization, the Company will recognize no gain or loss with respect to such
transactions to effect the G Reorganization, the Company's taxable year will
close on the date the Company emerges from bankruptcy (the "Effective Date") and
New Conseco will begin a new taxable year on the day after the Effective Date,
and all of the Company's tax attributes existing on the Effective Date,
including NOLs and other loss and credit carryovers will be transferred to New
Conseco as of the close of the Effective Date.

     Any NOLs and other loss and credit carryovers transferred to New Conseco
will be limited under the Code to a maximum amount in any one year. This amount
is equal to the product of the fair market value of the loss corporation's
outstanding stock immediately before the ownership change and the long term
tax-exempt rate (which is published monthly by the Treasury Department and most
recently was approximately 4.61 percent) in effect for the month in which the
ownership change occurs. This amount will not be known until the Effective Date.

     Our income tax expense includes deferred income taxes arising from
temporary differences between the financial reporting and tax bases of assets
and liabilities and NOLs. In assessing the realization of our deferred income
tax assets, we consider whether it is more likely than not that the deferred
income tax assets will be realized. The ultimate realization of our deferred
income tax assets depends upon generating future taxable income during the
periods in which our temporary differences become deductible and before our NOLs
expire.

     A valuation allowance of $1.7 billion (of which $.9 billion relates to
discontinued operations) has been provided for the entire balance of net
deferred income tax assets at December 31, 2002, as we believe the realization
of such assets in future periods is

                                       19

uncertain. We reached this conclusion after considering the availability of
taxable income in prior carryback years, tax planning strategies, and the
likelihood of future taxable income exclusive of reversing temporary differences
and carryforwards.

     ITEM 2. PROPERTIES.

     Headquarters. Our headquarters is located on a Company-owned 168-acre
corporate campus in Carmel, Indiana, immediately north of Indianapolis. The ten
buildings on the campus contain approximately 854,500 square feet of space and
house Conseco's executive offices and certain administrative operations of its
subsidiaries. Management believes that Conseco's offices are adequate for its
current needs. Some of our properties are or soon may be available for sale or
lease.

     Insurance operations. Our professional independent producer distribution
channel operations are administered from our Carmel, Indiana headquarters. Our
career agent operations are primarily administered from a single facility of
300,000 square feet in downtown Chicago, Illinois, leased under an agreement
whereby 107,000 square feet is leased until 2018; 70,000 square feet is leased
until 2008; and the remaining 123,000 square feet is leased through November
2003. We also lease approximately 130,000 square feet of warehouse space in a
second Chicago facility; this lease has a remaining life of approximately 11
months. Conseco owns an office building (currently listed for sale) in Rockford,
Illinois (total of 44,400 square feet), which served as an administrative center
for portions of our insurance operations. Conseco owns an office building in
Philadelphia, Pennsylvania (127,000 square feet), which serves as the
administrative center for our direct response life insurance operations;
approximately 60 percent of this space is occupied by the Company, with the
remainder leased to tenants. Conseco also leases 215 sales offices in various
states totaling approximately 507,000 square feet; these leases are short-term
in length, with remaining lease terms ranging from six months to five years.

     Finance operations. CFC is headquartered in St. Paul, Minnesota in a
CFC-owned building (110,000 square feet of which is occupied by CFC). CFC leases
additional space in downtown St. Paul (185,000 square feet), which is used by
its mortgage services, manufactured housing and private credit card divisions.
CFC owns a building in Rapid City, South Dakota (137,000 square feet), which is
used by its manufactured housing, private label credit card and retail bank
servicing units. CFC also leases buildings in Tempe, Arizona (200,000 square
feet) and Atlanta, Georgia (48,000 square feet) which serve as collection and
service centers. CFC had previously leased an additional 75,000 square feet in
Rapid City, South Dakota, and 48,000 square feet in Atlanta, Georgia, however
CFC rejected these leases in its bankruptcy proceedings in January 2003. CFC
leases 31 regional manufactured housing division offices and 88 mortgage
services branch offices across the United States; the lease terms generally
range from one to five years.

     ITEM 3. LEGAL PROCEEDINGS.

     As described in Item 1. "Business of Conseco", CNC and several of its
subsidiaries filed voluntary petitions for reorganization under Chapter 11 of
the Bankruptcy Code in the Bankruptcy Court. The Company's insurance
subsidiaries and other subsidiaries who did not file petitions are separate
legal entities and are not included in the petitions filed by the parent. The
Debtors retain control of the insurance subsidiaries and related subsidiaries
and are authorized to operate these businesses as debtors-in-possession while
being subject to the jurisdiction of the Bankruptcy Court. The Finance Company
Debtors filed a separate plan in connection with their Chapter 11 Cases on April
2, 2003. As of the Petition Date, pending litigation against the Debtors or the
Finance Company Debtors is stayed, and absent further order of the Bankruptcy
Court, substantially all prepetition liabilities of the Debtors and the Finance
Company Debtors are subject to settlement under a plan of reorganization. Based
on the Plan of the Debtors, liabilities subject to compromise exceed the fair
value of the Debtors' assets, and most unsecured claims will be satisfied at
less than 100 percent of their fair value.

     We and our subsidiaries are involved on an ongoing basis in lawsuits
(including purported class actions) relating to our operations, including with
respect to sales practices, and we and current and former officers and directors
are defendants in pending class action lawsuits asserting claims under the
securities laws and derivative lawsuits. The ultimate outcome of these lawsuits
cannot be predicted with certainty.

     Legal Proceedings Related to CFC Only

     CFC was served with various related lawsuits filed in the United States
District Court for the District of Minnesota. These lawsuits were generally
filed as purported class actions on behalf of persons or entities who purchased
common stock or options to purchase common stock of CFC during alleged class
periods that generally run from July 1995 to January 1998. One action (Florida
State Board of Admin. v. Green Tree Financial Corp., et. al, Case No. 98-1162)
was brought not on behalf of a class, but by the Florida State Board of
Administration, which invests and reinvests retirement funds for the benefit of
state employees. In addition to CFC, certain former officers and directors of
CFC are named as defendants in one or more of the lawsuits. CFC and other
defendants obtained an order consolidating the lawsuits seeking class action
status into two actions, one of which pertains to a purported class of common
stockholders (In re Green Tree Financial Corp. Stock Litig., Case No. 97-2666)
and the other of which pertains to a purported class of stock option traders (In
re Green Tree Financial Corp. Options Litig., Case No. 97-2679). Plaintiffs in
the lawsuits

                                       20


assert claims under Sections 10(b) (and Rule 10b-5 promulgated thereunder) and
20(a) of the Securities Exchange Act of 1934. In each case, plaintiffs allege
that CFC and the other defendants violated federal securities laws by, among
other things, making false and misleading statements about the current state and
future prospects of CFC (particularly with respect to prepayment assumptions and
performance of certain loan portfolios of CFC), which allegedly rendered CFC's
financial statements false and misleading. On August 24, 1999, the United States
District Court for the District of Minnesota issued an order dismissing with
prejudice all claims alleged in the lawsuits. The plaintiffs subsequently
appealed the decision to the U.S. Court of Appeals for the 8th Circuit. A three
judge panel issued an opinion on October 25, 2001, reversing the United States
District Court's dismissal order and remanding the actions to the United States
District Court. The parties to these lawsuits have entered into a stipulation of
settlement, which is subject only to review and approval by the court.

     CFC is a defendant in two arbitration proceedings in South Carolina (Lackey
v. Green Tree Financial Corporation, n/k/a Conseco Finance Corp. and Bazzle v.
Green Tree Financial Corporation, n/k/a Conseco Finance Corp.) where the
arbitrator, over CFC's objection, allowed the plaintiffs to pursue purported
class action claims in arbitration. The two purported arbitration classes
consist of South Carolina residents who obtained real estate secured credit from
CFC's Manufactured Housing Division (Lackey) and Home Improvement Division
(Bazzle) in the early and mid 1990s, and did not receive a South Carolina
specific disclosure form relating to selection of attorneys and insurance agents
in connection with the credit transactions. The arbitrator, in separate awards
issued on July 24, 2000, awarded a total of $26.8 million in penalties and
attorneys' fees. The awards were confirmed as judgments in both Lackey and
Bazzle. These cases were consolidated into one case, and CFC appealed them to
the South Carolina Supreme Court. Oral argument was heard on March 21, 2002. On
August 26, 2002 the South Carolina Supreme Court affirmed the arbitration
judgments, and CFC filed a petition for writ of certiorari with the U.S. Supreme
Court on October 23, 2002. CFC's petition was granted in January 2003, and the
U.S. Supreme Court will hear oral argument on April 22, 2003. CFC has posted
appellate bonds, including $23 million of cash, for these cases. CFC intends to
challenge the awards vigorously and believes that the arbitrator erred by, among
other things, conducting class action arbitrations without the authority to do
so. The ultimate outcome of this proceeding cannot be predicted with certainty.

     Securities Litigation

     A total of forty-five suits were filed in 2000 against CNC in the United
States District Court for the Southern District of Indiana. Nineteen of these
cases were putative class actions on behalf of persons or entities that
purchased CNC's common stock during alleged class periods that generally run
from April 1999 through April 2000. Two cases were putative class actions on
behalf of persons or entities that purchased CNC's bonds during the same alleged
class periods. Three cases were putative class actions on behalf of persons or
entities that purchased or sold option contracts, not issued by CNC, on CNC's
common stock during the same alleged class periods. One case was a putative
class action on behalf of persons or entities that purchased CNC's "FELINE
PRIDES" convertible preferred stock instruments during the same alleged class
periods. With four exceptions, in each of these twenty-five cases two former
officers/directors of CNC were named as defendants. In each case, the plaintiffs
asserted claims under Sections 10(b) (and Rule 10b-5 promulgated thereunder) and
20(a) of the Securities Exchange Act of 1934. In each case, plaintiffs alleged
that CNC and the individual defendants violated the federal securities laws by,
among other things, making false and misleading statements about the current
state and future prospects of CFC (particularly with respect to performance of
certain loan portfolios of CFC) which allegedly rendered CNC's financial
statements false and misleading.

       Eleven of the cases in the United States District Court for the Southern
District of Indiana were filed as purported class actions on behalf of persons
or entities that purchased preferred securities issued by various Conseco
Financing Trusts, including Conseco Financing Trust V, Conseco Financing Trust
VI, and Conseco Financing Trust VII. Each of these complaints named as
defendants CNC, the relevant trust (with two exceptions), two former
officers/directors of CNC, and underwriters for the particular issuance (with
one exception). One complaint also named an officer and all of CNC's directors
at the time of issuance of the preferred securities by Conseco Financing Trust
VII. In each case, plaintiffs asserted claims under Section 11 and Section 15 of
the Securities Act of 1933, and eight complaints also asserted claims under
Section 12(a)(2) of that Act. Two complaints also asserted claims under Sections
10(b) and 20(a) of the Securities Exchange Act of 1934, and one complaint also
asserted a claim under Section 10(b) of that Act. In each case, plaintiffs
alleged that the defendants violated the federal securities laws by, among other
things, making false and misleading statements in Prospectuses and/or
Registration Statements related to the issuance of preferred securities by the
Trust involved regarding the current state and future prospects of CFC
(particularly with respect to performance of certain loan portfolios of CFC)
which allegedly rendered the disclosure documents false and misleading.

     All of the CNC securities cases were consolidated into one case in the
United States District Court for the Southern District of Indiana, captioned:
"In Re Conseco, Inc. Securities Litigation", Case number IP00-C585-Y/S (the
"securities litigation"). An amended complaint was filed on January 12, 2001,
which asserted claims under Sections 10(b) and 20(a) of the Securities Exchange
Act of 1934, and Sections 11, 12(a)(2), and 15 of the Securities Act of 1933,
with respect to common stock and various other securities issued by CNC and
Conseco Financing Trust VII. The Company filed a motion to dismiss the amended
complaint on April 27, 2001. On January 10, 2002, CNC entered into a Memorandum
of Understanding (the "MOU") to settle the litigation for $120 million subject
to court approval. Under the MOU, as amended on February 12, 2002, $106 million
was required to be placed in

                                       21


escrow by March 8, 2002; the remaining $14 million was to be paid in two
installments: $6 million by April 1, 2002, and $8 million by October 1, 2002
(all payments with interest from January 25, 2002). The $106 million due on
March 8, 2002, was not paid, for reasons set forth in the following paragraph,
and the MOU was terminated by the plaintiffs. On April 15, 2002, a new MOU was
executed (the "April 15 MOU"). Pursuant to the April 15 MOU, $95 million was
funded on April 25, 2002, with the remaining $25 million to await the outcome of
the coverage litigation between CNC and certain of its directors' and officers'
liability insurance carriers as described in the next paragraph. Court approval
of the settlement was received on August 7, 2002.

     We maintained certain directors' and officers' liability insurance that was
in force at the time the Indiana securities and derivative litigation (the
derivative litigation is described below) was commenced and which, in our view,
applies to the claims asserted in that litigation. The insurers denied coverage
for those claims, so we commenced a lawsuit against them on June 13, 2001, in
Marion County Circuit Court in Indianapolis, Indiana (Conseco, Inc., et al. v.
National Union Fire Insurance Company of Pittsburgh, PA, Royal & SunAlliance,
Westchester Fire Insurance Company, RLI Insurance Company, Greenwich Insurance
Company and Certain Underwriters at Lloyd's of London, Case No.
49C010106CP001467) (the "coverage litigation") seeking, among other things, a
judicial declaration that coverage for those claims exists. The primary
insurance carrier, National Union Fire Insurance Co. of Pittsburgh, PA, has paid
its full $10 million in policy proceeds toward the settlement of the securities
litigation; in return, National Union has been released from the coverage
litigation. The first excess insurance carrier, Royal & SunAlliance ("Royal"),
has paid its full $15 million in policy proceeds toward the settlement, but
reserved rights to continue to litigate coverage. Royal subsequently asserted
counterclaims seeking repayment of the $15 million it previously provided to CNC
as part of the settlement. The second excess insurance carrier, Westchester Fire
Insurance Company, has paid its full $15 million in policy proceeds toward the
settlement without a reservation of rights and has been released from the
coverage litigation. The third excess insurance carrier, RLI Insurance Company
("RLI"), has paid its full $10 million in policy proceeds toward the settlement,
but initially reserved rights to continue to litigate coverage. RLI has
subsequently settled (for $50,000 paid by certain of the individual insureds as
partial payment of RLI's attorneys' fees incurred in the coverage litigation),
and RLI is no longer continuing to dispute coverage. The fourth excess insurance
carrier, Greenwich Insurance Company ("Greenwich"), has paid its full $25
million in policy proceeds toward the settlement without a reservation of rights
and has been released from the coverage litigation. The final excess carrier,
Certain Underwriters at Lloyd's of London ("Lloyd's"), refused to pay or to
escrow its $25 million in policy proceeds toward the settlement and is
continuing to litigate coverage. Under the April 15 MOU, the settlement of the
securities litigation will proceed notwithstanding the continuing coverage
litigation between CNC, Royal and Lloyd's. Since the United States District
Court for the Southern District of Indiana has approved the settlement of the
securities litigation prior to resolution of the coverage litigation, $90
million plus accrued interest is available for distribution to the putative
class. The remaining funds, with interest, will be distributed at the conclusion
of the coverage litigation (or, in the case of the $25 million at issue in the
litigation with Lloyd's, on December 31, 2005, if the litigation with Lloyd's
has not been resolved by that date), with such funds coming either from Lloyd's
(if CNC prevails in the coverage litigation) or from CNC (if CNC does not
prevail). We intend to pursue our coverage rights vigorously. Because the
directors' and officers' liability insurance that was in force at the time the
litigation commenced provides for coverage of $100 million, CNC believes its
exposure in the litigation should be $20 million (i.e., the excess of the $100
million in coverage). CNC believes that the insurance applies to the claims in
the securities litigation and that the two insurers who are continuing to
litigate the coverage issue were obligated to pay their policy limits to fund
the settlement, as the other four carriers have done. We recorded $20 million as
our best estimate of a probable loss in 2001. Such amount has been placed in
escrow. We also previously established the estimated remaining liability of $40
million and a claim receivable of $40 million. Such amount includes: (i) $15
million related to Royal who paid its portion of the settlement into a fund but
reserved its rights to continue to litigate coverage (which litigation is
proceeding); and (ii) $25 million related to Lloyd's who has refused to pay.
Following the filing of our Chapter 11 Case, the trial court granted Lloyd's
motion to dismiss our lawsuit resulting in our decision to establish an
allowance for the entire $40 million claim receivable CNC believes is due from
Royal and Lloyd's. We intend to appeal the decision to dismiss in part because
we believe the decision violates the stay in the Chapter 11 Case. CNC believes
that the coverage litigation should result in a determination that the insurer
that paid under a reservation of rights has no right to recoup the payment that
it made, and that the insurer that refused to pay is obligated to do so under
its policy. We believe the latter insurer should pay its portion of the coverage
once such determination is made. The ultimate outcome cannot be predicted with
certainty. CNC is also pursuing settlement discussions with Royal and Lloyd's.
In the event that CNC does not reach settlement and does not prevail in the
coverage litigation, it will seek to subordinate the securities plaintiffs'
claims under section 510 of the Bankruptcy Code, or disallow such claims under
sections 502(d) and 547 of the Bankruptcy Code, in which case CNC may not be
required to pay the portion of the settlement not covered by its directors' and
officers' liability insurance. CNC has asked the Bankruptcy Court to stay the
Indiana state court action, and the Bankruptcy Court is scheduled to hear that
motion on May 19, 2003.

     Since we announced our intention to restructure our capital on August 9,
2002, a total of eight purported securities fraud class action lawsuits have
been filed in the United States District Court for the Southern District of
Indiana. The complaints name CNC as a defendant, along with certain current and
former officers of CNC. These lawsuits were filed on behalf of persons or
entities who purchased CNC's common stock on various dates between October 24,
2001 and August 9, 2002. In each case Plaintiffs allege claims under Sections
10(b) and 20(a) of the Securities Exchange Act of 1934, and allege material
omissions and dissemination of materially misleading statements regarding, among
other things, the liquidity of CNC and alleged problems in CFC's manufactured
housing division, allegedly resulting in the artificial inflation of CNC's stock
price. Plaintiffs in one of these lawsuits have filed an

                                       22


uncontested consolidation and lead plaintiff motion, which, if granted, would
result in the consolidation of these eight cases into one. On March 13, 2003,
all of these cases were consolidated into one case in the United States District
Court for the Southern District of Indiana, captioned "Franz Schleicher, et al.
v. Conseco, Inc., et al.," File No. 02-CV-1332 DFH-TAB. CNC believes these
lawsuits are without merit and intends to defend them vigorously. The ultimate
outcome of these lawsuits cannot be predicted with certainty. CNC has filed an
adversary proceeding to extend the automatic stay provided for by the Bankruptcy
Code to this litigation as it pertains to current and former officers and
directors of CNC.

     In October 2002, Roderick Russell, on behalf of himself and a class of
persons similarly situated, and on behalf of the ConsecoSave Plan filed an
action in the United States District Court for the Southern District of Indiana
against CNC, Conseco Services LLC and certain current and former officers of CNC
(Roderick Russell, et al. v Conseco, Inc., et al., Case No. 1:02-CV-1639 LJM).
The purported class action consists of all individuals whose 401(k) accounts
held common stock of CNC at any time from April 28, 1999 through the present.
The complaint alleges, among other things, breaches of fiduciary duties under
ERISA by continuing to permit employees to invest in CNC's common stock without
full disclosure of the Company's true financial condition. CNC believes the
lawsuit is without merit and intends to defend it vigorously. The ultimate
outcome of the lawsuit cannot be predicted with certainty. CNC has filed an
adversary proceeding to extend the automatic stay provided for by the Bankruptcy
Code to this litigation as it pertains to current and former officers and
directors of CNC.

     Derivative Litigation

     Nine shareholder derivative suits were filed in 2000 in the United States
District Court for the Southern District of Indiana. The complaints named as
defendants the current directors, certain former directors, certain non-director
officers of CNC (in one case), and, alleging aiding and abetting liability,
certain banks that allegedly made loans in relation to CNC's "Stock Purchase
Plan" (in three cases). CNC is also named as a nominal defendant in each
complaint. Plaintiffs allege that the defendants breached their fiduciary duties
by, among other things, intentionally disseminating false and misleading
statements concerning the acquisition, performance and proposed sale of CFC, and
engaged in corporate waste by causing CNC to guarantee loans that certain
officers, directors and key employees of CNC used to purchase stock under the
Stock Purchase Plan. These cases have now been consolidated into one case in the
United States District Court for the Southern District of Indiana, captioned:
"In Re Conseco, Inc. Derivative Litigation", Case Number IP00655-C-Y/S. An
amended complaint was filed on April 12, 2001, making generally the same
allegations and allegations of violation of the Federal Reserve Board's margin
rules. Three similar cases have been filed in the Hamilton County Superior Court
in Indiana. Schweitzer v. Hilbert, et al., Case No. 29D01-0004CP251; Evans v.
Hilbert, et al., Case No. 29D01-0005CP308 (both Schweitzer and Evans name as
defendants certain non-director officers); Gintel v. Hilbert, et al., Case No.
29003-0006CP393 (naming as defendants, and alleging aiding and abetting
liability as to, banks that allegedly made loans in relation to the Stock
Purchase Plan). CNC believes that these lawsuits are without merit and intends
to defend them vigorously. The cases filed in Hamilton County have been stayed
pending resolution of the derivative suits filed in the United States District
Court. CNC asserts that these lawsuits are assets of the estate pursuant to
section 541(a) of the Bankruptcy Code and does not currently intend to pursue
them postpetition because they are meritless. The ultimate outcome of these
lawsuits cannot be predicted with certainty.

     Other Litigation

     On January 15, 2002, Carmel Fifth, LLC ("Carmel"), an indirect,
wholly-owned subsidiary of CNC, exercised its rights to require 767 Manager, LLC
("Manager"), an affiliate of Donald J. Trump, to elect within 60 days, either to
acquire Carmel's interests in 767 LLC for $499.4 million, or to sell its
interests in 767 LLC to Carmel for $15.6 million (the "Buy/Sell Right"). Such
rights were exercised pursuant to the Limited Liability Company Agreement of 767
LLC. 767 LLC is a Delaware limited liability company that indirectly owns the
General Motors Building, a 50-story office building in New York, New York (the
"GM Building"). 767 LLC is owned by Carmel and Manager. On February 6, 2002, Mr.
Trump commenced a civil action against CNC, Carmel and 767 LLC in New York State
Supreme Court, entitled Donald J. Trump v. Conseco, Inc., et al. (the "State
Court Action"). Plaintiff claims that CNC and Carmel breached an agreement,
dated July 3, 2001, to sell Carmel's interests to plaintiff for $295 million on
or before September 15, 2001 (the "July 3rd Agreement"). Specifically, plaintiff
claims that CNC and Carmel improperly refused to accept a reasonable guaranty of
plaintiff's payment obligations, refused to complete the sale of Carmel's
interest before the September 15, 2001 deadline, repudiated an oral promise to
extend the September 15 deadline indefinitely and repudiated the July 3rd
Agreement by exercising Carmel's Buy/Sell Right. Plaintiff asserts claims for
breach of contract, breach of the implied covenant of good faith and fair
dealing, promissory estoppel, unjust enrichment and breach of fiduciary duty.
Plaintiff is seeking compensatory and punitive damages of approximately $1
billion and declaratory and injunctive relief blocking Carmel's Buy/Sell Right.
On March 25, 2002, Carmel filed a Demand for Arbitration and Petition and
Statement of Claim with the American Arbitration Association ("AAA") to have the
issues relating to the Buy/Sell Right resolved by arbitration (the
"Arbitration"). Manager and Mr. Trump requested the New York State Supreme Court
to stay that arbitration, but the Court denied Manager's and Trump's request on
May 2, 2002, allowing the arbitration to proceed. In addition, CNC and Carmel
filed a Motion to Dismiss Mr. Trump's lawsuit on March 25, 2002. By Stipulation
and Order, dated June 14, 2002, the State Court Action was stayed, pending
resolution of the Arbitration. CNC plans to vigorously pursue its options to
compel prompt resolution of this dispute. CNC believes that Mr. Trump's lawsuit
is without merit and intends to vigorously pursue its own rights to acquire the
GM Building. The ultimate outcome cannot be predicted with certainty. On


                                       23


February 21, 2003, the Trump entities filed a proof of claim asserting a general
unsecured claim of $1 billion against CNC. On March 3, 2003, CNC and Carmel
Fifth initiated an adversary proceeding against the Trump entities. CNC and
Carmel Fifth's adversary complaint seeks declaratory and injunctive relief
against the Trump entities. CNC and Carmel Fifth's adversary action requests
that the court find (1) that the July 3rd Agreement terminated due to Trump's
failure to comply with the terms of that agreement, and (2) that the Trump
entities are required to convey their interest in 767 LLC to Carmel Fifth
pursuant to Carmel Fifth's rights under the LLC Agreement. On March 5, 2003, CNC
and Carmel Fifth, in the adversary proceeding, filed an emergency motion for
preliminary injunction and an emergency motion for expedited hearing. Through
those motions, CNC and Carmel Fifth sought: an accelerated schedule for
resolution of their claims against the Trump entities, removal of Mr. Trump from
management of the GM Building, and an order restraining Mr. Trump and the Trump
entities from interference with CNC and Carmel Fifth's efforts to market the GM
Building. The Bankruptcy Court has assumed jurisdiction of the matters related
to the July 3rd Agreement and has denied jurisdiction with respect to Carmel
Fifth's rights under the LLC Agreement and ordered that the arbitration of the
LLC Agreement matters be completed or nearly completed by May 19, 2003. After
such time, the Bankruptcy Court will set the July 3rd Agreement matters for
trial. In connection with the Bankruptcy Court's ruling on the jurisdictional
issues, the parties stipulated that they would appear before the Bankruptcy
Court to provide updates with respect to the pending arbitration in order to
keep the arbitration process on schedule for resolution or near resolution by
May 19, 2003. The Court also ordered the Trump entities to stipulate that they
would take no actions that would delay completion or near completion of
arbitration by May 19, 2003.

     On June 24, 2002, the heirs of a former officer, Lawrence Inlow, commenced
an action against CNC, Conseco Services, LLC, and two former officers in the
Boone Circuit Court (Inlow et al. v. Conseco, Inc., et al., Cause No.
06C01-0206-CT-244). The heirs assert that unvested options to purchase 756,248
shares of CNC common stock should have been vested at Mr. Inlow's death. The
heirs further claim that if such options had been vested, they would have been
exercised, and that the resulting shares of common stock would have been sold
for a gain of approximately $30 million based upon a stock price of $58.125 per
share, the highest stock price during the alleged exercise period of the
options. CNC believes the heirs' claims are without merit and will defend the
action vigorously. The maximum exposure to the Company for this lawsuit is
estimated to be $33 million. The ultimate outcome cannot be predicted with
certainty.

     CNC is also a party to litigation related to the death of Lawrence Inlow
with the manufacturer of a corporate helicopter and other parties. This
litigation was consolidated in the United States District Court for the Southern
District of Indiana (In re: Inlow Accident Litigation, Cause No.
IP99-0830-C-H/G) and is currently on appeal to the Seventh Circuit Court of
Appeals. The maximum exposure for this litigation is estimated to be $25
million, although CNC believes that the claims against it are without merit. The
ultimate outcome cannot be predicted with certainty. CNC is also party to
litigation with Associated Aviation Underwriters, Inc. in Hamilton County
Superior Court (Associated Aviation Underwriters, Inc. v. Conseco Inc., et al,
Cause No. 29C01-9909-CP588) relating to Associated Aviation Underwriters'
obligation to defend and/or indemnify CNC in the aforementioned litigation. If
CNC prevails in this lawsuit, Associated Underwriters may be obligated to
indemnify CNC for all or part of its liability in the aforementioned litigation.
This litigation has been stayed until final judgments are rendered in the former
litigation.

     In addition, the Company and its subsidiaries are involved on an ongoing
basis in other lawsuits and arbitrations (including purported class actions)
related to their operations. These actions include one action brought by the
Texas Attorney General regarding long-term care policies, two purported
nationwide class actions involving claims related to "vanishing premiums," and
two purported nationwide class actions involving claims related to "modal
premiums" (the alleged imposition and collection of insurance premium surcharges
in excess of stated annual premiums. The ultimate outcome of all of these other
legal matters pending against the Company or its subsidiaries cannot be
predicted, and, although such lawsuits are not expected individually to have a
material adverse effect on the Company, such lawsuits could have, in the
aggregate, a material adverse effect on the Company's consolidated financial
condition, cash flows or results of operations.

     Other Proceedings

     The Company has been notified that the staff of the SEC has obtained a
formal order of investigation in connection with an inquiry that relates to
events in and before the spring of 2000, including CFC's accounting for its
interest-only securities and servicing rights. These issues were among those
addressed in the Company's write-down and restatement in the spring of 2000, and
were the subject of shareholder class action litigation, which has recently been
settled as described above. The Company is cooperating with the SEC staff in
this matter.

     The Company has been notified that the Alabama Securities Commission is
examining the Company's 1998 Directors/Officers & Key Employees Stock Purchase
Program and the 2000 Employee Stock Purchase Program Work-Down Plan. The Company
is cooperating with the Commission's staff in this matter.

                                       24




     ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

     None.

     Optional Item. Executive Officers of the Registrant.



      Officer                                            Positions with Conseco, Principal
    Name and Age (a)                  Since             Occupation and Business Experience (b)
    ------------                      -----             ----------------------------------
                                             

    William J. Shea, 54.............  2001         Since November 2002, President and Chief Executive Officer of Conseco.  From
                                                   September 2001, President; from March 2002 to November 2002, Acting Chief
                                                   Financial Officer of Conseco; from 1998 to 2001, Chairman of the Board of
                                                   Demoulas Supermarkets, Inc.; from 1999 to 2000, CEO of View Tech, Inc.
                                                   (integrated videoconferencing); and from 1993 to 1998, Vice Chairman and Chief
                                                   Financial Officer of BankBoston Corporation.  Since September 2001, Director of
                                                   Conseco.

    Eugene M. Bullis, 57............  2002         Since November 2002, Executive Vice President and Chief Financial Officer of
                                                   Conseco.  From July 2002 to November 2002, Mr. Bullis was Executive Vice
                                                   President, Finance Administration of Conseco.  Chief Financial Officer of
                                                   Managed Ops. Com, Inc. from April 2000 to May 2002.  Executive Vice President
                                                   and Chief Financial Officer of Manufacturers' Services, Ltd. from October 1999
                                                   to March 2000.  From March 1998 to October 1999, Chief Operating Officer and
                                                   Chief Financial Officer of Physicians Quality Care.

    John R. Kline, 45...............  2002         Since 2002, Senior Vice President and Chief Accounting Officer of Conseco; from
                                                   2000 to 2002, Senior Vice President of various Conseco subsidiaries; from 1992
                                                   to 2000, Vice President of various Conseco subsidiaries.

    Maxwell E. Bublitz, 46..........  1998         Since 1998, Senior Vice President, Investments of Conseco; since 1994, President
                                                   and Chief Executive Officer of Conseco Capital Management, Inc., a subsidiary of
                                                   Conseco.

- -------------------

(a)  The executive officers serve as such at the discretion of the Board of
     Directors and are elected annually.

(b)  Business experience is given for at least the last five years.



                                       25


                                     PART II

     ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
             MATTERS.

     MARKET INFORMATION

     On January 21, 2003, the Bankruptcy Court granted our motion to restrict
the trading of CNC's common stock to assist the Company in preserving its net
operating losses. Under Section 382 of the Code, a company can lose the benefit
of its NOLs if the company is deemed to undergo an ownership change as defined
under that Section of the Code.

     On August 9, 2002, we announced that we had engaged legal and financial
advisors to begin discussions with creditors in order to effectuate a
fundamental restructuring of the Company's capital structure. After the
announcement, the New York Stock Exchange ("NYSE") halted trading in Conseco's
common stock and all of its other listed securities. The SEC subsequently
granted the NYSE's application for removal from listing and registration with
respect to the following Conseco securities: (i) common stock; (ii) 8.125%
senior notes due 2003; (iii) 10.5% senior notes due 2004; (iv) 9.16% trust
originated preferred securities; (v) 8.70% trust originated preferred
securities; (vi) 9% trust originated preferred securities; and (vii) 9.44% trust
originated preferred securities, effective on the opening of the trading session
on September 25, 2002.

     The following table sets forth the ranges of high and low sales prices per
share for the last two fiscal years. There have been no dividends paid or
declared during this period.


Period                                                             Market price
- ------                                                         ------------------
                                                               High           Low
                                                               ----           ---
                                                                        
2001:
    First Quarter...........................................  $18.60          $11.69
    Second Quarter..........................................   20.20           13.05
    Third Quarter...........................................   16.20            5.25
    Fourth Quarter..........................................    7.40            2.51

2002:
    First Quarter  .........................................  $ 4.59          $ 2.77
    Second Quarter .........................................    5.07            1.51
    Third Quarter  .........................................    2.05             .03
    Fourth Quarter .........................................     .13             .03



     The closing market price for a share of our common stock on April 10, 2003
was $.037. As of March 20, 2003, there were approximately 144,100 holders of the
outstanding shares of common stock, including individual participants in
securities position listings.

     DIVIDENDS

     The Company does not anticipate declaring or paying dividends on its common
stock in the foreseeable future, and is currently prohibited from doing so.


                                       26





     ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA.

CONSECO, INC. AND SUBSIDIARIES
(DEBTORS-IN-POSSESSION AS OF DECEMBER 17, 2002)



                                                                                 Years ended December 31,
                                                                ---------------------------------------------------------

                                                                2002          2001         2000         1999         1998
                                                                ----          ----         ----         ----         ----
                                                                       (Amounts in millions, except per share data)
                                                                                                    
STATEMENT OF OPERATIONS DATA(a)
Insurance policy income.....................................   $3,602.3     $3,992.7     $4,170.7     $3,977.9     $3,869.6
Net investment income.......................................    1,342.9      1,564.5      1,597.0      2,300.8      1,882.4
Net realized investment gains (losses) .....................     (597.0)      (379.4)      (346.5)      (146.3)       189.6
Total revenues..............................................    4,418.3      5,467.1      5,558.6      6,249.1      6,032.9
Interest expense on corporate notes payable and
  investment borrowings (contractual interest for 2002
  of $366.5)................................................      363.1        400.0        454.3        300.2        242.2
Total benefits and expenses.................................    6,052.3      5,727.5      6,328.5      5,242.3      4,928.3
Income (loss) before income taxes, minority interest,
  discontinued operations, extraordinary gain (loss)
  and cumulative effect of accounting change................   (1,634.0)      (260.4)      (769.9)     1,006.8      1,104.6
Extraordinary gain (loss) on extinguishment of debt,
  net of income tax.........................................        8.1         17.2         (5.0)         -          (42.6)
Cumulative effect of accounting change, net of income tax...   (2,949.2)         -          (55.3)         -            -
Net income (loss)...........................................   (7,835.7)      (405.9)    (1,191.2)       595.0        467.1
Preferred stock dividends ..................................        2.1         12.8         11.0          1.5          7.8
Net income (loss) applicable to common stock................   (7,837.8)      (418.7)    (1,202.2)       593.5        459.3

PER SHARE DATA
Net income (loss), basic....................................    $(22.67)      $(1.24)      $(3.69)       $1.83        $1.47
Net income (loss), diluted..................................     (22.67)       (1.24)       (3.69)        1.79         1.40
Dividends declared per common share.........................       -             -            .10          .58          .53
Book value (deficit) per common share outstanding...........      (7.38)       12.34        11.95        15.50        16.37
Shares outstanding at year-end..............................      346.0        344.7        325.3        327.7        315.8
Weighted average shares outstanding for diluted earnings....      345.8        338.1        326.0        332.9        332.7

BALANCE SHEET DATA - PERIOD END
Total investments...........................................  $21,783.7    $25,067.1    $25,017.6    $26,431.6    $26,073.0
Goodwill  ..................................................      100.0      3,695.4      3,800.8      3,927.8      3,960.2
Total assets................................................   46,509.0     61,432.2     58,589.2     52,185.9     43,599.9
Corporate notes payable and commercial paper ...............        -        4,085.0      5,055.0      4,624.2      3,809.9
Liabilities subject to compromise...........................    4,873.3          -            -            -            -
Total liabilities...........................................   46,637.9     54,764.7     51,810.9     43,990.6     36,229.4
Company-obligated mandatorily redeemable
     preferred securities of subsidiary trusts..............    1,921.5      1,914.5      2,403.9      2,639.1      2,096.9
Shareholders' equity (deficit)..............................   (2,050.4)     4,753.0      4,374.4      5,556.2      5,273.6


- -------------

(a)  Our financial condition and results of operations have been significantly
     affected during the periods presented by the discontinued finance
     operations. Please refer to the section of Management's Discussion and
     Analysis of Consolidated Financial Condition and Results of Operations
     entitled "Financial Condition and Results of Operations of CFC -
     Discontinued Finance Operations" for additional information.



                                       27





     ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL
             CONDITION AND RESULTS OF OPERATIONS.

     CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

     In this section, we review the consolidated financial condition of Conseco
at December 31, 2002 and 2001, the consolidated results of operations for the
three years ended December 31, 2002, and, where appropriate, factors that may
affect future financial performance. Please read this discussion in conjunction
with the accompanying consolidated financial statements, notes and selected
consolidated financial data.

     All statements, trend analyses and other information contained in this
report and elsewhere (such as in filings by Conseco with the Securities and
Exchange Commission, press releases, presentations by Conseco or its management
or oral statements) relative to markets for Conseco's products and trends in
Conseco's operations or financial results, as well as other statements including
words such as "anticipate," "believe," "plan," "estimate," "expect," "project,"
"intend," "may," "will," "would," "contemplate," "possible," "attempts,"
"seeks," "should," "could," "goal," "target," "on track," "comfortable with,"
"optimistic" and other similar expressions, constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. Forward-looking statements are subject to known and unknown risks,
uncertainties and other factors which may cause actual results, performance or
achievements to be materially different from the future results, performance or
achievements expressed or implied by the forward-looking statements. Assumptions
and other important factors that could cause our actual results to differ
materially from those anticipated in our forward-looking statements include,
among other things: (i) the ability of Conseco to develop, prosecute, confirm
and consummate one or more plans of reorganization with respect to the Chapter
11 petitions under the Bankruptcy Code filed by Conseco and some of its
subsidiaries, including CFC and CIHC, Incorporated (the "Chapter 11 petitions");
(ii) the potential adverse impact of the Chapter 11 petitions on Conseco's
operations, management and employees; (iii) the outcome and timing of Conseco's
efforts to restructure and/or sell assets of Conseco Finance; (iv) general
economic conditions and other factors, including prevailing interest rate
levels, stock and credit market performance and health care inflation, which may
affect (among other things) Conseco's ability to sell its products, its ability
to make loans and access capital resources and the costs associated therewith,
the market value of Conseco's investments, the lapse rate and profitability of
policies, and the level of defaults and prepayments of loans made by Conseco;
(v) Conseco's ability to achieve anticipated synergies and levels of operational
efficiencies, including from our process excellence initiatives, and to achieve
the goals of recent restructuring initiatives undertaken at Conseco Insurance
Group; (vi) customer response to new products, distribution channels, marketing
initiatives and the Chapter 11 petitions; (vii) mortality, morbidity, usage of
health care services and other factors which may affect the profitability of
Conseco's insurance products; (viii) performance of our investments; (ix)
changes in the Federal income tax laws and regulations which may affect the
relative tax advantages of some of Conseco's products; (x) increasing
competition in the sale of insurance and annuities and in the finance business;
(xi) regulatory changes or actions, including those relating to regulation of
the financial affairs of our insurance companies, regulation of the sale,
underwriting and pricing of products, and health care regulation affecting
health insurance products; (xii) actions by rating agencies and the effects of
past or future actions by these agencies on Conseco's business, including the
impact of recent rating downgrades; (xiii) the ultimate outcome of lawsuits
filed against Conseco; (xiv) the risk factors or uncertainties listed from time
to time in Conseco's filings with the SEC and with the U.S. Bankruptcy Court in
connection with the Chapter 11 petitions; (xv) our ability to continue as a
going concern; and (xvi) our ability to obtain Bankruptcy Court approval with
respect to motions in the Chapter 11 proceedings from time to time. Other
factors and assumptions not identified above are also relevant to the
forward-looking statements, and if they prove incorrect, could also cause actual
results to differ materially from those projected.

     All written or oral forward-looking statements attributable to us are
expressly qualified in their entirety by the foregoing cautionary statement. Our
forward-looking statements speak only as of the date made. We assume no
obligation to update or to publicly announce the results of any revisions to any
of the forward-looking statements to reflect actual results, future events or
developments, changes in assumptions or changes in other factors affecting the
forward-looking statements.

     These and other factors, including the terms of the Plan, will affect the
value of our various prepetition liabilities, Trust Preferred Securities and
preferred and common stock.

     Our Plan would result in holders of CNC's common stock and preferred stock
(other than Series F Preferred Stock) receiving no value and the holders of
CNC's Trust Preferred Securities and Series F Preferred Stock receiving little
value on account of the cancellation of their interests. In addition, holders of
unsecured claims against the Debtors would, in most cases, receive less than
full recovery for the cancellation of their interests.

                                       28


     OVERVIEW

     Since commencing operations in 1982, CNC pursued a strategy of growth
through acquisitions. Primarily as a result of these acquisitions and the
funding requirements necessary to operate and expand the acquired businesses,
CNC amassed outstanding indebtedness of approximately $6.0 billion as of June
30, 2002. In 2001 and early 2002, we undertook a series of steps designed to
reduce and extend the maturities of our parent company debt. Notwithstanding
these efforts, the Company's financial position continued to deteriorate,
principally due to our leveraged condition, losses experienced by our finance
business and losses in the value of our investment portfolio.

     As a result of these developments, on August 9, 2002, we announced that we
would seek to fundamentally restructure the Company's capital, and announced
that we had retained legal and financial advisors to assist us in these efforts.
We ultimately decided to seek judicial reorganization under Chapter 11 of the
Bankruptcy Code.

     Under Chapter 11 we are operating as a debtor-in-possession. As of the
Petition Date, actions to collect prepetition indebtedness of the Debtors as
well as other pending litigation involving the Debtors, are stayed and other
contractual obligations generally may not be enforced against the Debtors.
Information regarding the Chapter 11 Cases appears in Item 1. "Proceedings Under
Chapter 11 of the Bankruptcy Code" of this Form 10-K.

     As a result of the formalization of the plan to sell the finance business
and the filing of petitions under the Bankruptcy Code by the Finance Company
Debtors, the finance business is being accounted for as a discontinued
operation. Information regarding the planned sale of the finance business
appears in Item 1. "Discontinued Finance Business - Planned Sale of CFC".

     At this time, it is not possible to predict with certainty the effect of
the Chapter 11 Cases on our business or various creditors, or when we will
emerge from Chapter 11. Our future results depend upon our confirming and
successfully implementing, on a timely basis, a plan of reorganization.

     The consolidated financial statements included in Item 8. "Financial
Statements and Supplementary Data" have been prepared on a going concern basis
which assumes continuity of operations and realization of assets and
satisfaction of liabilities in the ordinary course of business. Our Plan will
materially change amounts reported in the financial statements, which do not
give effect to all adjustments of the carrying value of assets and liabilities
that are necessary as a consequence of reorganization.

     The ability of Conseco to continue as a going concern is predicated upon
many issues, including various bankruptcy considerations and risks related to
our business and financial condition. See "Cautionary Statement Regarding
Forward-Looking Information" above.

     CRITICAL ACCOUNTING POLICIES

     The preparation of financial statements in accordance with GAAP requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Management has made estimates in the past
that we believed to be appropriate but were subsequently revised to reflect
actual experience. If our future experience differs materially from these
estimates and assumptions, our results of operations and financial condition
could be affected.

     We base our estimates on historical experience and other assumptions that
we believe are reasonable under the circumstances. We continually evaluate the
information used to make these estimates as our business and the economic
environment change. The use of estimates is pervasive throughout our financial
statements. The accounting policies and estimates we consider most critical are
summarized below. Additional information on our accounting policies is included
in the note to our consolidated financial statements entitled "Summary of
Significant Accounting Policies".

     Critical Accounting Policies Related to our Continuing Business

     Investments

     At December 31, 2002, the carrying value of our investment portfolio was
$21.8 billion. The accounting risks associated with these assets relate to the
recognition of income, our determination of other-than-temporary impairments and
our estimation of fair values.

                                       29


     We defer any fees received or costs incurred when we originate investments.
We amortize fees, costs, discounts and premiums as yield adjustments over the
contractual lives of the investments. We consider anticipated prepayments on
mortgage-backed securities in determining estimated future yields on such
securities.

     When we sell a security (other than trading securities or venture capital
investments), we report the difference between the sale proceeds and the
amortized cost (determined based on specific identification) as a realized
investment gain or loss.

     We regularly evaluate all of our investments for possible impairment based
on current economic conditions, credit loss experience and other
investee-specific developments. If there is a decline in a security's net
realizable value that is other than temporary, the decline is recognized as a
realized loss and the cost basis of the security is reduced to its estimated
fair value. For 2002, the Company recorded $556.8 million of writedowns of fixed
maturities, equity securities, and other invested assets as a result of
conditions that caused us to conclude a decline in the fair value of the
investments was other than temporary. The facts and circumstances resulting in
the other-than-temporary losses are described in the note to our accompanying
financial statements entitled "Investments".

     If a decline in value is determined to be other than temporary and the cost
basis of the security is written down to fair value, we review the circumstances
which caused us to believe that the decline was other than temporary with
respect to other investments in our portfolio. If such circumstances exist with
respect to other investments, those investments are also written down to fair
value. Future events may occur, or additional or updated information may become
available, which may necessitate future realized losses of securities in our
portfolio. Significant losses in the carrying value of our investments could
have a material adverse effect on our earnings in future periods.

     Our evaluation of investments for impairment requires significant judgments
to be made including: (i) the identification of potentially impaired securities;
(ii) the determination of their estimated fair value; and (iii) assessment of
whether any decline in estimated fair value is other than temporary. Our
periodic assessment of whether unrealized losses are "other than temporary" also
requires significant judgment. Factors considered include: (i) the extent to
which market value is less than the cost basis; (ii) the length of time that the
market value has been less than cost; (iii) whether the unrealized loss is event
driven, credit-driven or a result of changes in market interest rates; (iv) the
near-term prospects for improvement in the issuer and/or its industry; (v)
whether the investment is investment-grade and our security analyst's view of
the investment's rating and whether the investment has been downgraded since its
purchase; (vi) whether the issuer is current on all payments in accordance with
the contractual terms of the investment and is expected to meet all of its
obligations under the terms of the investment; (vii) our ability and intent to
hold the investment for a period of time sufficient to allow for any anticipated
recovery; and (viii) the underlying asset and enterprise values of the issuer.
If new information becomes available or the financial condition of the investee
changes, our judgments may change resulting in the recognition of an investment
loss at that time. At December 31, 2002, our net accumulated other comprehensive
income included gross unrealized losses on investments of $508.9 million; we
consider all such declines in estimated fair value to be temporary. Our
assessments of the potential other-than-temporary losses related to investments
in our portfolio at December 31, 2002 are described in the note to our
consolidated financial statements entitled "Investments".

     Estimated fair values for our investments are determined based on estimates
from nationally recognized pricing services, broker-dealer market makers, and
internally developed methods. Our internally developed methods require us to
make judgments about the security's credit quality, liquidity and market spread.

     Below investment grade securities have different characteristics than
investment grade corporate debt securities. Risk of loss upon default by the
borrower is significantly greater with respect to below investment grade
securities than with other corporate debt securities. Below investment grade
securities are generally unsecured and are often subordinated to other creditors
of the issuer. Also, issuers of below investment grade securities usually have
higher levels of debt and are more sensitive to adverse economic conditions,
such as recession or increasing interest rates, than are investment grade
issuers. The Company attempts to reduce the overall risk in the below investment
grade portfolio, as in all investments, through careful credit analysis, strict
investment policy guidelines, and diversification by issuer and/or guarantor and
by industry.

     During 2002, we sold $19.5 billion of fixed maturity investments which
resulted in net realized investment losses (before income taxes) of $40.2
million. Securities sold at a loss are sold for a number of reasons including:
(i) changes in the investment environment; (ii) expectation that the market
value could deteriorate further; (iii) desire to reduce our exposure to an
issuer or an industry; (iv) changes in credit quality; and (v) our analysis
indicating there is a high probability that the security is
other-than-temporarily impaired.

     We seek to closely match the estimated duration of our invested assets to
the expected duration of our insurance liabilities. When the estimated durations
of assets and liabilities are similar, exposure to interest rate risk is
minimized because a change in the value of assets should be largely offset by a
change in the value of liabilities. A mismatch of the durations of invested
assets and insurance liabilities could have a significant impact on our results
of operations and financial position.

                                       30


     For more information on our investment portfolio and our critical
accounting policies related to investments, see the note to our consolidated
financial statements entitled "Investments".

     Cost of Policies Purchased and Cost of Policies Produced

     The cost of policies purchased are the costs assigned to the right to
receive future cash flows from contracts existing at the date of an acquisition.
The cost of policies produced are those costs that vary with, and are primarily
related to, producing new insurance business. These amounts are amortized using
the interest rate credited to the underlying policy: (i) in relation to the
estimated gross profits for universal life-type products; or (ii) in relation to
future anticipated premium revenue for other products.

     At December 31, 2002, the combined balance of our cost of policies
purchased and cost of policies produced was $3.2 billion. The recovery of these
costs is dependent on the future profitability of the related business.

     Each year, we evaluate the recoverability of the unamortized balance of the
cost of policies purchased and the cost of policies produced. We consider
estimated future gross profits or future premiums, expected mortality or
morbidity, interest earned and credited rates, persistency and expenses in
determining whether the balance is recoverable. If we determine a portion of the
unamortized balance is not recoverable, it is charged to amortization expense.

     The assumptions we use to amortize and evaluate the recoverability of the
cost of policies produced and cost of policies purchased involve significant
judgment. A revision to these assumptions could have a significant adverse
effect on our results of operations and financial position in future periods.

     Goodwill

     Goodwill is the excess of the amount we paid to acquire a company over the
fair value of its net assets. As more fully described in the note to our
consolidated financial statements entitled "Summary of Significant Accounting
Policies", the Company recorded the cumulative effect of the accounting change
for goodwill impairment of $2,949.2 million in 2002. In addition, we recognized
an impairment charge of $500 million in 2002, due to changes in the value of our
insurance businesses resulting from events occurring during 2002.

     The significant factors used to determine the amount of the impairments
included analyses of industry market valuations, historical and projected
performance of our insurance segment, discounted cash flow analyses and the
market value of our capital. The valuations utilized the best available
information, including assumptions and projections we considered reasonable and
supportable. The assumptions we used to determine the discounted cash flows
involved significant judgments regarding the best estimate of future premiums,
expected mortality and morbidity, interest earned and credited rates,
persistency and expenses. The discount rates used were based on analyses of the
weighted average cost of capital for other insurance companies and considered
the specific risk factors related to Conseco. Pursuant to the guidance in
Statement of Financial Accounting Standards No. 142, "Goodwill and Other
Intangible Assets" ("SFAS 142"), quoted market prices in active markets are the
best evidence of fair value and shall be used as the basis for measurement, if
available. Management believes that the assumptions and estimates used are
reasonable given all available facts and circumstances. However, if projected
cash flows are not realized in the future, we may be required to recognize
additional impairments. Subsequent impairment tests will be performed on an
annual basis, or more frequently if circumstances indicate a possible
impairment. Subsequent impairments, if any, would be classified as an operating
expense.


                                    31


     Income Taxes

     Our income tax expense includes deferred income taxes arising from
temporary differences between the financial reporting and tax bases of assets
and liabilities, capital loss carryforwards and operating loss carryforwards.
The net deferred tax assets totalled $1,719.6 million at December 31, 2002
(including $925.7 million of deferred tax assets related to CFC which is
classified as a discontinued operation). In assessing the realization of our
deferred income tax assets, we consider whether it is more likely than not that
the deferred income tax assets will be realized. The ultimate realization of our
deferred income tax assets depends upon generating future taxable income during
the periods in which our temporary differences become deductible and before our
NOLs expire. We evaluate the recoverability of our deferred income tax assets by
assessing the need for a valuation allowance on a quarterly basis.

     A valuation allowance of $1,719.6 million (of which $925.7 million relates
to discontinued operations) has been provided for the entire net deferred income
tax asset balance at December 31, 2002, as we believe the realization of such
asset in future periods is uncertain. We reached this conclusion after
considering the availability of taxable income in prior carryback years, tax
planning strategies, and the likelihood of future taxable income exclusive of
reversing temporary differences and carryforwards. This conclusion was greatly
influenced by recent unfavorable developments affecting the Company such as
rating downgrades that decrease the Company's likelihood to generate adequate
future taxable income to realize the tax benefits.

     The Company established valuation contingencies related to certain tax
uncertainties of the insurance companies we acquired on the date of their
acquisition. We have determined that $146.2 million of such valuation
contingencies are no longer necessary because the tax uncertainties no longer
exist. Pursuant to Financial Accounting Standards Board Statement No. 109,
"Accounting for Income Taxes", the benefit for the reduction of such valuation
contingencies is first applied to reduce the related goodwill balances related
to the acquisition. Accordingly, we reduced such valuation contingencies
(increasing deferred taxes) and goodwill balances by $146.2 million during 2002.

     At December 31, 2002, Conseco had federal income tax loss carryforwards of
$1,757.4 million available (subject to various statutory restrictions) for use
on future tax returns (including $552.4 million of federal income tax
carryforwards attributable to discontinued operations). These carryforwards will
expire as follows: $2.3 million in 2003; $11.2 million in 2004; $4.9 million in
2005; $.6 million in 2006; $7.9 million in 2007; $7.5 million in 2008; $14.7
million in 2009; $30.7 million in 2010; $6.2 million in 2011; $10.1 million in
2012; $43.9 million in 2013; $6.9 million in 2014; $60.5 million in 2016; $90.0
million in 2017; $244.6 million in 2018; $159.1 million in 2019; $594.3 million
in 2020; and $462.0 million in 2022.

     The Company is currently in bankruptcy and expects to restructure and
emerge from bankruptcy. As a result of the restructuring that is expected to
occur upon the anticipated emergence from bankruptcy, the aggregate outstanding
indebtedness will be substantially reduced. The cancellation of the indebtedness
is expected to result in the realization of COD Income. The COD Income will not
be recognized as taxable income because the Company is under the jurisdiction of
a court in a Title 11 bankruptcy proceeding. Instead, as a consequence of such
exclusion from taxable income, the Company must reduce its tax attributes by the
amount of COD Income, which it excluded from taxable income. Tax attributes are
reduced in the following order: (i) NOLs; (ii) tax credits and capital loss
carryforwards; and (iii) tax basis in assets. Although it is expected that a
reduction of tax attributes will be required, because the determination of the
COD Income is dependent upon the fair market value of the various debt and
capital instruments at the Effective Date, the exact amount of the reduction
cannot be predicted.

     The restructuring will be accomplished by the formation of New Conseco,
which will issue new debt, preferred stock and common stock, in exchange for
substantially all of the assets of the Company. The Company intends to
accomplish this transaction as a G Reorganization. Assuming that the
restructuring constitutes a G Reorganization, the Company will recognize no gain
or loss with respect to such transactions to effect the G Reorganization, the
Company's taxable year will close on the Effective Date and New Conseco will
begin a new taxable year on the day after the Effective Date, and all of the
Company's tax attributes existing on the Effective Date, including NOLs and
other loss and credit carryovers will be transferred to New Conseco as of the
close of the Effective Date.

     Any NOLs and other loss and credit carryovers transferred to New Conseco
will be limited under the Code to a maximum amount in any one year. This amount
is equal to the product of the fair market value of the loss corporation's
outstanding stock immediately before the ownership change and the long term
tax-exempt rate (which is published monthly by the Treasury Department and most
recently was approximately 4.61 percent) in effect for the month in which the
ownership change occurs. This amount will not be known until the Effective Date.

                                       32


     Liabilities for Insurance Products

     At December 31, 2002, the total balance of our liabilities for insurance
and asset accumulation products was $22.8 billion. These liabilities are often
payable over an extended period of time and the profitability of the related
products is dependent on the pricing of the products and other factors.
Differences between what we expected when we sold these products and actual
experience could result in future losses.

     We calculate and maintain reserves for the estimated future payment of
claims to our policyholders based on actuarial assumptions. For our health
insurance business, we establish an active life reserve plus a liability for due
and unpaid claims, claims in the course of settlement and incurred but not
reported claims, as well as a reserve for the present value of amounts not yet
due on claims. Many factors can affect these reserves and liabilities, such as
economic and social conditions, inflation, hospital and pharmaceutical costs,
changes in doctrines of legal liability and extra-contractual damage awards.
Therefore, the reserves and liabilities we establish are necessarily based on
extensive estimates, assumptions and historical experience. Establishing
reserves is an uncertain process, and it is possible that actual claims will
materially exceed our reserves and have a material adverse effect on our results
of operations and financial condition. Our financial results depend
significantly upon the extent to which our actual claims experience is
consistent with the assumptions we used in determining our reserves and pricing
our products. If our assumptions with respect to future claims are incorrect,
and our reserves are insufficient to cover our actual losses and expenses, we
would be required to increase our liabilities, negatively affecting our
operating results.

     Liabilities for insurance products are calculated using management's best
judgments of mortality, morbidity, lapse rates, investment experience and
expense levels that are based on the Company's past experience and standard
actuarial tables.

     Liabilities for Loss Contingencies Related to Lawsuits and Our Guarantees
     of Bank Loans and Related Interest Loans

     We are involved on an ongoing basis in lawsuits relating to our operations,
including with respect to sales practices, and we and current and former
officers and directors are defendants in pending class action lawsuits asserting
claims under the securities laws and in derivative lawsuits. The ultimate
outcome of these lawsuits cannot be predicted with certainty. We recognize an
estimated loss from these loss contingencies when we believe it is probable that
a loss has been incurred and the amount of the loss can be reasonably estimated.
However, it is difficult to measure the actual loss that might be incurred
related to litigation. The ultimate outcome of these lawsuits could have a
significant impact on our results of operations and financial position.

     We also establish a liability for potential losses related to our
guarantees of bank loans and the related interest loans to approximately 155
current and former directors, officers and key employees for the purchase of
Conseco common stock. This liability is based on an assessment of the value of
collateral held for the loans, the personal wealth of the participants in the
stock purchase plan, and other factors (such as current and expected future
earnings of the participants) which could affect the participants' ability to
repay the loans. As of December 31, 2002, we had guaranteed loans totaling
$481.3 million. In addition, Conseco has provided loans to participants for
interest on the bank loans totaling $179.2 million. During 2002, Conseco
purchased $55.5 million of loans from the banks utilizing cash held in a
segregated cash account as collateral for our guarantee of the bank loans
(including accrued interest, the balance on these loans was $56.7 million at
December 31, 2002). At December 31, 2002, we had recognized a reserve liability
of $660.0 million based on our estimate. A change in the ability of participants
to meet their obligations related to the bank loans and related interest loans
would have an effect on our results of operations and financial position.

     Critical Accounting Policies Related to Our Discontinued Finance Business

     Retained Interests in Securitization Trusts and Guarantee Liability Related
     to Interests in Securitization Trusts Held by Others

     Retained interests in securitization trusts represent CFC's right to
receive certain future cash flows from securitization transactions structured
prior to September 8, 1999, and the value of these interests totaled $252.6
million at December 31, 2002. Such cash flows generally are equal to the value
of the principal and interest to be collected on the underlying financial
contracts of each securitization in excess of the sum of the principal and
interest to be paid on the securities sold and contractual servicing fees. CFC
carries retained interests at estimated fair value. CFC estimates fair value by
discounting the projected cash flows over the expected life of the receivables
sold using current estimates of future prepayment, default, loss and interest
rates. CFC records any unrealized gain or loss determined to be temporary, net
of tax, as a component of shareholders' equity. Declines in value are considered
to be other than temporary when: (i) the fair value of the security is less than
its carrying value; and (ii) the timing and/or amount of cash expected to be
received from the security has changed adversely from the previous valuation
which determined the carrying value of the security. When declines in value
considered to be other than temporary occur, CFC reduces the amortized cost to
estimated fair value and recognizes a loss in its statement of operations. The
assumptions used to determine new values are based on CFC's internal
evaluations.

                                       33

     The estimation of the value of CFC's retained interests in securitization
trusts requires significant judgment. CFC has recognized significant impairment
charges when the retained interests did not perform as well as anticipated based
on the assumptions and expectations of CFC management.

     CFC's current valuation of retained interests in securitization trusts may
prove inaccurate in future periods. In the securitizations to which these
retained interests relate, CFC has retained certain contingent risks in the form
of guarantees of certain lower-rated securities issued by the securitization
trusts. As of December 31, 2002, the total nominal amount of these guarantees
was $1.4 billion. The net present value of expected future guarantee payments
are recognized as a liability by CFC and totaled $326.7 million at December 31,
2002. Management of CFC valued the guarantee liability using the same
assumptions used in valuing its retained interests in securitization trusts. If
CFC has to make more payments on these guarantees than anticipated, or CFC
experiences higher than anticipated rates of loan prepayments, including those
due to foreclosures or charge-offs, or any adverse changes in CFC's other
assumptions used for such valuation (such as interest rates and loss mitigation
policies), CFC could be required to recognize additional impairment charges
(including potential payments related to $1.4 billion of guarantees) which could
have a material adverse effect on CFC's financial condition or results of
operations. CFC considers any estimated payments related to these guarantees in
the projected cash flows used to determine the value of its retained interests
in securitization transactions.

     During 2002, CFC recognized an impairment charge related to the value of
its retained interests in securitization trusts of $1,077.2 million. CFC also
recognized a $336.5 million increase in the valuation allowance related to
servicing rights as a result of changes in assumptions in 2002. See "Finance
Operations - Impairment Charge" included in this "Management's Discussion and
Analysis of Financial Condition" for additional discussion.

     Finance Receivables

     At December 31, 2002, the balance of CFC's finance receivables was $14.5
billion. This value is significantly affected by CFC's assessment of the
collectibility of the receivables, servicing actions and the provision for
credit losses that CFC establishes.

     The provision for credit losses charged to expense is based upon an
assessment of current and historical loss experience, loan portfolio trends, the
value of collateral, prevailing economic and business conditions, and other
relevant factors. CFC reduces the carrying value of finance receivables to net
realizable value at the earlier of: (i) six months of contractual delinquency;
or (ii) when CFC takes possession of the property securing the finance
receivable. Estimates of the provision are revised each period, and changes are
recorded in the period they become known. A significant change in the level of
collectible finance receivables would have a significant adverse effect on CFC's
results of operations and financial position in future periods.

     RISK FACTORS

     Conseco and its businesses are subject to a number of risks including: (i)
bankruptcy related risk factors; and (ii) general business and financial risk
factors. Any or all of such factors, which are enumerated below, could have a
material adverse effect on the business, financial condition or results of
operations of Conseco. Also see "Cautionary Statement Regarding Forward-Looking
Statements" above. For additional risk factors specific to the Chapter 11 cases,
readers of this report should refer to the Plan and the Disclosure Statement,
which were filed with the SEC on March 21, 2003 as exhibits to CNC's Current
Report on Form 8-K dated March 18, 2003.

     Certain Bankruptcy Considerations

     The Bankruptcy Filing May Further Disrupt Our Operations and the Operations
     of Our Subsidiaries.

     The impact that the Chapter 11 Cases may have on our operations and the
operations of our subsidiaries cannot be accurately predicted or quantified.
Since the announcement of our intention to seek a restructuring of our capital
in August 2002 and the filing of the Chapter 11 Cases, we have suffered
significant disruptions in our operations. Our leveraged condition and liquidity
difficulties have eliminated CFC's access to the securitization markets, which
have historically served as CFC's main source of funding. As a result, CFC has
had to terminate the origination of loans which it is unable to sell profitably
in the whole-loan market. In addition, insurance regulators in each of the
states in which our insurance subsidiaries are domiciled have been monitoring
the Company's activities associated with its financial restructuring. Bankers
National Life Insurance Company and Conseco Life Insurance Company of Texas, our
insurance subsidiaries domiciled in Texas, each entered into consent orders with
the Commissioner of Insurance for the State of Texas, which, among other things,
has limited their ability to pay dividends without regulatory approval and to
make disbursements other than in the ordinary course of business. Conseco Life
Insurance Company of Texas is the parent of all of the Company's insurance
subsidiaries, except for Bankers National Life Insurance Company. In August
2002, A.M. Best further downgraded the financial strength ratings of our primary
insurance subsidiaries to "B (fair)." These ratings downgrades and other adverse
publicity concerning the Company's financial condition have caused sales of our
insurance products to decline and

                                       34

policyholder redemptions and lapses to increase. In some cases, we have
experienced defections among our sales force of agents and/or have increased
commissions in order to retain them.

     The continuation of the Chapter 11 Cases, particularly if the Plan is not
approved or confirmed in the time frame currently contemplated, could further
adversely affect our operations and relationship with our customers, employees,
regulators, distributors and agents. If confirmation and consummation of the
Plan do not occur expeditiously, the Chapter 11 Cases could result in, among
other things, increased costs for professional fees and similar expenses. In
addition, prolonged Chapter 11 Cases may make it more difficult to retain and
attract management and other key personnel and would require senior management
to spend a significant amount of time and effort dealing with our financial
reorganization instead of focusing on the operation of our business.

     We May Not Be Able to Obtain Confirmation of the Plan.

     We cannot assure you that we will receive the requisite acceptances to
confirm the Plan. Even if we receive the requisite acceptances, we cannot assure
you that the Bankruptcy Court will confirm the Plan. The Bankruptcy Court could
also decline to confirm the Plan if it found that any of the statutory
requirements for confirmation had not been met, including that the terms of the
Plan are fair and equitable to non-accepting holders of claims. Section 1129 of
the Bankruptcy Code sets forth the requirements for confirmation and requires,
among other things, (i) a finding by the Bankruptcy Court that the Plan "does
not unfairly discriminate" and is "fair and equitable" with respect to any
non-accepting holders of claims, (ii) confirmation of the Plan is not likely to
be followed by a liquidation or a need for further financial reorganization and
(iii) the value of distributions to non-accepting holders of claims and
interests within a particular class under the Plan will not be less than the
value of distributions such holders would receive if the Company were liquidated
under Chapter 7 of the Bankruptcy Code. While there can be no assurance that
these requirements will be met, we believe that the Plan will not be followed by
a need for further financial reorganization and that non-accepting holders
within each class under the Plan will receive distributions at least as great as
would be received following a liquidation under Chapter 7 of the Bankruptcy Code
when taking into consideration all administrative claims and costs associated
with any such Chapter 7 case. We believe that holders of equity interests in
Conseco would receive no distribution under either a liquidation pursuant to
Chapter 7 or Chapter 11.

     The confirmation and consummation of the Plan are also subject to various
conditions. One condition is the cancellation of the guarantee CIHC has given
Lehman for up to $125 million of obligations CFC owes to Lehman. The CFC
unsecured creditors have indicated that they intend to bring a lawsuit in the
Chapter 11 Cases to prevent Lehman from getting paid in full from the proceeds
of the sale of CFC's assets. If such suit were successful, the guarantee
provided by CIHC may not be cancelled resulting in the plan condition not being
satisfied. We can not predict the outcome of the threatened lawsuit by the CFC
unsecured creditors or the delay to consummation of the Plan that may result
from any such lawsuit against Lehman. If the Plan is not confirmed, it is
unclear whether a restructuring of Conseco could be implemented and what
distributions holders of claims or equity interests ultimately would receive
with respect to their claims or equity interests. If an alternative
reorganization could not be agreed to, it is possible that we would have to
liquidate our assets, in which case it is likely that holders of claims and
equity interests would receive substantially less favorable treatment than they
would receive under the Plan.

     The Finance Company Debtors May be Unable to Close the Sale of CFC Assets

     The Finance Company Debtors anticipate that they will be able to close the
sale of CFC assets to CFN and GE. There are many factors outside of the Finance
Company Debtors control, however, including the ability of CFN and/or GE to
finance the purchase and the ability of the Finance Company Debtors to obtain
necessary governmental consents to the sale or transfer of certain of their
assets. Moreover, it is possible that the Finance Company Debtors may not be
able to meet various closing conditions, and that either CFN or GE would elect
to cancel their respective sale agreements as a result of these failures. If
these sales transactions are not completed, it is possible that the Finance
Company Debtors would have to liquidate their assets under Chapter 7 of the
Bankruptcy Code.

     Risks Related To Our Business And Financial Condition

     Our Degree of Leverage May Limit Our Financial and Operating Activities.

     We will have significant indebtedness even if the Plan is consummated.
Furthermore, our historical capital requirements have been significant and our
future capital requirements could vary significantly and may be affected by
general economic conditions, industry trends, performance, and many other
factors that are not within our control. Recently, we have had difficulty
financing our operations due, in part, to our significant losses and leveraged
condition, and we cannot assure you that we will be able to obtain financing in
the future. Even if the Plan is approved and consummated, we cannot assure you
that we will not experience losses. Our profitability and ability to generate
cash flow will likely depend upon our ability to successfully implement our
business strategy and meet or exceed the results forecasted in the projections.
However, we cannot assure you that we will be able to accomplish these results.

                                       35

     A Failure to Improve and Maintain the Financial Strength Ratings of Our
     Insurance Subsidiaries Could Negatively Impact Our Operations and Financial
     Results.

     An important competitive factor for our insurance subsidiaries is the
ratings they receive from nationally recognized rating organizations as
discussed in Item 1. "Competition." In July 2002, A.M. Best downgraded the
financial strength ratings of Conseco's primary insurance subsidiaries to "B++
(Very Good)" and placed the ratings "under review with negative implications."
On August 14, 2002, A.M. Best further lowered the financial strength ratings of
our primary insurance subsidiaries from "B++ (very good)" to "B (fair)". The
A.M. Best downgrades caused sales of our insurance products to decline and
policyholder redemptions and lapses to increase. In some cases, the downgrades
also caused defections among our independent agent sales force and increases in
the commissions we must pay. These events have had a material adverse effect on
our operations, financial results and liquidity.

     Although our Plan contemplates that our insurance subsidiaries will achieve
a category "A" rating by the end of 2004, we cannot assure you that we will be
able to achieve or maintain this rating. If we fail to achieve and maintain a
category "A" rating, sales of our insurance products could continue to fall and
additional existing policyholders may redeem or lapse their policies, adversely
affecting our future operations, financial results and liquidity.

     The Covenants in the New Credit Facility Restrict Our Activities and
     Require Us to Meet or Maintain Various Financial Ratios and Minimum
     Insurance Ratings.

     Our Plan contemplates that we will enter into a senior secured credit
facility (the "New Credit Facility") with our lenders in connection with our
reorganization. We have agreed to a number of covenants and other provisions
that restrict our ability to engage in various financing transactions and pursue
certain operating activities without the prior consent of the lenders under the
New Credit Facility. We have also agreed to meet or maintain various financial
ratios and minimum financial strength ratings for our insurance subsidiaries.
For instance, if we experience a ratings downgrade following confirmation of the
Plan, if we fail to achieve an "A-" rating by a specified date following
confirmation of the Plan or if we experience a ratings downgrade after achieving
an "A-" rating, we will suffer an event of default under the New Credit
Facility. Our ability to meet these financial and ratings covenants may be
affected by events beyond our control. Although we expect to be in compliance
with these requirements as of the date the Company emerges from bankruptcy,
these requirements represent significant restrictions on the manner in which we
may operate our business. If we default under any of these requirements, the
lenders could declare all outstanding borrowings, accrued interest and fees to
be due and payable. If that were to occur, we cannot assure you that we would
have sufficient liquidity to repay or refinance this indebtedness or any of our
other debts.

     CNC and CIHC are Holding Companies and Depend on their Subsidiaries for
     Cash.

     CNC and CIHC are holding companies with no business operations of their
own; they depend on their operating subsidiaries for cash to make principal and
interest payments on debt, and to pay administrative expenses and income taxes.
The cash CNC and CIHC receive from insurance subsidiaries consists of fees for
services, tax sharing payments, dividends and distributions, and from our
non-insurance subsidiaries, loans and advances. A deterioration in the financial
condition, earnings or cash flow of the material subsidiaries of CNC or CIHC for
any reason could limit such subsidiaries' ability to pay cash dividends or other
disbursements to CNC and/or CIHC, which, in turn, would limit CNC's and/or
CIHC's ability to meet debt service requirements and satisfy other financial
obligations.

     The ability of our insurance subsidiaries to pay dividends is subject to
state insurance department regulations. These regulations generally permit
dividends to be paid from earned surplus of the insurance company for any
12-month period in amounts equal to the greater of (or in a few states, the
lesser of): (i) net gain from operations or net income for the prior year; or
(ii) 10 percent of capital and surplus as of the end of the preceding year. Any
dividends in excess of these levels require the approval of the director or
commissioner of the applicable state insurance department. As described in Item
1. "Government Regulation", Bankers National Life Insurance Company and Conseco
Life Insurance Company of Texas (on behalf of itself and its subsidiaries),
entered into consent orders with the Commissioner of Insurance for the State of
Texas on October 30, 2002. These consent orders, among other things, limit the
ability of our insurance subsidiaries to pay dividends. In addition, actions
that we may need to take to improve the ACLRBC ratios of our insurance
subsidiaries could affect the ability of our insurance subsidiaries to pay
dividends.

     Our results for future periods are subject to numerous uncertainties. We
may encounter liquidity problems, which could affect our ability to meet our
obligations while attempting to meet competitive pressures or adverse economic
conditions following the confirmation of the Plan.

                                       36

     The Obligations of CNC and CIHC are Structurally Subordinated to the
     Obligations of CNC's and CIHC's Subsidiaries.

     Because our operations are conducted through subsidiaries, claims of the
creditors of those subsidiaries (including policyholders) will rank senior to
claims to distributions from the subsidiaries, which we depend on to make
payments on our obligations. CIHC's subsidiaries excluding CFC had indebtedness
for borrowed money (including capitalized lease obligations but excluding
indebtedness to affiliates), policy reserves and other liabilities of
approximately $24.1 billion at December 31, 2002. The obligations of CNC and
CIHC, as parent holding companies, will rank effectively junior to these
liabilities.

     If an insurance company subsidiary were to be liquidated, that liquidation
would be conducted under the insurance law of its state of domicile by such
state's insurance regulator as the receiver with respect to such insurer's
property and business. In the event of a default on our debt or our insolvency,
liquidation or other reorganization, our creditors and stockholders will not
have the right to proceed against the assets of our insurance subsidiaries or to
cause their liquidation under federal and state bankruptcy laws.

     Our Insurance Business Performance May Decline if Our Premium Rates Are Not
     Adequate.

     We set the premium rates on our health insurance policies based on facts
and circumstances known at the time we issue the policies and on assumptions
about numerous variables, including the actuarial probability of a policyholder
incurring a claim, the severity of the claim, and the interest rate earned on
our investment of premiums. In setting premium rates, we consider historical
claims information, industry statistics, the rates of our competitors and other
factors. If our actual claims experience proves to be less favorable than we
assumed and we are unable to raise our premium rates, our financial results may
be adversely affected. Our estimates of insurance liabilities assume we will be
able to raise rates if future experience results in blocks of our health
insurance business becoming unprofitable. We generally cannot raise our health
insurance premiums in any state unless we first obtain the approval of the
insurance regulator in that state. We review the adequacy of our premium rates
regularly and file rate increases on our products when we believe existing
premium rates are too low. It is possible that we will not be able to obtain
approval for premium rate increases from currently pending requests or requests
filed in the future. If we are unable to raise our premium rates because we fail
to obtain approval for a rate increase in one or more states, our net income may
decrease. If we are successful in obtaining regulatory approval to raise premium
rates due to unfavorable actual claims experience, the increased premium rates
may reduce the volume of our new sales and cause existing policyholders to allow
their policies to lapse. This could result in anti-selection if healthier
policyholders allow their policies to lapse. This would reduce our premium
income in future periods. Increased lapse rates also could require us to expense
all or a portion of the deferred policy costs relating to lapsed policies in the
period in which those policies lapse, adversely affecting our financial results
in that period.

     We May Not Achieve the Goals of Certain Initiatives We Have Undertaken With
     Respect to the Restructuring of Our Principal Insurance Business.

     Several of our principal insurance businesses have experienced substantial
recent losses in their investment portfolio, declining sales and expense levels
that do not match product pricing. We have adopted several initiatives designed
to improve these operations, including focusing sales efforts on higher margin
products; reducing operating expenses by eliminating or reducing the costs of
marketing certain products; personnel reductions and streamlined administrative
procedures; stabilizing the profitability of inforce business, particularly
long-term care policies; combining certain legal insurance entities to reduce
burdens associated with statutory capital requirements; and improving the
performance of investments by reducing exposure to credit events and certain
types of higher risk assets. We have only recently adopted these initiatives and
we cannot assure you that they will be successfully implemented.

     Our Reserves for Future Insurance Policy Benefits and Claims May Prove To
     Be Inadequate, Requiring Us To Increase Liabilities and Resulting In
     Reduced Net Income and Shareholders' Equity.

     We calculate and maintain reserves for the estimated future payment of
claims to our policyholders based on assumptions made by our actuaries. For our
health insurance business, we establish an active life reserve plus a liability
for due and unpaid claims, claims in the course of settlement, and incurred but
not reported claims, as well as a reserve for the present value of amounts not
yet due on claims. Many factors can affect these reserves and liabilities, such
as economic and social conditions, inflation, hospital and pharmaceutical costs,
changes in doctrines of legal liability, and extra-contractual damage awards.
Therefore, the reserves and liabilities we establish are necessarily based on
extensive estimates, assumptions and prior years' statistics. Establishing
reserves is an uncertain process, and it is possible that actual claims will
materially exceed our reserves and have a material adverse effect on our results
of operations and financial condition. Our financial performance depends
significantly upon the extent to which our actual claims experience is
consistent with the assumptions we used in setting our reserves and pricing our
policies. If our assumptions with respect to future claims are incorrect, and
our reserves are insufficient to cover our actual losses and expenses, we would
be required to increase our liabilities resulting in an adverse effect to our
financial results and financial position.

                                       37

     Our Insurance Subsidiaries May be Required to Pay Assessments to Fund
     Policyholder Losses or Liabilities; This May Have a Material Adverse Effect
     on Our Results of Operations.

     The solvency or guaranty laws of most states in which an insurance company
does business may require that company to pay assessments (up to certain
prescribed limits) to fund policyholder losses or liabilities of insurance
companies that become insolvent. Recent insolvencies of insurance companies
increase the possibility that these assessments may be required. These
assessments may be deferred or forgiven under most guaranty laws if they would
threaten an insurer's financial strength and, in certain instances, may be
offset against future premium taxes. We cannot estimate the likelihood and
amount of future assessments. Any future assessments may have a material adverse
effect on our financial results and financial position.

     We are Subject to Further Risk of Loss Notwithstanding Our Reinsurance
     Arrangements.

     We transfer exposure to certain risks to others through reinsurance
arrangements. Under these arrangements, other insurers assume a portion of our
losses and expenses associated with reported and unreported claims in exchange
for a portion of policy premiums. The availability, amount and cost of
reinsurance depend on general market conditions and may vary significantly.
Furthermore, we face credit risk with respect to reinsurance. When we obtain
reinsurance, we are still liable for those transferred risks if the reinsurer
cannot meet its obligations. Therefore, the inability of our reinsurers to meet
their financial obligations could materially affect our operations and financial
condition.

     We Are Subject to Extensive Regulation.

     Our insurance business is subject to extensive regulation and supervision
in the jurisdictions in which we operate, which is primarily for the benefit and
protection of our customers, and not for the benefit of our investors or
creditors. Our insurance subsidiaries are subject to state insurance laws that
establish supervisory agencies with broad administrative powers relative to
granting and revoking licenses to transact business, regulating sales and other
practices, licensing agents, approving policy forms, setting reserve and
solvency requirements, determining the form and content of required statutory
financial statements, limiting dividends and prescribing the type and amount of
investments.

     We have been operating under heightened scrutiny from state insurance
regulators. As described in Item 1. "Competition", our insurance subsidiaries
domiciled in Texas, Bankers National Life Insurance Company and Conseco Life
Insurance Company of Texas (on behalf of itself and its subsidiaries), entered
into consent orders with the Commissioner of Insurance for the State of Texas on
October 30, 2002.

     In Certain Circumstances, Regulatory Authorities May Place Our Insurance
     Subsidiaries Under Regulatory Control.

     Our insurance subsidiaries are subject to risk-based capital requirements.
These requirements were designed to evaluate the adequacy of statutory capital
and surplus in relation to investment and insurance risks associated with: asset
quality; mortality and morbidity; asset and liability matching; and other
business factors. The requirements are used by states as an early warning tool
to discover potential weakly-capitalized companies for the purpose of initiating
regulatory action. Generally, if an insurer's ACLRBC falls below specified
levels, the insurer would be subject to different degrees of regulatory action
depending upon the magnitude of the deficiency. Possible regulatory actions
range from requiring the insurer to propose actions to correct the ACLRBC
deficiency to placing the insurer under regulatory control. The 2002 statutory
annual statements filed with the state insurance regulators of each of our
insurance subsidiaries reflected total adjusted capital in excess of levels
subjecting the subsidiary to any regulatory action. However, our ACLRBC ratios
have declined significantly over the last year and some of our subsidiary's
capital levels are near the level which would require them to submit a
comprehensive plan aimed at improving their capital position to the regulatory
authority.

     Recently Enacted and Pending or Future Legislation Could Also Affect the
     Financial Performance of Our Insurance Operations.

     During recent years, the health insurance industry has experienced
substantial changes, including those caused by healthcare legislation. Recent
federal and state legislation and legislative proposals relating to healthcare
reform contain features that could severely limit or eliminate our ability to
vary our pricing terms or apply medical underwriting standards with respect to
individuals which could have the effect of increasing our loss ratios and have
an adverse effect on our financial results. In particular, Medicare reform and
legislation concerning prescription drugs could affect our ability to price or
sell our products.

     Proposals currently pending in Congress and some state legislatures may
also affect our financial results. These proposals include the implementation of
minimum consumer protection standards for inclusion in all long-term care
policies, including: guaranteed premium rates; protection against inflation;
limitations on waiting periods for pre-existing conditions; setting standards
for sales practices for long-term care insurance; and guaranteed consumer access
to information about insurers (including lapse and

                                       38

replacement rates for policies and the percentage of claims denied). Enactment
of any of these proposals could adversely affect our financial results.

     In addition, the federal government may seek to regulate the insurance
industry, and recent government regulation may increase competition in the
insurance industry and may affect our insurance subsidiaries' current sales
methods. Although the federal government generally does not directly regulate
the insurance industry, federal initiatives often have a direct impact on the
insurance business. Current and proposed measures that may significantly affect
the insurance business generally include limitations on antitrust immunity and
minimum solvency requirements.

     Changing Interest Rates May Adversely Affect Our Results of Operations.

     Our profitability may be directly affected by the level of and fluctuations
in interest rates. While we monitor the interest rate environment and have
previously employed hedging strategies designed to mitigate the impact of
changes in interest rates, our financial results could be adversely affected by
changes in interest rates. Our spread-based insurance and annuity business is
subject to several inherent risks arising from movements in interest rates,
especially if we fail to anticipate or respond to such movements. First,
interest rate changes can cause compression of our net spread between interest
earned on investments and interest credited on customer deposits, thereby
adversely affecting our results. Second, if interest rate changes produce an
unanticipated increase in surrenders of our spread-based products, we may be
forced to sell investment assets at a loss in order to fund such surrenders. At
December 31, 2002, approximately 20 percent of our total insurance liabilities
(or approximately $4.5 billion) could be surrendered by the policyholder without
penalty. Finally, changes in interest rates can have significant effects on the
performance of our mortgage-backed securities portfolio, including
collateralized mortgage obligations, as a result of changes in the prepayment
rate of the loans underlying such securities. We follow asset/liability
strategies that are designed to mitigate the effect of interest rate changes on
our profitability. However, there can be no assurance that management will be
successful in implementing such strategies and achieving adequate investment
spreads.

     Litigation and Regulatory Investigations May Harm Our Financial Strength
     and Reduce Our Profitability.

     Insurance companies historically have been subject to substantial
litigation resulting from claims disputes and other matters. In addition to the
traditional policy claims associated with their businesses, insurance companies
are increasingly facing policyholder suits, class actions and disputes with
reinsurers. The class actions and policyholder suits are often in connection
with insurance sales practices, policy and claims administration practices and
other market conduct issues. State insurance departments are increasingly
focusing on sales practices and product issues in their market conduct
examinations. Negotiated settlements of class action and other lawsuits have had
a material adverse effect on the business, financial condition and results of
operations of insurance companies. As a result of these trends, we are in the
ordinary course of our business a plaintiff or defendant in actions arising out
of our insurance business and investment operations, including class actions and
reinsurance disputes, and, from time to time, are also involved in various
governmental and administrative proceedings. Such litigation and proceedings may
harm our financial strength and reduce our profitability. We cannot assure you
that such litigation will not adversely affect our future business, financial
condition or results of operations.

     A Delay or an Unfavorable Outcome in the Dispute Surrounding Our Interest
     in the GM Building May Adversely Affect Our Financial Condition and Our
     Ability to Fund Our Business Plan.

     As described in Item 3. "Legal Proceedings", entities controlled by Donald
J. Trump currently dispute CNC's subsidiary's ability to acquire the GM Building
and later to monetize that asset. This dispute could delay our subsidiary's
ability to sell the GM Building and distribute the profits of that sale. Our
Plan presumes that our interest in the GM Building will be monetized in the
first quarter of 2004, although timing of actual resolution of the dispute with
Trump and sale of the building is not certain. The mortgages on the GM Building,
which total $700 million, are due on August 1, 2003.

     The Markets in Which We Compete Are Highly Competitive.

     Each of the markets in which we operate is highly competitive. Competitors
include other life insurers, commercial banks, thrifts, mutual funds and
broker-dealers. Many of our competitors in different segments and regions are
larger companies that have greater capital, technological and marketing
resources, and have access to capital at a lower cost. Because the actual cost
of products is unknown when they are sold, we are subject to competitors who may
sell a product at a price that does not cover its actual cost. Agents placing
insurance business with our insurance subsidiaries generally are compensated on
a commission basis. There are many life and health insurance companies in the
U.S. Some of these companies may pay higher commissions and charge lower premium
rates, and many companies have more substantial resources than we do. Publicity
about our recent financial difficulties may cause agents to place business with
other insurers.

     We must attract and retain sales representatives to sell our insurance and
annuity products. Strong competition exists among

                                       39


financial services companies for efficient sales representatives. We compete
with other financial services companies for sales representatives primarily on
the basis of our financial position, support services and compensation and
product features. Our competitiveness for such agents also depends upon the
relationships we develop with these agents. If we are unable to attract and
retain sufficient numbers of sales representatives to sell our products, our
ability to compete and our revenues would suffer.

     Tax Law Changes Could Adversely Affect Our Insurance Product Sales and
     Profitability.

     We sell deferred annuities and some forms of life insurance products which
are attractive to purchasers, in part, because policyholders generally are not
subject to United States federal income tax on increases in policy values until
some form of distribution is made. Recently, Congress enacted legislation to
lower marginal tax rates, reduce the federal estate tax gradually over a
ten-year period, with total elimination of the federal estate tax in 2010 and
increase contributions which may be made to individual retirement accounts and
401(k) accounts. While these tax law changes will sunset at the beginning of
2011 absent future congressional action, they could in the interim diminish the
appeal of our annuity and life insurance products. Additionally, Congress has
considered, from time to time, other possible changes to the U.S. tax laws,
including elimination of the tax deferral on the accretion of value within
certain annuities and life insurance products. There can be no assurance that
further tax legislation will not be enacted which would contain provisions with
possible adverse effects on our annuity and life insurance products.

     The Impact of Recent Terrorist Attacks and the War in Iraq May Adversely
     Affect the Insurance Industry and Financial Markets.

     Terrorist attacks in New York City and Washington, D.C. on September 11,
2001 adversely affected commerce throughout the United States and resulted in
significant disruption to the insurance industry and significant declines and
volatility in financial markets. The continued threat of terrorism within the
United States and abroad, and the military action and heightened security
measures in response to that threat, including the possibility of extended
hostilities in Iraq, may cause additional disruptions to the insurance industry,
reduced economic activity and continued volatility in markets throughout the
world, which may adversely impact our financial results.


                                       40


     RESULTS OF OPERATIONS FOR THE THREE YEARS ENDED DECEMBER 31, 2002:

     The following tables and narratives summarize our operating results for the
three years ended December 31, 2002. Please read this discussion in conjunction
with the accompanying consolidated financial statements and notes.




                                                                                  2002             2001              2000
                                                                                  ----             ----              ----
                                                                                          (Dollars in millions)
                                                                                                        
Operating earnings (losses) from continuing operations before taxes and
   goodwill amortization:
     Insurance and fee-based segment operating earnings...................     $   284.6           $ 776.7       $   780.5

     Holding company activities:
       Corporate expenses, less charges to subsidiaries for services
         provided.........................................................         (87.3)            (22.0)          (71.0)
       Interest and dividends, net of corporate investment income.........        (487.2)           (551.4)         (654.1)
                                                                               ---------           -------       ---------

         Operating earnings (losses) from continuing operations
           before taxes and goodwill amortization.........................        (289.9)            203.3            55.4

     Taxes................................................................         (53.1)            (79.0)          (20.2)
                                                                               ---------           -------       ---------

         Operating earnings (losses) from continuing operations
           before goodwill amortization...................................        (343.0)            124.3            35.2

     Goodwill amortization................................................           -              (107.0)         (104.2)
                                                                               ---------           -------       ---------

         Operating earnings (losses) from continuing operations
           applicable to common stock.....................................        (343.0)             17.3           (69.0)
                                                                               ---------           -------       ---------

Non-operating items, net of tax:
   Deferred income tax valuation allowance................................        (811.2)              -               -
   Loss related to reinsurance transactions and businesses
     sold to raise cash...................................................         (47.5)              -             (56.3)
   Net realized losses....................................................        (569.2)           (222.4)         (193.1)
   Provision for losses related to loan guarantees........................        (240.0)           (110.2)         (150.0)
   Venture capital loss related to our investment
     in AT&T Wireless Services, Inc.......................................         (99.3)            (15.2)          (99.4)
   Costs related to debt modification and refinancing
     transactions.........................................................         (17.7)              -               -
   Restructuring items....................................................         (14.4)              -               -
   Major medical business in run-off and other
     non-recurring items..................................................         (31.3)           (121.3)         (192.1)
   Discontinued operations:
     CFC(a)...............................................................      (1,969.6)           (101.1)         (399.7)
     CVIC.................................................................        (253.5)             (5.6)           17.7
   Gain on sale of interest in riverboat..................................          -               122.6             -
   Extraordinary gain (loss) on extinguishment of debt ...................           8.1              17.2            (5.0)
   Cumulative effect of accounting change.................................      (2,949.2)              -             (55.3)
   Goodwill impairment ...................................................        (500.0)              -                 -
                                                                               ---------           -------       ---------

       Total non-operating items, net of tax..............................      (7,494.8)           (436.0)       (1,133.2)
                                                                               ---------           -------       ---------

Net loss applicable to common stock.......................................     $(7,837.8)          $(418.7)      $(1,202.2)
                                                                               =========           =======       =========


- --------------------

(a)  See the section of this Management's discussion and Analysis of Financial
     Condition and Results of Operation entitled "Financial Condition and
     Results of Operations of CFC" for information on CFC.


                                       41


     We evaluate performance and determine future earnings goals based on
operating earnings which we define as income before: (i) net investment gains
(losses)(less that portion of amortization of cost of policies purchased and
cost of policies produced and income taxes relating to such gains (losses));
(ii) the venture capital income (loss) related to our investment in AT&T
Wireless Services, Inc. ("AWE"); (iii) the gain on the sale of our interest in a
riverboat; (iv) special items not related to the continuing operations of our
businesses (including changes in the deferred income tax valuation allowance,
goodwill impairments, special charges and the provision for losses related to
loan guarantees); (v) the net income (loss) related to the major medical
business in run-off; and (vi) discontinued operations and the effect of
accounting changes and extraordinary gain (loss) on extinguishment of debt. The
criteria used by management to identify the items excluded from operating
earnings include whether the item: (i) relates to other than the continuing
operations of our businesses; (ii) is infrequent; (iii) is material to net
income (loss); (iv) results from restructuring activities; (v) results from a
change in the regulatory environment; and/or (vi) relates to the sale of an
investment or the change in estimated market value of our venture capital
investments. The non-operating items which may occur will vary from period to
period and since these items are determined based on management's discretion,
inconsistencies in the application of the criteria may exist. Operating earnings
are determined by adjusting GAAP net income for the above mentioned items. While
these items may be significant components in understanding and assessing our
consolidated financial performance, we believe that the presentation of
operating earnings enhances the understanding of our results of operations by
highlighting net income attributable to the normal, recurring operations of the
business and by excluding events that materially distort trends in net income.
However, operating earnings are not a substitute for net income (loss)
determined in accordance with GAAP.


                                       42




Insurance and Fee-based Operations:                                                   2002         2001          2000
                                                                                      ----         ----          ----
                                                                                             (Dollars in millions)
                                                                                                       
Premiums and asset accumulation product collections:
   Annuities......................................................................  $ 1,092.8     $ 1,223.7     $ 1,229.8
   Supplemental health............................................................    2,424.2       2,344.5       2,263.9
   Life...........................................................................      637.0         839.6         901.1
   Group major medical............................................................      315.6         370.9         502.8
                                                                                    ---------     ---------     ---------

       Collections on insurance products from continuing lines of business........    4,469.6       4,778.7       4,897.6

   Individual major medical in run-off ...........................................       93.9         366.2         407.3
   Discontinued operations........................................................      260.8         446.8         886.2
                                                                                    ---------     ---------     ---------

       Total collections on insurance products....................................    4,824.3       5,591.7       6,191.1

   Deposit type contracts.........................................................      287.6         178.0         147.7
Deposit type contracts - discontinued operations..................................        5.8           8.7          25.6
   Mutual funds...................................................................      207.9         468.7         794.2
                                                                                    ---------     ---------     ---------

       Total premiums and asset accumulation product collections..................  $ 5,325.6     $ 6,247.1     $ 7,158.6
                                                                                    =========     =========     =========

Average liabilities for insurance and asset accumulation products (excluding
   discontinued operations and our major medical business in run-off):
     Annuities:
       Mortality based............................................................  $   250.7     $   358.2     $   399.3
       Equity-linked..............................................................    2,170.6       2,632.2       2,550.6
       Deposit based..............................................................    7,902.2       7,955.9       8,718.6
       Separate accounts and investment trust liabilities.........................      672.6         738.0         824.3
     Health.......................................................................    5,459.9       5,106.3       4,753.8
     Life:
       Interest sensitive.........................................................    4,109.7       4,033.2       3,985.8
       Non-interest sensitive.....................................................    1,985.3       2,483.0       2,467.0
                                                                                    ---------     ---------     ---------

       Total average liabilities for insurance and asset accumulation products,
         net of reinsurance ceded.................................................  $22,551.0     $23,306.8     $23,699.4
                                                                                    =========     =========     =========

Revenues:
   Insurance policy income........................................................  $ 3,183.5     $ 3,240.5     $ 3,265.4
   Net investment income:
     General account invested assets..............................................    1,516.7       1,683.6       1,763.8
     Equity-indexed products based on the change in value of the S&P 500
       Call Options...............................................................     (100.5)       (114.2)       (111.0)
     Separate account assets......................................................        -            (5.4)         54.9
   Fee revenue and other income...................................................       85.8         100.2         128.9
                                                                                    ---------     ---------     ---------

       Total revenues (a).........................................................    4,685.5       4,904.7       5,102.0
                                                                                    ---------     ---------     ---------

Expenses:
   Insurance policy benefits......................................................    2,562.4       2,420.0       2,423.1
   Amounts added to policyholder account balances:
     Annuity products and interest-sensitive life products other than those
       listed below...............................................................      501.7         530.0         560.7
     Equity-indexed products based on S&P 500 Index...............................        (.3)           .8          11.4
     Separate account liabilities.................................................        -            (5.4)         54.9
   Amortization related to operations.............................................      773.1         596.0         591.7
   Interest expense on investment borrowings......................................       15.4          30.5          15.8
   Other operating costs and expenses.............................................      548.6         556.1         663.9
                                                                                    ---------     ---------     ---------

       Total benefits and expenses (a)............................................    4,400.9       4,128.0       4,321.5
                                                                                    ---------     ---------     ---------

       Operating income before goodwill amortization, goodwill impairment,
         income taxes and minority interest.......................................      284.6         776.7         780.5

Goodwill amortization.............................................................        -          (107.0)       (104.2)
Goodwill impairment...............................................................     (500.0)          -             -
Net investment losses, including related costs and amortization...................     (569.2)       (342.1)       (297.1)
Special charges...................................................................      (44.3)        (21.5)         -
                                                                                    ---------     ---------     ---------

       Income (loss) before income taxes, minority interest,
         extraordinary gain (loss) and cumulative effect of accounting change.....  $  (828.9)    $   306.1     $   379.2
                                                                                    =========     =========     =========

                                   (continued)
                                       43




                                                                                        2002          2001         2000
                                                                                        ----          ----         ----
                                                                                             (Dollars in millions)

                         (continued from previous page)
                                                                                                        
Ratios:
   Investment income, net of interest credited on annuities and universal life
     products and interest expense on investment borrowings, as a percentage of
     average liabilities for insurance and asset accumulation
     products (b)...................................................................      4.12%        4.38%        4.53%
   Operating costs and expenses (excluding amortization of cost of policies
     produced and cost of policies purchased) as a percentage of average
     liabilities for insurance and asset accumulation products (c)..................      2.51%        2.46%        2.90%

Health loss ratios:
   All health lines:
     Insurance policy benefits......................................................   $1,987.5     $1,750.4     $1,741.1
Loss ratio..........................................................................     83.03%       74.28%       76.21%

   Medicare supplement:
     Insurance policy benefits......................................................     $655.2       $635.9       $675.5
     Loss ratio.....................................................................     65.08%       65.25%       71.60%

   Long-term care:
     Insurance policy benefits......................................................     $990.2       $762.7       $691.5
     Loss ratio.....................................................................    110.08%       86.39%       84.17%
     Interest-adjusted loss ratio...................................................     88.06%       67.32%       66.77%

   Specified disease:
     Insurance policy benefits......................................................     $259.5       $250.9       $256.4
     Loss ratio.....................................................................     69.61%       67.35%       69.00%

   Other:
     Insurance policy benefits......................................................      $82.6       $100.9       $117.7
     Loss ratio.....................................................................     72.11%       79.66%       79.53%

- --------------------
(a)  Revenues exclude net investment gains (losses); benefits and expenses
     exclude amortization related to realized gains and goodwill amortization
(b)  Investment income includes income from general account assets only. Average
     insurance liabilities exclude liabilities related to separate accounts,
     investment trust and reinsurance ceded.
(c)  Average insurance liabilities exclude liabilities related to separate
     accounts, investment trust and reinsurance ceded.



     General: As more fully described in "Liquidity for insurance and fee-based
operations," within "Management's Discussion and Analysis of Financial Condition
and Results of Operations", our insurance subsidiaries financial strength
ratings were downgraded by A.M. Best on August 14, 2002 to "B (fair)" and the
ratings remain "under review with developing implications". The downgrade has
caused sales of our insurance products to fall and policyholder redemptions and
lapses to increase. This has had a material adverse impact on our financial
results. Conseco's insurance subsidiaries develop, market and administer
annuity, supplemental health, individual life insurance and other insurance
products. We distribute these products through a career agency force,
professional independent producers and direct response marketing. This segment
excludes our discontinued operations and the major medical business in run-off.

     Liabilities for insurance products are calculated using management's best
judgments of mortality, morbidity, lapse rates, investment experience and
expense levels that are based on the Company's past experience and standard
actuarial tables.

     Collections on insurance products from continuing operations in 2002 were
$4.5 billion, down 6.5 percent from 2001. Such collections in 2001 were $4.8
billion, down 2.4 percent from 2000. Sales of our insurance products were
adversely affected by the declines in our financial strength ratings during
2002, 2001 and 2000. See "Premium and Asset Accumulation Product Collections"
for further analysis.

     Average liabilities for insurance and asset accumulation products, net of
reinsurance receivables, were $22.6 billion in 2002, down 3.2 percent from 2001,
and $23.3 billion in 2001, down 1.7 percent from 2000. The decrease in such
liabilities is primarily due

                                       44


to ceding approximately $870 million of insurance liabilities pursuant to
reinsurance agreements entered into during the first quarter of 2002. In
addition, policyholder redemptions and lapses have increased following the
downgrade of our A.M. Best financial strength rating to "B (fair)". See the note
to our consolidated financial statements entitled "Summary of Significant
Accounting Policies" for additional discussion of the reinsurance transactions.
See "Liquidity for insurance and fee-based operations" within "Management's
Discussion and Analysis of Financial Condition and Results of Operations" for
additional discussion of the A.M. Best ratings downgrade. Such decrease in 2001
primarily reflects the decreased sales of interest-sensitive products.
Surrenders exceeded sales in both 2002 and 2001.

     Insurance policy income is comprised of: (i) premiums earned on policies
which provide mortality or morbidity coverage; and (ii) fees and other charges
made against other policies. See "Premium and Asset Accumulation Product
Collections" for further analysis.

     Net investment income on general account invested assets (which excludes
income on separate account assets related to variable annuities; and the income
(loss), cost and change in the fair value of S&P 500 Call Options related to
equity-indexed products) decreased by 9.9 percent, to $1,516.7 million, in 2002,
and by 4.5 percent, to $1,683.6 million, in 2001. The average balance of general
account invested assets decreased by 2.9 percent in 2002 to $23.3 billion and
increased by .7 percent in 2001 to $24.0 billion. The yield on these assets was
6.5 percent in 2002, 7.0 percent in 2001 and 7.4 percent in 2000. The decrease
in yield reflects general decreases in market interest rates between periods.
Net investment income and the average balance of general account invested assets
both reflect the transfer of a portion of our investment portfolio to reinsurers
pursuant to recent reinsurance transactions. See the note to our consolidated
financial statements entitled "Summary of Significant Accounting Policies" for
additional discussion of reinsurance transactions.

     Net investment income related to equity-indexed products based on the
change in value of the S&P 500 Call Options represents the change in the
estimated fair value of our S&P 500 Call Options which are purchased in an
effort to cover certain benefits accruing to the policyholders of our
equity-indexed products. Our equity-indexed products are designed so that the
investment income spread earned on the related insurance liabilities should be
more than adequate to cover the cost of the S&P 500 Call Options and other costs
related to these policies. Option costs that are attributable to benefits
provided were $97.5 million, $119.0 million and $123.9 million in 2002, 2001 and
2000, respectively. These costs are reflected in the change in market value of
the S&P 500 Call Options included in the investment income amounts. Net
investment income (loss) related to equity-indexed products before this expense
was $(3.0) million, $4.8 million and $12.9 million in 2002, 2001 and 2000,
respectively. Such amounts were partially offset by the corresponding charge
(credit) to amounts added to policyholder account balances for equity-indexed
products of $(.3) million, $.8 million and $11.4 million in 2002, 2001 and 2000,
respectively. Such income and related charge fluctuated based on the value of
options embedded in the Company's equity-indexed annuity policyholder account
balances subject to this benefit and to the performance of the S&P 500 Index to
which the returns on such products are linked.

     Net investment income (loss) from separate account assets is offset by a
corresponding charge (credit) to amounts added to policyholder account balances
for separate account liabilities. Such income (loss) and related charge (credit)
fluctuated in relationship to total separate account assets and the return
earned on such assets.

     Fee revenue and other income includes: (i) revenues we receive for managing
investments for other companies; and (ii) fees received for marketing insurance
products of other companies. In 2002, this amount includes $16.7 million of
affiliated fee revenue earned by our subsidiary in India compared to $5.4
million in 2001 and nil in 2000. Such revenue is eliminated in consolidation.
Excluding such affiliated income, fee revenue and other income decreased in 2002
and 2001 primarily as a result of a decrease in the market value of investments
managed for others, upon which these fees are based. The Company sold its India
subsidiary in the fourth quarter of 2002 and has significantly reduced the
customer service and backroom operations conducted there.

     Insurance policy benefits fluctuated in 2002 and 2001 as a result of the
factors summarized in the explanations for loss ratios related to specific
products which follow. Loss ratios are calculated by taking the related
insurance product's: (i) policy benefits; divided by (ii) policy income.

     The loss ratio for Medicare supplement products has been within the range
we expected it to be in during 2002 and 2001. Such ratio was higher in 2000, for
the following reasons: (i) our estimate of 1999 year end reserves proved to be
less than necessary to cover pre-2000 claims; (ii) the mix of our Medicare
supplement business in 2000 included a higher percentage of less profitable
standard Medicare supplement policies than the prior year (and a lower
percentage of more profitable nonstandard policies that we are no longer able to
offer to new policyholders); and (iii) a larger portion of certain older blocks
of our Medicare supplement business had remained inforce longer than we
expected. While the Company benefited from the additional profits earned on the
larger blocks of business, the loss ratio will generally increase since the
older policies have higher claim costs. Governmental regulations generally
require us to attain and maintain a loss ratio, after three years, of not less
than 65 percent.

     During 2002, the Company conducted an extensive examination of the
assumptions used to estimate its claim reserves for long-

                                       45


term care products sold through its independent agent distribution channel. The
examination was prompted by the continuing claim reserve deficiencies that we
experienced in recent periods based on the assumptions and estimates made by our
actuaries. The Company engaged an independent actuarial firm to assist in the
examination.

     The Company's prior estimates for long-term care reserves were based on
claim continuance tables using experience for the period from January 1, 1990
through September 30, 1999. These tables are used to estimate the length of time
an insured will receive covered long-term care for an incurred event. In 2002,
we completed studies which indicated that the average length of time an insured
will receive covered care has increased in recent periods. In addition, the
Company has experienced significant fluctuations in claim inventories for these
products. Accordingly, our actuaries and the independent actuarial firm
concluded that estimates of future claim payments for incurred claims using the
more recent data reflecting the longer covered care time periods were more
appropriate than estimates based on prior data. The changes in estimation in
calculating the reserves resulted in an increase to insurance policy benefits of
$130.0 million in 2002. Excluding this adjustment related to the change in
estimate, insurance policy benefits on long-term care policies would have been
$880.2 million, the loss ratio for the year ended December 31, 2002 would have
been 97.85 percent, and the interest-adjusted loss ratio for the year ended
December 31, 2002 would have been 75.84 percent.

     The loss ratios for long-term care products also increased in 2002 due to
the higher level of benefits paid out on these products as the policies age. The
net cash flows from our long-term care products generally result in the
accumulation of amounts in the early years of a policy (accounted for as reserve
increases) which will be paid out as benefits in later policy years (accounted
for as reserve decreases). Accordingly, as the policies age, the loss ratio will
typically increase, but the increase in the change in reserve will be partially
offset by investment income earned on the assets which have accumulated. The
interest-adjusted loss ratio for long-term care products is calculated by taking
the insurance product's (i) policy benefits less interest income on the
accumulated assets which back the insurance liabilities; divided by (ii) policy
income.

     The loss ratios for long-term care products increased in 2001 and 2000,
reflecting the effects of the asset accumulation phase of these products. In
addition, the estimated liabilities for claims at December 31, 2001 were
deficient by approximately $19 million based on subsequent payments through
December 31, 2002. Such claims at December 31, 2000 were deficient by
approximately $14 million based on subsequent claim payments through December
31, 2001.

     We experienced higher than expected claims on our specified disease
business in 2002. As a result, our loss ratio increased. Notwithstanding the
increased loss ratio, this block of business is performing within our
expectations. Our general expectation is for the loss ratio for specified
disease products to be approximately 68 percent. The 2001 loss ratio for
specified disease products was within our expectations. The higher loss ratio in
2000 reflects changes in estimates of period end claim liabilities. Our estimate
of 1999 claim liabilities proved to be inadequate to cover pre-2000 claims.

     The loss ratios on our other products will fluctuate due to the smaller
size of these blocks of business. The loss ratios on this business have
generally been within our expectations.

     Amounts added to policyholder account balances for annuity products
decreased by 5.3 percent, to $501.7 million, in 2002, and 5.5 percent, to $530.0
million, in 2001. The decrease in 2002 as compared to 2001 is primarily due to
the decrease in the weighted average crediting rates as the average liabilities
for this block of business were approximately $11.7 billion for both 2002 and
2001. The weighted average crediting rates for these products was 4.3 percent
and 4.5 percent in 2002 and 2001, respectively. The decrease in 2001 as compared
to 2000 is primarily due to a smaller block of this type of business inforce.
Average liabilities for these products were $11.7 billion in 2001, down 7.1
percent from 2000. The weighted average crediting rates for these products was
4.5 percent in both 2001 and 2000.

     Amounts added to equity indexed products and separate account liabilities
correspond to the related investment income accounts described above.

     Amortization related to operations includes amortization of the cost of
policies produced and the cost of policies purchased. Amortization generally
fluctuates in relationship to the total account balances subject to
amortization.

     Policyholder redemptions of annuity and, to a lesser extent, life products
have increased in recent periods. We have experienced additional redemptions
following the downgrade of our A.M. Best financial strength rating to "B
(fair)". When redemptions are greater than our previous assumptions, we are
required to accelerate the amortization of our cost of policies produced and
cost of policies purchased to write off the balance associated with the redeemed
policies. Accordingly, amortization expense has increased. We have changed the
lapse assumptions used to determine the amortization of the cost of policies
produced and the cost of policies purchased related to certain universal life
products and our annuities to reflect our current estimates of future lapses.
For certain universal life products, we changed the ultimate lapse assumption
from: (i) a range of 6 percent to 7 percent; to (ii) a tiered assumption based
on the level of funding of the policy of a range of 2 percent to 10 percent.
Policyholder withdrawals in recent periods have exceeded our estimates. Such
withdrawals were $3,708.3 million in 2002 and $2,528.3 million in 2001.
Accordingly,

                                       46


we increased the expected future lapse rates on these products to reflect our
current belief that lapses on these policies will continue to be higher than
previously expected for the next several quarters. We recorded additional
amortization of $203.2 million in 2002 related to higher redemptions and changes
to our lapse assumptions.

     As a result of economic developments, actual experience of our products and
changes in our expectations, we changed our investment yield assumptions used in
calculating the estimated gross profits to be earned on our annuity products in
2001 and 2000. Such changes resulted in additional amortization of the cost of
policies produced and cost of policies purchased of $27.8 million and $25.6
million in 2001 and 2000, respectively.

     Interest expense on investment borrowings decreased in 2002 while our
investment borrowing activities increased. Average investment borrowings were
$1,155.8 million during 2002, compared to $927.0 million during 2001 and $238.1
million during 2000. The weighted average interest rate on such borrowings were
1.3 percent, 3.3 percent and 6.6 percent during 2002, 2001 and 2000,
respectively.

     Other operating costs and expenses decreased in 2002 and 2001 consistent
with our cost cutting programs and the current business plans for the segment.
The increase in such expenses in 2000 was primarily the result of our increased
business and marketing initiatives. The ratio of operating expenses (excluding
amortization of cost of policies produced and cost of policies purchased) as a
percentage of average liabilities for insurance and asset accumulation products
was 2.51 percent for 2002 compared to 2.46 percent for 2001 and 2.90 percent for
2000. The increase in the ratio in 2002, as compared to the prior year, is
primarily due to the decrease in average liabilities for insurance and asset
accumulation products resulting from the ceding of approximately $870 million of
insurance liabilities in the first quarter of 2002.

     Net investment gains (losses), including related costs and amortization
fluctuate from period to period. During 2002, 2001 and 2000, we recognized net
investment losses of $597.0 million, $379.4 million and $346.5 million,
respectively. The net investment losses during 2002 included: (i) $556.8 million
to write down certain securities to fair value due to an other-than-temporary
decline in value (including issuers who have faced significant problems: K-Mart
Corp., Amerco, Inc., Global Crossing, MCI Communications, Mississippi Chemical,
United Airlines and Worldcom, Inc.); and (ii) $40.2 million of net losses from
the sales of investments (primarily fixed maturities) which generated proceeds
of $19.5 billion. The net investment losses during 2001 included: (i) $141.9
million to recognize the impact of higher default rate assumptions on certain
structured investments; (ii) $62.4 million to recognize losses on investments
held in our private equity portfolio; (iii) $150.5 million to write down certain
securities to fair value due to an other-than-temporary decline in value or the
Company's plan to sell the securities in connection with investment
restructuring activities (including issuers who have faced significant problems:
Sunbeam Corp., Enron Corp., Crown Cork & Seal Company Inc., Global Crossing Ltd.
and K-Mart Corp.); and (iv) $24.6 million of losses from the sales of
investments (primarily fixed maturities) which generated proceeds of $24.2
billion. During 2000, we recorded $180.6 million of writedowns; $106.7 million
of losses from the sales of investments; and a $59.2 million loss related to the
termination of certain swap agreements.

     When we sell securities at a gain (loss) and reinvest the proceeds at a
different yield, we increase (reduce) the amortization of cost of policies
purchased and cost of policies produced in order to reflect the change in future
yields. Sales of fixed maturity investments resulted in a reduction in the
amortization of the cost of policies purchased and the cost of policies produced
of $21.5 million in 2002, $37.3 million in 2001 and $49.4 million in 2000.

     Special charges in 2002 include: (i) losses of $35.0 million on reinsurance
and asset sale transactions entered into as part of our cash raising
initiatives; and (ii) other items totaling $9.3 million primarily related to
severance benefits and costs incurred with the transfer of certain customer
service and backroom operations to our India subsidiary. Special charges in 2001
were $21.5 million. Such charges primarily relate to severance benefits and
costs incurred in conjunction with the transfer of certain customer service and
backroom operations to our former India subsidiary. These charges are described
in greater detail in the note to our consolidated financial statements entitled
"Special Charges."






                                       47


Corporate Operations



                                                                            2002         2001          2000
                                                                            ----         ----          ----
                                                                                 (Dollars in millions)
                                                                                         
Corporate operations:
   Interest expense on corporate debt, net of investment
       income on cash and cash equivalents............................     $(312.0)     $(354.7)  $  (419.6)
   Investment income..................................................         -            4.4        31.3
   Other items........................................................       (87.2)       (26.4)      (20.2)
                                                                           -------      -------   ---------

       Operating loss before non-operating items, income
         taxes and minority interest..................................      (399.2)      (376.7)     (408.5)

   Provision for losses and expense related to stock purchase ........
     plan.............................................................      (240.0)      (169.6)     (231.5)
   Venture capital loss related to investment in
     AWE, net of related expenses.....................................       (99.3)       (23.4)     (152.8)
   Major medical business in run-off..................................         -         (130.3)      (51.3)
   Gain on sale of interest in riverboat..............................         -          192.4         -
   Special charges....................................................       (52.2)       (58.9)     (305.0)
   Reorganization items...............................................       (14.4)         -           -
                                                                           -------      -------   ---------

       Loss before income taxes and minority
         interest.....................................................     $(805.1)     $(566.5)  $(1,149.1)
                                                                           =======      =======   =========


     Interest expense on corporate debt, net of investment income on cash and
cash equivalents has decreased as a result of the repayment of debt and lower
interest rates. The average debt outstanding was $4.1 billion, $4.5 billion and
$5.2 billion in 2002, 2001 and 2000, respectively. The average interest rate on
such debt was 8.0 percent, 8.2 percent and 8.4 percent in 2002, 2001 and 2000,
respectively.

     Investment income includes the income from our investment in a riverboat
casino (prior to its sale in the first quarter of 2001) and miscellaneous other
income.

     Other items include general corporate expenses, net of amounts charged to
subsidiaries for services provided by the corporate operations. Such amount in
2002 includes the establishment of a $40.0 million allowance for a claim
receivable as further discussed in the note to our consolidated financial
statements entitled "Other Disclosures - Securities Litigation".

     Provision for losses and expense related to stock purchase plan represents
the non-cash provision we established in connection with our guarantees of bank
loans to approximately 155 current and former directors, officers and key
employees and our related loans for interest. The funds from the bank loans were
used by the participants to purchase approximately 18.0 million shares of
Conseco common stock. In 2002, 2001 and 2000, we established provisions of
$240.0 million, $169.6 million and $231.5 million, respectively, in connection
with these guarantees and loans. We determine the reserve based upon the value
of the collateral held by the banks (primarily the purchased common stock). At
December 31, 2002, the reserve for losses on the loan guarantees totaled $660.0
million. The outstanding principal balance on the bank loans was $481.3 million.
In addition, Conseco has provided loans to participants for interest on the bank
loans totaling $179.2 million. During 2002, Conseco purchased $55.5 million of
loans from the banks utilizing cash held in a segregated cash account as
collateral for our guarantee of the bank loans (including accrued interest, the
balance on these loans was $56.7 million at December 31, 2002). The guarantees
of the bank loans are discussed in greater detail in the note to our
consolidated financial statements entitled "Other Disclosures."

     Venture capital loss relates to our investment in TeleCorp PCS, Inc.
("TeleCorp"), a company in the wireless communication business. In the first
quarter of 2002, AWE acquired TeleCorp. Pursuant to the merger agreement, our
shares of TeleCorp were converted into 11.4 million shares of AWE. This
transaction is described in greater detail in the note to our consolidated
financial statements entitled "Summary of Significant Accounting Policies" Our
investment in AWE is carried at estimated fair value, with changes in fair value
recognized as investment income. The market values of AWE and many other
companies in this sector have declined significantly in recent years.

     The major medical business in run-off includes individual major medical
health insurance products. These lines of business had losses of $130.3 million
and $51.3 million in 2001 and 2000, respectively. These lines of business, which
have substantially run-off,

                                       48


did not incur additional losses in 2002. The amount in 2001 includes $77.4
million of amortization, which represented the unrecoverable cost of policies
produced and cost of policies purchased related to the major medical business in
run-off.

     Gain on sale of interest in riverboat represents the gain recognized in the
first quarter of 2001 as a result of our sale of our 29 percent ownership
interest in the riverboat casino in Lawrenceberg, Indiana, for $260 million.

     Special charges in corporate operations for 2002 include: (i) a loss of
$20.0 million associated with the sale of our India subsidiary; (ii) $17.7
million related to debt modification and refinancing transactions; (iii) other
items totaling $22.0 million; partially offset by (iv) net gains of $7.5 million
related to the sale of certain non-core assets. Special charges in corporate
operations for 2001 include: (i) litigation accrual and expenses of $23.8
million; (ii) severance benefits of $2.9 million; (iii) losses related to office
closings and the sale of artwork totaling $6.8 million; (iv) losses related to
disputed reinsurance balances totaling $8.5 million; and (v) other losses
totaling $16.9 million. Special charges in 2000 include: (i) advisory and
professional fees related to debt restructuring of $9.9 million; (ii) a portion
of the loss on the sale of asset-backed loans (excluding loss related to loans
held by the finance segment) of $15.2 million; (iii) advisory fees paid to
investment banks of $44.0 million; (iv) the loss related to our exit from the
subprime automobile business of $71.6 million; (v) the amount paid to a
terminated executive pursuant to his employment agreement of $72.5 million; (vi)
the amount paid to the newly hired Chief Executive Officer of $45.0 million;
(vii) the value of warrants issued to release the newly hired Chief Executive
Officer from a noncompete provision of a prior agreement of $21.0 million; and
(viii) other charges of $25.8 million. These charges are described in greater
detail in the note to our consolidated financial statements entitled "Special
Charges".

     Reorganization items are professional fees associated with CNC's bankruptcy
proceedings which are expensed as incurred in accordance with Statement of
Position 90-7 "Financial Reporting by Entities in Reorganization under the
Bankruptcy Code" ("SOP 90-7").

     PREMIUM AND ASSET ACCUMULATION PRODUCT COLLECTIONS

     In accordance with GAAP, insurance policy income as shown in our
consolidated statement of operations consists of premiums earned for policies
that have life contingencies or morbidity features. For annuity and universal
life contracts without such features, premiums collected are not reported as
revenues, but as deposits to insurance liabilities. We recognize revenues for
these products over time in the form of investment income and surrender or other
charges.

     Agents, insurance brokers and marketing companies who market our products
and prospective purchasers of our products use the ratings of our insurance
subsidiaries as an important factor in determining which insurer's products to
market or purchase. Ratings have the most impact on our annuity and
interest-sensitive life insurance products. During 2000, rating agencies lowered
their financial strength ratings of our insurance companies, and many were
placed on review as the agencies analyzed the impact of the events which
occurred during 2000. Such rating actions adversely affected the marketing and
persistency of our insurance products and other asset accumulation products. On
November 7, 2000, A.M. Best upgraded the financial strength ratings of our
principal insurance subsidiaries to A- (Excellent) from B++ (Very Good). On
October 3, 2001, A.M. Best placed the Company's principal insurance subsidiaries
"under review with negative implications" following our announcement regarding
charges to be taken in the third quarter of 2001. In July 2002, A.M. Best
downgraded the financial strength ratings of our primary insurance subsidiaries
to "B++ (Very Good)" and placed the ratings "under review with negative
implications." On August 14, 2002, A.M. Best further lowered the financial
strength ratings of our primary insurance subsidiaries from "B++ (very good)" to
"B (fair)." A.M. Best ratings for the industry currently range from "A++
(Superior)" to "F (In Liquidation)" and some companies are not rated. An "A++"
ranking indicates superior overall performance and a strong ability to meet
obligations to policyholders over a long period of time. The "B" rating is
assigned to companies which have, on balance, fair balance sheet strength,
operating performance and business profile, when compared to the standards
established by A.M. Best, and have an ability in A.M. Best's opinion to meet
their current obligations to policyholders, but their financial strength is
vulnerable to adverse changes in underwriting and economic conditions. The
rating reflects A.M. Best's view of the uncertainty surrounding our
restructuring initiatives and the potential adverse financial impact on the
subsidiaries if negotiations are protracted and execution of the restructuring
plan is delayed. S&P has given our insurance subsidiaries a financial strength
rating of "B+". Rating categories from "BB" to "CCC" are classified as
"vulnerable," and pluses and minuses show the relative standing within a
category. In S&P's view, an insurer rated "B" has the capacity to meet its
financial commitments but adverse business conditions could lead to insufficient
ability to meet financial commitments.

     These ratings downgrades caused sales of our insurance products to decline
and policyholder redemptions and lapses to increase. In some cases, the
downgrades also caused defections among our independent agent sales force and
increases in the commissions we had to pay to retain them. These events have had
a material adverse effect on our financial results. Further downgrades by A.M.
Best or S&P would likely have further material and adverse effects on our
financial results and liquidity.

     We set the premium rates on our health insurance policies based on facts
and circumstances known at the time we issue the policies and on assumptions
about numerous variables, including the actuarial probability of a policyholder
incurring a claim, the

                                       49


severity, and the interest rate earned on our investment of premiums. In setting
premium rates, we consider historical claims information, industry statistics,
premiums charged by competitors and other factors. If our actual claims
experience proves to be less favorable than we assumed and we are unable to
raise our premium rates, our financial results will be adversely affected. We
generally cannot raise our premiums in any state unless we first obtain the
approval of the insurance regulator in that state. We review the adequacy of our
premium rates regularly and file requests for rate increases on our products
when we believe existing premium rates are too low. It is possible that we will
not be able to obtain approval for premium rate increases from currently pending
requests or requests filed in the future. If we are unable to raise our premium
rates because we fail to obtain approval for a rate increase in one or more
states, our financial results will be adversely affected. If we are successful
in obtaining regulatory approval to raise premium rates due to unfavorable
actual claims experience, the increased premium rates may reduce the volume of
our new sales and cause existing policyholders to allow their policies to lapse.
This would reduce our premium income in future periods. Increased lapse rates
also could require us to expense all or a portion of the cost of policies
produced or the cost of policies purchased relating to lapsed policies in the
period in which those policies lapse, adversely affecting our financial results
in that period.

     We sell our insurance products through three primary distribution channels
career agents, independent producers and direct marketing. Our career agency
force sells primarily Medicare Supplement and long-term care insurance policies,
senior life insurance and annuities. These agents visit the customer's home
which permits one-on-one contacts with potential policyholders and promotes
strong personal relationships with existing policyholders. Our independent
producer distribution channel consists of a general agency and insurance
brokerage distribution system comprised of independent licensed agents doing
business in all fifty states, the District of Columbia, and certain
protectorates of the United States. Independent producers are a diverse network
of independent agents, insurance brokers and marketing organizations. Our direct
marketing distribution channel is engaged primarily in the sale of "graded
benefit life" insurance policies which are sold directly from the Company to the
policyholder.




                                       50


Total premiums and accumulation product collections were as follows:



                                                                                 2002        2001(a)      2000(a)
                                                                                 ----        -------      -------
                                                                                      (Dollars in millions)
                                                                                               

Premiums collected by our insurance subsidiaries:

   Annuities:
     Equity-indexed (first-year)............................................  $  193.0     $  347.6     $  602.9
     Equity-indexed (renewal)...............................................      27.1         33.3         40.6
                                                                              --------     --------     --------
       Subtotal - equity-indexed annuities..................................     220.1        380.9        643.5
                                                                              --------     --------     --------
     Other fixed (first-year)...............................................     842.0        808.9        531.9
     Other fixed (renewal)..................................................      30.7         33.9         54.4
                                                                              --------     --------     --------
       Subtotal - other fixed annuities.....................................     872.7        842.8        586.3
                                                                              --------     --------     --------

       Total annuities......................................................   1,092.8      1,223.7      1,229.8
                                                                              --------     --------     --------

   Supplemental health:
     Medicare supplement (first-year).......................................     166.6        121.4        101.9
     Medicare supplement (renewal)..........................................     867.2        853.7        829.1
                                                                              --------     --------     --------
       Subtotal - Medicare supplement.......................................   1,033.8        975.1        931.0
                                                                              --------     --------     --------
     Long-term care (first-year)............................................      97.7        105.2        119.2
     Long-term care (renewal)...............................................     819.7        783.1        716.8
                                                                              --------     --------     --------
       Subtotal - long-term care............................................     917.4        888.3        836.0
                                                                              --------     --------     --------
     Specified disease (first-year).........................................      36.8         42.1         39.1
     Specified disease (renewal)............................................     331.9        329.7        332.0
                                                                              --------     --------     --------
       Subtotal - specified disease.........................................     368.7        371.8        371.1
                                                                              --------     --------     --------
     Other health (first-year)..............................................      13.9         11.5         29.9
     Other health (renewal).................................................      90.4         97.8         95.9
                                                                              --------     --------     --------
       Subtotal - other health..............................................     104.3        109.3        125.8
                                                                              --------     --------     --------

       Total supplemental health............................................   2,424.2      2,344.5      2,263.9
                                                                              --------     --------     --------

   Life insurance:
     First-year.............................................................      96.7        120.1        185.3
     Renewal................................................................     540.3        719.5        715.8
                                                                              --------     --------     --------

       Total life insurance.................................................     637.0        839.6        901.1
                                                                              --------     --------     --------

   Group major medical:
     Group (first-year).....................................................        .5         16.4         79.6
     Group (renewal)........................................................     315.1        354.5        423.2
                                                                              --------     --------     --------

       Total group major medical............................................     315.6        370.9        502.8
                                                                              --------     --------     --------

Collections on insurance products from continuing lines of business:

     Total first-year premium collections on insurance products............    1,447.2      1,573.2      1,689.8
     Total renewal premium collections on insurance products...............    3,022.4      3,205.5      3,207.8
                                                                              --------     --------     --------

       Total collections on insurance products.............................   $4,469.6     $4,778.7     $4,897.6
                                                                              ========     ========     ========

Mutual funds (excludes variable annuities).................................   $  207.9     $  468.7     $  794.2
                                                                              ========     ========     ========

Deposit type contracts.....................................................   $  287.6     $  178.0     $  147.7
                                                                              ========     ========     ========



                                   (continued)

                                       51

                         (continued from previous page)



                                                                                 2002      2001(a)    2000(a)
                                                                                 ----      -------    -------
                                                                                      (Dollars in millions)
                                                                                             
Premiums collected from major medical business in run-off and discontinued
operations:

Major medical in run-off:
  Individual (first-year)................................................    $ 15.6     $112.8    $  161.1
  Individual (renewal)...................................................      78.3      253.4       246.2
                                                                             ------     ------    --------

     Total major medical in run-off.......................................     93.9      366.2       407.3
                                                                             ------     ------    --------

Discontinued operations:
   Annuities:
     Fixed (first year)...................................................      7.4       21.6        18.7
     Fixed (renewal)......................................................      4.4        6.6         6.9
                                                                             ------     ------    --------
       Subtotal other fixed annuities.....................................     11.8       28.2        25.6
                                                                             ------     ------    --------
     Variable (first year)................................................    199.6      313.5       747.8
     Variable (renewal)...................................................     49.0       72.6        80.4
                                                                             ------     ------    --------
       Subtotal variable annuities........................................    248.6      386.1       828.2
                                                                             ------     ------    --------

       Total annuities....................................................    260.4      414.3       853.8
                                                                             ------     ------    --------

   Life insurance:
     First-year...........................................................       .4         .8          .6
     Renewal..............................................................      -         31.7        31.8
                                                                             ------     ------    --------

       Total life insurance...............................................       .4       32.5        32.4
                                                                             ------     ------    --------

Collections on insurance products from major medical business
     in run-off and discontinued operations...............................   $354.7     $813.0    $1,293.5
                                                                             ======     ======    ========

Deposit type contracts....................................................   $  5.8     $  8.7    $   25.6
                                                                             ======     ======    ========


- ---------------
(a)  Certain amounts related to deposit type contracts have been reclassified to
     a separate category, to conform to the 2002 presentation.


     Continuing Operations

     Annuities include equity-indexed annuities and other fixed annuities sold
through both career agents and professional independent producers. Pursuant to
our initiatives to increase capital and focus on the sale of products that
result in less strain on our statutory capital and surplus, we are taking
actions to de-emphasize the sales of annuity products through professional
independent producers.

     We introduced our first equity-indexed annuity product in 1996. The
accumulation value of these annuities is credited with interest at an annual
guaranteed minimum rate of 3 percent (or, including the effect of applicable
sales loads, a 1.7 percent compound average interest rate over the term of the
contracts). These annuities provide for potentially higher returns based on a
percentage of the change in the S&P 500 Index during each year of their term. We
purchase S&P 500 Call Options in an effort to hedge increases to policyholder
benefits resulting from increases in the S&P 500 Index. Total collected premiums
for this product decreased by 42 percent, to $220.1 million, in 2002 and
decreased by 41 percent, to $380.9 million, in 2001. The decrease can be
attributed to: (i) the general stock market performance which has made other
investment products more attractive; and (ii) the effect of the A.M. Best
ratings downgrade to "B (fair)".

     Other fixed rate annuity products include SPDAs, FPDAs and SPIAs, which are
credited with a declared rate. The demand for traditional fixed-rate annuity
contracts has increased in 2002 as such products became more attractive than
equity-indexed or variable annuity products due to the general stock market
performance. SPDA and FPDA policies typically have an interest rate that is

                                       52


guaranteed for the first policy year, after which we have the discretionary
ability to change the crediting rate to any rate not below a guaranteed rate.
The interest rate credited on SPIAs is based on market conditions existing when
a policy is issued and remains unchanged over the life of the SPIA. Annuity
premiums on these products increased by 3.5 percent, to $872.7 million, in 2002
and by 44 percent, to $842.8 million, in 2001.

     Supplemental health products include Medicare supplement, long-term care,
specified disease and other insurance products distributed through a career
agency force and professional independent producers. Our profits on supplemental
health policies depend on the overall level of sales, the length of time the
business remains inforce, investment yields, claim experience and expense
management.

     Collected premiums on Medicare supplement policies increased by 6.0
percent, to $1,033.8 million, in 2002 and by 4.7 percent, to $975.1 million, in
2001. Sales of Medicare supplement policies have been affected by increased
premium rates and new sales.

     Premiums collected on long-term care policies increased by 3.3 percent, to
$917.4 million, in 2002 and by 6.3 percent, to $888.3 million, in 2001. Such
sales have been affected by increased premium rates and new sales. We have
determined that we will cease selling new long-term care policies through
professional independent producers in the second quarter of 2003.

     Premiums collected on specified disease products did not fluctuate
significantly in 2002, 2001 and 2000.

     Other health products include disability income, dental and various other
health insurance products. The disability income and dental products are
marketed to school systems located in nearly all states. The other health
insurance products are generally not being actively marketed. Premiums collected
in 2002 were $104.3 million, down 4.6 percent from 2001. Premiums collected in
2001 were $109.3 million, down 13 percent from 2000. The inforce business
continues to be profitable.

     Life products are sold through career agents, professional independent
producers and direct response distribution channels. Life premiums collected in
2002 were $637.0 million, down 24 percent from 2001. Life premiums collected in
2001 were $839.6 million, down 6.8 percent from 2000. Such decreases are
primarily a result of the reinsurance agreements we entered into during 2002. In
addition, the A.M. Best ratings downgrade to "B (fair)" has negatively affected
our sales of life products. We are currently considering the discontinuation of
selling many of our life products through the professional independent producer
channel. We expect our review to result in eliminating the sale of many life
products.

     Group major medical premiums decreased by 15 percent, to $315.6 million, in
2002 and by 26 percent, to $370.9 million, in 2001. We no longer actively market
these products.

     Mutual fund sales decreased 56 percent, to $207.9 million in 2002, and by
41 percent, to $468.7 million, in 2001. Mutual fund sales have been adversely
affected by the recent performance of the stock market and our decreased
marketing efforts.

     Deposit type contracts include guaranteed interest contracts, supplemental
contracts without life contingencies and other deposit funds. Amounts collected
from deposit type contracts increased by 62 percent, to $287.6 million, in 2002,
and by 21 percent, to $178.0 million in 2001. Such amounts often fluctuate from
period-to-period.

     Major Medical Business in Run-off and Discontinued Operations

     Major medical in run-off includes major medical health insurance products
sold to individuals. In the second half of 2001, we stopped renewing a large
portion of our major medical lines of business. In early 2002, we decided to
stop renewing all inforce individual and small group business and discontinue
new sales. Individual health premiums collected in 2002 decreased by 74 percent,
to $93.9 million, and by 10 percent, to $366.2 million in 2001. These premiums
will continue to decrease in future periods.

     Variable annuities offer contract holders the ability to direct premiums
into specific investment portfolios; rates of return are based on the
performance of the portfolio. Profits on variable annuities are earned from the
fees charged to contract holders. Variable annuity collected premiums decreased
by 36 percent, to $248.6 million in 2002, and by 53 percent, to $386.1 million
in 2001. The decreases can be attributed to: (i) the general stock market
performance, which has made other investment products more attractive; (ii) our
announcement that we planned to sell this business; and (iii) the A.M. Best
ratings downgrade to "B (fair)". We sold our variable annuity business in the
fourth quarter of 2002.

     Life product premiums from discontinued operations represent the life
business of CVIC, which was sold in the fourth quarter of 2002.

                                       53


     INVESTMENTS

     Our investment strategy is to: (i) maintain a predominately
investment-grade fixed income portfolio; (ii) provide adequate liquidity to meet
our cash obligations to policyholders and others; and (iii) maximize current
investment income and total investment return through active investment
management. Consistent with this strategy, investments in fixed maturity
securities, mortgage loans and policy loans made up 98 percent of our $21.8
billion investment portfolio at December 31, 2002. The remainder of the invested
assets were equity securities, venture capital investments and other invested
assets.

     Insurance statutes regulate the type of investments that our insurance
subsidiaries are permitted to make and limit the amount of funds that may be
used for any one type of investment. In light of these statutes and regulations
and our business and investment strategy, we generally seek to invest in United
States government and government-agency securities and corporate securities
rated investment grade by established nationally recognized rating organizations
or in securities of comparable investment quality, if not rated.

     The following table summarizes investment yields earned over the past three
years on the general account invested assets of our insurance subsidiaries
(excluding the investment income from our major medical business in run-off).
General account investments exclude our venture capital investment in AWE,
separate account assets, the value of S&P 500 call options and the investments
held by CFC.



                                                                                        2002          2001        2000
                                                                                        ----          ----        ----
                                                                                              (Dollars in millions)
                                                                                                       
Weighted average general account invested assets as defined:
       As reported .................................................................  $23,264.5     $23,259.9   $22,493.4
       Excluding unrealized depreciation (a)........................................   23,344.0      24,029.8    23,853.4
Net investment income on general account invested assets............................    1,516.7       1,683.6     1,763.8

Yields earned:
       As reported..................................................................        6.5%          7.2%        7.8%
       Excluding unrealized depreciation (a) .......................................        6.5%          7.0%        7.4%

- ------------------------

(a)  Excludes the effect of reporting fixed maturities at fair value as
     described in the note to our consolidated financial statements entitled
     "Investments".


     Although investment income is a significant component of total revenues,
the profitability of certain of our insurance products is determined primarily
by the spreads between the interest rates we earn and the rates we credit or
accrue to our insurance liabilities. At December 31, 2002, the average yield,
computed on the cost basis of our actively managed fixed maturity portfolio, was
6.7 percent, and the average interest rate credited or accruing to our total
insurance liabilities (excluding interest rate bonuses for the first policy year
only and excluding the effect of credited rates attributable to variable or
equity-indexed products) was 5.1 percent.

     Actively Managed Fixed Maturities

     Our actively managed fixed maturity portfolio at December 31, 2002,
included primarily debt securities of the United States government, public
utilities and other corporations, and mortgage-backed securities.
Mortgage-backed securities included collateralized mortgage obligations ("CMOs")
and mortgage-backed pass-through securities.

     At December 31, 2002, our fixed maturity portfolio had $926.6 million of
unrealized gains and $499.0 million of unrealized losses, for a net unrealized
gain of $427.6 million. Estimated fair values for fixed maturity investments
were determined based on estimates from: (i) nationally recognized pricing
services (85 percent of the portfolio); (ii) broker-dealer market makers (8
percent of the portfolio); and (iii) internally developed methods (7 percent of
the portfolio).

     At December 31, 2002, approximately 5.8 percent of our invested assets (6.5
percent of fixed maturity investments) were fixed maturities rated
below-investment grade by nationally recognized statistical rating organizations
(or, if not rated by such firms, with ratings below Class 2 assigned by the
NAIC). We plan to maintain approximately the present level of
below-investment-grade fixed maturities. These securities generally have greater
risks than other corporate debt investments, including risk of loss upon default
by the borrower, and are often unsecured and subordinated to other creditors.
Below-investment-grade issuers usually have higher levels of indebtedness and
are more sensitive to adverse economic conditions, such as recession or
increasing interest rates, than are investment-grade issuers. We are aware of
these risks and monitor our below-investment-grade securities closely. At
December 31, 2002, our below-investment-grade fixed maturity investments had an
amortized cost of $1,435.1 million and an estimated fair value of $1,261.2
million.

                                       54

     We continually evaluate the creditworthiness of each issuer whose
securities we hold. We pay special attention to those securities whose market
values have declined materially for reasons other than changes in interest rates
or other general market conditions. We evaluate the realizable value of the
investment, the specific condition of the issuer and the issuer's ability to
comply with the material terms of the security. Information reviewed may include
the recent operational results and financial position of the issuer, information
about its industry, information about the variety of factors affecting the
issuer's performance and other information. Conseco employs a staff of
experienced securities analysts in a variety of specialty areas who compile and
review such data. If evidence does not exist to support a realizable value equal
to or greater than the carrying value of the investment, and such decline in
market value is determined to be other than temporary, we reduce the carrying
amount to its fair value, which becomes the new cost basis. We report the amount
of the reduction as a realized loss. We recognize any recovery of such
reductions in the cost basis of an investment only upon the sale, repayment or
other disposition of the investment. In 2002, we recorded writedowns of fixed
maturity investments, equity securities and other invested assets totaling
$556.8 million. Our investment portfolio is subject to the risks of further
declines in realizable value. However, we attempt to mitigate this risk through
the diversification and active management of our portfolio.

     As of December 31, 2002, our fixed maturity investments in substantive
default (i.e., in default due to nonpayment of interest or principal) or
technical default (i.e., in default, but not as to the payment of interest or
principal) had an amortized cost of $203.9 million and a carrying value of
$174.8 million. Conseco employs a staff of experienced professionals to manage
non-performing and impaired investments. There were no other fixed maturity
investments about which we had serious doubts as to the ability of the issuer to
comply with the material terms of the instrument on a timely basis.

     When a security defaults, our policy is to discontinue the accrual of
interest and eliminate all previous interest accruals, if we determine that such
amounts will not be ultimately realized in full. Investment income forgone due
to defaulted securities was $60.4 million, $17.6 million and $15.3 million for
the years ended December 31, 2002, 2001 and 2000, respectively.

     At December 31, 2002, fixed maturity investments included $6.4 billion of
mortgage-backed securities (or 33 percent of all fixed maturity securities).
CMOs are backed by pools of mortgages that are segregated into sections or
"tranches" that provide for reprioritizing of retirement of principal.
Pass-through securities receive principal and interest payments through their
regular pro rata share of the payments on the underlying mortgages backing the
securities. The yield characteristics of mortgage-backed securities differ from
those of traditional fixed-income securities. Interest and principal payments
for mortgage-backed securities occur more frequently, often monthly.
Mortgage-backed securities are subject to risks associated with variable
prepayments because borrowers are generally allowed to pre-pay their mortgages
without penalty. Prepayment rates are influenced by a number of factors that
cannot be predicted with certainty, including: the relative sensitivity of the
underlying mortgages backing the assets to changes in interest rates; a variety
of economic, geographic and other factors; and the repayment priority of the
securities in the overall securitization structures.

     In general, prepayments on the underlying mortgage loans and the securities
backed by these loans increase when prevailing interest rates decline
significantly relative to the interest rates on such loans. The yields on
mortgage-backed securities purchased at a discount to par will increase when the
underlying mortgages prepay faster than expected. The yields on mortgage-backed
securities purchased at a premium will decrease when they prepay faster than
expected. When interest rates decline, the proceeds from the prepayment of
mortgage-backed securities are likely to be reinvested at lower rates than we
were earning on the prepaid securities. When interest rates increase,
prepayments on mortgage-backed securities decrease, as fewer underlying
mortgages are refinanced. When this occurs, the average maturity and duration of
the mortgage-backed securities increase, which decreases the yield on
mortgage-backed securities purchased at a discount, because the discount is
realized as income at a slower rate, and increases the yield on those purchased
at a premium as a result of a decrease in the annual amortization of the
premium.

     The following table sets forth the par value, amortized cost and estimated
fair value of mortgage-backed securities, summarized by interest rates on the
underlying collateral at December 31, 2002:


                                                                                  Par        Amortized      Estimated
                                                                                 value         cost        fair value
                                                                                 -----         ----        ----------
                                                                                       (Dollars in millions)
                                                                                                    
Below 7 percent..............................................................   $4,895.4      $4,857.3       $5,125.2
7 percent - 8 percent........................................................    1,000.4       1,007.6        1,059.1
8 percent - 9 percent........................................................      171.9         179.8          187.1
9 percent and above..........................................................       42.1          44.2           44.8
                                                                                --------      --------       --------

          Total mortgage-backed securities (a)...............................   $6,109.8      $6,088.9       $6,416.2
                                                                                ========      ========       ========

                                       55

- --------------------
(a)  Includes below-investment grade mortgage-backed securities with an
     amortized cost and estimated fair value of $6.9 million and $2.1 million,
     respectively.

     The amortized cost and estimated fair value of mortgage-backed securities
at December 31, 2002, summarized by type of security, were as follows:




                                                                                                  Estimated Fair Value
                                                                                                           Percent of
                                                                                Amortized                      fixed
Type                                                                              Cost         Amount       maturities
                                                                                  ----         ------       ----------
                                                                                 (Dollars in millions)
                                                                                                        
Pass-throughs and sequential and targeted amortization classes...............    $2,849.5      $3,000.8          16%
Planned amortization classes and accretion-directed bonds....................     2,439.8       2,580.6          13
Commercial mortgage-backed securities........................................       441.3         461.4           2
Subordinated classes and mezzanine tranches..................................       348.7         365.7           2
Other........................................................................         9.6           7.7           -
                                                                                 --------      --------          --

   Total mortgage-backed securities (a)......................................    $6,088.9      $6,416.2          33%
                                                                                 ========      ========          ==

- --------------------
(a)  Includes below-investment grade mortgage-backed securities with an
     amortized cost and estimated fair value of $6.9 million and $2.1 million,
     respectively.


     Pass-throughs and sequential and targeted amortization classes have similar
prepayment variability. Pass-throughs historically provide the best liquidity in
the mortgage-backed securities market. Pass-throughs are also used frequently in
the dollar roll market and can be used as the collateral when creating
collateralized mortgage obligations. Sequential classes are a series of tranches
that return principal to the holders in sequence. Targeted amortization classes
offer slightly better structure in return of principal than sequentials when
prepayment speeds are close to the speed at the time of creation.

     Planned amortization classes and accretion-directed bonds are some of the
most stable and liquid instruments in the mortgage-backed securities market.
Planned amortization class bonds adhere to a fixed schedule of principal
payments as long as the underlying mortgage collateral experiences prepayments
within a certain range. Changes in prepayment rates are first absorbed by
support or companion classes. This insulates the planned amortization class from
the consequences of both faster prepayments (average life shortening) and slower
prepayments (average life extension).

     Commercial mortgage-backed securities ("CMBS") are bonds secured by
commercial real estate mortgages. Commercial real estate encompasses income
producing properties that are managed for economic profit. Property types
include multi-family dwellings including apartments, retail centers, hotels,
restaurants, hospitals, nursing homes, warehouses, and office buildings. The
CMBS market currently offers high yields, strong credits, and call protection
compared to similar-rated corporate bonds. Most CMBS have call protection
features where borrowers are locked out from prepaying their mortgages for a
stated period of time. If the borrower does prepay any or all of the loan, they
will be required to pay prepayment penalties.

     Subordinated and mezzanine tranches are classes that provide credit
enhancement to the senior tranches. The rating agencies require that this credit
enhancement not deteriorate due to prepayments for a period of time, usually
five years of complete lockout followed by another period of time where
prepayments are shared pro rata with senior tranches. The credit risk of
subordinated and mezzanine tranches is derived from owning a small percentage of
the mortgage collateral, while bearing a majority of the risk of loss due to
property owner defaults. Subordinated bonds can be rated "AA" or lower; we
typically do not invest in such securities rated lower than "BB".

     During 2002, we sold $19.5 billion of investments (primarily fixed
maturities), resulting in $40.2 million of net investment losses (before related
amortization and taxes). Securities sold at a loss are sold for a number of
reasons including: (i) changes in the investment environment; (ii) expectation
that the market value could deteriorate; (iii) desire to reduce our exposure to
an issuer or an industry; (iv) changes in credit quality; and (v) our analysis
indicating there is a high probability that the security is permanently impaired
and subject to further declines in value. As discussed in the notes to our
consolidated financial statements, the realization of gains and losses affects
the timing of the amortization of the cost of policies produced and the cost of
policies purchased related to universal life and investment products.

                                       56

     Venture Capital Investment in AT&T Wireless Services, Inc.

     Our venture capital investment in AWE was made by our subsidiary which
engages in venture capital investment activity. AWE is a company in the wireless
communication business. In 2002, Conseco sold 10.3 million shares of AWE
generating net proceeds of $75.7 million. Our investment in AWE is carried at
estimated fair value, with changes in fair value recognized as investment income
(loss). At December 31, 2002, our holdings of AWE common stock included 4.1
million shares valued at $25.0 million. The market values of AWE and many other
companies in AWE's business sector have declined significantly in recent
periods. We recognized venture capital investment losses of $99.3 million, $42.9
million and $199.5 million in 2002, 2001 and 2000, respectively, related to this
investment.

     Other Investments

     At December 31, 2002, we held mortgage loan investments with a carrying
value of $1,308.3 million (or 6.0 percent of total invested assets) and a fair
value of $1,335.7 million. Mortgage loans were substantially comprised of
commercial loans. Noncurrent mortgage loans were insignificant at December 31,
2002. Realized losses on mortgage loans were not significant in any of the past
three years. At December 31, 2002, we had a mortgage loan loss reserve of $3.5
million. Approximately 9 percent, 8 percent, 7 percent, 6 percent, 6 percent and
6 percent of the mortgage loan balance were on properties located in New York,
Massachusetts, Florida, California, Ohio and Pennsylvania, respectively. No
other state accounted for more than 5 percent of the mortgage loan balance.

     At December 31, 2002, we held no trading securities; they were historically
included in other invested assets. Trading securities were investments we
intended to sell in the near term. We carried trading securities at estimated
fair value; changes in fair value were reflected in the statement of operations.

     Other invested assets also include: (i) S&P 500 Call Options; and (ii)
certain nontraditional investments, including investments in limited
partnerships and promissory notes.

     As part of our investment strategy, we enter into reverse repurchase
agreements and dollar-roll transactions to increase our return on investments
and improve our liquidity. Reverse repurchase agreements involve a sale of
securities and an agreement to repurchase the same securities at a later date at
an agreed-upon price. Dollar rolls are similar to reverse repurchase agreements
except that the repurchase involves securities that are only substantially the
same as the securities sold. We enhance our investment yield by investing the
proceeds from the sales in short-term securities pending the contractual
repurchase of the securities at discounted prices in the forward market. We are
able to engage in such transactions due to the market demand for mortgage-backed
securities to form CMOs. At December 31, 2002, we had investment borrowings of
$669.7 million. Such investment borrowings averaged $1,155.8 million during 2002
and were collateralized by investment securities with fair values approximately
equal to the loan value. The weighted average interest rate on such borrowings
was 1.3 percent in 2002. The primary risk associated with short-term
collateralized borrowings is that the counterparty might be unable to perform
under the terms of the contract. Our exposure is limited to the excess of the
net replacement cost of the securities over the value of the short-term
investments (which was not material at December 31, 2002). We believe that the
counterparties to our reverse repurchase and dollar-roll agreements are
financially responsible and that counterparty risk is minimal.

     CONSOLIDATED FINANCIAL CONDITION

     Changes in the Consolidated Balance Sheet of 2002 Compared with 2001

     Changes in our consolidated balance sheet between December 31, 2002 and
December 31, 2001, reflect: (i) the accounting for our finance operations as a
discontinued operation (as described in the note to our consolidated financial
statement entitled "Discontinued Finance Business - Planned Sale of CFC"; (ii)
the preparation of such statement in accordance with SOP 90-7, including the
segregation of all prepetition liabilities into an account entitled "liabilities
subject to compromise" at the estimated amount of allowable claims; (iii) our
net loss for 2002, including the effect of establishing a valuation allowance
for deferred tax assets; (iv) the cumulative effect of an accounting change
recognizing an impairment of our goodwill asset; (v) changes in the fair value
of actively managed fixed maturity securities and interest-only securities; and
(vi) various financing and reinsurance transactions including the sale of CVIC
(as described in the notes to our consolidated financial statements).

     In accordance with GAAP, we record our actively managed fixed maturity
investments, equity securities and certain other invested assets at estimated
fair value with any unrealized gain or loss (excluding impairment losses which
are recognized through earnings), net of tax and related adjustments, recorded
as a component of shareholders' equity. At December 31, 2002, we increased the
carrying value of such investments by $448.1 million as a result of this fair
value adjustment. The fair value adjustment resulted in a $816.0 million
decrease in carrying value at year-end 2001.

                                       57

     Total capital shown below excludes the debt of the discontinued finance
segment used to fund finance receivables in both periods. Total capital, before
the fair value adjustment recorded in accumulated other comprehensive loss,
decreased $7.8 billion, or 70 percent, to $3.3 billion. The decrease is
primarily due to the net loss realized in 2002, including the cumulative effect
of an accounting change to recognize an impairment of our goodwill asset.


                                                                           2002            2001
                                                                           ----            ----
                                                                           (Dollars in millions)
                                                                                  
Total capital, excluding accumulated other comprehensive loss:
    Corporate notes payable............................................  $ 4,057.1      $ 4,085.0

       Trust Preferred Securities......................................    1,921.5        1,914.5

    Shareholders' equity (deficit):
       Preferred stock.................................................      501.7          499.6
       Common stock and additional paid-in capital.....................    3,497.0        3,484.3
       Retained earnings (accumulated deficit).........................   (6,629.7)       1,208.1
                                                                         ---------      ---------

          Total shareholders' equity (deficit), excluding accumulated
             other comprehensive loss..................................   (2,631.0)       5,192.0
                                                                         ---------      ---------

          Total capital, excluding accumulated other
             comprehensive income (loss)...............................    3,347.6       11,191.5

       Accumulated other comprehensive income (loss)...................      580.6         (439.0)
                                                                         ---------      ---------

          Total capital................................................  $ 3,928.2      $10,752.5
                                                                         =========      =========

     Corporate notes payable decreased during 2002 primarily due to: (i) open
market repurchases of our 8.5% notes due 2002; partially offset by (ii) the
increase in unamortized fair market value of terminated interest rate swap
agreements (see the note to our consolidated financial statements entitled
"Summary of Significant Accounting Policies"). Pursuant to SOP 90-7, all
corporate notes payable have been classified as "liabilities subject to
compromise".

     Shareholders' equity (deficit), excluding accumulated other comprehensive
loss, decreased by $7.8 billion in 2002, to $(2.6) billion. The significant
component of the decrease was our net loss of $7.8 billion. The accumulated
other comprehensive income (loss) increased by $1.0 billion, principally related
to the increase in the unrealized gains of our insurance companies' investment
portfolio.

     Book value (deficit) per common share outstanding decreased to $(7.38) at
December 31, 2002, from $12.34 a year earlier. Such change was primarily
attributable to our net loss for 2002. Excluding accumulated other comprehensive
income (loss), book value (deficit) per common share outstanding was $(9.05) at
December 31, 2002, and $13.61 at December 31, 2001.

     Goodwill (representing the excess of the amounts we paid to acquire
companies over the fair value of net assets acquired in transactions accounted
for as purchases) was $100.0 million and $3,695.4 million at December 31, 2002
and 2001, respectively. Amortization of goodwill totaled $109.6 million and
$112.5 million during 2001 and 2000, respectively.

     The FASB issued SFAS 142, in June 2001. Under the new rule, intangible
assets with an indefinite life are no longer amortized in periods subsequent to
December 31, 2001, but are subject to annual impairment tests (or more frequent
under certain circumstances), effective January 1, 2002. The Company has
determined that all of its goodwill has an indefinite life and is therefore
subject to the new rules.

     Pursuant to SFAS 142, the goodwill impairment test has two steps. For
Conseco, the first step consisted of comparing the estimated fair value of each
of the business units comprising our insurance segment to the unit's book value.
Since all of our goodwill relates to the insurance segment (which is also a
reportable segment), the goodwill impairment test is not relevant to the finance
business. If the estimated fair value exceeds the book value, the test is
complete and goodwill is not impaired. If the fair value is less than the book
value, the second step of the impairment test must be performed, which compares
the implied fair value of the applicable business unit's goodwill with the book
value of that goodwill to measure the amount of goodwill impairment, if any.

     Pursuant to the transitional rules of SFAS 142, we completed the two-step
impairment test during 2002 and, as a result of that test, we recorded the
cumulative effect of the accounting change for the goodwill impairment charge of
$2,949.2 million. The

                                       58

impairment charge is reflected in the cumulative effect of an accounting change
in the accompanying consolidated statement for the year ended December 31, 2002.
Subsequent impairment tests will be performed on an annual basis, or more
frequently if circumstances indicate a possible impairment. Subsequent
impairment charges are classified as an operating expense. As described below
the Company performed additional impairment tests in 2002, as a result of
circumstances which indicated a possible impairment.

     The significant factors used to determine the amount of the initial
impairment included analyses of industry market valuations, historical and
projected performance of our insurance segment, discounted cash flow analyses
and the market value of our capital. The valuation utilized the best available
information, including assumptions and projections we considered reasonable and
supportable. The assumptions we used to determine the discounted cash flows
involve significant judgments regarding the best estimate of future premiums,
expected mortality and morbidity, interest earned and credited rates,
persistency and expenses. The discount rate used was based on an analysis of the
weighted average cost of capital for several insurance companies and considered
the specific risk factors related to Conseco. Pursuant to the guidance in SFAS
142, quoted market prices in active markets are the best evidence of fair value
and shall be used as the basis for measurement, if available.

     On August 14, 2002, our insurance subsidiaries' financial strength ratings
were downgraded by A.M. Best to "B (fair)" and on September 8, 2002, the Company
defaulted on its public debt. These developments caused sales of our insurance
products to fall and policyholder redemptions and lapses to increase. The
adverse impact on our insurance subsidiaries resulting from the ratings
downgrade and parent company default required that additional impairment tests
be performed as of September 30, 2002 in accordance with SFAS 142.

     In connection with our negotiations with debt holders, we retained an
outside actuarial consulting firm to assist in valuing our insurance
subsidiaries. That valuation work and our internal evaluations were used in
performing the additional impairment tests that resulted in an impairment charge
to goodwill of $500.0 million. The charge is reflected in the line item entitled
"Goodwill impairment" in our consolidated statement of operations for the year
ended December 31, 2002. The most significant changes made to the January 1,
2002 valuation that resulted in additional impairment charge were: (i) reduced
estimates of projected future sales of insurance products; (ii) increased
estimates of future policyholder redemptions and lapses; and (iii) a higher
discount rate to reflect the current rates used by the market to value life
insurance companies. Management believes that the assumptions and estimates used
are reasonable given all available facts and circumstances. However, if
projected cash flows are not realized in the future, we may be required to
recognize additional impairments.



                                       59

       Financial Ratios



                                                                                               2002       2001       2000
                                                                                               ----       ----       ----
                                                                                                           
Book value (deficit) per common share:
   As reported............................................................................    $(7.38)    $12.34     $11.95

   Excluding accumulated other comprehensive income (loss) (a)............................     (9.05)     13.61      13.95

   Excluding goodwill and accumulated other comprehensive
     income (loss) (a)....................................................................     (9.34)      2.89       2.27


Ratio of earnings to fixed charges:
   As reported............................................................................       (d)        (f)        (h)
   Excluding interest added to policyholder account balances..............................       (d)        (f)        (h)

Ratio of earnings to fixed charges, preferred dividends and distributions on
   Company-obligated mandatorily redeemable preferred securities of subsidiary
   trusts:
     As reported..........................................................................       (e)        (g)        (i)
     Excluding interest added to policyholder account balances............................       (e)        (g)        (i)

Rating agency ratios (a) (b) (c):
   Corporate debt to total capital........................................................       121%        37%        40%
   Corporate debt and Company-obligated mandatorily redeemable
     preferred securities of subsidiary trusts to total capital...........................       178%        54%        60%

- ------------------------

(a)  Excludes accumulated other comprehensive income (loss).

(b)  Excludes the direct debt of the finance segment used to fund finance
     receivables and investment borrowings of the insurance segment.

(c)  These ratios are calculated in a manner discussed with rating agencies.

(d)  For such ratios, adjusted earnings were $1,634.0 million less than fixed
     charges. Adjusted earnings for the year ended December 31, 2002, included:
     (i) special charges and reorganization items totaling $110.9 million; (ii)
     goodwill impairment charges of $500.0 million; and (iii) provision for
     losses related to loan guarantees of $240.0 million, as described in
     greater detail in the notes to our consolidated financial statements.

(e)  For such ratios, adjusted earnings were $1,810.4 million less than fixed
     charges. Adjusted earnings for the year ended December 31, 2002, included:
     (i) special charges and reorganization items totaling $110.9 million; (ii)
     goodwill impairment charges of $500.0 million; and (iii) provision for
     losses related to loan guarantees of $240.0 million, as described in
     greater detail in the notes to our consolidated financial statements.

(f)  For such ratios, adjusted earnings were $260.4 million less than fixed
     charges. Adjusted earnings for the year ended December 31, 2001, included:
     (i) special charges of $80.4 million; and (ii) provision for losses related
     to loan guarantees of $169.6 million, as described in greater detail in the
     notes to our consolidated financial statements.

(g)  For such ratios, adjusted earnings were $464.1 million less than fixed
     charges. Adjusted earnings for the year ended December 31, 2001, included:
     (i) special charges of $80.4 million; and (ii) provision for losses related
     to loan guarantees of $169.6 million, as described in greater detail in the
     notes to our consolidated financial statements.

(h)  For such ratios, adjusted earnings were $769.9 million less than fixed
     charges. Adjusted earnings for the year ended December 31, 2000, included:
     (i) special charges of $305.0 million; and (ii) provision for losses
     related to loan guarantees of $231.5 million, as described in greater
     detail in the notes to our consolidated financial statements.

(i)  For such ratios, adjusted earnings were $1,010.4 million less than fixed
     charges. Adjusted earnings for the year ended December 31, 2000, included:
     (i) special charges of $305.0 million; and (ii) provision for losses
     related to loan guarantees of $231.5 million, as described in greater
     detail in the notes to our consolidated financial statements.


                                       60

     Liquidity for Insurance and Fee-Based Operations

     Our insurance operating companies generally receive adequate cash flow from
premium collections and investment income to meet their obligations. Life
insurance and annuity liabilities are generally long-term in nature.
Policyholders may, however, withdraw funds or surrender their policies, subject
to any applicable surrender and withdrawal penalty provisions. We seek to
balance the duration of our invested assets with the estimated duration of
benefit payments arising from contract liabilities.

     Only a small portion of our insurance liabilities have a time for
contractual payment; the majority of such liabilities are payable upon
occurrence of the insured event or upon surrender. Of our total insurance
liabilities at December 31, 2002, approximately 20 percent could be surrendered
by the policyholder without a penalty. Approximately 62 percent could be
surrendered by the policyholder subject to penalty or the release of an
insurance liability in excess of surrender benefits paid. The remaining 18
percent do not provide a surrender benefit.

     Approximately 46 percent of insurance liabilities were subject to interest
rates that may be reset annually; 36 percent have a fixed explicit interest rate
for the duration of the contract; 12 percent have credited rates which
approximate the income earned by the Company; and the remainder have no explicit
interest rate.

     Insurance liabilities for interest-sensitive products by credited rate
(excluding interest rate bonuses for the first policy year only) at December 31,
2002 were as follows (dollars in millions):
                                                                                       
       Below 4.00 percent.............................................................   $ 3,735.8  (a)
       4.00 percent - 4.50 percent....................................................     3,332.3
       4.50 percent - 5.00 percent....................................................     4,542.5
       5.00 percent - 5.50 percent....................................................       867.9
       5.50 percent and above.........................................................       991.0
                                                                                         ---------

             Total insurance liabilities on interest-sensitive products...............   $13,469.5
                                                                                         =========

- ------------------

(a)  Includes liabilities related to our equity-indexed annuity products of
     $1,987.2 million. The accumulation value of these annuities is credited
     with interest at an annual guaranteed minimum rate of 3 percent (or,
     including the effect of applicable sales loads, a 1.7 percent compound
     average interest rate over the term of the contract). These annuities
     provide for potentially higher returns based on a percentage of the change
     in the S&P 500 Index during each year of their term. We purchase S&P 500
     Call Options in an effort to hedge increases to insurance liabilities
     resulting from increases in the S&P 500 Index.



       

     On August 14, 2002, A.M. Best lowered the financial strength ratings of our
primary insurance subsidiaries from "B++ (very good)" to "B (fair)". A.M. Best
ratings for the industry currently range from "A++ (Superior)" to "F (In
Liquidation)" and some companies are not rated. An "A++" ranking indicates
superior overall performance and a strong ability to meet obligations to
policyholders over a long period of time. The "B" rating is assigned to
companies which have, on balance, fair balance sheet strength, operating
performance and business profile, when compared to the standards established by
A.M. Best, and have an ability in A.M. Best's opinion to meet their current
obligations to policyholders, but their financial strength is vulnerable to
adverse changes in underwriting and economic conditions. The rating reflects
A.M. Best's view of the uncertainty surrounding our restructuring initiatives
and the potential adverse financial impact on the subsidiaries if negotiations
are protracted and execution of the restructuring plan is delayed. S&P has given
our insurance subsidiaries a financial strength rating of "B+". Rating
categories from "BB" to "CCC" are classified as "vulnerable", and pluses and
minuses show the relative standing within a category. In S&P's view an insurer
rated "B" currently has the capacity to meet its financial commitments but
adverse business conditions could lead to insufficient ability to meet financial
commitments.

     The ratings downgrades have caused sales of our insurance products to
decline and policyholder redemptions and lapses to increase. In some cases, the
downgrades have also caused defections among our independent agent sales force
and increases in the commissions we must pay. These events have had a material
adverse effect on our financial results. Further downgrades by A.M. Best or S&P
could have further material and adverse effects on our financial results and
liquidity.

     During 2002, our insurance subsidiaries paid dividends to Conseco totaling
$240 million. As more fully described in the note to our consolidated financial
statements entitled "Statutory Information", our two insurance subsidiaries
domiciled in Texas entered into consent orders with the Texas Department of
Insurance. The consent orders apply to all of our insurance subsidiaries and,
among other things, restrict the ability of our insurance subsidiaries to pay
dividends and other amounts to the parent company. State laws generally provide
state insurance regulatory agencies with broad authority to protect
policyholders in their jurisdictions. Accordingly, there can be no assurance
that the regulators will not seek to assert greater supervision and control over
our insurance subsidiaries' businesses and financial affairs.

                                       61


     Our insurance subsidiaries experienced increased lapse rates on annuity
policies during 2002. We believe that the diversity of the investment portfolios
of our insurance subsidiaries and the concentration of investments in
high-quality, liquid securities provide sufficient liquidity to meet foreseeable
cash requirements of our insurance subsidiaries. At December 31, 2002, we held
$1.1 billion of cash and cash equivalents and $15.8 billion of publicly traded
investment grade bonds. Our insurance subsidiaries could readily liquidate
portions of their investments, if lapses continue at current levels. In
addition, investments could be used to facilitate borrowings under
reverse-repurchase agreements or dollar-roll transactions. Such borrowings have
been used by the insurance subsidiaries from time to time to increase their
return on investments and to improve liquidity. The availability of
reverse-repurchase agreements and dollar-roll transactions is dependent on
counter parties' willingness to enter into the transactions, and, consequently,
no assurance can be given that such transactions will be available in the
future.

     Liquidity of the Debtors

     The liquidity and capital resources of the Debtors are significantly
affected by the Chapter 11 Cases. Our bankruptcy proceedings have resulted in
various restrictions on our activities, limitations on financing and a need to
obtain Bankruptcy Court approval for various matters. As a result of our
bankruptcy filing, the Debtors are not permitted to make any payments on its
prepetition liabilities. At December 31, 2002, the Debtors held cash of $41.9
million. In addition, the non-life insurance companies held cash of
approximately $60 million.

     Under the priority schedule established by the Bankruptcy Code, certain
postpetition and prepetition liabilities need to be satisfied before unsecured
creditors and holders of CNC's common and preferred stock and Trust Preferred
Securities are entitled to receive any distribution. The Plan (as summarized in
the Disclosure Statement) sets forth the Debtors' proposed treatment of claims
and equity interests. No assurance can be given as to what values, if any, will
be ascribed in the bankruptcy proceedings to each of these constituencies. Our
Plan would result in holders of CNC's common stock and preferred stock (other
than Series F Preferred Stock) receiving no value and the holders of CNC's Trust
Preferred Securities and Series F Preferred Stock receiving little value on
account of the cancellation of their interests. In addition, holders of
unsecured claims against the Debtors would, in most cases, receive less than
full recovery for the cancellation of their interests.

     At this time, it is not possible to predict with certainty the effect of
the Chapter 11 cases on our business or various creditors, or when we will
emerge from Chapter 11. Our future results depend upon our confirming and
successfully implementing, on a timely basis, a plan of reorganization.

     CNC and CIHC are holding companies with no business operations of their
own; they depend on their operating subsidiaries for cash to make principal and
interest payments on debt, and to pay administrative expenses and income taxes.
The cash CNC and CIHC receive from insurance subsidiaries consists of fees for
services, tax sharing payments, dividends and distributions, and from our
non-insurance subsidiaries, loans and advances. A further deterioration in the
financial condition, earnings or cash flow of the material subsidiaries of CNC
or CIHC for any reason could further limit such subsidiaries' ability to pay
cash dividends or other disbursements to CNC and/or CIHC, which, in turn, would
limit CNC's and/or CIHC's ability to meet debt service requirements and satisfy
other financial obligations.

     The ability of our insurance subsidiaries to pay dividends is subject to
state insurance department regulations. These regulations generally permit
dividends to be paid from earned surplus of the insurance company for any
12-month period in amounts equal to the greater of (or in a few states, the
lesser of): (i) net gain from operations or net income for the prior year; or
(ii) 10 percent of capital and surplus as of the end of the preceding year. Any
dividends in excess of these levels require the approval of the director or
commissioner of the applicable state insurance department. As described in Item
1. "Government Regulation", Bankers National Life Insurance Company and Conseco
Life Insurance Company of Texas (on behalf of itself and its subsidiaries),
entered into consent orders with the Commissioner of Insurance for the State of
Texas on October 30, 2002. These consent orders, among other things, limit the
ability of our insurance subsidiaries to pay dividends.

     The continuation of the Chapter 11 Cases, particularly if the Plan is not
approved or confirmed in the time frame currently contemplated, could further
adversely affect our operations and relationship with our customers, employees,
regulators, distributors and agents. If confirmation and consummation of the
Plan do not occur expeditiously, the Chapter 11 Cases could result in, among
other things, increased costs for professional fees and similar expenses. In
addition, prolonged Chapter 11 Cases may make it more difficult to retain and
attract management and other key personnel and would require senior management
to spend a significant amount of time and effort dealing with our financial
reorganization instead of focusing on the operation of our business. However, we
currently expect that our current cash resources and additional cash flows from
the operations of our non-life subsidiaries will be adequate to complete our
financial reorganization if the Plan is approved in the time frame currently
contemplated.

     Our cash flow may be affected by a variety of factors, many of which are
outside of our control, including insurance and banking regulatory issues,
competition, financial markets and other general business conditions. We cannot
assure you that we will possess sufficient income and liquidity to meet all of
our liquidity requirements and other obligations. Although we believe that

                                       62


amounts required for us to meet our financial and operating obligations will be
available from our subsidiaries and from funds currently held by CNC and CIHC,
our results for future periods are subject to numerous uncertainties. We may
encounter liquidity problems, which could affect our ability to meet our
obligations while attempting to meet competitive pressures or adverse economic
conditions.

     Because our operations are conducted through subsidiaries, claims of the
creditors of those subsidiaries (including policyholders) will rank senior to
claims to distributions from the subsidiaries, which we depend on to make
payments on our obligations. CIHC's subsidiaries, excluding CFC, had
indebtedness for borrowed money (including capitalized lease obligations but
excluding indebtedness to affiliates), policy reserves and other liabilities of
approximately $24.1 billion at December 31, 2002. The obligations of CNC and
CIHC, as parent holding companies, will rank effectively junior to these
liabilities.

     If an insurance company subsidiary were to be liquidated, that liquidation
would be conducted under the insurance law of its state of domicile by such
state's insurance regulator as the receiver with respect to such insurer's
property and business. In the event of a default on our debt or our insolvency,
liquidation or other reorganization, our creditors and stockholders will not
have the right to proceed against the assets of our insurance subsidiaries or to
cause their liquidation under federal and state bankruptcy laws.

     We will have significant indebtedness even if the Plan is consummated.
Further, our historical capital requirements have been significant and our
future capital requirements could vary significantly and may be affected by
general economic conditions, industry trends, performance, and many other
factors that are not within our control. Recently, we have had difficulty
financing our operations due, in part, to our significant losses and leveraged
condition, and we cannot assure you that we will be able to obtain financing in
the future. Even if the Plan is approved and consummated, we cannot assure you
that we will not continue to experience losses in the future. Our profitability
and ability to generate cash flow will likely depend upon our ability to
successfully implement our business strategy. However, we cannot assure you that
we will be able to accomplish these results.

     Our Plan contemplates that we will enter into a senior secured credit
facility (the "New Credit Facility") with our lenders in connection with our
reorganization. We have agreed to a number of covenants and other provisions
that restrict our ability to engage in various financing transactions and pursue
certain operating activities without the prior consent of the lenders under the
New Credit Facility. We have also agreed to meet or maintain various financial
ratios and minimum financial strength ratings for our insurance subsidiaries.
For instance, if we experience a ratings downgrade following confirmation of the
Plan, if we fail to achieve an "A-" rating by a specified date following
confirmation of the Plan or if we experience a ratings downgrade after achieving
an "A-" rating, we will suffer an event of default under the New Credit
Facility. Our ability to meet these financial and ratings covenants may be
affected by events beyond our control. Although we expect to be in compliance
with these requirements as of the Effective Date, these requirements represent
significant restrictions on the manner in which we may operate our business. If
we default under any of these requirements, the lenders could declare all
outstanding borrowings, accrued interest and fees to be due and payable. If that
were to occur, we cannot assure you that we would have sufficient liquidity to
repay or refinance this indebtedness or any of our other debts.

     INFLATION

     Inflation does not have a significant effect on our balance sheet; we have
minimal investments in property, equipment or inventories. To the extent that
interest rates may change to reflect inflation or inflation expectations, such
change would effect our balance sheet and operations. Lower interest rates will
typically result in increased value of our fixed maturities investments. Lower
rates may also make it more difficult to issue new fixed rate annuities. Rising
interest rates will typically result in decreased value of our fixed maturities
investments.

     Medical cost inflation has had a significant impact on our supplemental
health operations. Generally, these costs have increased more rapidly than the
Consumer Price Index. Medical costs will likely continue to rise. The impact of
medical cost inflation on our operations depends on our ability to increase
premium rates. Such increases are subject to approval by state insurance
departments. We seek to price our new standardized supplement plans to reflect
the impact of these filings and the lengthening of the period required to
implement rate increases.

     MARKET-SENSITIVE INSTRUMENTS AND RISK MANAGEMENT

     Our spread-based insurance business is subject to several inherent risks
arising from movements in interest rates, especially if we fail to anticipate or
respond to such movements. First, interest rate changes can cause compression of
our net spread between interest earned on investments and interest credited on
customer deposits, thereby adversely affecting our results. Second, if interest
rate changes produce an unanticipated increase in surrenders of our spread-based
products, we may be forced to sell investment assets at a loss in order to fund
such surrenders. At December 31, 2002, approximately 20 percent of our total
insurance liabilities (or approximately $4.5 billion) could be surrendered by
the policyholder without penalty. Finally, changes in interest rates can have
significant effects on the performance of our mortgage-backed securities
portfolio, including collateralized mortgage obligations, as a

                                       63

result of changes in the prepayment rate of the loans underlying such
securities. We follow asset/liability strategies that are designed to mitigate
the effect of interest rate changes on our profitability. However, there can be
no assurance that management will be successful in implementing such strategies
and achieving adequate investment spreads.

     We seek to invest our available funds in a manner that will fund future
obligations to policyholders, subject to appropriate risk considerations. We
seek to meet this objective through investments that: (i) have similar
characteristics to the liabilities they support; (ii) are diversified among
industries, issuers and geographic locations; and (iii) make up a predominantly
investment-grade fixed maturity securities portfolio. Many of our products
incorporate surrender charges, market interest rate adjustments or other
features to encourage persistency.

     We seek to maximize the total return on our investments through active
investment management. Accordingly, we have determined that our entire portfolio
of fixed maturity securities is available to be sold in response to: (i) changes
in market interest rates; (ii) changes in relative values of individual
securities and asset sectors; (iii) changes in prepayment risks; (iv) changes in
credit quality outlook for certain securities; (v) liquidity needs; and (vi)
other factors. From time to time, we invest in securities for trading purposes,
although such investments account for a relatively small portion of our total
portfolio.

     The profitability of many of our products depends on the spreads between
the interest yield we earn on investments and the rates we credit on our
insurance liabilities. In addition, changes in competition and other factors,
including the impact of the level of surrenders and withdrawals, may limit our
ability to adjust or to maintain crediting rates at levels necessary to avoid
narrowing of spreads under certain market conditions. Approximately 46 percent
of our insurance liabilities were subject to interest rates that may be reset
annually; 36 percent have a fixed explicit interest rate for the duration of the
contract; 12 percent have credited rates which approximate the income earned by
the Company; and the remainder have no explicit interest rates. As of December
31, 2002, the average yield, computed on the cost basis of our investment
portfolio, was 6.7 percent, and the average interest rate credited or accruing
to our total insurance liabilities (excluding interest rate bonuses for the
first policy year only and excluding the effect of credited rates attributable
to variable or equity-indexed products) was 5.1 percent.

     We use computer models to simulate the cash flows expected from our
existing insurance business under various interest rate scenarios. These
simulations help us to measure the potential gain or loss in fair value of our
interest rate-sensitive financial instruments. With such estimates, we seek to
closely match the duration of our assets to the duration of our liabilities.
When the estimated durations of assets and liabilities are similar, exposure to
interest rate risk is minimized because a change in the value of assets should
be largely offset by a change in the value of liabilities. At December 31, 2002,
the adjusted modified duration of our fixed maturity securities and short-term
investments was approximately 6.6 years and the duration of our insurance
liabilities was approximately 6.0 years. We estimate that our fixed maturity
securities and short-term investments (net of corresponding changes in the value
of cost of policies purchased, cost of policies produced and insurance
liabilities) would decline in fair value by approximately $595 million if
interest rates were to increase by 10 percent from their December 31, 2002
levels. This compares to a decline in fair value of $555 million based on
amounts and rates at December 31, 2001. The calculations involved in our
computer simulations incorporate numerous assumptions, require significant
estimates and assume an immediate change in interest rates without any
management of the investment portfolio in reaction to such change. Consequently,
potential changes in value of our financial instruments indicated by the
simulations will likely be different from the actual changes experienced under
given interest rate scenarios, and the differences may be material. Because we
actively manage our investments and liabilities, our net exposure to interest
rates can vary over time.

     We are subject to the risk that our investments will decline in value. This
has occurred in the past and may occur again. During 2002, we recognized net
realized investment losses of $597.0 million, compared to net realized
investment losses of $379.4 million during 2001. The net realized investment
losses during 2002 included: (i) $556.8 million of writedowns of fixed maturity
investments, equity securities and other invested assets as a result of
conditions which caused us to conclude a decline in fair value of the investment
was other than temporary; and (ii) $40.2 million of net losses from the sales of
investments (primarily fixed maturities) which generated proceeds of $19.5
billion. During 2002, we recognized other-than-temporary declines in value of
several of our investments including K-Mart Corp., Amerco, Inc., Global
Crossing, MCI Communications, Mississippi Chemical, United Airlines and
Worldcom, Inc.

     The operations of the Company are subject to risk resulting from
fluctuations in market prices of our equity securities and venture-capital
investments. In general, these investments have more year-to-year price
variability than our fixed maturity investments. However, returns over longer
time frames have been consistently higher. We manage this risk by limiting our
equity securities and venture-capital investments to a relatively small portion
of our total investments.

     Our investment in S&P 500 Call Options is closely matched with our
obligation to equity-indexed annuity holders. Market value changes associated
with that investment are substantially offset by an increase or decrease in the
amounts added to policyholder account balances for equity-indexed products.

                                       64


     FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF CFC - DISCONTINUED FINANCE
     OPERATIONS

Operating Results of the Discontinued Finance Operations:


                                                                                      2002         2001        2000
                                                                                      ----         ----        ----
                                                                                             (Dollars in millions)
                                                                                                    
Contract originations:
   Manufactured housing.........................................................   $ 1,026.7   $ 2,499.5     $ 4,395.8
   Mortgage services............................................................     2,535.9     3,043.7       4,448.3
   Retail credit................................................................     3,237.9     3,585.8       2,582.1
   Consumer finance - closed-end................................................        37.1         -           544.6
   Other lines (discontinued in early 2002 or previous periods).................       476.8     2,188.3       4,919.5
                                                                                   ---------   ---------     ---------

     Total......................................................................   $ 7,314.4   $11,317.3     $16,890.3
                                                                                   =========   =========     =========

Sales of finance receivables:
   Manufactured housing.........................................................   $   398.8   $     3.6     $   600.7
   Mortgage services............................................................     1,738.7       833.8         913.1
   Consumer finance - closed-end................................................         3.3         -             -
   Other lines (discontinued in early 2002 or previous periods).................       462.9       802.3       1,174.9
                                                                                   ---------   ---------     ---------

     Total......................................................................   $ 2,603.7   $ 1,639.7     $ 2,688.7
                                                                                   =========   =========     =========

Managed receivables (average):
   Manufactured housing.........................................................   $24,482.8   $25,979.1     $25,700.4
   Mortgage services............................................................    10,643.5    12,555.5      13,254.6
   Retail credit................................................................     2,702.7     2,248.0       1,523.0
   Consumer finance - closed-end................................................     1,218.6     1,735.2       2,173.1
   Other lines (discontinued in early 2002 or previous periods).................       709.4     1,856.4       4,770.7
                                                                                   ---------   ---------     ---------

     Total......................................................................   $39,757.0   $44,374.2     $47,421.8
                                                                                   =========   =========     =========

Revenues:
   Net investment income:
     Finance receivables and other..............................................   $ 2,074.2   $ 2,169.7     $ 1,853.6
     Retained interest..........................................................        75.0       125.3         180.7
   Gain (loss) on sale of finance receivables...................................       (49.5)       26.9           7.5
   Fee revenue and other income.................................................       273.8       335.8         365.6
                                                                                   ---------   ---------     ---------

     Total revenues.............................................................     2,373.5     2,657.7       2,407.4
                                                                                   ---------   ---------     ---------

Expenses:
   Provision for losses.........................................................       950.0       537.7         344.7
   Finance interest expense.....................................................     1,130.0     1,234.4       1,152.4
   Other operating costs and expenses...........................................       616.0       642.4         753.5
                                                                                   ---------   ---------     ---------

     Total expenses.............................................................     2,696.0     2,414.5       2,250.6
                                                                                   ---------   ---------     ---------

     Operating income (loss) before special charges, impairment charges
       and income taxes.........................................................      (322.5)      243.2         156.8

Special charges.................................................................      (121.9)      (21.5)       (394.3)
Reorganization items............................................................       (17.3)        -             -
Impairment charges..............................................................    (1,449.9)     (386.9)       (515.7)
                                                                                   ---------   ---------      --------

     Loss before income taxes...................................................   $(1,911.6)  $  (165.2)     $ (753.2)
                                                                                   =========   =========      ========


     General: CFC has historically provided financing for manufactured housing,
home equity, home improvements, consumer products and equipment, and consumer
and commercial revolving credit. As a result of the formalization of the plan to
sell the

                                       65

finance business and the filing of petitions under the Bankruptcy Code by the
Finance Company Debtors, the finance business is being accounted for as a
discontinued business in Conseco's consolidated financial statements. See the
note to our consolidated financial statements entitled "Discontinued Finance
Business - Planned Sale of CFC" for additional information. CFC's finance
products include both fixed-term and revolving loans and leases. CFC also
markets physical damage and other credit protection relating to the loans it
services.

     After September 8, 1999, CFC no longer structured securitizations in a
manner that resulted in recording a sale of the loans. Instead, new
securitization transactions were structured to include provisions that entitle
CFC to repurchase assets transferred to the special purpose entity when the
aggregate unpaid principal balance reaches a specified level. Until these assets
are repurchased, however, the assets are the property of the special purpose
entity and are not available to satisfy the claims of creditors of CFC. In
addition, CFC's securitization transactions were structured so that CFC, as
servicer for the loans, is able to exercise significant discretion in making
decisions about the serviced portfolio. Pursuant to Financial Accounting
Standards Board Statement No. 140, "Accounting for the Transfer and Servicing of
Financial Assets and Extinguishments of Liabilities" ("SFAS 140"), such
discretion requires the securitization transactions to be accounted for as
secured borrowings whereby the loans and securitization debt remain on the
balance sheet, rather than as sales.

     The change to the structure of CFC's securitizations has no effect on the
total profit CFC recognizes over the life of each new loan, but it changes the
timing of profit recognition. Under the portfolio method (the accounting method
required for CFC securitizations which are structured as secured borrowings),
CFC recognizes: (i) earnings over the life of new loans as interest revenues are
generated; (ii) interest expense on the securities which are sold to investors
in the loan securitization trusts; and (iii) provisions for losses. As a result,
CFC's reported earnings from new loans securitized in transactions accounted for
under the portfolio method are lower in the period in which the loans are
securitized (compared to CFC's historical method) and higher in later periods,
as interest spread is earned on the loans.

     CNC's leveraged condition and liquidity difficulties severely impacted the
operations of CFC, principally by eliminating CFC's access to the securitization
markets. The securitization markets have been CFC's main source of funding. The
loss of access to the securitization markets has severely affected CFC's ability
to originate, purchase and sell loans. In addition, CFC has historically relied
on these markets to finance the sale of repossessed manufactured housing units
which have historically lowered the loss on defaulted loans. CFC's inability to
access this market for repossessed manufactured housing units has forced CFC to
utilize the wholesale channel to dispose of its repossessed units, resulting in
higher losses on these portfolios. Increased losses have resulted in significant
reductions in cash flow from servicing and residual income, as well as CFC being
obligated to incur increasing amounts of guarantee liabilities on certain
securitizations. Additionally, market valuations of CFC's securitization trusts
have decreased due to uncertainty regarding CFC's liquidity position and its
ability to continue to provide servicing for the securitized portfolios,
thereby, reducing the value of CFC's retained interest pledged as collateral on
its residual facility.

       CFC's remaining liquidity sources (excluding its bank subsidiaries) are a
warehouse and a residual facility with Lehman and a postpetition financing
facility. CFC's diminished access to the securitization markets and the
constrained liquidity under its other funding sources have had a material
adverse effect on CFC's business and results of operations, resulting in CFC's
petition for relief under the Bankruptcy Code. On December 19, 2002, shortly
after the filing of the Chapter 11 Cases, CFC obtained debtor-in-possession
("DIP") financing provided by U.S. Bank and FPS DIP LLC, an affiliate of
Fortress Investment Group LLC ("Fortress"), J.C. Flowers & Co. LLC. ("Flowers")
and Cerberus Capital Management, L.P. ("Cerberus"). The DIP financing motion was
granted by the Bankruptcy Court on January 14, 2003. On April 14, 2003, the
Bankruptcy Court approved an amendment to the DIP Facility to increase the
maximum permitted borrowings thereunder, from $125 million to $150 million.

     CFC is currently in violation of several financial covenants required by
its warehouse and residual facilities. CFC has entered into a forbearance
agreement with Lehman pursuant to which Lehman has agreed to temporarily refrain
from exercising any rights arising from events of default that occurred under
the warehouse and residual facilities as of the date of such forbearance
agreement, including certain events of default triggered by CFC not being in
compliance with certain financial covenants. This forbearance agreement expires
on June 1, 2003 and is subject to various conditions.

     CFC's residual facility is collateralized by retained interests in
securitizations. CFC is required to maintain collateral based on current
estimated fair values in accordance with the terms of such facility. Due to the
decrease in the estimated fair value of its retained interests, CFC's collateral
was deficient at December 31, 2002 (as calculated in accordance with the
relevant transaction documents). Under the terms of the forbearance agreement,
Lehman has agreed not to cause accelerated repayment of the residual facility
based on the collateral deficiency through June 1, 2003. However, Lehman is
retaining certain cash flows from CFC's retained interests pledged to this
facility and applying these cash flows to the margin deficit. CFC is currently
unable to provide sufficient additional collateral or repay this residual
facility.

     On October 22, 2002, Conseco announced that its board of directors approved
a plan to seek new investors or acquirers for CFC's businesses and that it had
engaged the investment banking firms of Lazard Freres & Co., LLC and Credit
Suisse First Boston to pursue various alternatives, including securing new
investors and/or selling CFC's three primary lines of business: (i) manufactured

                                       66

housing; (ii) mortgage services; and (iii) consumer finance. On December 19,
2002, CFC announced that it had signed a purchase agreement for the sale of
substantially all of its assets to CFN. The Bankruptcy Court approved bidding
and sales procedures pursuant to which the assets of CFC were sold in a public
auction supervised by the Trustee appointed by the Bankruptcy Court, on March 4
and 5 of 2003. On March 14, 2003, the Bankruptcy Court approved the sale of
substantially all of the CFC assets to CFN and GE. These sales transactions are
expected to close in the second quarter of 2003.

     Prior to Conseco's October 22, 2002 announcement, CFC was undertaking
efforts to restructure its manufactured housing business. Originations had been
significantly curtailed and CFC began analyzing potential approaches to reducing
the negative cash flow that currently results from the servicing of this
portfolio and the payment of guarantees on the B-2 securities issued in
connection with securitizations of manufactured housing receivables. As a result
of CFC's decreased liquidity position and inability to sell manufactured housing
loans in the wholesale market at reasonable prices, CFC announced it would
suspend originating manufactured housing loans November 25, 2002. As part of the
Chapter 11 bankruptcy filing, CFC has requested a change in the servicing fee
structure for the servicing of manufactured housing portfolios. The contractual
servicing rate was 50 bps per annum on receivable balances. On December 18, 2002
the Bankruptcy Court approved an interim order to increase the servicing rate
for the manufactured housing portfolios to the lesser of 125 bps per annum based
on the balance of the receivables or the costs incurred to service the
manufactured portfolio as defined in the motion. During the first quarter of
2003, CFC reached an agreement with bondholders to amend the servicing agreement
for the manufactured housing portfolios, which was approved by the Bankruptcy
Court on March 14, 2003. The amendment provides for an increase in the servicing
fee to 125 bps per annum for one year following closing of the sale of the
assets to CFN Investment Holdings, LLC and to 115 bps per annum for subsequent
periods based on average unpaid principal balance of finance receivables,
excluding those in repossession status.

     During 2000 and 2001, management completed several actions with respect to
CFC, including: (i) the sale, closing or runoff of several units (including
asset-based lending, vendor leasing, bankcards, transportation and park
construction, which are collectively referred to as the "other lines"); (ii)
monetization of certain on-balance sheet financial assets through sales or as
collateral for additional borrowings; and (iii) cost savings and restructuring
of ongoing businesses such as streamlining of loan origination operations in the
manufactured housing and home equity divisions. The transactions CFC completed
to raise cash during 2001 and 2000 included: (i) the sale of a $568.4 million
portfolio of high-loan-to-value loans (which generated $80 million of cash after
repayment of debt collateralized by the loans); (ii) the sale of a $802.3
million portfolio of vendor services loans (which generated $180 million of cash
after repayment of debt collateralized by the loans); (iii) the sale of a 15
percent interest in the interest-only securities and new borrowing agreements
collateralized by the interest-only securities (which generated cash of $100
million); (iv) the sale of substantially all of the bankcard (Visa and
Mastercard) portfolio (which generated $154 million of cash); (v) the sale of
$216.1 million of asset-backed loans (which generated $43 million of cash after
repayment of debt collateralized by the loans); (vi) the sale of a $566.0
million portfolio of loans which finance the purchase of trucks (which generated
$30 million of cash after repayment of debt collateralized by the loans); and
(vii) new or revised borrowing agreements which provided financing for loans not
previously pledged under other borrowing agreements (which generated over $300
million of cash). The cash generated from these transactions was primarily used
toward the reduction of debt due to CNC of $674.1 million in 2000 and $537.2
million in 2001. These courses of action have caused significant fluctuations in
account balances.

     The risks associated with the finance business become more acute in any
economic slowdown or recession. Periods of economic slowdown or recession may be
accompanied by decreased demand for consumer credit and declining asset values.
In the home equity mortgage and manufactured housing businesses, any material
decline in real estate values reduces the ability of borrowers to use home
equity to support borrowing and increases the loan-to-value ratios of loans
previously made, thereby weakening collateral coverage and increasing the size
of losses in the event of a default. Delinquencies, foreclosures and losses
generally increase during economic slowdowns or recessions. For CFC's finance
customers, loss of employment, increases in cost-of-living or other adverse
economic conditions impair their ability to meet their payment obligations.
Higher industry inventory levels of repossessed manufactured homes have affected
recovery rates and may result in future impairment charges and provision for
losses. In addition, in an economic slowdown or recession, CFC's servicing and
litigation costs increase. Any sustained period of increased delinquencies,
foreclosures, losses or increased costs would have a material adverse effect on
CFC's financial condition and results of operations.

     Loan originations in 2002 were $7.3 billion, down 35 percent from 2001.
Loan originations in 2001 were $11.3 billion, down 33 percent from 2000. Given
CFC's limited liquidity and inability to access the securitization market, CFC
is no longer originating certain types of loans. CFC is limiting future
originations primarily to loans that can be sold at a profit in whole-loan sale
transactions. CFC discontinued originating manufactured housing loans in
November 2002. These decisions and continued constraints on liquidity have
resulted in origination volume which is significantly lower than in prior
periods.

     Sales of finance receivables in 2002 and 2001 include the sale of $2.1
billion and $.8 billion, respectively, of finance receivables, on which CFC
recognized a loss of $17.1 million and a gain of $26.9 million, respectively.
These sales are further explained below under "Gain on sale of finance
receivables". CFC also sold $.5 billion and $.8 billion of certain other finance
receivables in 2002 and 2001, respectively, as part of CFC's cash raising
arrangements.

                                       67


     Managed receivables include finance receivables recorded on CFC's
consolidated balance sheet and those managed by CFC but held by trusts
applicable to holders of asset-backed securities sold in securitizations
structured in a manner that resulted in gain-on-sale revenue. Average managed
receivables decreased to $39.8 billion in 2002, down 10 percent from 2001, and
decreased to $44.4 billion in 2001, down 6.4 percent from 2000.

     Net investment income on finance receivables and other consists of: (i)
interest earned on finance receivables; and (ii) interest income on short-term
and other investments. Such income decreased by 4.4 percent, to $2,074.2
million, in 2002 and increased by 17 percent, to $2,169.7 million, in 2001,
consistent with the changes in average on-balance sheet finance receivables. The
weighted average yields earned on finance receivables and other investments were
11.5 percent, 12.6 percent and 12.9 percent during 2002, 2001 and 2000,
respectively. The average yields decreased due to the declining interest rate
environment, change in product mix of the portfolio and rising delinquencies
primarily in CFC's manufactured housing business.

     Net investment income on retained interests is the income recognized on the
retained interests in securitizations CFC retains after it sells finance
receivables. Such income decreased by 40 percent, to $75.0 million, in 2002 and
by 31 percent, to $125.3 million, in 2001. The decrease is consistent with the
change in the average balance of retained interests. The weighted average yields
earned on retained interests were 12.3 percent, 14.4 percent and 13.6 percent
during 2002, 2001 and 2000, respectively. As a result of the change in the
structure of CFC's securitizations, securitization transactions are accounted
for as secured borrowings and CFC does not recognize gain-on-sale revenue or
additions to retained interests from such transactions. Accordingly, future
investment income accreted on the retained interests will decrease, as cash
remittances from the prior gain-on-sale securitizations reduce the retained
interests balances. In addition, the balance of the retained interests was
reduced by $1,077.2 million in 2002, $264.8 million in 2001 and $504.3 million
in 2000 (including $70.2 million due to the accounting change described in the
note to Conseco's consolidated financial statements entitled "Summary of
Significant Accounting Policies") due to impairment charges. Impairment charges
are further explained below. The weighted average yield was also adversely
affected by the decline in guarantee payments received on certain lower-rated
securities in the fourth quarter of 2002.

     Gain (loss) on sales of finance receivables resulted from various loan sale
transactions in 2002, 2001 and 2000. During 2002, CFC sold $2.1 billion of
finance receivables which generated net losses of $17.1 million. In 2002, CFC
also recognized $32.4 million loss to reduce the value of unsecuritized finance
receivables, which are being held for eventual sale and have market values below
their cost basis. During 2001, CFC sold $1.6 billion of finance receivables
which included: (i) $802.3 million vendor services loan portfolio (the value of
which was reduced in the fourth quarter of 2000 since the market value of these
loans exceeded their cost basis, and no additional gain or loss was recognized
in 2001); (ii) $568.4 million of high-loan-to-value mortgage loans; and (iii)
$269.0 million of other loans. These sales resulted in net gains of $26.9
million. In 2000, CFC sold approximately $147.1 million of finance receivables
in whole-loan sales resulting in net gains of $7.5 million. Gain on sales of
finance receivables in 2000 excludes the gain realized on the sale of CFC's
bankcard portfolio which is included in special charges.

     Fee revenue and other income includes servicing income, commissions earned
on insurance policies written in conjunction with financing transactions and
other income from late fees. Such income decreased by 18 percent, to $273.8
million, in 2002 and by 8.2 percent, to $335.8 million, in 2001. Such decreases
are primarily due to decreases in commission income as a result of reduced
origination activities and the termination of sales of single premium credit
life insurance. In addition, as a result of the change in the structure of CFC's
securitizations, CFC no longer records an asset for servicing rights at the time
of its securitizations, nor does CFC record servicing fee revenue; instead, the
entire amount of interest income is recorded as investment income. The amount of
servicing income (which is net of the amortization of servicing assets and
liabilities) was $83.9 million in 2002, $115.3 million in 2001 and $108.2
million in 2000. Servicing income will continue to decline in future periods as
the managed receivables in these securitizations are paid down. In 2000, the
decrease in servicing income was partially offset by higher commissions and late
fee income.

     Provision for losses related to finance operations increased by 77 percent,
to $950.0 million, in 2002 and by 56 percent, to $537.7 million, in 2001. These
amounts relate to CFC's on-balance sheet finance receivables. CFC's credit
losses as a percentage of related loan balances for the on-balance sheet
portfolio have been increasing over the last several quarters (2.26 percent,
2.36 percent, 2.53 percent, 2.61 percent, 2.76 percent and 3.74 percent for the
quarters ended September 30, 2001, December 31, 2001, March 31, 2002, June 30,
2002, September 30, 2002 and December 31, 2002, respectively). The increases to
the provision and CFC's credit losses are due to many factors including: (i)
CFC's inability to finance the sale of repossessed assets, resulting in CFC's
use of wholesale markets to sell such assets through which recovery rates are
significantly lower; (ii) the natural increase in delinquencies in some of CFC's
products as they age into periods in which CFC has historically experienced
higher delinquencies; (iii) the increase in retail credit receivables which
typically experience higher credit losses; (iv) economic factors which have
resulted in an increase in defaults; and (v) a decrease in the manufactured
housing recovery rates when repossessed properties are sold given current
industry levels of repossessed assets. At December 31, 2002 and 2001, the
60-days-and-over delinquencies as a percentage of on-balance sheet finance
receivables were 3.21 percent and 2.19 percent, respectively. Under the
portfolio method, CFC estimates an allowance for credit losses based upon its
assessment of current and historical loss experience, loan portfolio trends, the
value of collateral, prevailing economic and business conditions, and other
relevant factors. Increases in CFC's allowance for credit losses are recognized

                                       68


as expense based on CFC's current assessments of such factors. For loans
previously recorded as sales, the anticipated discounted credit losses over the
expected life of the loans were reflected through a reduction in the
gain-on-sale revenue recorded at the time of securitization or through
impairment charges when assessments of estimated losses have changed.

     Delinquencies on loans held in CFC's loan portfolio and CFC's ability to
recover collateral and mitigate loan losses are adversely impacted by a variety
of factors, many of which are outside of CFC's control. When loans are
delinquent and CFC forecloses on the loan, its ability to sell collateral to
recover or mitigate its losses is subject to the market value of such
collateral. In manufactured housing, these values are affected by the available
inventory of manufactured homes on the market, a factor over which CFC has no
control. It is also dependent upon demand for new homes, which is tied to
economic factors in the general economy. In addition, repossessed collateral is
generally in poor condition, which reduces its value.

     Many consumer lenders have stopped or significantly scaled back their
consumer finance operations in the manufactured housing sector. These lenders
began to foreclose on collateral pledged to secure loans at a more aggressive
rate. CFC has faced increased competition from such lenders in disposing of
collateral pledged to secure its loans. Often collateral is in similar forms.
There is a limited number of collateral buyers and the exiting consumer lenders
have been willing to sell their foreclosed collateral at prices significantly
below fair market value. As a result, collateral recovery rates for CFC have
fallen significantly and could fall further, which could have a further material
adverse effect on the financial position and results of CFC's operations.

     At December 31, 2002, CFC had a total of 20,918 unsold manufactured housing
properties (11,939 of which relate to off-balance sheet securitizations) in
repossession, compared to 15,057 properties (10,814 of which relate to
off-balance sheet securitizations) at December 31, 2001. CFC reduces the value
of repossessed property to its estimate of net realizable value upon
repossession. CFC liquidated 25,017 managed manufactured housing units at an
average loss severity rate (the ratio of the loss realized to the principal
balance of the foreclosed loan) of 65 percent in 2002 compared to 25,750 units
at an average loss severity rate of 57 percent in 2001. The loss severity rate
related to the on-balance sheet manufactured housing portfolio was 59 percent in
2002, compared to 49 percent in 2001. The higher industry levels of repossessed
manufactured homes which existed in the marketplace in 2002, have adversely
affected recovery rates, specifically wholesale severity, as other lenders
(including lenders who have exited the manufactured home lending business) have
acted to more quickly dispose of repossessed manufactured housing inventory.
Additionally, the higher level of repossessed inventory that currently exists in
the marketplace has made it more difficult for CFC to liquidate its inventory at
rates it has recovered in the past. CFC also believes the higher average
severity rate in 2002 related to the on-balance sheet manufactured housing
portfolio is partially due to the increased age of such portfolio.

     During the quarter ended September 30, 2002, CFC's ability to access the
securitization markets was eliminated. The securitization markets had been CFC's
main source of funding for loans made to purchasers of repossessed manufactured
homes. CFC believes that its severity rates have been historically positively
impacted when it used retail channels to dispose of repossessed inventory (where
the repossessed units are sold through company-owned sales lots or its dealer
network). Since CFC is no longer able to fund the loans made on repossessed
homes sold through these channels, sales through these channels have decreased
and CFC must rely on the wholesale channel to dispose of repossessed
manufactured housing units, through which recovery rates are significantly
lower.

     CFC believes that its historical loss experience has been favorably
affected by various loss mitigation policies. Under one such policy, CFC works
with the defaulting obligor and its dealer network to find a new buyer who meets
CFC's underwriting standards and is willing to assume the defaulting obligor's
loan. Under other loss mitigation policies, CFC may permit qualifying obligors
(obligors who are currently unable to meet the obligations under their loans,
but are expected to be able to meet them in the future under modified terms) to
defer scheduled payments or CFC may reduce the interest rate on the loan, in an
effort to avoid loan defaults.

     Due to the prevailing economic conditions in 2002 and 2001, CFC increased
the use of the aforementioned mitigation policies. Based on past experience, CFC
believes these policies will reduce the ultimate losses it recognizes. If CFC
applies loss mitigation policies, CFC generally reflects the customer's
delinquency status as not being past due. Accordingly, the loss mitigation
policies favorably impact CFC's delinquency ratios. CFC attempts to
appropriately reserve for the effects of these loss mitigation policies when
establishing loan loss reserves. These policies are also considered when CFC
determines the value of its retained interests in securitization trusts. Loss
mitigation policies were applied to 10.7 percent of average managed accounts in
2002 compared to 8.8 percent in 2001. Such loss mitigation policies were applied
to 3.0 percent, 2.7 percent, 2.8 percent and 2.2 percent of average managed
accounts during the first, second, third and fourth quarters of 2002,
respectively. Due to CFC's liquidity limitations, many loss mitigation policies
were curtailed in the fourth quarter of 2002.

     Finance interest expense decreased by 8.5 percent, to $1,130.0 million, in
2002 and increased by 7.1 percent, to $1,234.4 million, in 2001. Such decrease
was primarily the result of: (i) lower average borrowing rates; and (ii)
decreased borrowings to fund the decreased finance receivables. CFC's average
borrowing rate was 6.1 percent, 7.0 percent and 7.7 percent during 2002, 2001
and 2000, respectively. The decrease in average borrowing rates in 2002 as
compared to 2001 is primarily due to the decrease in the general interest rate
environment between periods and the repurchase and retirement of some of CFC's
public debt.

                                       69



     Other operating costs and expenses include the costs associated with
servicing CFC's managed receivables, non-deferrable costs related to originating
new loans and other operating costs. Such expense decreased by 4.1 percent, to
$616.0 million, in 2002 and by 15 percent, to $642.4 million, in 2001. In 2002,
CFC accrued $26.8 million pursuant to judgments issued in two arbitration
proceedings. Such litigation is described in greater detail in the note to
Conseco's consolidated financial statements entitled "Other Disclosures".
Excluding the litigation accrual, such costs have decreased due to the
realization of the benefits from cost saving initiatives and a decrease in
origination volumes. In 2001, CFC began to realize some of the cost savings from
its restructuring.

     Special charges in the finance segment for 2002 include: (i) the loss of
$96.0 million related to the sales of certain finance receivables of $463
million and $1.6 million of additional loss related to receivables required to
be repurchased from the purchaser of the vendor services receivables pursuant to
the repurchase clauses in the agreements; (ii) a $39.4 million charge for costs
associated with various modifications to financing arrangements and recognition
of deferred expenses for terminated warehouse facilities; (iii) a $16.3 million
charge for the abandonment of computer processing systems; (iv) a $38.1 million
benefit due to the reduction in the value of the warrant held by Lehman to
purchase five percent of CFC, which is currently expected to have no value due
to CFC's bankruptcy proceedings; and (v) restructuring and other charges of $6.7
million. Special charges recorded in 2001 include: (i) the loss related to the
sale of certain finance receivables of $11.2 million; (ii) severance benefits,
litigation reserves and other restructuring charges of $12.8 million; (iii) a
$7.5 million charge related to the decision to discontinue the sale of certain
types of life insurance in conjunction with lending transactions; and (iv) a
$10.0 million benefit due to the reduction in the value of the warrant held by
Lehman to purchase five percent of CFC which was caused by a decrease in the
value of CFC. Special charges recorded in 2000 include: (i) the $103.3 million
reduction in the value of finance receivables identified for sale; (ii) the
$53.0 million loss on the sale of asset-based loans; (iii) $29.5 million of
costs related to closing offices and streamlining businesses; (iv) $35.8 million
related to the abandonment of computer processing systems; (v) $30.3 million of
fees paid to Lehman including a $25.0 million fee paid in conjunction with the
sale of $1.3 billion of finance receivables to Lehman; (vi) the issuance of a
warrant valued at $48.1 million related to the modification of the Lehman master
repurchase financing facilities; (vii) the $51.0 million loss on sale of
transportation loans and vendor services financing business; (viii) a $48.0
million increase in the allowance for loan losses at our bank subsidiary; and
(ix) $4.7 million of net gains related to the sale of certain lines of business,
net of other items. These charges are described in greater detail in the note to
Conseco's consolidated financial statements entitled "Financial Information
Regarding CFC."

     Reorganization items are professional fees associated with CFC's bankruptcy
proceedings which are expensed as incurred in accordance with SOP 90-7.

     Impairment charges represent reductions in the value of CFC's retained
interests in securitization trusts (including interest-only securities and
servicing rights) recognized as a loss. CFC carries interest-only securities at
estimated fair value and servicing rights at the lower of cost or fair value.
Fair value is determined by discounting the projected cash flows over the
expected life of the receivables sold using current prepayment, default, loss,
interest rate and servicing cost assumptions. CFC considers any potential
payments related to the guarantees of certain lower-rated securities issued by
the securitization trusts in the projected cash flows used to determine the
value of its retained interests. When declines in value considered to be other
than temporary occur, CFC reduces the amortized cost to estimated fair value and
recognizes a loss. The assumptions used to determine new values are based on the
internal evaluations of CFC's management. Under current accounting rules
(pursuant to Emerging Issues Task Force Issue No. 99-20, "Recognition of
Interest Income and Impairment on Purchased and Retained Beneficial Interests in
Securitized Financial Assets" ("EITF 99-20")) which were adopted on July 1,
2000, declines in the value of CFC's retained interests are recognized when: (i)
the fair value of the security is less than its carrying value; and (ii) the
timing and/or amount of cash expected to be received from the security has
changed adversely from the previous valuation which determined the carrying
value of the security. When both occur, the security is written down to fair
value. The assumptions used to determine new values for CFC's retained interests
are based on internal evaluations. Although CFC believes its methodology is
reasonable, many of the assumptions and expectations underlying CFC's
determination may prove inaccurate, in which case there may be an adverse effect
on CFC's financial results.

     The determination of the value of CFC's retained interests in
securitization trusts requires significant judgment. CFC has recognized
significant charges when the retained interests did not perform as well as
anticipated based on CFC's assumptions and expectations. CFC's current valuation
of retained interests may prove inaccurate in future periods. In securitizations
to which these retained interests relate, CFC has retained certain contingent
risks in the form of guarantees of certain lower-rated securities issued by the
securitization trusts. As of December 31, 2002, the total amount of these
guarantees was approximately $1.4 billion. CFC considers any potential payments
related to these guarantees in the projected cash flows used to determine the
value of its retained interests. See the note to Conseco's consolidated
financial statements entitled "Financial Information Regarding CFC."

     During 2002, CFC's ability to access the securitization markets was
eliminated. The securitization markets had been CFC's main source of funding for
loans made to purchasers of repossessed manufactured homes. CFC believes that
its loss severity rates historically have been positively impacted when it used
retail channels to dispose of repossessed inventory (where the repossessed units
are sold through company-owned sales lots or CFC's dealer network). Since CFC is
no longer able to fund the loans made on repossessed homes, sales through these
channels have ceased and CFC must rely on the wholesale channel to dispose of
repossessed

                                       70


manufactured housing units, through which recovery rates are significantly
lower. Accordingly, CFC changed the loss severity assumptions used to value its
retained interests to reflect the higher loss severity CFC expects to experience
in the future. In addition, CFC's previous assumptions reflected its belief that
the adverse manufactured housing default experience in recent periods would
continue through the first half of 2002 and then improve over time. Default
experience did not improve as expected. Accordingly, CFC increased the default
assumptions used to value its retained interests to reflect CFC's future
expectations based on current default rates. CFC's home equity/home improvement
assumptions have also been adjusted to reflect recent default experience as well
as CFC's future expectations.

     CFC's access to liquidity was further limited during the fourth quarter of
2002. CFC was unable to access alternative funding sources to replace the
financing it previously obtained through the securitization markets. Further,
CFC continued to experience high levels of delinquencies and foreclosures. As a
result of the inability to obtain financing, CFC was required to suspend all
originations of manufactured housing loans, including the financing of
repossessed manufactured housing units, in the fourth quarter of 2002. In
addition, CFC discontinued the use of some of its loss mitigation strategies
including its inventory loan assumption program. Prices of used manufactured
housing units in the wholesale channels are at historical lows due to the high
levels of repossessed manufactured housing inventories available in the market.
Accordingly, CFC increased the loss severity and default assumptions used to
value its retained interests to reflect CFC's future expectations based on
current experience. During 2002, CFC increased the assumption for the expected
rates of loss severity (the expected weighted average ratio of losses realized
to the principal balance of the foreclosed loans) from 65.4 percent to 89.5
percent. CFC increased the assumption for the expected rates of default (the
expected weighted average constant ratio of defaulting loans to the balance of
all loans sold) from 2.34 percent to 2.97 percent.

     As a result of the requirements of EITF 99-20 and the assumption changes
described above, CFC recognized an impairment charge of $1,077.2 million in 2002
for the retained interests. CFC also recognized a $336.5 million increase in the
valuation allowance related to its servicing rights as a result of the changes
in assumptions in 2002. The valuation allowance related to the servicing rights
increased as a result of changes to the expected future cost of servicing the
finance receivables. The levels of delinquent and defaulting loans have caused
servicing costs to increase. In addition, future servicing costs are expected to
increase as the portfolio ages. Such assumptions reflect the subordination of
the servicing fees to other cash flows in certain securitization transactions.
In addition, CFC recognized impairment charges of: (i) $29.3 million to
establish a valuation allowance for advances CFC was required to make to the
securitization trusts which are estimated to be uncollectible; and (ii) $6.9
million to establish a liability of guarantee payments due to certain holders of
lower-rated securities issued by the securitization trusts which CFC was unable
to pay.

     CFC recognized an impairment charge of $386.9 million in 2001 which
included an impairment charge of $264.8 million related to its interest-only
securities. During 2001, CFC's interest-only securities did not perform as well
as anticipated. In addition, CFC's expectations regarding future economic
conditions changed. Accordingly, CFC increased its loss severity assumptions
related to the performance of the underlying loans to be consistent with its
expectations. CFC increased the assumption for the expected rates of loss
severity (the expected weighted average ratio of losses realized to the
principal balance of the foreclosed loans) from 59.8 percent to 65.4 percent.
The impairment charge also included a $122.1 million increase in the valuation
allowance related to CFC's servicing rights as a result of the changes in
assumptions. CFC carries its servicing rights at the lower of carrying value or
estimated fair value. Refer to "Finance Receivables and Retained Interests in
Securitization Trusts - Retained Interests in Securitization Trusts" for
additional discussion of the impairment charge and interest-only securities.

     During 2000, actual default and loss trends were worse than CFC's previous
estimates. In light of these trends, CFC's management analyzed the assumptions
used to determine the estimated fair value of the interest-only securities and
made changes to the credit loss assumptions and the discount rate used to
determine the value of its securities. These changes also reflected other
economic factors and further methodology enhancements made by CFC. During 2000,
CFC increased the assumption for the expected rates of default (the expected
weighted average constant ratio of defaulting loans to the balance of all loans
sold) from 2.25 percent to 2.45 percent. CFC also increased the assumption for
the expected rates of loss severity (the expected weighted average ratio of
losses realized to the principal balance of the foreclosed loans) from 55.3
percent to 59.8 percent. As a result, the expected future cash flows from
interest-only securities changed adversely from previous estimates. Pursuant to
the requirements of EITF 99-20, the effect of these changes was reflected
immediately in earnings as an impairment charge. The effect of the impairment
charge and adjustments to the value of CFC's interest-only securities and
servicing rights totaled $515.7 million ($324.9 million after the income tax
benefit) for 2000 (in addition to the cumulative effect of adopting EITF 99-20
of $70.2 million, or $45.5 million after the income tax benefit).



                                       71


     Finance Receivables and Retained Interests in Securitization Trusts Held by
     CFC

     Finance Receivables

     During the last several years, CFC has completed several actions in an
attempt to raise cash and improve its financial position and results of
operations. These actions have caused significant fluctuations in account
balances. See the section above entitled "Operating Results of the Discontinued
Finance Operations" for a description of such actions. Finance receivables,
including receivables which serve as collateral for the notes issued to
investors in securitization trusts of $12,460.0 million and $14,198.5 million at
December 31, 2002 and 2001, respectively, summarized by business line and
categorized as either a part of CFC's primary lines or a part of other lines
(discontinued in previous periods), were as follows:




                                                                                                  December 31,
                                                                                           2002             2001
                                                                                           ----             ----
                                                                                             (Dollars in millions)
                                                                                                  
Primary lines:
   Manufactured housing...............................................................   $ 7,124.8      $ 7,549.7
   Mortgage services..................................................................     5,266.6        6,787.1
   Retail credit......................................................................     2,240.6        2,690.0
   Consumer finance - closed-end......................................................       443.5          587.1
                                                                                         ---------      ---------

                                                                                          15,075.5       17,613.9
   Less allowance for credit losses...................................................       646.9          400.1
                                                                                         ---------      ---------

     Net finance receivables - for primary lines......................................    14,428.6       17,213.8
                                                                                         ---------      ---------

Other lines (discontinued in previous periods)........................................        71.4          816.6
   Less allowance for credit losses...................................................        16.9           21.2
                                                                                         ---------      ---------

     Net finance receivables - for other lines........................................        54.5          795.4
                                                                                         ---------      ---------

     Total finance receivables........................................................   $14,483.1      $18,009.2
                                                                                         =========      =========



     Managed finance receivables by loan type were as follows:



                                                                                     December 31,
                                                                                2002          2001
                                                                                ----          ----
                                                                               (Dollars in millions)
                                                                                      
Primary lines:
   Fixed term............................................................     $32,901.6     $38,876.5
   Revolving credit......................................................       2,255.5       2,695.1
Other lines (discontinued in previous periods)...........................         125.4       1,430.7
                                                                              ---------     ---------

     Total...............................................................     $35,282.5     $43,002.3
                                                                              =========     =========

Number of contracts serviced:
   Fixed term contracts - continuing lines...............................       978,000     1,164,000
   Revolving credit accounts - continuing lines..........................       835,000     1,486,000
   Other lines (discontinued in previous periods)........................        54,000       124,000
                                                                              ---------     ---------

     Total...............................................................     1,867,000     2,774,000
                                                                              =========     =========


     Approximately 9 percent, 8 percent, 7 percent and 6 percent of the loans
that CFC serviced were in Texas, North Carolina, Florida and Georgia,
respectively. No other state comprised more than 5 percent of the loans
serviced. In addition, no single contractor, dealer or vendor accounted for more
than 1 percent of the total contracts CFC originated.



                                       72


     The credit quality of managed finance receivables was as follows:



                                                                                        December 31,
                                                                                  2002             2001
                                                                                  ----             ----
                                                                                              
60-days-and-over delinquencies as a percentage of managed finance
   receivables at period end:
     Manufactured housing....................................................      3.62%            2.45%
     Mortgage services (a)...................................................      1.47             1.23
     Retail credit...........................................................      3.14             3.39
     Consumer finance - closed-end...........................................       .91             1.08
     Other lines (discontinued in early 2002 or previous periods)............      8.58             1.58
       Total.................................................................      3.00%            2.10%

Net credit losses incurred during the last twelve months as a percentage of
   average managed finance receivables during the period:
     Manufactured housing....................................................      3.09%            2.14%
     Mortgage services.......................................................      2.66             1.95
     Retail credit...........................................................      6.33             6.65
     Consumer finance - closed-end...........................................      3.09             2.50
     Other lines (discontinued in early 2002 or previous periods)............      3.98             2.72
       Total.................................................................      3.21%            2.35%

Repossessed collateral inventory as a percentage of managed finance receivables
   at period end (b):
     Manufactured housing....................................................      3.58%            2.45%
     Mortgage services (c)...................................................      5.97             4.07
     Retail credit...........................................................       .35              .13
     Consumer finance - closed-end...........................................      1.75             1.03
     Other lines (discontinued in early 2002 or previous periods)............      3.38             1.91
       Total.................................................................      3.92%            2.68%

- --------------------
(a)  60-days-and-over delinquencies exclude loans in the process of foreclosure.
(b)  Ratio of: (i) outstanding loan principal balance related to the repossessed
     inventory (before writedown) to: (ii) total receivables. CFC writes down
     the value of its repossessed inventory to estimated realizable value at the
     time of repossession.
(c)  Repossessed collateral inventory includes loans in the process of
     foreclosure.




                                       73





     The credit quality of on-balance sheet finance receivables was as follows:



                                                                                         December 31,
                                                                                   2002           2001
                                                                                   ----           ----
                                                                                             
60-days-and-over delinquencies as a percentage of on-balance sheet
   finance receivables at period end:
     Manufactured housing....................................................      4.61%            3.08%
     Mortgage services (a)...................................................      1.30              .94
     Retail credit...........................................................      3.14             3.39
     Consumer finance - closed-end...........................................      1.14             1.33
     Other lines (discontinued in early 2002 or previous periods)............      9.77             1.22
       Total.................................................................      3.21%            2.19%

Net credit losses incurred during the last twelve months as a percentage of
   average on-balance sheet finance receivables during the period:
     Manufactured housing....................................................      4.35%            1.87%
     Mortgage services.......................................................      2.07             1.53
     Retail credit...........................................................      6.33             6.65
     Consumer finance - closed-end...........................................      2.54             2.02
     Other lines (discontinued in early 2002 or previous periods)............      2.97             2.11
       Total.................................................................      3.74%            2.36%

Repossessed collateral inventory as a percentage of on-balance sheet finance
   receivables at period end (b) (c):
     Manufactured housing....................................................      4.93%            2.41%
     Mortgage services (d)...................................................      6.02             3.50
     Retail credit...........................................................       .35              .13
     Consumer finance - closed-end...........................................      2.08             1.15
     Other lines (discontinued in early 2002 or previous periods)............      2.85             1.36
       Total.................................................................      4.56%            2.37%


- --------------------
(a)  60-days-and-over delinquencies exclude loans in the process of foreclosure.
(b)  Ratio of: (i) outstanding loan principal balance related to the repossessed
     inventory (before writedown) to: (ii) total receivables.
(c)  Although the ratio is calculated using the outstanding loan principal
     balance related to the repossessed inventory, the repossessed inventory is
     written down to net realizable value at the time of repossession or
     completed foreclosure.
(d)  Repossessed collateral inventory includes loans in the process of
     foreclosure.




     These ratios increased during 2002 primarily as a result of the factors
described above under "Provision for losses related to finance operations."

     Retained Interests in Securitization Trusts

     As stated above in the section entitled "Operating Results of the
Discontinued Finance Operations", CFC changed the manner in which it structured
securitization of loans on September 8, 1999. The securitizations structured
prior to the September 8, 1999, announcement met the applicable criteria to be
accounted for as sales. At the time the loans were securitized and sold, CFC
recognized a gain and recorded its retained interest represented by the
interest-only security. The interest-only security represents the right to
receive, over the life of the pool of receivables: (i) the excess of the
principal and interest received on the receivables transferred to the special
purpose entity over the principal and interest paid to the holders of other
interests in the securitization; and (ii) contractual servicing fees. CFC
considers any potential payments related to the guarantees of certain
lower-rated securities issued by the securitization trusts in the projected cash
flows used to determine the value of its interest-only securities. In some of
those securitizations, CFC also retained certain lower-rated securities that are
senior in payment priority to the interest-only securities. Such retained
securities had a par value, fair market value and amortized cost of $718.7
million, $611.5 million and $548.0 million, respectively, at December 31, 2002.

     The interest-only securities and subordinated securities are carried at
estimated fair value. On a quarterly basis, CFC estimates the fair value of
these securities by discounting the projected future cash flows using current
assumptions. If CFC determines that the differences between the estimated fair
value and the book value of these securities is a temporary difference, CFC
adjusts shareholders' equity. At December 31, 2002, this adjustment increased
the carrying value of the retained interests by $63.5 million to $252.6 million.

                                       74


     The assumptions CFC uses to determine new values are based on its internal
evaluations. Although CFC's management believes its methodology is reasonable,
many of the assumptions and expectations underlying CFC's determinations are not
possible to predict with certainty and may change adversely in the future for
reasons beyond CFC's control. Largely as a result of adverse changes in the
underlying assumptions (as discussed above in the section entitled "Operating
Results of the Discontinued Finance Operations"), CFC recognized impairment
charges of $1,077.2 million in 2002, $386.9 million ($250.4 million after tax)
in 2001 and $515.7 million ($324.9 million after tax) in 2000 to reduce the book
value of interest-only securities and servicing rights as described above under
"Operating Results of the Discontinued Finance Operations."

     In conjunction with the sale of certain finance receivables, CFC provided
guarantees related to the principal and interest payments of certain lower-rated
securities issued to third parties by the securitization trusts. Such securities
had a total principal balance outstanding of $1.4 billion at December 31, 2002.
CFC considers any potential payments related to these guarantees in the
projected net cash flows used to determine the value of its retained interests.
At December 31, 2002, the net deficit value of CFC's retained interests of
$(74.1) million, reflected estimated guarantee payments related to bonds held by
others of $326.7 million.

     Based on CFC's current assumptions and expectations as to future events
related to the loans underlying its retained interests, management has projected
that the adverse loss experience in 2002 will continue into 2003 and then
improve over time. As a result of these assumptions, CFC projects that payments
related to the guarantees (including the guarantee payments described in the
preceding paragraph and guarantee payments related to the subordinated
securities we hold) will exceed the gross undiscounted cash flows from the
interest-only securities by approximately $225 million in 2003, $100 million in
2004, $60 million in 2005 and $10 million in 2006. CFC projects that the gross
cash flows from the interest-only securities will exceed the payments related to
guarantees issued in conjunction with the sales of certain finance receivables
by approximately $175 million in all years thereafter.

     Effective September 30, 2001, CFC transferred substantially all of its
interest-only securities into a securitization trust. The transaction provided a
means to finance a portion of the value of its interest-only securities by
selling some of the cash flows to Lehman. The transfer was accounted for as a
sale in accordance with SFAS 140. However, no gain or loss was recognized
because the aggregate fair value of the interest retained by CFC and the cash
received from the sale were equal to the carrying value of the interest-only
securities prior to their transfer to the trust. The trust is a qualifying
special purpose entity and is not consolidated pursuant to SFAS 140. CFC
received a trust security representing an interest in the trust equal to 85
percent of the estimated future cash flows of the interest-only securities held
in the trust. Lehman purchased the remaining 15 percent interest. The value of
the interest purchased by Lehman was $20.4 million at December 31, 2002. CFC
continues to be the servicer of the finance receivables underlying the
interest-only securities transferred to the trust. Lehman has the ability to
accelerate the principal payments related to their interest after a stated
period. Until such time, Lehman is required to maintain a 15 percent interest in
the estimated future cash flows of the trust. By aggregating the interest-only
securities into one structure, the impairment tests for these securities are
conducted on a single set of cash flows representing CFC's 85 percent interest
in the trust. Accordingly, adverse changes in cash flows from one interest-only
security may be offset by positive changes in another. The new structure does
not avoid an impairment charge if sufficient positive cash flows in the
aggregate are not available (such as was the case at December 31, 2002).

     CFC carries its servicing rights at the lower of carrying value or
estimated fair value stratified by product type and year of securitization. To
the extent the recorded amount exceeds the fair value for a given strata, CFC
establishes a valuation allowance through a charge to earnings. Such valuation
allowance increased by $336.5 million and $122.1 million in 2002 and 2001,
respectively. The fees CFC receives for servicing the securitized portfolio are
often subordinate to the interests of other security holders in the trusts.

     No assurances can be given that CFC's current valuation of retained
interests will prove accurate in future periods. In addition, CFC has retained
certain contingent risks in the form of guarantees of certain lower-rated
securities issued by the securitization trusts. If CFC has to make more payments
on these guarantees than anticipated, CFC may be required to recognize
additional impairment charges or to make payments on the guarantees, which, in
turn, could have a material adverse effect on its financial condition or results
of operations.

     Liquidity for Finance Operations

     CFC requires cash to originate finance receivables. CFC's primary sources
of cash have historically been: (i) the collection of receivable balances; (ii)
proceeds from the issuance of debt, certificates of deposit, bank credit
facility, securitizations, warehouse and residual lines, and sales of loans; and
(iii) cash provided by operations. CFC's lenders have severely restricted its
access to liquidity. The liquidity needs of CFC could increase in the event of
an extended economic slowdown or recession. Loss of employment, increases in
cost-of-living or other adverse economic conditions impair the ability of CFC's
customers to meet their payment obligations. Higher industry levels of
repossessed manufactured homes have affected recovery rates and resulted in
decreased cash flows. In addition, in an economic slowdown or recession, CFC's
servicing and litigation costs generally increase. Any sustained period of
increased delinquencies, foreclosures, losses or increased costs would have an
adverse effect on its liquidity. See "Operating Results of the Discontinued
Finance Operations" above for additional discussion.

                                       75


     The most significant source of liquidity for CFC has historically been its
ability to finance the receivables it originates in the secondary markets
through loan securitizations. Under certain securitization structures, CFC has
provided a variety of credit enhancements, which have taken the form of
corporate guarantees with respect to certain securitizations (although such
guarantees were not provided during 2001 and 2002), and have also included bank
letters of credit, surety bonds, cash deposits and over-collateralization or
other equivalent collateral. The nominal value of these guarantees is
approximately $1.4 billion. CFC suspended guarantee payments in the fourth
quarter of 2002 and without additional liquidity in the near future, CFC will be
unable to make these guarantee payments when such payments are required to be
made. See the section above entitled "Retained Interests in Securitization
Trusts" for additional information on the guarantee payments.

     The ratings downgrades that followed announcements regarding CNC's
defaulted debt and restructuring discussions with debt holders (see the section
entitled "Liquidity of Conseco (parent company)" in this "Management's
Discussion and Analysis of Financial Condition and Results of Operations") have
eliminated CFC's access to the securitization markets. The securitization
markets have been CFC's main source of funding. The loss of access to the
securitization markets has severely affected CFC's ability to originate,
purchase and sell loans. It has also affected the value of the retained
interests CFC holds in securitization trusts, since CFC relied on these markets
to finance the sale of repossessed manufactured housing units which often helped
to minimize the loss on defaulted loans (compared to selling directly to the
manufactured housing wholesale channel).

     CFC's remaining liquidity sources (excluding its bank subsidiaries) are a
warehouse and a residual facility with Lehman and a postpetition financing
facility. CFC's inability to access the securitization markets and the
constrained liquidity under its other funding sources have had a material
adverse effect on its business and results of operations, resulting in CFC's
petition for relief under the Bankruptcy Code. As part of the Chapter 11
bankruptcy filing, CFC requested and received an interim order from the
Bankruptcy Court to increase the servicing fees it is paid by the securitization
trusts for manufactured housing loans (see the section above entitled "Operating
Results of the Discontinued Finance Operations").

     CFC is currently in violation of several of its financial covenants
required by its warehouse and residual facilities. CFC has entered into a
forbearance agreement with Lehman pursuant to which Lehman has agreed to
temporarily refrain from exercising any rights arising from events of default
that occurred under the facilities as of the date of such forbearance agreement,
including certain events of default triggered by CFC not being in compliance
with certain financial covenants. This forbearance agreement expires on June 1,
2003. The forbearance agreement with Lehman contains additional provisions
which: (i) prohibit CFC from making any dividend or other payments to CNC or any
affiliates; (ii) during the forbearance period, grant Lehman rights over cash
proceeds resulting from the sale of assets in excess of $25 million; (iii)
provide Lehman with the right to consent to amendments to the documents
governing certain of CFC's securitization facilities; and (iv) provide Lehman
with additional security interests in CFC's otherwise unencumbered assets
(including, but not limited to, rights on servicing fees received by CFC). In
connection with the execution of the forbearance agreement, CFC and Lehman
amended the warehouse and residual facilities. These amendments provide for a
level of increased liquidity during the forbearance period and provide Lehman
with a security interest in cash flows received by CFC from its securitization
facilities.

     CFC's residual facility is collateralized by retained interests in
securitizations. CFC is required to maintain collateral based on current
estimated fair values in accordance with the terms of such facility. Due to the
decrease in estimated fair value of its retained interests, CFC's collateral was
deficient at December 31, 2002 (as calculated in accordance with the relevant
transaction documents). CFC has executed a forbearance agreement with Lehman in
which, among other things, Lehman has agreed not to require additional
collateral with respect to the residual facility through June 1, 2003. Under the
terms of the forbearance agreement, Lehman is retaining certain cash flows from
CFC's retained interests pledged to this facility and applying these cash flows
to the margin deficit. CFC is currently unable to provide sufficient additional
collateral or to repay this credit facility. The value of the retained interests
in the manufactured housing portfolio may also decrease based on CFC's inability
to continue to effectuate its historical loss mitigation strategy with respect
to the sale of repossessed manufactured housing units resulting in a reduction
of collateral pledged on its residual facility. CFC had historically provided
financing to retail buyers of repossessed units and funded that financing
through the securitization of those refinancing loans. Without access to the
securitization market, CFC's ability to provide financing to purchasers of
repossessed manufactured housing units has ceased. On November 25, 2002, CFC
announced it was suspending originations of loans for manufactured housing,
which required CFC to sell repossessed manufactured housing units in the
wholesale market at significantly reduced prices, thereby reducing cash flow
available to the retained interests. Additionally, the uncertainty with respect
to CFC's liquidity position and its ability to continue to provide servicing for
the securitized portfolios has reduced and may further reduce the value of its
retained interests pledged as collateral on the residual facility.

     During 2002, CFC repurchased $46.9 million par value of its senior
subordinated notes and medium term notes resulting in an extraordinary gain of
$3.9 million (net of income taxes). In March 2002, CFC completed a tender offer
pursuant to which it purchased $75.8 million par value of its senior
subordinated notes due June 2002. The purchase price was equal to 100 percent of
the principal amount of the notes plus accrued interest. The remaining principal
amount outstanding of $34.8 million of the senior subordinated notes after the
tender offer and other debt repurchases completed prior to the tender offer was
retired at maturity on June 3, 2002.

                                       76


     In April 2002, CFC completed a tender offer pursuant to which it purchased
$158.5 million par value of its medium term notes due September 2002 and $3.7
million par value of its medium term notes due April 2003. The purchase price
was equal to 100 percent of the principal amount of the notes plus accrued
interest. In June 2002, CFC commenced a tender offer for the remaining $8.2
million par value of its medium term notes due September 2002. Pursuant to the
tender offer $5.5 million par value of the notes was tendered in July. The
purchase price was equal to 101 percent of the principal amount of the notes
plus accrued interest. The remaining principal amount outstanding of the medium
term notes after giving effect to both tender offers and other debt repurchases
completed prior to the tender offers of $2.7 million was retired at maturity on
September 26, 2002. Since that date, CFC has had no outstanding public debt.

     CFC has historically pursued alternative and supplementary methods to
finance its lending operations. In late 1998, CFC began issuing certificates of
deposit through its bank subsidiaries. At December 31, 2002, $2.3 billion of
such deposits were outstanding. The average annual rate paid on these deposits
was 3.9 percent during 2002. Proceeds from the issuance of the certificates of
deposit are used to fund the origination of certain consumer/credit card finance
receivables. To the extent that CFC is unable to issue certificates of deposit,
loan origination activities would be adversely affected, which would have
additional material adverse effects on its operations, financial results and
cash position. The sale of Mill Creek Bank, CFC's subsidiary which issues the
certificates of deposit, to GE was approved by the Bankruptcy Court on March 14,
2003.

     Market-Sensitive Instruments and Risk Management - CFC

     Profitability may be directly affected by the level of and fluctuations in
interest rates which affect CFC's ability to earn a spread between interest
received on loans and the costs of liabilities. While CFC monitors the interest
rate environment, its financial results could be adversely affected by changes
in interest rates. During periods of increasing interest rates, CFC has
historically experienced market pressure to reduce servicing spreads in its
financing operations. In addition, increases in interest rates have historically
decreased the demand for consumer credit. If CFC was able to resume originating
loans and finance them through securitization transactions, a substantial and
sustained increase in interest rates could, among other things: (i) adversely
affect CFC's ability to purchase or originate loans or other assets; (ii) reduce
the average size of loans underwritten; and (iii) increase securitization
funding costs. A significant decline in interest rates could decrease the size
of CFC's loan servicing portfolio by increasing the level of loan prepayments,
thereby shortening the life and impairing the value of CFC's interest-only
securities. Fluctuating interest rates also may affect CFC's net interest income
earned resulting from the difference between the yield to CFC on loans held
pending securitization and the cost of funds obtained by CFC to finance such
loans.

     CFC has historically reduced interest rate risk of its finance operations
by funding most of the loans it makes through securitization transactions. The
finance receivables transferred in these transactions and the asset-backed
securities purchased by investors generally both have fixed rates. Principal
payments on the assets are passed through to investors in the securities as
received, thereby reducing interest rate exposure in these transactions that
might otherwise arise from maturity mismatches between debt instruments and
assets.

     Prior to September 8, 1999, CFC retained interests in the finance
receivables sold through investments in interest-only securities that are
subordinated to the rights of other investors. Interest-only securities do not
have a stated maturity or amortization period. The expected amount of the cash
flow as well as the timing depends on the performance of the underlying
collateral supporting each securitization. The actual cash flow of these
instruments could vary substantially if performance is different from CFC's
assumptions. CFC develops assumptions to value these investments by analyzing
past portfolio performance, current loan characteristics, current and expected
market conditions and the expected effect of its actions to mitigate adverse
performance.

     CFC uses computer models to simulate the cash flows (including any
potential payments related to the guarantees of certain lower-rated securities
issued by the securitization trusts) expected from its retained interests in
securitization trusts (including interest-only securities) under various
interest rate scenarios. These simulations help CFC to measure the potential
gain or loss in fair value of these financial instruments, including the effects
of changes in interest rates on prepayments. CFC estimates that its retained
interests would decline in fair value by approximately $10 million if interest
rates were to decrease by 10 percent from their December 31, 2002 levels. This
compares to a decline in fair value of approximately $60 million based on
amounts and rates at December 31, 2001. The calculations involved in CFC's
computer simulations incorporate numerous assumptions, require significant
estimates and assume an immediate change in interest rates without any
management of the interest-only securities in reaction to such change.
Consequently, potential changes in value of its retained interests indicated by
the simulations will likely be different from the actual changes experienced
under given interest rate scenarios, and the differences may be material. See
the note to Conseco's consolidated financial statements entitled "Financial
Information Regarding CFC" for a summary of the key economic assumptions used to
determine the estimated fair value of all of its retained interests in
securitizations and the sensitivity of the current fair value of cash flows to
immediate 10 percent and 20 percent changes in those assumptions.

     We estimate that CFC's finance receivables (including both "finance
receivables" and "finance receivables-securitized") would decline in fair value
by approximately $240 million if interest rates were to increase by 10 percent
from their December 31, 2002

                                       77


levels. This compares to a decline in fair value of $362.3 million based on
amounts and rates at December 31, 2001. The increase in the estimated decline
corresponds with the increase to its finance receivable balances.

     CFC's finance receivables were primarily funded with the fixed rate
asset-backed securities purchased by investors in securitization transactions
and floating-rate debt. Such borrowings included bank credit facilities, master
repurchase agreements and the notes payable related to securitized finance
receivables structured as collateralized borrowings ($10.9 billion of which was
at fixed rates and $3.0 billion of which was at floating rates). Based on the
interest rate exposure and prevalent rates at December 31, 2002, a relative 10
percent decrease in interest rates would increase the fair value of the finance
segment's fixed-rate borrowed capital by approximately $65 million. The interest
expense on this segment's floating-rate debt will fluctuate as prevailing
interest rates change. CFC is exposed to market risk from the time a loan is
originated to the time the loan is financed as interest rates may fluctuate
during such period of time.

     ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

     The information included under the caption "Market-Sensitive Instruments
and Risk Management" and "Market-Sensitive Instruments and Risk Management -
CFC" in Item 7. "Management's Discussion and Analysis of Consolidated Financial
Condition and Results of Operations" is incorporated herein by reference.







                                       78



     ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.


                   Index to Consolidated Financial Statements


                                                                                                                          Page
                                                                                                                          ----
                                                                                                                         
Report of Independent Accountants.......................................................................................    80

Consolidated Balance Sheet at December 31, 2002 and 2001................................................................    81

Consolidated Statement of Operations for the years ended
    December 31, 2002, 2001 and 2000....................................................................................    83

Consolidated Statement of Shareholders' Equity
    for the years ended December 31, 2002, 2001 and 2000................................................................    85

Consolidated Statement of Cash Flows for the years ended
    December 31, 2002, 2001 and 2000....................................................................................    88

Notes to Consolidated Financial Statements..............................................................................    89






















                                       79








                        REPORT OF INDEPENDENT ACCOUNTANTS


To the Shareholders and Board of Directors
Conseco, Inc.


     In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of operations, shareholders' equity (deficit) and cash
flows present fairly, in all material respects, the financial position of
Conseco, Inc. and subsidiaries at December 31, 2002 and 2001, and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 2002, in conformity with accounting principles generally
accepted in the United States of America. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with auditing standards generally
accepted in the United States of America, which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.

     The accompanying consolidated financial statements have been prepared
assuming that Conseco, Inc. will continue as a going concern, which contemplates
continuity of Conseco's operations and realization of its assets and payments of
its liabilities in the ordinary course of business. As more fully described in
the notes to the consolidated financial statements, on December 17, 2002,
Conseco, Inc. and several of its wholly-owned subsidiaries filed voluntary
petitions for reorganization under Chapter 11 of the United States Bankruptcy
Code. The uncertainties inherent in the bankruptcy process and Conseco's
recurring losses from operations raise substantial doubt about Conseco's ability
to continue as a going concern. Conseco, Inc. is currently operating its
business as a Debtor-in-Possession under the jurisdiction of the Bankruptcy
Court, and continuation of Conseco as a going concern is contingent upon, among
other things, the confirmation of Conseco's Plan of Reorganization and Conseco's
ability to generate sufficient cash from operations and obtain financing sources
to meet its future obligations. If no reorganization plan is approved, it is
possible that Conseco's assets may be liquidated. The consolidated financial
statements do not include any adjustments to reflect the possible future effects
on the recoverability and classification of assets or the amount and
classification of liabilities that may result from the outcome of these
uncertainties.

     As discussed in note 4 to the consolidated financial statements, the
Company adopted Emerging Issues Task Force Issue No. 99-20, "Recognition of
Interest Income and Impairment on Purchased and Retained Beneficial Interests in
Securitized Financial Assets" in 2000 and Statement of Financial Accounting
Standards No. 142, "Goodwill and Other Intangible Assets" in 2002.


                                       /s/ PricewaterhouseCoopers LLP
                                       ----------------------------------
                                       PricewaterhouseCoopers LLP


Indianapolis, Indiana
April 11, 2003







                                       80




                         CONSECO, INC. AND SUBSIDIARIES

                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                           CONSOLIDATED BALANCE SHEET
                           December 31, 2002 and 2001
                              (Dollars in millions)


                                     ASSETS




                                                                                            2002              2001
                                                                                            ----              ----
                                                                                                     
Investments:
    Actively managed fixed maturities at fair value (amortized cost:
       2002 - $18,989.8; 2001 - $22,422.8).............................................   $19,417.4         $21,818.5
    Retained interests in securitization trusts at fair value (amortized cost:
       2001 - $876.1)..................................................................         -               710.1
    Equity securities at fair value (cost: 2002 - $161.4; 2001 - $257.3)...............       156.0             227.0
    Mortgage loans.....................................................................     1,308.3           1,228.0
    Policy loans.......................................................................       536.2             635.8
    Venture capital investment in AT&T Wireless Services, Inc. at fair value
       (cost: 2002 - $14.2; 2001 - $39.0)..............................................        25.0             155.3
    Other invested assets .............................................................       340.8             292.4
                                                                                          ---------         ---------

          Total investments............................................................    21,783.7          25,067.1

Cash and cash equivalents:
    Held by the parent company.........................................................        41.9             152.2
    Held by the parent company in segregated accounts..................................         -                54.7
    Held by subsidiaries...............................................................     1,227.0           2,853.9
Accrued investment income..............................................................       389.8             688.6
Finance receivables....................................................................         -             3,810.7
Finance receivables - securitized......................................................         -            14,198.5
Cost of policies purchased.............................................................     1,170.0           1,657.8
Cost of policies produced..............................................................     2,014.4           2,570.2
Reinsurance receivables................................................................       934.2             663.0
Income tax assets......................................................................       101.5             678.1
Goodwill  .............................................................................       100.0           3,695.4
Assets held in separate accounts and investment trust..................................       447.0           2,376.3
Cash held in segregated accounts for investors.........................................         -               550.2
Cash held in segregated accounts related to servicing agreements and
    securitization transactions........................................................         -               994.6
Assets of discontinued operations......................................................    17,624.3              -
Other assets...........................................................................       675.2           1,420.9
                                                                                          ---------         ---------

          Total assets.................................................................   $46,509.0         $61,432.2
                                                                                          =========         =========



                            (continued on next page)









                   The accompanying notes are an integral part
                    of the consolidated financial statements.


                                       81



                         CONSECO, INC. AND SUBSIDIARIES

                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                     CONSOLIDATED BALANCE SHEET (Continued)
                           December 31, 2002 and 2001
                              (Dollars in millions)


                 LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)




                                                                                            2002              2001
                                                                                            ----              ----
                                                                                                      
Liabilities:
    Liabilities for insurance and asset accumulation products:
       Interest-sensitive products.....................................................   $13,469.5         $15,787.7
       Traditional products............................................................     7,971.4           8,172.8
       Claims payable and other policyholder funds.....................................       909.2           1,005.5
       Liabilities related to separate accounts and investment trust...................       447.0           2,376.3
       Liabilities related to certificates of deposit..................................         -             1,790.3
    Investor payables..................................................................         -               550.2
    Guarantee liability related to interests in securitization trusts held by others...         -                39.9
    Other liabilities..................................................................       673.5           1,701.9
    Liabilities of discontinued operations.............................................    17,624.3               -
    Investment borrowings..............................................................       669.7           2,242.7
    Notes payable:
       Direct corporate obligations....................................................         -             4,085.0
       Direct finance obligations:
          Master repurchase agreements.................................................         -             1,670.8
          Credit facility collateralized by retained interests in securitizations......         -               507.3
          Other borrowings.............................................................         -               349.8
       Related to securitized finance receivables structured as collateralized
          borrowings...................................................................         -            14,484.5
                                                                                          ---------         ---------


            Total liabilities not subject to compromise................................    41,764.6          54,764.7

    Liabilities subject to compromise..................................................     4,873.3               -
                                                                                          ---------         ---------

          Total liabilities............................................................    46,637.9          54,764.7
                                                                                          ---------         ---------

Minority interest:
    Company-obligated mandatorily redeemable preferred securities
       of subsidiary trusts............................................................     1,921.5           1,914.5

Shareholders' equity (deficit):
    Preferred stock....................................................................       501.7             499.6
    Common stock and additional paid-in capital (no par value, 1,000,000,000 shares
       authorized, shares issued and outstanding: 2002 - 346,007,133;
       2001 - 344,743,196).............................................................     3,497.0           3,484.3
    Accumulated other comprehensive income (loss)......................................       580.6            (439.0)
    Retained earnings (deficit)........................................................    (6,629.7)          1,208.1
                                                                                          ---------         ---------

            Total shareholders' equity (deficit).......................................    (2,050.4)          4,753.0
                                                                                          ---------         ---------

            Total liabilities and shareholders' equity (deficit).......................   $46,509.0         $61,432.2
                                                                                          =========         =========




                   The accompanying notes are an integral part
                    of the consolidated financial statements.

                                       82



                         CONSECO, INC. AND SUBSIDIARIES

                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                      CONSOLIDATED STATEMENT OF OPERATIONS
              for the years ended December 31, 2002, 2001 and 2000
                  (Dollars in millions, except per share data)



                                                                                       2002            2001             2000
                                                                                       ----            ----             ----
                                                                                                             
Revenues:
    Insurance policy income.......................................................    $ 3,602.3      $3,992.7         $ 4,170.7
    Net investment income:
       Insurance and fee-based segment general account assets.....................      1,528.0       1,706.1           1,800.8
       Equity-indexed and separate account products...............................       (100.5)       (119.6)            (56.1)
       Venture capital loss related to investment in AT&T Wireless Services, Inc..        (99.3)        (42.9)           (199.5)
       Other .....................................................................         14.7          20.9              51.8
    Gain on sale of interest in riverboat.........................................          -           192.4               -
Net realized investment losses....................................................       (597.0)       (379.4)           (346.5)
    Fee revenue and other income..................................................         70.1          96.9             137.4
                                                                                      ---------      --------         ---------

       Total revenues.............................................................      4,418.3       5,467.1           5,558.6
                                                                                      ---------      --------         ---------

Benefits and expenses:
    Insurance policy benefits.....................................................      3,332.5       3,588.5           3,807.6
    Provision for losses..........................................................        210.8         169.6             231.5
    Interest expense (contractual interest for 2002 of $366.5)....................        363.1         400.0             454.3
    Amortization..................................................................        822.9         766.8             657.2
    Other operating costs and expenses............................................        712.1         722.2             872.9
    Goodwill impairment...........................................................        500.0           -                 -
    Special charges...............................................................         96.5          80.4             305.0
    Reorganization items..........................................................         14.4           -                 -
                                                                                      ---------      --------         ---------

       Total benefits and expenses................................................      6,052.3       5,727.5           6,328.5
                                                                                      ---------      --------         ---------

       Loss before income taxes, minority interest, discontinued operations,
         extraordinary gain (loss) and cumulative effect of accounting change.....     (1,634.0)       (260.4)           (769.9)

Income tax expense (benefit):

       Tax expense (benefit) on period income.....................................         53.1         (63.5)           (166.2)
       Valuation allowance for deferred tax assets................................        811.2           -                 -
                                                                                      ---------      --------         ---------

       Loss before minority interest, discontinued operations,
         extraordinary gain (loss) and cumulative effect of accounting change.....     (2,498.3)       (196.9)           (603.7)

Minority interest:
    Distributions on Company-obligated mandatorily redeemable
       preferred securities of subsidiary trusts, net of income taxes
       (contractual distributions for 2002 of $179.8).............................        173.2         119.5             145.3
                                                                                      ---------      --------         ---------

       Loss before discontinued operations, extraordinary gain (loss)
         and cumulative effect of accounting change ..............................     (2,671.5)       (316.4)           (749.0)

Discontinued operations, net of income taxes......................................     (2,223.1)       (106.7)           (381.9)
Extraordinary gain (loss) on extinguishment of debt, net of income taxes..........          8.1          17.2              (5.0)
Cumulative effect of accounting change, net of income taxes.......................     (2,949.2)          -               (55.3)
                                                                                      ---------      --------         ---------

       Net loss...................................................................     (7,835.7)       (405.9)         (1,191.2)

Preferred stock dividends (contractual distributions for 2002 of $2.1)............          2.1          12.8              11.0
                                                                                      ---------      --------         ---------

       Net loss applicable to common stock........................................    $(7,837.8)     $ (418.7)        $(1,202.2)
                                                                                      =========      ========         =========


                                   (continued)

                   The accompanying notes are an integral part
                    of the consolidated financial statements.

                                       83






                         CONSECO, INC. AND SUBSIDIARIES

                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                CONSOLIDATED STATEMENT OF OPERATIONS (Continued)
              for the years ended December 31, 2002, 2001 and 2000
                  (Dollars in millions, except per share data)



                                                                           2002             2001             2000
                                                                           ----             ----             ----
                                                                                                
Loss per common share:
    Basic:
       Weighted average shares outstanding.........................    345,807,000     338,145,000       325,953,000
       Loss before discontinued operations, extraordinary
         gain (loss) and cumulative effect of accounting change ...       $ (7.73)        $  (.97)           $(2.34)
       Discontinued operations.....................................         (6.43)           (.32)            (1.17)
       Extraordinary gain (loss) on extinguishment of debt.........           .02             .05              (.01)
       Cumulative effect of accounting change......................         (8.53)             -               (.17)
                                                                          -------          ------            ------

         Net loss..................................................       $(22.67)        $ (1.24)           $(3.69)
                                                                          =======         =======            ======

    Diluted:
       Weighted average shares outstanding.........................    345,807,000     338,145,000       325,953,000
       Loss before discontinued operations, extraordinary
         gain (loss) and cumulative effect of accounting change....       $ (7.73)        $  (.97)           $(2.34)
       Discontinued operations.....................................         (6.43)           (.32)            (1.17)
       Extraordinary gain (loss) on extinguishment of debt ........           .02             .05              (.01)
       Cumulative effect of accounting change......................         (8.53)             -               (.17)
                                                                          -------          ------            ------

         Net loss..................................................       $(22.67)         $(1.24)           $(3.69)
                                                                          =======          ======            ======































                   The accompanying notes are an integral part
                    of the consolidated financial statements.

                                       84



                         CONSECO, INC. AND SUBSIDIARIES

                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
            CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT)
              for the years ended December 31, 2002, 2001 and 2000
                              (Dollars in millions)




                                                                                   Common stock     Accumulated other
                                                                       Preferred  and additional      comprehensive   Retained
                                                              Total      stock    paid-in capital         loss        earnings
                                                              -----      -----    ---------------         ----        --------

                                                                                                        
 Balance, December 31,1999................................$ 5,556.2      $478.4        $2,987.1          $(771.6)      $2,862.3

   Comprehensive loss, net of tax:
     Net loss............................................. (1,191.2)        -               -                -         (1,191.2)
     Change in unrealized depreciation
       of investments (net of applicable income tax
       expense of $72.0)..................................    120.6         -               -              120.6            -
                                                          ---------

         Total comprehensive loss......................... (1,070.6)

   Issuance of common shares for stock options and for
     employee benefit plans...............................      6.6         -               6.6              -              -
   Issuance of convertible preferred shares...............      8.4         8.4             -                -              -
   Issuance of warrants...................................     21.0         -              21.0              -              -
   Settlement of forward contract.........................    (90.5)        -             (90.5)             -              -
   Cost of shares acquired................................    (12.4)        -             (12.4)             -              -
   Dividends on preferred stock...........................    (11.0)        -               -                -            (11.0)
   Dividends on common stock..............................    (33.3)        -               -                -            (33.3)
                                                          ---------      ------        --------          -------       --------

Balance, December 31, 2000................................$ 4,374.4      $486.8        $2,911.8          $(651.0)      $1,626.8




                          (continued on following page)






















                   The accompanying notes are an integral part
                    of the consolidated financial statements.

                                       85




                         CONSECO, INC. AND SUBSIDIARIES

                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
      CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT) (Continued)
              for the years ended December 31, 2002, 2001 and 2000
                              (Dollars in millions)




                                                                               Common stock      Accumulated other
                                                                   Preferred  and additional       comprehensive     Retained
                                                          Total      stock    paid-in capital          loss          earnings
                                                          -----      -----    ---------------          ----          --------

                                                                                                      
Balance, December 31, 2000 (carried forward
       from prior page)..............................  $4,374.4      $486.8       $2,911.8            $(651.0)       $1,626.8

   Comprehensive loss, net of tax:
     Net loss........................................    (405.9)        -              -                  -            (405.9)
     Change in unrealized depreciation of
       investments (net of applicable income tax
       expense of $121.8)............................     212.0         -              -                212.0             -
                                                       --------
         Total comprehensive loss....................    (193.9)

   Issuance of shares pursuant to stock purchase
     contracts related to FELINE PRIDES..............     496.6         -            496.6                -               -
   Issuance of shares pursuant to acquisition of
     ExlService.com, Inc.............................      52.1         -             52.1                -
   Issuance of shares for stock options and for
     employee benefit plans..........................      23.8         -             23.8                -               -
   Payment-in-kind dividends on convertible
     preferred stock.................................      12.8        12.8            -                  -               -
   Dividends on preferred stock......................     (12.8)        -              -                  -             (12.8)
                                                       --------      ------       --------            -------        --------

Balance, December 31, 2001...........................  $4,753.0      $499.6       $3,484.3            $(439.0)       $1,208.1





                          (continued on following page)



















                   The accompanying notes are an integral part
                    of the consolidated financial statements.

                                       86



                         CONSECO, INC. AND SUBSIDIARIES

                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
      CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT) (Continued)
              for the years ended December 31, 2002, 2001 and 2000
                              (Dollars in millions)




                                                                                Common stock     Accumulated other
                                                                     Preferred and additional      comprehensive      Retained
                                                           Total       stock   paid-in capital     income (loss) earnings (deficit)
                                                           -----       -----   ---------------     ------------  ------------------

                                                                                                       
Balance, December 31, 2001 (carried forward
   from prior page) ..................................  $ 4,753.0      $499.6      $3,484.3           $(439.0)        $ 1,208.1

   Comprehensive loss, net of tax:
     Net loss.........................................   (7,835.7)        -             -                 -            (7,835.7)
     Change in unrealized depreciation
       of investments and other (net of applicable
       income tax expense of nil).....................    1,019.6         -             -             1,019.6               -
                                                         --------

         Total comprehensive loss.....................   (6,816.1)

   Issuance of shares for stock options and for
     employee benefit plans...........................       12.7         -            12.7               -                -
   Payment-in-kind dividends on convertible
     preferred stock..................................        2.1         2.1           -                 -                -
   Dividends on preferred stock.......................       (2.1)         -            -                 -                (2.1)
                                                         --------      ------      --------           -------         ---------


Balance, December 31, 2002............................  $(2,050.4)     $501.7      $3,497.0           $ 580.6         $(6,629.7)
                                                        =========      ======      ========           =======         =========




























                   The accompanying notes are an integral part
                    of the consolidated financial statements.

                                       87




                         CONSECO, INC. AND SUBSIDIARIES

                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                      CONSOLIDATED STATEMENT OF CASH FLOWS
              for the years ended December 31, 2002, 2001 and 2000
                              (Dollars in millions)



                                                                                              2002          2001         2000
                                                                                              ----          ----         ----
                                                                                                             
Cash flows from operating activities:
   Insurance policy income.............................................................    $ 3,041.3     $ 3,518.8    $  3,634.4
   Net investment income...............................................................      3,323.9       3,913.6       3,864.1
   Fee revenue and other income........................................................        307.1         389.1         518.7
   Insurance policy benefits...........................................................     (1,996.9)     (2,792.8)     (2,686.5)
   Interest expense....................................................................     (1,279.6)     (1,570.5)     (1,331.6)
   Policy acquisition costs............................................................       (509.2)       (667.0)       (794.2)
   Special charges.....................................................................        (47.2)        (29.5)       (216.3)
   Reorganization items, net...........................................................        (31.7)          -             -
   Other operating costs...............................................................     (1,406.1)     (1,466.8)     (1,741.7)
   Taxes...............................................................................       (105.9)         29.8         (41.6)
                                                                                           ---------     ---------    ----------

       Net cash provided by operating activities.......................................      1,295.7       1,324.7       1,205.3
                                                                                           ---------     ---------    ----------

Cash flows from investing activities:
   Sales of investments................................................................     19,465.4      24,179.7       6,987.5
   Maturities and redemptions of investments...........................................      1,623.9       1,381.4         825.5
   Purchases of investments............................................................    (19,879.4)    (25,509.5)     (7,952.6)
   Cash received from the sale of finance receivables, net of expenses.................      2,372.9         867.2       2,501.2
   Principal payments received on finance receivables..................................      8,294.0       8,611.3       8,490.1
   Finance receivables originated......................................................     (7,877.9)    (12,320.3)    (18,515.9)
   Cash held by Conseco Finance Corp. and classified as assets held by
     discontinued operations...........................................................       (562.3)          -             -
   Other...............................................................................        (27.6)       (136.7)       (165.2)
                                                                                           ---------     ---------    ----------

       Net cash provided (used) by investing activities ...............................      3,409.0      (2,926.9)     (7,829.4)
                                                                                           ---------     ---------    ----------

Cash flows from financing activities:
   Amounts received for deposit products...............................................      4,584.8       4,204.8       4,966.7
   Withdrawals from deposit products...................................................     (5,682.8)     (4,489.4)     (4,545.9)
   Issuance of notes payable...........................................................      6,671.9      12,160.5      22,548.9
   Payments on notes payable...........................................................    (10,481.3)    (10,480.5)    (14,416.2)
   Ceding commission received on reinsurance transaction...............................         83.0           -             -
   Change in cash held in restricted accounts for settlement of borrowings.............        (13.0)       (241.8)       (689.7)
   Investment borrowings...............................................................     (1,573.0)      2,022.9        (609.1)
   Repurchase of Company-obligated mandatorily redeemable preferred
     securities of subsidiary trusts...................................................          -             -          (250.0)
   Issuance of common and convertible preferred shares.................................          -             4.1            .8
   Payments for settlement of forward contract and to repurchase equity securities.....          -             -          (102.6)
   Dividends on common and preferred shares and distributions on
     Company-obligated mandatorily redeemable
     preferred securities of subsidiary trusts.........................................        (86.2)       (181.2)       (302.1)
                                                                                           ---------     ---------    ----------

       Net cash provided (used) by financing activities................................     (6,496.6)      2,999.4       6,600.8
                                                                                           ---------     ---------    ----------

       Net increase (decrease) in cash and cash equivalents............................     (1,791.9)      1,397.2         (23.3)

Cash and cash equivalents, beginning of year...........................................      3,060.8       1,663.6       1,686.9
                                                                                           ---------     ---------    ----------

Cash and cash equivalents, end of year.................................................    $ 1,268.9     $ 3,060.8    $  1,663.6
                                                                                           =========     =========    ==========


                   The accompanying notes are an integral part
                    of the consolidated financial statements.

                                       88



                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                   Notes to Consolidated Financial Statements
                           --------------------------


       1. PROCEEDINGS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE

       Conseco, Inc. ("CNC") is the top tier holding company for our two
operating businesses: insurance and finance. Our insurance business is operated
through subsidiaries owned directly and indirectly by CIHC, Incorporated
("CIHC"), an intermediate holding company that is controlled by CNC. Our finance
business has been historically operated through Conseco Finance Corp. ("CFC"), a
wholly-owned subsidiary of CIHC, and its subsidiaries. Effective December 17,
2002 (the date CFC filed a petition for relief under the Bankruptcy Code as
further described below), we began to account for our finance business as a
discontinued operation. Our subsidiaries operate throughout the United States.
We sometimes collectively refer to CNC, together with its consolidated
subsidiaries, as "we," "Conseco" or the "Company."

       Our insurance subsidiaries develop, market and administer supplemental
health insurance, annuity, individual life insurance and other insurance
products. Our finance business has historically provided a variety of finance
products including manufactured housing and floor plan loans, home equity
mortgages, home improvement and consumer product loans and private label credit
cards.

       On December 17, 2002 (the "Petition Date"), CNC, CIHC, CTIHC, Inc. and
Partners Health Group, Inc. (collectively, the "Debtors") filed voluntary
petitions for reorganization under Chapter 11 of Title 11 of the United States
Bankruptcy Code (the "Bankruptcy Code") in the United States Bankruptcy Court
(the "Bankruptcy Court") for the Northern District of Illinois. The following
discussion provides general background information regarding the Debtors'
Chapter 11 cases, but is not intended to be a comprehensive summary. The Debtors
are currently operating their business as debtors-in-possession pursuant to the
Bankruptcy Code. As debtors-in-possession, the Debtors are authorized to
continue to operate as ongoing businesses, but may not engage in transactions
outside the ordinary course of business without approval of the Bankruptcy
Court, after notice and an opportunity for a hearing. The Company's insurance
subsidiaries are separate legal entities and are not included in the petitions
filed by the Debtors. On March 18, 2003, the Bankruptcy Court approved the
Debtor's Second Amended Joint Plan of Reorganization (the "Plan"), and the
Second Amended Disclosure Statement (the "Disclosure Statement").

       CFC and Conseco Finance Servicing Corp. also filed petitions under the
Bankruptcy Code with the Bankruptcy Court on the Petition Date. In addition, on
February 3, 2003, the following subsidiaries of CFC filed petitions under the
Bankruptcy Code with the Bankruptcy Court: Conseco Finance Corp. - Alabama,
Conseco Finance Credit Corp., Conseco Finance Consumer Discount Company, Conseco
Finance Canada Holding Company, Conseco Finance Canada Company, Conseco Finance
Loan Company, Rice Park Properties Corporation, Landmark Manufactured Housing,
Inc., Conseco Finance Net Interest Margin Finance Corp. I, Conseco Finance Net
Interest Margin Finance Corp. II, Green Tree Finance Corp. - Two, Green Tree
Floorplan Funding Corp., Conseco Agency of Nevada, Inc., Conseco Agency of New
York, Inc., Conseco Agency, Inc., Conseco Agency of Alabama, Inc., Conseco
Agency of Kentucky, Inc., Crum-Reed General Agency, Inc. The foregoing entities
are referred to as the "Finance Company Debtors." The Finance Company Debtors
filed a separate plan in connection with their bankruptcy proceedings. The
bankruptcy proceedings of the Debtors and the Finance Company Debtors are
referred to as the "Chapter 11 Cases".

       Since commencing operations in 1982, CNC pursued a strategy of growth
through acquisitions. Primarily as a result of these acquisitions and the
funding requirements necessary to operate and expand the acquired businesses,
CNC amassed outstanding indebtedness of approximately $6.0 billion as of June
30, 2002. In 2001 and early 2002, we undertook a series of steps designed to
reduce and extend the maturities of our parent company debt. Notwithstanding
these efforts, the Company's financial position continued to deteriorate,
principally due to our leveraged condition, losses experienced by our finance
business and losses in the value of our investment portfolio.

       As a result of these developments, on August 9, 2002, we announced that
we would seek to fundamentally restructure the Company's capital, and announced
that we had retained legal and financial advisors to assist us in these efforts.
We ultimately decided to seek to reorganize under Chapter 11 of the Bankruptcy
Code.

       Under the Bankruptcy Code, actions to collect prepetition indebtedness,
as well as most pending litigation, are stayed and other contractual obligations
against the Debtors generally may not be enforced. Absent an order of the
Bankruptcy Court, substantially all prepetition liabilities are subject to
settlement under a plan of reorganization to be voted upon by creditors and
other stakeholders and approved by the Bankruptcy Court. On March 18, 2003, the
Bankruptcy Court approved the Debtors' Plan, as summarized in the Disclosure
Statement, as containing adequate information, as such term is defined in
Section 1125 of the Bankruptcy Code, to permit the solicitation of votes from
creditors on whether or not to accept the Plan. The Debtors commenced
solicitation on April 4, 2003. The voting record date has been set as March 19,
2003 and the deadline for returning completed ballots is May 14, 2003. A hearing
to consider confirmation of the Plan is scheduled to begin on May 28, 2003. The
Debtors will emerge from bankruptcy if and when

                                       89

                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                   Notes to Consolidated Financial Statements
                           --------------------------

the Plan receives the requisite stakeholder approval and is approved by the
Bankruptcy Court, and all conditions to the consummation of the Plan, have been
satisfied or waived.

       The United States Trustee has appointed a creditors committee
representing the unsecured creditors of the Debtors and a TOPrS committee
representing the claims of the holders of the Company-obligated mandatorily
redeemable preferred securities of subsidiary trusts ("Trust Preferred
Securities"). Before the Petition Date, the Company met with and provided
materials to certain prepetition committees and entered into extensive
arms-length negotiations with committees representing the holders of bank debt
and publicly held notes of CNC. Shortly before the Petition Date, the Company
reached a non-binding agreement in principle with respect to the general terms
of a restructuring with certain prepetition committees. However, there can be no
assurance that the appointed committees will support the Debtors' positions in
the bankruptcy proceedings or approve the Plan. The TOPrS committee has raised
certain objections to the Plan which are summarized in the Disclosure Statement.
Disagreements between the Debtors and the appointed committees could protract
the bankruptcy proceedings, could negatively impact the Company's ability to
operate and the results of those operations during bankruptcy, and could delay
the Debtors' emergence from bankruptcy.

       The Debtors previously filed with the Bankruptcy Court schedules of
assets and liabilities of the Debtors as reflected on our books and records.
Subject to certain limited exceptions, the Bankruptcy Court established a bar
date of February 21, 2003, for all prepetition claims against the Debtors. A bar
date is the date by which claims against the Debtors must be filed if the
claimants wish to receive any distribution in the bankruptcy proceedings. The
Debtors notified all known or potential claimants subject to the February 21,
2003 bar date of their need to file a proof of claim with the Bankruptcy Court.
Approximately 9,000 proofs of claim were filed on or before the February 21,
2003 bar date and the Company has begun objecting to claims and otherwise
reconciling claims that differ from the Debtors' records. Any differences that
cannot be resolved through negotiations between the Debtors and the claimant
will be resolved by the Bankruptcy Court. Certain creditors have filed claims
substantially in excess of amounts reflected in the Debtors' records.
Accordingly, the ultimate number and amount of allowed claims is not presently
known. Similarly, the ultimate distribution with respect to allowed claims is
not presently known.

       We have filed several motions in the Chapter 11 Cases pursuant to which
the Bankruptcy Court has granted us authority or approval with respect to
various items required by the Bankruptcy Code and/or necessary for our
reorganization efforts. We have obtained orders providing for, among other
things: (i) payment of prepetition and postpetition employee compensation and
benefits; (ii) continuing a key-employee retention plan; (iii) obtaining
debtor-in-possession financing for the Finance Company Debtors; and (iv)
increasing the amount of the servicing fee paid to the Finance Company Debtors
as servicers of various manufactured housing securitization trusts.

       Under the priority schedule established by the Bankruptcy Code, certain
postpetition and prepetition liabilities need to be satisfied before unsecured
creditors and holders of CNC's common and preferred stock and Trust Preferred
Securities are entitled to receive any distribution. The Plan (as summarized in
the Disclosure Statement) sets forth the Debtors' proposed treatment of claims
and equity interests. No assurance can be given as to what values, if any, will
be ascribed in the bankruptcy proceedings to each of these constituencies. Our
Plan would result in holders of CNC's common stock and preferred stock (other
than Series F Common-Linked Convertible Preferred Stock ("Series F Preferred
Stock")) receiving no value and the holders of CNC's Trust Preferred Securities
and Series F Preferred Stock receiving little value on account of the
cancellation of their interests. In addition, holders of unsecured claims
against the Debtors would, in most cases, receive less than full recovery for
the cancellation of their interests.

       At this time, it is not possible to predict with certainty the effect of
the Chapter 11 cases on our business or various creditors, or when we will
emerge from Chapter 11. Our future results depend upon our confirming and
successfully implementing, on a timely basis, a plan of reorganization.

       2. DISCONTINUED FINANCE BUSINESS - PLANNED SALE OF CFC

       In October 2002, we announced that we had engaged financial advisors to
pursue various alternatives with respect to our finance business and that CNC's
board of directors had approved a plan to sell or seek new investors for our
finance business. On December 19, 2002, CFC entered into an Asset Purchase
Agreement (the "Asset Purchase Agreement") with CFN Investment Holdings LLC
("CFN"), an affiliate of Fortress Investment Group LLC, J.C. Flowers & Co. LLC
and Cerberus Capital Management, L.P., pursuant to which CFC would, subject to
the satisfaction of certain conditions, sell all or substantially all of its
assets (the "CFC Assets") in a sale pursuant to Section 363 of the Bankruptcy
Code as part of CFC's Chapter 11 proceedings, subject to the right of CFN to
exclude certain assets from its purchase. In accordance with Section 363 of the
Bankruptcy Code and the terms of the Asset Purchase Agreement, CFC continued to
seek alternative transactions that would provide greater value to CFC and its
creditors than the

                                       90

                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                   Notes to Consolidated Financial Statements
                           --------------------------

transactions contemplated by the Asset Purchase Agreement.

       As a result of the formalization of the plans to sell the finance
business and the filing of petitions under the Bankruptcy Code by CFC and
certain of its subsidiaries, the finance business is being accounted for as a
discontinued operation. See the note to the consolidated financial statements
entitled "Financial Information Regarding CFC" for information regarding this
discontinued operation.

       As part of CFC's efforts to seek alternative transactions that would
provide greater value to CFC, and in accordance with the bidding procedures
order approved by the Bankruptcy Court, CFC conducted an auction for the sale of
its businesses and assets. Potential bidders that submitted bids for the
purchase of the CFC Assets that, by their own terms or aggregated with other
bids, were for more than the purchase price payable under the Asset Purchase
Agreement, plus the amount of the break-up fee of $30 million, plus $5 million
in expense reimbursements, plus the profit sharing rights relating to the
manufactured housing business, were allowed to participate in the auction. The
auction, which commenced on February 28, 2003, promptly adjourned, and was
continued to March 4, 2003, ultimately concluding the morning of March 5, 2003.

       At the auction, CFC, with the assistance of its advisors, analyzed each
of the bids presented and determined that CFN's bid of $970 million in cash,
plus the assumption of certain liabilities, represented the highest and best
bid. The terms of the sale included an option for CFC to sell the assets of Mill
Creek Bank, Inc. ("Mill Creek Bank", formerly known as Conseco Bank, Inc.) to
General Electric Capital Corporation ("GE") for approximately $310 million in
cash, plus certain assumed liabilities, which option, if exercised, would
provide CFN with a credit of $270 million to its $970 million bid.

       On March 6, 2003, CFC received an offer from Berkadia Equity Holdings,
L.L.C. ("Berkadia") that purported to be a bid in the recently concluded
auction. Concurrently therewith, Berkadia filed an objection to the sale that
the Bankruptcy Court heard, and summarily dismissed, on March 7, 2003. After
further negotiations during the March 7-14, 2003 period, CFN and GE
significantly increased the amount of cash to be paid for the CFC Assets.
Ultimately, each of the major constituencies, including the CFC Committee, the
Ad Hoc Securitization Holders' Committee, U.S. Bank as securitization trustee
for the certificate holders of certain lower-rated securities that are senior in
payment priority to the interest-only securities (the "B-2 securities"), and
Federal National Mortgage Association, as a major B-2 securities certificate
holder, agreed to support the sale of CFC Assets to CFN and GE. The total value
to be received as part of the transactions with CFN and GE upon closing is
expected to be approximately $1.3 billion, representing approximately $1.1
billion in cash and approximately $200 million in assumed liabilities, subject
to certain purchase price adjustments. On March 14, 2003, the Bankruptcy Court
entered orders approving the terms of the sale of the CFC Assets free and clear
of all liens to each of CFN and GE. The closing of the sale of the CFC Assets is
subject to various closing conditions, but is currently expected to occur in the
second quarter of 2003.

       Overall, CFC is seeking to maximize the value obtainable from all
restructuring transactions it contemplates as part of its Chapter 11 filing.
However, there can be no assurance that any such transaction will be completed.
Moreover, if such a transaction is completed, no proceeds resulting therefrom
will be available to satisfy any creditors, other than creditors, of CFC or
parties with a security interest in CFC's assets.

       3. BASIS OF PRESENTATION

       The accompanying consolidated financial statements have been prepared on
a going concern basis, which assumes continuity of operations and realization of
assets and liabilities in the ordinary course of business, and in accordance
with Statement of Position 90-7 "Financial Reporting by Entities in
Reorganization under the Bankruptcy Code" ("SOP 90-7"). Accordingly, all
prepetition liabilities subject to compromise have been segregated in the
consolidated balance sheet and classified as "liabilities subject to compromise"
at the estimated amount of allowable claims.

       Pursuant to SOP 90-7, professional fees associated with the Chapter 11
Cases are expensed as incurred and reported as reorganizational items. Interest
expense is reported only to the extent that it will be paid during the Chapter
11 Cases or when it is probable that it will be an allowed claim. During 2002,
the Company recognized a charge of $14.4 million associated with the Chapter 11
Cases for fees payable to professionals to assist with the filing of the Chapter
11 Cases.

       The Company is currently operating under the jurisdiction of Chapter 11
of the Bankruptcy Code and the Bankruptcy Court, and continuation of Conseco as
a going concern is contingent upon our ability to obtain confirmation of the
Plan, our ability to return to profitability, generate sufficient cash flows
from operations, obtain financing sources to meet our future obligations and
many other

                                       91

                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                   Notes to Consolidated Financial Statements
                           --------------------------

issues, ongoing other bankruptcy considerations and risks related to our
business and financial condition. These matters raise substantial doubt about
Conseco's ability to continue as a going concern. The accompanying consolidated
financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts or the amounts and
classification of liabilities that might result from the outcome of these
uncertainties. Additionally, our Plan will materially change amounts reported in
the consolidated financial statements, which do not give effect to all
adjustments of the carrying value of assets and liabilities that are necessary
as a consequence of a reorganization under Chapter 11 of the Bankruptcy Code.

       As described in the note entitled "Discontinued Finance Business -
Planned Sale of CFC", CFC is being accounted for as a discontinued operation.

       During the third quarter of 2002, Conseco entered into an agreement to
sell Conseco Variable Insurance Company ("CVIC"), its wholly owned subsidiary
and the primary writer of its variable annuity products. The sale was completed
in October 2002. The operating results of CVIC have been reported as
discontinued operations in all periods presented in the accompanying
consolidated statement of operations. See the note to the consolidated financial
statements entitled "Financial Information Regarding CVIC."

       During 2001, we stopped renewing a large portion of our major medical
lines of business. These lines of business are referred to herein as the "major
medical business in run-off". These actions had a significant effect on the
Company's operating results during 2001 and 2000. These lines had pre-tax losses
of $130.3 million in 2001 (including a write off of $77.4 million of the cost of
policies produced and the cost of policies purchased related to this business
that is not recoverable) and $51.3 million in 2000.

       On July 31, 2001, we completed the acquisition of ExlService.com, Inc.
("Ex1"), a firm that specializes in customer service and backroom outsourcing
with operations in India. We issued 3.4 million shares of our common stock in
exchange for Ex1's common stock. The total value of the transaction was $52.1
million. The Conseco Board of Directors (without Gary C. Wendt, the Company's
former Chief Executive Officer, voting) approved the transaction, after
receiving the recommendation of a special committee of outside directors. Mr.
Wendt was one of the founders of Exl. Mr. Wendt and his wife owned 20.3 percent
of Exl and his other relatives owned an additional 9.4 percent. Mr. Wendt and
his wife received 692,567 shares of Conseco common stock in the transaction
(worth approximately $9.7 million at the time the agreement was negotiated).
However, these shares were restricted until Conseco recovered its $52.1 million
acquisition price through cost savings achieved by transferring work to Exl
and/or pre-tax profits from services provided to third parties by Exl. The
shares also become unrestricted upon a change of control of 51 percent of the
outstanding shares of Conseco common stock. In November 2002, the Company
completed the sale of Exl and recognized a loss of $20.0 million on the
transaction. The Company had previously written off a significant portion of the
value of this investment in conjunction with the impairment charge related to
goodwill pursuant to the Company's adoption of SFAS 142 (as defined in the
following paragraph). Since Conseco did not recover the acquisition price prior
to its sale of Exl, the shares held by Mr. Wendt and his wife remain restricted.

       Statement of Financial Accounting Standards No. 141, "Business
Combinations" ("SFAS 141") eliminated the pooling-of-interests method of
accounting for business combinations initiated after July 1, 2001 and also
changed the criteria used to recognize intangible assets apart from goodwill. We
were required to apply these rules in accounting for the Exl acquisition.
Pursuant to these rules, in the Exl acquisition Conseco acquired: (i) goodwill
with a value of $38.6 million, which had an indeterminate life; and (ii) other
intangible assets with a value of $7.5 million, which were expected to have an
average life of approximately 5 years. Pursuant to SFAS 141 and Statement of
Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets"
("SFAS 142") described below under "Recently Issued Accounting Standards", this
goodwill was not amortized but was subject to annual impairment tests, effective
January 1, 2002.

       The accompanying financial statements include the accounts of the Company
and all of its wholly owned insurance subsidiaries. Our consolidated financial
statements exclude the results of material transactions between us and our
consolidated affiliates, or among our consolidated affiliates. We reclassified
certain amounts in our 2001 and 2000 consolidated financial statements and notes
to conform with the 2002 presentation. These reclassifications have no effect on
net income (loss) or shareholders' equity (deficit).

       For certain other special purpose entities related to our investment
portfolio, we consider the requirements of Emerging Issues Task Force Issue
Topic D-14, "Transactions Involving Special-Purpose Entities" ("EITF D-14") in
determining whether to consolidate such entities. We consolidate such entities
if: (i) an independent third party has not made a substantial capital investment
in the entity; (ii) such independent third party does not control the activities
of the entity; and (iii) the independent party does not retain substantial risks
and rewards of the special purpose entity's assets. See the note to the
consolidated financial statements entitled "Investments in Variable Interest
Entities" for additional information.

                                       92

                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                   Notes to Consolidated Financial Statements
                           --------------------------

       4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

       The following summary explains the significant accounting policies we use
to prepare our financial statements. We prepare our financial statements in
accordance with generally accepted accounting principles ("GAAP"). We follow the
accounting standards established by the Financial Accounting Standards Board
("FASB"), the American Institute of Certified Public Accountants ("AICPA") and
the Securities and Exchange Commission (the "SEC").

       Investments

       Fixed maturities are securities that mature more than one year after
issuance and include bonds, certain notes receivable and redeemable preferred
stock. Fixed maturities that we may sell prior to maturity are classified as
actively managed and are carried at estimated fair value, with any unrealized
gain or loss, net of tax and related adjustments, recorded as a component of
shareholders' equity (deficit). Fixed maturity securities that we intend to sell
in the near term are classified as trading and included in other invested
assets. We include any unrealized gain or loss on trading securities in net
realized investment losses.

       Retained interests in securitization trusts represent the right to
receive certain future cash flows from securitization transactions structured
prior to our September 8, 1999 announcement (see "Revenue Recognition for Sales
of Finance Receivables and Amortization of Servicing Rights" below). Such cash
flows generally are equal to the value of the principal and interest to be
collected on the underlying financial contracts of each securitization in excess
of the sum of the principal and interest to be paid on the securities sold and
contractual servicing fees. We carry retained interests at estimated fair value.
We determine fair value by discounting the projected cash flows over the
expected life of the receivables sold using current prepayment, default, loss
and interest rate assumptions. We determine the appropriate discount rate to
value these securities based on our estimates of current market rates of
interest for securities with similar yield, credit quality and maturity
characteristics. The discount rate was 16 percent at December 31, 2002 and
December 31, 2001. We record any unrealized gain or loss determined to be
temporary, net of tax, as a component of shareholders' equity. Declines in value
are considered to be other than temporary when: (i) the fair value of the
security is less than its carrying value; and (ii) the timing and/or amount of
cash expected to be received from the security has changed adversely from the
previous valuation which determined the carrying value of the security. When
declines in value considered to be other than temporary occur, we reduce the
amortized cost to estimated fair value and recognize a loss in the statement of
operations. The assumptions used to determine new values are based on our
internal evaluations. See the note to the consolidated financial statements
entitled "Financial Information Regarding CFC" for additional discussion of gain
on sale of receivables and interest-only securities.

       Equity securities include investments in common stocks and non-redeemable
preferred stock. We carry these investments at estimated fair value. We record
any unrealized gain or loss, net of tax and related adjustments, as a component
of shareholders' equity. When declines in value considered to be other than
temporary occur, we reduce the amortized cost to estimated fair value and
recognize a loss in the statement of operations.

       Mortgage loans held in our investment portfolio are carried at amortized
unpaid balances, net of provisions for estimated losses.

       Policy loans are stated at their current unpaid principal balances.

       Venture capital investment in AT&T Wireless Services, Inc. ("AWE") is
carried at fair value, with changes in such value recognized as venture capital
investment income (loss). In 2002, we sold 10.3 million shares of AWE common
stock which generated proceeds of $75.7 million. At December 31, 2002, we held
4.1 million shares of AWE common stock with a value of $25 million. The market
values of AWE common stock and other companies in AWE's business sector have
declined significantly in recent periods. We recognized venture capital
investment losses of $99.3 million, $42.9 million and $199.5 million in 2002,
2001 and 2000, respectively, related to this investment.

       Other invested assets include: (i) trading securities; (ii) Standard &
Poor's 500 Index Call Options ("S&P 500 Call Options"); and (iii) certain
non-traditional investments. Trading securities are carried at market value with
the change in value recognized as a charge to net income (loss). These
securities are expected to be sold in the near term or relate to our multibucket
annuity products as described under "Multibucket Annuity Product" below. We
carry the S&P 500 Call Options at estimated fair value as further described
below under "Accounting for Derivatives". Non-traditional investments include
investments in certain limited partnerships and promissory notes; we account for
them using either the cost method, or for investments in partnerships, the
equity method.

                                       93

                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                   Notes to Consolidated Financial Statements
                           --------------------------

       We defer any fees received or costs incurred when we originate
investments. We amortize fees, costs, discounts and premiums as yield
adjustments over the contractual lives of the investments. We consider
anticipated prepayments on mortgage-backed securities in determining estimated
future yields on such securities.

       When we sell a security (other than trading securities or venture capital
investments), we report the difference between the sale proceeds and amortized
cost (determined based on specific identification) as an investment gain or
loss.

       We regularly evaluate all of our investments based on current economic
conditions, credit loss experience and other investee-specific developments. If
there is a decline in a security's fair value that is other than temporary, we
treat it as a realized loss and reduce the cost basis of the security to its
estimated fair value.

       Cash and Cash Equivalents

       Cash and cash equivalents include commercial paper, invested cash and
other investments purchased with original maturities of less than three months.
We carry them at amortized cost, which approximates estimated fair value.

       Finance Receivables

       Finance receivables relate to the business of CFC and include
manufactured housing, home equity, home improvement, retail credit and floor
plan loans. CFC carries finance receivables at amortized cost, net of an
allowance for credit losses.

       CFC defers fees received and costs incurred when it originates finance
receivables. CFC amortizes deferred fees, costs, discounts and premiums over the
estimated lives of the receivables. CFC includes such deferred fees or costs in
the amortized cost of finance receivables.

       CFC generally stops accruing investment income on finance receivables
after three consecutive months of contractual delinquency.

       Finance receivables transferred to securitization trusts in transactions
structured as securitized borrowings are classified as finance receivables -
securitized. These receivables are held as collateral for the notes issued to
investors in the securitization trusts. Finance receivables held by CFC that
have not been securitized are classified as finance receivables.

       Provision for Losses

       The provision for credit losses charged to expense is related to the
business of CFC. This expense is based upon an assessment of current and
historical loss experience, loan portfolio trends, prevailing economic and
business conditions, and other relevant factors. In management's opinion, the
provision is sufficient to maintain the allowance for credit losses at a level
that adequately provides for losses inherent in the portfolio.

       CFC reduces the carrying value of finance receivables to net realizable
value at the earlier of: (i) six months of contractual delinquency; or (ii) when
it takes possession of the property securing the finance receivable.

       In addition, during 2002, 2001 and 2000, we established additional
provisions for losses related to our guarantees of bank loans and the related
interest loans to approximately 155 current and former directors, officers and
key employees for the purchase of Conseco common stock (see the note to the
consolidated financial statements entitled "Other Disclosures" for additional
information on this provision).

                                       94


                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                   Notes to Consolidated Financial Statements
                           --------------------------

       Cost of Policies Produced

       The costs that vary with, and are primarily related to, producing new
insurance business are referred to as cost of policies produced. We amortize
these costs using the interest rate credited to the underlying policy: (i) in
relation to the estimated gross profits for universal life-type and
investment-type products; or (ii) in relation to future anticipated premium
revenue for other products.

       When we realize a gain or loss on investments backing our universal life
or investment-type products, we adjust the amortization to reflect the change in
estimated gross profits from the products due to the gain or loss realized and
the effect of the event on future investment yields. We also adjust the cost of
policies produced for the change in amortization that would have been recorded
if actively managed fixed maturity securities had been sold at their stated
aggregate fair value and the proceeds reinvested at current yields. We include
the impact of this adjustment in accumulated other comprehensive income (loss)
within shareholders' equity.

       When we replace an existing insurance contract with another insurance
contract with substantially different terms, all unamortized cost of policies
produced related to the replaced contract is immediately written off. When we
replace an existing insurance contract with another insurance contract with
substantially similar terms, we continue to defer the cost of policies produced
associated with the replaced contract. Such costs related to the replaced
contracts which continue to be deferred were $7.6 million, $10.0 million and
$5.6 million in 2002, 2001 and 2000, respectively.

       Each year, we evaluate the recoverability of the unamortized balance of
the cost of policies produced. We consider estimated future gross profits or
future premiums, expected mortality or morbidity, interest earned and credited
rates, persistency and expenses in determining whether the balance is
recoverable. If we determine a portion of the unamortized balance is not
recoverable, it is charged to amortization expense.

       Cost of Policies Purchased

       The cost assigned to the right to receive future cash flows from
contracts existing at the date of an acquisition is referred to as the cost of
policies purchased. We also defer renewal commissions paid in excess of ultimate
commission levels related to the purchased policies in this account. The balance
of this account is amortized, evaluated for recovery, and adjusted for the
impact of unrealized gains (losses) in the same manner as the cost of policies
produced described above.

       The discount rate we use to determine the value of the cost of policies
purchased is the rate of return we need to earn in order to invest in the
business being acquired. In determining this required rate of return, we
consider many factors including: (i) the magnitude of the risks associated with
each of the actuarial assumptions used in determining expected future cash
flows; (ii) the cost of our capital required to fund the acquisition; (iii) the
likelihood of changes in projected future cash flows that might occur if there
are changes in insurance regulations and tax laws; (iv) the acquired company's
compatibility with other Conseco activities that may favorably affect future
cash flows; (v) the complexity of the acquired company; and (vi) recent prices
(i.e., discount rates used in determining valuations) paid by others to acquire
similar blocks of business.

       Goodwill

       Goodwill is the excess of the amount we paid to acquire a company over
the fair value of its net assets. We adopted SFAS 142 effective January 1, 2002,
as further described under the caption "Cumulative Effect of Accounting Change
and Goodwill Impairment". Prior to the adoption of SFAS 142, our analysis of
acquired businesses indicated that the anticipated ongoing cash flows from the
earnings of the purchased businesses extended beyond the maximum 40-year period
allowed for goodwill amortization. Accordingly, for periods prior to 2002, we
amortized goodwill on a straight-line basis generally over a 40-year period.
Pursuant to GAAP in effect at December 31, 2001, we had determined that goodwill
was fully recoverable from projected undiscounted net cash flows from earnings
of the subsidiaries over the remaining amortization period. If we had determined
that the undiscounted projected cash flows no longer supported the
recoverability of goodwill over the remaining amortization period, we would have
reduced its carrying value with a corresponding charge to expense or shortened
the amortization period. Cash flows considered in such an analysis were those of
the business acquired, if separately identifiable, or the product line that
acquired the business, if such earnings were not separately identifiable.

                                       95

                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                   Notes to Consolidated Financial Statements
                           --------------------------

       Assets Held in Separate Accounts and Investment Trust

       Separate accounts are funds on which investment income and gains or
losses accrue directly to certain policyholders. The assets of these accounts
are legally segregated. They are not subject to the claims that may arise out of
any other business of Conseco. We report separate account assets at market
value; the underlying investment risks are assumed by the contractholders. We
record the related liabilities at amounts equal to the market value of the
underlying assets. We record the fees earned for administrative and
contractholder services performed for the separate accounts in insurance policy
income.

       In addition, we hold investments in a trust for the benefit of the
purchasers of certain products of our asset management subsidiary; this amount
is offset by a corresponding liability account, the value of which fluctuates in
relation to changes in the values of these investments. Because we hold the
residual interests in the cash flows from the trust and actively manage its
investments, we are required to include the accounts of the trust in our
consolidated financial statements. We record the fees earned for investment
management and other services provided to the trust as fee revenue. See the
caption "Brickyard Trust" in the note to the consolidated financial statements
entitled "Investments in Variable Interest Entities" for further information on
these investments.

       Recognition of Insurance Policy Income and Related Benefits and Expenses
       on Insurance Contracts

       Generally, we recognize insurance premiums for traditional life and
accident and health contracts as earned over the premium-paying periods. We
establish reserves for future benefits on a net-level premium method based upon
assumptions as to investment yields, mortality, morbidity, withdrawals and
dividends. We record premiums for universal life-type and investment-type
contracts that do not involve significant mortality or morbidity risk as
deposits to insurance liabilities. Revenues for these contracts consist of
mortality, morbidity, expense and surrender charges. We establish reserves for
the estimated present value of the remaining net costs of all reported and
unreported claims.

       Liabilities Related to Certificates of Deposit

       These liabilities relate to the certificates of deposits issued by the
bank subsidiaries of CFC. The liability and interest expense account are also
increased for the interest which accrues on the deposits. At December 31, 2002
and 2001, the weighted average interest crediting rate on these deposits was 3.5
percent and 4.7 percent, respectively.

       Reinsurance

       In the first quarter of 2002, we completed a reinsurance agreement
pursuant to which we ceded 80 percent of the inforce traditional life business
of our subsidiary, Bankers Life & Casualty Company, to Reassure America Life
Insurance Company (rated A++ by A.M. Best). The total insurance liabilities
ceded pursuant to the contract were approximately $400 million. The reinsurance
agreement and the related dividends of $110.5 million were approved by the
appropriate state insurance departments and the dividends were paid to CNC. The
ceding commission approximated the amount of the cost of policies purchased and
cost of policies produced related to the ceded business.

       On June 28, 2002, we completed a reinsurance transaction pursuant to
which we ceded 100 percent of the traditional life and interest-sensitive life
insurance business of our subsidiary, Conseco Variable Insurance Company, to
Protective Life Insurance Company (rated A+ by A.M. Best). The total insurance
liabilities ceded pursuant to the contract were approximately $470 million. Our
insurance subsidiary received a ceding commission of $49.5 million.

       During the second quarter of 2002, one of our subsidiaries, Colonial Penn
Life Insurance Company (formerly known as Conseco Direct Life Insurance
Company), ceded a block of graded benefit life insurance policies to an
unaffiliated company pursuant to a modified coinsurance agreement. Our
subsidiary received a ceding commission of $83.0 million. The cost of policies
purchased and the cost of policies produced were reduced by $123.0 million and
we recognized a loss of $39.0 million related to the transaction.

       In the normal course of business, we seek to limit our exposure to loss
on any single insured or to certain groups of policies by ceding reinsurance to
other insurance enterprises. We currently retain no more than $.8 million of
mortality risk on any one policy. We diversify the risk of reinsurance loss by
using a number of reinsurers that have strong claims-paying ratings. If any
reinsurer could not meet its obligations, the Company would assume the
liability. The likelihood of a material loss being incurred as a result of the
failure of one of our reinsurers is considered remote. The cost of reinsurance
is recognized over the life of the reinsured policies using assumptions
consistent with those used to account for the underlying policy. The cost of
reinsurance ceded totaled $327.8 million,

                                       96

                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                   Notes to Consolidated Financial Statements
                           --------------------------

$249.4 million and $237.2 million in 2002, 2001 and 2000, respectively. A
receivable is recorded for the reinsured portion of insurance policy benefits
paid and liabilities for insurance products. Reinsurance recoveries netted
against insurance policy benefits totaled $323.6 million, $201.3 million and
$273.2 million in 2002, 2001 and 2000, respectively.

       From time-to-time, we assume insurance from other companies. Any costs
associated with the assumption of insurance are amortized consistent with the
method used to amortize the cost of policies produced described above.
Reinsurance premiums assumed totaled $78.7 million, $146.0 million and $300.5
million in 2002, 2001 and 2000, respectively.

       Income Taxes

       Our income tax expense includes deferred income taxes arising from
temporary differences between the tax and financial reporting bases of assets
and liabilities and net operating loss carryforwards. In assessing the
realization of deferred income tax assets, we consider whether it is more likely
than not that the deferred income tax assets will be realized. The ultimate
realization of deferred income tax assets depends upon generating future taxable
income during the periods in which temporary differences become deductible and
net operating loss carryforwards expire. As of December 31, 2002, a valuation
reserve of $1.7 billion has been provided as the realization of the net deferred
tax asset is uncertain.

       Investment Borrowings

       As part of our investment strategy, we may enter into reverse repurchase
agreements and dollar-roll transactions to increase our investment return or to
improve our liquidity. We account for these transactions as collateral
borrowings, where the amount borrowed is equal to the sales price of the
underlying securities. Reverse repurchase agreements involve a sale of
securities and an agreement to repurchase the same securities at a later date at
an agreed-upon price. Dollar rolls are similar to reverse repurchase agreements
except that, with dollar rolls, the repurchase involves securities that are
substantially the same as the securities sold (rather than being the same
security). Such borrowings averaged $1,155.8 million during 2002 and $927.0
million during 2001. These borrowings were collateralized by investment
securities with fair values approximately equal to the loan value. The weighted
average interest rate on short-term collateralized borrowings was 1.3 percent
and 3.3 percent in 2002 and 2001, respectively. The primary risk associated with
short-term collateralized borrowings is that a counterparty will be unable to
perform under the terms of the contract. Our exposure is limited to the excess
of the net replacement cost of the securities over the value of the short-term
investments (such excess was not material at December 31, 2002). We believe the
counterparties to our reverse repurchase and dollar-roll agreements are
financially responsible and that the counterparty risk is minimal.

       Liabilities Subject to Compromise

       Under the Bankruptcy Code, actions by creditors to collect indebtedness
we owe prior to the Petition Date are stayed and certain other prepetition
contractual obligations may not be enforced against the Debtors. We have
received approval from the Court to pay certain prepetition liabilities
including employee salaries and wages, benefits and other employee obligations.
All other prepetition liabilities have been classified as "liabilities subject
to compromise" in the December 31, 2002 consolidated balance sheet.

                                       97

                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                   Notes to Consolidated Financial Statements
                           --------------------------


       The following table summarizes the components of the liabilities included
in the line "liabilities subject to compromise" in our consolidated balance
sheet as of December 31, 2002 (dollars in millions):
                                                                       

Other liabilities
    Liability for guarantee of bank loans to current and former
       directors, officers and key employees to purchase
       CNC common stock................................................   $  480.8
    Interest payable...................................................      171.6
    Accrual for distributions on Company-obligated mandatorily
       redeemable preferred securities of subsidiary trusts............       90.1
    Liability for litigation...........................................       41.8
    Liability for retirement benefits pursuant to executive
       employment agreements...........................................       22.6
    Liability for deferred compensation................................        2.3
    Other payables.....................................................        7.0
                                                                          --------

       Total other liabilities subject to compromise...................      816.2

Notes payable - direct corporate obligations...........................    4,057.1
                                                                          --------

       Total liabilities subject to compromise.........................   $4,873.3
                                                                          ========




                                       98


                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                   Notes to Consolidated Financial Statements
                           --------------------------


       The following table summarizes condensed consolidating financial
information segregating such information between the Debtors and non-Debtor
subsidiaries.

          Condensed Consolidating Balance Sheet as of December 31, 2002
                              (Dollars in millions)



                                                                   Conseco and     Subsidiaries                  Conseco, Inc.
                                                                 subsidiaries in      not in                   and subsidiaries
                                                                 reorganization   reorganization   Eliminations   consolidated
                                                                 --------------   --------------   ------------   ------------

                                     ASSETS
                                                                                                      
Cash and cash equivalents.......................................    $    41.5        $ 1,227.4      $     -       $ 1,268.9
Investments.....................................................          5.9         21,777.8            -        21,783.7
Investment in wholly-owned subsidiaries
    (eliminated in consolidation)...............................      5,521.5          1,239.0       (6,760.5)         -
Receivable from affiliates
    (eliminated in consolidation)...............................      1,280.3          1,153.7       (2,434.0)         -
Income tax assets...............................................         77.8             23.7            -           101.5
Other assets....................................................         66.8          5,663.8            -         5,730.6
Assets of discontinued operations...............................     17,624.3             -               -        17,624.3
                                                                    ---------        ---------      ---------     ---------

          Total assets..........................................    $24,618.1        $31,085.4      $(9,194.5)    $46,509.0
                                                                    =========        =========      =========     =========

                 LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Liabilities:
    Liabilities for insurance and asset accumulation products...    $    -           $22,797.1      $     -       $22,797.1
    Payables to subsidiaries (eliminated in consolidation)......          4.8          1,298.3       (1,303.1)          -
    Other liabilities...........................................         -             1,343.2                      1,343.2
    Liabilities of discontinued operations......................     17,624.3             -              -         17,624.3
    Liabilities subject to compromise...........................      4,873.3             -              -          4,873.3
    Affiliated liabilities subject to compromise................      1,177.4             -          (1,177.4)         -
                                                                    ---------        ---------      ---------     ---------


          Total liabilities.....................................     23,679.8         25,438.6       (2,480.5)     46,637.9
                                                                    ---------        ---------      ---------     ---------

Company-obligated mandatorily redeemable preferred securities
     of subsidiary trusts.......................................      1,921.5             -               -         1,921.5

Shareholders' equity (deficit):
    Preferred stock.............................................      1,644.7             -          (1,143.0)        501.7
    Common stock and additional paid-in capital (no par value,
       1,000,000,000 shares authorized, shares issued and
       outstanding: 2002 - 346,007,133; 2001 - 344,743,196).....      3,497.3          6,393.4       (6,393.7)      3,497.0
    Accumulated other comprehensive income (loss)...............        580.6            470.0         (470.0)        580.6
    Retained earnings (deficit).................................     (6,705.8)        (1,216.6)       1,292.7      (6,629.7)
                                                                    ----------       ---------      ---------     ---------

          Total shareholders' equity (deficit)..................       (983.2)         5,646.8       (6,714.0)     (2,050.4)
                                                                    ---------        ---------      ---------     ---------

          Total liabilities and shareholders' equity (deficit)..    $24,618.1        $31,085.4      $(9,194.5)    $46,509.0
                                                                    =========        =========      =========     =========


                                       99

                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                   Notes to Consolidated Financial Statements
                           --------------------------


                 Condensed Consolidating Statement of Operations
                      for the year ended December 31, 2002
                              (Dollars in millions)



                                                                   Conseco and     Subsidiaries                  Conseco, Inc.
                                                                 subsidiaries in      not in                   and subsidiaries
                                                                 reorganization   reorganization   Eliminations  consolidated
                                                                 --------------   --------------   ------------  ------------
                                                                                                      
Revenues:
    Insurance policy income.......................................   $    -         $3,602.3         $    -       $ 3,602.3
    Net investment income.........................................        2.4        1,439.8              -         1,442.2
    Net investment income from venture capital investments........      (67.1)         (32.2)             -           (99.3)
    Dividends from subsidiaries...................................      276.0            -             (276.0)          -
    Fee and interest income - affiliated..........................       65.5           58.5           (124.0)          -
    Net investment losses.........................................        -           (597.0)             -          (597.0)
    Fee revenue and other income..................................        1.5           68.6              -            70.1
                                                                     --------       --------         --------     ---------

          Total revenue...........................................      278.3        4,540.0           (400.0)      4,418.3
                                                                     --------       --------         --------     ---------

Expenses:
    Insurance policy benefits.....................................        -          3,332.5              -         3,332.5
    Interest expense on notes payable.............................      326.2           36.9              -           363.1
    Interest expense on notes payable - affiliated................        8.4           48.8            (57.2)          -
    Provision for loss............................................      147.2           63.6              -           210.8
    Amortization..................................................        -            822.9              -           822.9
    Operating costs and expenses - affiliated.....................       17.5           32.2            (49.7)          -
    Operating costs and expenses..................................       74.2          637.9              -           712.1
    Goodwill impairment...........................................        -            500.0              -           500.0
    Special charges...............................................       30.5           66.0              -            96.5
    Reorganization items, net.....................................       14.4            -                -            14.4
                                                                     --------       --------         --------     ---------

          Total expenses..........................................      618.4        5,540.8           (106.9)      6,052.3
                                                                     --------       --------         --------     ---------

          Loss before income taxes, equity in undistributed
             earnings of subsidiaries, distributions on Company-
             obligated mandatorily redeemable preferred securities
             of subsidiary trusts, discontinued operations,
             extraordinary gain and cumulative effect of
             accounting change....................................     (340.1)      (1,000.8)          (293.1)     (1,634.0)

    Income tax expense expense (benefit):
       Tax (benefit) expense on period income ....................      (49.3)         102.4              -            53.1
       Valuation allowance for deferred tax assets................      811.2            -                -           811.2
                                                                     --------       --------         --------     ---------

             Loss before equity in undistributed earnings of
             subsidiaries, distributions on Company-obligated
             mandatorily redeemable preferred securities of
             subsidiary trusts, discontinued operations,
             extraordinary gain and cumulative effect of
             accounting change (eliminated in consolidation)......   (1,102.0)      (1,103.2)          (293.1)     (2,498.3)

       Equity in undistributed earnings of subsidiaries before
          discontinued operations, extraordinary charge and
          cumulative effect of accounting change
          (eliminated in consolidation)...........................   (4,298.2)           -            4,298.2           -
                                                                     --------       --------         --------     ---------



                                      100



                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                   Notes to Consolidated Financial Statements
                           --------------------------


                 Condensed Consolidating Statement of Operations
                for the year ended December 31, 2002 (Continued)
                              (Dollars in millions)



                                                                   Conseco and     Subsidiaries                  Conseco, Inc.
                                                                 subsidiaries in      not in                   and subsidiaries
                                                                 reorganization   reorganization   Eliminations  consolidated
                                                                 --------------   --------------   ------------  ------------
                                                                                                      

             Loss before distributions on Company-obligated
               mandatorily redeemable preferred securities of
               subsidiary trusts, discontinued operations,
               extraordinary gain and cumulative effect
               of accounting change...............................   (5,400.2)      (1,103.2)         4,005.1      (2,498.3)

    Distributions on Company-obligated mandatorily redeemable
       preferred securities of subsidiary trusts..................      173.2           -                -            173.2
                                                                    ---------      ---------         --------     ---------

       Loss before discontinued operations, extraordinary gain
         and cumulative effect of accounting change...............   (5,573.4)      (1,103.2)         4,005.1      (2,671.5)

    Discontinued operations of subsidiaries, net of income tax....   (1,961.6)        (253.5)            (8.0)     (2,223.1)
    Extraordinary gain on extinguishment of debt,
       net of income taxes:
         Parent company...........................................        1.8            -                -             1.8
         Subsidiary...............................................        6.3            -                -             6.3
     Cumulative effect of accounting change of subsidiaries, net of
       income taxes...............................................       (0.8)      (2,948.4)             -        (2,949.2)
                                                                    ---------      ---------         --------     ----------

         Net loss.................................................   (7,527.7)      (4,305.1)         3,997.1      (7,835.7)

    Preferred stock dividends.....................................        2.1            -                -             2.1
    Preferred stock dividends - affiliated........................       60.7            -              (60.7)          -
                                                                    ---------      ---------         --------     ---------


         Loss applicable to common stock..........................  $(7,590.5)     $(4,305.1)        $4,057.8     $(7,837.8)
                                                                    =========      =========         ========     =========


                                      101




                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                   Notes to Consolidated Financial Statements
                           --------------------------


                 Condensed Consolidating Statement of Cash Flows
                      for the year ended December 31, 2002
                              (Dollars in millions)



                                                                   Conseco and     Subsidiaries                  Conseco, Inc.
                                                                 subsidiaries in      not in                   and subsidiaries
                                                                 reorganization   reorganization   Eliminations  consolidated
                                                                 --------------   --------------   ------------  ------------

                                                                                                    
    Net cash provided (used) by operating activities..............   $   395.2      $  982.3        $(81.8)     $1,295.7
    Net cash provided by investing activities.....................     2,555.7       1,119.5        (266.2)      3,409.0
    Net cash used by financing activities.........................    (3,455.1)     (3,389.5)        348.0      (6,496.6)
                                                                     ---------      --------        ------      --------

    Net increase (decrease) in cash and cash equivalents..........      (504.2)     (1,287.7)          -        (1,791.9)
    Cash and cash equivalents, beginning of year..................       545.7       2,515.1           -         3,060.8
                                                                     ---------      --------        ------      --------

       Cash and cash equivalents, end of year.....................   $    41.5      $1,227.4        $  -        $1,268.9
                                                                     =========      ========        ======      ========


                                      102

                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                   Notes to Consolidated Financial Statements
                           --------------------------

       Subject to certain limited exceptions, the Bankruptcy Court established a
bar date of February 21, 2003, for all prepetition claims against the Debtors. A
bar date is the date by which claims against the Debtors must be filed if the
claimants wish to receive any distribution in the Chapter 11 Cases. The Debtors
have notified all known or potential claimants subject to the February 21, 2003,
bar date of their need to file a proof of claim with the Bankruptcy Court.

       Approximately 9,000 proofs of claim have been filed in connection with
the February 21, 2003, bar date, and the Debtors have begun reconciling claims
that differ from their records. Any remaining differences that cannot be
resolved by negotiated agreement between the Debtors and the claimants will be
resolved by the Bankruptcy Court.

       Certain creditors have filed claims substantially in excess of amounts
reflected in the Debtors' records. Consequently, the amount included in the
consolidated balance sheet at December 31, 2002, as liabilities subject to
compromise may be adjusted.

       Use of Estimates

       When we prepare financial statements in conformity with GAAP, we are
required to make estimates and assumptions that significantly affect various
reported amounts of assets and liabilities, and the disclosure of contingent
assets and liabilities at the date of the financial statements and revenues and
expenses during the reporting periods. For example, we use significant estimates
and assumptions in calculating values for the cost of policies produced, the
cost of policies purchased, retained interest in securitization trusts
(including interest-only securities and B-2 securities), certain investments,
servicing rights, assets and liabilities related to income taxes, goodwill,
liabilities for insurance and asset accumulation products, the guarantee
liability related to interests in securitizations, liabilities related to
litigation, guaranty fund assessment accruals, liabilities related to guarantees
of securitized debt issued in conjunction with certain sales of finance
receivables and liabilities related to guarantees of bank loans and the related
interest loans to certain current and former directors, officers and key
employees, gain on sale of finance receivables and allowance for credit losses
on finance receivables. If our future experience differs from these estimates
and assumptions, our financial statements would be materially affected.

       Accounting for Derivatives

       Our equity-indexed annuity products provide a guaranteed base rate of
return and a higher potential return linked to the performance of the Standard &
Poor's 500 Index ("S&P 500 Index") based on a percentage (the participation
rate) over an annual period. At the beginning of each policy year, a new index
period begins. The Company is able to change the participation rate at the
beginning of each index period, subject to contractual minimums. We buy S&P 500
Call Options in an effort to hedge potential increases to policyholder benefits
resulting from increases in the S&P 500 Index to which the product's return is
linked. We include the cost of the S&P 500 Call Options in the pricing of these
products. Policyholder account balances for these annuities fluctuate in
relation to changes in the values of these options. We reflect changes in the
estimated market value of these options in net investment income. Option costs
that are attributable to benefits provided were $97.5 million, $119.0 million
and $123.9 million during 2002, 2001 and 2000, respectively. These costs are
reflected in the change in market value of the S&P 500 Call Options included in
investment income. Net investment income (loss) related to equity-indexed
products before this expense was $(3.0) million, $4.8 million and $12.9 million
in 2002, 2001 and 2000, respectively. Such amounts were substantially offset by
the corresponding charge to insurance policy benefits. The estimated fair value
of the S&P 500 Call Options was $32.8 million and $49.8 million at December 31,
2002 and 2001, respectively. We classify such instruments as other invested
assets. The Company accounts for the options attributed to the policyholder for
the estimated life of the annuity contract as embedded derivatives as defined by
Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities", as amended by Statement of Financial
Accounting Standards No. 137, "Deferral of the Effective Date of FASB Statement
No. 133" and Statement of Financial Accounting Standards No. 138, "Accounting
for Certain Derivative Instruments and Certain Hedging Activities" (collectively
referred to as "SFAS 138"). The Company records the change in the fair values of
the embedded derivatives in current earnings as a component of policyholder
benefits. The fair value of these derivatives, which are classified as
"liabilities for interest-sensitive products" was $274.0 million and $491.2
million at December 31, 2002 and 2001, respectively.

       On June 29, 2001, we entered into interest rate swap agreements to
convert the fixed rate on our senior notes (10.75 percent) to a variable rate
based on LIBOR plus 4.75 percent. In accordance with the requirements of SFAS
138, the change in the fair value of the interest rate swap and the gain or loss
on the hedged senior notes attributable to the hedged interest rate risk were
recorded in current-period earnings. Because the terms of the interest rate swap
agreements substantially matched the terms of the senior notes, the gain or loss
on the swap and the senior notes was generally equal and offsetting (although
the effective interest rate on our debt was affected).


                                      103

                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                   Notes to Consolidated Financial Statements
                           --------------------------

       In early October 2001, we terminated these interest rate swap agreements
for cash proceeds of $19.0 million (the value of the terminated swap
agreements). No gain was recognized upon the termination of the interest rate
swap agreements. Instead, the change in the fair value of the senior notes
recorded while the interest rate swaps were outstanding will be amortized as a
reduction to interest expense over the remaining life of our senior notes.

       In October 2001, we also entered into new interest rate swap agreements
to replace the terminated agreements which convert the fixed rate on our 10.75%
senior notes to a variable rate based on LIBOR plus 5.7525 percent. At December
31, 2001, "notes payable-direct corporate obligations" was decreased by $13.5
million to reflect the estimated fair value of such interest rate swap
agreements. Such interest rate swap agreements were terminated in April 2002
generating cash proceeds of $3.5 million. Such amount represented $11.9 million
of cash due to the Company pursuant to the terms of the swaps, net of $8.4
million which represented the fair value of the interest rate swaps on the date
of termination. The $8.4 million will be amortized as additional interest
expense over the remaining life of our senior notes.

       In the past, we have used interest-rate swaps to hedge the interest rate
risk associated with our borrowed capital. These agreements were terminated
during 2000. We realized a net investment loss of $38.6 million (net of an
income tax benefit of $20.6 million) related to such terminations during 2000.

       The Company entered into a forward sale contract related to a portion of
its venture capital investment in AWE. Such contract was carried at market
value, with the change in such value being recognized as venture capital income
(loss). The value of the derivative fluctuated in relation to the AWE common
stock it related to. In the third quarter of 2002, we agreed with the
counterparties to unwind the forward sale contract. The net effect of unwinding
the forward purchase contract resulted in a small gain.

       If the counterparties for the derivatives we hold fail to meet their
obligations, Conseco may have to recognize a loss. Conseco limits its exposure
to such a loss by diversifying among several counterparties believed to be
strong and creditworthy. At December 31, 2002, all of the counterparties were
rated "A" or higher by Standard & Poor's Corporation ("S&P").

       Multibucket Annuity Product

       The Company's multibucket annuity is a fixed annuity product that credits
interest based on the experience of a particular market strategy. Policyholders
allocate their annuity premium payments to several different market strategies
based on different asset classes within the Company's investment portfolio.
Interest is credited to this product based on the market return of the given
strategy, less management fees, and funds may be moved between different
strategies. The Company guarantees a minimum return of premium plus
approximately 3 percent per annum over the life of the contract. The investments
backing the market strategies of these products are designated by the Company as
trading securities. The change in the fair value of these securities is included
in investment income which is substantially offset by the change in insurance
policy benefits for these products.

       Revenue Recognition for Sales of Finance Receivables and Amortization of
       Servicing Rights

       Subsequent to September 8, 1999, CFC generally structured its
securitizations in a manner that required them to be accounted for under the
portfolio method, whereby the loans and securitization debt remain on CFC's
balance sheet pursuant to Financial Accounting Standards Board Statement No.
140, "Accounting for the Transfer and Servicing of Financial Assets and
Extinguishments of Liabilities" ("SFAS 140"). The ratings downgrades and other
events that followed the Company's August 9, 2002, announcement, eliminated
CFC's access to the securitization markets.

       For securitizations structured prior to September 8, 1999, CFC accounted
for the transfer of finance receivables as sales. In accordance with GAAP, CFC
recognized a gain, representing the difference between the proceeds from the
sale (net of related sale costs) and the carrying value of the component of the
finance receivable sold. CFC determined such carrying value by allocating the
carrying value of the finance receivables between the portion sold and the
interests retained (generally interest-only securities, servicing rights and, in
some instances, other subordinated securities), based on each portion's relative
fair values on the date of the sale.

       CFC amortizes the servicing rights it retains after the sale of finance
receivables in proportion to, and over the estimated period of, net servicing
income.

       CFC evaluates servicing rights for impairment on an ongoing basis,
stratified by product type and securitization period. To the extent that the
recorded amount exceeds the fair value for any strata, CFC establishes a
valuation allowance through a charge to

                                      104

                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                   Notes to Consolidated Financial Statements
                           --------------------------

earnings. If CFC determines, upon subsequent measurement of the fair value of
these servicing rights, that the fair value equals or exceeds the amortized
cost, any previously recorded valuation allowance would be deemed unnecessary
and restored to earnings.

       Fair Values of Financial Instruments

       We use the following methods and assumptions to determine the estimated
       fair values of financial instruments:

       Investment securities. For fixed maturity securities (including
       redeemable preferred stocks) and for equity and trading securities, we
       use quotes from independent pricing services, where available. For
       investment securities for which such quotes are not available, we use
       values obtained from broker-dealer market makers or by discounting
       expected future cash flows using a current market rate appropriate for
       the yield, credit quality, and (for fixed maturity securities) the
       maturity of the investment being priced.

       Retained interests in securitization trusts. These assets relate to the
       business of CFC. Management of CFC discounts future expected cash flows
       over the expected life of the receivables sold using current estimates of
       future prepayment, default, loss severity and interest rates. They
       consider any potential payments related to the guarantees of certain
       lower-rated securities issued by the securitization trusts in the
       projected cash flows used to determine the value of CFC's retained
       interests in securitization trusts.

       Venture capital investment in AWE. We carry this investment at estimated
       fair value based on quoted market prices.

       Cash and cash equivalents. The carrying amount for these instruments
       approximates their estimated fair value.

       Mortgage loans and policy loans. We discount future expected cash flows
       for loans included in our investment portfolio based on interest rates
       currently being offered for similar loans to borrowers with similar
       credit ratings. We aggregate loans with similar characteristics in our
       calculations. The market value of policy loans approximates their
       carrying value.

       Other invested assets. We use quoted market prices, where available. When
       quotes are not available, we estimate the fair value based on: (i)
       discounted future expected cash flows; or (ii) independent transactions
       which establish a value for our investment. When we are unable to
       estimate a fair value, we assume a market value equal to carrying value.

       Finance receivables. These assets relate to the business of CFC. The
       estimated fair value of finance receivables, including those that have
       been securitized, is determined based on general market transactions
       which establish values for similar loans.

       Insurance liabilities for interest-sensitive products. We discount future
       expected cash flows based on interest rates currently being offered for
       similar contracts with similar maturities.

       Liabilities related to certificates of deposit. These assets relate to
       the business of CFC. Management of CFC estimates the fair value of these
       liabilities using discounted cash flow analyses based on current
       crediting rates. Since crediting rates are generally not guaranteed
       beyond one year, market value approximates carrying value.

       Investment borrowings and notes payable. For publicly traded debt, we use
       current market values. For other notes, we use discounted cash flow
       analyses based on our current incremental borrowing rates for similar
       types of borrowing arrangements.

       Trust Preferred Securities. We use quoted market prices.

                                      105

                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                   Notes to Consolidated Financial Statements
                           --------------------------



       Here are the estimated fair values of our financial instruments:



                                                                            2002                           2001
                                                                 -----------------------       --------------------------
                                                                 Carrying          Fair        Carrying            Fair
                                                                  Amount           Value        Amount             Value
                                                                                  (Dollars in millions)
                                                                                                     
Financial assets:
   Actively managed fixed maturities..........................  $19,417.4        $19,417.4       $21,818.5       $21,818.5
   Retained interests in securitization trusts (a)............        -                -             710.1           710.1
   Equity securities .........................................      156.0            156.0           227.0           227.0
   Mortgage loans.............................................    1,308.3          1,335.7         1,228.0         1,210.7
   Policy loans...............................................      536.2            536.2           635.8           635.8
   Venture capital investment in AT&T Wireless
     Services, Inc............................................       25.0             25.0           155.3           155.3
   Other invested assets......................................      340.8            340.8           292.4           292.4
   Cash and cash equivalents..................................    1,268.9          1,268.9         3,060.8         3,060.8
   Finance receivables (including finance
     receivables-securitized) (a).............................        -                -          18,009.2        18,376.7

Financial liabilities:
   Insurance liabilities for interest-sensitive products (b)..   13,469.5         13,469.5        15,787.7        15,787.7
   Liabilities related to certificates of deposit (a).........        -                -           1,790.3         1,790.3
   Guarantee liability related to interests in securitization
     trusts held by others (a)................................        -                -              39.9            39.9
   Investment borrowings......................................      669.7            669.7         2,242.7         2,242.7
   Notes payable:
     Corporate (c)............................................        -                -           4,085.0         2,863.5
     Finance (a)..............................................        -                -           2,527.9         2,455.2
     Related to securitized finance receivables structured
       as collateralized borrowings (a).......................        -                -          14,484.5        14,774.3
   Company-obligated mandatorily redeemable
     preferred securities of subsidiary trusts................    1,921.5              9.7         1,914.5         1,206.5


- --------------------
   (a) These accounts relate to the business of CFC, which are classified as
       discontinued operations at December 31, 2002. See "Basis of Presentation"
       above.

   (b) The estimated fair value of the liabilities for interest-sensitive
       products was approximately equal to its carrying value at December 31,
       2002 and 2001. This was because interest rates credited on the vast
       majority of account balances approximate current rates paid on similar
       products and because these rates are not generally guaranteed beyond one
       year. We are not required to disclose fair values for insurance
       liabilities, other than those for interest-sensitive products. However,
       we take into consideration the estimated fair values of all insurance
       liabilities in our overall management of interest rate risk. We attempt
       to minimize exposure to changing interest rates by matching investment
       maturities with amounts due under insurance contracts.

   (c) At December 31, 2002, corporate notes payable are classified as
       liabilities subject to compromise as such amounts may be subject to
       adjustment.



       Cumulative Effect of Accounting Change and Goodwill Impairment

       The FASB issued SFAS 142, in June 2001. Under the new rule, intangible
assets with an indefinite life are no longer amortized in periods subsequent to
December 31, 2001, but are subject to annual impairment tests (or more
frequently under certain circumstances), effective January 1, 2002. The Company
has determined that all of its goodwill has an indefinite life and is therefore
subject to the new rules.

       Pursuant to SFAS 142, the goodwill impairment test has two steps. For
Conseco, the first step consisted of comparing the estimated fair value of each
of the business units comprising our insurance segment to the unit's book value.
Since all of our goodwill relates to the insurance segment (which is also a
reportable segment), the goodwill impairment test is not relevant to the finance

                                      106

                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                   Notes to Consolidated Financial Statements
                           --------------------------

business. If the estimated fair value exceeds the book value, the test is
complete and goodwill is not impaired. If the fair value is less than the book
value, the second step of the impairment test must be performed, which compares
the implied fair value of the applicable business unit's goodwill with the book
value of that goodwill to measure the amount of goodwill impairment, if any.

       Pursuant to the transitional rules of SFAS 142, we completed the two-step
impairment test during 2002 and, as a result of that test, we recorded the
cumulative effect of the accounting change for the goodwill impairment charge of
$2,949.2 million. The impairment charge is reflected in the cumulative effect of
an accounting change in the accompanying consolidated statement of operations
for the year ended December 31, 2002. Subsequent impairment tests will be
performed on an annual basis, or more frequently if circumstances indicate a
possible impairment. Subsequent impairment charges are classified as an
operating expense. As described below, the Company performed additional
impairment tests in 2002, as a result of circumstances which indicated a
possible impairment.

       The significant factors used to determine the amount of the initial
impairment included analyses of industry market valuations, historical and
projected performance of our insurance segment, discounted cash flow analyses
and the market value of our capital. The valuation utilized the best available
information, including assumptions and projections we considered reasonable and
supportable. The assumptions we used to determine the discounted cash flows
involve significant judgments regarding the best estimate of future premiums,
expected mortality and morbidity, interest earned and credited rates,
persistency and expenses. The discount rate used was based on an analysis of the
weighted average cost of capital for several insurance companies and considered
the specific risk factors related to Conseco. Pursuant to the guidance in SFAS
142, quoted market prices in active markets are the best evidence of fair value
and shall be used as the basis for measurement, if available.

       On August 14, 2002, our insurance subsidiaries' financial strength
ratings were downgraded by A.M. Best to "B (fair)" and on September 8, 2002, the
Company defaulted on its public debt. These developments caused sales of our
insurance products to fall and policyholder redemptions and lapses to increase.
The adverse impact on our insurance subsidiaries resulting from the ratings
downgrade and parent company default required that an additional impairment test
be performed as of September 30, 2002, in accordance with SFAS 142.

       In connection with our negotiations with debt holders, we retained an
outside actuarial consulting firm to assist in valuing our insurance
subsidiaries. That valuation work and our internal evaluation were used in
performing the additional impairment tests that resulted in an impairment charge
to goodwill of $500.0 million. The charge is reflected in the line item entitled
"Goodwill impairment" in our consolidated statement of operations for the year
ended December 31, 2002. The most significant changes made to the January 1,
2002 valuation that resulted in the additional impairment charge were: (i)
reduced estimates of projected future sales of insurance products; (ii)
increased estimates of future policyholder redemptions and lapses; and (iii) a
higher discount rate to reflect the current rates used by the market to value
life insurance companies. Management believes that the assumptions and estimates
used are reasonable given all available facts and circumstances. However, if
projected cash flows are not realized in the future, we may be required to
recognize additional impairments.

       Prior to the adoption of SFAS 142, we determined whether goodwill was
recoverable from projected undiscounted net cash flows for the earnings of our
subsidiaries over the remaining amortization period. If we determined that
undiscounted projected cash flows were not sufficient to recover the goodwill
balance, we would reduce its carrying value with a corresponding charge to
expense or shorten the amortization period. Cash flows considered in such an
analysis were those of the business acquired, if separately identifiable, or the
product line that acquired the business, if such earnings were not separately
identifiable.

                                      107

                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                   Notes to Consolidated Financial Statements
                           --------------------------


       Changes in the carrying amount of goodwill for the years ended December
31, 2002 and 2001, are as follows:



                                                                                 2002        2001
                                                                                 ----        ----
                                                                              (Dollars in millions)

                                                                                      
Goodwill balance, beginning of year.........................................  $ 3,695.4     $3,800.8
Amortization expense........................................................        -         (109.6)
Cumulative effect of accounting change......................................   (2,949.2)         -
Impairment charge...........................................................     (500.0)         -
Reduction of tax valuation contingencies established at acquisition date
    for acquired companies..................................................     (146.2)         -
Goodwill related to the acquisition of ExlServices, Inc.....................        -           46.1
Goodwill related to businesses sold.........................................        -          (41.9)
                                                                              ---------     --------

Goodwill balance, end of year...............................................  $   100.0     $3,695.4
                                                                              =========     ========


                                      108

                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                   Notes to Consolidated Financial Statements
                           --------------------------


       In accordance with SFAS 142, we discontinued the amortization of goodwill
expense effective January 1, 2002. The following information summarizes the
impact of goodwill amortization on income before discontinued operations,
extraordinary gain (loss) and cumulative effect of accounting change; net
income; and the respective earnings per share amounts for the periods presented
in our consolidated statement of operations for periods prior to January 1,
2002:



                                                                                                      2001         2000
                                                                                                     -----         ----
                                                                                        (Dollars in millions, except per share data)
                                                                                                          
Reported loss before discontinued operations, extraordinary
    gain (loss) and cumulative effect of accounting change...................................      $(316.4)     $  (749.0)
Add back:  goodwill amortization..............................................................       108.2          108.5
                                                                                                   -------      ---------
Adjusted loss before discontinued operations, extraordinary
    gain (loss) and cumulative effect of accounting change....................................     $(208.2)     $  (640.5)
                                                                                                   =======      =========

Reported net loss applicable to common stock.................................................      $(418.7)     $(1,202.2)
Add back:  goodwill amortization..............................................................       109.6          112.5
                                                                                                     -----      ---------
Adjusted net loss applicable to common stock..................................................     $(309.1)     $(1,089.7)
                                                                                                   =======      =========

Basic earnings per share:

Reported loss before discontinued operations, extraordinary
    gain (loss) and cumulative effect of accounting change....................................     $  (.97)     $   (2.34)
Add back:  goodwill amortization..............................................................         .32            .33
                                                                                                   -------      ---------
Adjusted loss before discontinued operations, extraordinary
    gain (loss) and cumulative effect of accounting change....................................     $  (.65)     $   (2.01)
                                                                                                   =======      =========

Reported net loss applicable to common stock..................................................     $ (1.24)     $   (3.69)
Add back:  goodwill amortization..............................................................         .32            .35
                                                                                                   -------      ---------
Adjusted net loss applicable to common stock..................................................     $  (.92)     $   (3.34)
                                                                                                   =======      =========

Diluted earnings per share:

Reported loss before discontinued operations, extraordinary
    gain (loss) and cumulative effect of accounting change...................................      $  (.97)     $   (2.34)
Add back:  goodwill amortization.............................................................          .32            .33
                                                                                                   -------      ---------
Adjusted loss before discontinued operations, extraordinary
    gain (loss) and cumulative effect of accounting change....................................     $  (.65)     $   (2.01)
                                                                                                   =======      =========

Reported net loss applicable to common stock.................................................      $ (1.24)     $   (3.69)
Add back:  goodwill amortization..............................................................         .32            .35
                                                                                                   -------      ---------
Adjusted net loss applicable to common stock..................................................     $  (.92)     $   (3.34)
                                                                                                   =======      =========


                                      109


                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                   Notes to Consolidated Financial Statements
                           --------------------------


       Pursuant to the transitional rules of SFAS 142, the cumulative effect of
the accounting change for goodwill impairment is reflected in the consolidated
financial statements for the quarter ended March 31, 2002. Accordingly, the
consolidated statement of operations for the three months ended March 31, 2002,
has been restated to reflect the change as summarized below (dollars in
millions, except per share data):
                                                              
Net loss applicable to common stock, as reported................ $     (96.9)
Cumulative effect of accounting change..........................    (2,949.2)
                                                                 -----------

Net loss applicable to common stock, as adjusted................ $  (3,046.1)
                                                                 ===========

Net loss per common share:
Basic:
   Net loss, as reported........................................      $ (.28)
   Cumulative effect of accounting change.......................       (8.54)
                                                                      ------

   Net loss, as adjusted........................................      $(8.82)
                                                                      ======

Diluted:
   Net loss, as reported........................................      $ (.28)
   Cumulative effect of accounting change.......................       (8.54)
                                                                      ------

   Net loss, as adjusted........................................      $(8.82)
                                                                      ======




       During the third quarter of 2000, the Emerging Issues Task Force of the
Financial Accounting Standards Board issued EITF 99-20, "Recognition of Interest
Income and Impairment on Purchased and Retained Beneficial Interests in
Securitized Financial Assets" ("EITF 99-20").

       Under the prior accounting rule, declines in the value of our
interest-only securities and other retained beneficial interests in securitized
financial assets were recognized in the statement of operations when the present
value of estimated cash flows discounted at a risk-free rate using current
assumptions was less than the carrying value of the interest-only security.

       Under the new accounting rule, declines in value are recognized when: (i)
the fair value of the retained beneficial interests are less than their carrying
value; and (ii) the timing and/or amount of cash expected to be received from
the retained beneficial interests have changed adversely from the previous
valuation which determined the carrying value of the retained beneficial
interests. When both occur, the retained beneficial interests are written down
to fair value.

                                      110


                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                   Notes to Consolidated Financial Statements
                           --------------------------

       We adopted the new accounting rule on July 1, 2000. The cumulative effect
of the accounting change for periods prior to July 1, 2000 was a charge to the
statement of operations of $55.3 million (net of an income tax benefit of $29.9
million), or $.17 per diluted share. The cumulative effect of the accounting
change includes: (i) $45.5 million (net of an income tax benefit of $24.7
million) related to interest-only securities held by CFC; and (ii) $9.8 million
(net of an income tax benefit of $5.2 million) related to other retained
beneficial interests in securitized financial assets held by our insurance
segment.

       Impairment Charge

     During 2002, 2001 and 2000, the retained interests held by CFC did not
perform as well as anticipated. In addition, CFC's expectations regarding future
economic conditions changed. Accordingly, CFC changed various underlying
assumptions (including default, severity, credit loss, discount rate and
servicing cost assumptions) related to the future performance of the underlying
loans to be consistent with management's expectations. As a result, the expected
future cash flows (including any potential payments related to the guarantees of
certain lower-rated securities issued by the securitization trusts) from
interest-only securities changed adversely from previous estimates. Pursuant to
the requirements of EITF 99-20, the effect of these changes was reflected
immediately in earnings as an impairment charge. In 2002, CFC recognized an
impairment charge of $1,077.2 million related to its retained interests. CFC
also recognized a $336.5 million increase in the valuation allowance related to
its servicing rights as a result of the changes in assumptions in 2002. The
valuation allowance related to the servicing rights increased as a result of
changes to the expected future cost of servicing the finance receivables. The
levels of delinquent and defaulting loans have caused servicing costs to
increase. In addition, future servicing costs are expected to increase as the
portfolio ages. In addition, CFC recognized impairment charges of: (i) $29.3
million to establish a valuation allowance for advances CFC was required to make
to the securitization trusts which are potentially uncollectible; and (ii) $6.9
million to establish a liability of guarantee payments due to certain holders of
lower-rated securities issued by the securitization trusts which CFC was unable
to pay. In 2001, CFC recognized an impairment charge of $264.8 million ($171.3
million after the income tax benefit) related to its retained interests. CFC
also recognized a $122.1 million ($79.1 million after the income tax benefit)
increase in the valuation allowance related to its servicing rights as a result
of the changes in assumptions in 2001. In 2000, the effect of the impairment
charge and adjustments to the value of its retained interests totaled $515.7
million ($324.9 million after the income tax benefit) in addition to the
cumulative effect of adopting EITF 99-20 of $70.2 million ($45.5 million after
the income tax benefit).

       Recently Issued Accounting Standards

       In January 2003, the FASB issued Interpretation No. 46, "Consolidation of
Variable Interest Entities" ("FIN 46"), which requires expanded disclosures for
and, in some cases, consolidation of significant investments in variable
interest entities ("VIE"). A VIE is an entity in which the equity investors do
not have the characteristics of a controlling financial interest, or do not have
sufficient equity at risk for the entity to finance its activities without
additional subordinated financial support from other parties. Under FIN 46, a
company is required to consolidate a VIE if it is the primary beneficiary of the
VIE. FIN 46 defines primary beneficiary as the party which will absorb a
majority of the VIE's expected losses or receive a majority of the VIE's
expected residual returns, or both. FIN 46 is effective immediately for VIEs
created after January 31, 2003. For VIEs acquired before February 1, 2003, the
additional disclosure requirements are effective for financial statements issued
after January 31, 2003 and the consolidation requirements must be applied not
later than the fiscal year or interim period beginning after June 15, 2003.

       The Company has investments in various types of VIEs, some of which
require additional disclosure under FIN 46, and several of which that will
require consolidation under FIN 46. As further discussed in the note to the
consolidated financial statements entitled "Investments in Variable Interest
Entities", certain of our investments in VIEs are already consolidated in our
financial statements. We have identified one additional VIE investment in which
we are the primary beneficiary and, accordingly, will require consolidation in
our financial statements beginning with our September 30, 2003 financial
statements. The additional liabilities, which will be recognized as a result of
consolidating the VIE, do not represent claims on the general assets of the
Company. Likewise, the additional assets, which will be recognized upon
consolidation, are collateral for the additional recognized liabilities.
Consequently, the adoption of the consolidation requirements of FIN 46 is not
expected to have a material impact on our financial condition or results of
operations. The note entitled "Investments in Variable Interest Entities"
includes the expanded disclosures required by FIN 46.

       The FASB issued FASB Interpretation No. 45, "Guarantor's Accounting and
Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others" ("FIN 45") in November 2002. FIN 45 requires certain
guarantees to be recognized as liabilities at fair value. In addition, it
requires a guarantor to make new disclosures regarding its obligations. We
implemented the new disclosure requirements as of December 31, 2002; see the
note to the consolidated financial statements entitled "Other Disclosures." FIN
45's liability recognition requirement is effective on a prospective basis for
guarantees issued or modified after December 31, 2002.

                                      111

                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                   Notes to Consolidated Financial Statements
                           --------------------------

We do not expect that FIN 45 will materially impact the Company's results of
operations or financial condition.

       The FASB issued Statement of Financial Accounting Standards No. 146,
"Accounting for Exit or Disposal Activities" ("SFAS 146") in June 2002. SFAS 146
addresses financial accounting and reporting for costs that are associated with
exit and disposal activities and supersedes Emerging Issues Task Force Issue No.
94-3, "Liability Recognition for Certain Employee Termination Benefits and Other
Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)"
("EITF 94-3"). SFAS 146 is required to be used to account for exit or disposal
activities that are initiated after December 31, 2002. The provisions of EITF
94-3 shall continue to apply for an exit activity initiated prior to the
adoption of SFAS 146. SFAS 146 requires companies to recognize costs associated
with exit or disposal activities when they are incurred rather than at the date
of commitment to an exit or disposal plan. The Company plans to adopt the
provisions of SFAS 146 on January 1, 2003. We do not expect the initial adoption
of SFAS 146 to have a material impact on the Company's consolidated financial
statements.

       The FASB issued Statement of Financial Accounting Standards No. 145,
"Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No.
13, and Technical Corrections" ("SFAS 145") in April 2002. Under previous
guidance all gains and losses resulting from the extinguishment of debt were
required to be aggregated and, if material, classified as an extraordinary item,
net of related income tax effect. SFAS 145 rescinds that guidance and requires
that gains and losses from extinguishments of debt be classified as
extraordinary items only if they are both unusual and infrequent in occurrence.
SFAS 145 also amends previous guidance to require certain lease modifications
that have economic effects similar to sale-leaseback transactions be accounted
for in the same manner as sale-leaseback transactions. This new guidance is
effective for fiscal years beginning after May 15, 2002. We do not expect SFAS
145 to materially impact the Company's results of operations and financial
position.

       The FASB issued Statement of Financial Accounting Standards No. 144,
"Accounting for the Impairment of Long-Lived Assets" ("SFAS 144") in August
2001. This standard addresses the measurement and reporting for impairment of
all long-lived assets. It also broadens the definition of what may be presented
as a discontinued operation in the consolidated statement of operations to
include components of a company's business segments. SFAS 144 requires that
long-lived assets currently in use be written down to fair value when considered
impaired. Long-lived assets to be disposed of are written down to the lower of
cost or fair value less the estimated cost to sell. The Company adopted this
standard on January 1, 2002. We have followed this standard in determining when
it is appropriate to recognize impairments on assets we have decided to sell as
part of our efforts to raise cash. We have also followed this standard in
determining that our variable annuity business line and CFC should be presented
as discontinued operations in our consolidated financial statements (see the
notes to the consolidated financial statements entitled "Financial Information
Regarding CFC" and "Financial Information Regarding CVIC").

       The FASB issued SFAS 141 and SFAS 142 in June 2001. Under the new rules,
intangible assets with an indefinite life are no longer amortized in periods
subsequent to December 31, 2001, but are subject to annual impairment tests (or
more frequently under certain circumstances), effective January 1, 2002. The
Company adopted SFAS 141 and SFAS 142 effective January 1, 2002 (see the note to
the consolidated financial statements entitled "Summary of Significant
Accounting Policies" for additional discussion).

       The FASB issued SFAS 140 (which is a replacement for Statement of
Financial Accounting Standards No. 125, "Accounting for Transfers and Servicing
of Financial Assets and Extinguishments of Liabilities") and a related
implementation guide in September 2000. SFAS 140 and the implementation guide
have changed the criteria that must be met for securitization transactions to be
recorded under the portfolio method. We did not need to make any significant
changes to our securitization structures to meet the new criteria which are
effective for securitization transactions completed after March 31, 2001. We
first adopted the SFAS 140 requirement for additional disclosures on
securitization in our December 31, 2000, consolidated financial statements.

       SFAS 138 requires all derivative instruments to be recorded on the
balance sheet at estimated fair value. Changes in the fair value of derivative
instruments are to be recorded each period either in current earnings or other
comprehensive income (loss), depending on whether a derivative is designated as
part of a hedge transaction and, if it is, on the type of hedge transaction. We
adopted SFAS 138 on January 1, 2001. The initial adoption of the new standard
did not have a material impact on the Company's financial position or results of
operations and there was no cumulative effect of an accounting change related to
its adoption.

       Statement of Position No. 98-7, "Accounting for Insurance and Reinsurance
Contracts That Do Not Transfer Insurance Risk" ("SOP 98-7") provides guidance on
the method of accounting for insurance and reinsurance contracts that do not
transfer risk. We adopted SOP 98-7 on January 1, 2000. The adoption did not have
a material impact on the Company's consolidated financial condition or results
of operations.

                                      112

                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                   Notes to Consolidated Financial Statements
                           --------------------------

       5. INVESTMENTS:

       At December 31, 2002, the amortized cost and estimated fair value of
actively managed fixed maturities and equity securities were as follows:




                                                                                                   Gross       Gross       Estimated
                                                                                   Amortized     unrealized  unrealized       fair
                                                                                      cost         gains       losses         value
                                                                                      ----         -----       ------         -----
                                                                                                  (Dollars in millions)
                                                                                                               
Investment grade:
   Corporate securities........................................................... $10,529.0        $517.5      $293.9     $10,752.6
   United States Treasury securities and obligations of
     United States government corporations and agencies...........................     442.4          25.2         9.0         458.6
   States and political subdivisions..............................................     418.0          23.2          .9         440.3
   Debt securities issued by foreign governments..................................      83.3           7.3         -            90.6
   Mortgage-backed securities ....................................................   6,082.0         336.3         4.2       6,414.1
Below-investment grade (primarily corporate securities)...........................   1,435.1          17.1       191.0       1,261.2
                                                                                   ---------        ------      ------     ---------

     Total actively managed fixed maturities...................................... $18,989.8        $926.6      $499.0     $19,417.4
                                                                                   =========        ======      ======     =========

Equity securities.................................................................    $161.4          $4.5        $9.9        $156.0
                                                                                      ======          ====        ====        ======


       At December 31, 2001, the amortized cost and estimated fair value of
actively managed fixed maturities and equity securities were as follows:



                                                                                                   Gross       Gross       Estimated
                                                                                   Amortized     unrealized  unrealized       fair
                                                                                     cost          gains       losses         value
                                                                                     ----          -----       ------         -----
                                                                                                  (Dollars in millions)
                                                                                                                 
Investment grade:
   Corporate securities........................................................... $12,827.2        $121.5      $501.1     $12,447.6
   United States Treasury securities and obligations of
     United States government corporations and agencies...........................     240.9          11.8         1.0         251.7
   States and political subdivisions..............................................     225.7           5.0         2.0         228.7
   Debt securities issued by foreign governments..................................     103.9           3.8          .9         106.8
   Mortgage-backed securities ....................................................   7,488.1          82.8        74.3       7,496.6
Below-investment grade (primarily corporate securities)...........................   1,537.0          15.2       265.1       1,287.1
                                                                                   ---------       -------      ------    ----------

     Total actively managed fixed maturities...................................... $22,422.8        $240.1      $844.4     $21,818.5
                                                                                   =========        ======      ======     =========

Equity securities.................................................................    $257.3          $6.0       $36.3        $227.0
                                                                                      ======          ====       =====        ======


       Accumulated other comprehensive income (loss) is primarily comprised of
unrealized gains (losses) on actively managed fixed maturity investments. Such
amounts, included in shareholders' equity (deficit) as of December 31, 2002 and
2001, were as follows:



                                                                                                        2002       2001
                                                                                                        ----       ----
                                                                                                     (Dollars in millions)

                                                                                                            
Unrealized gains (losses) on investments...........................................................    $448.1     $(816.0)
Adjustments to cost of policies purchased and cost of policies produced............................     (95.3)      133.9
Deferred income tax benefit........................................................................     249.6       249.6
Other..............................................................................................     (21.8)       (6.5)
                                                                                                       ------     -------

       Accumulated other comprehensive income (loss)...............................................    $580.6     $(439.0)
                                                                                                       ======     =======



                                      113



                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                   Notes to Consolidated Financial Statements
                           --------------------------

       Concentration of Corporate Securities

       At December 31, 2002, our corporate securities (including
below-investment grade) were concentrated in the following industries:



                                                                                     Percent of        Percent of
                                                                                      amortized         estimated
                                                                                       cost            fair value
                                                                                  --------------       ----------

                                                                                                     
Media and communications.........................................................         13.7%            13.5%
Financial institutions...........................................................         10.5             10.5
Bank/savings and loan............................................................         10.2             10.7
Electric utility.................................................................          9.0              9.0
Energy...........................................................................          8.2              8.8
Insurance .......................................................................          4.7              5.5


       With respect to our corporate securities, no other industry accounted for
more than 5.0 percent of amortized cost or estimated fair value.

       Below-Investment Grade Securities

       At December 31, 2002, the amortized cost of the Company's fixed maturity
securities in below-investment grade securities was $1,435.1 million, or 7.6
percent of the Company's fixed maturity portfolio. The estimated fair value of
the below-investment grade portfolio was $1,261.2 million, or 88 percent of the
amortized cost. The value of these securities varies based on the economic terms
of the securities, structural considerations and the credit worthiness of the
issuer of the securities. Recently a number of large highly leveraged issuers
have experienced significant financial difficulties, which resulted in our
recognition of other-than-temporary impairments. These impairments have had a
material adverse effect on us.

       Below-investment grade securities have different characteristics than
investment grade corporate debt securities. Risk of loss upon default by the
borrower is significantly greater with respect to below-investment grade
securities than with other corporate debt securities. Below-investment grade
securities are generally unsecured and are often subordinated to other creditors
of the issuer. Also, issuers of below-investment grade securities usually have
higher levels of debt and are more sensitive to adverse economic conditions,
such as recession or increasing interest rates, than are investment grade
issuers. The Company attempts to reduce the overall risk in the below-investment
grade portfolio, as in all investments, through careful credit analysis, strict
investment policy guidelines, and diversification by issuer and/or guarantor and
by industry.

       Contractual Maturity

       The following table sets forth the amortized cost and estimated fair
value of actively managed fixed maturities at December 31, 2002, by contractual
maturity. Actual maturities will differ from contractual maturities because
borrowers may have the right to call or prepay obligations with or without call
or prepayment penalties. Most of the mortgage-backed securities shown below
provide for periodic payments throughout their lives.

                                      114


                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                   Notes to Consolidated Financial Statements
                           --------------------------




                                                                                                                 Estimated
                                                                                                 Amortized         fair
                                                                                                   cost            value
                                                                                                   ----            -----
                                                                                                   (Dollars in millions)

                                                                                                          
Due in one year or less......................................................................    $   160.0      $   162.0
Due after one year through five years........................................................      1,147.8        1,189.6
Due after five years through ten years.......................................................      4,094.7        4,228.8
Due after ten years..........................................................................      7,498.4        7,420.8
                                                                                                 ---------      ---------

    Subtotal.................................................................................     12,900.9       13,001.2
Mortgage-backed securities (a)...............................................................      6,088.9        6,416.2
                                                                                                 ---------      ---------

        Total actively managed fixed maturities .............................................    $18,989.8      $19,417.4
                                                                                                 =========      =========

- --------------------
   (a) Includes below-investment grade mortgage-backed securities with an
       amortized cost and estimated fair value of $6.9 million and $2.1 million,
       respectively.



       Net Investment Income

       Net investment income consisted of the following:



                                                                                          2002         2001         2000
                                                                                          ----         ----         ----
                                                                                               (Dollars in millions)

                                                                                                         
    Fixed maturities.................................................................   $1,375.2      $1,510.7    $1,550.5
    Venture capital investment loss..................................................      (99.3)        (42.9)     (199.5)
    Equity securities................................................................       13.2          17.8        35.2
    Mortgage loans...................................................................       99.0          90.2        96.4
    Policy loans.....................................................................       32.6          35.9        33.7
    Change in value of S&P 500 Call Options related to equity-indexed products.......     (100.5)       (114.2)     (111.0)
    Other invested assets............................................................        7.7          24.6        91.9
    Cash and cash equivalents........................................................       27.6          60.5        58.0
    Separate accounts................................................................        -            (5.4)       54.9
                                                                                        --------      --------    --------

       Gross investment income.......................................................    1,355.5       1,577.2     1,610.1
    Less investment expenses.........................................................       12.6          12.7        13.1
                                                                                        --------      --------    --------

       Net investment income.........................................................   $1,342.9      $1,564.5    $1,597.0
                                                                                        ========      ========    ========


       The carrying value of fixed maturity investments and mortgage loans not
accruing investment income totaled $169.6 million, $140.2 million and $98.0
million at December 31, 2002, 2001 and 2000, respectively.

                                      115


                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                   Notes to Consolidated Financial Statements
                           --------------------------


       Net Realized Investment Losses

       Investment losses, net of related investment expenses, were included in
revenue as follows:



                                                                                           2002         2001         2000
                                                                                           ----         ----         ----
                                                                                                (Dollars in millions)
                                                                                                          
Fixed maturities:
    Gross gains......................................................................    $ 260.8      $ 295.8      $  83.6
    Gross losses.....................................................................     (251.8)      (260.3)      (154.4)
    Other-than-temporary decline in fair value.......................................     (500.6)      (293.2)      (139.4)
                                                                                         -------      -------      -------

         Net investment losses from fixed maturities before expenses.................     (491.6)      (257.7)      (210.2)

Equity securities....................................................................       (7.5)        (1.8)        11.5
Mortgages............................................................................       (1.4)        (1.9)        (3.2)
Other-than-temporary decline in fair value of equity securities and
    other invested assets............................................................      (56.2)       (68.5)       (41.2)
Loss related to termination of interest rate swap agreements.........................        -            -          (59.2)
Other ...............................................................................        .4         (10.1)        (2.4)
                                                                                         -------      -------      -------

         Net investment losses before expenses.......................................     (556.3)      (340.0)      (304.7)
Investment expenses..................................................................       40.7         39.4         41.8
                                                                                         -------      -------      -------

         Net investment losses.......................................................    $(597.0)     $(379.4)     $(346.5)
                                                                                         =======      =======      =======


       Net realized investment losses during 2002 included: (i) $556.8 million
of writedowns of fixed maturity investments, equity securities and other
invested assets as a result of conditions which caused us to conclude a decline
in fair value of the investment was other than temporary; and (ii) $40.2 million
of net losses from the sales of investments (primarily fixed maturities) which
generated proceeds of $19.5 billion. At December 31, 2002, fixed maturity
securities in default as to the payment of principal or interest had an
aggregate amortized cost of $203.9 million and a carrying value of $174.8
million. Net realized investment losses during 2001 included: (i) $361.7 million
of writedowns of fixed maturity investments, equity securities and other
invested assets as a result of conditions which caused us to conclude a decline
in fair value of the investment was other than temporary; and (ii) $17.7 million
of net losses from the sales of investments (primarily fixed maturities).

       During 2002, we sold $11.3 billion of fixed maturity investments which
resulted in gross investment losses (before income taxes) of $251.8 million.
Securities sold at a loss are sold for a number of reasons including: (i)
changes in the investment environment; (ii) expectation that the market value
could deteriorate further; (iii) desire to reduce our exposure to an issuer or
an industry; (iv) changes in credit quality; and (v) our analysis indicating
there is a high probability that the security is other-than-temporarily
impaired.

       The following summarizes the investments sold at a loss during 2002 which
had been continuously in an unrealized loss position exceeding 20 percent of the
amortized cost basis prior to the sale for the period indicated:



                                                                                                    At date of sale
                                                                                                   -----------------
                                                                                  Number of     Amortized    Estimated Fair
                         Period                                                    issuers        cost            value
                         ------                                                    -------        ----            -----
                                                                                                 (Dollars in millions)
                                                                                                         

                         Less than 6 months prior to sale.......................     90            $231.3         $130.4

                         Greater than or equal to 6 and less than 12 months
                            prior to sale.......................................     28              79.2           43.1

                         Greater than 12 months
                            prior to sale.......................................     24              79.3           48.8


                                      116


                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                   Notes to Consolidated Financial Statements
                           --------------------------

       Investments with Other-Than-Temporary Losses

       During 2002, we recorded writedowns of fixed maturity investments, equity
securities and other invested assets totaling $556.8 million. The following is a
brief description of the facts and circumstances that resulted in the
other-than-temporary losses.

       During 2002, we recorded writedowns totaling $130.1 million on
securitized investments backed by various debt securities and/or commercial
loans (referred to herein as "collateralized debt obligations" or "CDOs").
Principal and interest payments on CDOs are made from cash flows from underlying
loans held by the trusts. The current value of these investments are influenced
by a number of factors, such as the performance of the underlying loans, the
current and future expected economic environment, and the payment priority of
our investment in the securitization structure. In recent periods, general rates
of defaults on commercial loans have increased. In addition, the ratings of
several CDOs which we hold have been downgraded by nationally recognized
statistical rating organizations. Accordingly, we reviewed our CDO portfolio for
potential other-than-temporary impairments in accordance with EITF 99-20.

       During 2002, we recorded writedowns totaling $73.7 million related to
fixed maturity investments issued by a merchant energy company rated B3/B-. The
issuer's operating results and liquidity have deteriorated due to lower energy
prices, diminished energy trading profits and higher working capital demands.
Although the issuer has successfully executed certain cash raising activities
and has remained in compliance with the terms of all of its debt securities, its
earnings have significantly declined and its debt service requirements are
significant. We concluded the decline in fair value was other than temporary.

       During 2002, we recorded writedowns totaling $67.8 million on certain
lower-rated securities issued by the non-consolidated securitization trusts
which hold loans to purchase manufactured housing originated and managed by CFC.
These securities were acquired by our insurance subsidiaries prior to our
acquisition of CFC. Due to the performance of the underlying portfolios, the
payments on lower-priority securities are dependent on the guarantees of CFC.
Given the current financial condition of CFC, there can be no assurance it will
be able to honor its commitments with respect to such guarantees. Accordingly,
we wrote these investments down to estimated fair value.

       During 2002, we recorded writedowns totaling $29.9 million related to
investments in a large capitalization stock fund, a balanced fund, and a
diversified science and technology fund. The events of September 11, 2001 caused
a decline in the value of most equity securities, including net assets in these
funds. Based on the belief that the economy was improving at year-end 2001,
combined with the general equity market improvement in late 2001, we concluded
that the unrealized loss at December 31, 2001 was temporary. However, the equity
markets in the first half of 2002 suffered additional significant losses due to
a combination of corporate restatements, fears over a double-dip recession and
decreased corporate capital spending. We changed our intent to hold these funds
once we concluded that the loss was other than temporary. All of our holdings in
such funds were sold by August 5, 2002.

       During 2002, we recorded writedowns totaling $30.2 million related to an
investment in a telecommunications company that was rated investment grade at
the time of purchase and was subsequently downgraded to below-investment grade.
The issuer faced significant financial difficulties and accounting
irregularities that resulted in sequential and material restatements of its
financial statements. The issuer defaulted and filed for Chapter 11 Bankruptcy
protection in July 2002.

       During 2002, we recorded writedowns totaling $24.5 million related to
holdings of fixed maturity investments in a retail chain that defaulted in early
2002. A writedown was taken as of December 31, 2001 based upon the estimated
fair value of the investment at that time. Given the subsequent decrease in the
estimated fair value of our investment, subsequent writedowns were taken in
2002.

       During 2002, we recorded writedowns totaling $26.5 million based upon our
analysis of the value of the underlying collateral of various investments in the
airline sector. Many major airlines are facing significant liquidity issues and
we believe the current market value of the collateral backing these loans is
less than the book value of our investment. We believe that the decline in fair
value of these investments is other than temporary.

       During 2002, we recorded writedowns totaling $10.8 million on a fixed
maturity investment in an Australian nickel mining company. The construction
costs of the processing plant at this start-up nickel project were higher than
anticipated and the plant's ultimate production capacity did not meet projected
levels. Initially, the project's equity sponsors supported this project through
additional equity and cash infusions. However, during the first six months of
2002, the equity sponsors notified bond investors that they were no longer
willing to support the project without a restructuring of the issuer's debt. As
a result, we believe the decline in market value of this security is other than
temporary.

                                      117


                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                   Notes to Consolidated Financial Statements
                           --------------------------

       During 2002, we recorded writedowns totaling $9.4 million of fixed
maturity investments issued by a global energy services company. The issuer is
suffering from reduced profitability due to declining energy prices in key
markets plus the effect of above market purchase contracts. Due to very high
financial leverage related to several acquisitions at high prices and diminished
cash flows, we believe that the decline in fair value is other than temporary.

       During 2002, we recorded writedowns totaling $8.5 million related to
investments issued by a moving and storage company. The issuer failed to make a
scheduled principal payment on a public debt security. The issuer recently
cancelled a proposed offering of long-term notes. While the issuer has publicly
expressed its intention and belief that a successful refinancing can be
completed, we believe that the decline in market value of this security is other
than temporary.

       During 2002, we recorded writedowns of $8.1 million of fixed maturity
investments issued by a copper producer. The financial condition of this issuer
is significantly affected by the price of copper, which has dropped from as high
as $0.80 per pound earlier this year to a low of $0.68 near the end of the
second quarter. In addition, the issuer was downgraded by a national rating
agency during the first six months of 2002. Despite the fact that the issuer was
still making the coupon payments on this issue, we believed that the decline in
market value of this security was other than temporary. All of our holdings in
this issuer were sold by August 8, 2002.

       During 2002, in addition to the specific securities discussed above, we
recorded $105.3 million of writedowns related to various other investments. In
accordance with GAAP, we are required to recognize an impairment charge when we
no longer have an intent to hold an investment with unrealized loss for a period
of time sufficient to allow for any anticipated recovery. In early 2003, we sold
certain securities at a loss in conjunction with decisions made in 2003 to
restructure our portfolio by reducing our exposure to certain credits. We
recorded $32.0 million of investment writedowns in 2002 related to such sales.
No other writedowns of a single issuer exceeded $7.0 million.

       Recognition of Losses

       We regularly evaluate all of our investments for possible impairment
based on current economic conditions, credit loss experience and other
investee-specific developments. If there is a decline in a security's net
realizable value that is other than temporary, the decline is recognized as a
realized loss and the cost basis of the security is reduced to its estimated
fair value.

       Our evaluation of investments for impairment requires significant
judgments to be made including: (i) the identification of potentially impaired
securities; (ii) the determination of their estimated fair value; and (iii)
assessment of whether any decline in estimated fair value is other than
temporary. If new information becomes available or the financial condition of
the investee changes, our judgments may change resulting in the recognition of
an investment loss at that time.

       Our periodic assessment of whether unrealized losses are "other than
temporary" requires significant judgment. Factors considered include: (i) the
extent to which market value is less than the cost basis; (ii) the length of
time that the market value has been less than cost; (iii) whether the unrealized
loss is event driven, credit-driven or a result of changes in market interest
rates; (iv) the near-term prospects for improvement in the issuer and/or its
industry; (v) whether the investment is investment-grade and our security
analyst's view of the investment's rating and whether the investment has been
downgraded since its purchase; (vi) whether the issuer is current on all
payments in accordance with the contractual terms of the investment and is
expected to meet all of its obligations under the terms of the investment; (vii)
our ability and intent to hold the investment for a period of time sufficient to
allow for any anticipated recovery; and (viii) the underlying asset and
enterprise values of the issuer.

       If a decline in value is determined to be other than temporary and the
cost basis of the security is written down to fair value, we review the
circumstances which caused us to believe that the decline was other than
temporary with respect to other investments in our portfolio. If such
circumstances exist with respect to other investments, those investments are
also written down to fair value. Future events may occur, or additional or
updated information may become available, which may necessitate future realized
losses of securities in our portfolio. Significant losses in the carrying value
of our investments could have a material adverse effect on our earnings in
future periods.

       The following table sets forth the amortized cost and estimated fair
value of those actively managed fixed maturities with unrealized losses at
December 31, 2002, by contractual maturity. Actual maturities will differ from
contractual maturities because borrowers may have the right to call or prepay
obligations with or without call or prepayment penalties. Most of the
mortgage-backed securities shown below provide for periodic payments throughout
their lives.

                                      118


                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                   Notes to Consolidated Financial Statements
                           --------------------------





                                                                                                            Estimated
                                                                                             Amortized        fair
                                                                                              cost            value
                                                                                             ---------      ---------
                                                                                               (Dollars in millions)

                                                                                                       
Due in one year or less...................................................................    $   57.3       $   56.9
Due after one year through five years.....................................................       259.7          241.0
Due after five years through ten years....................................................       864.4          786.4
Due after ten years.......................................................................     3,108.9        2,716.0
                                                                                              --------       --------

   Subtotal...............................................................................     4,290.3        3,800.3

Mortgage-backed securities (a)............................................................       127.1          118.1
                                                                                              --------       --------

   Total..................................................................................    $4,417.4       $3,918.4
                                                                                              ========       ========


- --------------------
   (a) Includes below-investment grade mortgage-backed securities with an
       amortized cost and estimated fair value of $6.8 million and $2.1 million,
       respectively.



       The following summarizes the investments in our portfolio rated
below-investment grade or classified as equity-type securities which have been
continuously in an unrealized loss position exceeding 20 percent of the cost
basis for the period indicated as of December 31, 2002:



                                                                   Number           Cost          Unrealized      Estimated
          Period                                                 of issuers         basis            loss       fair value
          ------                                                 ----------         -----            ----       ----------
                                                                                             (Dollars in millions)

                                                                                                              

          Less than 6 months(1)...............................         25           $190.2              $59.7              $130.5

          Greater than or equal to
                  6 months and less
                  than 12 months(2)...........................         10             97.4               37.5                59.9

          Greater than 12 months(3)...........................         21            238.4               76.4               162.0


          -----------------------

          (1)  These investments include fixed maturity investments in three
               commercial airlines with a cost basis of $35.2 million and an
               estimated fair value of $20.0 million. See "Investments with
               Unrealized Losses" for additional information. No other single
               issuer in this category had an unrealized loss exceeding $7.0
               million.

          (2)  These investments include: (i) an investment in an oil-related
               production facility with a cost basis of $50.4 million and an
               estimated fair value of $33.0; and (ii) an investment in a
               telecommunications company with a cost basis of $19.7 million and
               an estimated fair value of $10.6 million. See "Investments with
               Unrealized Losses" for additional information. No other single
               issuer in this category had an unrealized loss exceeding $7.0
               million.

          (3)  These investments include: (i) a fixed maturity investment issued
               by a commercial property and casualty insurance company with a
               cost basis of $31.6 million and an estimated fair value of $24.1
               million; and (ii) a fixed maturity investment in a
               telecommunications company with a cost basis of $34.4 million and
               an estimated fair value of $21.9 million; and (iii) a fixed
               maturity investment issued by a regional retail chain with an
               amortized cost basis of $28.8 million and an estimated fair value
               of $20.1 million. See "Investments with Unrealized Losses" for
               additional information. No other single issuer in this category
               had an unrealized loss exceeding $7.0 million.




                                      119


                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                   Notes to Consolidated Financial Statements
                           --------------------------

       Our investment strategy is to maximize investment income and total
investment return through active investment management. Accordingly, we may sell
securities at a gain or a loss to enhance the total return of the portfolio as
market opportunities change. While we have both the ability and intent to hold
securities with unrealized losses until they mature or recover in value, we may
sell securities at a loss in the future because of actual or expected changes in
our view of the particular investment, its industry, its type or the general
investment environment.

       Based on management's current assessment of these securities and other
investments with unrealized losses at December 31, 2002, the Company believes
the issuers of the securities will continue to meet their obligations (or with
respect to equity-type securities, the investment value will recover to its cost
basis). The Company has no current plans to sell these securities and has the
ability to hold them to maturity. The recognition of an other-than-temporary
impairment through a charge to earnings may be recognized in future periods if
management later concludes that the decline in market value below the cost basis
is other than temporary.

       Investments with Unrealized Losses

       The following is a brief description of our assessment of the potential
other-than-temporary losses related to investments in our below-investment grade
portfolio (or equity-type securities) with significant unrealized losses at
December 31, 2002 (unrealized losses which exceed $7.0 million and 20 percent of
the cost basis of the securities by the same issuer):

       At December 31, 2002, we held fixed maturity investments issued by a
telecommunications company with ratings of Ba3/B- and Caa1/C with an amortized
cost basis of $54.1 million and an estimated fair value of $32.6 million. The
issuer reduced total debt in the fourth quarter of 2002 by $4.6 billion due to
the closing of a sales transaction and a debt exchange offer. The issuer also
expects to receive regulatory approval to close a $4.3 billion transaction in
mid-2003, the proceeds of which will be used to further reduce debt. We believe
that the issuer has sufficient liquidity and the underlying value of the
issuer's customer base provides sufficient value to cover the existing debt.
Therefore, we concluded that the unrealized loss at December 31, 2002 is
temporary.

       At December 31, 2002, we held fixed maturity investments in an
oil-related production facility rated Ba1 with an amortized cost basis of $53.9
million and an estimated fair value of $35.5 million. Proceeds from the sale of
the oil produced are used to service the debt. This joint venture includes
purchase guarantees from investment grade companies that will provide sufficient
liquidity to service the debt. Therefore, we concluded that the unrealized loss
at December 31, 2002 is temporary.

       At December 31, 2002, we held fixed maturity investments issued by a
commercial property and casualty insurance company rated Ba2/BB+ with an
amortized cost basis of $32.1 million and an estimated fair value of $24.5
million. We believe this issuer currently has sufficient liquidity to cover its
debt service through 2005. They believe the underwriting cycle will improve
before then (consistent with prior cycles), allowing the issuer to continue to
service its debt beyond 2005. In addition, this issuer recently completed the
public issuance of equity securities, which further improves its liquidity and
demonstrates the ability to access the capital market, if needed, to service its
future debt obligations. Therefore, we concluded that the unrealized loss at
December 31, 2002 is temporary.

       At December 31, 2002, we held secured fixed maturity investments issued
by a commercial airline rated Ba2/BB+ with an amortized cost of $17.2 million
and an estimated fair value of $10.5 million. The issuer is facing financial
challenges that affect the entire industry, but is implementing a plan to
increase liquidity, reduce debt and reduce costs. Given that the issuer has
demonstrated that it has sufficient cash flows and liquidity to meet its
obligations, we concluded that the unrealized loss at December 31, 2002 is
temporary.

       At December 31, 2002, we held fixed maturity investments issued by a
commercial airline rated Ba3/B+ and Caa1/CCC+ with an amortized cost of $29.8
million and an estimated fair value of $14.4 million. We previously recorded
writedowns related to these securities. We believe the collateral supporting
these investments is sufficient and, therefore, concluded that the unrealized
loss at December 31, 2002 is temporary.

       At December 31, 2002, we held fixed maturity investments issued by a
regional retail chain rated B2/B+ with an amortized cost basis of $28.8 million,
a par amount of $24.2 million and an estimated fair value of $20.1 million. We
have observed that this issuer has improving fundamentals including its
liquidity position, leverage and operating performance. This fixed maturity has
a long duration and was purchased at a price in excess of par as an investment
grade credit. The market value of this security has increased significantly
during 2002 (from 70 percent of par at December 31, 2001 to 83 percent of par at
December 31, 2002). We believe that

                                      120


                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                   Notes to Consolidated Financial Statements
                           --------------------------

we will recover full value from this investment and we intend to hold the
security to maturity. Therefore, we concluded that the unrealized loss at
December 31, 2002 is temporary.

       At December 31, 2002 we held fixed maturity investments in a reinsurance
company rated Ba2/BB+ with an amortized cost of $23.1 million and an estimated
fair value of $16.0 million. The reinsurance on the books of the issuer is high
quality, with counter parties rated AA or better. The issuer recently received a
capital infusion and is seeing strong price increases across most product lines.
The issuer appears to have sufficient cash flow to retire existing debt. We
concluded that the unrealized loss at December 31, 2002 is temporary.

       Investment in General Motors Building

       At December 31, 2002, Conseco holds $292.9 million of investments related
to a 50 story office building in New York City known as the General Motors
Building. Such investments are primarily held in our fixed maturity investment
portfolio. In January 2002, Conseco exercised its right to purchase the interest
of the other investor in the building.

       Pursuant to GAAP, Conseco's future earnings on these investments are
limited to amounts which are based on the actual earnings related to the
operation of the building (including adjustments to reflect Conseco's actual
cost basis). These earnings were not material in 2002 and are not expected to be
material in 2003; accordingly, our income from these investments will be less
than the stated return on the investment of 12.7 percent.

       The other investor in the building has filed a lawsuit against Conseco
which is described in the note to the consolidated financial statements entitled
"Other Disclosures". See the caption "Investment in General Motors Building" in
the note to the consolidated financial statements entitled "Investments in
Variable Interest Entities" for further information on this investment.

       Mortgage-Backed Securities

       At December 31, 2002, fixed maturity investments included $6.4 billion of
mortgage-backed securities (or 33 percent of all fixed maturity securities). The
yield characteristics of mortgage-backed securities differ from those of
traditional fixed-income securities. Interest and principal payments for
mortgage-backed securities occur more frequently, often monthly. Mortgage-backed
securities are subject to risks associated with variable prepayments. Prepayment
rates are influenced by a number of factors that cannot be predicted with
certainty, including: the relative sensitivity of the underlying mortgages
backing the assets to changes in interest rates; a variety of economic,
geographic and other factors; and the repayment priority of the securities in
the overall securitization structures.

       In general, prepayments on the underlying mortgage loans and the
securities backed by these loans increase when prevailing interest rates decline
significantly relative to the interest rates on such loans. The yields on
mortgage-backed securities purchased at a discount to par will increase when the
underlying mortgages prepay faster than expected. The yields on mortgage-backed
securities purchased at a premium will decrease when they prepay faster than
expected. When interest rates decline, the proceeds from the prepayment of
mortgage-backed securities are likely to be reinvested at lower rates than we
were earning on the prepaid securities. When interest rates increase,
prepayments on mortgage-backed securities decrease as fewer underlying mortgages
are refinanced. When this occurs, the average maturity and duration of the
mortgage-backed securities increase, which decreases the yield on
mortgage-backed securities purchased at a discount, because the discount is
realized as income at a slower rate, and increases the yield on those purchased
at a premium as a result of a decrease in the annual amortization of the
premium.

                                      121


                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                   Notes to Consolidated Financial Statements
                           --------------------------

       The following table sets forth the par value, amortized cost and
estimated fair value of mortgage-backed securities, summarized by interest rates
on the underlying collateral at December 31, 2002:



                                                                                         Par        Amortized    Estimated
                                                                                        value         cost      fair value
                                                                                        -----         ----      ----------
                                                                                              (Dollars in millions)

                                                                                                         
Below 7 percent.....................................................................    $4,895.4      $4,857.3    $5,125.2
7 percent - 8 percent...............................................................     1,000.4       1,007.6     1,059.1
8 percent - 9 percent...............................................................       171.9         179.8       187.1
9 percent and above.................................................................        42.1          44.2        44.8
                                                                                        --------      --------    --------

       Total mortgage-backed securities (a).........................................    $6,109.8      $6,088.9    $6,416.2
                                                                                        ========      ========    ========

- -------------------
   (a) Includes below-investment grade mortgage-backed securities with an
       amortized cost and estimated fair value of $6.9 million and $2.1 million,
       respectively.



       The amortized cost and estimated fair value of mortgage-backed securities
at December 31, 2002, summarized by type of security, were as follows:



                                                                                               Estimated fair value
                                                                                               --------------------
                                                                                                             Percent
                                                                            Amortized                        of fixed
Type                                                                           cost          Amount          maturities
- ----                                                                           ----          ------          ----------
                                                                               (Dollars in millions)

                                                                                                         
Pass-throughs and sequential and targeted amortization classes............    $2,849.5        $3,000.8            16%
Planned amortization classes and accretion-directed bonds.................     2,439.8         2,580.6            13
Commercial mortgage-backed securities.....................................       441.3           461.4             2
Subordinated classes and mezzanine tranches...............................       348.7           365.7             2
Other.....................................................................         9.6             7.7             -
                                                                              --------        --------            --

       Total mortgage-backed securities (a)...............................    $6,088.9        $6,416.2            33%
                                                                              ========        ========            ==

- -------------------------
   (a) Includes below-investment grade mortgage-backed securities with an
       amortized cost and estimated fair value of $6.9 million and $2.1 million,
       respectively.



       Pass-throughs and sequential and targeted amortization classes have
similar prepayment variability. Pass-throughs historically provide the best
liquidity in the mortgage-backed securities market. Pass-throughs are also used
frequently in the dollar roll market and can be used as the collateral when
creating collateralized mortgage obligations. Sequential classes are a series of
tranches that return principal to the holders in sequence. Targeted amortization
classes offer slightly better structure in return of principal than sequentials
when prepayment speeds are close to the speed at the time of creation.

       Planned amortization classes and accretion-directed bonds are some of the
most stable and liquid instruments in the mortgage-backed securities market.
Planned amortization class bonds adhere to a fixed schedule of principal
payments as long as the underlying mortgage collateral experiences prepayments
within a certain range. Changes in prepayment rates are first absorbed by
support or companion classes. This insulates the planned amortization class from
the consequences of both faster prepayments (average life shortening) and slower
prepayments (average life extension).

       Commercial mortgage-backed securities ("CMBS") are bonds secured by
commercial real estate mortgages. Commercial real estate encompasses income
producing properties that are managed for economic profit. Property types
include multi-family dwellings including apartments, retail centers, hotels,
restaurants, hospitals, nursing homes, warehouses, and office buildings. The
CMBS market currently offers high yields, strong credits, and call protection
compared to similar-rated corporate bonds. Most CMBS have strong call protection
features where borrowers are locked out from prepaying their mortgages for a
stated period of time. If the

                                      122


                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                   Notes to Consolidated Financial Statements
                           --------------------------

borrower does prepay any or all of the loan, he or she will be required to pay
prepayment penalties.

       Subordinated and mezzanine tranches are classes that provide credit
enhancement to the senior tranches. The rating agencies require that this credit
enhancement not deteriorate due to prepayments for a period of time, usually
five years of complete lockout, followed by another period of time where
prepayments are shared pro rata with senior tranches. The credit risk of
subordinated and mezzanine tranches is derived from owning a small percentage of
the mortgage collateral, while bearing a majority of the risk of loss due to
property owner defaults. Subordinated bonds can be rated "AA" or lower; we
typically do not buy anything rated lower than "BB".

       Mortgage Loans

       At December 31, 2002, the mortgage loan balance was primarily comprised
of commercial loans. Approximately 9 percent, 8 percent, 7 percent, 6 percent, 6
percent and 6 percent of the mortgage loan balance were on properties located in
New York, Massachusetts, Florida, California, Ohio and Pennsylvania,
respectively. No other state comprised greater than 5 percent of the mortgage
loan balance. Less than one percent of the mortgage loan balance was noncurrent
at December 31, 2002. Our allowance for loss on mortgage loans was $3.5 million
and $3.8 million at December 31, 2002 and 2001, respectively.

       Investment Borrowings

       Our investment borrowings averaged approximately $1,155.8 million during
2002, compared with approximately $927.0 million during 2001 and were
collateralized by investment securities with fair values approximately equal to
the loan value. The weighted average interest rates on such borrowings were 1.3
percent and 3.3 percent during 2002 and 2001, respectively.

       Other Investment Disclosures

       Life insurance companies are required to maintain certain investments on
deposit with state regulatory authorities. Such assets had an aggregate carrying
value of $144.5 million at December 31, 2002.

       Conseco had two investments in excess of 10 percent of the absolute
dollar amount of shareholders' deficit at December 31, 2002, (other than
investments issued or guaranteed by the United States government or a United
States government agency) which are summarized below:



                                                 Amortized         Estimated
         Issuer                                    cost           fair value
         ------                                    ----           ----------
                                                    (Dollars in millions)

                                                               
         Investors Guaranty Assurance...........  $305.0             $283.7
         Carmel Fifth, LLC......................   212.7              212.5



                                      123


                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                   Notes to Consolidated Financial Statements
                           --------------------------


       6. LIABILITIES FOR INSURANCE AND ASSET ACCUMULATION PRODUCTS:

       These liabilities consisted of the following:



                                                                                    Interest
                                                         Withdrawal    Mortality      rate
                                                         assumption   assumption   assumption      2002            2001
                                                         ----------   ----------   ----------      ----            ----
                                                                                                   (Dollars in millions)
                                                                                                  
   Future policy benefits:
     Interest-sensitive products:
       Investment contracts............................      N/A          N/A          (c)        $ 9,203.6      $11,117.1
       Universal life-type contracts...................      N/A          N/A          N/A          4,265.9        4,670.6
                                                                                                  ---------      ---------

         Total interest-sensitive products.............                                            13,469.5       15,787.7
                                                                                                  ---------      ---------
     Traditional products:
       Traditional life insurance contracts............    Company        (a)          6%           1,821.3        2,091.5
                                                         experience

       Limited-payment contracts.......................    Company        (b)          7%             569.7          869.9
                                                         experience,
                                                        if applicable

       Individual and group accident and health .......    Company     Company         6%           5,580.4        5,211.4
                                                          experience  experience                  ---------      ---------


         Total traditional products....................                                             7,971.4        8,172.8
                                                                                                  ---------      ---------

   Claims payable and other policyholder funds ........      N/A          N/A          N/A            909.2        1,005.5
   Liabilities related to separate accounts and
     investment trust..................................      N/A          N/A          N/A            447.0        2,376.3
                                                                                                  ---------      ---------

       Total...........................................                                           $22,797.1      $27,342.3
                                                                                                  =========      =========


- --------------------
   (a) Principally, modifications of the 1965 - 70 and 1975 - 80 Basic, Select
       and Ultimate Tables.
   (b) Principally, the 1984 United States Population Table and the NAIC 1983
       Individual Annuitant Mortality Table.
   (c) In both 2002 and 2001: (i) approximately 96 percent of this liability
       represented account balances where future benefits are not guaranteed;
       and (ii) approximately 4 percent represented the present value of
       guaranteed future benefits determined using an average interest rate of
       approximately 6 percent.



                                      124


                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                   Notes to Consolidated Financial Statements
                           --------------------------


       Changes in the unpaid claims reserve and liabilities related to accident
and health insurance were as follows:



                                                            2002                  2001                  2000
                                                            ----                  ----                  -----
                                                                          (Dollars in millions)

                                                                                             
Balance, beginning of year.............................    $1,324.2             $1,324.9              $1,224.7
   Less reinsurance ceded..............................      (132.7)               (89.7)                (85.5)
                                                           --------             --------              --------

                                                            1,191.5              1,235.2               1,139.2
                                                           --------             --------              --------
Incurred claims related to:
   Current year........................................     1,906.5              1,986.4               2,053.1
   Prior year (a)......................................        73.1                (19.5)                 55.0
                                                           --------             --------              --------

      Total incurred...................................     1,979.6              1,966.9               2,108.1
                                                           --------             --------              --------

Paid claims related to:
   Current year........................................     1,137.9              1,232.4               1,277.4
   Prior year..........................................       699.3                778.2                 734.7
                                                           --------             --------              --------

      Total paid.......................................     1,837.2              2,010.6               2,012.1
                                                           --------             --------              --------

Balance, end of year...................................     1,333.9              1,191.5               1,235.2
   Reinsurance ceded...................................       107.5                132.7                  89.7
                                                           --------             --------              --------

                                                           $1,441.4             $1,324.2              $1,324.9
                                                           ========             ========              ========


- -------------
   (a) Such amounts will fluctuate based upon the estimation procedures used to
       determine the amount of unpaid losses. Such estimates are the result of
       ongoing analysis related to recent loss development trends.



                                      125



                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                   Notes to Consolidated Financial Statements
                           --------------------------

       7. INCOME TAXES:

       Our income tax expense includes deferred income taxes arising from
temporary differences between the financial reporting and tax bases of assets
and liabilities, capital loss carryforwards and net operating loss
carryforwards. The net deferred tax assets totaled $1,719.6 million at December
31, 2002 (including $925.7 million of deferred tax assets related to CFC which
are classified as discontinued operations). In assessing the realization of our
deferred income tax assets, we consider whether it is more likely than not that
the deferred income tax assets will be realized. The ultimate realization of our
deferred income tax assets depends upon generating future taxable income during
the periods in which our temporary differences become deductible and before our
net operating loss carryforwards expire. We evaluate the realizability of our
deferred income tax assets by assessing the need for a valuation allowance on a
quarterly basis. A valuation allowance of $1,719.6 million (of which $925.7
million relates to discontinued operations) has been provided for the entire
balance of net deferred income tax assets at December 31, 2002, as we believe
the realization of such assets in future periods is uncertain. We reached this
conclusion after considering the availability of taxable income in prior
carryback years, tax planning strategies, and the likelihood of future taxable
income exclusive of reversing temporary differences and carryforwards. This
conclusion was greatly influenced by recent unfavorable developments affecting
the Company such as rating downgrades that decrease the Company's likelihood to
generate adequate future taxable income to realize the tax benefits.

                                      126


                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                   Notes to Consolidated Financial Statements
                           --------------------------

       The Company established valuation contingencies related to certain tax
uncertainties of the insurance companies we acquired on the date of their
acquisition. We have determined that $146.2 million of such valuation
contingencies are no longer necessary because the tax uncertainties no longer
exist. Pursuant to Statement of Financial Accounting Standards Statement No.
109, "Accounting for Income Taxes", the benefit for the reduction of such
valuation contingencies shall be first applied to reduce the goodwill balance
related to the acquisition. Accordingly, in the second quarter of 2002, we
reduced such valuation contingencies (increasing deferred tax asset) and reduced
goodwill by $146.2 million. The components of the Company's income tax assets
and liabilities were as follows:



                                                                                                 2002          2001
                                                                                                 ----          ----
                                                                                                (Dollars in millions)
                                                                                                      
Deferred tax assets:
    Net operating loss carryforwards..................................................         $  615.0     $  411.7
    Deductible temporary differences:
       Actively managed fixed maturities..............................................            196.0        124.9
       Capital loss carryforwards.....................................................            112.8          -
       Interest-only securities.......................................................            536.3          -
       Insurance liabilities..........................................................            750.4        827.5
       Allowance for loan losses......................................................            252.2        148.2
       Reserve for loss on loan guarantees............................................            229.2        147.0
       Unrealized depreciation........................................................              -          247.1
       Debt obligations...............................................................             39.4          -
       Other..........................................................................             14.0          -
                                                                                               --------     --------

         Total deferred tax assets....................................................          2,745.3      1,906.4

       Valuation allowance............................................................          1,719.6          -
                                                                                               --------     --------

         Net deferred tax assets......................................................          1,025.7      1,906.4
                                                                                               --------     --------

Deferred tax liabilities:
       Venture capital income (loss)..................................................              -          (36.7)
       Interest-only securities.......................................................              -          (75.2)
       Cost of policies purchased and cost of policies produced.......................           (773.8)    (1,075.6)
       Unrealized appreciation........................................................           (126.2)         -
       Other..........................................................................           (125.7)       (56.2)
                                                                                               --------     --------

         Total deferred tax liabilities...............................................         (1,025.7)    (1,243.7)
                                                                                               --------     --------

Current income taxes prepaid..........................................................             66.9         15.4
Income tax liabilities classified as liabilities of discontinued operations...........             34.6          -
                                                                                               --------     --------

         Net income tax assets........................................................         $  101.5     $  678.1
                                                                                               ========     ========


       Included in the components of the consolidated net deferred tax asset are
$925.7 million of net deferred tax assets related to CFC (see the note entitled
"Financial Information Regarding CFC" for further detail). These assets are
offset by a $925.7 million valuation reserve. The CFC deferred taxes are
presented assuming a continuation of its business. The actual realization of
CFC's deferred items may be materially different as the result of the conclusion
of bankruptcy proceedings and the disposition of certain businesses.

       At December 31, 2002, Conseco had federal income tax loss carryforwards
of $1,757.4 million available (subject to various statutory restrictions) for
use on future tax returns (including $552.4 million of federal income tax
carryforwards attributable to discontinued operations). These carryforwards will
expire as follows: $2.3 million in 2003; $11.2 million in 2004; $4.9 million in
2005; $.6 million in 2006; $7.9 million in 2007; $7.5 million in 2008; $14.7
million in 2009; $30.7 million in 2010; $6.2 million in 2011; $10.1 million in
2012; $43.9 million in 2013; $6.9 million in 2014; $60.5 million in 2016; $90.0
million in 2017; $244.6 million in 2018; $159.1 million in 2019; $594.3 million
in 2020; and $462.0 million in 2022.

                                      127


                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                   Notes to Consolidated Financial Statements
                           --------------------------

       At December 31, 2002, Conseco had $322.4 million of capital loss
carryforwards. These carryforwards will expire as follows: $23.2 million in
2006; and $299.2 million in 2007.

       Income tax expense (benefit) was as follows:



                                                                                               2002       2001       2000
                                                                                               ----       ----       ----
                                                                                                  (Dollars in millions)

                                                                                                           
Current tax provision.....................................................................    $ 53.1     $ 132.2    $  65.9
Deferred tax provision (benefit)..........................................................       -        (195.7)    (232.1)
                                                                                              ------     -------    -------

         Income tax expense (benefit) on period income....................................      53.1       (63.5)    (166.2)

Valuation allowance.......................................................................     811.2         -           -
                                                                                              ------     -------    -------

         Total income tax expense (benefit)...............................................    $864.3     $ (63.5)   $(166.2)
                                                                                              ======     =======    =======


       The income tax expense (benefit) recorded in 2002 has been allocated
entirely to continuing operations before the following items: minority interest,
discontinued operations, extraordinary gain, cumulative effect of accounting
change and other comprehensive income. This accounting treatment is required
because the calculation of income tax expense is the same, both "with and
without" the items other than continuing operations discussed above.

       A reconciliation of the U.S. statutory corporate tax rate to the
effective rate reflected in the consolidated statement of operations is as
follows:



                                                                                                2002       2001       2000
                                                                                                ----       ----       ----

                                                                                                             
U.S. statutory corporate rate.............................................................     (35.0)%     (35.0)%    (35.0)%
Valuation allowance.......................................................................      49.6         -          -
Net deferred benefits not recognized in the current period................................      27.7         -          -
Nondeductible goodwill amortization and impairment........................................      10.9        15.9        5.1
Other nondeductible expenses..............................................................       (.1)       (1.6)       3.8
State taxes...............................................................................       (.2)        3.0        1.2
Provision for tax issues and other........................................................       -          (6.7)       3.3
                                                                                               -----       -----      -----

         Effective tax rate...............................................................      52.9%      (24.4)%    (21.6)%
                                                                                               =====       =====      =====


       Conseco and its affiliates are currently under examination by the
Internal Revenue Service for tax years ending June 30, 1998 through December 31,
1999. The outcome of the examination is not expected to result in material
adverse deficiencies, but may result in utilization or adjustment to the income
tax loss carryforwards reported above.

                                      128


                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                   Notes to Consolidated Financial Statements
                           --------------------------

       8. NOTES PAYABLE:

       Direct Corporate Obligations of CNC

       This note contains information regarding notes payable that were direct
corporate obligations of CNC as of December 31, 2002 and 2001. As a result of
the filing of the Chapter 11 Cases previously described, no payments have been
made by CNC on these prepetition notes payable:



                                                                              December 31,     December 31,
                                                                                  2002             2001
                                                                                  ----             ----
                                                                                  (Dollars in millions)

                                                                                            
$1.5 billion Senior Credit Facility..........................................   $1,531.4          $1,493.3
8.5% senior notes due 2002...................................................      224.9             302.3
8.5% guaranteed senior notes due 2003........................................        1.0               -
8.125% senior notes due 2003.................................................       63.5              63.5
6.4% senior notes due 2003...................................................      234.1             250.0
6.4% guaranteed senior notes due 2004........................................       14.9                -
10.5% senior notes due 2004..................................................       24.5              24.5
8.75% senior notes due 2004..................................................      423.7             788.0
8.75% guaranteed senior notes due 2006.......................................      364.3               -
6.8% senior notes due 2005...................................................       99.2             250.0
6.8% guaranteed senior notes due 2007........................................      150.8               -
9.0% senior notes due 2006...................................................      150.8             550.0
9.0% guaranteed senior notes due 2008........................................      399.2               -
10.75% senior notes due 2008.................................................       37.6             400.0
10.75% guaranteed senior notes due 2009......................................      362.4               -
                                                                                --------          --------

     Total principal amount..................................................    4,082.3           4,121.6
Unamortized net discount related to issuance of notes payable ...............      (34.0)            (42.1)
Mark-to-market adjustment related to hedging transactions (as described in
       the note entitled "Summary of Significant Accounting Policies").......        -                 5.5
Unamortized fair market value of terminated interest rate swap
       agreements (as described in the note entitled "Summary of
       Significant Accounting Policies").....................................        8.8               -
                                                                                --------          --------

Less amounts subject to compromise...........................................   (4,057.1)              -
                                                                                --------          --------

     Direct corporate obligations............................................   $    -            $4,085.0
                                                                                ========          ========


       CNC has not made any interest or principal payments on any of its direct
corporate obligations since its August 9, 2002 announcement that it intends to
effectuate a fundamental restructuring of the Company's capital structure. As a
result of its failure to make such payments and the filing of the Chapter 11
Cases, CNC has defaulted on its debt obligations, $481.3 million of principal
amount of the guaranteed D&O loans and approximately $1.9 billion of trust
preferred securities through cross-default provisions contained in the governing
instruments. CNC is also not in compliance with certain covenants under its bank
credit agreement and the guarantees of the D&O loans. During the reorganization
proceedings the Debtors are not subject to the restrictions contained in the
bank credit agreement and the guarantees of the D&O loans.

       CNC has a $1.5 billion credit facility (the "Senior Credit Facility")
with Bank of America, N.A., as administrative agent, and various other lending
institutions. The Senior Credit Facility was scheduled to mature on December 31,
2003. Approximately $38 million of accrued and unpaid interest was added to the
outstanding principal amount of the Senior Credit Facility pursuant to a waiver
dated September 8, 2002.

       In 1993, CNC issued $200 million of 8.125% senior notes due February 15,
2003 (the "93 Notes"). In 1994, CCP Insurance, Inc. ("CCP") issued $200 million
of 10.5% senior notes due December 15, 2004 (the "94 Notes"). CNC acquired CCP
by merger on

                                      129



                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                   Notes to Consolidated Financial Statements
                           --------------------------

August 31, 1995 and assumed CCP's obligations under the 94 Notes in connection
with the merger.

       We sometimes refer to the 93 Notes and the 94 Notes collectively as the
"93/94 Notes." The 93/94 Notes are secured by the stock of CIHC, Conseco Capital
Management, Inc. (a registered investment advisor and wholly-owned subsidiary of
CNC), CFC and certain of its subsidiaries and certain intercompany notes. It is
anticipated that substantially all of CFC's assets will be sold in connection
with the Company's reorganization. If certain of these assets have been pledged
to the holders of the 93/94 Notes, and if proceeds of these pledged assets are
used to pay the 93/94 Notes, then CFC may assert, by subrogation, the rights of
such holders against the Debtors.

       The collateral that secures the 93/94 Notes was pledged pursuant to an
"equal and ratable" clause in the indentures governing the 93/94 Notes. The
indentures of the 93/94 Notes provide that if another creditor obtains a
security interest in certain property of CNC or any of its significant
subsidiaries, then the 93/94 Notes will automatically obtain an "equal and
ratable" security interest in such property. Certain parties have alleged that
the legal mechanism by which the 93/94 Notes obtained a security interest
somehow impairs that security interest. Such parties allege that because the
holders of the 93/94 Notes did not provide consideration for the security
interest that they received simply because another party received that security
interest, the 93/94 Notes' security interest may be voided under a theory of
unjust enrichment, fraudulent conveyance or lack of consideration. Wilmington
Trust Company, the indenture trustee under the 93/94 Notes, maintains that any
and all claims with respect to the avoidability of the 93/94 Notes are frivolous
and wholly without merit.

       Between 1998 and 2001, CNC issued the following series of senior notes:
(i) $450,000,000 of 8.5% senior notes due October 15, 2002 (the "8.5% Original
Notes"); (ii) $250,000,000 of 6.4% senior notes due February 10, 2003 (the "6.4%
Original Notes"); (iii) $800,000,000 of 8.75% senior notes due February 9, 2004
(the "8.75% Original Notes"); (iv) $250,000,000 of 6.8% senior notes due June
15, 2005 (the "6.8% Original Notes"); (v) $550,000,000 of 9.0% senior notes due
October 15, 2006 (the "9.0% Original Notes"); and (vi) $400,000,000 of 10.75%
senior notes due June 15, 2008 (the "10.75% Original Notes").

       In April 2002, CNC completed an exchange of approximately $1.3 billion
aggregate principal amount of newly issued guaranteed notes for its senior
unsecured notes held by "qualified institutional buyers," institutional
"accredited investors", or non-U.S. persons in transactions outside the United
States. The bonds which were exchanged have identical principal and interest
components, but the new bonds have extended maturities in exchange for an
enhanced ranking in the Company's capital structure. The purpose of the exchange
offer was to extend the maturity profile of the existing notes in an effort to
improve the Company's financial flexibility and to enhance its future ability to
refinance public debt. The new notes are guaranteed on a senior subordinated
basis by CIHC. As a result, the new notes are structurally senior to the
existing notes. The new notes were not registered under the Securities Act of
1933, as amended, and may not be offered or sold in the United States absent
registration or an exemption from registration. CNC entered into a registration
rights agreement for the benefit of each exchange participant in which we agreed
to file, and did file, an exchange offer registration statement with the SEC
with respect to the new notes. However, as a result of the decision to
restructure the Company's capital, CNC does not intend to make the registered
exchange offer. Accordingly, the affected notes will accrue additional interest
as liquidated damages under the registration rights agreement.

       In connection with the exchange offer CNC issued: (i) $991,000 of 8.5%
senior notes due October 15, 2003, in exchange for an equal amount of 8.5%
Original Notes due October 15, 2002 (the "8.5% Exchange Notes"); (ii)
$14,936,000 of 6.4% senior notes due February 10, 2004 in exchange for an equal
amount of 6.4% Original Notes due February 10, 2003 (the "6.4% Exchange Notes");
(iii) $364,294,000 of 8.75% senior notes due August 9, 2006 in exchange for an
equal amount of 8.75% Original Notes due February 9, 2004 (the "8.75% Exchange
Notes"); (iv) $150,783,000 of 6.8% senior notes due June 15, 2007 in exchange
for an equal amount of 6.8% Original Notes due June 15, 2005 (the "6.8% Exchange
Notes"); (v) $399,200,000 of 9.0% senior notes due April 15, 2008 in exchange
for an equal amount of 9.0% Original Notes due October 15, 2006 (the "9.0%
Exchange Notes"); and (vi) $362,433,000 of 10.75% senior notes due June 15, 2009
in exchange for an equal amount of 10.75% Original Notes due June 15, 2008 (the
"10.75% Exchange Notes").

       Effective March 20, 2002, CNC reached agreement with the participating
banks in its bank credit facility to modify certain terms and conditions within
the $1.5 billion Senior Credit Facility. The most significant changes in the
amended facility include (i) a change in financial covenant requirements; (ii) a
change in the distribution of proceeds on asset sales; (iii) a reduction in the
minimum liquidity requirement at the holding company necessary to pay trust
preferred dividends; and (iv) a provision permitting the Company to exchange up
to $2.54 billion aggregate principal amount of newly issued notes guaranteed by
CIHC. As noted above, the new notes are structurally senior to the existing
notes, but subordinated to the CIHC guarantee of the Senior Credit Facility.
Absent the default described above, the amended facility would have been due on
December 31, 2003, and could have been extended to March

                                      130


                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                   Notes to Consolidated Financial Statements
                           --------------------------

31, 2005, subject to the satisfaction of a number of conditions.

       Our Senior Credit Facility requires the Company to maintain various
financial ratios and balances, as defined in the agreement. At December 31,
2002, we were not in compliance with these covenants in our Senior Credit
Facility. We were in violation of the following financial covenants we agreed to
maintain at December 31, 2002: (i) a debt to capitalization ratio of less than
..375:1.0 at December 31, 2002 and decreasing over time, as defined in the
agreement, to 0.300:1.0 at March 31, 2004 and thereafter (such ratio was
..567:1.0 at December 31, 2002); (ii) an interest coverage ratio greater than
1.10:1.0 for the four quarters ending December 31, 2002 and changing over time,
as defined in the agreement, to 2.50:1.0 for the four quarters ending June 30,
2004 and thereafter (such ratio was .11:1.0 for the four quarters ended December
31, 2002); (iii) adjusted earnings, as defined in the agreement, of at least
$1,300.0 million for the four quarters ending December 31, 2002 and increasing
over time, as defined in the agreement, to $1,700.0 million for the four
quarters ending September 30, 2004 (the adjusted earnings for the four quarters
ended December 31, 2002 were $926.7 million); and (iv) CFC tangible net worth,
as defined in the agreement, of at least $1.2 billion at December 31, 2002; and
$1.6 billion at March 31, 2005 (such tangible net worth was less than zero at
December 31, 2002). We also agreed to maintain the ratio of aggregate total
adjusted capital to aggregate authorized control level risk-based capital (as
defined by the National Association of Insurance Commissioners) with respect to
our insurance subsidiaries of at least 250 percent (such ratio was greater than
250 percent at December 31, 2002). Our amended credit facility provides that any
charges taken to write off goodwill to the extent required by SFAS 142 will be
excluded from the various financial ratios and covenants that we are required to
meet or maintain.

       The Senior Credit Facility reduces the 90-day moving average cash balance
we must maintain at the parent company from $100 million to $50 million. The
Company is required to have at least $50 million of cash on hand immediately
after making a trust preferred dividend payment in addition to the 90-day moving
average requirement. The parent company had less than $50 million in cash at
December 31, 2002. The Senior Credit Facility also states that in the event one
of Conseco's significant insurance subsidiaries is rated "B" or below by A.M.
Best, the Company must take certain actions to generate liquidity and accelerate
the repayment of the amended credit facility. All of our significant insurance
subsidiaries are rated "B" by A.M. Best.

       The Senior Credit Facility prohibits the payment of cash dividends on our
common stock until the Company has received investment grade ratings on its
outstanding public debt. Such agreement also prohibits the repurchase of our
common stock. The Senior Credit Facility limits the issuance of additional debt,
contingent obligations, liens, asset dispositions, other restrictive agreements,
affiliate transactions, change in business and modification of terms of debt or
preferred stock, all as defined in the agreements. The obligations under our
credit facility are also guaranteed by CIHC.

       Effective September 9, 2002, we were subject to the default interest rate
on the Senior Credit Facility. Such rate is based on the prime rate plus a
margin of 3.75 percent. Prior to September 9, 2002, the interest rate on the
amended credit facility was based on an IBOR rate plus a margin of 3.25 percent.
Borrowings under our Senior Credit Facility averaged $1,499.2 million during
2002, at a weighted average interest rate of 6.0 percent. The interest rate on
the Senior Credit Facility was 8.0 percent at December 31, 2002.

       On June 29, 2001, the Company completed the public offering of $400.0
million of senior notes with a stated rate of 10.75 percent (the "10.75%
Original Notes") due June 15, 2008. We entered into interest rate swap
agreements to convert the fixed rate on these notes to a weighted average
variable rate based on LIBOR plus approximately 5.75 percent. Such interest rate
swap agreements were terminated in 2002. See the note to the consolidated
financial statements entitled "Summary of Significant Accounting Policies" for
additional information on these interest rate swap agreements. The indenture for
the 10.75% Original Notes limits our ability to, among other things (all as
described in the indenture): (i) incur additional debt and issue preferred
stock; (ii) make loans and investments; (iii) pay dividends; (iv) create
additional loans on our assets; (v) engage in transactions with our affiliates;
(vi) consolidate, merge or transfer all or substantially all our assets; or
(vii) change lines of business. Most of the foregoing restrictions will expire
if the 10.75% Original Notes have been rated as investment grade securities by
either S & P or Moody's. The 10.75% Original Notes are unsecured and rank
equally with all other unsecured senior indebtedness of CNC. Proceeds from the
offering of approximately $385.9 million (after underwriting discounts and
estimated offering expenses) were used to reduce amounts outstanding under our
credit facilities. As a result, we recognized an extraordinary charge of $.4
million (net of an income tax benefit of $.2 million) in 2001.

       During 2002, we repurchased: (i) $76.4 million par value of the 8.5%
Original Notes (resulting in an extraordinary gain of $1.7 million); and (ii)
$1.0 million of the 6.4% Original Notes (resulting in an extraordinary gain of
$.2 million).

       During 2001, we repurchased: (i) $64.6 million par value of the 7.6%
senior notes due June 2001 (resulting in an extraordinary gain of $.3 million,
net of income taxes of $.2 million); and (ii) $147.7 million par value of the
8.5% Original Notes (resulting in an

                                      131


                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                   Notes to Consolidated Financial Statements
                           --------------------------

extraordinary gain of $15.8 million, net of income taxes of $8.5 million).

       Pursuant to the terms of the Mandatory Par Put Remarketed Securities, the
Company elected to redeem the notes at a redemption price defined in the
remarketing agreement. As a result, the Company recognized an extraordinary
charge of $4.6 million (net of an income tax benefit of $2.5 million) in the
second quarter of 2001.

       During 2000, we repurchased: (i) $18.5 million par value of the 7.875
percent notes due 2000 for $16.7 million; and (ii) $12 million par value of the
8.75% Original Notes for $8.7 million. We recognized an extraordinary gain of
$3.2 million (net of income taxes of $1.7 million) related to these repurchases.
In addition, during 2000, the Company repurchased $250 million of notes payable
due 2003. We recognized an extraordinary loss of $4.9 million (net of an income
tax benefit of $2.6 million) related to this repurchase.

       9. OTHER DISCLOSURES:

       Leases

       The Company rents office space, equipment and computer software under
noncancellable operating leases. Rental expense was $41.5 million in 2002, $45.3
million in 2001 and $42.4 million in 2000. Future required minimum rental
payments as of December 31, 2002, were as follows (dollars in millions):

                                                                                
2003   ......................................................................       $ 33.5
2004   ......................................................................         19.5
2005   ......................................................................         15.9
2006   ......................................................................         11.2
2007   ......................................................................          9.5
Thereafter...................................................................         10.8
                                                                                    ------

        Total................................................................       $100.4
                                                                                    ======




       Postretirement Plans

       One of our insurance subsidiaries has a noncontributory, unfunded
deferred compensation plan for qualifying members of its career agency force.
Benefits are based on years of service and career earnings. The liability
recognized in the consolidated balance sheet for the agents' deferred
compensation plan was $54.2 million and $48.4 million at December 31, 2002 and
2001, respectively. Included as an adjustment to accumulated other comprehensive
income (loss) is a $9.1 million adjustment representing the additional minimum
liability associated with this plan. Substantially all of this liability
represents vested benefits. Costs incurred on this plan, primarily representing
interest on unfunded benefit costs, were $5.1 million, $4.9 million and $4.4
million during 2002, 2001 and 2000, respectively.

                                      132


                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                   Notes to Consolidated Financial Statements
                           --------------------------

       The Company provides certain health care and life insurance benefits for
certain eligible retired employees under partially funded and unfunded plans in
existence at the date on which certain subsidiaries were acquired. Certain
postretirement benefit plans are contributory, with participants' contributions
adjusted annually. Amounts related to the postretirement benefit plans were as
follows:



                                                                                     Postretirement
                                                                                         benefits
                                                                                     --------------
                                                                                     2002      2001
                                                                                     ----      ----
                                                                                 (Dollars in millions)

                                                                                         
Benefit obligation, beginning of year........................................     $ 24.5       $ 21.1
    Interest cost............................................................        1.6          1.5
    Plan participants' contributions.........................................        1.1          1.1
    Actuarial loss (gain)....................................................         .4          3.1
    Benefits paid............................................................       (3.0)        (2.3)
                                                                                  ------       ------

Benefit obligation, end of year..............................................     $ 24.6       $ 24.5
                                                                                  ======       ======

Fair value of plan assets, beginning of year.................................     $  2.0       $  3.0
    Actual return on plan assets.............................................        -             .3
    Employer contributions...................................................        2.1          1.0
    Benefits paid............................................................       (3.0)        (2.3)
                                                                                  ------       ------

Fair value of plan assets, end of year.......................................     $  1.1       $  2.0
                                                                                  ======       ======

Funded status................................................................     $(23.5)      $(22.5)
Unrecognized net actuarial loss (gain).......................................       (7.1)        (7.6)
Unrecognized prior service cost..............................................       (1.4)        (1.6)
                                                                                  ------       ------

       Prepaid (accrued) benefit cost........................................     $(32.0)      $(31.7)
                                                                                  ======       ======


       We used the following weighted average assumptions to calculate benefit
obligations for our 2002 and 2001 valuations: discount rate of approximately 6.5
percent and 7.0 percent, respectively; an expected return on plan assets of
approximately 4.6 percent and 4.6 percent, respectively. Beginning in 2000, as a
result of plan amendments, no assumption for compensation increases was
required. For measurement purposes, we assumed an 11.5 percent annual rate of
increase in the per capita cost of covered health care benefits for 2003,
decreasing gradually to 5 percent in 2015 and remaining level thereafter.

       Components of the cost we recognized related to postretirement plans were
as follows:



                                                                                              Postretirement
                                                                                                     benefits
                                                                                      -----------------------------------------
                                                                                        2002       2001       2000
                                                                                        ----       ----       ----
                                                                                             (Dollars in millions)

                                                                                                      
Interest cost........................................................................   $1.6      $ 1.5        $1.5
Expected return of plan assets.......................................................    (.1)       (.1)        (.2)
Amortization of prior service cost...................................................    (.2)      (1.0)        (.9)
Recognized net actuarial loss........................................................    (.5)       (.1)         -
                                                                                        ----      -----        ----

       Net periodic cost (benefit)...................................................   $ .8      $  .3        $ .4
                                                                                        ====      =====        ====


       A one-percentage-point change in the assumed health care cost trend rates
would have an insignificant effect on the net periodic benefit cost of our
postretirement benefit obligation.

       The Company has qualified defined contribution plans for which
substantially all employees are eligible. Company contributions, which match
certain voluntary employee contributions to the plan, totaled $6.6 million in
2002, $4.7 million in 2001, and $9.1 million in 2000. Prior to 2002, employer
matching contributions were made in CNC common stock. For the first nine months
of 2002, employer matching

                                      133


                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                   Notes to Consolidated Financial Statements
                           --------------------------

contributions were made in cash. In September 2002, the plans were amended to
make future employer matching contributions discretionary. Subsequently, the
Company determined that no additional employer matching contributions will be
made until the Plan of Reorganization has been confirmed.

       Litigation

       As described in the note to the consolidated financial statements
entitled "Proceedings under Chapter 11 of the Bankruptcy Code", CNC and several
of its subsidiaries filed voluntary petitions for reorganization under Chapter
11 of the Bankruptcy Code in the Bankruptcy Court. The Company's insurance
subsidiaries and other subsidiaries who did not file petitions are separate
legal entities and are not included in the petitions filed by the parent. The
Debtors retain control of the insurance subsidiaries and related subsidiaries
and are authorized to operate these businesses as debtors-in-possession while
being subject to the jurisdiction of the Bankruptcy Court. The Finance Company
Debtors filed a separate plan in connection with their Chapter 11 Cases on April
2, 2003. As of the Petition Date, pending litigation against the Debtors or the
Finance Company Debtors is stayed, and absent further order of the Bankruptcy
Court, substantially all prepetition liabilities of the Debtors and the Finance
Company Debtors are subject to settlement under a plan of reorganization. Based
on the Plan of the Debtors, liabilities subject to compromise exceed the fair
value of the Debtors' assets, and unsecured claims will be satisfied at less
than 100 percent of their fair value.

       We and our subsidiaries are involved on an ongoing basis in lawsuits
(including purported class actions) relating to our operations, including with
respect to sales practices, and we and current and former officers and directors
are defendants in pending class action lawsuits asserting claims under the
securities laws and derivative lawsuits. The ultimate outcome of these lawsuits
cannot be predicted with certainty.

       Legal Proceedings Related to CFC Only

       CFC was served with various related lawsuits filed in the United States
District Court for the District of Minnesota. These lawsuits were generally
filed as purported class actions on behalf of persons or entities who purchased
common stock or options to purchase common stock of CFC during alleged class
periods that generally run from July 1995 to January 1998. One action (Florida
State Board of Admin. v. Green Tree Financial Corp., et. al, Case No. 98-1162)
was brought not on behalf of a class, but by the Florida State Board of
Administration, which invests and reinvests retirement funds for the benefit of
state employees. In addition to CFC, certain former officers and directors of
CFC are named as defendants in one or more of the lawsuits. CFC and other
defendants obtained an order consolidating the lawsuits seeking class action
status into two actions, one of which pertains to a purported class of common
stockholders (In re Green Tree Financial Corp. Stock Litig., Case No. 97-2666)
and the other of which pertains to a purported class of stock option traders (In
re Green Tree Financial Corp. Options Litig., Case No. 97-2679). Plaintiffs in
the lawsuits assert claims under Sections 10(b) (and Rule 10b-5 promulgated
thereunder) and 20(a) of the Securities Exchange Act of 1934. In each case,
plaintiffs allege that CFC and the other defendants violated federal securities
laws by, among other things, making false and misleading statements about the
current state and future prospects of CFC (particularly with respect to
prepayment assumptions and performance of certain loan portfolios of CFC), which
allegedly rendered CFC's financial statements false and misleading. On August
24, 1999, the United States District Court for the District of Minnesota issued
an order dismissing with prejudice all claims alleged in the lawsuits. The
plaintiffs subsequently appealed the decision to the U.S. Court of Appeals for
the 8th Circuit. A three judge panel issued an opinion on October 25, 2001,
reversing the United States District Court's dismissal order and remanding the
actions to the United States District Court. The parties to these lawsuits have
entered into a stipulation of settlement, which is subject only to review and
approval by the court.

       CFC is a defendant in two arbitration proceedings in South Carolina
(Lackey v. Green Tree Financial Corporation, n/k/a Conseco Finance Corp. and
Bazzle v. Green Tree Financial Corporation, n/k/a Conseco Finance Corp.) where
the arbitrator, over CFC's objection, allowed the plaintiffs to pursue purported
class action claims in arbitration. The two purported arbitration classes
consist of South Carolina residents who obtained real estate secured credit from
CFC's Manufactured Housing Division (Lackey) and Home Improvement Division
(Bazzle) in the early and mid 1990s, and did not receive a South Carolina
specific disclosure form relating to selection of attorneys and insurance agents
in connection with the credit transactions. The arbitrator, in separate awards
issued on July 24, 2000, awarded a total of $26.8 million in penalties and
attorneys' fees. The awards were confirmed as judgments in both Lackey and
Bazzle. These cases were consolidated into one case, and CFC appealed them to
the South Carolina Supreme Court. Oral argument was heard on March 21, 2002. On
August 26, 2002 the South Carolina Supreme Court affirmed the arbitration
judgments, and CFC filed a petition for writ of certiorari with the U.S. Supreme
Court on October 23, 2002. CFC's petition was granted in January 2003, and the
U.S. Supreme Court will hear oral argument on April 22, 2003. CFC has posted
appellate bonds, including $23 million of cash, for these cases. CFC intends to
challenge the awards vigorously and believes that the arbitrator erred by, among
other things, conducting class action arbitrations without the authority to do
so. The ultimate outcome of this proceeding

                                      134


                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                   Notes to Consolidated Financial Statements
                           --------------------------

cannot be predicted with certainty.

       Securities Litigation

       A total of forty-five suits were filed in 2000 against CNC in the United
States District Court for the Southern District of Indiana. Nineteen of these
cases were putative class actions on behalf of persons or entities that
purchased CNC's common stock during alleged class periods that generally run
from April 1999 through April 2000. Two cases were putative class actions on
behalf of persons or entities that purchased CNC's bonds during the same alleged
class periods. Three cases were putative class actions on behalf of persons or
entities that purchased or sold option contracts, not issued by CNC, on CNC's
common stock during the same alleged class periods. One case was a putative
class action on behalf of persons or entities that purchased CNC's "FELINE
PRIDES" convertible preferred stock instruments during the same alleged class
periods. With four exceptions, in each of these twenty-five cases two former
officers/directors of CNC were named as defendants. In each case, the plaintiffs
asserted claims under Sections 10(b) (and Rule 10b-5 promulgated thereunder) and
20(a) of the Securities Exchange Act of 1934. In each case, plaintiffs alleged
that CNC and the individual defendants violated the federal securities laws by,
among other things, making false and misleading statements about the current
state and future prospects of CFC (particularly with respect to performance of
certain loan portfolios of CFC) which allegedly rendered CNC's financial
statements false and misleading.

       Eleven of the cases in the United States District Court for the Southern
District of Indiana were filed as purported class actions on behalf of persons
or entities that purchased preferred securities issued by various Conseco
Financing Trusts, including Conseco Financing Trust V, Conseco Financing Trust
VI, and Conseco Financing Trust VII. Each of these complaints named as
defendants CNC, the relevant trust (with two exceptions), two former
officers/directors of CNC, and underwriters for the particular issuance (with
one exception). One complaint also named an officer and all of CNC's directors
at the time of issuance of the preferred securities by Conseco Financing Trust
VII. In each case, plaintiffs asserted claims under Section 11 and Section 15 of
the Securities Act of 1933, and eight complaints also asserted claims under
Section 12(a)(2) of that Act. Two complaints also asserted claims under Sections
10(b) and 20(a) of the Securities Exchange Act of 1934, and one complaint also
asserted a claim under Section 10(b) of that Act. In each case, plaintiffs
alleged that the defendants violated the federal securities laws by, among other
things, making false and misleading statements in Prospectuses and/or
Registration Statements related to the issuance of preferred securities by the
Trust involved regarding the current state and future prospects of CFC
(particularly with respect to performance of certain loan portfolios of CFC)
which allegedly rendered the disclosure documents false and misleading.

       All of the CNC securities cases were consolidated into one case in the
United States District Court for the Southern District of Indiana, captioned:
"In Re Conseco, Inc. Securities Litigation", Case number IP00-C585-Y/S (the
"securities litigation"). An amended complaint was filed on January 12, 2001,
which asserted claims under Sections 10(b) and 20(a) of the Securities Exchange
Act of 1934, and Sections 11, 12(a)(2), and 15 of the Securities Act of 1933,
with respect to common stock and various other securities issued by CNC and
Conseco Financing Trust VII. The Company filed a motion to dismiss the amended
complaint on April 27, 2001. On January 10, 2002, CNC entered into a Memorandum
of Understanding (the "MOU") to settle the litigation for $120 million subject
to court approval. Under the MOU, as amended on February 12, 2002, $106 million
was required to be placed in escrow by March 8, 2002; the remaining $14 million
was to be paid in two installments: $6 million by April 1, 2002, and $8 million
by October 1, 2002 (all payments with interest from January 25, 2002). The $106
million due on March 8, 2002, was not paid, for reasons set forth in the
following paragraph, and the MOU was terminated by the plaintiffs. On April 15,
2002, a new MOU was executed (the "April 15 MOU"). Pursuant to the April 15 MOU,
$95 million was funded on April 25, 2002, with the remaining $25 million to
await the outcome of the coverage litigation between CNC and certain of its
directors' and officers' liability insurance carriers as described in the next
paragraph. Court approval of the settlement was received on August 7, 2002.

       We maintained certain directors' and officers' liability insurance that
was in force at the time the Indiana securities and derivative litigation (the
derivative litigation is described below) was commenced and which, in our view,
applies to the claims asserted in that litigation. The insurers denied coverage
for those claims, so we commenced a lawsuit against them on June 13, 2001, in
Marion County Circuit Court in Indianapolis, Indiana (Conseco, Inc., et al. v.
National Union Fire Insurance Company of Pittsburgh, PA, Royal & SunAlliance,
Westchester Fire Insurance Company, RLI Insurance Company, Greenwich Insurance
Company and Certain Underwriters at Lloyd's of London, Case No.
49C010106CP001467) (the "coverage litigation") seeking, among other things, a
judicial declaration that coverage for those claims exists. The primary
insurance carrier, National Union Fire Insurance Co. of Pittsburgh, PA, has paid
its full $10 million in policy proceeds toward the settlement of the securities
litigation; in return, National Union has been released from the coverage
litigation. The first excess insurance carrier, Royal & SunAlliance ("Royal"),
has paid its full $15 million in policy proceeds toward the settlement, but
reserved rights to continue to litigate coverage. Royal subsequently asserted
counterclaims seeking repayment of the $15 million it previously provided to CNC
as part of the

                                      135


                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                   Notes to Consolidated Financial Statements
                           --------------------------

settlement. The second excess insurance carrier, Westchester Fire
Insurance Company, has paid its full $15 million in policy proceeds toward the
settlement without a reservation of rights and has been released from the
coverage litigation. The third excess insurance carrier, RLI Insurance Company
("RLI"), has paid its full $10 million in policy proceeds toward the settlement,
but initially reserved rights to continue to litigate coverage. RLI has
subsequently settled (for $50,000 paid by certain of the individual insureds as
partial payment of RLI's attorneys' fees incurred in the coverage litigation),
and RLI is no longer continuing to dispute coverage. The fourth excess insurance
carrier, Greenwich Insurance Company ("Greenwich"), has paid its full $25
million in policy proceeds toward the settlement without a reservation of rights
and has been released from the coverage litigation. The final excess carrier,
Certain Underwriters at Lloyd's of London ("Lloyd's"), refused to pay or to
escrow its $25 million in policy proceeds toward the settlement and is
continuing to litigate coverage. Under the April 15 MOU, the settlement of the
securities litigation will proceed notwithstanding the continuing coverage
litigation between CNC, Royal and Lloyd's. Since the United States District
Court for the Southern District of Indiana has approved the settlement of the
securities litigation prior to resolution of the coverage litigation, $90
million plus accrued interest is available for distribution to the putative
class. The remaining funds, with interest, will be distributed at the conclusion
of the coverage litigation (or, in the case of the $25 million at issue in the
litigation with Lloyd's, on December 31, 2005, if the litigation with Lloyd's
has not been resolved by that date), with such funds coming either from Lloyd's
(if CNC prevails in the coverage litigation) or from CNC (if CNC does not
prevail). We intend to pursue our coverage rights vigorously. Because the
directors' and officers' liability insurance that was in force at the time the
litigation commenced provides for coverage of $100 million, CNC believes its
exposure in the litigation should be $20 million (i.e., the excess of the $100
million in coverage). CNC believes that the insurance applies to the claims in
the securities litigation and that the two insurers who are continuing to
litigate the coverage issue were obligated to pay their policy limits to fund
the settlement, as the other four carriers have done. We recorded $20 million as
our best estimate of a probable loss in 2001. Such amount has been placed in
escrow. We also previously established the estimated remaining liability of $40
million and a claim receivable of $40 million. Such amount includes: (i) $15
million related to Royal who paid its portion of the settlement into a fund but
reserved its rights to continue to litigate coverage (which litigation is
proceeding); and (ii) $25 million related to Lloyd's who has refused to pay.
Following the filing of our Chapter 11 Case, the trial court granted Lloyd's
motion to dismiss our lawsuit resulting in our decision to establish an
allowance for the entire $40 million claim receivable CNC believes is due from
Royal and Lloyd's. We intend to appeal the decision to dismiss in part because
we believe the decision violates the stay in the Chapter 11 Case. CNC believes
that the coverage litigation should result in a determination that the insurer
that paid under a reservation of rights has no right to recoup the payment that
it made, and that the insurer that refused to pay is obligated to do so under
its policy. We believe the latter insurer should pay its portion of the coverage
once such determination is made. The ultimate outcome cannot be predicted with
certainty. CNC is also pursuing settlement discussions with Royal and Lloyd's.
In the event that CNC does not reach settlement and does not prevail in the
coverage litigation, it will seek to subordinate the securities plaintiffs'
claims under section 510 of the Bankruptcy Code, or disallow such claims under
sections 502(d) and 547 of the Bankruptcy Code, in which case CNC may not be
required to pay the portion of the settlement not covered by its directors' and
officers' liability insurance. CNC has asked the Bankruptcy Court to stay the
Indiana state court action, and the Bankruptcy Court is scheduled to hear that
motion on May 19, 2003.

       Since we announced our intention to restructure our capital on August 9,
2002, a total of eight purported securities fraud class action lawsuits have
been filed in the United States District Court for the Southern District of
Indiana. The complaints name CNC as a defendant, along with certain current and
former officers of CNC. These lawsuits were filed on behalf of persons or
entities who purchased CNC's common stock on various dates between October 24,
2001 and August 9, 2002. In each case Plaintiffs allege claims under Sections
10(b) and 20(a) of the Securities Exchange Act of 1934, and allege material
omissions and dissemination of materially misleading statements regarding, among
other things, the liquidity of CNC and alleged problems in CFC's manufactured
housing division, allegedly resulting in the artificial inflation of CNC's stock
price. Plaintiffs in one of these lawsuits have filed an uncontested
consolidation and lead plaintiff motion, which, if granted, would result in the
consolidation of these eight cases into one. On March 13, 2003, all of these
cases were consolidated into one case in the United States District Court for
the Southern District of Indiana, captioned "Franz Schleicher, et al. v.
Conseco, Inc., et al.," File No. 02-CV-1332 DFH-TAB. CNC believes these lawsuits
are without merit and intends to defend them vigorously. The ultimate outcome of
these lawsuits cannot be predicted with certainty. CNC has filed an adversary
proceeding to extend the automatic stay provided for by the Bankruptcy Code to
this litigation as it pertains to current and former officers and directors of
CNC.

       In October 2002, Roderick Russell, on behalf of himself and a class of
persons similarly situated, and on behalf of the ConsecoSave Plan filed an
action in the United States District Court for the Southern District of Indiana
against CNC, Conseco Services LLC and certain current and former officers of CNC
(Roderick Russell, et al. v Conseco, Inc., et al., Case No. 1:02-CV-1639 LJM).
The purported class action consists of all individuals whose 401(k) accounts
held common stock of CNC at any time from April 28, 1999 through the present.
The complaint alleges, among other things, breaches of fiduciary duties under
ERISA by continuing to permit employees to invest in CNC's common stock without
full disclosure of the Company's true financial condition. CNC believes

                                      136


the lawsuit is without merit and intends to defend it vigorously. The ultimate
outcome of the lawsuit cannot be predicted with certainty. CNC has filed an
adversary proceeding to extend the automatic stay provided for by the Bankruptcy
Code to this litigation as it pertains to current and former officers and
directors of CNC.

       Derivative Litigation

       Nine shareholder derivative suits were filed in 2000 in the United States
District Court for the Southern District of Indiana. The complaints named as
defendants the current directors, certain former directors, certain non-director
officers of CNC (in one case), and, alleging aiding and abetting liability,
certain banks that allegedly made loans in relation to CNC's "Stock Purchase
Plan" (in three cases). CNC is also named as a nominal defendant in each
complaint. Plaintiffs allege that the defendants breached their fiduciary duties
by, among other things, intentionally disseminating false and misleading
statements concerning the acquisition, performance and proposed sale of CFC, and
engaged in corporate waste by causing CNC to guarantee loans that certain
officers, directors and key employees of CNC used to purchase stock under the
Stock Purchase Plan. These cases have now been consolidated into one case in the
United States District Court for the Southern District of Indiana, captioned:
"In Re Conseco, Inc. Derivative Litigation", Case Number IP00655-C-Y/S. An
amended complaint was filed on April 12, 2001, making generally the same
allegations and allegations of violation of the Federal Reserve Board's margin
rules. Three similar cases have been filed in the Hamilton County Superior Court
in Indiana. Schweitzer v. Hilbert, et al., Case No. 29D01-0004CP251; Evans v.
Hilbert, et al., Case No. 29D01-0005CP308 (both Schweitzer and Evans name as
defendants certain non-director officers); Gintel v. Hilbert, et al., Case No.
29003-0006CP393 (naming as defendants, and alleging aiding and abetting
liability as to, banks that allegedly made loans in relation to the Stock
Purchase Plan). CNC believes that these lawsuits are without merit and intends
to defend them vigorously. The cases filed in Hamilton County have been stayed
pending resolution of the derivative suits filed in the United States District
Court. CNC asserts that these lawsuits are assets of the estate pursuant to
section 541(a) of the Bankruptcy Code and does not currently intend to pursue
them postpetition because they are meritless. The ultimate outcome of these
lawsuits cannot be predicted with certainty.

       Other Litigation

       On January 15, 2002, Carmel Fifth, LLC ("Carmel"), an indirect,
wholly-owned subsidiary of CNC, exercised its rights to require 767 Manager, LLC
("Manager"), an affiliate of Donald J. Trump, to elect within 60 days, either to
acquire Carmel's interests in 767 LLC for $499.4 million, or to sell its
interests in 767 LLC to Carmel for $15.6 million (the "Buy/Sell Right"). Such
rights were exercised pursuant to the Limited Liability Company Agreement of 767
LLC. 767 LLC is a Delaware limited liability company that indirectly owns the
General Motors Building, a 50-story office building in New York, New York (the
"GM Building"). 767 LLC is owned by Carmel and Manager. On February 6, 2002, Mr.
Trump commenced a civil action against CNC, Carmel and 767 LLC in New York State
Supreme Court, entitled Donald J. Trump v. Conseco, Inc., et al. (the "State
Court Action"). Plaintiff claims that CNC and Carmel breached an agreement,
dated July 3, 2001, to sell Carmel's interests to plaintiff for $295 million on
or before September 15, 2001 (the "July 3rd Agreement"). Specifically, plaintiff
claims that CNC and Carmel improperly refused to accept a reasonable guaranty of
plaintiff's payment obligations, refused to complete the sale of Carmel's
interest before the September 15, 2001 deadline, repudiated an oral promise to
extend the September 15 deadline indefinitely and repudiated the July 3rd
Agreement by exercising Carmel's Buy/Sell Right. Plaintiff asserts claims for
breach of contract, breach of the implied covenant of good faith and fair
dealing, promissory estoppel, unjust enrichment and breach of fiduciary duty.
Plaintiff is seeking compensatory and punitive damages of approximately $1
billion and declaratory and injunctive relief blocking Carmel's Buy/Sell Right.
On March 25, 2002, Carmel filed a Demand for Arbitration and Petition and
Statement of Claim with the American Arbitration Association ("AAA") to have the
issues relating to the Buy/Sell Right resolved by arbitration (the
"Arbitration"). Manager and Mr. Trump requested the New York State Supreme Court
to stay that arbitration, but the Court denied Manager's and Trump's request on
May 2, 2002, allowing the arbitration to proceed. In addition, CNC and Carmel
filed a Motion to Dismiss Mr. Trump's lawsuit on March 25, 2002. By Stipulation
and Order, dated June 14, 2002, the State Court Action was stayed, pending
resolution of the Arbitration. CNC plans to vigorously pursue its options to
compel prompt resolution of this dispute. CNC believes that Mr. Trump's lawsuit
is without merit and intends to vigorously pursue its own rights to acquire the
GM Building. The ultimate outcome cannot be predicted with certainty. On
February 21, 2003, the Trump entities filed a proof of claim asserting a general
unsecured claim of $1 billion against CNC. On March 3, 2003, CNC and Carmel
Fifth initiated an adversary proceeding against the Trump entities. CNC and
Carmel Fifth's adversary complaint seeks declaratory and injunctive relief
against the Trump entities. CNC and Carmel Fifth's adversary action requests
that the court find (1) that the July 3rd Agreement terminated due to Trump's
failure to comply with the terms of that agreement, and (2) that the Trump
entities are required to convey their interest in 767 LLC to Carmel Fifth
pursuant to Carmel Fifth's rights under the LLC Agreement. On March 5, 2003, CNC
and Carmel Fifth, in the adversary proceeding, filed an emergency motion for
preliminary injunction and an emergency motion for expedited hearing. Through
those motions, CNC and Carmel Fifth sought: an accelerated schedule for
resolution of their claims against the Trump entities, removal of Mr. Trump from
management of the GM Building, and

                                      137


                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                   Notes to Consolidated Financial Statements
                           --------------------------

an order restraining Mr. Trump and the Trump entities from interference with CNC
and Carmel Fifth's efforts to market the GM Building. The Bankruptcy Court has
assumed jurisdiction of the matters related to the July 3rd Agreement and has
denied jurisdiction with respect to Carmel Fifth's rights under the LLC
Agreement and ordered that the arbitration of the LLC Agreement matters be
completed or nearly completed by May 19, 2003. After such time, the Bankruptcy
Court will set the July 3rd Agreement matters for trial. In connection with the
Bankruptcy Court's ruling on the jurisdictional issues, the parties stipulated
that they would appear before the Bankruptcy Court to provide updates with
respect to the pending arbitration in order to keep the arbitration process on
schedule for resolution or near resolution by May 19, 2003. The Court also
ordered the Trump entities to stipulate that they would take no actions that
would delay completion or near completion of arbitration by May 19, 2003.

       On June 24, 2002, the heirs of a former officer, Lawrence Inlow,
commenced an action against CNC, Conseco Services, LLC, and two former officers
in the Boone Circuit Court (Inlow et al. v. Conseco, Inc., et al., Cause No.
06C01-0206-CT-244). The heirs assert that unvested options to purchase 756,248
shares of CNC common stock should have been vested at Mr. Inlow's death. The
heirs further claim that if such options had been vested, they would have been
exercised, and that the resulting shares of common stock would have been sold
for a gain of approximately $30 million based upon a stock price of $58.125 per
share, the highest stock price during the alleged exercise period of the
options. CNC believes the heirs' claims are without merit and will defend the
action vigorously. The maximum exposure to the Company for this lawsuit is
estimated to be $33 million. The ultimate outcome cannot be predicted with
certainty.

       CNC is also a party to litigation related to the death of Lawrence Inlow
with the manufacturer of a corporate helicopter and other parties. This
litigation was consolidated in the United States District Court for the Southern
District of Indiana (In re: Inlow Accident Litigation, Cause No.
IP99-0830-C-H/G) and is currently on appeal to the Seventh Circuit Court of
Appeals. The maximum exposure for this litigation is estimated to be $25
million, although CNC believes that the claims against it are without merit. The
ultimate outcome cannot be predicted with certainty. CNC is also party to
litigation with Associated Aviation Underwriters, Inc. in Hamilton County
Superior Court (Associated Aviation Underwriters, Inc. v. Conseco Inc., et al,
Cause No. 29C01-9909-CP588) relating to Associated Aviation Underwriters'
obligation to defend and/or indemnify CNC in the aforementioned litigation. If
CNC prevails in this lawsuit, Associated Underwriters may be obligated to
indemnify CNC for all or part of its liability in the aforementioned litigation.
This litigation has been stayed until final judgments are rendered in the former
litigation.

       In addition, the Company and its subsidiaries are involved on an ongoing
basis in other lawsuits and arbitrations (including purported class actions)
related to their operations. These actions include one action brought by the
Texas Attorney General regarding long-term care policies, two purported
nationwide class actions involving claims related to "vanishing premiums," and
two purported nationwide class actions involving claims related to "modal
premiums" (the alleged imposition and collection of insurance premium surcharges
in excess of stated annual premiums. The ultimate outcome of all of these other
legal matters pending against the Company or its subsidiaries cannot be
predicted, and, although such lawsuits are not expected individually to have a
material adverse effect on the Company, such lawsuits could have, in the
aggregate, a material adverse effect on the Company's consolidated financial
condition, cash flows or results of operations.

       Other Proceedings

       The Company has been notified that the staff of the SEC has obtained a
formal order of investigation in connection with an inquiry that relates to
events in and before the spring of 2000, including CFC's accounting for its
interest-only securities and servicing rights. These issues were among those
addressed in the Company's write-down and restatement in the spring of 2000, and
were the subject of shareholder class action litigation, which has recently been
settled as described above. The Company is cooperating with the SEC staff in
this matter.

       The Company has been notified that the Alabama Securities Commission is
examining the Company's 1998 Directors/Officers & Key Employees Stock Purchase
Program and the 2000 Employee Stock Purchase Program Work-Down Plan. The Company
is cooperating with the Commission's staff in this matter.

       Guaranty Fund Assessments

       The balance sheet at December 31, 2002, includes: (i) accruals of $11.5
million, representing our estimate of all known assessments that will be levied
against the Company's insurance subsidiaries by various state guaranty
associations based on premiums written through December 31, 2002; and (ii)
receivables of $7.5 million that we estimate will be recovered through a
reduction in future premium taxes as a result of such assessments. At December
31, 2001, such guaranty fund assessment related accruals were $18.7

                                      138



                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                   Notes to Consolidated Financial Statements
                           --------------------------

million and such receivables were $8.0 million. These estimates are subject to
change when the associations determine more precisely the losses that have
occurred and how such losses will be allocated among the insurance companies. We
recognized expense (benefit) for such assessments of $(1.7) million in 2002,
$6.5 million in 2001 and $7.6 million in 2000.

       Guarantees

       We have guaranteed D&O loans totaling $481.3 million. As previously
described, Conseco has defaulted on certain notes, which has resulted in the
immediate maturity of the D&O loans through cross-acceleration and cross-default
provisions contained in the governing instruments. The proceeds of the bank
loans were used by the participants to purchase approximately 18.0 million
shares of Conseco common stock in open market or negotiated transactions with
independent parties. Such shares have been held by the D&O lenders as collateral
for the loans. In addition, Conseco has provided loans to participants for
interest on the D&O loans totaling $179.2 million.

       The Company is exploring a number of alternatives to reduce the balance
of certain participants' D&O loans. The plan currently being considered would
reduce the D&O loan balance of certain participants who collectively owe less
than 10 percent of the entire amount due under the stock purchase program.
Conseco also granted a security interest in most of its assets in conjunction
with the guarantee of a portion of the bank loans. In 2002, 2001, and 2000, we
established a noncash provision in connection with these guarantees and loans of
$240.0 million, $169.6 million and $231.5 million, respectively. Such provision
is included as a component of the provision for losses. At December 31, 2002,
the reserve for losses on the loan guarantees and on the loans held by Conseco
totaled $660.0 million. During 2002, Conseco purchased $55.5 million of loans
from the banks utilizing cash held in a segregated cash account as collateral
for our guarantee of the bank loans (including accrued interest, the balance on
these loans was $56.7 million at December 31, 2002). At December 31, 2002, the
guaranteed bank loans and interest loans exceeded the value of the collateral
held and the reserve for losses by approximately $50 million. All participants
have agreed to indemnify Conseco for any loss incurred on their loans. We
regularly evaluate these guarantees and loans in light of the collateral and the
creditworthiness of the participants.

     CIHC is the guarantor of an aggregate principal amount of $125 million with
respect to CFC's residual and warehouse lines of credit with Lehman Brothers,
Inc. and its affiliates ("Lehman"). Such facilities are collectively referred to
as the "CFC Lehman Facilities". In addition, CIHC is the guarantor of: (i) the
term portion of the Secured Super-Priority Debtor in Possession Credit
Agreement, dated as of December 19, 2002, among CFC, various subsidiaries of
CFC, CIHC and FPS DIP, LLC (the "FPS DIP"); and (ii) a cash management facility
with U.S. Bank National Association (the "U.S. Bank Facility"). The term portion
of the FPS DIP provides for funding in a maximum aggregate amount of $60 million
and is fully drawn. The guarantee obligations of CIHC under the FPS DIP and the
U.S. Bank Facility are limited to an aggregate of $125 million. The December 31,
2002 balances outstanding on the CFC Lehman Facilities and CFC's
debtor-in-possession facility are included in the caption "Liabilities of
discontinued operations" in the liability section of the consolidated balance
sheet. Also, see the note to the consolidated financial statement entitled
"Financial Information Regarding CFC." Assuming the sale of CFC's assets is
completed and CFC receives the proceeds from the sale of such assets as
contemplated by the CFN and GE transactions, Conseco believes the proceeds will
be sufficient to satisfy CFC's obligations pursuant to the Lehman and CFC's
debtor-in-possession facility and all claims senior to such facilities. CFC's
unsecured creditors have indicated that they intend to challenge Lehman's
security position and otherwise attempt to prevent Lehman from being paid in
full out of the proceeds from the sale of CFC's assets. If Lehman were not paid
in full from the proceeds, Lehman would likely pursue its claim on the CIHC
guarantee which, if successful, could impact the ability of the Debtors to
complete their proposed Plan.

       In accordance with the terms of the Company's former Chief Executive
Officer's employment agreement, Bankers Life & Casualty Company, a wholly-owned
subsidiary of the Company, is the guarantor of the former executive's
nonqualified supplemental retirement benefit. The liability for such benefit at
December 31, 2002 was $14.8 million and is included in the caption "Other
liabilities" in the liability section of the consolidated balance sheet.

       Trust Preferred Securities

       Certain wholly-owned subsidiary trusts have issued preferred securities
in public offerings. The trusts used the proceeds from these offerings to
purchase subordinated debentures from Conseco. The terms of the preferred
securities parallel the terms of the debentures, which account for substantially
all trust assets. The preferred securities are to be redeemed on a pro rata
basis, to the same extent as the debentures are repaid. Under certain
circumstances involving a change in law or legal interpretation, the debentures
may be distributed to the holders of the preferred securities. Our obligations
under the debentures and related agreements, taken together, provide a full and
unconditional guarantee of payments due on the preferred securities. The
debentures issued to the subsidiary trusts

                                      139


                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                   Notes to Consolidated Financial Statements
                           --------------------------

and the common securities purchased by Conseco from the subsidiary trusts are
eliminated in the consolidated financial statements.

       On February 16, 2001, the trust preferred securities component of the
FELINE PRIDES were retained by the Company (and subsequently retired) as payment
under the stock purchase contract in accordance with their terms and, as a
result, we issued 11.4 million shares of Conseco common stock to the holders of
the FELINE PRIDES. The $496.6 million carrying value of the FELINE PRIDES that
were retired (and used for payment pursuant to the stock purchase contracts) was
transferred from minority interest to common stock and additional paid-in
capital.

       In April 2000, the Company and the holder of the Redeemable Hybrid Income
Overnight Shares ("RHINOS") issued in 1999 agreed to the repurchase by the
Company of the RHINOS at their $250 million par value. The Company recognized an
extraordinary loss of $3.3 million (net of income taxes of $1.8 million) in the
second quarter of 2000 related to the redemption.

       Trust Preferred Securities at December 31, 2002, were as follows:



                                                        Year                  Carrying   Distribution     Earliest/mandatory
                                                       issued     Par value     value       rate           redemption dates
                                                       ------     ---------     -----       ----           ----------------
                                                                    (Dollars in millions)

                                                                                             
Trust Originated Preferred Securities................   1999     $   300.0     $  296.5       9.44%         2004/2029 (b)
Trust Originated Preferred Securities ...............   1998         500.0        496.9       8.70          2003/2028 (b)
Trust Originated Preferred Securities................   1998         230.0        228.1       9.00          2003/2028 (b)
Capital Securities (a)...............................   1997         300.0        300.0       8.80               2027
Trust Originated Preferred Securities................   1996         275.0        275.0       9.16          2001/2026 (b)
Capital Trust Pass-through Securities (a)............   1996         325.0        325.0       8.70               2026
                                                                 ---------     --------

                                                                 $ 1,930.0     $1,921.5
                                                                 =========     ========


- ---------------
   (a) These securities may be redeemed anytime at: (i) the principal balance;
       plus (ii) a premium equal to the excess, if any, of the sum of the
       discounted present value of the remaining scheduled payments of principal
       and interest using a current market interest rate over the principal
       amount of securities to be redeemed.

   (b) The mandatory redemption dates of these securities may be extended for up
       to 19 years.



       So long as no event of default under the debentures has occurred and is
continuing, Conseco has the right to defer interest payments on the subordinated
debentures for up to 20 consecutive quarters, but not beyond the maturity date
of the subordinated debentures. If Conseco defers interest payments on the
subordinated debentures, the trust will also defer distributions on the Trust
Preferred Securities. During the deferral period, distributions continue to
accumulate on the par amount plus any unpaid distributions at the stated
distribution rate. Since the third quarter of 2002, Conseco has not paid certain
interest and principal payments on its notes payable which resulted in defaults
with respect to the Trust Preferred Securities through cross-default provisions.

                                      140


                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                   Notes to Consolidated Financial Statements
                           --------------------------

       Reclassification Adjustments Included in Comprehensive Income

       The changes in unrealized appreciation (depreciation) included in
comprehensive income are net of reclassification adjustments for after-tax net
gains (losses) from the sale of investments included in net income (loss) of
approximately $545 million, $240 million and $220 million for the years ended
December 31, 2002, 2001 and 2000, respectively.

       Sale of Interest in Riverboat

       In the first quarter of 2001, the Company sold its 29 percent ownership
interest in the riverboat casino in Lawrenceberg, Indiana, for $260 million. We
recognized a net gain on the sale of $192.4 million.

       10. SPECIAL CHARGES

       2002

       The following table summarizes the special charges incurred by the
Company during 2002, which are further described in the paragraphs which follow
(dollars in millions):

                                                                                         
     Loss related to reinsurance transactions and businesses sold to raise cash.....        $47.5
     Costs related to debt modification and refinancing transactions................         17.7
     Other items....................................................................         31.3
                                                                                            -----

         Special charges before income tax benefit..................................        $96.5
                                                                                            =====



       Loss related to reinsurance transactions and businesses sold to raise
       cash

       We completed various asset sales and reinsurance transactions to raise
cash which resulted in net losses of $47.5 million in 2002. Such amounts
included: (i) a loss of $39.0 million related to the reinsurance of a portion of
our life insurance business; (ii) a loss of $20.0 million associated with the
sale of Exl; partially offset by (iii) asset sales resulting in a net gain of
$11.5 million.

       Costs related to debt modification and refinancing transactions

       In conjunction with the various modifications to borrowing arrangements
(including the debt exchange offer completed in April 2002), we incurred costs
of $17.7 million in 2002 which are not permitted to be deferred pursuant to
GAAP.

       Other items

       Other items include expenses incurred: (i) as a result of the termination
of our chief financial officer; (ii) in conjunction with the transfer of certain
customer service and backroom operations to our India subsidiary; (iii) for
severance benefits; and (iv) for other items which are not individually
significant. The Company sold its India subsidiary in the fourth quarter of 2002
and has significantly reduced the customer service and backroom operations
conducted there.

                                      141


                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                   Notes to Consolidated Financial Statements
                           --------------------------

       2001

       The following table summarizes the special charges incurred by the
Company during 2001, which are further described in the paragraphs which follow
(dollars in millions):
                                                                                           
Organizational restructuring:
   Severance benefits....................................................................     $12.4
   Office closings and sale of artwork...................................................       7.9
   Transfer of certain customer service and backroom operations to our
     India subsidiary....................................................................      10.6
Amounts related to disputed reinsurance balances.........................................       8.5
Litigation expenses......................................................................      23.8
Other items..............................................................................      17.2
                                                                                              -----

   Special charges before income tax benefit.............................................     $80.4
                                                                                              =====



       Severance benefits

       During 2001, Conseco undertook several restructuring actions in an effort
to improve the Company's operations and profitability. The planned changes
included moving a significant number of jobs to India. Pursuant to GAAP, the
Company is required to recognize the costs associated with most restructuring
activities as the costs are incurred. However, costs associated with severance
benefits are required to be recognized when the costs are: (i) attributable to
employees' services that have already been rendered; (ii) relate to obligations
that accumulate; and (iii) are probable and can be reasonably estimated. Since
the severance costs associated with our planned activities met these
requirements, we recognized a charge of $12.4 million in 2001.

       Office closings and sale of artwork

       In conjunction with our restructuring activities, we closed certain
offices, which resulted in the abandonment of certain leasehold improvements.
Further, certain antiques and artwork, formerly displayed in the Company's
executive offices were sold. We recognized losses of $7.9 million related to
these actions in 2001.

       Amounts related to disputed reinsurance balances

       During 2001, we discontinued marketing certain medical insurance
products. Several reinsurers who assumed most of the risks associated with these
products disputed the reinsurance receivables due to us. We established an
allowance of $8.5 million for disputed balances that were ultimately written off
due to their uncollectibility.

       Litigation expenses

       Litigation expenses primarily include the cost and proposed settlement
related to our securities litigation class action lawsuit. Such lawsuit is
further discussed in the note to the consolidated financial statements entitled
"Other Disclosures".

       Other items

       Other items include expenses incurred: (i) for consulting fees with
respect to services provided related to various debt and organizational
restructuring transactions; (ii) pursuant to the terms of the employment
agreement for our chief executive officer; and (iii) for other items which are
not individually significant.

                                      142


                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                   Notes to Consolidated Financial Statements
                           --------------------------

       2000

       The Company incurred significant special charges during 2000, primarily
related to the restructuring of our debt, asset sales to raise cash and payments
made pursuant to employment contracts. The following table summarizes the
special charges, which are further described in the paragraphs which follow
(dollars in millions):
                                                                              
Advisory and professional fees related to debt restructuring................     $  9.9
Restructuring of finance business:
     Loss on sale of asset-based loans......................................       15.2
     Loss on sale of subprime automobile business...........................       71.6
     Advisory fees paid to Lehman and other investment banks................       44.0

Executive contracts:
     Executive termination payment .........................................       72.5
     Chief Executive Officer signing payment................................       45.0
     Warrants issued to General Electric Company............................       21.0

Other items.................................................................       25.8
                                                                                 ------

         Special charges before income tax benefit..........................     $305.0
                                                                                 ======



       Advisory and professional fees related to debt restructuring

       During 2000, we incurred $9.9 million of non-deferrable advisory and
professional fees primarily related to the restructuring of our bank credit
facilities.

       Loss on sale of asset-based loans

       During the third quarter of 2000, we sold asset-based loans with a
carrying value of $63.9 million in whole loan sale transactions. We recognized a
loss of $15.2 million on these sales.

       Loss on sale of subprime automobile business

       During the second quarter of 2000, we sold all of the finance receivables
of our subprime automobile financing and servicing companies and terminated
their operations. We recognized a net loss on these sales of $71.6 million.

       Advisory fees paid to Lehman and other investment banks

       We paid Lehman $20.0 million in fees for its efforts to form an investor
group to purchase Conseco Finance. In addition, the Company paid other
investment banks and financial institutions $24.0 million in advisory fees
related to the potential sale of Conseco Finance and consultation regarding
various other transactions.

       Executive Terminations

       On April 28, 2000, Conseco and Stephen C. Hilbert, the Company's former
Chairman and Chief Executive Officer, entered into an agreement pursuant to
which Mr. Hilbert's employment was terminated. As contemplated by the terms of
his employment agreement, Mr. Hilbert received: (i) $72.5 million (prior to
required withholdings for taxes), an amount equal to five times his salary and
the non-discretionary bonus amount (as defined in his employment agreement) for
2000; less (ii) the amount due under a secured loan of $23 million, plus accrued
interest, made to Mr. Hilbert on April 6, 2000. Mr. Hilbert also received the
bonus of $3,375,000 payable under his employment agreement for the first quarter
of 2000. Conseco agreed to continue to treat Mr. Hilbert as though he were an
employee/participant for purposes of the guaranteed bank loans and the loans for
interest on such loans pursuant to the stock purchase program. Conseco also
entered into a consulting agreement with Mr. Hilbert pursuant to which Mr.
Hilbert agreed to provide consulting services up to an average of 25 hours per
month for a period of three years. Mr. Hilbert also agreed not to compete with
Conseco during the term of the consulting agreement. On April 27, 2000, Mr.
Hilbert was granted options to purchase an aggregate of 2,000,000 shares of
Conseco common stock at a price of $5.75 per share (the average of the high and
low sales prices on the New York Stock Exchange on such date). The options
expire on April 26, 2003.

                                      143


                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                   Notes to Consolidated Financial Statements
                           --------------------------

       On April 28, 2000, Conseco and Rollin M. Dick, the Company's former Chief
Financial Officer, entered into an agreement pursuant to which Mr. Dick's
employment was terminated. As contemplated by the terms of his employment
agreement, Conseco agreed to pay Mr. Dick his salary of $250,000 per year
through December 31, 2001, and he also received the bonus of $187,500 payable
under his employment agreement for the first quarter of 2000. Conseco also
agreed to continue to treat Mr. Dick as though he were an employee/participant
for purposes of the guaranteed bank loans and the loans for interest on such
loans pursuant to the stock purchase program. Conseco also entered into a
consulting agreement with Mr. Dick pursuant to which Mr. Dick agreed to provide
consulting services up to an average of 25 hours per month for a period of three
years. Mr. Dick also agreed not to compete with Conseco during the term of the
consulting agreement. On April 27, 2000, Mr. Dick was granted options to
purchase an aggregate of 600,000 shares of Conseco common stock at a price of
$5.75 per share. The options expire on April 26, 2003.

       Executive Hiring

       On June 28, 2000, the Company hired Gary C. Wendt as its Chief Executive
Officer. Pursuant to the terms of his employment agreement, Mr. Wendt received a
payment of $45 million (prior to required withholdings for taxes) and was
granted options to purchase an aggregate of 10,000,000 shares of Conseco common
stock at a price of $5.875 per share (the average of the high and low sales
price on the New York Stock Exchange on the date on which the substantial terms
of Mr. Wendt's employment were agreed to). The options vest over five years and
expire on June 28, 2010. The Company also issued 3,200,000 shares of restricted
stock to Mr. Wendt. The restrictions on the stock lapse if Mr. Wendt remains
employed by Conseco through June 30, 2002, or upon a "change in control" of the
Company. The value of the restricted shares ($18.8 million) was recognized as an
expense to the Company over the two year period ending June 30, 2002. In 2002,
Mr. Wendt's restricted stock agreement was amended to extend the date that the
restrictions on the stock would lapse. Prior to the date that the restrictions
would lapse, Mr. Wendt resigned his position of Chief Executive Officer
(although he remains Chairman of the Board of Conseco) and the shares were
canceled. Mr. Wendt is also being provided certain supplemental retirement,
insurance and other benefits under the terms of his employment agreement.

       In conjunction with Mr. Wendt's hiring and his release from noncompete
provisions of a prior agreement, the Company issued a warrant to a subsidiary of
General Electric Company to purchase 10,500,000 shares of Conseco common stock
at a purchase price of $5.75 per share. The estimated value of the warrant
($21.0 million) was recognized as a special charge.

       11. SHAREHOLDERS' EQUITY:

       We are authorized to issue up to 20 million shares of preferred stock. On
December 15, 1999, we issued $500.0 million (2.6 million shares) of Series F
Preferred Stock to Thomas H. Lee Company and affiliated investors. The Series F
Preferred Stock is convertible into Conseco common stock at a common equivalent
rate of $19.25 per share. The Series F Preferred Stock pays a 4 percent
dividend, of which an amount at least equal to the common dividend will be
payable in cash, and the remainder may be paid in additional Series F shares
valued at a common equivalent rate of $19.25 per share. In September 2000, we
suspended the payment of common stock dividends and, as a result, all dividend
payments since that date have been paid in additional Series F shares (the
carrying value of such additional shares is determined based on the fair value
of the equivalent number of Conseco common shares that such shares are
convertible into as of the date the dividend is paid). The Series F Preferred
Stock ranks senior to the common stock outstanding and has a liquidation
preference of $192.50 per share plus all declared and unpaid dividends.

                                      144


                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                   Notes to Consolidated Financial Statements
                           --------------------------

       Changes in the number of shares of common stock outstanding during the
years ended December 31, 2002, 2001 and 2000 were as follows:



                                                                                       2002           2001          2000
                                                                                       ----           ----          ----
                                                                                              (Shares in thousands)

                                                                                                          
Balance, beginning of year..........................................................   344,743       325,318       327,679
    Stock options exercised.........................................................         6           432            95
    Stock warrants exercised........................................................         -         3,327             -
    Shares issued in conjunction with the acquisition of Exl........................         -         3,411             -
    Shares issued pursuant to stock purchase contracts related to the
       FELINE PRIDES................................................................         -        11,351             -
    Shares issued under employee benefit compensation plans.........................     1,258           904         1,791
    Settlement of forward contract and common stock acquired........................         -             -        (4,247)
                                                                                       -------       -------       -------

Balance, end of year................................................................   346,007       344,743       325,318
                                                                                       =======       =======       =======


       In February 2001, the Company issued 11.4 million shares of Conseco
common stock pursuant to stock purchase contracts related to the FELINE PRIDES.
This transaction is discussed in further detail in the note to the consolidated
financial statements entitled "Other Disclosures".

       Dividends declared on common stock for 2000, were $.10 per common share.
No dividends were declared in 2002 or 2001.

       During 1999, we sold 3.6 million shares of our common stock to an
unaffiliated party (the "Buyer"). Simultaneous with the issuance of the common
stock, we entered into a forward transaction with the Buyer to be settled at
$29.0625 per share in a method of our choosing (i.e., cash settlement, transfer
of net shares to or from the Buyer, or transfer of net cash to or from the
Buyer). We settled the contract in March 2000 by repurchasing 3.6 million shares
held by the Buyer.

       Conseco's 1994 Stock and Incentive Plan authorizes the granting of
options to employees and directors of the Company to purchase up to 24 million
shares of Conseco common stock at a price not less than its market value on the
date the option is granted. In 1997, the Company adopted the 1997 Non-qualified
Stock Option Plan, which authorizes the granting of non-qualified options to
employees of the Company to purchase shares of Conseco common stock. The
aggregate number of shares of common stock for which options may be granted
under the 1997 plan, when added to all outstanding, unexpired options under the
Company's employee benefit plans, shall not exceed 20 percent of the total of
shares of common stock outstanding plus the number of shares issuable upon
conversion of any outstanding convertible security on the date of grant
(calculated in the manner set forth in the 1997 plan). The options may become
exercisable immediately or over a period of time. The 1994 plan also permits
granting of restricted stock, stock appreciation rights and certain other
awards.

                                      145


                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                   Notes to Consolidated Financial Statements
                           --------------------------

       A summary of the Company's stock option activity and related information
for the years ended December 31, 2002, 2001 and 2000, is presented below (shares
in thousands):



                                                   2002                       2001                      2000
                                          -----------------------    ---------------------    ----------------------
                                                        Weighted                  Weighted                  Weighted
                                                         average                   average                   average
                                                        exercise                  exercise                  exercise
                                          Shares          price      Shares         price      Shares         price
                                          ------          -----      ------         -----      ------         -----

                                                                                             
Outstanding at the beginning of year....   40,292        $15.01      36,107       $18.38        33,750         $32.15

Options granted.........................    2,572          3.57       8,609         6.32        18,404           7.10

Exercised...............................       (6)         1.51        (432)        9.88           (95)          8.15
Forfeited or terminated.................  (19,338)        12.35      (3,992)       27.27       (15,952)         34.56
                                          -------                    ------                    -------

Outstanding at the end of the year......   23,520         15.95      40,292        15.01        36,107          18.38
                                          =======                    ======                    =======

Options exercisable at year-end.........   13,593                    13,591                     13,905
                                          =======                    ======                    =======

Available for future grant..............   52,668                    34,903                     34,853
                                          =======                    ======                    =======



       The following table summarizes information about stock options
outstanding at December 31, 2002 (shares in thousands):



                                                      Options outstanding                 Options exercisable
                                            ----------------------------------------    ------------------------
                                                            Weighted        Weighted                    Weighted
                                                             average         average                     average
Range of                                      Number        remaining       exercise      Number        exercise
exercise prices                             outstanding  life (in years)      price     exercisable       price
- ---------------                             -----------  ---------------      -----     -----------       -----
                                                                                           
$   1.51 -   4.24...................           6,781            8.9          $ 3.70       1,432           $ 3.61
    5.75 -   8.87...................           3,587            2.3            6.20       2,852             5.92
    9.19 -  14.73...................           3,520            4.7           11.41       1,659            13.49
   15.03 -  16.57...................             162            6.4           15.25          73            15.43
   17.63 -  26.19...................           3,510            5.5           22.67       2,668            22.83
   27.19 -  30.41...................           1,606           10.5           30.11         963            29.92
   30.81 -  45.44...................           3,964            3.5           34.72       3,700            34.88
   46.71 -  51.28...................             390            5.3           50.51         246            50.44
                                              ------                                     ------

                                              23,520                                     13,593
                                              ======                                     ======



                                      146


                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                   Notes to Consolidated Financial Statements
                           --------------------------


       We apply Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees" and related interpretations in accounting for our
stock option plans. Since the amount an employee must pay to acquire the stock
is equal to the market price of the stock on the grant date, no compensation
cost has been recognized for our stock option plans. Had compensation cost been
determined based on the fair value at the grant dates for awards granted after
January 1, 1995, consistent with the method of Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation", the Company's pro
forma net income (loss) and pro forma earnings (loss) per share for the years
ended December 31, 2002, 2001 and 2000 would have been as follows:



                                                    2002                        2001                         2000
                                         -------------------------   -------------------------     ------------------------
                                         As reported     Pro forma   As reported     Pro forma     As reported    Pro forma
                                         -----------     ---------   -----------     ---------     -----------    ---------
                                                            (Dollars in millions, except per share amounts)

                                                                                                
Net loss..............................  $(7,835.7)     $(7,848.1)      $(405.9)       $(434.1)      $(1,191.2)    $(1,218.3)
Basic loss per share..................     (22.67)        (22.70)        (1.24)         (1.32)          (3.69)        (3.77)
Diluted loss per share................     (22.67)        (22.70)        (1.24)         (1.32)          (3.69)        (3.77)


       We estimated the fair value of each option grant used to determine the
pro forma amounts summarized above using the Black-Scholes option valuation
model with the following weighted average assumptions for 2002, 2001 and 2000:



                                                     2002 Grants               2001 Grants             2000 Grants
                                                     -----------               -----------             -----------
                                                                                             
Weighted average risk-free interest rates......           4.7%                    4.8%                     6.3%
Weighted average dividend yields...............           0.0%                    0.0%                     2.4%
Volatility factors.............................            40%                     40%                      40%
Weighted average expected life.................      6.4 years               6.4 years                6.1 years
Weighted average fair value per share..........          $1.73                   $3.04                    $2.84


       At December 31, 2002, a total of 115 million shares of common stock were
reserved for issuance under stock options, stock bonus and deferred compensation
plans, Series F Preferred Stock, warrants to buy 700,000 shares of Conseco
common stock for $19.71 per share at anytime through September 29, 2006 and
warrants to buy 5,250,000 shares of Conseco common stock for $5.75 at any time
through June 2005.

       At December 31, 2002, a total of 50,000 shares of restricted common
shares issued pursuant to employment agreements were outstanding. The
restrictions on such shares will expire in September 2004.

                                      147


                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                   Notes to Consolidated Financial Statements
                           --------------------------

       A reconciliation of net income (loss) and shares used to calculate basic
and diluted earnings per share is as follows:




                                                                                 2002          2001           2000
                                                                                 ----          ----           ----
                                                                           (Dollars in millions and shares in thousands)
                                                                                                   
Net loss:
   Net loss............................................................      $(7,835.7)      $(405.9)       $(1,191.2)
   Preferred stock dividends...........................................            2.1          12.8             11.0
                                                                             ---------       -------        ---------

     Loss applicable to common ownership for basic and diluted
       earnings per share..............................................      $(7,837.8)      $(418.7)       $(1,202.2)
                                                                             =========       =======        =========

Shares:
   Weighted average shares outstanding for basic and diluted earnings
     per share.........................................................        345,807       338,145          325,953
                                                                               =======       =======          =======


       There were no dilutive common stock equivalents during 2002, 2001 and
2000 because of the net loss realized by the Company.


       The following summarizes the equivalent common shares for securities that
were not included in the computation of diluted earnings per share during 2002,
2001 and 2000 because doing so would have been antidilutive in the periods
presented:



                                                                                  2002         2001          2000
                                                                                  ----         ----          ----
                                                                                        (Shares in thousands)
                                                                                                    
  Equivalent common shares that were antidilutive during the period:
     Stock options.......................................................           75         9,117          2,798
     Employee benefit plans..............................................        3,080         2,786          1,438
     Assumed conversion of convertible preferred stock...................       28,557        27,443         26,405
     Forward contract....................................................            -             -            476
                                                                                ------        ------         ------

       Antidilutive equivalent common shares.............................       31,712        39,346         31,117
                                                                                ======        ======         ======


                                      148


                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                   Notes to Consolidated Financial Statements
                           --------------------------

       12. OTHER OPERATING STATEMENT DATA:

       Insurance policy income consisted of the following:



                                                                                           2002         2001         2000
                                                                                           ----         ----         ----
                                                                                                (Dollars in millions)
                                                                                                          
Traditional products:
    Direct premiums collected.........................................................   $5,100.2     $5,426.3     $5,389.3
    Reinsurance assumed...............................................................       78.7        146.0        300.5
    Reinsurance ceded.................................................................     (327.8)      (249.4)      (237.2)
                                                                                         --------     --------     --------

          Premiums collected, net of reinsurance......................................    4,851.1      5,322.9      5,452.6
    Change in unearned premiums.......................................................      (19.7)         1.9          1.1
    Less premiums on universal life and products
       without mortality and morbidity risk which are
       recorded as additions to insurance liabilities ................................   (1,792.7)    (1,828.2)    (1,833.5)
                                                                                         --------     --------     --------
          Premiums on traditional products with mortality or morbidity risk,
             recorded as insurance policy income......................................    3,038.7      3,496.6      3,620.2
Fees and surrender charges on interest-sensitive products.............................      563.6        496.1        550.5
                                                                                         --------     --------     --------

          Insurance policy income.....................................................   $3,602.3     $3,992.7     $4,170.7
                                                                                         ========     ========     ========


       The five states with the largest shares of 2002 collected premiums were
Florida (8.5 percent), California (7.5 percent), Illinois (7.3 percent), Texas
(7.1 percent), and Michigan (5.3 percent). No other state accounted for more
than 5 percent of total collected premiums.

       Other operating costs and expenses were as follows:



                                                                                           2002        2001          2000
                                                                                           ----        ----          ----
                                                                                                (Dollars in millions)

                                                                                                            
Commission expense....................................................................     $195.1       $218.6       $270.9
Salaries and wages....................................................................      215.1        206.0        240.0
Other.................................................................................      301.9        297.6        362.0
                                                                                           ------       ------       ------

       Total other operating costs and expenses.......................................     $712.1       $722.2       $872.9
                                                                                           ======       ======       ======


                                      149



                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                   Notes to Consolidated Financial Statements
                           --------------------------

       Changes in the cost of policies purchased were as follows:




                                                                                           2002         2001         2000
                                                                                           ----         ----         ----
                                                                                                (Dollars in millions)

                                                                                                         
Balance, beginning of year............................................................   $1,657.8     $1,954.8    $2,258.5
    Additional acquisition expense on acquired policies...............................       11.3         12.5        14.6
    Amortization......................................................................     (215.5)      (242.0)     (266.0)
    Amounts related to fair value adjustment of actively managed fixed maturities.....      (81.9)       (49.0)      (68.1)
    Reinsurance transactions..........................................................      (73.4)         -           -
    Net amounts related to discontinued operations ...................................      (66.6)       (13.9)      (20.2)
    Amounts related to sales of subsidiaries..........................................      (60.0)         -           -
    Other ............................................................................       (1.7)        (4.6)       36.0
                                                                                         --------     --------    --------

Balance, end of year..................................................................   $1,170.0     $1,657.8    $1,954.8
                                                                                         ========     ========    ========


       Based on current conditions and assumptions as to future events on all
policies inforce, the Company expects to amortize approximately 12 percent of
the December 31, 2002 balance of cost of policies purchased in 2003, 11 percent
in 2004, 9 percent in 2005, 8 percent in 2006 and 7 percent in 2007. The
discount rates used to determine the amortization of the cost of policies
purchased averaged 7 percent in 2002, 6 percent in 2001 and 7 percent in 2000.

       Changes in the cost of policies produced were as follows:



                                                                                           2002         2001         2000
                                                                                           ----         ----         ----
                                                                                                (Dollars in millions)

                                                                                                         
Balance, beginning of year............................................................   $2,570.2     $2,480.5    $2,087.4
   Additions..........................................................................      486.0        612.8       695.6
   Amortization.......................................................................     (544.3)      (396.3)     (269.6)
   Amounts related to fair value adjustment of actively managed fixed maturities......     (121.0)       (28.2)        7.5
   Reinsurance transactions...........................................................     (134.6)         -           -
   Net amounts related to discontinued operations.....................................     (103.3)        15.0        66.8
   Amounts related to sales of subsidiaries...........................................     (140.8)         -           -
   Other..............................................................................        2.2       (113.6)     (107.2)
                                                                                         --------     --------    --------

Balance, end of year..................................................................   $2,014.4     $2,570.2    $2,480.5
                                                                                         ========     ========    ========


       In 2001, the Company stopped renewing portions of our major medical lines
of business in several unprofitable states in accordance with the contractual
terms of the policies. As a result, we determined that approximately $77.4
million of the cost of policies produced and the cost of policies purchased
would not be recoverable. Such amount is recorded as amortization in the
accompanying statement of operations.

       Policyholder redemptions of annuity and, to a lesser extent, life
products have increased in recent periods. We have experienced additional
redemptions following the downgrade of our A.M. Best financial strength rating
to "B (fair)". When redemptions are greater than our previous assumptions, we
are required to accelerate the amortization of our cost of policies produced and
cost of policies purchased to write off the balance associated with the redeemed
policies. Accordingly, amortization expense has increased. We have changed the
lapse assumptions used to determine the amortization of the cost of policies
produced and the cost of policies purchased related to certain universal life
products and our annuities to reflect our current estimates of future lapses.
For certain universal life products, we changed the ultimate lapse assumption
from: (i) a range of 6 percent to 7 percent; to (ii) a tiered assumption based
on the level of funding of the policy of a range of 2 percent to 10 percent.
Policyholder withdrawals in recent periods have exceeded our estimates. Such
withdrawals were $3,708.3 million in 2002 and $2,528.3 million in 2001.
Accordingly, we increased the expected future lapse rates on these products to
reflect our current belief that lapses on these policies will continue to be
higher than previously expected for the next several quarters. These changes
resulted in additional amortization of the cost of policies produced and the
cost of policies purchased of $203.2 million in 2002.

       The cost of policies produced and the cost of policies purchased are
amortized in relation to the estimated gross profits to be earned

                                       150


                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                   Notes to Consolidated Financial Statements
                           --------------------------

over the life of our annuity products. As a result of economic developments,
actual experience of our products and changes in our expectations, we changed
our investment yield assumptions used in calculating the estimated gross profits
to be earned on our annuity products. Such changes resulted in additional
amortization of the cost of policies produced and the cost of policies purchased
of $35.0 million (of which $7.2 million related to discontinued operations) and
$25.6 million in 2001 and 2000, respectively.

       13. CONSOLIDATED STATEMENT OF CASH FLOWS:

       The following disclosures supplement our consolidated statement of cash
flows:



                                                                                           2002         2001         2000
                                                                                           ----         ----         ----
                                                                                                (Dollars in millions)
                                                                                                            
Non-cash items not reflected in the investing and financing activities section
   of the consolidated statement of cash flows:
     Issuance of common stock under stock option and employee benefit plans.............    $12.7       $ 19.7       $  5.8
     Issuance of convertible preferred shares...........................................      2.1         12.8          8.4
     Value of FELINE PRIDES retired and transferred from minority interest to
       common stock and additional paid-in capital......................................      -          496.6          -
     Issuance of common stock in connection with the acquisition of Exl.................      -           52.1          -
     Decrease in notes payable-direct corporate obligations and increase in other
       liabilities reflecting the estimated fair value of interest rate swap agreements.      -           13.5          -
     Issuance of warrants to Lehman.....................................................      -            -           48.1
     Issuance of warrants to General Electric Company...................................      -            -           21.0


       The following reconciles net loss to net cash provided by operating
activities:



                                                                                             2002          2001         2000
                                                                                             ----          ----         ----
                                                                                                   (Dollars in millions)
                                                                                                              
Cash flows from operating activities:
   Net loss............................................................................   $(7,835.7)     $ (405.9)     $(1,191.2)
   Adjustments to reconcile net income (loss) to net cash provided by
     operating activities:
       Interest-only securities investment income......................................       (10.6)        (51.5)        (106.6)
       Cash received from interest-only securities, net................................       (73.3)         14.3          187.6
       Servicing income................................................................       (83.9)       (115.3)        (108.2)
       Cash received from servicing activities.........................................        46.9          71.7          123.8
       Provision for losses............................................................     1,160.8         707.2          576.2
       (Gain) loss on sale of finance receivables......................................        49.5         (26.9)          (7.5)
       Amortization and depreciation...................................................     1,017.8         848.0          745.9
       Income taxes....................................................................       758.3        (140.7)        (531.1)
       Insurance liabilities...........................................................       509.5         334.4          539.7
       Accrual and amortization of investment income...................................       227.9          97.2          174.6
       Deferral of cost of policies produced and purchased.............................      (509.2)       (667.0)        (794.3)
       Gain on sale of interest in riverboat...........................................         -          (192.4)           -
       Impairment charges..............................................................     1,514.4         386.9          515.7
       Goodwill impairment.............................................................       500.0           -              -
       Special charges.................................................................       171.2          72.4          483.1
       Cumulative effect of accounting change..........................................     2,949.2           -             85.2
       Minority interest...............................................................       173.2         183.9          223.5
       Net investment losses...........................................................       673.7         413.7          358.3
       Loss on CVIC sale...............................................................        93.1           -              -
       Extraordinary (gain) loss on extinguishment of debt.............................        (8.1)        (26.9)           7.7
       Other...........................................................................       (29.0)       (178.4)         (77.1)
                                                                                           --------      --------      ---------

         Net cash provided by operating activities.....................................   $ 1,295.7      $1,324.7      $ 1,205.3
                                                                                          =========      ========      =========


                                      151


                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                   Notes to Consolidated Financial Statements
                           --------------------------

       14. STATUTORY INFORMATION:

       Statutory accounting practices prescribed or permitted by regulatory
authorities for the Company's insurance subsidiaries differ from GAAP. Our
insurance subsidiaries reported the following amounts to regulatory agencies,
after appropriate elimination of intercompany accounts:



                                                                                                      2002          2001
                                                                                                      ----          ----
                                                                                                     (Dollars in millions)

                                                                                                            
Statutory capital and surplus....................................................................    $1,063.4     $1,649.8
Asset valuation reserve..........................................................................        11.6        105.1
Interest maintenance reserve.....................................................................       311.3        379.3
                                                                                                     --------     --------

      Total......................................................................................    $1,386.3     $2,134.2
                                                                                                     ========     ========


       The statutory capital and surplus shown above included investments in
up-stream affiliates, all of which were eliminated in the consolidated financial
statements prepared in accordance with GAAP, as follows:



                                                                                                      2002          2001
                                                                                                      ----          ----
                                                                                                     (Dollars in millions)
                                                                                                              
Securitization debt issued by special purpose entities and guaranteed by our
   finance subsidiary, all of which was purchased by our insurance subsidiaries
   prior to the
      acquisition of Conseco Finance (a)...........................................................    $  2.0       $ 71.7
Preferred and common stock of intermediate holding company.........................................     146.4        145.9
Common stock of Conseco (39.8 million shares)......................................................       -           14.9
Other .............................................................................................       2.5          2.5
                                                                                                       ------       ------

      Total........................................................................................    $150.9       $235.0
                                                                                                       ======       ======


- --------------------
   (a) Total par value, amortized cost and fair value of securities issued by
       special purpose entities which hold loans originated by our finance
       subsidiary (including the securities that are not guaranteed by Conseco
       Finance, and therefore are not considered affiliated investments) were
       $269.3 million, $197.1 million and $177.7 million, respectively.



       The statutory net loss of our life insurance subsidiaries was $466.0
million, $137.8 million and $70.8 million in 2002, 2001 and 2000, respectively.
Included in such net loss are net realized capital losses, net of income taxes,
of $514.7 million, $188.0 million and $200.8 million in 2002, 2001 and 2000,
respectively. In addition, the insurance subsidiaries incur fees and interest to
Conseco or its non-life subsidiaries; such amounts totaled $194.8 million,
$279.2 million and $264.4 million in 2002, 2001 and 2000, respectively.

       The ability of our insurance subsidiaries to pay dividends is subject to
state insurance department regulations. These regulations generally permit
dividends to be paid from earned surplus of the insurance company for any
12-month period in amounts equal to the greater of (or in a few states, the
lesser of): (i) net gain from operations or net income for the prior year; or
(ii) 10 percent of capital and surplus as of the end of the preceding year. Any
dividends in excess of these levels require the approval of the director or
commissioner of the applicable state insurance department. During 2002, our
insurance subsidiaries paid dividends to Conseco totaling $240.0 million.

       On October 30, 2002, Bankers National Life Insurance Company and Conseco
Life Insurance Company of Texas (on behalf of itself and its insurance
subsidiaries), our insurance subsidiaries domiciled in Texas, each entered into
consent orders with the Commissioner of Insurance for the State of Texas whereby
they agreed: (i) not to request any dividends or other distributions before
January 1, 2003 and, thereafter, not to pay any dividends or other distributions
to parent companies outside of the insurance system without the prior approval
of the Texas Insurance Commissioner; (ii) to continue to maintain sufficient
capitalization and reserves as required by the Texas Insurance Code; (iii) to
request approval from the Texas Insurance Commissioner before making any
disbursements not in the ordinary course of business; (iv) to complete any
pending transactions previously reported to the proper insurance regulatory
officials prior to and during Conseco's restructuring, unless not approved by
the Texas Insurance Commissioner; (v) to obtain a commitment from Conseco and
CIHC to maintain their infrastructure, employees, systems and physical
facilities prior

                                      152


                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                   Notes to Consolidated Financial Statements
                           --------------------------

to and during Conseco's restructuring; and (vi) to continue to permit the Texas
Insurance Commissioner to examine its books, papers, accounts, records and
affairs. Conseco Life Insurance Company of Texas is the parent of all of the
Company's insurance subsidiaries, except for Bankers National Life Insurance
Company. The consent orders do not prohibit the payment of fees in the ordinary
course of business pursuant to existing administrative, investment management
and marketing agreements with our non-insurance subsidiaries.

       The National Association of Insurance Commissioners ("NAIC") adopted
codified statutory accounting principles in a process referred to as
codification. Such principles are summarized in the Accounting Practices and
Procedures Manual. The revised manual was effective January 1, 2001. The
domiciliary states of our insurance subsidiaries have adopted the provisions of
the revised manual or, with respect to some states, adopted the manual with
certain modifications. The revised manual has changed, to some extent,
prescribed statutory accounting practices and resulted in changes to the
accounting practices that our insurance subsidiaries use to prepare their
statutory-basis financial statements. The impact of these changes increased our
insurance subsidiaries' statutory-based capital and surplus as of January 1,
2001, by approximately $198 million.

     The NAIC's Risk-Based Capital for Life and/or Health Insurers Model Act
(the "Model Act") provides a tool for insurance regulators to determine the
levels of statutory capital and surplus an insurer must maintain in relation to
its insurance and investment risks and whether there is a need for possible
regulatory attention. The Model Act provides four levels of regulatory
attention, varying with the ratio of the insurance company's total adjusted
capital (defined as the total of its statutory capital and surplus, asset
valuation reserve and certain other adjustments) to its authorized control level
risk based capital ("ACLRBC"): (i) if a company's total adjusted capital is less
than or equal to 200 percent but greater than 150 percent of its ACLRBC (the
"Company Action Level"), the company must submit a comprehensive plan to the
regulatory authority proposing corrective actions aimed at improving its capital
position; (ii) if a company's total adjusted capital is less than or equal to
150 percent but greater than 100 percent of its ACLRBC (the "Regulatory Action
Level"), the regulatory authority will perform a special examination of the
company and issue an order specifying the corrective actions that must be
followed; (iii) if a company's total adjusted capital is less than or equal to
100 percent but greater than 70 percent of its ACLRBC (the "Authorized Control
Level"), the regulatory authority may take any action it deems necessary,
including placing the company under regulatory control; and (iv) if a company's
total adjusted capital is less than or equal to 70 percent of its ACLRBC (the
"Mandatory Control Level"), the regulatory authority must place the company
under its control. In addition the Model Law provides for an annual trend test
if a company's total adjusted capital is between 200 percent and 250 percent of
its ACLRBC at the end of the year. The trend test calculates the greater of the
decrease in the margin of total adjusted capital over ACLRBC: (i) between the
current year and the prior year; and (ii) for the average of the last 3 years.
It assumes that such decrease could occur again in the coming year. Any company
whose trended total adjusted capital is less than 190 percent of its ACLRBC
would trigger a requirement to submit a comprehensive plan as described above
for the Company Action Level.

       The 2002 statutory annual statements filed with the state insurance
regulators of each of our insurance subsidiaries reflected total adjusted
capital in excess of the levels subjecting the subsidiary to any regulatory
action. However, our ACLRBC ratios have declined significantly over the last
year and some of our subsidiaries are near the level which would require them to
submit a comprehensive plan aimed at improving their capital position.

     The aggregate ACLRBC ratio for our insurance subsidiaries was 332 percent
at December 31, 2002, compared to 480 percent at December 31, 2001. The ratios
for our insurance subsidiaries that are subject to the four levels of regulatory
attention described above ranged from 250 percent (just above the trend test
level) to 563 percent. We are taking actions intended to improve the ACLRBC
ratios of our insurance subsidiaries. Such actions include: (i) discontinuing or
reducing sales of products that create initial reductions in statutory surplus
because of the costs of selling the products; (ii) reducing operating expenses;
(iii) merging some of our insurance subsidiaries with other insurance
subsidiaries; and (iv) restructuring our investment portfolio to better match
the risk profile of the portfolio with the insurance subsidiary's earnings and
capital requirements. We have discussed these actions with insurance regulators
in each of the states in which our insurance subsidiaries are domiciled. The
audited financial statements of our insurance subsidiaries generally are not
completed until around June 1 of each year (the date such audited financial
statements are generally required to be filed with state insurance departments).
Any significant audit adjustments to the financial statements of our insurance
subsidiaries resulting in a reduction in capital could cause the ACLRBC ratio of
one or more of our insurance subsidiaries to fall below the trend test level
requiring the trended total adjusted capital to be calculated. In addition, the
Company has been and will be discussing the appropriate statutory accounting
treatment for certain investments with the state insurance regulators. If the
ultimate outcome of these discussions resulted in adjustments to the December
31, 2002 statutory financial statements of our insurance subsidiaries, some of
our subsidiaries could be required to complete the trend test. If a trend test
were required for any of our subsidiaries, such a test would likely result in
trended total adjusted capital which is less than 190 percent of ACLRBC.

       Our internal actuaries must annually render opinions concerning the
adequacy of our insurance reserves. Our actuaries

                                      153


                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                   Notes to Consolidated Financial Statements
                           --------------------------

rendered unqualified opinions at December 31, 2002. Such opinions reference the
Chapter 11 Cases and recent downgrades of our insurance company ratings as being
outside the scope of the actuarial opinion, meaning that the actuaries did not
believe it was appropriate to calculate what impact, if any, such events would
have on the life insurance reserves. Regulators have raised the question as to
whether or not such references result in the actuarial opinions becoming
qualified opinions. We continue to believe the actuarial opinions are
unqualified opinions. If the actuarial opinions were qualified opinions, more
stringent rules would apply for calculating ACLRBC which we believe would result
in the ACLRBC for several of our insurance subsidiaries falling below the trend
test level.

       15. BUSINESS SEGMENTS:

       We have historically managed our business operations through two
segments, based on the products offered, in addition to the corporate segment.

       Insurance and fee-based segment. Our insurance and fee-based segment
provides supplemental health, annuity and life insurance products to a broad
spectrum of customers through multiple distribution channels, each focused on a
specific market segment. These products are primarily marketed through career
agents, professional independent producers and direct marketing. Fee-based
activities include services performed for other companies, including investment
management and insurance product marketing.

       Finance segment. CFC has historically provided a variety of finance
products including: (i) loans for the purchase of manufactured housing, home
improvements and various consumer products; (ii) home equity loans; and (iii)
private label credit card programs. As a result of the formalization of the plan
to sell the finance business and the filing of petitions under the Bankruptcy
Code by the Finance Company Debtors, the finance business is being accounted for
as a discontinued business in Conseco's consolidated financial statements. See
the note to our consolidated financial statements entitled "Discontinued Finance
Business - Planned Sale of CFC" for additional information on this segment.

       Corporate and other segment. Our corporate segment includes certain
investment activities, such as our venture capital investment in AWE, and, prior
to its sale, our ownership interest in the riverboat casino in Lawrenceberg,
Indiana. In addition, the corporate segment includes interest expense related to
the Company's corporate debt, special corporate charges, income (loss) from the
major medical business in run-off and other income and expenses. Corporate
expenses are net of charges to our subsidiaries for services provided by the
corporate operations.

                                      154


                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                   Notes to Consolidated Financial Statements
                           --------------------------

       Operating information regarding the insurance and corporate segments was
as follows:



                                                                                  2002         2001         2000
                                                                                  ----         ----         ----
                                                                                       (Dollars in millions)
                                                                                                
Revenues:
   Insurance and fee-based segment:
     Insurance policy income:
       Annuities.............................................................  $   160.9    $    88.2    $   125.5
       Supplemental health...................................................    2,279.1      2,229.9      2,136.6
       Life  ................................................................      628.9        795.7        855.2
       Other ................................................................      114.6        126.7        148.1
     Net investment income (a)...............................................    1,416.2      1,564.0      1,707.7
     Fee and other revenue (a)...............................................       85.8        100.2        128.9
     Net realized investment losses (a)......................................     (597.0)      (379.4)      (346.5)
                                                                               ---------    ---------    ---------

       Total insurance and fee-based segment revenues........................    4,088.5      4,525.3      4,755.5
                                                                               ---------    ---------    ---------

   Corporate and other:
     Net investment income...................................................       13.6         19.2         50.1
     Venture capital loss related to investment in AWE.......................      (99.3)       (42.9)      (199.5)
     Gain on sale of interest in riverboat...................................        -          192.4          -
     Revenue from the major medical business in run-off......................      439.2        777.7        946.3
     Other income............................................................        -             .9          6.7
                                                                               ---------    ---------    ---------

       Total corporate segment revenues......................................      353.5        947.3        803.6
                                                                               ---------    ---------    ---------

   Eliminations..............................................................      (23.7)        (5.5)         (.5)
                                                                               ---------    ---------    ---------

       Total revenues........................................................    4,418.3      5,467.1      5,558.6
                                                                               ---------    ---------    ---------

Expenses:
   Insurance and fee-based segment:
     Insurance policy benefits...............................................    3,063.8      2,945.4      3,050.1
     Amortization............................................................      745.3        665.7        646.5
     Interest expense on investment borrowings...............................       15.4         30.5         15.8
     Other operating costs and expenses......................................      548.6        556.1        663.9
     Goodwill impairment.....................................................      500.0          -            -
     Special charges.........................................................       44.3         21.5          -
                                                                               ---------    ---------    ---------

       Total insurance and fee-based segment expenses........................    4,917.4      4,219.2      4,376.3
                                                                               ---------    ---------    ---------

                          (continued on following page)


                                      155


                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                   Notes to Consolidated Financial Statements
                           --------------------------



                                                                                    2002         2001          2000
                                                                                    ----         ----          ----
                                                                                       (Dollars in millions)
                                                                                  (continued from previous page)

                                                                                                
Corporate and other:
   Interest expense on corporate debt........................................      325.6        369.5        438.4
   Provision for losses and expenses related to stock purchase plan..........      240.0        169.6        231.5
   Expenses from the major medical business in run-off.......................      439.2        908.0        997.6
   Special charges and other corporate expenses, less charges to
       subsidiaries for services provided....................................      153.8         66.7        285.2
                                                                               ---------    ---------    ---------

       Total corporate segment expenses......................................    1,158.6      1,513.8      1,952.7
                                                                                --------    ---------    ---------

   Eliminations..............................................................      (23.7)        (5.5)         (.5)
                                                                               ---------    ---------    ---------

       Total expenses........................................................    6,052.3      5,727.5      6,328.5
                                                                               ---------    ---------    ---------

Income (loss) before income taxes, minority interest, extraordinary gain (loss)
   and cumulative effect of accounting change:
     Insurance and fee-based operations......................................     (828.9)       306.1        379.2
     Corporate interest expense and other items..............................     (805.1)      (566.5)    (1,149.1)
                                                                               ---------    ---------    ---------

       Loss before income taxes, minority interest,
         extraordinary gain (loss) and cumulative
         effect of accounting change.........................................  $(1,634.0)   $  (260.4)   $  (769.9)
                                                                               =========    =========    =========


       Segment balance sheet information was as follows:



                                                                                 2002          2001
                                                                                 ----          ----
                                                                                (Dollars in millions)

                                                                                      
Assets:
   Insurance and fee-based...................................................  $28,649.1    $38,768.2
   Discontinued operations...................................................   17,964.9     22,267.9
   Corporate.................................................................    5,343.7     12,175.8
   Eliminate intercompany amounts............................................   (5,448.7)   (11,779.7)
                                                                               ---------    ---------

        Total assets.........................................................  $46,509.0    $61,432.2
                                                                               =========    =========

Liabilities:
   Insurance and fee-based...................................................  $24,118.5    $30,128.5
   Discontinued operations...................................................   18,051.1     20,318.4
   Corporate.................................................................    5,472.6      5,508.3
   Eliminate intercompany amounts............................................   (1,004.3)    (1,190.5)
                                                                               ---------    ---------

        Total liabilities....................................................  $46,637.9    $54,764.7
                                                                               =========    =========


- -------------------
   (a) It is not practicable to provide additional components of revenue by
       product or services.



                                      156


                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                   Notes to Consolidated Financial Statements
                           --------------------------


       16. QUARTERLY FINANCIAL DATA (UNAUDITED):

       We compute earnings per common share for each quarter independently of
earnings per share for the year. The sum of the quarterly earnings per share may
not equal the earnings per share for the year because of: (i) transactions
affecting the weighted average number of shares outstanding in each quarter; and
(ii) the uneven distribution of earnings during the year.



                                                                             1st Qtr.     2nd Qtr.    3rd Qtr.     4th Qtr.
                                                                             --------     --------    --------     --------
                                                                              (Dollars in millions, except per share data)
                                                                                                       
2002
- ----
   Revenues................................................................ $ 1,253.0     $  981.8    $  982.3     $ 1,201.2
   Loss before income taxes, minority interest, discontinued operations,
     extraordinary gain (loss) and cumulative effect of accounting change .     (85.7)      (275.7)     (846.1)       (426.5)
   Net loss................................................................  (3,045.1)    (1,333.1)   (1,769.0)     (1,688.5)

   Income (loss) per common share:
     Basic:
       Loss before discontinued operations, extraordinary gain (loss)
          and cumulative effect of accounting change .......................   $ (.26)      $(3.39)     $(2.98)       $(1.10)
       Discontinued operations..............................................     (.03)        (.47)      (2.13)        (3.79)
       Extraordinary gain (loss)............................................      .01           -           -            .01
       Cumulative effect of accounting change...............................    (8.54)          -           -             -
                                                                                -----       ------      ------        ------

          Net loss..........................................................   $(8.82)      $(3.86)     $(5.11)       $(4.88)
                                                                               ======       ======      ======        ======

     Diluted:
       Loss before discontinued operations, extraordinary gain (loss) and
          cumulative effect of accounting change............................   $ (.26)      $(3.39)     $(2.98)       $(1.10)
       Discontinued operations..............................................     (.03)        (.47)      (2.13)        (3.79)
       Extraordinary gain (loss)............................................      .01           -           -            .01
       Cumulative effect of accounting change...............................    (8.54)          -           -             -
                                                                              -------       ------      ------        ------

          Net loss..........................................................   $(8.82)      $(3.86)     $(5.11)       $(4.88)
                                                                               ======       ======      ======        ======


                                      157


                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                   Notes to Consolidated Financial Statements
                           --------------------------





                                                                             1st Qtr.     2nd Qtr.    3rd Qtr.     4th Qtr.
                                                                             --------     --------    --------     --------
                                                                             (Dollars in millions, except per share data)
                                                                                                      
2001
- ----
   Revenues.................................................................  $1,485.2    $1,456.8   $1,168.3     $1,356.8
   Income (loss) before income taxes, minority interest, discontinued
     operations and extraordinary gain (loss)...............................     124.6          .6     (280.2)      (105.4)
   Net income (loss)........................................................      84.1       (25.7)    (407.5)       (56.8)

   Income (loss) per common share:
     Basic:
       Income (loss) before discontinued operations and extraordinary
          gain (loss).......................................................      $.14       $(.14)     $(.67)       $(.30)
     Discontinued operations................................................       .10         .06       (.54)         .07
     Extraordinary gain (loss) on extinguishment of debt....................        -         (.01)         -          .06
                                                                                  ----       -----      -----        -----

          Net income (loss).................................................      $.24       $(.09)    $(1.21)       $(.17)
                                                                                  ====       =====     ======        =====

     Diluted:
       Income (loss) before discontinued operations and extraordinary
          gain (loss).......................................................      $.14       $(.14)     $(.67)       $(.30)
       Discontinued operations..............................................       .09         .06       (.54)         .07
       Extraordinary gain (loss) on extinguishment of debt..................        -         (.01)         -          .06
                                                                                  ----       -----     ------        -----

          Net income (loss).................................................      $.23       $(.09)    $(1.21)       $(.17)
                                                                                  ====       =====     ======        =====


                                      158



                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                   Notes to Consolidated Financial Statements
                           --------------------------

       17. FINANCIAL INFORMATION REGARDING CFC

       As previously described, CFC filed a petition for relief under the
Bankruptcy Code in the United States Bankruptcy Court on December 17, 2002. On
March 14, 2003, the Bankruptcy Court entered orders approving the terms of the
sale of substantially all of CFC's assets. The closing of the sale of the CFC
assets is subject to various closing conditions, but is currently expected to
occur in the second quarter of 2003. As a result of the formalization of the
plan to sell the finance business and the filing of petitions for relief under
the Bankruptcy Code by the Finance Company Debtors, the finance business is
being accounted for as a discontinued business in our consolidated financial
statements. The consolidated statement of operations reflects the operations of
the discontinued finance business in the caption "Discontinued operations" for
all periods. Our December 31, 2002 consolidated balance sheet includes the total
assets of the finance segment in the caption "Assets of discontinued operations"
and the total liabilities of the finance segment in the caption "Liabilities of
discontinued operations". We currently believe that it is unlikely that the
Company will receive any net proceeds from the ultimate disposition of CFC
beyond the extinguishment of CFC's liabilities and the release of related
Company guarantees on CFC's debt. Accordingly, we wrote off our entire remaining
investment in CFC of $64.5 million on December 31, 2002.

                                      159



       The following summarizes selected balance sheet information of CFC as of
December 31, 2002 and 2001:

                                       CFC
                     CONSOLIDATED BALANCE SHEET INFORMATION
                           December 31, 2002 and 2001
                              (Dollars in millions)


                                                                                                     2002          2001
                                                                                                     ----          ----
                                                                                                         
ASSETS

Retained interests in securitization trusts at fair value (amortized cost:
    2002 - $189.1; 2001 - $876.1).............................................................   $   252.6     $    710.1
Cash and cash equivalents.....................................................................       562.3          394.5
Cash held in segregated accounts for investors in securitizations.............................       394.7          550.2
Cash held in segregated accounts related to servicing agreements and
   securitization transactions................................................................       998.4          994.6
Finance receivables...........................................................................     2,023.1        3,810.7
Finance receivables - securitized.............................................................    12,460.0       14,198.5
Receivables due from Conseco, Inc.(a).........................................................       276.1          358.0
Income tax assets.............................................................................         -            267.2
Other assets..................................................................................       997.7          984.1
                                                                                                 ---------      ---------

       Total assets...........................................................................   $17,964.9      $22,267.9
                                                                                                 =========      =========

LIABILITIES AND SHAREHOLDER'S EQUITY

Liabilities:
   Investor payables..........................................................................   $   394.7      $   550.2
   Guarantee liability related to interests in securitization trusts held by others...........       326.7           39.9
   Liabilities related to certificates of deposit.............................................     2,326.0        1,790.3
   Servicing liability........................................................................       333.4           17.8
   Income tax liability.......................................................................        34.6            -
   Other liabilities..........................................................................       279.1          548.5
   Preferred stock dividends payable to Conseco, Inc.(a)......................................         -             86.1
   Notes payable:
     Related to securitized finance receivables structured as collateralized borrowings.......    13,069.7       14,484.5
     Debtor in possession facilities..........................................................        82.0            -
     Master repurchase agreements.............................................................         -          1,691.8
     Credit facility collateralized by retained interests in securitizations..................         -            507.3
     Due to Conseco, Inc.(a)..................................................................         -            249.5
     Other borrowings.........................................................................         -            352.5
                                                                                                 ---------      ---------

          Total liabilities not subject to compromise.........................................    16,846.2       20,318.4
                                                                                                 ---------      ---------

Liabilities subject to compromise ............................................................     1,204.9            -
                                                                                                 ---------      ---------

          Total Liabilities...................................................................    18,051.1       20,318.4
                                                                                                 ---------      ---------
Shareholder's equity (deficit):
   Preferred stock (a)........................................................................       750.0          750.0
   Common stock and additional paid-in capital (a)............................................     1,209.4        1,209.4
   Accumulated other comprehensive income (loss) (net of applicable deferred
     income tax benefit:  2002 - $(63.8); 2001 - $(63.8)) (a).................................       110.6         (108.6)
   Retained earnings (deficit) (a)............................................................    (2,156.2)          98.7
                                                                                                 ---------      ---------

          Total shareholder's equity (deficit)................................................       (86.2)       1,949.5
                                                                                                 ---------      ---------

          Total liabilities and shareholder's equity (deficit)................................   $17,964.9      $22,267.9
                                                                                                 =========      =========

- -------------

(a)  Intercompany accounts were eliminated when consolidated with Conseco and
     its other wholly-owned subsidiaries.



                                      160

     The following summarizes selected statement of operations information of
CFC for the years ended December 31, 2002, 2001 and 2000:

                                       CFC
              CONSOLIDATED STATEMENT OF OPERATIONS INFORMATION (a)
              for the years ended December 31, 2002, 2001 and 2000
                              (Dollars in millions)


                                                                                 2002           2001        2000
                                                                                 ----           ----        ----
                                                                                                 
Revenues:
   Net investment income:
     Finance receivables and other..........................................  $ 2,062.4       $2,150.1    $1,826.7
     Retained interests.....................................................       75.0          125.3       180.7
     Affiliated (b).........................................................       11.8           19.6        26.9
   Gain (loss) on sale of finance receivables...............................      (49.5)          26.9         7.5
   Servicing income.........................................................       83.9          115.3       108.2
   Impairment charges.......................................................   (1,449.9)        (386.9)     (515.7)
   Fee revenue and other income.............................................      189.9          220.5       257.4
                                                                              ---------       --------    --------

         Total revenues.....................................................      923.6        2,270.8     1,891.7
                                                                              ---------       --------    --------

Expenses:
   Provision for losses.....................................................      950.0          537.7       344.7
   Interest expense - affiliated (b)........................................       10.3           28.5       156.3
   Interest expense.........................................................    1,119.7        1,205.9       996.1
   Other operating costs and expenses.......................................      608.0          639.4       750.0
   Other operating costs and expenses - affiliated (b)......................        8.0            3.0         3.5
   Special charges..........................................................      121.9           21.5       394.3
   Reorganization items.....................................................       17.3            -           -
                                                                              ---------       --------    --------

         Total expenses.....................................................    2,835.2        2,436.0     2,644.9
                                                                              ---------       --------    --------

         Loss before income taxes, cumulative effect of accounting change
           and extraordinary gain (loss) on extinguishment of debt..........   (1,911.6)        (165.2)     (753.2)

Income tax expense (benefit):
   Tax (benefit) expense on period income...................................       34.4          (56.4)     (262.8)
   Valuation allowance for deferred tax assets..............................      245.3            -           -
                                                                              ---------       --------    --------

         Loss before cumulative effect of accounting change and
           extraordinary gain (loss) on extinguishment of debt..............   (2,191.3)        (108.8)     (490.4)

Extraordinary gain (loss) on extinguishment of debt, net of income taxes..          3.9            6.1         -
Cumulative effect of accounting change, net of income taxes.................        -              -         (45.5)
                                                                              ---------       --------    ---------

         Net loss...........................................................   (2,187.4)        (102.7)     (535.9)

Preferred stock dividends payable to Conseco (b)............................       67.5           67.5        18.6
                                                                              ---------       --------    --------

         Net loss applicable to common stock................................  $(2,254.9)      $ (170.2)   $ (554.5)
                                                                              =========       ========    ========


                                      161



- ----------------

(a)  CFC's statement of operations information has been presented as a
     discontinued operation in Conseco's consolidated financial statements for
     the periods summarized.
(b)  Intercompany accounts were eliminated when consolidated with Conseco and
     its other wholly-owned subsidiaries.

     The following table reconciles CFC's loss before extraordinary gain (loss)
and cumulative effect of accounting change as presented on the previous page to
the amount included in discontinued operations in the accompanying consolidated
statement of operations:



                                                                   2002             2001              2000
                                                                   ----             ----              ----
                                                                            (dollars in millions)
                                                                                           
       Loss before extraordinary gain (loss) and cumulative
          effect of accounting change........................  $(2,191.3)         $(108.8)          $(490.4)

       Income taxes(a).......................................      279.7              -                 -

       Net expenses eliminated in consolidation, net of
          income tax.........................................        6.5              7.7              90.8

       Impairment charge related to investment in CFC........      (64.5)             -                 -
                                                               ---------          -------           -------

       Loss recognized as discontinued operations............  $(1,969.6)         $(101.1)          $(399.6)
                                                               =========          =======           =======

- -------------

(a)  Amount is considered in determining the income tax expense in the
     consolidated statement of operations.



     Refer to the note to the consolidated financial statements entitled
"Summary of Significant Accounting Policies" for disclosures related to the
accounting policies of CFC. Disclosures related to the significant accounts of
CFC are summarized below:

     Liabilities Subject to Compromise

     Under the Bankruptcy Code, actions by creditors to collect indebtedness CFC
owes prior to the Petition Date are stayed and certain other prepetition
contractual obligations may not be enforced against the Finance Company Debtors.
CFC has received approval from the Bankruptcy Court to pay certain prepetition
liabilities including employee salaries and wages, benefits, and other employee
obligations. All other prepetition liabilities have been classified as
"liabilities subject to compromise" in CFC's December 31, 2002 consolidated
balance sheet.

                                      162

     The following table summarizes the components of the liabilities included
in the line "liabilities subject to compromise" in CFC's consolidated balance
sheet as of December, 2002 (dollars in millions):
                                                                             
Other liabilities:
   Liability for litigation...................................................  $   38.8
   Accounts payable and accrued expenses......................................      65.8
                                                                                --------

       Total other liabilities subject to compromise..........................     104.6
                                                                                --------

Preferred stock dividends payable to Conseco, Inc.............................     153.6
                                                                                --------

Notes payable:
   Master repurchase agreements (a)...........................................     174.4
   Credit facility collateralized by retained
     interests in securitizations (a) ........................................     497.7
   Due to Conseco, Inc........................................................     273.2
   Other borrowings...........................................................       1.4
                                                                                --------

       Total notes payable subject to compromise..............................     946.7
                                                                                --------

       Total liabilities subject to compromise................................  $1,204.9
                                                                                ========


- ----------------

(a)  The Finance Company Debtors have guaranteed these facilities.





     Finance Receivables and Retained Interests in Securitization Trusts

     During 2002, CFC completed six securitization transactions, securitizing
$2.7 billion of finance receivables. These securitizations were structured in a
manner that requires them to be accounted for as secured borrowings, whereby the
loans and securitization debt remain on our balance sheet, rather than as sales,
pursuant to SFAS 140. Such accounting method is referred to as the "portfolio
method".

     CFC classifies the finance receivables transferred to the securitization
trusts and held as collateral for the notes issued to investors as "finance
receivables-securitized". The average interest rate on these receivables was
approximately 12.4 percent and 12.5 percent at December 31, 2002 and 2001,
respectively. We classify the notes issued to investors in the securitization
trusts as "notes payable related to securitized finance receivables structured
as collateralized borrowings".

     Conseco's leveraged condition and liquidity difficulties eliminated CFC's
ability to access the securitization markets. This has required CFC to pursue
whole loan sales to maintain availability under its warehouse facilities for new
originations. Accordingly, CFC has classified its unsecuritized finance
receivables as held for sale which requires the assets to be carried at the
lower of cost or market. At December 31, 2002, CFC has an allowance of $47.1
million for certain finance receivables with current estimated market values
below cost.

     During 2002 and 2001, CFC completed various loan sale transactions. During
2002, CFC sold $2.1 billion of finance receivables which generated net losses of
$49.5 million. CFC also recognized a loss of $96.0 million related to the sale
of $.5 billion of certain finance receivables sold as part of its cash raising
initiatives in order to meet its debt obligations. See "Special Charges"
elsewhere in the notes to the consolidated financial statements. In 2001, CFC
sold $1.6 billion of receivables including: (i) $802.3 million vendor services
loan portfolio (which was marked-to-market in the fourth quarter of 2000 and no
additional gain or loss was recognized in 2001); (ii) $568.4 million of
high-loan-to-value mortgage loans; and (iii) $269.0 million of other loans.
These sales resulted in net gains of $26.9 million in 2001.

                                      163

     The following table summarizes CFC's finance receivables - securitized by
business line and categorized as either part of CFC's primary lines or part of
other lines (discontinued in previous periods):



                                                                                                December 31,
                                                                                           ---------------------
                                                                                           2002             2001
                                                                                           ----             ----
                                                                                           (Dollars in millions)
                                                                                                   
Primary lines:
   Manufactured housing.............................................................    $ 6,965.3        $ 6,940.4
   Mortgage services................................................................      5,005.9          5,658.2
   Retail credit....................................................................        641.5            878.9
   Consumer finance - closed-end....................................................        407.7            580.8
                                                                                        ---------        ---------

                                                                                         13,020.4         14,058.3
   Less allowance for credit losses.................................................        560.4            288.5
                                                                                        ---------        ---------

     Net other finance receivables for primary lines................................     12,460.0         13,769.8
                                                                                        ---------        ---------

Other lines (discontinued in previous periods)......................................          -              436.9
   Less allowance for credit losses.................................................          -                8.2
                                                                                        ---------        ---------

     Net other finance receivables for other lines..................................           -             428.7
                                                                                        ---------        ---------

     Total finance receivables - securitized........................................    $12,460.0        $14,198.5
                                                                                        =========        =========

     The following table summarizes CFC's other finance receivables by business
line and categorized as either a part of CFC's primary lines or a part of other
lines (discontinued in previous periods):



                                                                                                December 31,
                                                                                           ---------------------
                                                                                           2002             2001
                                                                                           ----             ----
                                                                                           (Dollars in millions)
                                                                                                    
Primary lines:
   Manufactured housing...............................................................   $  159.5         $  609.3
   Mortgage services..................................................................      260.7          1,128.9
   Retail credit......................................................................    1,599.1          1,811.1
   Consumer finance closed-end........................................................       35.8              6.3
                                                                                         --------         --------

                                                                                          2,055.1          3,555.6
   Less allowance for credit losses...................................................       86.5            111.6
                                                                                         --------         --------

     Net other finance receivables for primary lines..................................    1,968.6          3,444.0
                                                                                         --------         --------

Other lines (discontinued in previous periods)........................................       71.4            379.7
   Less allowance for credit losses...................................................       16.9             13.0
                                                                                         --------         --------

     Net other finance receivables for other lines....................................       54.5            366.7
                                                                                         --------         --------

     Total other finance receivables..................................................   $2,023.1         $3,810.7
                                                                                         ========         ========


                                      164

     The changes in CFC's allowance for credit losses included in finance
receivables (both securitized and other portfolios) were as follows:



                                                                                     2002         2001          2000
                                                                                     ----         ----          ----
                                                                                         (Dollars in millions)
                                                                                                     
Allowance for credit losses, beginning of year...................................  $ 421.3      $ 306.8       $  88.4
Additions to the allowance:
   Provision for losses..........................................................    950.0        537.7         344.7
Provision for losses related to discontinued lines (further discussed
     under the caption "Special Charges" below)..................................      -            -            45.9
   Provision for losses related to regulatory changes related to CFC's bank
     subsidiary (further discussed under the caption "Special Charges" below)....      -            -            48.0
   Change in allowance due to purchases and sales of certain
     finance receivables.........................................................    (21.3)         (.1)         24.7
Credit losses....................................................................   (686.2)      (423.1)       (244.9)
                                                                                   -------      -------       -------

Allowance for credit losses, end of year.........................................  $ 663.8      $ 421.3       $ 306.8
                                                                                   =======      =======       =======







                                      165

     The securitizations structured prior to September 8, 1999, met the
applicable criteria to be accounted for as sales. At the time the loans were
securitized and sold, CFC recognized a gain and recorded its retained interest
represented by the interest-only security and servicing rights. The
interest-only security represents the right to receive, over the life of the
pool of receivables: (i) the excess of the principal and interest received on
the receivables transferred to the special purpose entity over the principal and
interest paid to the holders of other interests in the securitization; and (ii)
contractual servicing fees. In some of those securitizations, CFC also retained
B-2 securities. CFC's net retained interests in securitization trusts at
December 31, 2002 and 2001 are summarized below:



                                                                            December 31, 2002            December 31, 2001
                                                                        -------------------------     ----------------------
                                                                        Amortized       Estimated     Amortized    Estimated
                                                                          cost         fair value       cost      fair value
                                                                          ----         ----------       ----      ----------
                                                                                        (Dollars in millions)
                                                                                                        
Retained interests in securitization trusts:
     Interests securitized in the form of B-2 securities.............    $ 548.0         $ 611.5       $704.9       $528.5
     Interest-only securities........................................     (358.9)         (358.9)       171.2        181.6
                                                                         -------         -------       ------       ------

         Total retained interests, excluding guarantee liabilities...      189.1           252.6        876.1        710.1

Guarantee liability related to interests in securitization
     trusts held by others...........................................     (326.7)         (326.7)       (39.9)       (39.9)
                                                                         -------         -------       ------       ------

         Total retained interests, net of guarantee liabilities......    $(137.6)        $ (74.1)      $836.2       $670.2
                                                                         =======         =======       ======       ======

     During 2002 and 2001, CFC recognized no gain on sale related to securitized
transactions.

     The retained interests in securitization trusts on CFC's balance sheet
represent an allocated portion of the cost basis of the finance receivables in
the securitization transactions accounted for as sales. CFC's retained interests
in those securitization transactions are subordinate to the interests of other
investors. Their values are subject to credit, prepayment, and interest rate
risk on the securitized finance receivables. Management of CFC determines the
discount rate to value these securities based on our estimates of current market
rates of interest for securities with similar yield, credit quality and maturity
characteristics. CFC includes the difference between estimated fair value and
the amortized cost of the retained interests (after adjustments for impairments
required to be recognized in earnings) in "accumulated other comprehensive
income (loss), net of taxes."

     The determination of the value of CFC's retained interests in
securitization trusts requires significant judgment. CFC has recognized
significant charges when the interest-only securities did not perform as well as
anticipated based on its assumptions and expectations. CFC's current valuation
of retained interests may prove inaccurate in future periods. In securitizations
to which these retained interests relate, CFC has retained certain contingent
risks in the form of guarantees of certain lower-rated securities issued by the
securitization trusts. As of December 31, 2002, the total nominal amount of
these guarantees was approximately $1.4 billion. CFC considers any potential
payments related to these guarantees in the projected cash flows used to
determine the value of its retained interests. The discounted present value of
the expected future payments related to the guarantees are classified as the
"Guarantee liability related to interests in securitization trusts held by
others" in CFC's balance sheet. If CFC would have to make more payments on these
guarantees than anticipated, or if CFC experienced higher than anticipated rates
of repayment, including due to foreclosure or charge-offs, or any adverse
changes in its assumptions used for valuation, CFC would be required to
recognize additional impairment charges. The $1.4 billion nominal amount of
these guarantees represents the par value of the guaranteed lower-rated
securities. The maximum potential amount of undiscounted future payments which
CFC could be required to make on these guarantees would include both the par
value and interest. Because the guaranteed securities do not have fixed maturity
dates, such maximum potential amount is not possible to calculate. During 2002,
2001 and 2000, interest and principal payments related to such guarantees
totaled $45.5 million, $32.7 million and $22.3 million, respectively. CFC
suspended guarantee payments in the fourth quarter of 2002 and without
additional liquidity in the near future, CFC will be unable to make these
guarantee payments when such payments are required to be made.

     Together, the interest-only securities and the B-2 securities, represent
CFC's retained interests in these securitization trusts.

     During 2002, CFC's ability to access the securitization markets was
eliminated. The securitization markets are CFC's main source of funding for
loans made to purchasers of repossessed manufactured homes. CFC believes that
its loss severity rates were

                                      166


positively impacted when it used retail channels to dispose of repossessed
inventory (where the repossessed units are sold through company-owned sales lots
or its dealer network). Since CFC is no longer able to fund the loans made on
repossessed homes sold through these channels, sales through these channels have
decreased and CFC must use the wholesale channel to dispose of repossessed
manufactured housing units, through which recovery rates are significantly
lower. Accordingly, CFC changed the loss severity assumptions used to value its
retained interests to reflect the higher loss severity expected to be
experienced in the future. In addition, CFC's previous assumptions reflected its
belief that the adverse manufactured housing default experience in recent
periods would continue through the first half of 2002 and then improve over
time. Given recent circumstances, default experience is not expected to improve
as previously expected. Accordingly, CFC increased the default assumptions it
used to value its retained interests to reflect its future expectations. CFC's
home equity/home improvement assumptions have also been adjusted to reflect
recent default experience as well as CFC's future expectations.

     As described in the note to the consolidated financial statements entitled
"Summary of Significant Accounting Policies", the Company adopted the
requirements of EITF 99-20 effective July 1, 2000. Under EITF 99-20, declines in
the value of CFC's retained interests in securitization trusts are recognized
when: (i) the fair value of the retained beneficial interests are less than
their carrying value; and (ii) the timing and/or amount of cash expected to be
received from the retained beneficial interests have changed adversely from the
previous valuation which determined the carrying value of the retained
beneficial interests. When both occur, the retained beneficial interests are
written down to fair value as an other-than-temporary impairment.

     As a result of the requirements of EITF 99-20 and the assumption changes
described above, CFC recognized an impairment charge of $1,077.2 million in 2002
for the retained beneficial interests. CFC also recognized a $336.5 million
increase in the valuation allowance as a result of changes to the expected
future cost of servicing the finance receivables. The levels of delinquent and
defaulting loans have caused servicing costs to increase. In addition, future
servicing costs are expected to increase as the portfolio ages.

     CFC recognized impairment charges of $386.9 million and $515.7 million in
2001 and 2000, respectively, for the interest-only securities that were not
performing as well as expected based on its previous valuation estimates.

     The following table summarizes certain cash flows received from and paid to
the securitization trusts during 2002 and 2001 (dollars in millions):


                                                                                             2002                  2001
                                                                                          ---------             ---------
                                                                                                          
Servicing fees received.........................................................          $  46.9               $ 71.7
Cash flows from retained interests, net of guarantee payments...................             22.3                 71.3
Servicing advances paid.........................................................           (275.9)              (677.0)
Repayment of servicing advances.................................................            257.1                665.2



     During the third quarter and again in the fourth quarter of 2002, CFC
changed the assumptions used to estimate the value of its retained interests to:
(i) project higher severity losses related to the defaults, reflecting CFC's
inability to finance the sale of repossessed manufactured homes resulting in
reliance on the wholesale disposition channel for repossessed manufactured
homes; and (ii) project higher rates of default in the future, based on its
current expectations. As a result of these assumptions, CFC projects that
payments related to guarantees issued in conjunction with the sales of certain
finance receivables will exceed the gross cash flows from the retained interests
by approximately $225 million in 2003, $100 million in 2004, $60 million in 2005
and $10 million in 2006. These projected payments are considered in the
projected cash flows CFC used to value its retained interests. Without
additional liquidity in the near future, CFC will be unable to make these
projected guarantee payments when such payments are required to be made. CFC
projects the gross cash flows from the retained interests will exceed the
payments related to guarantees issued in conjunction with the sales of certain
finance receivables by approximately $175 million in all years thereafter.

     Effective September 30, 2001, CFC transferred substantially all of its
interest-only securities into a securitization trust. The transaction provided a
means to finance a portion of the value of its interest-only securities by
selling some of the cash flows to Lehman. The transfer was accounted for as a
sale in accordance with SFAS 140. However, no gain or loss was recognized
because the aggregate fair value of the interest retained by CFC and the cash
received from the sale were equal to the carrying value of the interest-only
securities prior to their transfer to the trust. The trust is a qualifying
special purpose entity and is not consolidated pursuant to SFAS 140. CFC
received a trust security representing an interest in the trust equal to 85
percent of the estimated future

                                      167


cash flows of the interest-only securities held in the trust. Lehman purchased
the remaining 15 percent interest. The value of the interest purchased by Lehman
was $20.4 million at December 31, 2002. CFC continues to be the servicer of the
finance receivables underlying the interest-only securities transferred to the
trust. Lehman has the ability to accelerate the principal payments related to
their interest after a stated period. Until such time, Lehman is required to
maintain a 15 percent interest in the estimated future cash flows of the trust.
By aggregating the interest-only securities into one structure, the impairment
tests for these securities are conducted on a single set of cash flows
representing CFC's 85 percent interest in the trust. Accordingly, adverse
changes in cash flows from one interest-only security are offset by positive
changes in another. The new structure does not avoid an impairment charge if
sufficient positive cash flows in the aggregate are not available (such as was
the case at December 31, 2002).

     On December 2, 2002, Conseco Finance elected not to make approximately $4.7
million in guarantee payments of which $.6 million was owed to outside third
parties. Upon filing for protection under Chapter 11 of the United States
Bankruptcy Code on December 17, 2002, Conseco Finance has not made any
additional guarantee payments. The continued payment of guarantee payments
depends on the restructuring results of Conseco Finance Corp. as approved by the
Bankruptcy Court. There can be no guarantee that the Court will uphold the
continuation of the required guarantee fees (refer to the caption entitled
"Subsequent events related to CFC" for further discussion regarding the
guarantee payments).

                                      168

     At December 31, 2002, key economic assumptions used to determine the
estimated fair value of CFC's retained interests in securitizations and the
sensitivity of the current fair value of residual cash flows to immediate 10
percent and 20 percent changes in those assumptions are as follows:



                                                                            Home equity/                       Interests  Interests
                                                             Manufactured       home        Consumer/           held by   held by
                                                                housing      improvement    equipment   Total   others     Conseco
                                                                -------     ------------    ---------   -----   ------     -------
                                                                                      (Dollars in millions)
                                                                                                          
Carrying amount/fair value of retained interests:

     Retained interests.....................................   $    24.6     $  234.4       $ 14.0   $   273.0   $(20.4)    $ 252.6
     Guarantee liability....................................      (299.7)        (5.8)       (21.2)     (326.7)     -        (326.7)
     Servicing liabilities..................................      (320.1)        (5.9)        (7.4)     (333.4)     -        (333.4)
                                                                 -------     --------       ------   ---------   ------     -------

         Total retained interests...........................   $  (595.2)    $  222.7       $(14.6)  $  (387.1)  $(20.4)    $(407.5)
                                                               =========     ========       ======   =========   ======     =======

Cumulative principal balance of sold finance
     receivables at December 31, 2002.......................   $15,429.6     $3,723.2       $787.2   $19,940.0
Weighted average life in years..............................         6.9          3.6          2.5         6.1
Weighted average stated customer interest rate
     on sold finance receivables............................         9.7%        11.9%        10.5%       10.2%
Assumptions to determine estimated fair value
     of retained interests at December 31, 2002:

Expected prepayment speed as a percentage
     of principal balance of sold finance receivables (a)...         7.1%        18.9%        18.0%        9.8%

     Impact on fair value of 10 percent decrease............       $(6.7)        $2.0         $(.6)      $(5.3)

     Impact on fair value of 20 percent decrease............       (18.1)         5.9         (1.1)      (13.3)

     Impact on fair value of 10 percent increase............         8.0         (1.3)          .4         7.1

     Impact on fair value of 20 percent increase............        15.8         (1.9)          .9        14.8

Expected nondiscounted credit losses as a percentage of
     principal balance of related finance receivables (a)...        20.3%         9.0%        11.7%       17.9%

     Impact on fair value of 10 percent decrease............       $26.8        $17.4         $2.2       $46.4

     Impact on fair value of 20 percent decrease............       115.3         37.6          5.2       158.1

     Impact on fair value of 10 percent increase............        (6.3)       (15.8)        (2.0)      (24.1)

     Impact on fair value of 20 percent increase............       (30.3)       (30.3)        (3.5)      (64.1)

Weighted average discount rate..............................        16.0%        16.0%        16.0%       16.0%

     Impact on fair value of 10 percent decrease............      $(11.8)       $20.3          $.9        $9.4

     Impact on fair value of 20 percent decrease............       (24.4)        43.6          2.0        21.2

     Impact on fair value of 10 percent increase............        11.2        (17.8)        (1.0)       (7.6)

     Impact on fair value of 20 percent increase............        21.6        (33.5)        (1.8)      (13.7)


                                      169

- -----------------

(a)  The valuation of retained interests in securitization trusts is affected
     not only by the projected level of prepayments of principal and net credit
     losses, but also by the projected timing of such prepayments and net credit
     losses. Should such timing differ materially from CFC's projections, it
     could have a material effect on the valuation of its retained interests.
     Additionally, such valuation is determined by discounting cash flows over
     the entire expected life of the receivables sold.

     These sensitivities are hypothetical and should be used with caution. As
the figures indicate, changes in fair value based on a 10 percent variation in
assumptions generally cannot be extrapolated because the relationship of the
change in assumption to the change in fair value may not be linear. Also, in
this table, the effect of a variation in a particular assumption on the fair
value of the retained interest is calculated without changing any other
assumption; in reality, changes in one factor may result in changes in another
(for example, increases in market interest rates may result in lower prepayments
and increased credit losses), which might magnify or counteract the
sensitivities.

     The following table summarizes quantitative information about
delinquencies, net credit losses, and components of managed finance receivables:



                                                                            Principal balance
                                                                             60 days or more             Net credit
                                                   Principal balance          past due                     losses
                                                 ---------------------      -----------------              ------
                                                                                                     for the year ended
                                                                at December 31,                          December 31,
                                                ----------------------------------------------      --------------------
                                                2002           2001           2002        2001        2002           2001
                                                ----           ----           ----        ----        ----           ----
                                                                            (Dollars in millions)
                                                                                               
Type of finance receivables

Manufactured housing......................    $23,022.4       $25,575.1     $  803.3      $610.5    $  756.3     $  555.5
Home equity/home improvement..............      8,842.8        11,851.4        122.6       139.9       282.7        244.4
Consumer..................................      3,334.6         4,198.8         83.8       112.6       219.3        199.5
Commercial................................         82.7         1,377.0          6.5        16.2        17.7         38.3
                                              ---------       ---------     --------      ------    --------     --------

Total managed receivables.................     35,282.5        43,002.3      1,016.2       879.2     1,276.0      1,037.7

Less finance receivables securitized
   and repossessed assets.................     19,908.8        24,297.3        528.5       464.9       589.8        614.7
                                              ---------       ---------     --------      ------    --------     --------

Finance receivables held on balance sheet
   before allowance for credit losses and
   deferred points and other, net.........     15,373.7        18,705.0     $  487.7      $414.3    $  686.2     $  423.0
                                                                            ========      ======    ========     ========

Less allowance for credit losses..........        663.8           421.3

Less deferred points and other, net.......        226.8           274.5
                                              ---------       ---------

Finance receivables held on
   balance sheet..........................    $14,483.1       $18,009.2
                                              =========       =========


                                      170



     The following schedule reconciles CFC's retained interests, net of
guarantee liabilities, from the beginning to the end of the years presented:


                                                                                        2002         2001        2000
                                                                                        ----         ----        ----
                                                                                             (Dollars in millions)

                                                                                                       
Balance, beginning of year.........................................................  $   670.2     $ 927.5      $1,599.3
   Investment income...............................................................       75.0       125.3         180.7
   Cash paid (received):
     Gross cash received...........................................................      (67.8)     (132.6)       (279.9)
     Guarantee payments related to clean-up calls (a)..............................        -          45.3         100.3
     Guarantee payments related to interests held by others........................       45.5        32.7          22.3
   Impairment charge to reduce carrying value......................................   (1,077.2)     (264.8)       (434.1)
   Sale of securities related to a discontinued line and other.....................       15.9       (12.4)          -
   Change in interest purchased by Lehman in conjunction with
     securitization transaction....................................................       34.8       (55.2)          -
   Transfer to servicing rights in conjunction with securitization transaction.....        -         (50.0)          -
   Cumulative effect of change in accounting principle.............................        -           -           (70.2)
   Change in unrealized appreciation (depreciation) recorded in shareholders'
     equity (deficit)..............................................................      229.5        54.4        (190.9)
                                                                                     ---------     -------      --------

Balance, end of year...............................................................  $   (74.1)    $ 670.2      $  927.5
                                                                                     =========     =======      ========

- -----------------------

(a)  During 2001 and 2000, clean-up calls were exercised for certain
     securitizations that were previously recognized as sales. The interest-only
     securities related to these securitizations had previously been separately
     securitized with other interest-only securities in transactions recognized
     as sales. CFC holds the residual interests issued by the securitization
     trusts. The terms of the residual interests require the holder to make
     payments to the securitization trust when a clean-up call related to an
     underlying trust (a trust which issued interest-only securities held by the
     securitization trust) occurs. These payments are used to accelerate
     principal payments to the holders of the other securities issued by the
     securitization trusts. During 2001, CFC was required to make payments to
     the securitization trusts. These payments increased our basis in the
     retained interests, as the related liability assumed by CFC (and reflected
     in the value of the retained interest) was extinguished.




                                      171


     Income Taxes

     CFC's income tax expense includes deferred income taxes arising from
temporary differences between the financial reporting and tax bases of assets
and liabilities. These amounts are reflected in the balance of deferred income
tax assets which totaled $925.7 million at December 31, 2002. In assessing the
realization of deferred income tax assets, CFC considers whether it is more
likely than not that the deferred income tax assets will be realized. The
ultimate realization of deferred income tax assets depends upon generating
future taxable income during the periods in which temporary differences become
deductible. CFC evaluates the realizability of its deferred income tax assets by
assessing the need for a valuation allowance on a quarterly basis. A valuation
allowance of $925.7 million has been provided for the entire net deferred tax
asset balance as of December 31, 2002, as CFC believes that the realization of
such assets in future periods is uncertain. The components of CFC's income tax
assets and liabilities were as follows:




                                                                                                         2002              2001
                                                                                                         ----              ----
                                                                                                           (Dollars in millions)
                                                                                                                   
Deferred tax assets (liabilities):
  Net operating loss carryforwards.................................................................    $ 193.3           $   -
  Deductible timing differences:
     Interest-only securities......................................................................      536.3             (75.2)
     Unrealized (appreciation) depreciation........................................................      (22.4)             61.5
     Allowance for loan losses.....................................................................      252.2             148.2
     Other.........................................................................................      (33.7)            110.8
                                                                                                       --------           ------

          Total deferred tax assets................................................................      925.7             245.3
         Valuation allowance.......................................................................     (925.7)              -
                                                                                                       --------           ------

         Net deferred tax asset (liability)........................................................        -               245.3

Current income taxes prepaid (payable).............................................................      (34.6)             21.9
                                                                                                       -------            ------

         Net income tax assets (liabilities).......................................................    $ (34.6)           $267.2
                                                                                                       =======            ======


     Income tax expense (benefit) was as follows:



                                                                                                      2002       2001      2000
                                                                                                      ----       ----      ----
                                                                                                         (Dollars in millions)
                                                                                                                 
Current tax provision..............................................................................  $ 34.4     $ 59.5    $  60.6
Deferred tax provision (benefit)...................................................................       -     (115.9)    (323.4)
                                                                                                     ------     ------    -------
             Income tax expense (benefit)..........................................................    34.4      (56.4)    (262.8)

Valuation allowance................................................................................   245.3        -          -
                                                                                                     ------     ------    -------

           Net income tax expense (benefit)........................................................  $279.7     $(56.4)   $(262.8)
                                                                                                     ======     ======    =======


     The income tax benefit differed from that computed at the applicable
federal statutory rate (35 percent) for the following reasons:



                                                                                                       2002       2001       2000
                                                                                                       ----       ----       ----
                                                                                                          (Dollars in millions)
                                                                                                                  
Tax expense (benefit) on income (loss) before income taxes at statutory rate.......................  $(669.1)   $(57.8)    $(259.9)
Valuation allowance................................................................................    245.3        .2         1.6
Net deferred benefits not recognized in the current period.........................................    760.9       -           -
State taxes, net...................................................................................    (57.4)      1.2        (4.5)
                                                                                                     -------    ------     -------

       Income tax benefit..........................................................................   $279.7    $(56.4)    $(262.8)
                                                                                                      ======    ======     =======

                                      172


     At December 31, 2002, CFC had $552.4 million of net operating loss
carryforwards. The carryforwards will expire as follows: $54.7 in 2018; $273.6
in 2020; and $224.1 in 2022.

     CFC is under examination by the Internal Revenue Service for the periods
ending June 30, 1998 through December 31, 1999. No material deficiencies are
known at this time; however, the net operating losses may be reduced, utilized
or reattributed as a result of the examinations.

     The above deferred income tax assets are scheduled assuming a continuation
of business. The actual realization of CFC's deferred items may be materially
different as the result of the conclusion of bankruptcy proceedings and the
disposition of certain businesses.

     Pension Plan of CFC

     CFC provided certain pension benefits for certain eligible retired
employees under a partially funded plan. Amounts related to the pension plan
were as follows:


                                                                      Pension benefits
                                                                      ----------------
                                                                      2002        2001
                                                                      ----        ----
                                                                    (Dollars in millions)
                                                                             
Benefit obligation, beginning of year.............................     $14.8       $17.9
    Interest cost.................................................        .9         1.1
    Actuarial loss................................................       7.1          .6
    Benefits paid.................................................      (4.6)       (4.8)
                                                                       -----       -----

Benefit obligation, end of year...................................     $18.2       $14.8
                                                                       =====       =====

Fair value of plan assets, beginning of year......................     $14.2       $19.9
    Actual return on plan assets..................................      (1.1)       (1.4)
    Employer contributions........................................        .4          .5
    Benefits paid.................................................      (4.6)       (4.8)
                                                                       -----       -----

Fair value of plan assets, end of year............................     $ 8.9       $14.2
                                                                       =====       =====

Funded status.....................................................     $(9.3)      $ (.6)
Unrecognized net actuarial loss...................................      12.9         6.5
                                                                       -----       -----

       Prepaid benefit cost.......................................     $ 3.6       $ 5.9
                                                                       =====       =====


     CFC used the following weighted average assumptions to calculate benefit
obligations for its 2002 and 2001 valuations: postretirement discount rate of
approximately 5.0 percent and 6.5 percent, respectively; preretirement discount
rate of approximately 6.0 percent and 7.0 percent, respectively; and an expected
return on plan assets of approximately 9.0 percent and 9.0 percent,
respectively. Beginning in 2000, as a result of plan amendments, no assumption
for compensation increases was required. Included as an adjustment to
accumulated other comprehensive income (loss) is a $12.7 million adjustment
representing the additional minimum liability associated with this plan.

                                      173


     Components of the cost CFC recognized related to its pension plan were as
follows:



                                                                          Pension benefits
                                                                     --------------------------
                                                                     2002        2001      2000
                                                                     ----        ----      ----
                                                                        (Dollars in millions)
                                                                                  
Interest cost....................................................    $  .9      $ 1.1       $ 1.4
Expected return of plan assets...................................     (1.1)      (1.5)       (1.7)
Settlement (gain) loss...........................................      2.2        1.3         (.3)
Recognized net actuarial loss....................................       .6         .3         -
                                                                     -----      -----       -----

       Net periodic cost (benefit)...............................    $ 2.6      $ 1.2       $ (.6)
                                                                     =====      =====       ======


     Notes Payable, Representing Direct Finance Obligations (Excluding Notes
     Payable Related to Securitized Finance Receivables Structured as
     Collateralized Borrowings)

       Notes payable (excluding notes payable related to securitized finance
receivables structured as collateralized borrowings) of CFC at December 31, 2002
and 2001, were as follows (interest rates as of December 31, 2002):



                                                                                  2002             2001
                                                                                  ----             ----
                                                                                  (Dollars in millions)
                                                                                                
Master repurchase agreements ("Warehouse Facilities") due on various
   dates in 2003 (3.10%).....................................................   $  176.3        $1,679.0
Residual facility collateralized by retained interests in securitizations
   due 2004 ("Residual Facility") (3.88%)....................................      497.7           507.3
Debtor in possession facility due May 2003 (10.0%)...........................       82.0             -
Medium term notes due September 2002 and April 2003..........................        -             189.7
10.25% senior subordinated notes due June 2002...............................        -             161.9 (a)
Bank credit facility due December 2002 ("U.S. Bank Facility")................        -              21.0
Note payable to Conseco (2.91%)..............................................      273.2           249.5
Other........................................................................        1.4             1.5
                                                                                --------        --------

     Total principal amount..................................................    1,030.6         2,809.9

Unamortized net discount and deferred fees...................................       (1.9)           (8.8)
                                                                                --------        --------

     Direct finance obligations..............................................   $1,028.7        $2,801.1
                                                                                ========        ========

- -----------------

(a)  Includes $23.7 million held by Conseco.



     As of the Petition Date, CFC's remaining liquidity sources were a warehouse
facility (the "Warehouse Facility") and a residual facility ("Residual
Facility") with Lehman and a bank credit facility with U.S. Bank and together
with the Warehouse Facility and Residual Facility, the "CFC Facilities". The
direct borrower under (i) the Warehouse Facility is CFC's non-debtor subsidiary
Green Tree Finance Corp. - Five ("GTFC"), and (ii) the Residual Facility is
CFC's non-debtor subsidiary Green Tree Residual Finance Corp. I ("GTRFC"). The
Warehouse Facility and the Residual Facility are fully guaranteed by CFC and, up
to an aggregate of $125 million, by CIHC. CFC was the direct borrower under the
U.S. Bank Facility, which was also guaranteed by CIHC up to an aggregate of $125
million.

     Prior to the Petition Date, CFC was in default under the CFC Facilities as
a result of (i) cross-defaults triggered by CNC's defaulting on its debt
obligations, (ii) cross-defaults among the U.S. Bank Facility, the Warehouse
Facility and the Residual Facility, (iii) failure to make payments required by
CFC's guarantees of payments on B-2 securities, which were issued to investors
in certain finance receivable securitization transactions; and (iv) breaches of
several financial covenants under the CFC Facilities. CFC entered into
forbearance agreements with Lehman with respect to the Warehouse Facility and
Residual Facility and with U.S. Bank with

                                      174


respect to U.S. Bank Facility, pursuant to which Lehman and U.S. Bank agreed to
temporarily refrain from exercising any rights arising from events of default
that occurred under each CFC Facility prior to the Petition Date.

     The Warehouse Facility is a repurchase facility under which primarily newly
originated manufactured housing, home equity, home improvement and recreational
vehicle loans originated by CFC or affiliates of CFC and transferred to GTFC are
sold by GTFC to Lehman with an agreement to repurchase those loans at a later
date and at a higher price. The price differential reflects the cost of
financing. The Warehouse Facility provides funding to CFC for new loan
origination. The Warehouse Facility and the Residual Facility are
cross-collateralized.

     The Residual Facility is collateralized by retained interests in
securitizations. CFC is required to maintain collateral based on current
estimated fair values in accordance with the terms of such facility. Due to the
decrease in the estimated fair value of its retained interests, CFC's collateral
was deficient at December 31, 2002 (as calculated in accordance with the
relevant transaction documents, which provide that Lehman calculates the value
of CFC's collateral within its sole discretion). Pursuant to the forbearance
agreement entered into with Lehman on December 20, 2002, Lehman agreed not to
accelerate the repayment of the Residual Facility based on the collateral
deficiency through June 1, 2003. Under the terms of this forbearance agreement,
Lehman retains the cash flows from CFC's retained interests pledged under this
facility and applies those cash flows to the margin deficit. As mentioned above,
this forbearance agreement is subject to a number of conditions that may cause
it to terminate prior to June 1, 2003. The filing by CNC, CIHC and CFC of a
Chapter 11 petition triggered additional defaults under the CFC Facilities.

     On December 19, 2002, shortly after the filing of the Chapter 11 Cases, CFC
obtained the FPS DIP provided by U.S. Bank and FPS DIP LLC, an affiliate of
Fortress Investment Group LLC ("Fortress"), J.C. Flowers & Co. LLC. ("Flowers")
and Cerberus Capital Management, L.P. ("Cerberus"). The DIP financing is for up
to $125,000,000. The DIP financing motion was granted by the Bankruptcy Court on
January 14, 2003.

     From time to time, CFC has failed to comply with certain covenants
regarding the maximum permissible variance of the budgets provided to the FPS
DIP lenders in connection with the FPS DIP. In each instance, CFC has obtained
appropriate waivers. The occurrence of events of default under the FPS DIP, may
cause events of default under the Lehman December 20 Agreements (as defined
below).

     On December 20, 2002, CFC, GTFC, and GTRFC, entered into several agreements
with Lehman: (the "Lehman December 20 Agreements") (i) providing that Lehman
temporarily refrain from exercising any rights arising from events of default
that occurred under each relevant CFC Facility (including, but not limited to,
those arising out of CNC, CIHC and CFC filing for Chapter 11 relief) until June
1, 2003; (ii) indirectly providing CFC with up to $25,000,000 in postpetition
financing by allowing GTFC to provide intercompany loans to CFC with cash flows
obtained from the Warehouse Facility; (iii) decreasing the capacity of the
Warehouse Facility to a maximum of $250,000,000; and (iv) otherwise amending the
Warehouse Facility and the Residual Facility. These agreements are subject to a
number of conditions that may cause them to terminate prior to June 1, 2003.

     As a result of CFC's defaults and the Lehman December 20 Agreements, CFC
may not draw funds from the Residual Facility.

     During 2002, CFC repurchased $46.9 million par value of its senior
subordinated notes and medium term notes resulting in an extraordinary gain of
$3.9 million (net of income taxes). In March 2002, CFC completed a tender offer
pursuant to which it purchased $75.8 million par value of its senior
subordinated notes due June 2002. The purchase price was equal to 100 percent of
the principal amount of the notes plus accrued interest. The remaining principal
amount outstanding of $58.5 million (including $23.7 million held by Conseco) of
the senior subordinated notes was retired at maturity on June 3, 2002.

     In April 2002, CFC completed a tender offer pursuant to which it purchased
$158.5 million par value of its medium term notes due September 2002 and $3.7
million par value of its medium term notes due April 2003. The purchase price
was equal to 100 percent of the principal amount of the notes plus accrued
interest. In June 2002, CFC tendered for the remaining $8.2 million par value of
its medium term notes due September 2002. Pursuant to the tender offer $5.5
million par value of the notes was tendered in July. The purchase price was
equal to 101 percent of the principal amount of the notes plus accrued interest.
The remaining principal amount outstanding of the medium term notes after giving
effect to both tender offers and other debt repurchases completed prior to the
tender offers of $2.7 million was retired at maturity on September 26, 2002.

     During 2001, CFC repurchased $55.4 million par value of its 10.25% senior
subordinated notes due June 2002 for $51.9 million (resulting in an
extraordinary gain of $2.1 million, net of income taxes of $1.3 million). Also
during 2001, CFC repurchased $34.0

                                      175


million par value of its 6.5% medium term notes due September 2002 for $27.5
million (resulting in an extraordinary gain of $4.0 million, net of income taxes
of $2.5 million).

     Notes Payable Related to Securitized Finance Receivables Structured as
Collateralized Borrowings

     Notes payable related to securitized finance receivables structured as
collateralized borrowings were $13,069.7 million and $14,484.5 million at
December 31, 2002 and 2001, respectively. The principal and interest on these
notes are paid using the cash flows from the underlying finance receivables
which serve as collateral for the notes. Accordingly, the timing of the
principal payments on these notes is dependent on the payments received on the
underlying finance receivables which back the notes. In some instances, CFC is
required to advance principal and interest payments even though the payments on
the underlying finance receivables which back the notes have not yet been
received. The average interest rate on these notes was 6.7 percent and 6.4
percent at December 31, 2002 and 2001, respectively. The notes payable balance
also includes amounts related to financing transactions securitized by: (i)
capitalized expenses related to the refurbishment of repossessed assets; and
(ii) principal and interest advances. The outstanding liability on these
facilities at December 31, 2002 was $85 million.

     Special Charges

     2002

     The following table summarizes the special charges incurred by CFC during
2002, which are further described in the paragraphs which follow (dollars in
millions):
                                                                                   
     Loss related to assets sold to raise cash......................................       $ 97.6
     Costs related to debt modification and refinancing transactions................         39.4
     Reduction in value of Lehman warrant...........................................        (38.1)
     Abandonment of computer processing system......................................         16.3
     Other items....................................................................          6.7
                                                                                           ------

         Special charges before income tax benefit..................................       $121.9
                                                                                           ======


     

     Loss related to assets sold to raise cash

     CFC completed various asset sales which resulted in net losses of $97.6
million in 2002. Such amounts included the loss of $96.0 million related to the
sales of $463 million of certain finance receivables and $1.6 million of
additional loss related to receivables required to be repurchased from the
purchaser of the vendor services receivables pursuant to the repurchase clauses
in the agreements.

     Costs related to debt modification and refinancing transactions

     In conjunction with the various modifications to borrowing arrangements and
refinancing transactions and the recognition of deferred expenses for terminated
financing arrangements, CFC incurred costs of $39.4 million in 2002 which are
not permitted to be deferred pursuant to GAAP.

     Reduction in value of Lehman warrant

     As partial consideration for a financing transaction, Conseco Finance
issued a warrant to Lehman which permits the holder to purchase 5 percent of
Conseco Finance at a nominal price. The holder of the warrant or Conseco Finance
may cause the warrant and any stock issued upon its exercise to be purchased for
cash at an appraised value in May 2003. Additionally, until May 2003, the holder
has the right (subject to certain terms and conditions) to convert the warrant
into convertible preferred stock of Conseco. Since the warrant permits cash
settlement at fair value at the option of the holder of the warrant, it has been
included in other liabilities and is measured at fair value, with changes in its
value reported in earnings. The estimated fair value of the warrant at December
31, 2002 was nil based on current valuations of Conseco Finance. Accordingly,
CFC recorded a $38.1 million reduction in the value of the warrant during 2002.

                                      176


     Abandonment of computer processing systems

     In 2002, CFC incurred a $16.3 million charge for the abandonment of certain
computer processing systems. CFC is abandoning such systems given the recent
changes to its business and its decision to no longer originate certain types of
loans.











                                      177

     2001

     The following table summarizes the special charges incurred by CFC during
2001, which are further described in the paragraphs which follow (dollars in
millions):
                                                                                          
Severance benefits, litigation reserves and other restructuring charges...................   $ 20.3
Loss related to sale of certain finance receivables.......................................     11.2
Change in value of warrant................................................................    (10.0)
                                                                                              -----

     Special charges before income tax benefit............................................   $ 21.5
                                                                                             ======


     Severance benefits, litigation reserves and other restructuring charges

     During 2001, Conseco developed plans to change the way it operates. Such
changes were undertaken in an effort to improve CFC's operations and
profitability. The planned changes included moving a significant number of jobs
to India, where a highly-educated, low-cost, English-speaking labor force is
available. Pursuant to GAAP, CFC was required to recognize the costs associated
with most restructuring activities as the costs were incurred. However, costs
associated with severance benefits are required to be recognized when the costs
are: (i) attributable to employees' services that have already been rendered;
(ii) relate to obligations that accumulate; and (iii) are probable and can be
reasonably estimated. Since the severance costs associated with their planned
activities met these requirements, CFC recognized a charge of $6.2 million in
2001 related to severance benefits and other restructuring charges. CFC also
recognized charges of: (i) $7.5 million related to its decision to discontinue
the sale of certain types of life insurance in conjunction with lending
transactions; and (ii) $6.6 million related to certain litigation matters.

     Loss related to the sale of certain finance receivables

     During 2001, CFC recognized a loss of $2.2 million on the sale of $11.2
million of finance receivables. Also, during 2001, the purchaser of certain
credit card receivables returned certain receivables pursuant to a return of
accounts provision included in the sales agreement. Such returns and the
associated losses exceeded the amounts CFC initially anticipated when the
receivables were sold. CFC recognized a loss of $9.0 million related to the
returned receivables.

     Change in value of warrant

     As partial consideration for a financing transaction, CFC issued a warrant
which permits the holder to purchase 5 percent of Conseco Finance at a nominal
price. The holder of the warrant or CFC may cause the warrant and any stock
issued upon its exercise to be purchased for cash at an appraised value in May
2003. Additionally, until May 2003, the holder has the right (subject to certain
terms and conditions) to convert the warrant into preferred stock of Conseco.
Since the warrant permits cash settlement at fair value at the option of the
holder of the warrant, it has been included in other liabilities and is measured
at fair value, with changes in its value reported in earnings. The estimated
fair value of the warrant at December 31, 2001 was $38.1 million. The estimated
value was determined based on discounted cash flow and market multiple valuation
techniques. During 2001, CFC recognized a $10.0 million benefit as a result of
the decreased value of the warrant (which was classified as a reduction to
special charges).

                                      178


     2000

     CFC incurred significant special charges during 2000, primarily related to
the restructuring of its debt and its business. The following table summarizes
the special charges, which are further described in the paragraphs which follow
(dollars in millions):
                                                                              
Lower of cost or market adjustment for finance receivables
     identified for sale....................................................     $103.3
Loss on sale of transportation loans and vendor services
     financing business.....................................................       51.0
Loss on sale of asset-based loans...........................................       53.0
Costs related to closing offices and streamlining businesses................       29.5
Abandonment of computer processing systems..................................       35.8
Transaction fees paid and warrant issued....................................       78.4
Reserve methodology change at bank subsidiary...............................       48.0
Net gain on sale of certain loans and other items...........................       (4.7)
                                                                                 ------

         Special charges before income tax benefit..........................     $394.3
                                                                                 ======


     Lower of cost or market adjustment for finance receivables identified for
     sale

     On July 27, 2000, CFC announced several courses of action to restructure
its business, including the sale or runoff of the finance receivables of several
business lines. The carrying value of the loans held for sale was reduced to the
lower of cost or market, consistent with CFC's accounting policy for such loans.
The reduction in value of these loans of $103.3 million (including a $45.9
million increase to the allowance for credit losses) primarily related to
transportation finance receivables (primarily loans for the purchase of trucks
and buses). These loans had experienced a significant decrease in value as a
result of the adverse economic effect that increases in oil prices and
competition had on borrowers in the transportation business during 2000.

     Loss on sale of transportation loans and vendor service financing business

     During the fourth quarter of 2000, CFC sold transportation loans with a
carrying value of $566.0 million (after the market adjustment described above)
in whole loan sale transactions. CFC recognized an additional loss of $30.7
million on the sale. During 2000, CFC recognized a special charge and reduced
goodwill by $20.3 million, representing the difference between: (i) the carrying
value of the net assets of the vendor services financing business; and (ii) the
anticipated proceeds from the sale of such business, which was completed in the
first quarter of 2001.

     Loss on sale of asset-based loans

     During the third quarter of 2000, CFC sold asset-based loans with a
carrying value of $152.2 million in whole loan sale transactions. CFC recognized
a loss of $53.0 million on these sales.

     Costs related to closing offices and streamlining businesses

     CFC's restructuring activities included the closing of several branch
offices and streamlining its businesses. These activities included a reduction
in the work force of approximately 1,700 employees. CFC incurred a charge of
$6.9 million related to severance costs paid to terminated employees in 2000.
CFC also incurred lease termination and direct closing costs of $12.3 million
associated with the branch offices closed in conjunction with the restructuring
activities. In addition, fixed assets and leasehold improvements of $10.3
million were abandoned when the branch offices were closed.

     Abandonment of computer processing systems

     CFC recorded a $35.8 million charge in 2000 to write off the carrying value
of capitalized computer software costs for projects that have been abandoned in
conjunction with its restructuring. These costs are primarily associated with:
(i) computer processing systems under development that would require significant
additional expenditures to complete and that were inconsistent with its business
plan; and (ii) computer systems related to the lines of business discontinued by
CFC and therefore were no longer required.

                                      179


     Advisory fees and warrant paid and/or issued to Lehman and other investment
     banks

     In May 2000, CFC sold approximately $1.3 billion of finance receivables to
Lehman and its affiliates for cash and a right to share in future profits from a
subsequent sale or securitization of the assets sold. CFC paid a $25.0 million
transaction fee to Lehman in conjunction with the sale, which was included in
special charges. Such loans were sold to Lehman at a value which approximated
net book value, less the fee paid to Lehman.

     During the second and third quarters of 2000, CFC repurchased a significant
portion of the finance receivables sold to Lehman. These finance receivables
were subsequently included in securitization transactions structured as
financings. The cost of the finance receivables purchased from Lehman did not
differ materially from the book value of the loans prior to their sale to
Lehman.

     Lehman has also amended its master repurchase financing facilities to
expand the types of assets financed. As partial consideration for the financing
transaction, Lehman received a warrant, with a nominal exercise price, for five
percent of the common stock of CFC. The initial $48.1 million estimated value of
the warrant was recognized as an expense during the second quarter of 2000. The
estimated fair value of the warrant did not change materially during 2000.

     CFC also paid Lehman $5.3 million in advisory fees related to the business
and debt restructuring.

     Reserve Methodology Change at Bank Subsidiary

     During the fourth quarter of 2000, CFC increased the allowance for credit
losses related to credit card receivables held by its bank subsidiary. CFC
implemented a more conservative approach pursuant to a regulatory examination,
which resulted in this special charge.

     Gain on sale of certain loans and other items

     During 2000, CFC sold substantially all of the finance receivables related
to its bankcard (Visa and Mastercard) portfolio. CFC recognized a gain of $9.7
million on the sale.

     During 2000, CFC recognized $5.0 million of other costs related to its
restructuring.

     Reorganization Items

     During 2002, CFC incurred professional fees associated with its bankruptcy
proceedings which totaled $17.3 million. Such items are expensed and classified
in accordance with SOP 90-7.

     Subsequent events related to CFC

     On March 14, 2003, the Bankruptcy Court approved a new servicing agreement
which was agreed upon by CFC and the securitization bondholders. Pursuant to the
agreement the servicing fee for the manufactured housing securitization trusts
will increase to 125 bps for the first 12 months subsequent to the closing of
the sale of CFC's assets to CFN and 115 bps thereafter. This is an increase from
the original servicing fee of 50 bps. This agreement also moves the payment of
the servicing fee to the top of the cash flow streams before distributions to
the bondholders. Previously, this servicing fee was distributed after all
principal and interest payments were made to all bondholders. The modifications
to the servicing agreements will have a favorable impact on the cash flow and
valuation of CFC's servicing rights. Under the new servicing assumptions, CFC's
servicing rights would have been valued at $180.8 million as of December 31,
2002, an increase in value of $514.2 million. The change adversely affects the
valuation of our retained interests and guarantee liability related to interests
in securitization trusts held by others by $10.3 million and $216.1 million,
respectively. The valuations for the retained interests and the guarantee
liability related to interests in securitization trusts held by others as of
December 31, 2002 under the new assumptions would have been $242.2 million and
$(542.8) million, respectively.

     Through April 1, 2003, CFC has failed to make $254.2 million in guarantee
payments of which $91.8 million was owed to outside third parties. These amounts
are contemplated in the above mentioned valuations using the new servicing
agreement and related assumptions.

     On April 14, 2003, the Bankruptcy Court approved an amendment to the FPS
DIP to increase the maximum permitted borrowings thereunder, from $125 million
to $150 million.

                                      180



     18.  FINANCIAL INFORMATION REGARDING CVIC

     In October 2002, Conseco Life Insurance Company of Texas (a wholly-owned
subsidiary of the Company) completed the sale of CVIC to Inviva, Inc.
("Inviva"), a holding company that owns The American Life Insurance Company of
New York. CVIC marketed tax qualified annuities and certain employee
benefit-related insurance products through professional independent agents.
Pursuant to SFAS 144, CVIC is accounted for as a discontinued operation. Our
consolidated statement of operations reflects the operations of CVIC in the
caption "Discontinued operations" for all periods. The consideration received
from Inviva at closing (subject to adjustment based upon the adjusted statutory
balance sheet of CVIC at September 30, 2002) totaled $83.7 million, of which
$35.0 million was in the form of Series D Preferred Shares (the "Preferred
Shares") issued by Inviva and the remainder was in cash. Under the terms of the
purchase agreement, if the adjusted statutory book value of CVIC at September
30, 2002, is less than a specified value, the purchase price shall be reduced by
the amount that such specified value exceeds the adjusted statutory book value.
In addition, Conseco Life Insurance Company of Texas received a dividend of
approximately $75 million from CVIC immediately prior to the closing. We
recognized a loss on the sale of $93.1 million. There was no income tax benefit
recognized on the transaction.

     The Preferred Shares accrue dividends (in-kind) at an annual rate of 19
percent. On or after December 31, 2002, our insurance subsidiary that holds
these shares may elect to exchange the Preferred Shares for non-voting common
stock of JNF Holding Company, Inc., a wholly-owned subsidiary of Inviva, ("JNF")
that now owns all of the stock of CVIC. If not previously exchanged, on October
15, 2003, the Preferred Shares will be mandatorily exchanged into the common
stock of JNF and our insurance subsidiary that holds the Preferred Shares will
be entitled to receive a $1.67 million cash fee upon the occurrence of such
exchange. After the exchange has occurred, such JNF common stock may be
repurchased by JNF at any time at 115 percent of the stated value of the
Preferred Shares plus accrued and unpaid dividends thereon immediately prior to
the exchange.

     In connection with the sale of CVIC, we agreed to provide, for a fee,
various administrative and technical services in order to allow CVIC to continue
to operate and to facilitate the transition of CVIC to Inviva. Such services are
being provided pursuant to an Administrative and Transition Services Agreement
(the "Transition Agreement"). The term of the Transition Agreement is nine
months subject to extension or early termination. As part of the CVIC sale,
Conseco agreed that it would not engage in the variable annuity or variable
insurance business for a period of three years after the closing.

     The following summarizes selected financial information of CVIC:



                                                                                                    December 31,
                                                                                                        2001
                                                                                                    -----------
                                                                                               (Dollars in millions)
                                                                                                  
     Total investments..........................................................................     $1,399.6
     Cost of policies purchased.................................................................        100.7
     Cost of policies produced..................................................................        228.0
     Assets held in separate accounts........................................................         1,649.1
     Total assets...............................................................................      3,631.1

     Insurance liabilities......................................................................      1,382.9
     Liabilities related to separate accounts...................................................      1,649.1
     Investment borrowings......................................................................        151.8
     Total liabilities..........................................................................      3,242.6

     Net assets of discontinued operations....................................................          388.5

                                      181





                                                                                                    Year ended
                                                                                                    December 31,
                                                                                        ---------------------------------
                                                                                        2002             2001        2000
                                                                                        ----             ----        ----
                                                                                               (Dollars in millions)
                                                                                                        
     Insurance policy income.....................................................     $   30.5         $ 73.0       $ 49.6
     Net investment income.......................................................       (217.3)         (61.7)       309.9
     Net realized investment losses..............................................        (76.7)         (34.3)       (11.8)
     Total revenues..............................................................       (263.3)         (23.0)       347.9

     Insurance policy benefits...................................................       (234.7)         (81.7)       263.4
     Amortization................................................................        117.4           33.7         27.3
     Total expenses..............................................................       (102.9)         (17.4)       319.5

     Pre-tax income (loss).......................................................       (160.4)          (5.6)        28.4

     Net income (loss)...........................................................      $(101.6)        $ (5.6)       $17.7
     Income taxes................................................................        (58.8)(a)        -            -
     Loss on sale of CVIC........................................................        (93.1)           -            -
                                                                                         -----         ------        -----

         Amount classified as discontinued operations............................      $(253.5)        $ (5.6)       $17.7
                                                                                       =======         ======        =====

- ---------------
(a)  Amount is considered in determining the income tax expense in the
     consolidated statement of operations.


                                      182



     19.  INVESTMENTS IN VARIABLE INTEREST ENTITIES

     The Company has investments in various types of special purpose entities
and other entities, some of which are VIEs under FIN 46, as described in the
note to the consolidated financial statements entitled "Summary of Significant
Accounting Policies". The following are descriptions of our significant
investments in VIEs:

     Brickyard Trust

     In 1998, the Company invested in an investment trust known as the Brickyard
Loan Trust ("Brickyard"). Brickyard is a collateralized debt obligation trust
which participates in an underlying pool of commercial loans. The initial
capital structure of Brickyard consisted of $575 million of senior financing
provided by unrelated third party investors and $127 million of notes and
certificates owned by the Company and others. As a result of our 85 percent
ownership interest in the subordinated certificates, we are the primary
beneficiary of Brickyard. In accordance with ARB 51 "Consolidated Financial
Statements", Brickyard is consolidated in our financial statements, because of:
(i) our investment management subsidiary, Conseco Capital Management, Inc. was
the investment manager; and (ii) our significant ownership of the subordinated
certificates. Included in "Assets held in separate accounts and investment
trust" were $410.2 million and $481.1 million at December 31, 2002 and 2001,
respectively, of assets which serve as collateral for Brickyard's obligations.
These amounts are offset by a corresponding liability account, the value of
which fluctuates in relation to changes in the values of the investments. At
December 31, 2002 the net carrying value of our investment was $66.7 million,
which is also the maximum loss we could recognize if the loans held in the trust
experiences significant defaults. The senior note obligations have no recourse
to the general credit of the Company.

     Other Investment Trusts

     In December 1998, the Company formed three investment trusts which were
special purpose entities formed to hold various fixed maturity, limited
partnership and other types of investments. The initial capital structure of
each of the trusts consisted of: (i) approximately 96 percent
principal-protected senior notes; (ii) approximately 3 percent subordinated
junior notes; and (iii) 1 percent equity. The senior principal-protected notes
are collateralized by zero coupon treasury notes with par values and maturities
matching the par values and maturities of the principal-protected senior notes.
Conseco's life insurance subsidiaries own 100 percent of the senior
principal-protected notes. Certain of Conseco's non-life insurance subsidiaries
own all of the subordinated junior notes, which have a preferred return equal to
the total return on the trusts' assets in excess of principal and interest on
the senior notes. The equity of the trusts is owned by unrelated third parties.

     The three investment trusts are VIEs under FIN 46 because the trusts'
equity represents significantly less than 10 percent of total capital and the
subordinated junior notes were intended to absorb expected losses and receive
virtually all expected residual returns. Based on our 100 percent ownership of
the subordinated junior notes, we are the primary beneficiary of the investment
trusts. All three trusts are consolidated in our financial statements at
December 31, 2002. The carrying value of the total invested assets in the three
trusts were approximately $382 million at December 31, 2002, which also
represents Conseco's maximum exposure to loss as a result of our ownership
interests in the trusts. The trusts have no obligations or debt to outside
parties.

     Investment in General Motors Building

     In 1998, Conseco invested in a partnership which was formed to acquire and
own the 50 story office building in New York City known as the General Motors
Building (the "GM Building"). The partnership acquired the GM Building for
approximately $878 million. The initial capital structure of the partnership
consisted of: (i) a $700 million senior mortgage; (ii) $200 million of
subordinated debt with a stated fixed return of 12.7 percent payable-in-kind,
and the opportunity to earn an additional residual return; and (iii) $30 million
of partnership equity, owned 50 percent by Conseco and 50 percent by an
affiliate of Donald Trump. A Trump affiliate also served as general manager of
the acquired building. We own 100 percent of the subordinated debt. The
partnership is a VIE under FIN 46 because the $30 million of equity represents
significantly less than 10 percent of total partnership capital and the
subordinated debt was intended to absorb virtually all expected losses and
receive a significant portion of expected residual returns. Based on our 100
percent ownership of the subordinated debt, we are the primary beneficiary of
the GM Building partnership. Accordingly, the partnership will be consolidated
in our financial statements beginning in the third quarter 2003. We do not
expect the consolidation of the GM Building partnership to have a material
impact on our financial condition or results of operations. The real estate
asset, which will be added to our balance sheet as a result of consolidation,
collateralizes the partnership's senior mortgage obligation. The existing senior
mortgage obligation, which would also be added to our balance sheet as a result
of consolidation, is not guaranteed by Conseco and does not have recourse
against Conseco's general credit. The existing senior mortgage obligation
matures

                                      183



on August 1, 2003.

     At December 31, 2002, actively managed fixed maturities at fair value
included $277.8 million of subordinated debt and accrued interest in the GM
Building partnership. Other invested assets included our $15 million equity
investment at December 31, 2002. The investments in subordinated debt and equity
represent our maximum exposure to investment loss as a result of our involvement
in the partnership. As more fully described in the note to the consolidated
financial statements entitled "Other Disclosures", the other investor in the
partnership has filed a lawsuit against Conseco.

     Other Investments in Variable Interest Entities

     Certain limited partnerships and other entities, which are part of our
non-traditional investment portfolio, are VIEs. However, our investments in each
of those entities are not significant and, therefore, the disclosure and
consolidation requirements of FIN 46 are not applicable. In each case, the
carrying value included in other invested assets represents the Company's
maximum exposure to loss as a result of its involvement with the entity.





                                      184


     ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

     None.

                                    PART III

     ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

     Information regarding Executive Officers is included under a separate
caption at the end of Part I.

     The following information regarding each Director includes, as of April 11,
2003, such person's age, positions with Conseco, principal occupation and
business experience for the last five years, and tenure as a Director of
Conseco.



                                     Director            Positions with Conseco, Principal                 Term
             Name and Age              Since            Occupation and Business Experience               Expiring
      --------------------------     --------   -------------------------------------------------        --------
                                                                                                   

      John M. Mutz, 67                  1997    Since 1999, investor and consultant.                        2005
                                                   President of PSI Energy Inc. (electric utility) from
                                                   1994 to 1999.  From 1989 to 1993 President of Lilly
                                                   Endowment, Inc. (charitable foundation).  From
                                                   1980  to 1988, Lieutenant Governor of the State of
                                                   Indiana.
      Robert S. Nickoloff, 74           1998    From 1993 to present, Chairman of KMN, Inc.                 2005
                                                   (medical venture capital).
                                                   From 1999 to present, General
                                                   Counsel of Venturi Group LLC
                                                   (medical venture capital).
      Gary C. Wendt, 61                 2000    Since June 2000, Chairman of Conseco.  From June            2005
                                                   2000 until October 2002, Chief Executive Officer of
                                                   Conseco.  From 1999 to 2000, associated with Global
                                                   Opportunity Advisors (a private equity investment
                                                   fund).  From 1986 to 1998, Chairman and Chief
                                                   Executive Officer of GE Capital Services.  From
                                                   1984 to 1986, President and Chief Operations Officer
                                                   of GE Credit Corp.  Also a director of Sanchez
                                                   Computer Associates, Inc.
      Julio A. Barea, 55                2001    Since 2002, partner of Kiwi Holdings, Inc.  From 1998       2003
                                                   to 2002, Vice President of Sara Lee Corporation.
                                                   From 1997 to 1998 President and Chief Executive
                                                   Officer of Sara Lee Underwear.
      Carol Bellamy, 60                 2001    Since 1995, Executive Director of UNICEF.                   2003
      Lawrence M. Coss, 64              1998    Private Investor.  Founder, Chief Executive Officer         2003
                                                   and Director of Green Tree Financial Corporation
                                                   (now known as Conseco Finance Corp.) from 1975 to
                                                   1998).
      Thomas M. Hagerty, 40             2000    From July 2000 until March 2001, Senior Vice                2003
                                                   President and Acting Chief Financial Officer of
                                                   Conseco.  Since 1988 employed by Thomas H. Lee
                                                   Partners, L.P. and its predecessor, Thomas H. Lee
                                                   Company.  Also a Director of Metris Companies,
                                                   Inc., ARC Holdings, Cott Corp.and Syratech Corp.
      David V. Harkins, 62              1999    From April 28 until June 28, 2000, interim Chairman         2004
                                                   of the Board and Chief Executive Officer of Conseco.
                                                   Since 1999, President of Thomas H. Lee Partners
                                                   and since its founding in 1974 has been affiliated
                                                   with Thomas H. Lee Partners, L.P. and its
                                                   predecessor, Thomas H. Lee Company.  Also a
                                                   Director of Metris Companies, Inc., Cott Corp.,
                                                   Fisher Scientific International Inc., Stanley
                                                   Furniture Company, Inc., and Syratech Corp.
      M. Phil Hathaway, 73              1984    Retired. Formerly Treasurer of Cook Group Inc.              2004
                                                   (medical equipment, property and casualty insurance
                                                   and real estate development operations).  Also a
                                                   Certified Public Accountant.

                                      185




                                     Director            Positions with Conseco, Principal                 Term
             Name and Age              Since            Occupation and Business Experience               Expiring
      --------------------------     --------   -------------------------------------------------        --------
                                                                                                   
      Samme Thompson, 57                2002    Since April 2002, President of Telit Associates, Inc.       2004
                                                   (consulting).  From 1999 until April 2002, Senior
                                                   Vice President Strategy and Corporate
                                                   Development of Motorola Corporation.  From 1994 to
                                                   1999 President of Telit Associates, Inc.
      William J. Shea, 55               2002    Since November 2002, Chief Executive Officer, since         2001
                                                   September 2001 President and from March 2002
                                                   until November 2002 Acting Chief Financial Officer of
                                                   Conseco.  From 1998 to 2001, Chairman of the
                                                   Board of Demoulas Supermarkets, Inc.; from 1999
                                                   to 2000, CEO of View Tech, Inc. (integrated video-
                                                   conferencing) and from 1993 to 1998, Vice
                                                   Chairman and Chief Financial Officer of BankBoston
                                                   Corporation.

     Because of Conseco's bankruptcy filing on December 17, 2002, the foregoing
officers (disclosed at the end of Part I) and directors have served as such of a
bankrupt company. Additionally, the officers listed in Part I serve as officers
and/or directors of various subsidiaries of Conseco that also filed bankruptcy
petitions on December 17, 2002.

     SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

     Section 16(a) of the Exchange Act requires Conseco's Directors and
executive officers, and each person who is the beneficial owner of more than 10
percent of any class of Conseco's outstanding equity securities, to file with
the SEC initial reports of ownership and reports of changes in ownership of
Common Stock and other equity securities of Conseco. Specific due dates for
these reports have been established by the SEC, and Conseco is required to
disclose any failure by such persons to file such reports for fiscal year 2002
by the prescribed dates. Officers, Directors and greater than ten percent
beneficial owners are required by SEC regulations to furnish Conseco with copies
of all reports filed with the SEC pursuant to Section 16(a) of the Exchange Act.
To Conseco's knowledge, based solely on review of the copies of reports
furnished to Conseco and written representations that no other reports were
required, all filings required pursuant to Section 16(a) of the Exchange Act
applicable to Conseco's officers, Directors and greater than 10 percent
beneficial owners were made for the year ended December 31, 2002, with the
exception of one report that was not filed by Mr. Wendt to report the
cancellation of his restricted stock.

     ITEM 11. EXECUTIVE COMPENSATION.

     Summary Compensation Table

     The following Summary Compensation Table sets forth the cash compensation
and certain other components of the compensation paid to each person who served
as chief executive officer and the other four most highly compensated
individuals who served as executive officers of Conseco in 2002 (collectively,
the "Named Officers") for services rendered during 2002.





                                      186




                                                                                     Long-Term Compensation
                                                                                     ----------------------
                                                   Annual Compensation                       Awards
                                              ------------------------------         ----------------------
                                                                                                  Number of
                                                                                                  Securities
                                                                                    Restricted    Underlying
                                                                                      Stock      Options/SARs           All Other
 Name and Principal Position         Year      Salary      Bonus      Other(1)       Awards(2)  (in shares)(3)     Compensation(4)
- ----------------------------        -------   --------   --------    ---------       ---------  ---------------    ----------------
                                                                                                    
Gary C. Wendt                        2002    $129,487    $8,000,000  $  70,163       $   --           --                $  --
                                     2001       --          --          58,617           --           --                    661,281
                                     2000       --          --          25,641        24,400,000   10,000,000            45,870,278

William J. Shea (5)                  2002     774,038     1,100,000     87,625            --          --                      3,677
   President and Chief Executive     2001     147,756       250,000                      340,000      450,000
   Officer                                                                                                                       92

Edward M. Berube                     2002     660,000       660,000                       --          --                      5,500
   Senior Vice President             2001     660,000       693,000                       --          100,000               269,778
                                     2000     600,000       500,000                       --          230,000                   552
Maxwell E. Bublitz                   2002     700,000       450,000(5)                    --           --                     6,790
  Senior Vice President,             2001     625,000       450,000                       --           25,000                 6,750
  Investment                         2000     250,000       900,000                       --           30,000                 6,750

Eugene M. Bullis (5)(7)              2002     243,590       600,000                       --           --                  --
  Executive Vice President
  and Chief Financial Officer

John R. Kline (5)(8)                 2002     214,571     1,052,500                       --           --                     6,310
  Senior Vice President
  and Chief Accounting Officer

- --------------------
(1)     Includes for Mr. Wendt $56,008 in 2002, $45,839 in 2001 and $17,452 in
        2000 relating to his personal use of Company aircraft. Includes for Mr.
        Shea $68,541 relating to his personal use of Company aircraft in 2002.
        The Named Officers did not otherwise have other annual compensation for
        2002, 2001 or 2000 that is required to be disclosed under SEC rules
        concerning executive officer and director compensation disclosure.

(2)     The amount shown in this column for Mr. Wendt represents the value of
        the award of 3,200,000 shares of restricted Common Stock based on the
        closing price of the Common Stock on June 28, 2000. Those shares were
        scheduled to vest on November 1, 2002, but were cancelled because he was
        not then employed by Conseco. The amount shown in this column for Mr.
        Shea represents the value of the award of 50,000 shares of restricted
        Common Stock based on the closing price of the Common Stock on September
        17, 2001. The shares are scheduled to vest as follows if Mr. Shea
        remains employed by Conseco: 20 percent on June 30, 2003, 40 percent on
        September 17, 2003 and 40 percent on September 17, 2004. Mr. Shea is
        entitled to receive any dividends paid on the Common Stock during the
        restricted period after the shares have vested. The value of those
        shares at December 31, 2002 was $1,950.

(3)     No stock appreciation rights have been granted.

(4)     For 2002, the amounts reported in this column represent amounts paid for
        the Named Officers for: (i) individual life insurance premiums; (ii)
        group life insurance premiums; and (iii) the employer contribution under
        the ConsecoSave Plan. The table below shows such amounts for each Named
        Officer.


                                      187



                                           Individual           Group Life
                                         Life Insurance          Insurance           ConsecoSave Plan
                    Name                    Premiums             Premiums              Contributions
           ----------------------      ------------------    ------------------     ------------------
                                                                                   
           Gary C. Wendt                    $   --               $   --                     $   --
           William J. Shea                   2,435                1,242                         --
           Edward M. Berube                     --                   --                      5,500
           Maxwell E. Bublitz                1,290                   --                      5,500
           Eugene M. Bullis                     --                   --                         --
           John R. Kline                        --                  810                      5,500

- ----------------
(5)  No compensation information is reported for years prior to the year in
     which the Named Officer became an executive officer of the Company.
(6)  The bonus for Mr. Bublitz has not been paid and is subject to approval of
     the Bankruptcy Court.
(7)  Mr. Bullis' employment commenced in July 2002.
(8)  Mr. Kline became an executive officer in July 2002.


     Employment Contracts and Change-In-Control Arrangements

     Mr. Shea has an employment agreement with Conseco for a term ending July
31, 2005, with a minimum annual salary of $750,000, annual bonuses at the
discretion of the Compensation Committee of the Board of Directors, various
restricted stock and stock option awards, supplemental bonuses of $1,500,000 on
June 30, 2004, and $2,500,000 on March 31, 2005, a severance allowance upon
termination of employment and certain insurance and other fringe benefits.

     Mr. Berube has an agreement with Conseco Services, LLC, a subsidiary of
Conseco, which provides for a base salary of $660,000 per year, annual bonuses
based on the achievement of performance parameters and certain other benefits.

     Conseco also has an employment agreement with Mr. Bublitz for a term ending
December 31, 2003, with a minimum annual salary of $250,000, annual bonuses in
the discretion of the Compensation Committee or Board of Directors, a severance
allowance upon termination of employment and certain insurance and other fringe
benefits.

     Each of the employment agreements described above includes provisions
pursuant to which the employee may elect to receive, in the event of a
termination of the agreement in anticipation of or following a change in control
of Conseco (a "Control Termination"), a severance allowance. Under the terms of
Mr. Shea's employment agreement, upon a Control Termination, Mr. Shea is
entitled to the greater of: (i) 1.5 times his base salary for the most recent
fiscal year; or (ii) $4,000,000 multiplied by a fraction, the numerator of which
is equal to the number of months from June 1, 2002, until the date of
termination of his employment agreement, and the denominator of which is 34.
Under the terms of his agreement with Conseco, Mr. Berube is entitled to a
severance payment equal to two years of total cash compensation, but in no case
less then $2,320,000 in the event of a change of control, a major change in
strategy resulting in the elimination of his role, a material reduction in his
responsibilities or termination of employment for other than cause. Upon any
such event, Mr. Berube is also entitled to receive a payment of up to $1,234,000
depending on the gains realized from 200,000 stock options granted to him during
2000 at a price of $7.63 per share.

     Under the terms of Mr. Bublitz's employment agreement with Conseco, he
would be entitled to receive a lump sum payment, net of applicable taxes, within
30 days of a Change of Control equal to the purchase price paid by Mr. Bublitz
to acquire shares of Common Stock under the Company's stock purchase plans plus
all accrued interest, less the value of the consideration to be paid for such
stock in any transaction relating to a Change of Control. Within 30 days after a
"Termination of Service" (similar to the definition of Control Termination
above), Mr. Bublitz is entitled to receive a lump sum payment equal to the
lesser of (a) five times the base salary, bonuses and other incentive
compensation paid to him by Conseco during the calendar year immediately
preceding the Change of Control or (b) five million dollars ($5,000,000). As
defined in the employment agreement with Mr. Bublitz, "Change of Control" means
the acquisition prior to December 31, 2003 by any person of securities of the
Company representing 51% or more of the combined voting power of the Company's
then outstanding securities entitled to vote with respect to the election of its
Board of Directors.

     Conseco entered into an employment agreement with Mr. Wendt on June 28,
2000. Pursuant to the employment agreement, Mr. Wendt received no salary for the
first two years and was to receive a salary of $1 million per year thereafter.
The agreement also provided for a cash bonus at the end of two years of between
$8 million and $50 million, depending on the price of the company's common
stock. Because the common stock was trading at less than $10 per share in 2002,
the amount of the bonus paid to Mr. Wendt was $8 million. Mr. Wendt resigned
from his position as the Chief Executive Officer of Conseco. Because of Mr.
Wendt's

                                      188


resignation, his agreement terminated.

     Mr. Bullis has an employment agreement with Conseco Services, LLC for a
term ending June 30, 2003, with an annual salary of $500,000, a bonus for the
period ending December 31, 2002 of up to $250,000, a bonus for the period ended
June 30, 2003 of up to $250,000, a severance allowance upon termination of
employment and certain insurance and other fringe benefits. Mr. Kline has an
employment agreement with Conseco for a term ending July 14, 2004, with an
annual salary of at least $275,000, bonuses at the discretion of Conseco, a
signing bonus of $865,000 subject to payment to Conseco in a pro rata amount in
the event Mr. Kline voluntarily left Conseco (based on the portion of the 2-year
period ending July 14, 2004, remaining after the date of such voluntary
termination of employment), a severance allowance upon termination of employment
and other fringe benefits.

     See the discussion under the table headed Option Grants in 2002 concerning
change-in-control provisions related to stock options.

     Stock Options

     The following table sets forth certain information concerning the exercise
in 2002 of options to purchase Common Stock by the Named Officers and the
unexercised options to purchase Common Stock held by such individuals at
December 31, 2002.

     Aggregated Option Exercises in 2002 and Year-End Option Values


                                                                        Number of Securities
                                                                       Underlying Unexercised           Value of Unexercised
                                       Number of                       Options (in shares) at          In-the-Money Options at
                                    Shares Acquired       Value           December 31, 2002               December 31, 2002
                                                                    ---------------------------     -----------------------
       Name                           On Exercise       Realized     Exercisable    Unexercisable    Exercisable   Unexercisable
- ------------------                 ---------------      --------    ------------   --------------   ------------  --------------
                                                                                                       
Gary C. Wendt                             0                 0                0               0            0              0
William J. Shea                           0                 0           90,000         360,000            0              0
Edward M. Berube..                        0                 0           28,500         518,500            0              0
Maxwell E. Bublitz                        0                 0          551,356         315,000            0              0
Eugene M. Bullis..                        0                 0                0               0            0              0
John R. Kline                             0                 0           15,835          25,725            0              0

     All outstanding options under the 1994 Stock Plan and the 1997 Plan
immediately vest and become exercisable or satisfiable upon the occurrence of a
Change of Control. The Compensation Committee, in its discretion, may determine
that upon the occurrence of such a transaction, each option outstanding shall
terminate within a specified number of days after notice to the holder thereof,
and such holder shall receive, with respect to each share of Common Stock
subject to such option, cash in an amount equal to the excess of: (i) the higher
of (x) the Fair Market Value (as defined in the 1994 Stock Plan and the 1997
Plan) of such shares of Common Stock immediately prior to the occurrence of such
transaction or (y) the value of the consideration to be received in such
transaction for one share of Common Stock; over (ii) the price per share, if
applicable, of Common Stock set forth in such option. If the consideration
offered to shareholders of Conseco in any transaction described in this
paragraph consists of anything other than cash, the Compensation Committee shall
determine the fair cash equivalent of the portion of the consideration offered
which is other than cash. These provisions will not terminate any rights of a
holder to further payments pursuant to any agreement between Conseco and such
holder following a Change of Control. A "Change of Control" of Conseco is deemed
to occur under the 1994 Stock Plan and the 1997 Plan if: (i) any person becomes
the beneficial owner, directly or indirectly, of securities of Conseco
representing 25 percent or more of the combined voting power of Conseco's
outstanding securities then entitled to vote for the election of directors; or
(ii) as the result of a tender offer, merger, consolidation, sale of assets, or
contest for election of directors, or any combination of the foregoing
transactions or events, individuals who were members of the Board of Directors
of Conseco immediately prior to any such transaction or event shall not
constitute a majority of the Board of Directors following such transaction or
event. However, no Change of Control shall be deemed to have occurred if and
when either: (i) any such change is the result of a transaction which
constitutes a "Rule 13e-3 transaction" as such term is defined in Rule 13e-3
promulgated under the Exchange Act; or (ii) any such person becomes, with the
approval of the Board of Directors of Conseco, the beneficial owner of
securities of Conseco representing 25 percent or more but less than 50 percent
of the combined voting power of Conseco's then outstanding securities entitled
to vote with respect to the election of its Board of Directors and in connection
therewith represents, and at all times continues to represent, in a filing, as
amended, with the SEC on Schedule 13D or Schedule 13G (or any successor Schedule
thereto) that "such person has acquired such securities for investment and not
with the purpose nor with the effect of changing or influencing the control of
Conseco, nor in connection with or as a participant in any transaction having
such purpose or effect," or words of comparable meaning and import.

     Mr. Bublitz has an employment agreement with Conseco (see Employment
Contracts and Change-in-Control Agreements) that provide, in the event of a
Control Termination such Named Officer may elect, within 60 days after such
Control Termination, to receive a lump sum payment from Conseco in return for
surrender by such Named Officer of all or any portion of the options then

                                      189


outstanding held by such Named Officer to purchase shares of Common Stock or
successor securities ("Unexercised Options"). Unexercised Options include all
outstanding options whether or not then exercisable. For each Unexercised Option
to purchase one share of Common Stock, Conseco must pay to the Named Officer an
amount equal to the Put Price. Amounts to be paid to Mr. Bublitz for Unexercised
Options in the event of a Control Termination of his employment agreement are to
be reduced by the exercise price of his Unexercised Options.

     Compensation of Directors

     Directors who are not also employees of Conseco are entitled to receive an
annual fee of $50,000, a fee of $500 for each Board or committee meeting they
attend, and an annual fee of $3,000 for serving as chairman of a Board
committee. The 1994 Stock Plan provides for an annual grant to each non-employee
director of options to purchase 5,000 shares of Common Stock on the date of the
annual meeting of shareholders at a price equal to the market price of Common
Stock on the date of grant. Messrs. Barea, Bellamy, Coss, Hagerty, Harkins,
Hathaway, Mutz, Nickoloff and Thompson each received such a grant in 2002. The
options were scheduled to vest 20 percent per year on each of the first five
anniversary dates of grant, subject to acceleration upon a Change of Control.

     Compensation Committee Interlocks and Insider Participation in Compensation
Decisions

     The members of the Compensation Committee during 2002 were Messrs. Barea,
Hathaway, Nickoloff and Thompson.

     ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS.

     The following table sets forth information as of April 11, 2003 regarding
ownership of Common Stock (excluding shares held by subsidiaries) and Series F
Preferred Stock by the only persons known to own beneficially more than 5
percent thereof, by the Directors individually, by the executive officers named
in the Summary Compensation Table in Item 11 individually, and by all current
Directors and executive officers of Conseco as a group. Where any footnote
indicates that shares included in the table are owned by, or jointly with,
family members or by an affiliate of such person, the Director or executive
officer may be deemed to exercise shared voting and investment power with
respect to those shares, unless otherwise indicated.


                                                                                          Shares Owned and
                                                                                         Nature of Ownership
                   Title of Class                  Name and Address(1)                 Number (2)        Percent
                 ------------------    ------------------------------------------  ------------------  ---------
                                                                                                  
                                       5-Percent Owners:
                 Preferred             Thomas H. Lee Equity Fund IV, L.P.(2)          2,855,502 (3)        100%
                   Stock                   75 State Street
                                           Boston, MA 02109
                 Common Stock          Thomas H. Lee Equity Fund IV, L.P.            28,555,020(3)(4)       7.6%
                                           75 State Street
                                           Boston, MA 02109
                                       Directors and Executive Officers:
                 Common Stock          Julio A. Barea                                      1,000              *
                 Common Stock          Carol Bellamy                                           0              *
                 Common Stock          Edward M. Berube                                   28,500              *
                 Common Stock          Maxwell E. Bublitz                              1,167,226              *
                 Common Stock          Eugene M. Bullis                                        0              *
                 Common Stock          Lawrence M. Coss                                7,337,123(5)          2.1%
                 Common Stock          Thomas M. Hagerty                              25,437,717(6)          6.8%
                 Common Stock          David V. Harkins                               25,459,648(7)          6.9%
                 Common Stock          M. Phil Hathaway                                  199,255(8)           *
                 Common Stock          John R. Kline                                      35,417              *
                 Common Stock          John M. Mutz                                      60,600(9)            *
                 Common Stock          Robert S. Nickoloff                               127,498              *
                 Common Stock          William J. Shea                                   140,000              *
                 Common Stock          Samme Thompson                                      5,000              *
                 Common Stock          Gary C. Wendt                                   1,692,567(10)          *
                 Common Stock          Directors and executive officers
                                       as a group (16 persons)                        36,319,664(11)         9.7%




                                      190



- --------------

(1)  Address given for 5-percent owners only.

(2)  The number of shares listed includes shares of Common Stock that the
     individual has a right to acquire as of or within 60 days of April 11, 2003
     upon exercise of outstanding stock options or warrants (although in each
     case the exercise price far exceeds the trading price of the Common Stock)
     as follows: Mr. Berube (28,500), Mr. Bublitz (586,356), Mr. Coss
     (2,245,659), Mr. Hagerty (4,000), Mr. Harkins (4,000), Mr. Hathaway
     (68,000), Mr. Kline (15,835), Mr. Mutz (18,000), Mr. Nickoloff (62,990),
     Mr. Shea (90,000) and all current executive officers and directors as a
     group (3,123,340).

(3)  The shareholder listed, together with certain affiliates and other entities
     and individuals (including Messrs. Hagerty and Harkins), jointly filed a
     Schedule 13D on December 22, 1999 relating to the purchase of an aggregate
     of 2,597,403 shares of Series F Preferred Stock, each share of which is
     convertible into 10 shares of Common Stock. The amount listed in the table
     reflects additional shares of Series F Preferred Stock which have been
     issued in payment of dividends since the date of the Schedule 13D filing.

(4)  Represents shares of Common Stock that may be acquired upon conversion of
     Series F Preferred Stock.

(5)  Includes 79,918 shares held by his spouse and 14,663 shares held by his
     children. Mr. Coss expressly disclaims beneficial ownership of the shares
     held by his wife and children.

(6)  The address for Mr. Hagerty is c/o Thomas H. Lee Company, 75 State Street,
     Boston, MA 02109. Represents shares of Common Stock that may be acquired
     upon conversion of the Series F Preferred Stock. Of those shares of Common
     Stock, 22,422,065 shares are beneficially owned by the Thomas H. Lee Equity
     Fund IV, L.P., 768,117 shares are beneficially owned by Thomas H. Lee
     Foreign Fund IV, L.P. and 2,177,705 shares are beneficially owned by Thomas
     H. Lee Foreign Fund IV-B, L.P. Mr. Hagerty disclaims beneficial ownership
     of such shares except to the extent of his pecuniary interest.

(7)  The address for Mr. Harkins is c/o Thomas H. Lee Company, 75 State Street,
     Boston, MA 02109. Represents shares of Common Stock that may be acquired
     upon conversion of Series F Preferred Stock. Of those shares of Common
     Stock, 8,838 shares are beneficially owned by the 1995 Harkins Gift Trust,
     22,422,065 shares are beneficially owned by the Thomas H. Lee Equity Fund
     IV, L.P., 768,117 shares are beneficially owned by Thomas H. Lee Foreign
     Fund IV, L.P. and 2,177,705 shares are beneficially owned by Thomas H. Lee
     Foreign Fund IV-B, L.P. Mr. Harkins disclaims beneficial ownership of all
     shares except to the extent of his pecuniary interest.

(8)  Includes 16,000 shares owned by Mr. Hathaway's wife.

(9)  Includes 42,600 shares held by Mr. Mutz's wife. Mr. Mutz expressly
     disclaims beneficial ownership of the shares held by his wife.

(10) Includes 64,282 shares held by Mr. Wendt's wife as to which shares Mr.
     Wendt expressly disclaims beneficial ownership.

(11) Includes 25,521,478 shares of Common Stock which may be acquired upon
     conversion of Series F Preferred Stock.

*    Less than 1%.
                                      191


     Equity Compensation Plan Information

     The following table sets forth information about the Company's common stock
that may be issued under all of the Company's existing equity compensation plans
as of December 31, 2002, including the 1994 Stock Plan and the 1997 Plan.



                                                                                                Number of securities
                                                                                               remaining available for
                                           Number of securities                                 future issuance under
                                             to be issued upon          Weighted-average         equity compensation
                                                exercise of             exercise price of         plans (excluding
                                           outstanding options,       outstanding options,    securities reflected in
       Plan category                        warrants or rights         warrants or rights            column (a))
       -------------                        ------------------         ------------------            ----------
                                                                                            
       Equity compensation
         plans approved by
         security holders                        23,520,000                  $15.95                  52,668,000

       Equity compensation
         plans not approved
         by security holders                              -                       -                           -
                                                 ----------                  ------                 -----------

         Total                                   23,520,000                  $15.95                  52,668,000
                                                 ==========                  ======                  ==========

     ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     Conseco adopted stock purchase plans (the "Purchase Plans") to encourage
direct, long-term ownership of Conseco stock by Directors, executive officers
and certain key employees. Purchases of Common Stock under the Purchase Plans
were financed by personal loans made to the participants from banks. Such loans
were collateralized by the Common Stock purchased. Approximately 170 Directors,
officers and key employees of Conseco and its subsidiaries participated in the
Purchase Plans and purchased an aggregate of approximately 19.0 million shares
of Common Stock offered under the Purchase Plans. Conseco guaranteed the loans
but has recourse to the participants if it incurs a loss under the guarantees.
As a result of declines in the price of the Common Stock, the value of shares
pledged as collateral for the bank loans is substantially less than the amount
of such loans. The aggregate number of shares of Common Stock purchased by each
current director or executive officer that is participating in the Purchase
Plans and the largest amount owed on the guaranteed bank loans during 2002 were
as follows: Mr. Bublitz - 420,631 shares and $13,466,130 and John R. Kline (an
executive officer) - 10,000 shares and $371,702. As of March 31, 2003, the
outstanding bank loan balance for Mr. Bublitz was $13,466,130. Mr. Kline repaid
his loan during 2002.

     In addition, Conseco agreed to provide loans to these participants for the
interest payments payable on the guaranteed bank loans. The largest amounts owed
by current directors or executive officers on the interest-payment loans during
2002 were as follows: Mr. Bublitz, $3,991,865 and Mr. Kline $106,042. As of
March 31, 2003, the outstanding principal balance of the interest-payment loan
for Mr. Bublitz was $4,715,904. Mr. Kline repaid his interest payment loan
during 2002. The interest payment loans bear interest at a variable rate per
annum equal to the lowest interest rate per annum being paid by Conseco under
its most senior borrowing facility, and as of March 31, 2003, the interest rate
was 8.75 percent per annum.

     During 2000, the Board of Directors approved two plans (the "Work-Down
Plans") relating to the Purchase Plans. One of the Work-Down Plans applies, with
certain exceptions, to current employees and the other applies to all other
participants in the Purchase Plans. Participants who elected to participate in
the Work-Down Plans participated in a refinancing of the bank loans through
December 31, 2003. The Work-Down Plans require participants to make payments on
or provide additional collateral to secure their obligations under the Purchase
Plan in specified amounts or on such other terms as the special committee of the
Board of Directors administering the Work-Down Plans approves. Employees also
have an opportunity to be awarded bonus points tied to the achievement of
specified goals. The bonus points will have a value tied to the employee's
Purchase Plan obligations. The bonus points may be redeemed at the expiration of
the Work-Down Plan in which event, the employee must pay the Company a portion
of the amount, if any, by which the value of the employee's stock in the
Purchase Plan exceeds $25.00 per share.

     ITEM 14. CONTROLS AND PROCEDURES.

     Based on their evaluations as of a date within 90 days of the filing of
this Annual Report on Form 10-K, the Chief Executive Officer and Chief Financial
Officer have concluded that our disclosure controls and procedures were
effective. Effective disclosure controls and procedures are designed to ensure
that information required to be disclosed in our reports filed or submitted
under the

                                      192


Exchange Act is recorded, processed, summarized and reported, within the time
periods specified in the Commission's rules and forms.

     There have been no significant changes in our internal controls or in other
factors that could significantly affect our internal controls subsequent to the
date we carried out this evaluation.

                                     PART IV

     ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

  (a)     1. Financial Statements. See Index to Consolidated Financial
             Statements on page 79 for a list of financial statements included
             in this Report.

          2. Financial Statement Schedules. The following financial statement
             schedules are included as part of this Report immediately following
             the signature page:

             Schedule II -- Condensed Financial Information of Registrant
             (Parent Company)

             Schedule IV -- Reinsurance

     All other schedules are omitted, either because they are not applicable,
not required, or because the information they contain is included elsewhere in
the consolidated financial statements or notes.

          3. Exhibits. See Exhibit Index immediately preceding the Exhibits
             filed with this report.

   (b)    Reports on Form 8-K

          A report on Form 8-K dated October 3, 2002, was filed with the
          Commission to report under Item 5, a memorandum issued by the
          Registrant's Chief Operating Officer to the Company's shareholders and
          other interested parties summarizing information about the Company.

          A report on Form 8-K dated October 22, 2002, was filed with the
          Commission to report under Item 9, the Company's plan to seek new
          investors for Conseco Finance Corp.'s businesses.

          A report on Form 8-K dated December 3, 2002, was filed with the
          Commission to report under Item 5, a memorandum issued by the
          Registrant's Chief Executive Officer to the Company's shareholders and
          other interested parties summarizing information about the Company.

          A report on Form 8-K dated December 17, 2002, was filed with the
          Commission to report under Item 3, the Company's filing for relief
          under Chapter 11 of the United States Bankruptcy Code.

          A report on Form 8-K dated December 18, 2002, was filed with the
          Commission to report under Item 5, the United States Bankruptcy
          Court's equity trading restriction order and the related motion.

                                      193



                                   SIGNATURES

     Pursuant to the requirements of Section 13 of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized, this 14th day of April, 2003.

                                  CONSECO, INC.

                                  By:  /s/ William J. Shea
                                       --------------------
                                       William J. Shea, President and
                                       Chief Executive Officer














                                      194




     Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:



Signature                                        Title (Capacity)                                Date
- ---------                                        ----------------                                ----
                                                                                           
/s/ WILLIAM J. SHEA                              President and Chief Executive Officer           April 14, 2003
- ---------------------------------                and Director
William J. Shea                                  (Principal Executive Officer)


/s/ EUGENE M. BULLIS                             Executive Vice President                        April 14, 2003
- ---------------------------------                and Chief Financial Officer
Eugene M. Bullis                                 (Principal Financial Officer)


/s/ JOHN R. KLINE                                Senior Vice President                           April 14, 2003
- ---------------------------------                and Chief Accounting Officer
John R. Kline                                    (Principal Accounting Officer)


/s/ GARY C. WENDT                                Director                                        April 14, 2003
- ---------------------------------
Gary C. Wendt

/s/ LAWRENCE M. COSS                             Director                                        April 14, 2003
- ---------------------------------
Lawrence M. Coss

/s/ THOMAS M. HAGERTY                            Director                                        April 14, 2003
- ---------------------------------
Thomas M. Hagerty

/s/ M. PHIL HATHAWAY                             Director                                        April 14, 2003
- ---------------------------------
M. Phil Hathaway

/s/ JOHN M. MUTZ                                 Director                                        April 14, 2003
- ---------------------------------
John M. Mutz

/s/ ROBERT S. NICKOLOFF                          Director                                        April 14, 2003
- ---------------------------------
Robert S. Nickoloff

/s/ DAVID V. HARKINS                             Director                                        April 14, 2003
- ---------------------------------
David V. Harkins

/s/ JULIO A. BAREA                               Director                                        April 14, 2003
- ---------------------------------
Julio A. Barea

/s/ CAROL BELLAMY                                Director                                        April 14, 2003
- ---------------------------------
Carol Bellamy

/s/ SAMME THOMPSON                               Director                                        April 14, 2003
- ---------------------------------
Samme Thompson


                                      195


                         CONSECO, INC. AND SUBSIDIARIES

                                  CERTIFICATION



I, William J. Shea, certify that:

1. I have reviewed this annual report on Form 10-K of Conseco, Inc.:

2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the year covered by this annual
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
Registrant as of, and for, the years presented in this annual report;

4. The Registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the Registrant and we have:

         a) designed such disclosure controls and procedures to ensure that
         material information relating to the Registrant, including its
         consolidated subsidiaries, is made known to us by others within those
         entities, particularly during the year in which this annual report is
         being prepared;

         b) evaluated the effectiveness of the Registrant's disclosure controls
         and procedures as of a date within 90 days prior to the filing date of
         this annual report (the "Evaluation Date"); and

         c) presented in this annual report our conclusions about the
         effectiveness of the disclosure controls and procedures based on our
         evaluation as of the Evaluation Date;

5. The Registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, to the Registrant's auditors and the audit committee of
Registrant's board of directors (or persons performing the equivalent function):

         a) all significant deficiencies in the design or operation of internal
         controls which could adversely affect the Registrant's ability to
         record, process, summarize and report financial data and have
         identified for the Registrant's auditors any material weaknesses in
         internal controls; and

         b) any fraud, whether or not material, that involves management or
         other employees who have a significant role in the Registrant's
         internal controls; and

6. The Registrant's other certifying officer and I have indicated in this annual
report whether or not there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date:   April 14, 2003

                          /s/ William J. Shea
                          --------------------------------------------
                          William J. Shea, President and Chief Executive Officer



                                      196



                         CONSECO, INC. AND SUBSIDIARIES


                                  CERTIFICATION



I, Eugene M. Bullis, certify that:

1. I have reviewed this annual report on Form 10-K of Conseco, Inc.;

2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the year covered by this annual
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
Registrant as of, and for, the years presented in this annual report;

4. The Registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the Registrant and we have:

         a) designed such disclosure controls and procedures to ensure that
         material information relating to the Registrant, including its
         consolidated subsidiaries, is made known to us by others within those
         entities, particularly during the year in which this annual report is
         being prepared;

         b) evaluated the effectiveness of the Registrant's disclosure controls
         and procedures as of a date within 90 days prior to the filing date of
         this annual report (the "Evaluation Date"); and

         c) presented in this annual report our conclusions about the
         effectiveness of the disclosure controls and procedures based on our
         evaluation as of the Evaluation Date;

5. The Registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, to the Registrant's auditors and the audit committee of
Registrant's board of directors (or persons performing the equivalent function):

         a) all significant deficiencies in the design or operation of internal
         controls which could adversely affect the Registrant's ability to
         record, process, summarize and report financial data and have
         identified for the Registrant's auditors any material weaknesses in
         internal controls; and

         b) any fraud, whether or not material, that involves management or
         other employees who have a significant role in the Registrant's
         internal controls; and

6. The Registrant's other certifying officer and I have indicated in this annual
report whether or not there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date:   April 14, 2003
                                 /s/ Eugene M. Bullis
                                 --------------------------------------------
                                 Eugene M. Bullis, Executive Vice President and
                                   Chief Financial Officer


                                      197




                        REPORT OF INDEPENDENT ACCOUNTANTS
                        ON FINANCIAL STATEMENT SCHEDULES





To the Shareholders and Board of Directors
Conseco, Inc.


     Our report on the consolidated financial statements of Conseco, Inc. and
subsidiaries is included on page 80 of this Form 10-K. In connection with our
audits of such financial statements, we have also audited the related financial
statement schedules listed in the index on page 193 of this Form 10-K. In our
opinion, the financial statement schedules referred to above, present fairly, in
all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements.

     The accompanying consolidated financial statements have been prepared
assuming that Conseco, Inc. will continue as a going concern, which contemplates
continuity of Conseco's operations and realization of its assets and payments of
its liabilities in the ordinary course of business. As more fully described in
the notes to the consolidated financial statements, on December 17, 2002,
Conseco, Inc. and several of its wholly-owned subsidiaries filed voluntary
petitions for reorganization under Chapter 11 of the United States Bankruptcy
Code. The uncertainties inherent in the bankruptcy process and Conseco's
recurring losses from operations raise substantial doubt about Conseco's ability
to continue as a going concern. Conseco, Inc. is currently operating its
business as a Debtor-in-Possession under the jurisdiction of the Bankruptcy
Court, and continuation of Conseco as a going concern is contingent upon, among
other things, the confirmation of Conseco's Plan of Reorganization and Conseco's
ability to generate sufficient cash from operations and obtain financing sources
to meet its future obligations. If no reorganization plan is approved, it is
possible that Conseco's assets may be liquidated. The consolidated financial
statements do not include any adjustments to reflect the possible future effects
on the recoverability and classification of assets or the amount and
classification of liabilities that may result from the outcome of these
uncertainties.

     As discussed in note 4 to the consolidated financial statements, the
Company adopted Emerging Issues Task Force Issue No. 99-20, "Recognition of
Interest Income and Impairment on Purchased and Retained Beneficial Interests in
Securitized Financial Assets" in 2000 and Statement of Financial Accounting
Standards No. 142, "Goodwill and Other Intangible Assets" in 2002.



                                             /s/ PricewaterhouseCoopers LLP
                                             --------------------------------
                                             PricewaterhouseCoopers LLP


Indianapolis, Indiana
April 11, 2003


                                      198



                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)

                                   SCHEDULE II

         Condensed Financial Information of Registrant (Parent Company)
                                  Balance Sheet
                        as of December 31, 2002 and 2001
                              (Dollars in millions)

                                     ASSETS


                                                                                                    2002           2001
                                                                                                    ----           ----
                                                                                                         
Cash and cash equivalents.................................................................        $   41.9     $   152.2
Cash held in segregated accounts for the payment of debt..................................             -            54.7
Other invested assets.....................................................................             8.0          15.3
Investment in wholly-owned subsidiaries (eliminated in consolidation).....................         3,899.7       9,528.5
Notes receivable from Conseco Finance (eliminated in consolidation).......................             -           249.5
Receivable from subsidiaries (eliminated in consolidation)................................         1,272.9       1,643.7
Income tax assets.........................................................................            54.3         521.2
Other assets..............................................................................            66.9          10.7
                                                                                                  --------     ---------

          Total assets....................................................................        $5,343.7     $12,175.8
                                                                                                  ========     =========

                                            LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:
    Notes payable.........................................................................       $     -       $ 4,085.0
    Notes payable to subsidiaries (eliminated in consolidation)...........................             -           353.5
    Payable to subsidiaries (eliminated in consolidation).................................             5.1         477.7
    Liabilities subject to compromise.....................................................         4,873.3           -
    Affiliated liabilities subject to compromise..........................................           572.4           -
    Other liabilities.....................................................................            21.8         592.1
                                                                                                 ---------     ---------

          Total liabilities...............................................................         5,472.6       5,508.3
                                                                                                 ---------     ---------

Company-obligated mandatorily redeemable preferred securities of subsidiary trusts........         1,921.5       1,914.5

Shareholders' equity (deficit):
    Preferred stock.......................................................................           501.7         499.6
    Common stock and additional paid-in capital (no par value, 1,000,000,000
       shares authorized, shares issued and outstanding: 2002 - 346,007,133;
        2001 - 344,743,196) ..............................................................         3,497.0       3,484.3
    Accumulated other comprehensive income (loss).........................................           580.6        (439.0)
    Retained earnings (deficit)...........................................................        (6,629.7)      1,208.1
                                                                                                 ---------     ---------

          Total shareholders' equity (deficit)............................................        (2,050.4)      4,753.0
                                                                                                 ---------     ---------

          Total liabilities and shareholders' equity (deficit)............................       $ 5,343.7     $12,175.8
                                                                                                 =========     =========




                   The accompanying notes are an integral part
                     of the condensed financial information.

                                      199



                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                                   SCHEDULE II
         Condensed Financial Information of Registrant (Parent Company)
                             Statement of Operations
              for the years ended December 31, 2002, 2001 and 2000
                              (Dollars in millions)


                                                                                        2002          2001         2000
                                                                                        ----          ----         ----
                                                                                                      
Revenues:
   Net investment income..........................................................   $     3.3       $  29.9   $    77.3
   Dividends from subsidiaries (eliminated in consolidation)......................       276.0         216.3       178.0
   Fee and interest income from subsidiaries (eliminated in consolidation)........        68.6         170.2       347.3
   Net investment losses..........................................................        (2.1)        (53.5)      (66.8)
   Gain on sale of interest in riverboat..........................................         -           192.4         -
   Other income...................................................................         1.5           1.6         7.6
                                                                                     ---------       -------   ---------

       Total revenues.............................................................       347.3         556.9       543.4
                                                                                     ---------       -------   ---------

Expenses:
   Interest expense on notes payable (contractual interest for 2002 of $328.7)....       325.3         369.5       438.4
   Provision for loss.............................................................       147.2         169.6       231.5
   Intercompany expenses (eliminated in consolidation)............................         -            21.0        28.0
   Operating costs and expenses...................................................        91.9          53.8        37.0
   Special charges................................................................        30.5          49.6       281.6
   Reorganization items, net......................................................        14.4           -           -
                                                                                     ---------       -------   ---------

       Total expenses.............................................................       609.3         663.5     1,016.5
                                                                                     ---------       -------   ---------

       Loss before income taxes, equity in undistributed earnings of
         subsidiaries, distributions on Company-obligated mandatorily redeemable
         preferred securities of subsidiary trusts, discontinued operations,
         extraordinary gain (loss) and cumulative effect of accounting change.....      (262.0)       (106.6)     (473.1)

Income tax expense (benefit):
   Tax benefit on period income...................................................       (50.5)       (115.6)     (185.7)
   Valuation allowance for deferred tax assets....................................       811.2           -           -
                                                                                     ---------       -------   ---------

       Income (loss) before equity in undistributed earnings of subsidiaries,
         distributions on Company-obligated mandatorily redeemable preferred
         securities of subsidiary trusts, discontinued operations, extraordinary
         gain (loss) and cumulative effect of accounting change...................    (1,022.7)          9.0      (287.4)

Equity in undistributed loss of subsidiaries before discontinued operations,
   extraordinary gain (loss) and cumulative effect of accounting change
   (eliminated in consolidation)..................................................    (1,475.6)       (205.9)     (316.3)
                                                                                     ---------       -------   ---------

       Loss before distributions on Company-obligated mandatorily redeemable
         preferred securities of subsidiary trusts, discontinued operations,
         extraordinary gain (loss) and cumulative effect of
         accounting change........................................................    (2,498.3)       (196.9)     (603.7)

Distributions on Company-obligated mandatorily redeemable preferred securities
   of subsidiary trusts (contractual distributions for 2002 of $179.8)............       173.2         119.5       145.3
                                                                                     ---------       -------   ---------

       Loss before discontinued operations, extraordinary gain (loss)
         and cumulative effect of accounting change...............................    (2,671.5)       (316.4)     (749.0)

Discontinued operations of subsidiaries, net of income taxes......................    (2,223.1)       (106.7)     (381.9)
Extraordinary gain (loss) on extinguishment of debt, net of income taxes:
   Parent company.................................................................         1.9          11.1        (5.0)
   Subsidiary.....................................................................         6.2           6.1         -
Cumulative effect of accounting change of subsidiaries, net of income taxes.......    (2,949.2)          -         (55.3)
                                                                                     ---------       -------   ---------

       Net loss...................................................................    (7,835.7)       (405.9)   (1,191.2)

Preferred stock dividends (contractual distributions for 2002 of $2.1)............         2.1          12.8        11.0
                                                                                     ---------       -------   ---------

       Loss applicable to common stock............................................   $(7,837.8)      $(418.7)  $(1,202.2)

                                                                                     =========       =======   =========


                   The accompanying notes are an integral part
                     of the condensed financial information.


                                      200




                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                                   SCHEDULE II

         Condensed Financial Information of Registrant (Parent Company)

                             Statement of Cash Flows
              for the years ended December 31, 2002, 2001 and 2000
                              (Dollars in millions)


                                                                                           2002         2001         2000
                                                                                           ----         ----         ----
                                                                                                         
Cash flows from operating activities:
     Net loss.......................................................................   $(7,835.7)    $  (405.9)   $(1,191.2)
     Adjustments to reconcile net income to net cash
       provided by operating activities:
         Equity in undistributed earnings of consolidated subsidiaries *............     1,475.6         205.9        316.3
         Discontinued operations of subsidiaries....................................     2,223.1         106.7        381.9
         Cumulative effect of accounting change of subsidiaries.....................     2,949.2           -           -
         Provision for loss on loan guarantees......................................       147.2         169.6        231.5
         Net investment losses......................................................         2.1          53.5         66.8
         Income taxes ..............................................................       723.4           (80.1)      (351.7)
         Extraordinary charge on extinguishment of debt.............................        (8.1)        (26.9)         7.7
         Cumulative effect of change in accounting..................................         -             -           85.2
         Distributions on Company-obligated mandatorily redeemable preferred
           securities of subsidiary trusts..........................................       173.2         183.9        223.5
         Special charges............................................................        10.2          41.9        112.1
         Gain on sale of interest in riverboat......................................         -          (192.4)
         Other......................................................................       272.7          71.8        (19.9)
                                                                                       ---------     ---------    ---------

         Net cash provided (used) by operating activities...........................       132.9         128.0       (137.8)
                                                                                       ---------     ---------    ---------

Cash flows from investing activities:
   Sales and maturities of investments..............................................        16.7         375.9        228.2
   Investments and advances to consolidated subsidiaries*...........................       (72.2)          -       (1,427.2)
   Purchases of investments.........................................................       (59.2)        (50.1)      (220.0)
   Payments from subsidiaries*......................................................        21.5         535.9      2,218.0
                                                                                       ---------     ---------    ---------

         Net cash provided by investing activities..................................       (93.2)        861.7        799.0
                                                                                       ---------     ---------    ---------

Cash flows from financing activities:
   Issuance of common and convertible preferred shares..............................         -             4.1           .8
   Repurchase of Company-obligated mandatorily redeemable preferred
     securities of subsidiary trusts................................................         -             -         (250.0)
   Issuance of notes payable and commercial paper...................................         -           410.8      3,537.2
   Payments on notes payable........................................................       (75.5)     (1,349.4)    (3,114.6)
   Payments on notes payable to affiliates*.........................................         -             -           (3.1)
   Payments to repurchase equity securities of Conseco, Inc.........................         -             -         (102.6)
   Dividends to subsidiaries*.......................................................       (43.0)        (43.0)       (52.8)
   Dividends and distributions on Company-obligated mandatorily redeemable
     preferred securities of subsidiary trusts......................................       (86.2)       (181.2)      (302.1)
                                                                                       ---------     ---------   ----------

         Net cash used by financing activities......................................      (204.7)     (1,158.7)      (287.2)
                                                                                       ---------     ---------   ----------

         Net increase (decrease) in cash and cash equivalents.......................      (165.0)       (169.0)       374.0

   Cash and cash equivalents, beginning of year.....................................       206.9         375.9          1.9
                                                                                       ---------     ---------   ----------

   Cash and cash equivalents, end of year...........................................   $    41.9     $   206.9   $    375.9
                                                                                       =========     =========   ==========


     *  Eliminated in consolidation

                   The accompanying notes are an integral part
                     of the condensed financial information.

                                      201



                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                                   SCHEDULE II

                    Notes to Condensed Financial Information

1.   Basis of Presentation

     The condensed financial information should be read in conjunction with the
consolidated financial statements of Conseco, Inc. ("Conseco" or "CNC"). The
condensed financial information includes the accounts and activity of the parent
company and its wholly-owned non-insurance subsidiaries which act as the holding
companies for Conseco's life insurance subsidiaries.

2.   Condensed Consolidating Financial Information

     The obligations under our current bank credit facilities, which had a
principal balance of $1,531.4 million at December 31, 2002, are guaranteed by
CIHC, Incorporated, ("CIHC") a wholly-owned subsidiary of Conseco, and the
ultimate holding company for Conseco's principal operating subsidiaries. In
addition, CIHC has guaranteed up to $250.0 million of debt of Conseco Finance
Corp. ("CFC"), and up to $481.3 million of bank loans to certain of our current
and former directors, officers and key employees which were used to purchase
shares of our common stock.

     As described in the note to the consolidated financial statements entitled
"Notes Payable", Conseco completed an exchange of approximately $1.3 billion
aggregate principal amount of newly issued guaranteed notes for its senior
unsecured notes held by "qualified institutional buyers," institutional
"accredited investors," or non U.S. persons in transactions outside the United
States. The bonds which were exchanged have identical principal and interest
amounts, but the new bonds have extended maturities and are guaranteed on a
senior subordinated basis by CIHC. Such guarantee is subordinated to the
guarantees of CIHC summarized in the preceding paragraph. The guarantee is on
parity with CIHC's senior subordinated debt including a $177.4 million note to
CFIHC, Inc. CFIHC, Inc. is a subsidiary of CIHC.

     The following condensed consolidating financial information as of December
31, 2002 and 2001, and for the three years ended December 31, 2002, summarizes
the accounts of CIHC, Conseco and other holding companies which comprise the
parent company. Such condensed consolidating financial information should be
read in conjunction with the consolidated financial statements of Conseco.


                                      202



                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                                   SCHEDULE II

                    Notes to Condensed Financial Information

  Condensed Consolidating Financial Information of Registrant (Parent Company)

                                  Balance Sheet
                             as of December 31, 2002

                              (Dollars in millions)

                                     ASSETS


                                                                                       Conseco, Inc.                  Total
                                                                          CIHC,          and other               Conseco, Inc.
                                                                      Incorporated        holding                   (parent
                                                                    (holding company)    companies   Eliminations   company)
                                                                    -----------------    ---------   ------------   --------
                                                                                                       
Cash and cash equivalents.........................................      $   25.9       $    16.0      $     -      $    41.9
Other invested assets.............................................           5.8             2.2            -            8.0
Investment in wholly-owned subsidiaries
    (eliminated in consolidation).................................       4,440.3         5,360.9       (5,901.5)     3,899.7
Receivable from subsidiaries (eliminated in consolidation)........       1,278.7         1,007.8       (1,013.6)     1,272.9
Income tax assets.................................................          (4.7)           59.0            -           54.3
Other assets......................................................          .1              66.8            -           66.9
                                                                        --------       ---------      ---------    ---------

          Total assets............................................     $ 5,746.1       $ 6,512.7      $(6,915.1)   $ 5,343.7
                                                                       =========       =========      =========    =========

                                            LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
    Payable to subsidiaries (eliminated in consolidation).........     $     4.8       $    71.3      $   (71.0)   $     5.1
    Liabilities subject to compromise.............................           7.4         4,865.9            -        4,873.3
    Affiliated liabilities subject to compromise..................       1,030.3           558.1       (1,016.0)       572.4
    Other liabilities.............................................           -              21.8            -           21.8
                                                                       ---------       ---------      ---------    ---------

          Total liabilities.......................................       1,042.5         5,517.1       (1,087.0)     5,472.6
                                                                       ---------       ---------      ---------    ---------

Company-obligated mandatorily redeemable preferred securities
     of subsidiary trusts.........................................           -           1,921.5            -        1,921.5

Shareholders' equity (deficit):
    Preferred stock...............................................         268.8         1,401.7       (1,168.8)       501.7
    Common stock and additional paid-in capital...................       8,718.8         3,800.0       (9,021.8)     3,497.0
    Accumulated other comprehensive income........................         585.6           580.6         (585.6)       580.6
    Retained earnings (deficit)...................................      (4,869.6)       (6,708.2)       4,948.1     (6,629.7)
                                                                       ---------       ---------      ---------    ---------

          Total shareholders' equity (deficit)....................       4,703.6          (925.9)      (5,828.1)    (2,050.4)
                                                                       ---------       ---------      ---------    ---------

          Total liabilities and shareholders' equity (deficit)....     $ 5,746.1       $ 6,512.7      $(6,915.1)   $ 5,343.7
                                                                       =========       =========      =========    =========

                                      203






                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                                   SCHEDULE II

                    Notes to Condensed Financial Information

  Condensed Consolidating Financial Information of Registrant (Parent Company)

                                  Balance Sheet
                             as of December 31, 2001

                              (Dollars in millions)

                                     ASSETS



                                                                                        Conseco, Inc.                 Total
                                                                          CIHC,           and other              Conseco, Inc.
                                                                      Incorporated         holding                  (parent
                                                                    (holding company)     companies  Eliminations   company)
                                                                    -----------------     ---------  ------------   --------

                                                                                                      
Cash and cash equivalents.........................................     $     1.0       $   151.2    $      -      $   152.2
Cash held in segregated accounts for the payment of debt..........           -              54.7           -           54.7
Other invested assets.............................................           3.5            11.8           -           15.3
Investment in wholly-owned subsidiaries
    (eliminated in consolidation).................................      10,240.6        10,166.6     (10,878.7)     9,528.5
Notes receivable from Conseco Finance
    (eliminated in consolidation).................................         249.5             -             -          249.5
Receivable from subsidiaries (eliminated in consolidation)........       1,535.8         2,685.1      (2,577.2)     1,643.7
Income taxes......................................................        (210.8)          648.8          83.2        521.2
Other assets......................................................           1.0             9.7           -           10.7
                                                                       ---------       ---------    ----------    ---------

          Total assets............................................     $11,820.6       $13,727.9    $(13,372.7)   $12,175.8
                                                                       =========       =========    ==========    =========

                      LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:
    Notes payable.................................................     $     -         $ 4,085.0    $      -      $ 4,085.0
    Notes payable to subsidiaries (eliminated in consolidation)...       1,279.8            77.0      (1,003.3)       353.5
    Payable to subsidiaries (eliminated in consolidation).........         313.3         1,094.0        (929.6)       477.7
    Other liabilities.............................................          35.7           556.4           -          592.1
                                                                       ---------       ---------    ----------    ---------

          Total liabilities.......................................       1,628.8         5,812.4      (1,932.9)     5,508.3
                                                                       ---------       ---------    ----------    ---------

Company-obligated mandatorily redeemable preferred securities
     of subsidiary trusts.........................................           -           1,914.5           -        1,914.5

Shareholders' equity:
    Preferred stock...............................................         250.8         1,399.6      (1,150.8)       499.6
    Common stock and additional paid-in capital...................       8,763.4         3,789.0      (9,068.1)     3,484.3
    Accumulated other comprehensive loss..........................        (478.2)         (438.9)        478.1       (439.0)
    Retained earnings.............................................       1,655.8         1,251.3      (1,699.0)     1,208.1
                                                                       ---------       ---------    ----------    ---------

          Total shareholders' equity..............................      10,191.8         6,001.0     (11,439.8)     4,753.0
                                                                       ---------       ---------    ----------    ---------

          Total liabilities and shareholders' equity..............     $11,820.6       $13,727.9    $(13,372.7)   $12,175.8
                                                                       =========       =========    ==========    =========


                                      204




                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                                   SCHEDULE II

                    Notes to Condensed Financial Information

  Condensed Consolidating Financial Information of Registrant (Parent Company)

                             Statement of Operations
                      for the year ended December 31, 2002

                              (Dollars in millions)



                                                                                        Conseco, Inc.                 Total
                                                                          CIHC,           and other              Conseco, Inc.
                                                                      Incorporated         holding                  (parent
                                                                    (holding company)     companies  Eliminations  company)
                                                                    -----------------     ---------  ------------  --------
                                                                                                      
Revenues:
    Net investment income.........................................     $      .1       $     3.2        $    -    $     3.3
    Dividends from subsidiaries (eliminated in consolidation).....         276.0             -               -        276.0
    Fee and interest income from subsidiaries
       (eliminated in consolidation)..............................          67.3            39.6           (38.3)      68.6
    Net investment gains (losses).................................           -              (2.1)            -         (2.1)
    Other income..................................................           -               1.5             -          1.5
                                                                       ---------       ---------        --------  ---------

          Total revenues..........................................         343.4            42.2           (38.3)     347.3
                                                                       ---------       ---------        --------  ---------

Expenses:
    Interest expense on notes payable.............................           -             325.3             -        325.3
    Provision for loss............................................           -             147.2             -        147.2
    Intercompany expenses (eliminated in consolidation)...........          32.5             1.2           (33.7)       -
    Operating costs and expenses..................................           4.7            89.6            (2.4)      91.9
    Special charges...............................................            .1            30.4             -         30.5
    Reorganization items, net.....................................           -              14.4             -         14.4
                                                                       ---------       ---------        --------  ---------

          Total expenses..........................................          37.3           608.1           (36.1)     609.3
                                                                       ---------       ---------        --------  ---------

          Income (loss) before income taxes, equity in
             undistributed earnings ofsubsidiaries, distributions
             on Company-obligated mandatorilyredeemable preferred
             securities of subsidiary trusts, discontinued
             operations, extraordinary gain and cumulative effect
             of accounting change.................................         306.1          (565.9)           (2.2)    (262.0)

Income tax expense (benefit):
       Tax benefit on period income ..............................          37.0           (87.5)            -        (50.5)
       Valuation allowance for deferred tax assets................           -             811.2             -        811.2
                                                                       ---------       ---------        --------  ---------

       Income (loss) before equity in undistributed earnings of
             subsidiaries,distributions on Company-obligated
             mandatorily redeemable preferredsecurities of
             subsidiary trusts, discontinued operations,
             extraordinary gain and cumulative effectof
             accounting change....................................         269.1        (1,289.6)           (2.2)  (1,022.7)

Equity in undistributed earnings of subsidiaries before
    discontinued operations,extraordinary gain and cumulative
    effect of accounting change(eliminated in consolidation)......      (1,664.1)       (6,274.1)        6,462.6   (1,475.6)
                                                                       ---------       ---------        --------  ---------

       Income (loss) before distributions on Company-obligated
             mandatorily redeemable preferred securities of
             subsidiary trusts, discontinued operations,
             extraordinary gain and cumulative effect
             of accounting change.................................      (1,395.0)       (7,563.7)        6,460.4   (2,498.3)

Distributions on Company-obligated mandatorily redeemable
    preferred securities of subsidiary trusts.....................           -             173.2             -        173.2
                                                                       ---------       ---------        --------  ---------

       Income (loss) before discontinued operations,
       extraordinary gain and cumulative effect of
       accounting change..........................................      (1,395.0)       (7,736.9)        6,460.4   (2,671.5)
Discontinued operations of subsidiaries, net of tax...............      (2,223.1)            -               -     (2,223.1)
Extraordinary gain on extinguishment of debt, net of tax..........
    Parent company................................................           -               1.9             -          1.9
    Subsidiary....................................................           6.2             -               -          6.2
Cumulative effect of accounting change of subsidiaries,
    net of tax....................................................      (2,857.1)          (92.1)            -     (2,949.2)
                                                                       ---------       ---------        --------  ---------

       Net income (loss)..........................................      (6,469.0)       (7,827.1)        6,460.4   (7,835.7)

Preferred stock dividends.........................................          27.1            38.1           (63.1)       2.1
                                                                       ---------       ---------        --------  ---------

       Income (loss) applicable to common stock...................     $(6,496.1)      $(7,865.2)       $6,523.5  $(7,837.8)
                                                                       =========       =========        ========  =========


                                      205

                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                                   SCHEDULE II

                    Notes to Condensed Financial Information

  Condensed Consolidating Financial Information of Registrant (Parent Company)

                             Statement of Operations
                      for the year ended December 31, 2001

                              (Dollars in millions)


                                                                                        Conseco, Inc.                 Total
                                                                          CIHC,           and other              Conseco, Inc.
                                                                      Incorporated         holding                   (parent
                                                                    (holding company)     companies  Eliminations   company)
                                                                    -----------------     ---------  ------------   --------
                                                                                                      
Revenues:
    Net investment income.........................................         $    .7       $  29.2       $   -      $  29.9
    Dividends from subsidiaries (eliminated in consolidation).....           192.3          24.0           -        216.3
    Fee and interest income from subsidiaries
       (eliminated in consolidation)..............................           172.5         180.4        (182.7)     170.2
    Net investment gains (losses).................................             4.3         (57.8)          -        (53.5)
    Gain on sale of interest in riverboat.........................             -           192.4           -        192.4
    Other income..................................................             -             1.6           -          1.6
                                                                           -------       -------       -------    -------

          Total revenues..........................................           369.8         369.8        (182.7)     556.9
                                                                           -------       -------       -------    -------
Expenses:
    Interest expense on notes payable.............................             2.6         369.2          (2.3)     369.5
    Provision for loss............................................             -           169.6           -        169.6
    Intercompany expenses (eliminated in consolidation)...........           122.0           5.3        (106.3)      21.0
    Operating costs and expenses..................................             2.5          70.4         (19.1)      53.8
    Special charges...............................................              .2          36.9          12.5       49.6
                                                                           -------       -------       -------    -------

          Total expenses..........................................           127.3         651.4        (115.2)     663.5
                                                                           -------       -------       -------    -------
          Income (loss) before income taxes, equity in
             undistributed earnings ofsubsidiaries, distributions
             on Company-obligated mandatorily redeemable preferred
             securities of subsidiary trusts, discontinued
             operations, extraordinary gain and cumulative effect
             of accounting change.................................           242.5        (281.6)        (67.5)    (106.6)

Income tax expense (benefit)......................................            16.3        (107.5)        (24.4)    (115.6)
                                                                           -------       -------       -------    -------
       Income (loss) before equity in undistributed earnings of
             subsidiaries, distributions on Company-obligated
             mandatorily redeemable preferred securities of
             subsidiary trusts, discontinued operations,
             extraordinary gain and cumulative effect of
             accounting change....................................           226.2        (174.1)        (43.1)       9.0

Equity in undistributed earnings of subsidiaries before
    discontinued operations, extraordinary gain and cumulative
    effect of accounting change (eliminated in consolidation).....          (193.9)        (78.3)         66.3     (205.9)
                                                                            -------       -------       -------    -------
       Income (loss) before distributions on Company-obligated
             redeemable mandatorily preferred securities of
             subsidiary trusts, discontinued operations,
             extraordinary gain and cumulative effect of
             accounting change....................................            32.3        (252.4)         23.2     (196.9)

Distributions on Company-obligated mandatorily redeemable
    preferred securities of subsidiary trusts.....................             -           119.5           -        119.5
                                                                           -------       -------       -------    -------
       Income (loss) before discontinued operations, extraordinary
       gain and cumulative effect of accounting change............            32.3        (371.9)         23.2     (316.4)

Discontinued operations of subsidiaries, net of tax...............          (106.7)          -             -       (106.7)

Extraordinary gain on extinguishment of debt, net of tax:
    Parent company................................................             -            11.1           -         11.1
    Subsidiary....................................................             6.1           -             -          6.1
                                                                           -------       -------       -------    -------

       Net income (loss)..........................................           (68.3)       (360.8)         23.2     (405.9)

Preferred stock dividends.........................................             -            12.8           -         12.8
                                                                           -------       -------       -------    -------

       Income (loss) applicable to common stock...................         $ (68.3)      $(373.6)      $  23.2    $(418.7)
                                                                           =======       =======       =======    =======


                                      206

                         CONSECO, INC. AND SUBSIDIARIES
                 (DEBTOR-IN-POSSESSION AS OF DECEMBER 17, 2002)
                                   SCHEDULE II

                    Notes to Condensed Financial Information

  Condensed Consolidating Financial Information of Registrant (Parent Company)

                             Statement of Operations
                      for the year ended December 31, 2000

                              (Dollars in millions)


                                                                                        Conseco, Inc.                 Total
                                                                          CIHC,           and other              Conseco, Inc.
                                                                      Incorporated         holding                  (parent
                                                                    (holding company)     companies  Eliminations  company)
                                                                    -----------------     ---------  ------------  --------
                                                                                                       
Revenues:
    Net investment income.........................................       $     -       $    77.3       $   -      $    77.3
    Dividends from subsidiaries (eliminated in consolidation).....         178.0             -             -          178.0
    Fee and interest income from subsidiaries
       (eliminated in consolidation)..............................         197.4           335.3        (185.4)       347.3
    Net investment gains (losses).................................           2.7           (69.5)          -          (66.8)
    Other income..................................................           -               7.6           -            7.6
                                                                         -------       ---------       -------    ---------

          Total revenues..........................................         378.1           350.7        (185.4)       543.4
                                                                         -------       ---------       -------    ---------
Expenses:
    Interest expense on notes payable.............................          12.5           425.9           -          438.4
    Provision for loss............................................           -             231.5           -          231.5
    Intercompany expenses (eliminated in consolidation)...........         198.9            11.6        (182.5)        28.0
    Operating costs and expenses..................................           6.9            30.1           -           37.0
    Special charges...............................................           -             281.6           -          281.6
                                                                         -------       ---------       -------    ---------

          Total expenses..........................................         218.3           980.7        (182.5)     1,016.5
                                                                         -------       ---------       -------    ---------

          Income (loss) before income taxes, equity in undistributed
             earnings of subsidiaries, distributions on Company-
             obligated mandatorily redeemable preferred securities
             of subsidiary trusts, discontinued operations,
             extraordinary charge and cumulative effect of
             accounting change....................................         159.8          (630.0)         (2.9)      (473.1)

Income tax expense (benefit)......................................          (2.6)         (182.1)         (1.0)      (185.7)
                                                                         -------       ---------       -------    ---------

       Income (loss) before equity in undistributed earnings of
             subsidiaries, distributions on Company-obligated
             mandatorily redeemable preferred securities of
             subsidiary trusts, discontinued operations,extraordinary
             charge and cumulative effect of accounting change....         162.4          (447.9)         (1.9)      (287.4)

Equity in undistributed earnings of subsidiaries before discontinued
    operations, extraordinary charge and cumulative effect of
    accounting change (eliminated in consolidation)...............        (321.1)         (584.4)        589.2       (316.3)
                                                                         -------       ---------       -------    ---------

       Loss  before distributions on Company-obligated mandatorily
             redeemable preferred securities of subsidiary trusts,
             discontinued operations, extraordinary charge and
             cumulative effect of accounting change...............        (158.7)       (1,032.3)        587.3       (603.7)

Distributions on Company-obligated mandatorily redeemable
    preferred securities of subsidiary trusts.....................           -             145.3           -          145.3
                                                                         -------       ---------       -------    ---------

       Loss before discontinued operations, extraordinary charge
       and cumulative effect of accounting change.................        (158.7)       (1,177.6)        587.3       (749.0)

Discontinued operations of subsidiaries, net of tax...............        (381.9)            -             -         (381.9)
Extraordinary charge on extinguishment of debt, net of tax........          (4.9)          (.1)            -           (5.0)
Cumulative effect of accounting change, net of tax, of
    subsidiaries..................................................         (55.3)            -             -          (55.3)
                                                                         -------       ---------       -------    ---------

       Net loss...................................................        (600.8)       (1,177.7)        587.3     (1,191.2)

Preferred stock dividends.........................................           -              11.0           -           11.0
                                                                         -------       ---------       -------    ---------

       Loss applicable to common stock............................       $(600.8)      $(1,188.7)      $ 587.3    $(1,202.2)
                                                                         =======       =========       =======    =========


                                      207

                         CONSECO, INC. AND SUBSIDIARIES

                                   SCHEDULE IV

                                   Reinsurance
              for the years ended December 31, 2002, 2001 and 2000
                              (Dollars in millions)




                                                                           2002             2001              2000
                                                                           ----             ----              ----
                                                                                                  
Life insurance inforce:
   Direct............................................................   $ 94,098.3       $116,075.0        $117,556.2
   Assumed...........................................................      3,380.7          1,996.5           4,878.0
   Ceded ............................................................    (26,368.9)       (26,088.6)        (27,106.3)
                                                                        ----------       ----------       -----------

         Net insurance inforce.......................................   $ 71,110.1        $91,982.9        $ 95,327.9
                                                                        ==========        =========        ==========

         Percentage of assumed to net................................          4.8%             2.2%              5.1%
                                                                               ===              ===               ===

Premiums recorded as revenue for generally accepted
  accounting principles:
     Direct..........................................................    $ 3,287.8        $ 3,600.0         $ 3,556.7
     Assumed.........................................................         78.7            146.0             300.5
     Ceded...........................................................       (327.8)          (249.4)           (237.1)
                                                                         ---------        ---------         ---------

         Net premiums................................................    $ 3,038.7        $ 3,496.6         $ 3,620.1
                                                                         =========        =========         =========

         Percentage of assumed to net................................          2.6%             4.2%              8.3%
                                                                               ===              ===               ===


                                      208




Exhibit
No.                                        Document
- -------                                    --------

2.1               Second Amended Disclosure Statement with Respect to Joint Plan
                  of Reorganization of Conseco, Inc. and its affiliated Debtors
                  dated March 18, 2003 was filed with the Commission as Exhibit
                  2.1 to the Registrant's Report on Form 8-K, dated March 18,
                  2003, and is incorporated herein by this reference.

2.2               Second Amended Joint Plan of Reorganization of Conseco, Inc.
                  and its affiliated Debtors dated March 18, 2003 was filed with
                  the Commission as Exhibit 2.2 to the Registrant's Report on
                  Form 8-K, dated March 18, 2003, and is incorporated herein by
                  this reference.

2.3               Amended Final Order Under 11 U.S.C. section 105(a), 362(a)(3)
                  and 541 (A) Limiting Certain Transfers of, and Trading in,
                  Equity Interests and (B) Approving Related Notification
                  Procedures (including exhibits thereto) was filed with the
                  Commission as Exhibit 99.1 to the Registrant's Report on Form
                  8-K, dated January 21, 2003, and is incorporated herein by
                  this reference.

2.4               Disclosure Statement for Finance Company Debtors' Joint
                  Liquidating Plan of Reorganization dated April 1, 2003.

2.5               Finance Company Debtors' Joint Liquidating Plan of
                  Reorganization dated April 1, 2003.

2.6               Amended and Restated Asset Purchase Agreement by and among
                  Conseco Finance Corp., various subsidiaries of Conseco Finance
                  Corp. and CFN Investment Holdings LLC dated as of March 14,
                  2003 and Amendment No. 1 to Amended and Restated Asset
                  Purchase Agreement dated April 1, 2003.

2.7               Asset Purchase Agreement by and among Conseco Finance Corp.,
                  various subsidiaries of Conseco Finance Corp. and General
                  Electric Capital Corporation dated as of March 14, 2003.

3.1               Amended and Restated Articles of Incorporation and Articles of
                  Amendment thereto of the Registrant were filed with the
                  Commission as Exhibit 3.1 to the Registrant's Registration
                  Statement on Form S-3 (No. 333-94683), and are incorporated
                  herein by this reference.

3.2               Amended and Restated By-Laws of the Registrant was filed with
                  the Commission as Exhibit 3.2 to the Registrant's Report on
                  Form 10-Q for the quarter ended September 30, 2002 and is
                  incorporated herein by this reference.

4.22.1            Senior Indenture, dated November 13, 1997, by and between the
                  Registrant and Bank of New York as successor in interest to
                  LTCB Trust Company, as Trustee (the "Senior Indenture"), was
                  filed with the Commission as Exhibit 4.1 to Post-Effective
                  Amendment No. 1 to the Registrant's Registration Statement on
                  Form S-3, No. 333-27803, and is incorporated herein by this
                  reference.

4.22.6            First Supplemental Indenture dated June 29, 2001 was filed
                  with the Commission as Exhibit 4.1 to the Registrant's Report
                  on Form 8-K, dated June 29, 2001, and is incorporated herein
                  by this reference.

4.30.1            Warrant No. 2000-2, dated September 5, 2000, issued to GE
                  Capital Equity Investments, Limited was filed as




                  Exhibit 4.30.1 to the Registrant's Report on Form 10-K for the
                  year ended December 31, 2000 and is incorporated herein by
                  this reference.

4.30.2            Warrant No. 2000-3, dated September 5, 2000, issued to
                  Westport Insurance Corporation was filed as Exhibit 4.30.2 to
                  the Registrant's Report on Form 10-K for the year ended
                  December 31, 2000 and is incorporated herein by this
                  reference.

4.31.1            First Amendment to the Five-Year Credit Agreement dated as of
                  September 22, 2000 was filed with the Commission as Exhibit
                  4.1 to the Registrant's Report on Form 8-K/A, dated September
                  28, 2000, and is incorporated herein by this reference.

4.31.13           Second Amendment to Five-Year Credit Agreement, dated as of
                  May 30, 2001, by and among Conseco, Inc., the various
                  financial institutions signatory thereto and Bank of America,
                  N.A. was filed as Exhibit 4.31.13 to the Registrant's Report
                  on Form 10-K for the year ended December 31, 2001 and is
                  incorporated herein by this reference

4.31.14           Third Amendment to Five-Year Credit Agreement, dated as of
                  March 20, 2002, by and among Conseco, Inc., the various
                  financial institutions signatory thereto and Bank of America,
                  N.A. was filed as Exhibit 4.31.14 to the Registrant's Report
                  on Form 10-K for the year ended December 31, 2001 and is
                  incorporated herein by this reference.

4.31.15           Five-Year Credit Agreement, dated as of September 25, 1998,
                  among Conseco, Inc., Bank of America National Trust and
                  Savings Association, as Agent, First Union National Bank and
                  JPMorgan Chase Bank, as Syndication Agents, Morgan Guaranty
                  Company of New York, as Documentation Agent, and the other
                  financial institutions party thereto incorporated by reference
                  to Exhibit 4.11 to Amendment No. 1 to Conseco, Inc.'s
                  Registration Statement on Form S-4 (No. 333-89802), dated July
                  25, 2002.

4.31.16           Forbearance agreement relating to $1,500,000,000 five-year
                  credit agreement was filed with the Commission as Exhibit
                  4.31.15 to the Registrant's Report on Form 10-Q for the
                  quarter ended September 30, 2002 and is incorporated herein by
                  this reference.

4.32.1            First Senior Supplemental Indenture, dated as of April 24,
                  2002 to Second Senior Indenture for the 10.75% Guaranteed
                  Senior Notes dated as of April 24, 2002 between Conseco, Inc.,
                  CIHC, Incorporated and State Street Bank and Trust Company
                  incorporated by reference to Exhibit 4.1 to Conseco, Inc.'s
                  Registration Statement on Form S-4 (No. 333-89802), dated June
                  5, 2002.

4.32.2            Second Senior Indenture, dated as of April 24, 2002 for



                  10.75% Guaranteed Senior Notes, between Conseco, Inc., CIHC,
                  Incorporated and State Street Bank and Trust Company
                  incorporated by reference to Exhibit 4.2 to Conseco, Inc.'s
                  Registration Statement on Form S-4 (No. 333-89802), dated June
                  5, 2002.

4.32.3            First Senior Indenture, dated as of April 24, 2002 among
                  Conseco, Inc., CIHC, Incorporated and State Street Bank and
                  Trust Company incorporated by reference to Exhibit 4.3 to
                  Conseco, Inc.'s Registration Statement on Form S-4 (No.
                  333-89802), dated June 5, 2002.

4.32.4            Terms Resolution, dated as of April 24, 2002 with respect to
                  the 6.4% Guaranteed Senior Notes, due February 10, 2004
                  incorporated by reference to Exhibit 4.4 to Conseco, Inc.'s
                  Registration Statement on Form S-4 (No. 333-89802), dated June
                  5, 2002.

4.32.5            Terms Resolution, dated as of April 24, 2002 with respect to
                  the 8.5% Guaranteed Senior Notes due October 15, 2003
                  incorporated by reference to Exhibit 4.5 to Conseco, Inc.'s
                  Registration Statement on Form S-4 (No. 333-89802), dated June
                  5, 2002.

4.32.6            Terms Resolution, dated as of April 24, 2002 with respect to
                  the 6.8% Guaranteed Senior Notes due June 15, 2007
                  incorporated by reference to Exhibit 4.6 to Conseco, Inc.'s
                  Registration Statement on Form S-4 (No. 333-89802), dated June
                  5, 2002.

4.32.7            Terms Resolution, dated as of April 24, 2002 with respect to
                  the 9% Guaranteed Senior Notes due April 15, 2008 incorporated
                  by reference to Exhibit 4.7 to Conseco, Inc.'s Registration
                  Statement on Form S-4 (No. 333-89802), dated June 5, 2002.

4.32.8            Terms Resolution, dated as of April 24, 2002 with respect to
                  the 8.75% Guaranteed Senior Notes due August 9, 2006
                  incorporated by reference to Exhibit 4.8 to Conseco, Inc.'s
                  Registration Statement on Form S-4 (No. 333-89802), dated June
                  5, 2002.

4.32.9            Registration Rights Agreement, dated as of April 24, 2002
                  among Conseco, Inc., CIHC, Incorporated and Banc of America
                  Securities LLC, J.P. Morgan Securities Inc. and Lehman
                  Brothers Inc., as Dealer Managers incorporated by reference to
                  Exhibit 4.9 to Conseco, Inc.'s Registration Statement on Form
                  S-4 (No. 333-89802), dated June 5, 2002.



There have not been filed as exhibits to this Form 10-K certain long-term debt
instruments, none of which relates to authorized indebtedness that exceeds 10%
of the consolidated assets of the Registrant. The Registrant agrees to furnish
the Commission upon its request a copy of any instrument defining the rights of
holders of long-term debt of the Company and its consolidated subsidiaries.

10.1.13           Employment Agreement, dated February 9, 1996 between Green
                  Tree and Lawrence Coss and related Noncompetition agreement
                  dated February 9, 1996, as amended by the Amendment Agreement
                  dated April 6, 1998 were filed with the Commission as an
                  exhibit to Green Tree's Registration Statement on Form S-3,
                  and are incorporated herein by this reference.

10.1.14           Employment Agreement, amended and restated as of December 15,
                  1999, between the Registrant and Maxwell E. Bublitz was filed
                  with the Commission as Exhibit 10.1.14 to the Registrant's
                  Report on Form 10-K for the year ended December 31, 1999 and
                  is incorporated herein by this reference.

10.1.16           Description of incentive compensation and severance
                  arrangement with Edward M. Berube was filed with the
                  Commission as Exhibit 10.1.16 to the Registrant's Annual
                  Report on Form 10-K for the year ended December 31, 2000 and
                  is incorporated herein by this reference.

10.1.24           Second Amendment Agreement, dated as of November 1, 1999,
                  between Conseco Finance Corp. and Lawrence M. Coss was filed
                  with the commission as Exhibit 10.1.24 to the Registrant's
                  Report on Form 10-K/A for the year ended December 31, 1999,
                  and is incorporated herein by this reference.

10.1.27           Employment Agreement by and between Gary C. Wendt and Conseco,
                  Inc., dated as of June 28, 2000 was filed as Exhibit 10.1.27
                  to the Registrant's Report on Form 8-K, dated July 10, 2000,
                  and is incorporated herein by this reference.

10.1.28           Nonqualified Stock Option Agreement by and between Gary C.
                  Wendt and Conseco, Inc., dated as of June 28, 2000 was filed
                  as Exhibit 10.1.28 to the Registrant's Report on Form 8-K,
                  dated July 10, 2000, and is incorporated herein by this
                  reference.

10.1.29           Restricted Stock Agreement by and between Gary C. Wendt and
                  Conseco, Inc., dated as of June 28, 2000 was filed as Exhibit
                  10.1.29 to the Registrant's Report on Form 8-K, dated July 10,
                  2000, and is incorporated herein by this reference.

10.1.31           Supplemental Retirement Agreement dated as of August 16, 2000,
                  between Conseco, Inc. and Gary C. Wendt was filed as Exhibit
                  10.1.31 to the Registrant's Report on



                  Form 10-Q for the quarter ended September 30, 2000 and is
                  incorporated herein by this reference.

10.1.32           Guaranty dated as of August 16, 2000, between Bankers Life and
                  Casualty Company as Guarantor, and Gary C. Wendt was filed as
                  Exhibit 10.1.32 to the Registrant's Report on Form 10-Q for
                  the quarter ended September 30, 2000 and is incorporated
                  herein by this reference.

10.1.38           Employment Agreement between William J. Shea and Conseco,
                  Inc., dated as of June 1, 2002, was filed with the Commission
                  as Exhibit 10.1.38 to the Registrant's Report on Form 10-Q for
                  the quarter ended September 30, 2001 and is incorporated
                  herein by this reference.

10.1.39           Restricted Stock Agreement dated as of September 17, 2001
                  between Conseco, Inc. and William J. Shea was filed with the
                  Commission as Exhibit 10.1.39 to the Registrant's Report on
                  Form 10-Q for the quarter ended September 30, 2002 and is
                  incorporated herein by this reference.

10.1.41           Amendment to Employment and Restricted Stock Agreements by and
                  between William J. Shea and Conseco, Inc., dated as of
                  September 16, 2002 was filed with the Commission as Exhibit
                  10.1.41 to the Registrant's Report on Form 10-Q for the
                  quarter ended September 30, 2002 and is incorporated herein by
                  this reference.

10.1.42           Employment Agreement by and between John R. Kline and Conseco,
                  Inc., dated as of July 15, 2002 was filed with the Commission
                  as Exhibit 10.1.42 to the Registrant's Report on Form 10-Q for
                  the quarter ended September 30, 2002 and is incorporated
                  herein by this reference.

10.1.43           Amendment to Employment and Restricted Stock Agreements by and
                  between Gary C. Wendt and Conseco, Inc., dated as of June 26,
                  2002, was filed with the Commission as Exhibit 10.1.27 to the
                  Registrant's Report on Form 10-Q for the quarter ended June
                  30, 2002 and is incorporated herein by this reference.

10.1.44           Second Amendment to Employment and Restricted Stock
                  Agreements, between William J. Shea and Conseco, Inc. dated
                  December 16, 2002.

10.1.45           Employment Agreement between Conseco Services, LLC and Eugene
                  M. Bullis dated as of July 1, 2002.

10.8              The Registrant's Stock Option Plan was filed with the
                  Commission as Exhibit B to its definitive Proxy Statement
                  dated December 10, 1983; Amendment No. 1 thereto was filed
                  with the Commission as Exhibit 10.8.1 to its Report on Form
                  10-Q for the quarter ended June 30, 1985; Amendment No. 2
                  thereto was filed with the Commission as Exhibit 10.8.2 to its
                  Registration Statement on Form S-1, No. 33-4367; Amendment No.
                  3 thereto was filed with the Commission as Exhibit 10.8.3 to
                  the Registrant's Annual Report on Form 10-K for 1986;
                  Amendment No. 4 thereto was filed with the Commission as
                  Exhibit 10.8 to the Registrant's Annual Report on Form 10-K
                  for 1987; Amendment No. 5 thereto



                  was filed with the Commission as Exhibit 10.8 to the
                  Registrant's Report on Form 10-Q for the quarter ended
                  September 30, 1991; and are incorporated herein by this
                  reference.

10.8.4            Amended and Restated Conseco Stock Bonus and Deferred
                  Compensation Program was filed with the Commission as Exhibit
                  10.8.4 to the Registrant's Annual Report on Form 10-K for
                  1992, and is incorporated herein by this reference.

10.8.6            Conseco Performance-Based Compensation Plan for Executive
                  Officers was filed with the Commission as Exhibit 10.8.15 to
                  the Registrant's Report on Form 10-Q for the quarter ended
                  March 31, 1998, and is incorporated herein by this reference.

10.8.7            Conseco, Inc. Amended and Restated Deferred Compensation Plan
                  was filed with the Commission as Exhibit A to the Registrant's
                  definitive Proxy Statement dated April 26, 1995, and is
                  incorporated herein by this reference.

10.8.8            Amendment to the Amended and Restated Conseco Stock Bonus and
                  Deferred Compensation Program was filed with the Commission as
                  Exhibit 10.8.8 to the Registrant's Annual Report on Form 10-K
                  for 1994, and is incorporated herein by this reference.

10.8.9            Conseco Amended and Restated 1994 Stock and Incentive Plan was
                  filed as Exhibit 10.8.9 to the Registrant's Report on Form
                  10-K for the year ended December 31, 2001 and is incorporated
                  herein by this reference.

10.8.10           Amendment Number 2 to the Amended and Restated Conseco Stock
                  Bonus and Deferred Compensation Program was filed with the
                  Commission as Exhibit 10.8.10 to the Registrant's Annual
                  Report on Form 10-K for 1995 and is incorporated herein by
                  reference.

10.8.11           Amended and Restated Director, Officer and Key Employee Stock
                  Purchase Plan of Conseco was filed with the Commission as
                  Exhibit 10.8.11 to the Registrant's Report on Form 10-Q for
                  the quarter ended September 30, 1999, and is incorporated
                  herein by this reference.

10.8.13           Form of Promissory Note payable to the Registrant relating to
                  the Registrant's Director, Officer and Key Employee Stock
                  Purchase Plan was filed with the Commission as Exhibit 10.8.13
                  to the Registrant's Annual Report on Form 10-K for the year
                  ended December 31, 1998, and is incorporated herein by
                  reference.

10.8.14           Conseco, Inc. Amended and Restated 1997 Non-qualified Stock
                  Option Plan was filed with the Commission as Exhibit 10.8.14
                  to the Registrant's Annual Report on Form 10-K for 1997, and
                  is incorporated herein by this reference.

10.8.21           Amended and Restated 1999 Director and Executive



                  Officer Stock Purchase Plan of Conseco was filed with the
                  Commission as Exhibit 10.8.21 to the Registrant's Report on
                  Form 10-Q for the quarter ended September 30, 1999 and is
                  incorporated herein by this reference.

10.8.22           Guaranty regarding 1999 Director and Executive Officer Stock
                  Purchase Plan was filed with the Commission as Exhibit 10.8.22
                  to the Registrant's Report on Form 10-Q for the quarter ended
                  September 30, 1999 and is incorporated herein by this
                  reference.

10.8.23           Form of Borrower Pledge Agreement dated as of September 15,
                  1999 with The Chase Manhattan Bank relating to the 1999
                  Director and Executive Officer Stock Purchase Plan was filed
                  with the Commission as Exhibit 10.8.23 to the Registrant's
                  Report on Form 10-Q for the quarter ended September 30, 1999
                  and is incorporated herein by this reference.

10.8.24           Form of note payable to the Registrant relating to the 1999
                  Director and Executive Officer Stock Purchase Plan was filed
                  with the Commission as Exhibit 10.8.24 to the Registrant's
                  Report on Form 10-Q for the quarter ended September 30, 1999
                  and is incorporated herein by this reference.

10.8.25           Conseco, Inc. 2000 Employee Stock Purchase Program Work-Down
                  Plan was filed with the Commission as Exhibit 10.8.25 to the
                  Registrant's Annual Report on Form 10-K for the year ended
                  December 31, 2000 and is incorporated herein by this
                  reference.

10.8.26           Conseco, Inc. 2000 Non-Employee Stock Purchase Program
                  Work-Down Plan was filed with the Commission as Exhibit
                  10.8.26 to the Registrant's Annual Report on Form 10-K for the
                  year ended December 31, 2000 and is incorporated herein by
                  this reference.

10.8.27           Guaranty, dated as of November 22, 2000 between Conseco, Inc.,
                  as Guarantor, and Bank of America, National Association, as
                  Administrative Agent; Guaranty and Subordination Agreement,
                  dated as of November 22, 2000, made by CIHC, Incorporated, as
                  Guarantor and Subordinated Borrower, and Conseco, Inc., as
                  Obligor and Subordinated Lender, in favor of Bank of America,
                  National Association, as Administrative Agent under the Credit
                  Agreement dated as of November 22, 2000; and Form of Credit
                  Agreement, dated as of November 22, 2000 among the Borrowers,
                  the other financial institutions party thereto and Bank of
                  America, National Association, as Administrative Agent
                  (Relating to Refinancing of certain Loans under that certain
                  Credit Agreement, dated as of August 21, 1998) was filed with
                  the Commission as Exhibit 10.8.27 to the Registrant's Annual
                  Report on Form 10-K for the year ended December 31, 2000 and
                  is incorporated herein by this reference.



10.8.28           Guaranty, dated as of November 22, 2000, between Conseco,
                  Inc.,as Guarantor,and Bank of America, National Association,as
                  Administrative Agent; Guaranty and Subordination Agreement,
                  dated as of November 22, 2000 made by CIHC, Incorporated,as
                  Guarantor and Subordinated Borrower, and Conseco, Inc., as
                  Obligor and Subordinated Lender, in favor of Bank of America,
                  National Association, as Administrative Agent under the Credit
                  Agreement dated as of November 22, 2000; and the Form of
                  Credit Agreement, dated as of November 22, 2000, among the
                  Borrowers, the other financial institutions party thereto and
                  Bank of America, National Association, as Administrative Agent
                  (Relating to the Refinancing of Certain Loans under that
                  certain Amended and Restated Credit Agreement, dated as of
                  August 26, 1997) was filed with the Commission as Exhibit
                  10.8.28 to the Registrant's Annual Report on Form 10-K for the
                  year ended December 31, 2000 and is incorporated herein by
                  this reference.

10.8.29           Guaranty, dated as of November 22, 2000, between Conseco,
                  Inc.,as Guarantor, and The Chase Manhattan Bank,as
                  Administrative Agent; Guaranty and Subordination Agreement,
                  dated as of November 22, 2000 made by CIHC, Incorporated, as
                  Guarantor and Subordinated Borrower, and Conseco, Inc., as
                  Obligor and Subordinated Lender, in favor of The Chase
                  Manhattan Bank, as Administrative Agent under the Credit
                  Agreement dated as of November 22, 2000; and the Form of
                  Credit Agreement, dated as of November 22, 2000, among the
                  Borrowers, the other financial institutions party thereto and
                  The Chase Manhattan Bank, as Administrative Agent (Relating to
                  the Refinancing of Certain Loans under that certain Credit
                  Agreement, dated as of September 15, 1999, as terminated and
                  replaced by that certain Termination and Replacement
                  Agreement, dated as of May 30, 2000) was filed with the
                  Commission as Exhibit 10.8.29 to the Registrant's Annual
                  Report on Form 10-K for the year ended December 31, 2000 and
                  is incorporated herein by this reference.

10.8.30           Forms of note payable to Conseco Services, LLC regarding the
                  2000 Work-Down Plans, Form of Unconditional Guarantee and Form
                  of Indemnification Agreement was filed with the Commission as
                  Exhibit 10.8.30 to the Registrant's Annual Report on Form 10-K
                  for the year ended December 31, 2000 and is incorporated
                  herein by this reference.

10.8.31           First Stage Amendment and Agreement re: Non-Refinanced 1998
                  D&O Loans, dated as of March 20, 2002, among Conseco, Inc.,
                  CDOC, Inc., CIHC, Incorporated, Bank of



                  America, N.A. and the various financial institutions parties
                  thereto was filed as Exhibit 10.8.31 to the Registrant's
                  Report on Form 10-K for the year ended December 31, 2001 and
                  is incorporated herein by this reference.

10.8.32           First Stage Amendment and Agreement re: 1997 D&O Loans, dated
                  as of March 20, 2002, among Conseco, Inc., CDOC, Inc., CIHC,
                  Incorporated, Bank of America, N.A. and the various financial
                  institutions parties thereto was filed as Exhibit 10.8.32 to
                  the Registrant's Report on Form 10-K for the year ended
                  December 31, 2001 and is incorporated herein by this
                  reference.

10.8.33           Cash Collateral Pledge Agreement among CDOC, Inc. and JP
                  Morgan Chase Bank, dated as of March 20, 2002 was filed as
                  Exhibit 10.8.33 to the Registrant's Report on Form 10-K for
                  the year ended December 31, 2001 and is incorporated herein by
                  this reference.

10.8.34           First Stage Amendment and Agreement Re: 1998 D&O Loans, dated
                  as of March 20, 2002, among Conseco, Inc., CDOC, Inc., CIHC,
                  Incorporated, Bank of America, N.A. and the various financial
                  institutions parties thereto was filed as Exhibit 10.8.34 to
                  the Registrant's Report on Form 10-K for the year ended
                  December 31, 2001 and is incorporated herein by this
                  reference.

10.8.35           Amended and Restated Collateral Agreement made by Conseco,
                  Inc. and CIHC, Incorporated in favor of JP Morgan Chase Bank,
                  dated as of March 20, 2002 was filed as Exhibit 10.8.35 to the
                  Registrant's Report on Form 10-K for the year ended December
                  31, 2001 and is incorporated herein by this reference.

10.8.36           First Stage Amendment and Agreement re: 1999 D&O Loans, dated
                  as of March 20, 2002, among Conseco, Inc., CDOC, Inc., CIHC,
                  Incorporated, JPMorgan Chase Bank and the various financial
                  institutions parties thereto was filed as Exhibit 10.8.36 to
                  the Registrant's Report on Form 10-K for the year ended
                  December 31, 2001 and is incorporated herein by this
                  reference.

10.8.37           Forbearance agreement relating to 1997 D&O loans was filed
                  with the Commission as Exhibit 10.1.37 to the Registrant's
                  Report on Form 10-Q for the quarter ended September 30, 2002
                  and is incorporated herein by this reference.

10.8.38           Forbearance agreement relating to 1998 D&O loans was filed
                  with the Commission as Exhibit 10.8.38 to the Registrant's
                  Report on Form 10-Q for the quarter ended September 30, 2002
                  and is incorporated herein by this reference.

10.8.39           Forbearance agreement relating to 1998 (non-refinanced) D&O
                  loans was filed with the Commission as Exhibit 10.8.39 to the
                  Registrant's Report on Form 10-Q for the quarter ended
                  September 30, 2002 and is incorporated herein by this
                  reference.




10.8.40           Forbearance agreement relating to 1999 D&O loans was filed
                  with the Commission as Exhibit 10.8.40 to the Registrant's
                  Report on Form 10-Q for the quarter ended September 30, 2002
                  and is incorporated herein by this reference.

10.8.41           Forbearance agreement relating to 1997 D&O loans was filed
                  with the Commission as Exhibit 99.2 to the Registrant's Form
                  8-K dated December 3, 2002, and is incorporated herein by this
                  reference.

10.8.42           Forbearance agreement relating to 1998 D&O loans was filed
                  with the Commission as Exhibit 99.3 to the Registrant's Form
                  8-K dated December 3, 2002, and is incorporated herein by this
                  reference.

10.8.43           Forbearance agreement relating to 1998 (non-refinanced) D&O
                  loans was filed with the Commission as Exhibit 99.4 to the
                  Registrant's Form 8-K dated December 3, 2002, and is
                  incorporated herein by this reference.

10.8.44           Forbearance agreement relating to 1999 D&O loans was filed
                  with the Commission as Exhibit 99.5 to the Registrant's Form
                  8-K dated December 3, 2002, and is incorporated herein by this
                  reference.

10.8.45           Forbearance agreement relating to $1,500,000,000 five-year
                  credit agreement was filed with the Commission as Exhibit 99.6
                  to the Registrant's Form 8-K dated December 3, 2002, and is
                  incorporated herein by this reference.

10.43             Amended and Restated Securities Purchase Agreement dated as of
                  December 15, 1999 between the Registrant and the purchasers
                  named therein was filed with the Commission as Exhibit 10.43
                  to the Registrant's Report on Form 8-K dated December 15,
                  1999, and is incorporated herein by this reference.

10.45.1           Warrant to Purchase Common Stock of Conseco Finance Corp.,
                  dated May 11, 2000, by and between Conseco Finance Corp. and
                  Lehman Brothers Holdings Inc. was filed with the Commission as
                  Exhibit 10.45 to the Registrant's Report on Form 10-Q for the
                  quarter ended June 30, 2000 and is incorporated herein by this
                  reference.

10.45.2           Exchange Agreement by and between Lehman Brothers Holdings
                  Inc. and Conseco, Inc., dated January 30, 2002 was filed as
                  Exhibit 10.45.2 to the Registrant's Report on Form 10-K for
                  the year ended December 31, 2001 and is incorporated herein by
                  this reference.

10.46.1           Amended and Restated Agreement dated January 30, 2002, by and
                  among Conseco Finance Corp., Conseco, Inc., CIHC,
                  Incorporated, Green Tree Residual Finance Corp. I, Green Tree
                  Finance Corp. - Five and Lehman Brothers Holdings Inc. was
                  filed as Exhibit 10.46.1 to the Registrant's Report on Form
                  10-K for the year ended December 31, 2001 and is incorporated
                  herein by this reference.

10.46.2           Amended and Restated Master Repurchase Agreement dated as of
                  April 5, 2001 between Merrill Lynch Mortgage Capital Inc. and
                  Green Tree Finance Corp. - Three was



                  filed with the Commission as Exhibit 10(a) to the Conseco
                  Finance Corp. Report on Form 10-K for the years ended December
                  31, 2001 and is incorporated herein by reference.

10.46.3           Second Amended and Restated Master Repurchase Agreement dated
                  January 30, 2002 between Lehman Commercial Paper Inc. and
                  Green Tree Finance Corp.-Five was filed with the Commission as
                  Exhibit 10(b) to the Conseco Finance Corp. Report on Form 10-K
                  for the year ended December 31, 2001 and is incorporated
                  herein by reference.

10.46.4           Asset Assignment Agreement dated as of February 13, 1998
                  between Green Tree Residual Finance Corp. I and Lehman
                  Commercial Paper, Inc. (incorporated by reference to the
                  Conseco Finance Corp. Quarterly Report on Form 10-Q for the
                  quarterly period ended March 31, 1998; File No. 1-08916);
                  Amendment to the First Residual Facility, dated as of
                  September 22, 2000, by and among Lehman ALI Inc. and Green
                  Tree Residual Finance Corp. I (incorporated by reference to
                  Exhibit 10(c) to Conseco Finance Corp.'s Annual Report on Form
                  10-K for the year ended December 31, 2000); Amendment, dated
                  January 30, 2002, by and between Lehman ALI Inc. and Green
                  Tree Residual Finance Corp. was filed with the Commission as
                  Exhibit 10(c) to the Conseco Finance Corp. Report on Form 10-K
                  for the year ended December 31, 2001 and is incorporated
                  herein by reference.

10.46.5           Amendment to First Residual Facility (Asset Assignment
                  Agreement), dated October 9, 2002, by and between Lehman ALI
                  Inc. and Green Tree Residual Finance Corp. I was filed with
                  the Commission as Exhibit 10.46.6 to the Registrant's Report
                  on Form 10-Q for the quarter ended September 30, 2002 and is
                  incorporated herein by this reference.

10.46.6           Third Amendment to Master Repurchase Agreement, dated October
                  9, 2002, by and between Lehman Commercial Paper Inc. and Green
                  Tree Finance Corp. - Five was filed with the Commission as
                  Exhibit 10.46.7 to the Registrant's Report on Form 10-Q for
                  the quarter ended September 30, 2002 and is incorporated
                  herein by this reference.

10.46.7           Amended and Restated Forbearance Agreement, dated October 9,
                  2002, by and among Conseco Finance Corp., Green Tree Finance
                  Corp. - Five, Green Tree Residual Finance Corp. I, Lehman
                  Commercial Paper, Inc. and Lehman Brothers, Inc. was filed
                  with the Commission as Exhibit 10.46.8 to the Registrant's
                  Report on Form 10-Q for the quarter ended September 30, 2002
                  and is incorporated herein by this reference.

10.46.9           Secured Super-Priority Debtor In Possession Credit Agreement
                  dated as of December 19, 2002 among Conseco Finance Corp.,
                  various subsidiaries of Conseco Finance Corp. and CIHC,
                  Incorporated, the lenders from time to time party thereto and
                  FPS DIP LLC, Amendment No. 1 thereto, dated as of December 23,
                  2002, Amendment No. 2 thereto, dated as of December 24, 2002,
                  Amendment No. 3 thereto, dated as of January 17, 2003,
                  Amendment No. 4 thereto, dated as of February 7, 2003 and
                  Amendment No. 5 thereto, dated as of March 14, 2003.




10.47             Insurance Agreement by and between Registrant and Gary C.
                  Wendt 2000 Irrevocable Insurance Trust dated 11/22/00 ("Wendt
                  Trust"), dated December 1, 2000 and Collateral Assignment by
                  Wendt Trust in favor of Registrant dated December 1, 2000 was
                  filed with the Commission as Exhibit 10.47 to the Registrant's
                  Report on Form 10-K for the year ended December 31, 2000 and
                  is incorporated herein by this reference.

10.48             Insurance Agreement by and between Registrant and Wendt Trust,
                  dated January 16, 2001 and Collateral Assignment by Wendt
                  Trust in favor of Registrant dated January 16, 2001 was filed
                  with the Commission as Exhibit 10.48 to the Registrant's
                  Report on Form 10-K for the year ended December 31, 2000 and
                  is incorporated herein by this reference.

10.49             Insurance Agreement by and between Registrant and Wendt Trust,
                  dated January 16, 2001 and Collateral Assignment by Wendt
                  Trust in favor of Registrant dated January 16, 2001 was filed
                  with the Commission as Exhibit 10.49 to the Registrant's
                  Report on Form 10-K for the year ended December 31, 2000 and
                  is incorporated herein by this reference.

10.50             Agreement and Plan of Merger dated as of July 27, 2001 by and
                  among Conseco, Inc., Noida Acquisition Corp. and
                  ExlService.com, Inc. was filed with the Commission as Exhibit
                  10.50 to the Registrant's Report on Form 10-Q for the quarter
                  ended June 30, 2001 and is incorporated herein by this
                  reference.

10.51             Restricted Stock Agreement dated as of July 31, 2001, between
                  Conseco, Inc., Gary Wendt and Rosemarie Wendt was filed with
                  the Commission as Exhibit 10.51 to the Registrant's Report on
                  Form 10-Q for the quarter ended June 30, 2001 and is
                  incorporated herein by this reference.

10.52.1           Conseco Life Insurance Company of Texas Official Order of the
                  Commissioner of Insurance of the State of Texas was filed with
                  the Commission as Exhibit 10.52.1 to the Registrant's Report
                  on Form 10-Q for the quarter ended September 30, 2002 and is
                  incorporated herein by this reference.

10.52.2           Bankers National Life Insurance Company Official Order of the
                  Commissioner of Insurance of the State of Texas was filed with
                  the Commission as Exhibit 10.52.2 to the Registrant's Report
                  on Form 10-Q for the quarter ended September 30, 2002 and is
                  incorporated herein by this reference.

12.1              Computation of Ratio of Earnings to Fixed Charges, Preferred
                  Dividends and Distributions on Company-Obligated Mandatorily
                  Redeemable Preferred Securities of Subsidiary Trusts.



21                List of Subsidiaries.

23.1              Consent of PricewaterhouseCoopers LLP with respect to the
                  financial statements of Conseco, Inc.

99.1              Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
                  Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

99.2              Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
                  Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


COMPENSATION PLANS AND ARRANGEMENTS.

10.1.13           Employment Agreement, dated February 9, 1996 between Green
                  Tree and Lawrence Coss and related Noncompetition agreement
                  dated February 9, 1996, as amended by the Amendment Agreement
                  dated April 6, 1998 were filed with the Commission as an
                  exhibit to Green Tree's Registration Statement on Form S-3,
                  and are incorporated herein by this reference.

10.1.14           Employment Agreement, amended and restated as of December 15,
                  1999, between the Registrant and Maxwell E. Bublitz was filed
                  with the Commission as Exhibit 10.1.14 to the Registrant's
                  Report on Form 10-K for the year ended December 31, 1999 and
                  is incorporated herein by this reference.

10.1.15           Description of incentive compensation and severance
                  arrangement with Edward M. Berube was filed with the
                  Commission as Exhibit 10.1.16 to the Registrant's Annual
                  Report on Form 10-K for the year ended December 31, 2000 and
                  is incorporated herein by this reference.

10.1.24           Second Amendment Agreement, dated as of November 1, 1999,
                  between Conseco Finance Corp. and Lawrence M. Coss was filed
                  with the commission as Exhibit 10.1.24 to the Registrant's
                  Report on Form 10-K/A for the year ended December 31, 1999,
                  and is incorporated herein by this reference.

10.1.27           Employment Agreement by and between Gary C. Wendt and Conseco,
                  Inc., dated as of June 28, 2000 was filed as Exhibit 10.1.27
                  to the Registrant's Report on Form 8-K, dated July 10, 2000,
                  and is incorporated herein by this reference.

10.1.28           Nonqualified Stock Option Agreement by and between Gary C.
                  Wendt and Conseco, Inc., dated as of June 28, 2000 was filed
                  as Exhibit 10.1.28 to the Registrant's Report on Form 8-K,
                  dated July 10, 2000, and is incorporated herein by this
                  reference.

10.1.29           Restricted Stock Agreement by and between Gary C. Wendt and
                  Conseco, Inc., dated as of June 28, 2000 was filed as Exhibit
                  10.1.29 to the Registrant's Report on Form 8-K, dated July 10,
                  2000, and is incorporated herein by this reference.

10.1.31           Supplemental Retirement Agreement dated as of August 16, 2000,
                  between Conseco, Inc. and Gary C. Wendt was



                  filed as Exhibit 10.1.31 to the Registrant's Report on Form
                  10-Q for the quarter ended September 30, 2000 and is
                  incorporated herein by this reference.

10.1.32           Guaranty dated as of August 16, 2000, between Bankers Life and
                  Casualty Company as Guarantor, and Gary C. Wendt was filed as
                  Exhibit 10.1.32 to the Registrant's Report on Form 10-Q for
                  the quarter ended September 30, 2000 and is incorporated
                  herein by this reference.

10.1.38           Employment Agreement between William J. Shea and Conseco,
                  Inc., dated as of June 1, 2002, was filed with the Commission
                  as Exhibit 10.1.38 to the Registrant's Report on Form 10-Q for
                  the quarter ended September 30, 2001 and is incorporated
                  herein by this reference.

10.1.39           Restricted Stock Agreement dated as of September 17, 2001
                  between Conseco, Inc. and William J. Shea was filed with the
                  Commission as Exhibit 10.1.39 to the Registrant's Report on
                  Form 10-Q for the quarter ended September 30, 2002 and is
                  incorporated herein by this reference.

10.1.41           Amendment to Employment and Restricted Stock Agreements by and
                  between William J. Shea and Conseco, Inc., dated as of
                  September 16, 2002 was filed with the Commission as Exhibit
                  10.1.41 to the Registrant's Report on Form 10-Q for the
                  quarter ended September 30, 2002 and is incorporated herein by
                  this reference.

10.1.42           Employment Agreement by and between John R. Kline and Conseco,
                  Inc., dated as of July 15, 2002 was filed with the Commission
                  as Exhibit 10.1.42 to the Registrant's Report on Form 10-Q for
                  the quarter ended September 30, 2002 and is incorporated
                  herein by this reference.

10.1.43           Amendment to Employment and Restricted Stock Agreements by and
                  between Gary C. Wendt and Conseco, Inc., dated as of June 26,
                  2002, was filed with the Commission as Exhibit 10.1.27 to the
                  Registrant's Report on Form 10-Q for the quarter ended June
                  30, 2002 and is incorporated herein by this reference.

10.1.44           Second Amendment to Employment and Restricted Stock
                  Agreements, between William J. Shea and Conseco, Inc. dated
                  December 16, 2002.

10.1.45           Employment Agreement between Conseco Services, LLC and Eugene
                  M. Bullis dated as of July 1, 2002.

10.8              The Registrant's Stock Option Plan was filed with the
                  Commission as Exhibit B to its definitive Proxy Statement
                  dated December 10, 1983; Amendment No. 1 thereto was filed
                  with the Commission as Exhibit 10.8.1 to its Report on Form
                  10-Q for the quarter ended June 30, 1985; Amendment No. 2
                  thereto was filed with the Commission as Exhibit 10.8.2 to its
                  Registration Statement on Form S-1, No. 33-4367; Amendment No.
                  3 thereto was filed with the Commission as Exhibit 10.8.3 to
                  the Registrant's Annual Report on Form 10-K for 1986;
                  Amendment No. 4 thereto was filed with the Commission as
                  Exhibit 10.8 to the Registrant's Annual



                  Report on Form 10-K for 1987; Amendment No. 5 thereto was
                  filed with the Commission as Exhibit 10.8 to the Registrant's
                  Report on Form 10-Q for the quarter ended September 30, 1991;
                  and are incorporated herein by this reference.

10.8.4            Amended and Restated Conseco Stock Bonus and Deferred
                  Compensation Program was filed with the Commission as Exhibit
                  10.8.4 to the Registrant's Annual Report on Form 10-K for
                  1992, and is incorporated herein by this reference.

10.8.6            Conseco Performance-Based Compensation Plan for Executive
                  Officers was filed with the Commission as Exhibit 10.8.15 to
                  the Registrant's Report on Form 10-Q for the quarter ended
                  March 31, 1998, and is incorporated herein by this reference.

10.8.7            Conseco, Inc. Amended and Restated Deferred Compensation Plan
                  was filed with the Commission as Exhibit A to the Registrant's
                  definitive Proxy Statement dated April 26, 1995, and is
                  incorporated herein by this reference.

10.8.8            Amendment to the Amended and Restated Conseco Stock Bonus and
                  Deferred Compensation Program was filed with the Commission as
                  Exhibit 10.8.8 to the Registrant's Annual Report on Form 10-K
                  for 1994, and is incorporated herein by this reference.

10.8.9            Conseco Amended and Restated 1994 Stock and Incentive Plan was
                  filed as Exhibit 10.8.9 to the Registrant's Report on Form
                  10-K for the year ended December 31, 2001 and is incorporated
                  herein by this reference.

10.8.10           Amendment Number 2 to the Amended and Restated Conseco Stock
                  Bonus and Deferred Compensation Program was filed with the
                  Commission as Exhibit 10.8.10 to the Registrant's Annual
                  Report on Form 10-K for 1995 and is incorporated herein by
                  reference.

10.8.11           Amended and Restated Director, Officer and Key Employee Stock
                  Purchase Plan of Conseco was filed with the Commission as
                  Exhibit 10.8.11 to the Registrant's Report on Form 10-Q for
                  the quarter ended September 30, 1999, and is incorporated
                  herein by this reference.

10.8.13           Form of Promissory Note payable to the Registrant relating to
                  the Registrant's Director, Officer and Key Employee Stock
                  Purchase Plan was filed with the Commission as Exhibit 10.8.13
                  to the Registrant's Annual Report on Form 10-K for the year
                  ended December 31, 1998, and is incorporated herein by
                  reference.

10.8.14           Conseco, Inc. Amended and Restated 1997 Non-qualified Stock
                  Option Plan was filed with the Commission as Exhibit 10.8.14
                  to the Registrant's Annual Report on Form 10-K for 1997, and
                  is incorporated herein by this reference.



10.8.21           Amended and Restated 1999 Director and Executive Officer Stock
                  Purchase Plan of Conseco was filed with the Commission as
                  Exhibit 10.8.21 to the Registrant's Report on Form 10-Q for
                  the quarter ended September 30, 1999 and is incorporated
                  herein by this reference.

10.8.22           Guaranty regarding 1999 Director and Executive Officer Stock
                  Purchase Plan was filed with the Commission as Exhibit 10.8.22
                  to the Registrant's Report on Form 10-Q for the quarter ended
                  September 30, 1999 and is incorporated herein by this
                  reference.

10.8.23           Form of Borrower Pledge Agreement dated as of September 15,
                  1999 with The Chase Manhattan Bank relating to the 1999
                  Director and Executive Officer Stock Purchase Plan was filed
                  with the Commission as Exhibit 10.8.23 to the Registrant's
                  Report on Form 10-Q for the quarter ended September 30, 1999
                  and is incorporated herein by this reference.

10.8.24           Form of note payable to the Registrant relating to the 1999
                  Director and Executive Officer Stock Purchase Plan was filed
                  with the Commission as Exhibit 10.8.24 to the Registrant's
                  Report on Form 10-Q for the quarter ended September 30, 1999
                  and is incorporated herein by this reference.

10.8.25           Conseco, Inc. 2000 Employee Stock Purchase Program Work-Down
                  Plan was filed with the Commission as Exhibit 10.8.25 to the
                  Registrant's Annual Report on Form 10-K for the year ended
                  December 31, 2000 and is incorporated herein by this
                  reference.

10.8.26           Conseco, Inc. 2000 Non-Employee Stock Purchase Program
                  Work-Down Plan was filed with the Commission as Exhibit
                  10.8.26 to the Registrant's Annual Report on Form 10-K for the
                  year ended December 31, 2000 and is incorporated herein by
                  this reference.

10.8.27           Guaranty, dated as of November 22, 2000 between Conseco, Inc.,
                  as Guarantor, and Bank of America, National Association, as
                  Administrative Agent; Guaranty and Subordination Agreement,
                  dated as of November 22, 2000, made by CIHC, Incorporated, as
                  Guarantor and Subordinated Borrower, and Conseco, Inc., as
                  Obligor and Subordinated Lender, in favor of Bank of America,
                  National Association, as Administrative Agent under the Credit
                  Agreement dated as of November 22, 2000; and Form of Credit
                  Agreement, dated as of November 22, 2000 among the Borrowers,
                  the other financial institutions party thereto and Bank of
                  America, National Association, as Administrative Agent
                  (Relating to Refinancing of certain Loans under that certain
                  Credit Agreement, dated as of August 21, 1998) was filed with
                  the Commission as Exhibit 10.8.27 to the Registrant's Annual
                  Report on Form 10-K for the year ended December



                  31, 2000 and is incorporated herein by this reference.

10.8.28           Guaranty, dated as of November 22, 2000, between Conseco,
                  Inc.,as Guarantor,and Bank of America, National Association,as
                  Administrative Agent; Guaranty and Subordination Agreement,
                  dated as of November 22, 2000 made by CIHC, Incorporated,as
                  Guarantor and Subordinated Borrower, and Conseco, Inc., as
                  Obligor and Subordinated Lender, in favor of Bank of America,
                  National Association, as Administrative Agent under the Credit
                  Agreement dated as of November 22, 2000; and the Form of
                  Credit Agreement, dated as of November 22, 2000, among the
                  Borrowers, the other financial institutions party thereto and
                  Bank of America, National Association, as Administrative Agent
                  (Relating to the Refinancing of Certain Loans under that
                  certain Amended and Restated Credit Agreement, dated as of
                  August 26, 1997) was filed with the Commission as Exhibit
                  10.8.28 to the Registrant's Annual Report on Form 10-K for the
                  year ended December 31, 2000 and is incorporated herein by
                  this reference.

10.8.29           Guaranty, dated as of November 22, 2000, between Conseco,
                  Inc.,as Guarantor, and The Chase Manhattan Bank,as
                  Administrative Agent; Guaranty and Subordination Agreement,
                  dated as of November 22, 2000 made by CIHC, Incorporated, as
                  Guarantor and Subordinated Borrower, and Conseco, Inc., as
                  Obligor and Subordinated Lender, in favor of The Chase
                  Manhattan Bank, as Administrative Agent under the Credit
                  Agreement dated as of November 22, 2000; and the Form of
                  Credit Agreement, dated as of November 22, 2000, among the
                  Borrowers, the other financial institutions party thereto and
                  The Chase Manhattan Bank, as Administrative Agent (Relating to
                  the Refinancing of Certain Loans under that certain Credit
                  Agreement, dated as of September 15, 1999, as terminated and
                  replaced by that certain Termination and Replacement
                  Agreement, dated as of May 30, 2000) was filed with the
                  Commission as Exhibit 10.8.29 to the Registrant's Annual
                  Report on Form 10-K for the year ended December 31, 2000 and
                  is incorporated herein by this reference.

10.8.30           Forms of note payable to Conseco Services, LLC regarding the
                  2000 Work-Down Plans, Form of Unconditional Guarantee and Form
                  of Indemnification Agreement was filed with the Commission as
                  Exhibit 10.8.30 to the Registrant's Annual Report on Form 10-K
                  for the year ended December 31, 2000 and is incorporated
                  herein by this reference.

10.8.31           First Stage Amendment and Agreement re: Non-Refinanced 1998
                  D&O Loans, dated as of March 20, 2002,



                  among Conseco, Inc., CDOC, Inc., CIHC, Incorporated, Bank of
                  America, N.A. and the various financial institutions parties
                  thereto was filed as Exhibit 10.8.31 to the Registrant's
                  Report on Form 10-K for the year ended December 31, 2001 and
                  is incorporated herein by this reference.

10.8.32           First Stage Amendment and Agreement re: 1997 D&O Loans, dated
                  as of March 20, 2002, among Conseco, Inc., CDOC, Inc., CIHC,
                  Incorporated, Bank of America, N.A. and the various financial
                  institutions parties thereto was filed as Exhibit 10.8.32 to
                  the Registrant's Report on Form 10-K for the year ended
                  December 31, 2001 and is incorporated herein by this
                  reference.

10.8.33           Cash Collateral Pledge Agreement among CDOC, Inc. and JP
                  Morgan Chase Bank, dated as of March 20, 2002 was filed as
                  Exhibit 10.8.33 to the Registrant's Report on Form 10-K for
                  the year ended December 31, 2001 and is incorporated herein by
                  this reference.

10.8.34           First Stage Amendment and Agreement Re: 1998 D&O Loans, dated
                  as of March 20, 2002, among Conseco, Inc., CDOC, Inc., CIHC,
                  Incorporated, Bank of America, N.A. and the various financial
                  institutions parties thereto was filed as Exhibit 10.8.34 to
                  the Registrant's Report on Form 10-K for the year ended
                  December 31, 2001 and is incorporated herein by this
                  reference.

10.8.35           Amended and Restated Collateral Agreement made by Conseco,
                  Inc. and CIHC, Incorporated in favor of JP Morgan Chase Bank,
                  dated as of March 20, 2002 was filed as Exhibit 10.8.35 to the
                  Registrant's Report on Form 10-K for the year ended December
                  31, 2001 and is incorporated herein by this reference.

10.8.36           First Stage Amendment and Agreement re: 1999 D&O Loans, dated
                  as of March 20, 2002, among Conseco, Inc., CDOC, Inc., CIHC,
                  Incorporated, JPMorgan Chase Bank and the various financial
                  institutions parties thereto was filed as Exhibit 10.8.36 to
                  the Registrant's Report on Form 10-K for the year ended
                  December 31, 2001 and is incorporated herein by this
                  reference.

10.8.37           Forbearance agreement relating to 1997 D&O loans was filed
                  with the Commission as Exhibit 10.1.37 to the Registrant's
                  Report on Form 10-Q for the quarter ended September 30, 2002
                  and is incorporated herein by this reference.

10.8.38           Forbearance agreement relating to 1998 D&O loans was filed
                  with the Commission as Exhibit 10.8.38 to the Registrant's
                  Report on Form 10-Q for the quarter ended September 30, 2002
                  and is incorporated herein by this reference.

10.8.39           Forbearance agreement relating to 1998 (non-refinanced) D&O



                  loans was filed with the Commission as Exhibit 10.8.39 to the
                  Registrant's Report on Form 10-Q for the quarter ended
                  September 30, 2002 and is incorporated herein by this
                  reference.

10.8.40           Forbearance agreement relating to 1999 D&O loans was filed
                  with the Commission as Exhibit 10.8.40 to the Registrant's
                  Report on Form 10-Q for the quarter ended September 30, 2002
                  and is incorporated herein by this reference.

10.8.41           Forbearance agreement relating to 1997 D&O loans was filed
                  with the Commission as Exhibit 99.2 to the Registrant's Form
                  8-K dated December 3, 2002, and is incorporated herein by this
                  reference.

10.8.42           Forbearance agreement relating to 1998 D&O loans was filed
                  with the Commission as Exhibit 99.3 to the Registrant's Form
                  8-K dated December 3, 2002, and is incorporated herein by this
                  reference.

10.8.43           Forbearance agreement relating to 1998 (non-refinanced) D&O
                  loans was filed with the Commission as Exhibit 99.4 to the
                  Registrant's Form 8-K dated December 3, 2002, and is
                  incorporated herein by this reference.

10.8.44           Forbearance agreement relating to 1999 D&O loans was filed
                  with the Commission as Exhibit 99.5 to the Registrant's Form
                  8-K dated December 3, 2002, and is incorporated herein by this
                  reference.

10.8.45           Forbearance agreement relating to $1,500,000,000 five-year
                  credit agreement was filed with the Commission as Exhibit 99.6
                  to the Registrant's Form 8-K dated December 3, 2002, and is
                  incorporated herein by this reference.

10.47             Insurance Agreement by and between Registrant and Gary C.
                  Wendt 2000 Irrevocable Insurance Trust dated 11/22/00 ("Wendt
                  Trust"), dated December 1, 2000 and Collateral Assignment by
                  Wendt Trust in favor of Registrant dated December 1, 2000 was
                  filed with the Commission as Exhibit 10.47 to the Registrant's
                  Report on Form 10-K for the year ended December 31, 2000 and
                  is incorporated herein by this reference.

10.48             Insurance Agreement by and between Registrant and Wendt Trust,
                  dated January 16, 2001 and Collateral Assignment by Wendt
                  Trust in favor of Registrant dated January 16, 2001 was filed
                  with the Commission as Exhibit 10.48 to the Registrant's
                  Report on Form 10-K for the year ended December 31, 2000 and
                  is incorporated herein by this reference.

10.49             Insurance Agreement by and between Registrant and Wendt Trust,
                  dated January 16, 2001 and Collateral Assignment by Wendt
                  Trust in favor of Registrant dated January 16, 2001 was filed
                  with the Commission as Exhibit 10.49 to the Registrant's
                  Report on Form 10-K for the year ended December 31, 2000 and
                  is incorporated herein by this reference.

EX-2

                                                                     Exhibit 2.4

                      IN THE UNITED STATES BANKRUPTCY COURT
                      FOR THE NORTHERN DISTRICT OF ILLINOIS
                                EASTERN DIVISION






In re:                                             ) Chapter 11
                                                   )
Conseco, Inc., et al.,(1)                          )
                                                   ) Case No. 02 B49672
                        Debtors.                   ) Honorable Carol A. Doyle
                                                   ) (Jointly Administered)
                                                   )

                DISCLOSURE STATEMENT FOR FINANCE COMPANY DEBTORS'
                    JOINT LIQUIDATING PLAN OF REORGANIZATION
           PURSUANT TO CHAPTER 11 OF THE UNITED STATES BANKRUPTCY CODE


                                 IMPORTANT DATES

   o      Date by which Ballots must be received: May [__], 2003
   o      Date by which objections to Confirmation of the Plan must be filed and
          served: May [__], 2003
   o      Hearing on Confirmation of the Plan: May [__], 2003

- -------------------------------------------------------------------------------
THIS IS NOT A SOLICITATION OF ACCEPTANCE OR REJECTION OF THE JOINT LIQUIDATING
PLAN OF REORGANIZATION. ACCEPTANCES OR REJECTIONS MAY NOT BE SOLICITED UNTIL THE
BANKRUPTCY COURT HAS APPROVED THIS DISCLOSURE STATEMENT.
- -------------------------------------------------------------------------------

- -------------------------------------------------------------------------------


James H.M. Sprayregen, P.C. (ARDC. No. 6190206)
Richard L. Wynne (Admitted pro hac vice)
Anne Marrs Huber (ARDC No. 6226828)
Anup Sathy (ARDC No. 6230191)
Roger J. Higgins (ARDC No. 6257915)
Erin N. Brady (Admitted pro hac vice)
Ross M. Kwasteniet (ARDC No. 6276604)
Kirkland & Ellis
200 East Randolph Drive
Chicago, IL 60601-6636
(312) 861-2000 (telephone)
(312) 861-2200 (facsimile)

Counsel for the Debtors and Debtors-in-Possession
Dated:  April 1, 2003

- ------------------
1    The Debtors are the following entities: (i) Conseco, Inc., CIHC,
     Incorporated, CTIHC, Inc., Partners Health Group, Inc., (collectively the
     "Holding Company Debtors"), (ii) Conseco Finance Corp. and Conseco Finance
     Servicing Corp (the "Finance Company Debtors" and together with the Holding
     Company Debtors, the "Initial Debtors"), (iii) Conseco Finance Corp. -
     Alabama, Conseco Finance Credit Corp., Conseco Finance Consumer Discount
     Company, Conseco Finance Canada Holding Company, Conseco Finance Canada
     Company, Conseco Finance Loan Company, Rice Park Properties Corporation,
     Landmark Manufactured Housing, Inc., Conseco Finance Net Interest Margin
     Finance Corp. I, Conseco Finance Net Interest Margin Finance Corp. II,
     Green Tree Finance Corp. - Two, Conseco Agency of Nevada, Inc., Conseco
     Agency of New York, Inc., Green Tree Floorplan Funding Corp., Conseco
     Agency, Inc., Conseco Agency of Alabama, Inc., Conseco Agency of Kentucky,
     Inc., and Crum-Reed General Agency, Inc. (collectively, the "CFC Subsidiary
     Debtors"), Mill Creek Servicing Corporation, Conseco Finance Credit Card
     Funding Corp., Green Tree Residual Finance Corp. I, and Green Tree Finance
     Corp.-5 (the "New Filing Entities", together with the Finance Company
     Debtors and the CFC Subsidiary Debtors, the "Finance Company Debtors").




     THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION (THE "SEC") HAS
NEITHER APPROVED NOR DISAPPROVED THIS DISCLOSURE STATEMENT NOR PASSED UPON THE
ACCURACY OR ADEQUACY OF THE STATEMENTS CONTAINED HEREIN.

     THIS DISCLOSURE STATEMENT SUMMARIZES CERTAIN PROVISIONS OF THE PLAN AS WELL
AS CERTAIN OTHER DOCUMENTS AND FINANCIAL INFORMATION. THE FINANCE COMPANY
DEBTORS BELIEVE THAT THESE SUMMARIES ARE FAIR AND ACCURATE. THE FINANCIAL
INFORMATION SUMMARIES AND OTHER DOCUMENTS ATTACHED HERETO OR INCORPORATED BY
REFERENCE HEREIN ARE QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO THOSE
DOCUMENTS. IN THE EVENT OF ANY INCONSISTENCY OR DISCREPANCY BETWEEN A
DESCRIPTION IN THIS DISCLOSURE STATEMENT AND THE TERMS AND PROVISIONS OF THE
PLAN, OR THE OTHER DOCUMENTS AND FINANCIAL INFORMATION INCORPORATED HEREIN BY
REFERENCE, THE PLAN OR THE OTHER DOCUMENTS AND FINANCIAL INFORMATION, AS THE
CASE MAY BE, SHALL GOVERN FOR ALL PURPOSES.

     MOREOVER, THIS DISCLOSURE STATEMENT DOES NOT CONSTITUTE, AND MAY NOT BE
CONSTRUED AS, AN ADMISSION OF FACT, LIABILITY, STIPULATION OR WAIVER BUT RATHER
SHOULD BE CONSTRUED AS A STATEMENT MADE IN SETTLEMENT NEGOTIATIONS RELATED TO
CONTESTED MATTERS, ADVERSARY PROCEEDINGS, AND OTHER PENDING OR THREATENED
LITIGATION OR ACTIONS.

     THE FINANCE COMPANY DEBTORS MAKE THE STATEMENTS AND PROVIDE THE FINANCIAL
INFORMATION CONTAINED HEREIN AS OF THE DATE HEREOF UNLESS OTHERWISE SPECIFIED.
HOLDERS OF CLAIMS AND EQUITY INTERESTS REVIEWING THIS DISCLOSURE STATEMENT
SHOULD NOT INFER AT THE TIME OF SUCH REVIEW THAT THE FACTS SET FORTH HEREIN HAVE
NOT CHANGED SINCE THE DATE HEREOF UNLESS SO SPECIFIED. EACH HOLDER OF AN
IMPAIRED CLAIM OR IMPAIRED EQUITY INTEREST ENTITLED TO VOTE THEREFORE SHOULD
CAREFULLY REVIEW THE PLAN, THIS DISCLOSURE STATEMENT AND THE EXHIBITS TO BOTH
DOCUMENTS IN THEIR ENTIRETY BEFORE CASTING A BALLOT. THIS DISCLOSURE STATEMENT
DOES NOT CONSTITUTE LEGAL, BUSINESS, FINANCIAL OR TAX ADVICE. ANY PERSONS
DESIRING ANY SUCH ADVICE OR ANY OTHER ADVICE SHOULD CONSULT WITH THEIR OWN
ADVISORS.

     NO PARTY IS AUTHORIZED TO PROVIDE TO ANY OTHER PARTY ANY INFORMATION
CONCERNING THE PLAN OTHER THAN THE CONTENTS OF THIS DISCLOSURE STATEMENT. THE
FINANCE COMPANY DEBTORS HAVE NOT AUTHORIZED ANY REPRESENTATIONS CONCERNING THE
FINANCE COMPANY DEBTORS OR THE VALUE OF THEIR PROPERTY OTHER THAN THOSE SET
FORTH IN THIS DISCLOSURE STATEMENT. HOLDERS OF CLAIMS AND EQUITY INTERESTS
SHOULD NOT RELY ON ANY INFORMATION, REPRESENTATIONS OR INDUCEMENTS MADE TO
OBTAIN YOUR ACCEPTANCE OF THE PLAN THAT ARE OTHER THAN, OR INCONSISTENT WITH,
THE INFORMATION CONTAINED HEREIN AND IN THE PLAN.

     THE FINANCE COMPANY DEBTORS' MANAGEMENT HAS REVIEWED THE FINANCIAL
INFORMATION PROVIDED IN THIS DISCLOSURE STATEMENT. ALTHOUGH THE FINANCE COMPANY
DEBTORS HAVE USED THEIR BEST EFFORTS TO ENSURE THE ACCURACY OF THIS FINANCIAL
INFORMATION, THE FINANCIAL INFORMATION CONTAINED IN, OR INCORPORATED BY
REFERENCE INTO, THIS DISCLOSURE STATEMENT, OTHER THAN THE FINANCIAL STATEMENTS
INCLUDED IN CONSECO'S ANNUAL REPORT ON FORM 10-K, HAS NOT BEEN AUDITED.





                                TABLE OF CONTENTS



                                                                                                               Page
                                                                                                               ----
                                                                                                  
I.  SUMMARY.......................................................................................................1
         A.       Events Leading to the Chapter 11 Cases..........................................................2
         B.       The Auction and Sale Process For Substantially All Of Our Assets................................3
         C.       Plan Overview...................................................................................4
                  1.       Purpose -- Liquidating Plan of Reorganization..........................................4
                  2.       Substantive Consolidation..............................................................4
                  3.       Creation of a Post-Consummation Estate.................................................5
                  4.       Summary of Projected Distributions to Creditors........................................5
                  5.       Plan Consummation......................................................................8
                  6.       Executory Contracts and Unexpired Leases...............................................8
         D.       Voting and Confirmation.........................................................................8
                  1.       Time and Place of the Confirmation Hearing.............................................9
                  2.       Deadline for Voting For or Against the Plan............................................9
                  3.       Deadline for Objecting to the Confirmation of the Plan.................................9
         E.       Risk Factors...................................................................................10
         F.       Identity of Persons to Contact for More Information............................................10
         G.       Recommendation.................................................................................10
         H.       Disclaimer.....................................................................................10

II. GENERAL INFORMATION..........................................................................................11
         A.       DESCRIPTION OF THE FINANCE COMPANY DEBTORS' BUSINESSES.........................................11
                  1.       Finance Company Debtors' Corporate Structure..........................................11
                  2.       The Finance Company Debtors' Businesses...............................................12
                  3.       Government Regulation.................................................................12
                  4.       Competition...........................................................................13
                  5.       Employees.............................................................................14
         B.       EXISTING CAPITAL STRUCTURE OF THE FINANCE COMPANY DEBTORS......................................14
                  1.       Ownership of CFC; CNC Debt Structure..................................................14
                  2.       Overview of Finance Company Debtors' Debt Structure...................................16
                  3.       Prepetition Credit Facilities.........................................................17
                  4.       Guarantees on B-2 Certificates........................................................18
                  5.       Intercompany Obligations..............................................................18
                  6.       Preferred Dividends...................................................................19
                  7.       Debtor-in-Possession Facilities.......................................................19
         C.       CIHC GUARANTEES OF FINANCE COMPANY DEBTORS' DEBT...............................................19
         D.       EVENTS LEADING TO THE CHAPTER 11 CASES.........................................................19
                  1.       Background to the Restructuring.......................................................19
                  2.       Announcement of Restructuring Plan; Credit Facility Events of Default.................20
                  3.       Prepetition Decline of Finance Company Debtors' Businesses; Strategic
                           Alternatives Considered...............................................................20
                  4.       Recent Financial Results..............................................................21
                  5.       The Prepetition Committees............................................................22
         E.       PLANNED SALE OF SUBSTANTIALLY ALL OF THE CFC ASSETS............................................22
         F.       RESTRUCTURING OF THE MANUFACTURED HOUSING BUSINESS.............................................24

III.THE CHAPTER 11 CASES.........................................................................................25
         A.       DEBTOR-IN-POSSESSION FINANCING FROM FPS AND THE SPE............................................25
         B.       SUMMARY OF OTHER SIGNIFICANT MOTIONS...........................................................26
                  1.       Applications for Retention of Holding Company Reorganizing Debtors'
                           and Finance Company Debtors'Professionals.............................................26
                  2.       Motion to Continue Using Existing Bank Accounts and Business Forms....................26


                                       i




                                                                                                               Page
                                                                                                               ----
                                                                                                  

                  3.       Motion to Increase CFC's Manufactured Housing Securitization Servicing Fee............27
                  4.       Motion for Joint Administration of the Chapter 11 Cases...............................28
                  5.       Motion for Case Management Procedures.................................................28
                  6.       Motion to Pay Employee Wages and Associated Benefits..................................28
                  7.       CFC Credit Card Motion................................................................28
                  8.       Utilities Procedures Motion...........................................................28
                  9.       Motion to Pay Certain Essential Trade Vendors.........................................29
                  10.      Motion to Perform Contractual Obligations with Certain Insurance Agencies.............29
                  11.      Motions for Authority to Continue the Key Employee Retention Program..................29
                  12.      Motion for CFC to Continue Servicing Originating and Selling Customer Loans...........29
                  13.      Motion to Employ Ordinary Course Professionals........................................29
                  14.      Motion to Limit Trading of Holding Company Equity.....................................30
                  15.      Motion for Procedures for Sale or Abandonment of De Minimis Assets....................30
                  16.      Motion for an Extension of Time to Assume or Reject Nonresidential
                           Real Property Leases..................................................................30
                  17.      CFC Subsidiary Debtors' Applicability Motion..........................................30
                  18.      Schedules and Statements..............................................................30
                  19.      Motion to Enter Into Replacement Financing............................................30
                  20.      Motion to Extend Period to Remove Actions.............................................31
                  21.      Motion to Renew U.S. Bank Letter of Credit............................................31
                  22.      Motion to Enforce the Automatic Stay, Demand the Turnover of Property, Settle
                           Valid Lien Claimsand Foreclose On, Sell, or Otherwise Transfer Property Free
                           and Clear of All Liens................................................................31
                  23.      Motion for Contract and Lease Rejection Procedures....................................31
                  24.      Motion to Establish Solicitation Procedures...........................................31
         C.       APPOINTMENT OF THE OFFICIAL COMMITTEES.........................................................31
         D.       ASSUMPTION/REJECTION OF CONTRACTS AND LEASES...................................................32
         E.       PENDING LITIGATION AND THE AUTOMATIC STAY......................................................33
                  1.       D&O Loans Litigation..................................................................33
                  2.       Significant Prepetition Litigation....................................................33
                  3.       Adversary Proceedings Filed in the Finance Company Debtors' Chapter 11 Cases..........34
         F.       CLAIMS PROCESS AND CLAIMS BAR DATES............................................................35
                  1.       Filing of Schedules of Liabilities....................................................35
                  2.       Bar Date for Nongovernmental Entities to File Proofs of Claim.........................35
                  3.       Bar Date for Governmental Units To File Proofs of Claim...............................36
                  4.       Claims Objection Process..............................................................36
         G.       EXCLUSIVE PLAN PROPOSAL AND ACCEPTANCE RIGHTS..................................................36

IV. SUMMARY OF THE PLAN OF REORGANIZATION........................................................................37
         A.       OVERVIEW OF CHAPTER 11.........................................................................37
         B.       GENERALLY......................................................................................38
                  1.       Liquidating Plan of Reorganization....................................................38
                  2.       The Post-Consummation Estate..........................................................39
                  3.       Substantive Consolidation.............................................................39
         C.       CONDITIONS PRECEDENT TO PLAN CONFIRMATION AND CONSUMMATION.....................................41
                  1.       Conditions Precedent to Confirmation..................................................41
                  2.       Conditions Precedent to Effective Date of the Plan....................................41
                  3.       Waiver of Conditions Precedent........................................................42
                  4.       Effect of Non-Occurrence of Consummation..............................................42
         D.       SEVERABILITY OF PLAN PROVISIONS................................................................42


                                       ii



                                                                                                               Page
                                                                                                               ----
                                                                                                  
         E.       CLASSIFICATION AND TREATMENT OF CLAIMS AND EQUITY INTERESTS....................................42
                  1.       Summary of Unclassified Claims against all Finance Company Debtors....................42
                  2.       Classification and Treatment of Classified Claims.....................................43
         F.       ACCEPTANCE AND REJECTION OF THE PLAN...........................................................45
                  1.       Voting Classes........................................................................45
                  2.       Acceptance by Impaired Classes........................................................45
                  3.       Presumed Acceptance of the Plan.......................................................45
                  4.       Presumed Rejection of the Plan........................................................45
                  5.       Non-Consensual Confirmation...........................................................45
         G.       PLAN IMPLEMENTATION............................................................................46
                  1.       Sale of Assets........................................................................46
                  2.       Establishment of the Post-Consummation Estate.........................................46
                  3.       Funding Expenses of the Post-Consummation Estate......................................46
                  4.       Corporate Action......................................................................46
                  5.       Appointment of Plan Administrator.....................................................46
                  6.       Cancellation of Notes, Instruments, Debentures and Equity Securities..................47
                  7.       Creation of Creation of Professional Escrow Account...................................47
                  8.       Creation of Employee Benefit Escrow Account...........................................47
                  9.       Creation of Lehman Escrow Account.....................................................47
                  10.      Creation of 93/94 Note Claim Escrow Account...........................................47
                  11.      Creation of Consent Agreement Reserve Account.........................................47
                  12.      Retiree Benefits......................................................................47
         H.       EXECUTORY CONTRACTS............................................................................47
                  1.       Assumption and Rejection of Executory Contracts and Unexpired Leases..................47
                  2.       Rejection Claims; Cure of Defaults....................................................48
         I.       DISTRIBUTIONS..................................................................................48
                  1.       Time and Method of Distributions......................................................48
                  2.       Manner of Payment under the Plan......................................................48
                  3.       Delivery of Distributions.............................................................48
                  4.       Undeliverable Distributions...........................................................49
                  5.       Compliance with Tax Requirements/Allocation...........................................49
                  6.       Time Bar to Cash Payments.............................................................49
                  7.       Distributions after Effective Date....................................................49
                  8.       Fractional Dollars; De Minimis Distributions..........................................50
                  9.       Set-Offs..............................................................................50
                  10.      Setoff of Certain Intercompany Notes..................................................50
                  11.      Preservation of Finance Company Debtors' Subordination Rights.........................50
                  12.      Waiver by Creditors of All Subordination Rights.......................................50
                  13.      Settlement of Claims and Controversies................................................50
         J.       RETENTION OF JURISDICTION......................................................................51
         K.       RELEASE, INJUNCTIVE AND RELATED PROVISIONS.....................................................52
                  1.       Compromise and Settlement.............................................................52
                  2.       Releases by the Finance Company Debtors...............................................52
                  3.       Releases by Holders of Claims.........................................................52
                  4.       Exculpation...........................................................................53
                  5.       Preservation of Rights of Action......................................................53
                  6.       Discharge of Claims and Termination of Equity Interests...............................55
                  7.       Injunction............................................................................55
         L.       POST-CONSUMMATION ESTATE AND PLAN ADMINISTRATOR................................................55
                  1.       Generally.............................................................................55
                  2.       Purpose of the Post-Consummation Estate...............................................56
                  3.       Transfer of Assets....................................................................56
                  4.       Valuation of Assets...................................................................56
                  5.       Distribution; Withholding.............................................................56


                                      iii



                                                                                                               Page
                                                                                                               ----
                                                                                                  
                  6.       Post-Consummation Estate Implementation...............................................57
                  7.       Disputed Claims Reserve...............................................................57
                  8.       Termination of Post-Consummation Estate...............................................57
                  9.       Termination of Plan Administrator.....................................................57
                  10.      Exculpation; Indemnification..........................................................57
         M.       MISCELLANEOUS PROVISIONS.......................................................................58
                  1.       Modification of Plan Supplement.......................................................58
                  2.       Effectuating Documents, Further Transactions and Corporation Action...................58
                  3.       Dissolution of Committee(s)...........................................................58
                  4.       Payment of Statutory Fees.............................................................58
                  5.       Modification of Plan..................................................................58
                  6.       Revocation of Plan....................................................................59
                  7.       Successors and Assigns................................................................59
                  8.       Reservation of Rights.................................................................59
                  9.       Section 1146 Exemption................................................................59
                  10.      Further Assurances....................................................................59
                  11.      Transactions on Business Days.........................................................60
                  12.      Filing of Additional Documents........................................................60
                  13.      Post-Effective Date Fees and Expenses.................................................60
                  14.      Conflicts.............................................................................60
                  15.      Term of Injunctions or Stays..........................................................60
                  16.      Entire Agreement......................................................................60
                  17.      Closing of the Chapter 11 Cases.......................................................60

V. VOTING AND CONFIRMATION PROCEDURE.............................................................................60
         A.       VOTING INSTRUCTIONS............................................................................61
         B.       VOTING TABULATION..............................................................................62
         C.       VOTING PROCEDURES..............................................................................64
                  1.       Voting Record Date....................................................................64
                  2.       Beneficial Holders....................................................................64
                  3.       Nominees..............................................................................64
         D.       THE CONFIRMATION HEARING.......................................................................65
         E.       STATUTORY REQUIREMENTS FOR CONFIRMATION OF THE PLAN............................................65
                  1.       Acceptance............................................................................65
                  2.       Fair and Equitable Test...............................................................66
                  3.       Feasibility...........................................................................66
                  4.       "Best Interests" Test.................................................................67

VI. PLAN-RELATED RISK FACTORS AND ALTERNATIVES TO CONFIRMING AND CONSUMMATING THE PLAN...........................68
         A.       CERTAIN BANKRUPTCY CONSIDERATIONS..............................................................68
                  1.       Parties-in-Interest May Object to the Finance Company Debtors'
                           Classification of Claims..............................................................68
                  2.       The Finance Company Debtors May be Unable to Close One or Both
                           of the Sale Transactions..............................................................68
                  3.       The Finance Company Debtors May Not be Able to Secure Confirmation of the Plan........69
                  4.       The Confirmation and Consummation of the Plan Are Also Subject to Certain
                           Conditions as Described Herein........................................................69
                  5.       The Finance Company Debtors May Object to the Amount or Classification of a Claim.....69
                  6.       Nonconsensual Confirmation............................................................69
         B.       LIQUIDATION UNDER CHAPTER 7....................................................................69

VII. CERTAIN FEDERAL INCOME TAX CONSEQUENCES.....................................................................70


                                       iv



                                                                                                               Page
                                                                                                               ----
                                                                                                  
         A.       Consequences to Finance Company Debtors........................................................71
         B.       Federal Income Tax Treatment of Post-Consummation Estate.......................................71
                  1.       Classification of Post-Consummation Estate............................................71
                  2.       Tax Reporting.........................................................................71
                  3.       Reserve for Disputed Claims...........................................................71
         C.       Consequence to Holders of Claims...............................................................72
                  1.       Holders of Claims.....................................................................72
                  2.       Distributions in Discharge of Accrued but Unpaid Interest.............................72
                  3.       Character of Gain or Loss; Tax Basis; Holding Period..................................73
         D.       Consequences to Holders of Interests...........................................................73
         E.       Withholding....................................................................................73

VIII. MISCELLANEOUS PROVISIONS...................................................................................74
         A.       PENDING LITIGATION.............................................................................74
         B.       SUCCESSORS AND ASSIGNS.........................................................................74
         C.       RESERVATION OF RIGHTS..........................................................................74
         D.       SERVICE OF DOCUMENTS...........................................................................74

IX. RECOMMENDATION...............................................................................................75


                                       v




                                    EXHIBITS

Exhibit A   -     Joint Plan of Reorganization
Exhibit B   -     Prepetition Organizational Chart


















                                       vi


                                       I.

                                    SUMMARY(1)

     On December 17, 2002, Conseco Finance Corp. ("CFC") and Conseco Finance
Servicing Corp. ("CFSC") filed petitions under Chapter 11 of title 11 of the
United States Bankruptcy Code (the "Bankruptcy Code") in the United States
Bankruptcy Court for the Northern District of Illinois (the "Initial Petition
Date"). Thereafter, on February 3, 2003, (the "CFC Subsidiary Petition Date")
the following subsidiaries of CFC filed petitions under the Bankruptcy Code in
the United States Bankruptcy Court for the Northern District of Illinois:
Conseco Finance Corp. - Alabama, Conseco Finance Credit Corp., Conseco Finance
Consumer Discount Company, Conseco Finance Canada Holding Company, Conseco
Finance Canada Company, Conseco Finance Loan Company, Rice Park Properties
Corporation, Landmark Manufactured Housing, Inc., Conseco Finance Net Interest
Margin Finance Corp. I, Conseco Finance Net Interests Margin Finance Corp. II,
Green Tree Finance Corp. - Two, Green Tree Floorplan Funding Corp., Conseco
Agency of Nevada, Inc., Conseco Agency of New York, Inc., Conseco Agency, Inc.,
Conseco Agency of Alabama, Inc., Conseco Agency of Kentucky, Inc., Crum-Reed
General Agency, Inc. (the "CFC Subsidiary Debtors"). The Finance Company Debtors
anticipate certain other related entities may also file chapter 11 petitions,
including Green Tree Residual Finance Corp. I, Green Tree Finance Corp. - Five,
Mill Creek Servicing Corporation and Conseco Finance Credit Card Corp. (the
"Newly Filed Entities and, individually, a "Newly Filed Entity") in order to
facilitate the completion of certain Sale Transactions (as discussed herein). We
sometimes refer to CFC, CFSC and the CFC Subsidiary Debtors collectively as
"we," or the "Finance Company Debtors" and individually as a "Finance Company
Debtor" and, on or after the Effective Date, as the "Liquidated Debtors" and
individually as a "Liquidated Debtor."

     CFC, CFSC and the CFC Subsidiary Debtors are operating their businesses and
managing their properties as debtors-in-possession pursuant to sections 1107(a)
and 1108 of the Bankruptcy Code.

     The Finance Company Debtors have historically operated several
sophisticated and integrated finance businesses providing a variety of financial
products, including manufactured housing loans to consumers and floor plan
financing of MH dealer inventory, home equity mortgage loans, home improvement
loans and consumer product loans and private label credit cards. In connection
with such products, certain of the Finance Company Debtors broker a range of
insurance policies, such as homeowners insurance policies, credit insurance,
life and disability insurance policies, and extended warranty products (the
"Insurance Products") for sale to finance customers.

     Pursuant to section 363 of the Bankruptcy Code, the Bankruptcy Court
recently approved sale of substantially all of the Finance Company assets (the
"CFC Assets") from Mill Creek Bank to CFN Investment Holdings, LLC ("CFN"), and
the sale of Mill Creek Bank to General Electric Capital Corporation ("GE"),
collectively (the "Sale Transactions"). Collectively, these Sale Transactions
are expected to generate approximately $1.1 billion in cash proceeds for the
Estates. To facilitate the expeditious distribution of these proceeds, the
Finance Company Debtors are sponsoring a liquidating plan of reorganization
pursuant to chapter 11 of the Bankruptcy Code entitled "Finance Company Debtors'
Joint Liquidating Plan of Reorganization Pursuant To Chapter 11 of The United
States Bankruptcy Code" (the "Plan"), which is attached hereto as Exhibit A.

     Chapter 11 of the Bankruptcy Code allows a debtor to sponsor a plan of
reorganization that proposes how to dispose of a debtor's assets and treat
claims (i.e., debts) against, and interests in, such a debtor. A plan of
reorganization typically may provide for a debtor-in-possession to reorganize by
continuing to operate, to liquidate by selling assets of the estate or to
implement a combination of both. As mentioned above, the Plan is a liquidating
plan of reorganization.

Why You Are Receiving This Document

     The Bankruptcy Code requires that the party proposing a chapter 11 plan of
reorganization prepare and file with the Bankruptcy Court a document called a
"disclosure statement." THIS DOCUMENT IS THE

- ----------------------
1    The following summary is qualified in its entirety by the more detailed
     information contained in the Plan and elsewhere in this Disclosure
     Statement.







DISCLOSURE STATEMENT (THE "DISCLOSURE STATEMENT") FOR THE PLAN. THE DISCLOSURE
STATEMENT INCLUDES CERTAIN EXHIBITS, EACH OF WHICH ARE INCORPORATED HEREIN BY
REFERENCE.

     Please note that any terms not specifically defined in this Disclosure
Statement shall have the meaning ascribed to them in the Plan and any conflict
arising therefrom shall be governed by the Plan.

     This Disclosure Statement summarizes the Plan's content and provides
information relating to the Plan and the process the Bankruptcy Court follows in
determining whether or not to confirm the Plan. The Disclosure Statement also
discusses the events leading to the Finance Company Debtors' filing their
chapter 11 cases, describes the main events that have occurred in the Finance
Company Debtors' chapter 11 cases, and, finally, summarizes and analyzes the
Plan. The Plan also describes certain potential Federal income tax consequences
of Holders of Claims and Equity Interests, voting procedures and the
confirmation process.

     The Bankruptcy Code requires a disclosure statement to contain "adequate
information" concerning the Plan. In other words, a disclosure statement must
contain sufficient information to enable parties who are affected by the Plan to
vote intelligently for or against the Plan or object to the Plan, as the case
may be. The Bankruptcy Court has reviewed this Disclosure Statement, and has
determined that it contains adequate information and may be sent to you to
solicit your vote on the Plan.

     All Creditors should carefully review both the Disclosure Statement and the
Plan before voting to accept or reject the Plan. Indeed, Creditors should not
rely solely on the Disclosure Statement but should be sure to read the Plan as
well. Moreover, the Plan provisions will govern if there are any inconsistencies
between the Plan and the Disclosure Statement.

     It is important to note that this Disclosure Statement does not supersede
or incorporate the separate disclosure statement filed by Conseco, Inc., CIHC,
CTIHC, Inc., and Partners Health Group, Inc. in these jointly administered cases
(the "Holding Company Reorganizing Debtors' Disclosure Statement"). These
entities, sometimes referred to as the "Holding Company Reorganizing Debtors,"
are not sponsors of the Plan. The Holding Company Reorganizing Debtors have
filed a separate plan and disclosure statement in connection with their chapter
11 cases, and, having obtained approval of their disclosure statement, are
currently in the process in soliciting votes to accept their proposed plan of
reorganization.

A.   Events Leading to the Chapter 11 Cases

     Since commencing operations in 1982, our ultimate parent, Conseco, Inc.
("CNC") has pursued a strategy of growth through acquisitions. Primarily as a
result of these acquisitions and the funding requirements necessary to operate
and expand the acquired businesses, CNC amassed outstanding indebtedness
totaling approximately $6.0 billion as of June 30, 2002. During the two years
prior to the Petition Date, CNC undertook a series of steps designed to reduce
and extend the maturities of the parent company debt. Notwithstanding these
efforts, CNC's financial position continued to deteriorate, principally due to
its leveraged condition, losses experienced by the finance businesses and the
decreasing value of its investment portfolio. On August 9, 2002, CNC announced
that it would seek to fundamentally restructure its capital, and announced that
it had retained legal and Advisors to assist in these efforts.

     In October 2002, CNC announced that it had engaged Advisors to pursue
various alternatives for the finance business and that CNC's board of directors
had approved a plan to sell or seek new investors for the finance businesses.
With the help of these Advisors, we pursued an intensive marketing campaign.
This campaign was largely successful, and on December 19, 2002, we entered into
an Asset Purchase Agreement (the "CFN Asset Purchase Agreement") with CFN
Investment Holdings LLC ("CFN"), an affiliate of Fortress Investment Group LLC,
J.C. Flowers & Co. LLC and Cerberus Capital Management, L.P., pursuant to which
we would, subject to satisfying certain conditions, sell all, or substantially
all, of our assets (referred to herein as the "CFC Assets") in a sale pursuant
to section 363 of the Bankruptcy Code as part of our chapter 11 proceedings,
subject to CFN's right to exclude certain assets from its purchase.

                                       2



     One asset that we sought to dispose of through the sale process was our
manufactured housing servicing business (our "MH Servicing Business"). Prior to
our chapter 11 filings, we were by far the largest servicer of manufactured
housing loan contracts ("MH Contracts") in the United States, servicing
approximately 55% of the manufactured housing contract market. Pursuant to our
various servicing agreements, we generally received 50 basis points of the
principal amount outstanding of each MH contract per annum for servicing the MH
Contracts (the "MH Servicing Fee"), payable only from any funds remaining after
payment of all current payments owing on the debt securities issued by the MH
Securitization Trusts. Due to various factors, including an increased number of
MH Contract consumer defaults caused by the recent economic downturn, the MH
Servicing Fee was grossly insufficient to cover our MH Servicing Business costs.
Just prior to the Petition Date, we were losing approximately $15 million each
month, and could not sustain the business without either selling it or
substantially restructuring it. It came as no surprise, therefore, that CFN
(and, in fact, all other potential bidders) required a restructuring of the MH
Servicing Business as a purchasing condition.

     Accordingly, even prior to filing our chapter 11 cases, we worked
diligently to negotiate an agreement with U.S. Bank, as securitization trustee
for the vast majority of CFC's securitization trusts (the "Trustee"), to reduce
this above-described negative cash flow by: (i) increasing the amount and
payment priority of the MH Servicing Fee we receive as compensation for
servicing the securitized manufactured housing portfolios as set forth in
certain loan pooling and servicing agreements (the "Servicing Agreements"), and
(ii) restructuring the guarantees on certain lower-rated securities referred to
as "B-2 Certificates" that were issued to investors in certain securitization
transactions of manufactured housing receivables as set forth in certain sale
agreements (the "Sale Agreements"). We therefore were pleased when, on December
18, 2003, upon the joint motion of CFC, CFSC and the Trustee, the Bankruptcy
Court entered an interim order providing, for an interim period of 30 business
days, (i) for an increase of the MH Servicing Fee to 125 basis points per annum
of the principal amount outstanding of each manufactured housing securitization
trust where the Trustee acts as trustee (the "Revised Servicing Fee"); (ii) that
the MH Servicing Fee be paid as an expense prior to the distribution of any
amounts in respect of certificates issued by each such securitization trust; and
(iii) for a senior security interest in CFC's Manufactured Housing servicing
platform and a junior security interest in CFC's other assets in favor of the
Trustee for the benefit of itself and the corresponding certificateholders (the
"Adequate Protection Lien"), to secure (a) the continued payment of certain of
the Trustee's fees and expenses; (b) the amount, if any, by which the Revised
Servicing Fee exceeds the original servicing fee at the contractual level of
priority during the period of the interim order; and (c) any losses to the
securitization trusts relating to manufactured housing, home equity and home
improvement loans, credit card receivables and recreational vehicle loans
resulting from any misappropriation, misapplication or other diversion of funds
by the servicer. The Bankruptcy Court subsequently extended the interim order on
several occasions pending a final resolution of the issue by all interested
parties.

B.   The Auction and Sale Process For Substantially All Of Our Assets

     Notwithstanding the CFN Asset Purchase Agreement, we elected to conduct an
auction for the sale of our businesses and assets as part of our efforts to seek
transactions that would provide the highest and best value to us and our
creditors. In contemplation thereof, on December 19, 2002, we filed a motion
with the Bankruptcy Court seeking approval of certain sale and bidding
procedures (the "Bidding Procedures"), which procedures were approved (as
modified) by an order of the Bankruptcy Court dated January 8, 2003 (the
"Bidding Procedures Order"). All parties-in-interest, including, inter alia,
creditors and prospective purchasers, were provided with (i) notice of the entry
of the Bidding Procedures Order and the contemplated sale of the CFC Assets and
(ii) the opportunity to participate in the contemplated auction or object to the
proposed sale. In accordance with the Bidding Procedures, all potential bidders
that submitted bids for the purchase of the CFC Assets, by their own terms or
aggregated with other bids, were for more than the purchase price payable under
the CFN Asset Purchase Agreement, plus the amount of the break-up fee, plus $5
million, plus the profit sharing rights relating to the MH Servicing Business.
The Finance Company Debtors commenced the auction on February 28, 2003,
adjourned it to allow for greater time to analyze the seven competing bids, and
thereafter continued it on March 4-5, 2003.

     Prior to and at the auction, with the assistance of our advisers, we
analyzed each of the bids presented at the auction. At the conclusion of the
auction, we determined that CFN's bid of $970 million in cash, plus the
assumption of certain liabilities, represented the highest and best bid. The
terms of the sale included an option for CFC to sell the assets of Mill Creek
Bank to GE for approximately $310 million in cash, plus certain assumed
liabilities, which option, if exercised, would provide CFN with a credit of $270
million to its bid.

                                       3


     On March 6, 2003, we received an offer from Berkadia Equity Holdings,
L.L.C. ("Berkadia"), which Berkadia asserted was a valid bid in the then
recently concluded auction. Concurrently therewith, Berkadia filed an objection
to the Sale Transactions. The Bankruptcy Court heard and summarily dismissed
this objection on March 7, 2003. After further negotiations taking place between
March 7, 2003, and March 14, 2003, CFN and GE significantly increased the amount
of cash to be paid to us for the CFC Assets, bringing the total value to be
received as part of the Sale Transactions with CFN and GE to approximately $1.3
billion, consisting of approximately $1.1 billion in cash and approximately $200
million in assumed liabilities, subject to certain purchase price adjustments.

     Nonetheless, one significant hurdle remained before a sale order could be
entered approving the Sale Transactions: restructuring the MH Servicing Fee.
Ultimately, however, each of the major constituencies, including the CFC
Committee, the Ad Hoc Securitization Holders' Committee (representing, among
others, the following entities: Teachers Insurance & Annuity Assoc. of America;
Metropolitan Life Insurance Co.; Businessmen's Assurance Co. of America;
Deutsche Asset Management, Inc.; Putnam Investments; and the Northwestern Mutual
Life Insurance Co.), U.S. Bank as securitization trustee for the
securitizations, and Federal National Mortgage Association ("Fannie Mae"), as a
major B-2 certificate holder, agreed to restructure the MH Servicing Business,
entering into a Consent Agreement and agreeing to the entry of a final
settlement order resolving this issue. With this hurdle overcome, on March 14,
2003, the Bankruptcy Court entered final orders approving the terms of the Sale
Transaction. The Finance Company Debtors expect the Sale Transactions, which are
subject to various closing conditions, to close in May 2003.

     One of the closing conditions of the CFN Asset Purchase Agreement requires
that the Finance Company Debtors cause Green Tree Residual Finance Corp. 1 and
Green Tree Finance Corp. 5 to file petitions under chapter 11 at or before the
closing of the CFN Sale Transaction to the extent required to facilitate such a
closing. Similarly, a closing condition of the GE Asset Purchase Agreement
requires that the Finance Company Debtors cause Mill Creek Servicing Corporation
and Conseco Finance Credit Card Corp. to file petitions under chapter 11 at some
time prior to the closing of the GE Sale Transaction to the extent required to
facilitate such a closing (collectively, the "New Filing Entities").
Accordingly, we anticipate that the New Filing Entities will file their chapter
11 petitions in May 2003.

     Moreover, the Solicitation described herein shall encompass not only the
Finance Company Debtors, but also the New Filing Entities.

C.   Plan Overview

     THE FOLLOWING SUMMARIZES CERTAIN KEY INFORMATION CONTAINED ELSEWHERE IN
THIS DISCLOSURE STATEMENT. REFERENCE IS MADE TO, AND THIS SUMMARY IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO, THE MORE DETAILED INFORMATION CONTAINED
ELSEWHERE IN THIS DISCLOSURE STATEMENT AND IN THE PLAN. THE PLAN WILL CONTROL IN
THE EVENT OF ANY INCONSISTENCY BETWEEN THIS SUMMARY AND THE PLAN. FOR A MORE
DETAILED SUMMARY OF THE PLAN, PLEASE SEE SECTION IV OF THIS DISCLOSURE
STATEMENT.

     1.   Purpose -- Liquidating Plan of Reorganization

          The Plan provides for the orderly liquidation of substantially all of
the property of the Finance Company Debtors' Estates, including certain retained
causes of action (the "Retained Causes of Action"). Cash on hand and the Cash
generated from the sale, disposition or collection of property and any recovery
from the Retained Causes of Actions will be used to pay Allowed Claims under the
Plan.

     2.   Substantive Consolidation

          On the Effective Date, each of the Finance Company Debtors' Estates
and the Estates of the New Filing Entities will be substantively consolidated
pursuant to section 105(a) of the Bankruptcy Code. As a result of the
substantive consolidation, on the Effective Date, all property, rights and
claims of the Estates of the Finance Company Debtors

                                       4


and the New Filing Entities and all Claims against the Estates of the Finance
Company Debtors and the New Filing Entities shall be deemed to be pooled for
purposes of allowance, treatment and distributions under the Plan.

     3.   Creation of a Post-Consummation Estate

          To implement the Plan, on the Effective Date, the Post-Consummation
Estate will be created to hold the Residual Assets, which will comprise Cash,
Retained Causes of Action and property that will be sold or otherwise disposed
of or collected. The Finance Company Debtors and their Estates shall retain no
interest in the property transferred to the Post-Consummation Estate.

     4.   Summary of Projected Distributions to Creditors

          Upon Consummation of the Sale Transactions, and after paying the
Lehman Secured Claims, DIP Claims, and certain Administrative Claims, the
Debtors estimate that there will be approximately $343.5 Million to distribute
to creditors. The Debtors anticipate making distributions according to the
following schedule:




- ------------------- ---------------------- ------------------------------------------------------- -----------------
  Unclassified                                                                                        Projected
      Claims          Projected Claims                         Plan Treatment                          Recovery
- ------------------- ---------------------- ------------------------------------------------------- -----------------
- ------------------- ---------------------- ------------------------------------------------------- -----------------
                                                                                                
DIP Claims          Unknown                Pursuant to the Final DIP Order, the CFN Sale Order           100%
                                           and the GE Sale Order, the DIP Facility Claims will
                                           be paid in full in Cash out of the Sale Proceeds on
                                           the earlier of the CFN Closing Date or the GE Closing
                                           Date. To the extent any DIP Facility Claim has not
                                           been fully paid prior to the Effective Date, subject
                                           to the provisions of sections 328, 330(a) and 331 of
                                           the Bankruptcy Code, each Holder of an Allowed DIP
                                           Facility Claim will be paid the full unpaid amount of
                                           such Allowed DIP Facility Claim in Cash on the
                                           Effective Date or as soon thereafter as is
                                           practicable.
- ------------------- ---------------------- ------------------------------------------------------- -----------------
- ------------------- ---------------------- ------------------------------------------------------- -----------------
Administrative      Unknown                Subject to the provisions of sections 328, 330(a) and         100%
Claims                                     331 of the Bankruptcy Code, each Holder of an Allowed
                                           Administrative Claim will be paid the full unpaid
                                           amount of such Allowed Administrative Claim in Cash
                                           (a) on the Effective Date or as soon thereafter as is
                                           practicable, (b) if such Administrative Claim is
                                           Allowed after the Effective Date, on the date such
                                           Administrative Claim is Allowed, or as soon
                                           thereafter as is practicable, or (c) upon such other
                                           terms as may be agreed upon by such Holder and the
                                           respective Reorganized Debtor or otherwise upon an
                                           order of the Bankruptcy Court; provided that Allowed
                                           Administrative Claims representing obligations
                                           incurred in the ordinary course of business or
                                           otherwise assumed by the Debtors pursuant to the Plan
                                           will be assumed on the Effective Date and paid or
                                           performed by the respective Reorganized Debtor when
                                           due in accordance with the terms and conditions of
                                           the particular agreements governing such
                                           obligations. The Finance Company Debtors are not
                                           obliged to pay Administrative Claims against any
                                           Holding Company Debtors or Post-Consummation Estate.
- ------------------- ---------------------- ------------------------------------------------------- -----------------


                                       5


- ------------------- ---------------------- ------------------------------------------------------- -----------------
  Unclassified                                                                                        Projected
      Claims          Projected Claims                         Plan Treatment                          Recovery
- ------------------- ---------------------- ------------------------------------------------------- -----------------
- ------------------- ---------------------- ------------------------------------------------------- -----------------
                                                                                                
Priority Tax        Unknown                On the Effective Date or as soon as practicable 100%
                                           thereafter, each Holder of an Allowed Priority Tax
                                           Claim due and payable on or prior to the Effective
                                           Date shall be paid, at the option of the respective
                                           Debtor, (1) Cash in an amount equal to the amount of
                                           such Allowed Priority Tax Claim, or (2) Cash over a
                                           six-year period from the date of assessment as
                                           provided in section 1129(a)(9)(C) of the Bankruptcy
                                           Code, with interest payable at a rate of 4% per annum
                                           or such other rate as may be required by the
                                           Bankruptcy Code. The amount of any Priority Tax
                                           Claim that is not an Allowed Claim or that is not
                                           otherwise due and payable on or prior to the
                                           Effective Date, and the rights of the Holder of such
                                           Claim, if any, to payment in respect thereof shall
                                           (x) be determined in the manner in which the amount
                                           of such Claim and the rights of the Holder of such
                                           Claim would have been resolved or adjudicated if the
                                           Chapter 11 Cases had not been commenced, (y) survive
                                           the Effective Date and Consummation of the Plan as if
                                           the Chapter 11 Cases had not been commenced, and (z)
                                           not be discharged pursuant to section 1141 of the
                                           Bankruptcy Code. The Finance Company Debtors are not
                                           obliged to pay Priority Tax Claims Allowed solely
                                           against any Holding Company Debtors or
                                           Post-Consummation Estate.
- ------------------- ---------------------- ------------------------------------------------------- -----------------




- ------------ ------------- ------------------ ---------------------------------------------------- -----------------
   Class        Claim      Projected Claims                     Plan Treatment                        Projected
                                                                   of Class                            Recovery
- ------------ ------------- ------------------ ---------------------------------------------------- -----------------
- ------------ ------------- ------------------ ---------------------------------------------------- -----------------
                                                                                             

     1       Other         $1.75 million      The legal, equitable and contractual rights of the        100%
             Priority                         Holders of Allowed Class 1 Claims are unaltered by
             Claims                           the  Plan. Unless otherwise  agreed  to  by  the
                                              Holders of the Allowed Other Priority Claim and the
                                              Finance Company Debtors, each Holder of an Allowed
                                              Class 1A Claim shall receive, in full and final
                                              satisfaction of such Allowed Class 1 Claim, one of
                                              the following treatments, in the sole discretion
                                              of the Finance Company Debtors:

                                              A. Payment of each Allowed Class 1 Claim in full in
                                              Cash on the Effective Date or as soon thereafter
                                              as is practicable; provided that, Class 1 Claims
                                              representing obligations incurred in the ordinary
                                              course of business will be paid in full in Cash when
                                              such Class 1 Claims become due and owing in the
                                              ordinary course of business; or

                                              B. Such Claim will be treated in any other manner
                                              so that such Claim shall otherwise be rendered
                                              Unimpaired pursuant to section 1124 of the Bankruptcy
                                              Code.
- ------------ ------------- ------------------ ---------------------------------------------------- -----------------


                                       6



- ------------ ------------- ------------------ ---------------------------------------------------- -----------------
   Class        Claim      Projected Claims                     Plan Treatment                        Projected
                                                                   of Class                            Recovery
- ------------ ------------- ------------------ ---------------------------------------------------- -----------------
- ------------ ------------- ------------------ ---------------------------------------------------- -----------------
                                                                                             
     2       Other         Approximately      The  Plan  will  not   alter  any  of  the   legal,        100%
             Secured       $15 million        equitable and contractual  rights of the Holders of
             Claims                           Class 2 Claims. Unless otherwise agreed to by the
                                              Holder of the Allowed Class 2 Claim and the
                                              Finance Company Debtors, each Holder of an Allowed
                                              Class 2 Claim shall receive, in full and final
                                              satisfaction of such Allowed Class 2 Claim, one of
                                              the following treatments, in the sole discretion
                                              of the Finance Company Debtors:

                                              A. The payment of such Holders' Allowed Class 2
                                              Claim in full in Cash on the Effective Date;

                                              B. The payment to Holders of the sale or disposition
                                              proceeds of the collateral securing each such
                                              Allowed Class 2 Claim to the extent of the value of
                                              the Holder's interest in such property;

                                              C. The surrender to each Holder of all collateral
                                              securing each such Allowed Class 2 Claim without
                                              representation or warranty by or further recourse
                                              against the relevant Finance Company Debtor;
                                              provided that, such surrender must render each such
                                              Allowed Class 2 Claim Unimpaired pursuant to
                                              section 1124 of the Bankruptcy Code; or

                                              D. Treatment in any other manner so as to render
                                              the Allowed Class 2 Claim otherwise Unimpaired
                                              pursuant to section 1124 of the Bankruptcy Code.
- ------------ ------------- ------------------ ---------------------------------------------------- -----------------
- ------------ ------------- ------------------ ---------------------------------------------------- -----------------
     3       Lehman        Approximately      Holders of Allowed  Class 3 Claims  shall  receive,        100%
             Secured       $704 Million       in full and final  satisfaction of their respective
             Claims(2)                        Allowed  Class 3 Claims,  the payment of Cash equal
                                              to the amount of each such Allowed Class 3 Claim,
                                              payable on the Effective Date or as soon thereafter
                                              as is practicable.
- ------------ ------------- ------------------ ---------------------------------------------------- -----------------
- ------------ ------------- ------------------ ---------------------------------------------------- -----------------
     4       93/94   Note  $93.7 Million      Holders of Allowed  93/94 Note Claims against the        100%
             Claims        Plus Post-         Finance Company Debtors shall receive, in full and
                           Petition Interest, final satisfaction of their Claims against the
                           Fees And           Finance Company Debtors and the Holding Company
                           Expenses To        Debtors, the payment of Cash equal to the amount of
                           The Extent         each such Allowed Class 4 Claim, payable on the
                           Permitted Under    Effective Date or as soon thereafter
                           The Bankruptcy     as is  practicable.
                           Code

- ------------ ------------- ------------------ ---------------------------------------------------- -----------------
- ------------ ------------- ------------------ ---------------------------------------------------- -----------------
     5       General       Unknown            Holders of Allowed  Class 5 Claims  shall  receive,      Unknown
             Unsecured                        in full and final  satisfaction  of their  Allowed
             Claims                           Class 5 Claims, their  respective Pro Rata shares
                                              of the Residual Cash Balance.

- ------------ ------------- ------------------ ---------------------------------------------------- -----------------

- ---------------------
2    As of March 27, 2003.



                                       7



- ------------ ------------- ------------------ ---------------------------------------------------- -----------------
   Class        Claim      Projected Claims                     Plan Treatment                        Projected
                                                                   of Class                            Recovery
- ------------ ------------- ------------------ ---------------------------------------------------- -----------------
- ------------ ------------- ------------------ ---------------------------------------------------- -----------------
                                                                                             

     6       Equity        N/A                                                                            0%
             Interests                        On the  Effective  Date,  Class 6 Equity  Interests
                                              will be cancelled and the Holders
                                              thereof will not receive any
                                              distribution under the Plan
                                              pursuant to such Interests.
- ------------ ------------- ------------------ ---------------------------------------------------- -----------------



     THE COURT HAS NOT YET CONFIRMED THE PLAN DESCRIBED IN THIS DISCLOSURE
STATEMENT. IN OTHER WORDS, THE TERMS OF THE PLAN ARE NOT YET BINDING ON ANYONE.
HOWEVER, IF THE BANKRUPTCY COURT LATER CONFIRMS THE PLAN, THEN THE PLAN WILL BE
BINDING ON ALL CLAIM AND EQUITY INTEREST HOLDERS.

     5.   Plan Consummation

          Following Confirmation of the Plan, the Plan will be consummated on
the date selected by the Finance Company Debtors, which will be a Business Day
after the Confirmation Date on which: (a) no stay of the Confirmation Order is
in effect, and (b) all conditions specified in Article X.B of the Plan have been
(x) satisfied or (y) waived pursuant to Article X.C therein. Distributions to be
made under the Plan will be made on or as soon after the Effective Date as
practicable.

     6.   Executory Contracts and Unexpired Leases

          As set forth in the Confirmation Hearing Notice, any executory
contracts or unexpired leases that have not expired by their own terms on, or
prior to, the Effective Date, that the Finance Company Debtors have not assumed
and assigned or rejected with approval of the Bankruptcy Court (whether as part
of the Sale Transactions or otherwise), or that are not the subject of a motion
to assume the same pending as of the Effective Date, shall be deemed rejected by
the Finance Company Debtors on the Effective Date and the entry of the
Confirmation Order shall constitute approval of such rejections pursuant to
sections 365(a) and 1123 of the Bankruptcy Code. Any objections to the proposed
assumption, assumption and assignment or rejection of an alleged executory
contract or unexpired lease or any proof of Claim related thereto must conform
to the procedures described in the Confirmation Hearing Notice. Briefly, any
such objection or proof of Claim must be filed with the Bankruptcy Court and
must be served on the parties described in the Confirmation Hearing Notice so it
is actually received by them by no later than May 27, 2003. Please note,
however, that notwithstanding the Confirmation Hearing Notice, to the extent an
executory contract or unexpired lease was assumed as part of the orders
approving the Sale Transactions, any party that did not file a timely objection
thereto will be barred from any further objection.

D.   Voting and Confirmation

     Each Holder of a Claim or Equity Interest in Classes 3, 4, and 5 will be
entitled to vote either to accept or reject the Plan. Classes 3, 4, and 5 shall
have accepted the Plan if: (i) the Holders of at least two-thirds in dollar
amount of the Allowed Claims actually voting in each such Class have voted to
accept the Plan and (ii) the Holders of more than one-half in number of the
Allowed Claims actually voting in each such Class have voted to accept the Plan.
Assuming the requisite acceptances are obtained, the Debtors intend to seek
confirmation of the Plan at the Confirmation Hearing (as defined in Article
VII.D herein) scheduled to commence on May [__], 2003, before the Bankruptcy
Court. Notwithstanding the foregoing, the Finance Company Debtors will seek
Confirmation of the Plan under section 1129(b) of the Bankruptcy Code with
respect to the Impaired Classes presumed to reject the Plan, and reserve the
right to do so with respect to any other rejecting Class or to modify the Plan
in accordance with Article V of the Plan.

     Article V of this Disclosure Statement specifies the deadlines, procedures
and instructions for voting to accept or reject the Plan and the applicable
standards for tabulating Ballots. The Bankruptcy Court has established April
[__], 2003, (the "Voting Record Date") as the date for determining which Holders
of Claims are eligible to vote on the Plan. Ballots will be mailed to all
registered Holders of Claims as of the Voting Record Date who are entitled to
vote to accept or reject the Plan. An appropriate return envelope will be
included with your Ballot, if necessary. Beneficial Holders of Claims who
receive a return envelope addressed to their bank, brokerage firm or

                                       8


other nominee, or any agent thereof, (each, a "Nominee") should allow sufficient
time for the Nominee to receive their votes and process them on a Master Ballot
before the Voting Deadline, as defined below.

     The Finance Company Debtors have engaged the Solicitation Agent to assist
in the voting process. The Solicitation Agent will answer questions, provide
additional copies of all materials and oversee the voting tabulation. The
Solicitation Agent will also process and tabulate ballots for each Class
entitled to vote to accept or reject the Plan. The Solicitation Agent is
Bankruptcy Management Corporation, 1330 E. Franklin Avenue, El Segundo, CA
90245, (888) 909-0100 (toll free).

     TO BE COUNTED, THE SOLICITATION AGENT MUST RECEIVE YOUR BALLOT (OR MASTER
BALLOT OF YOUR NOMINEE HOLDER) INDICATING ACCEPTANCE OR REJECTION OF THE PLAN NO
LATER THAN 9:00 A.M., CENTRAL TIME, ON MAY [__], 2003 (THE "VOTING DEADLINE"),
UNLESS THE BANKRUPTCY COURT EXTENDS OR WAIVES THE PERIOD DURING WHICH VOTES WILL
BE ACCEPTED BY THE FINANCE COMPANY DEBTORS, IN WHICH CASE THE TERM "VOTING
DEADLINE" FOR SUCH SOLICITATION SHALL MEAN THE LAST TIME AND DATE TO WHICH SUCH
SOLICITATION IS EXTENDED. ANY EXECUTED BALLOT OR COMBINATION OF BALLOTS
REPRESENTING CLAIMS IN THE SAME CLASS OR SUBCLASS HELD BY THE SAME HOLDER THAT
DOES NOT INDICATE EITHER AN ACCEPTANCE OR REJECTION OF THE PLAN OR THAT
INDICATES BOTH AN ACCEPTANCE AND REJECTION OF THE PLAN SHALL BE DEEMED TO
CONSTITUTE AN ACCEPTANCE OF THE PLAN. ANY BALLOT RECEIVED AFTER THE VOTING
DEADLINE MAY NOT BE COUNTED IN THE DISCRETION OF THE FINANCE COMPANY DEBTORS.

     THE FINANCE COMPANY DEBTORS BELIEVE THAT THE PLAN IS IN THE BEST INTEREST
OF ALL OF THEIR CREDITORS AS A WHOLE. THE FINANCE COMPANY DEBTORS THEREFORE
RECOMMEND THAT ALL HOLDERS OF CLAIMS SUBMIT BALLOTS TO ACCEPT THE PLAN.

     1.   Time and Place of the Confirmation Hearing

          The hearing where the Bankruptcy Court will determine whether to
confirm the Plan will take place on May [__], 2003, at _:__ _.m., C.S.T., in the
United States Bankruptcy Court, 219 S. Dearborn St., Chicago, Illinois, 60604,
before the Honorable Carol A. Doyle, United States Bankruptcy Judge.

     2.   Deadline for Voting For or Against the Plan

          If you are entitled to vote, it is in your best interest to vote
timely on the enclosed ballot (the "Ballot") and return the Ballot in the
enclosed envelope to the Balloting Agent, who is Bankruptcy Management
Corporation, 1330 E. Franklin Avenue, El Segundo, California 90245, (888)
909-0100 (toll free).

          Your vote must be received prior to the Voting Deadline, which is 9:00
p.m. C.S.T. on May [__], 2003, or it will not be counted. At the Finance Company
Debtors' request, the Bankruptcy Court has established certain procedures for
the solicitation and tabulation of votes on the Plan. They are described in the
Order entitled "Order (A) Approving The Finance Company Debtors' Disclosure
Statement; (B) Scheduling A Hearing To Confirm The Plan; (C) Establishing A
Deadline For Objecting To The Finance Company Debtors' Plan; (E) Approving Form
Of Ballots, Master Ballot, Voting Deadline And Solicitation Procedures; And (E)
Approving Form And Manner Of Notices" (the "Solicitation Order") and the "Notice
Of (I) Entry Of Order Approving Disclosure Statement; (II) Hearing To Confirm
Plan Of Reorganization And (III) Related Important Dates" (the "Confirmation
Hearing Notice") that accompany this Disclosures Statement.

     3.   Deadline for Objecting to the Confirmation of the Plan

          Objections to Plan confirmation must be filed with the Bankruptcy
Court and served upon the following so that they are actually received , on or
before [__] p.m. C.S.T. on May [__], 2003.

                                       9

                                                       
Counsel to the Finance Company Debtors                       Finance Company Debtors' Solicitation Agent
- --------------------------------------                       -------------------------------------------
Kirkland & Ellis                                             Bankruptcy Management Corporation
200 East Randolph Drive                                      1330 E. Franklin Avenue
Chicago, Illinois 60601                                      El Segundo, CA 90245
Attn:  Anne Marrs Huber, Esq.                                Attn: Finance Company Debtors' Solicitation Agent
       Anup Sathy, Esq.
       Roger J. Higgins, Esq.



United States Trustee                                        Counsel to the Official Committee of the Finance
- ---------------------                                        Company Debtors
Office of the United States Trustee (Region 11)              ---------------
227 West Monroe Street, Suite 3350                           Greenberg Traurig, P.C.
Chicago, Illinois 60606                                      77 West Wacker Drive, Suite 2500
Attn: Ira Bodenstein, Esq.                                   Chicago, Illinois 60601
                                                             Attn: Keith J. Shapiro, Esq.

Counsel for the Official Committee of the Reorganizing       Counsel to the Official Committee of the Trust
Debtors                                                      Preferred Securities
- -------                                                      --------------------
Fried Frank Harris Shriver & Jacobson                        Saul Ewing LLP
One New York Plaza                                           222 Delaware Avenue, Suite 1200
New York, New York 10004                                     Wilmington, Delaware 19801
Attn: Brad Eric Scheler, Esq.                                Attn: Donald J. Detweiler, Esq.

Mayer, Brown, Rowe & Maw                                     Jenner & Block, LLC
190 South LaSalle Street                                     One IBM Plaza
Chicago, Illinois 60603-3441                                 Chicago, Illinois 60611
Attn: Thomas Kiriakos, Esq.                                  Attn: Catherine L. Steege, Esq.





E.   Risk Factors

     Prior to deciding whether and how to vote on the Plan, each Holder of a
Claim should consider carefully all of the information in this Disclosure
Statement, and should particularly consider the Risk Factors described in
Article VI hereof.

F.   Identity of Persons to Contact for More Information

     Any interested party desiring further information about the Plan should
contact: Counsel for the Finance Company Debtors: Roger Higgins, Esq., Kirkland
& Ellis, 200 East Randolph Street, Chicago, Illinois 60601, via e-mail at
consecoinfo@kirkland.com.

G.   Recommendation

     The Finance Company Debtors believe that the Plan provides the best and
most feasible recovery for Holders of Allowed Claims against or Equity Interests
in the Finance Company Debtors and that accepting the Plan is in the best
interests of the Holders of Allowed Claims against, or Equity Interests in, the
Finance Company Debtors. The Finance Company Debtors therefore recommend that
you vote to accept the Plan.

H.   Disclaimer

     In formulating the Plan, the Finance Company Debtors relied on financial
data derived from our books and records. We therefore represent that everything
stated in the Disclosure Statement is true to the best of our knowledge. We
nonetheless cannot, and do not, confirm the current accuracy of all statements
appearing in this Disclosure Statement. Moreover, the Bankruptcy Court has not
yet determined whether the Plan is confirmable and therefore does not recommend
whether you should accept or reject the Plan.

                                       10



     The discussion in the Disclosure Statement regarding the Finance Company
Debtors may contain "forward looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. Such statements consist of any
statement other than a recitation of historical fact and can be identified by
the use of forward-looking terminology such as "may," "expect," "anticipate,"
"estimate" or "continue" or the negative thereof or other variations thereon or
comparable terminology. The reader is cautioned that all forward looking
statements are necessarily speculative and there are certain risks and
uncertainties that could cause actual events or results to differ materially
from those referred to in such forward looking statements. The liquidation
analyses, distribution projections, and other information are estimates only,
and the timing and amount of actual distributions to creditors may be affected
by many factors that cannot be predicted. Therefore, any analyses, estimates or
recovery projections may or may not turn out to be accurate.

     NOTHING CONTAINED IN THIS DISCLOSURE STATEMENT IS, OR SHALL BE DEEMED TO
BE, AN ADMISSION OR STATEMENT AGAINST INTEREST BY THE FINANCE COMPANY DEBTORS
FOR PURPOSES OF ANY PENDING OR FUTURE LITIGATION MATTER OR PROCEEDING.

     ALTHOUGH THE ATTORNEYS, ACCOUNTANTS, ADVISORS AND OTHER PROFESSIONALS
EMPLOYED BY THE FINANCE COMPANY DEBTORS HAVE ASSISTED IN PREPARING THIS
DISCLOSURE STATEMENT BASED UPON FACTUAL INFORMATION AND ASSUMPTIONS RESPECTING
FINANCIAL, BUSINESS, AND ACCOUNTING DATA FOUND IN THE BOOKS AND RECORDS OF THE
FINANCE COMPANY DEBTORS, THEY HAVE NOT INDEPENDENTLY VERIFIED SUCH INFORMATION
AND MAKE NO REPRESENTATIONS AS TO THE ACCURACY THEREOF. THE ATTORNEYS,
ACCOUNTANTS, ADVISORS AND OTHER PROFESSIONALS EMPLOYED BY THE FINANCE COMPANY
DEBTORS SHALL HAVE NO LIABILITY FOR THE INFORMATION IN THE DISCLOSURE STATEMENT.

     THE FINANCE COMPANY DEBTORS AND THEIR PROFESSIONALS ALSO HAVE MADE A
DILIGENT EFFORT TO IDENTIFY IN THIS DISCLOSURE STATEMENT PENDING LITIGATION
CLAIMS AND PROJECTED OBJECTIONS TO CLAIMS. HOWEVER, NO RELIANCE SHOULD BE PLACED
ON THE FACT THAT A PARTICULAR LITIGATION CLAIM OR PROJECTED OBJECTION TO CLAIM
IS, OR IS NOT, IDENTIFIED IN THE DISCLOSURE STATEMENT. THE FINANCE COMPANY
DEBTORS, THE CREDITORS' COMMITTEE, THE POST-CONSUMMATION ESTATE OR OTHER PARTIES
IN INTEREST MAY SEEK TO INVESTIGATE, FILE AND PROSECUTE LITIGATION CLAIMS AND
PROJECTED OBJECTIONS TO CLAIMS AFTER THE CONFIRMATION OR EFFECTIVE DATE OF THE
PLAN IRRESPECTIVE OF WHETHER THE DISCLOSURE STATEMENT IDENTIFIES ANY SUCH CLAIMS
OR OBJECTIONS TO CLAIMS.

                                      II.

                               GENERAL INFORMATION

A.   DESCRIPTION OF THE FINANCE COMPANY DEBTORS' BUSINESSES

     1.   Finance Company Debtors' Corporate Structure

          CFC is a Delaware corporation that functions as an operating parent
company for our finance business. CFSC is an intermediate operating parent
company for our finance business. The CFC Subsidiary Debtors are all direct or
indirect subsidiaries of CFC, and to the extent that the CFC Subsidiary Debtors
conduct any operations, such operations are integrally tied to those of the CFC
and CFSC.

          Of the New Filing Entities, Green Tree Residual Finance Corp. I and
Green Tree Finance Corp. - Five are special purpose securitization entities that
hold approximately 80% of the Finance Company Debtors' assets. Both are direct
subsidiaries of CFC. Mill Creek Servicing Corporation is a subsidiary to Mill
Creek Bank Inc. ("Mill Creek Bank," formerly known as Conseco Bank, Inc.), which
is a direct subsidiary of CFC. Finally, Conseco Finance Credit Card Corp. is a
special-purpose securitization entity created in connection with the
securitization of certain private label credit card receivables.

                                       11



          CNC is the top tier holding company for our finance business as well
as for the insurance business operated by the Reorganizing Debtors'. The finance
business is operated through CFC and its subsidiaries. The insurance business is
operated by the Holding Company Reorganizing Debtors, and is not subject to this
disclosure statement or the Plan. An organizational chart of CNC and its
subsidiaries, including the Finance Company Debtors, as of the Petition Date is
attached hereto as Exhibit B.

     2.   The Finance Company Debtors' Businesses

          We provide a variety of finance products, including manufactured
housing and floor plan loans, mortgage services products, including home
improvement loans and home equity mortgages, consumer product loans and private
label credit cards. In conjunction therewith, several of our subsidiaries also
broker a range of insurance policies, such as homeowners insurance policies,
life and disability insurance policies, mortgage insurance, and extended
warranty products (the "Insurance Products") for sale to customers. As of
September 30, 2002, we managed receivables of approximately $38.2 billion.

          We historically have provided financing for consumers purchasing
manufactured housing. To promote the MH contract business, we also provided to
manufactured housing dealers floor plan financing their MH inventory. A
manufactured home is a structure, transportable in one or more sections,
designed to be a dwelling with or without a permanent foundation. During 2001,
we originated approximately $2.5 billion of MH Contracts, or 22% of our total
finance company originations, and approximately $2.1 billion of floor plan
loans. As of September 30, 2002, our managed receivables included approximately
$23.9 billion of MH Contracts, or 63% of our total managed receivables, and
approximately $200 million of floor plan loans. On November 25, 2002, we
discontinued originating MH Contracts because certain funding constraints were
imposed on us. Moreover, originating MH Contracts has steadily become
increasingly unprofitable under the prevailing market conditions.

          Our mortgage loan products also include home equity and home
improvement loans. During 2001, we originated approximately $3.0 billion of
contracts for these products, or 27% of our total originations. At September 30,
2002, our managed receivables included approximately $10.0 billion of home
equity and home improvement loan contracts, or 26% of our total managed
receivables. During 2001, we originated approximately $3.6 billion of private
label credit card receivables, primarily through our bank subsidiaries, or 32%
of our total originations. As of September 30, 2002, our managed receivables
included approximately $2.9 billion of contracts for credit card loans, or 7% of
our total managed receivables. We offer private label credit card programs
through our Mill Creek Bank to select retailers with a core focus on the home
improvement industry. We also offer consumer finance products through 90 home
equity offices, approximately 1,280 home improvement dealers and approximately
3,700 private label retail outlets.

          The insurance agencies broker a range of insurance policies for sale
to customers in connection with loans made in the Finance Company Debtors'
Manufactured Housing, Home Equity/Home Improvement, Consumer Finance and other
divisions. Various third party insurance companies (the "Insurance Companies")
who have no affiliation with the Finance Company Debtors or the Holding Company
Reorganized Debtors provide the Insurance Products. To be clear, however, none
of the Finance Company Debtors are insurance companies nor are they in any way
related to the business of the Holding Company Reorganizing Debtors' insurance
company subsidiaries. Rather, the insurance rely upon the specialized insurance
products that the Insurance Companies offer in order to provide our customers
with a broad range of insurance options in connection with the loans that our
affiliates originate.

     3.   Government Regulation

          Our finance operations are subject to regulation by certain federal
and state regulatory authorities. Indeed, finance subsidiaries licensed under
applicable state law originate or purchase a substantial portion of our consumer
loans and assigned sales contracts. These licensed entities are subject to
examination by, and the reporting requirements of, the state administrative
agencies issuing these licenses. Moreover, our finance subsidiaries are also
subject to state laws and regulations, which in certain states: (i) limit the
amount, duration and charges for such loans and contracts; (ii) require
disclosure of certain loan terms and regulate the content of documentation;
(iii) place limitations on collection practices; and (iv) govern creditor
remedies. The licenses are renewable and may be subject to revocation by the
respective issuing authority for violating that state's laws and

                                       12


regulations. Some states have adopted, or are considering adopting, consumer
protection laws or regulations that impose requirements or restrictions on
lenders who make certain types of loans secured by residential real estate.

          Mill Creek Bank and Green Tree Retail Services Bank, Inc. ("Retail
Bank"), both non-debtor subsidiaries of CFC, are also highly regulated. The
Federal Deposit Insurance Corporation regulates and subjects to examination both
Mill Creek Bank and Retail Bank. Additionally, the Utah Department of Financial
Institutions regulates and examines Mill Creek Bank, and the South Dakota
Department of Banking supervises and examines Retail Bank. Nonetheless, CFC is
not, however, regulated by the Federal Reserve Board as a bank holding company.
Mill Creek Bank is authorized to engage generally in the banking business and
may accept all types of deposits, other than demand deposits. Retail Bank is
limited by its charter to engage in the credit card lending business and may
issue only certificates of deposit in denominations of $100,000 or greater. Mill
Creek Bank and Retail Bank are thus generally subject to regulations relating to
lending activities, capital adequacy, leverage, loans loss reserves, deposits,
consumer protection, community reinvestment, payment of dividends and
transactions with affiliates.

          A number of states have usury and other consumer protection laws that
may limit the amount of interest and other charges and fees charged on loans
originated in any such state. Generally, the Federal Depository Institutions
Deregulation and Monetary Control Act of 1980 ("DIDA"), which regulates the rate
of interest, discount points and finance charges with respect to first lien
residential loans, including manufactured home loans and real estate secured
mortgage loans, has preempted these kinds of state laws. But, as permitted under
DIDA, a number of states enacted legislation timely opting out of coverage of
either or both of the interest rate and/or finance charge provisions of DIDA.
States may no longer opt out of the interest rate provisions of DIDA, but could
in the future opt out of its finance charge provisions. To be eligible for
federal preemption for manufactured home loans, our licensed finance companies
must provide certain consumer protection.

          Our finance operations are also subject to regulation under other
applicable federal laws and regulations, the more significant of which include:
the Truth in Lending Act, the Equal Credit Opportunity Act, the Fair Credit
Reporting Act, the Real Estate Settlement and Procedures Act, the Home Mortgage
Disclosure Act, the Home Owner Equity Protection Act, the privacy provisions of
the Gramm-Leach-Wiley Act, and certain rules and regulations of the Federal
Trade Commission.

          Our commercial lending operations are not subject to material
regulation in most states, although some states do require licensing. In
addition, certain provisions of the Equal Credit Opportunity Act apply to
commercial loans to small businesses.

          We have internal controls designed to manage the regulatory and legal
risks associated with our various finance activities. There is, however, a risk
that one or more employees may circumvent these controls, as has occurred at
other financial institutions.

     4.   Competition

          The financial services market is highly competitive, and our highly
leveraged position has materially and adversely impacted our ability to compete
in these markets. The financial services industry comprises a large number of
companies, some of which are larger and have greater capital, technological and
marketing resources, access to capital and other sources of liquidity at a lower
cost, as well as broader and more diversified product lines and larger staffs
than we do. Moreover, CFC and its subsidiaries must also compete with their
competitors to attract and retain the allegiance of dealers, vendors,
contractors, manufacturers, retailers and agents.

          Conseco's leveraged condition and liquidity difficulties also have
severely impacted the operations of our finance businesses. For a more complete
discussion of the effect of our leveraged condition and liquidity difficulties,
see Article II.E.3, "Events Leading to the Chapter 11 Cases - Prepetition
Decline of Finance Company Debtors' Businesses, Strategic Alternatives
Considered."

                                       13



     5.   Employees

          At December 31, 2002, the Finance Company Debtors and their non-debtor
subsidiaries had approximately 5,800 employees, including: (i) 5,400 employees
supporting finance operations; and (ii) 400 employees supporting the holding
company and shared services. None of our employees is covered by a collective
bargaining agreement.

          For additional information about the Debtors' business operations,
refer to the Debtors' Annual Report on Form 10-K for the fiscal year ended
December 31, 2001, and the Quarterly Report on Form 10-Q for the quarter ended
September 30, 2002. Additional information regarding the Debtors will be
included in their Annual Report on Form 10-K for the year ended December 31,
2002, scheduled to be filed on or about April 15, 2003. These filings are, or
will be, available by visiting the SEC's website at www.sec.gov or the Holding
Company Reorganizing Debtors' website at www.conseco.com.

B.   EXISTING CAPITAL STRUCTURE OF THE FINANCE COMPANY DEBTORS

     1.   Ownership of CFC; CNC Debt Structure

          As previously discussed in Article II.A.1, CNC is the top-tier holding
company for CFC and its finance subsidiaries. CNC is a publicly owned, highly
leveraged entity. A summary of its equity and debt obligations follows:

          (a)  Bank Debt

          CNC has a $1.5 billion credit facility (the "Senior Credit Facility")
with Bank of America, N.A., as administrative agent, and various other lending
institutions. The Senior Credit Facility was scheduled to mature on December 31,
2003, and is currently fully drawn. Approximately $38 million of accrued and
unpaid interest was added to the outstanding principal amount of the Senior
Credit Facility pursuant to a waiver dated September 8, 2002. In addition, as of
the Petition Date, there was an aggregate of approximately $6.1 million of
unpaid interest on the Senior Credit Facility.

          (b)  Guarantee of D&O Credit Facilities

          Beginning in 1996, certain officers and directors of Conseco borrowed
money to purchase common stock of CNC under credit facilities provided by Bank
of America, N.A., JP Morgan Chase Bank and various other lending institutions
(individually, a "D&O Credit Facility," and collectively, the "D&O Credit
Facilities"). Until the fall of 2000, there were three D&O Credit Facilities:
the $245 million D&O Credit Facility entered into in 1997 (which included the
original purchasers in 1996 plus new purchasers in 1997); the $181 million D&O
Credit Facility entered into in 1998; and the $144 million D&O Credit Facility
entered into in 1999, which is partially secured. The aggregate amount of the
D&O Credit Facilities guaranteed by the Debtors as of the Petition Date was
approximately $481.3 million. In addition, as of the Petition Date, CNC owed
approximately $4.0 million of waiver consideration and approximately $9.6
million in interest with respect to the D&O Credit Facilities.

          In May 2000, the 1999 D&O Credit Facility was refinanced to add
additional collateral in the form of pledges of stock of CIHC, CFC and Conseco
Capital Management, Inc. ("CCM") and certain intercompany notes. In the fall of
2000, most of the borrowers refinanced the existing facilities to extend the
maturity date of the obligations to December 31, 2003 (the scheduled maturity
date of the Senior Credit Facility). Certain of the officers and directors who
are borrowers under the 1998 D&O Credit Facility chose not to refinance (by not
signing the agreement), thereby creating, in effect, an additional tranche,
which is referred to as the 1998 non-refinanced facility.

          Individual obligors under the D&O Credit Facilities owe amounts to:
(i) the lenders who are party to the D&O Credit Facilities for the principal
amounts borrowed (less any principal repayments); (ii) CNC for the payment of
approximately $55.5 million made in September 2002 from cash collateral
previously pledged by CNC to such lenders (such amounts correspondingly reduced
certain individual obligors' amounts owed to lenders under

                                       14


(i) above); and (iii) Conseco Services, LLC, an affiliate of CNC ("Conseco
Services"), for interest and other fee payments made to the lenders who are
party to the D&O Credit Facilities on behalf of the individual obligors.

          (c)  The 93/94 Notes

          In 1993, CNC issued $200,000,000 of 8.125% senior notes due February
15, 2003 (the "93 Notes"). In 1994, CCP Insurance, Inc. ("CCP") issued
$200,000,000 of 10.5% senior notes due December 15, 2004 (the "94 Notes"). CNC
acquired CCP by merger on August 31, 1995, and assumed CCP's obligations under
the 94 Notes in connection with the merger.

          We sometimes refer to the 93 Notes and the 94 Notes collectively as
the "93/94 Notes." The 93/94 Notes are secured by the stock of CIHC, CCM, CFC
and certain of their subsidiaries and certain intercompany notes. If certain
assets sold in the Sale Transactions have been pledged to the holders of the
93/94 Notes, and if the proceeds of these pledged assets are used to pay the
93/94 Notes, then CFC may assert, by subrogation, the rights of such Holders
against the Holding Company Reorganizing Debtors. As of the Petition Date, the
aggregate outstanding principal amount of the 93/94 Notes was approximately $88
million and there was an aggregate amount of $5.7 million of unpaid interest on
the 93/94 Notes.

          CNC has pledged the collateral securing the 93/94 Notes pursuant to an
"equal and ratable" clause in the indentures governing the 93/94 Notes. The
93/94 Notes indentures provide that, if another creditor obtains a security
interest in certain property of CNC or any of its significant subsidiaries, then
the 93/94 Notes will automatically obtain an "equal and ratable" security
interest in such property. Certain parties, including the CFC Committee (as
defined herein), have alleged that the legal mechanism by which the 93/94 Notes
obtained a security interest somehow impairs that security interest. These
parties allege that, because the holders of the 93/94 Notes did not provide
consideration for the security interest that they received simply because
another party received that security interest, the 93/94 Notes' security
interest may be voided under theories, including, but not limited to, unjust
enrichment, fraudulent conveyance or a lack of consideration. Wilmington Trust
Company, the indenture trustee under the 93/94 Notes, maintains that any and all
claims with respect to the avoidability of the 93/94 Notes, including the claims
of the CFC Committee, are without merit.

          (d)  The Original Notes

          Between 1998 and 2001, CNC issued the following series of senior
notes: (i) $450,000,000 of 8.5% senior notes due October 15, 2002 (the "8.5%
Original Notes"); (ii) $250,000,000 of 6.4% senior notes due February 10, 2003
(the "6.4% Original Notes"); (iii) $800,000,000 of 8.75% senior notes due
February 9, 2004 (the "8.75% Original Notes"); (iv) $250,000,000 of 6.8% senior
notes due June 15, 2005 (the "6.8% Original Notes"); (v) $550,000,000 of 9.0%
senior notes due October 15, 2006 (the "9.0% Original Notes"); and (vi)
$400,000,000 of 10.75% senior notes due June 15, 2008 (the "10.75% Original
Notes").

          We sometimes refer to the foregoing series of senior notes
collectively as the "Original Notes." As of the Petition Date, the aggregate
outstanding principal amount of the Original Notes was approximately $1.17
billion, and there was an aggregate of approximately $72.2 million of unpaid
interest on the Original Notes.

          (e)  The Exchange Notes

          In connection with an exchange offer completed in April 2002, CNC
issued: (i) $991,000 of 8.5% senior notes due October 15, 2003, in exchange for
an equal amount of 8.5% Original Notes due October 15, 2002 (the "8.5% Exchange
Notes"); (ii) $14,936,000 of 6.4% senior notes due February 10, 2004 in exchange
for an equal amount of 6.4% Original Notes due February 10, 2003 (the "6.4%
Exchange Notes"); (iii) $364,294,000 of 8.75% senior notes due August 9, 2006 in
exchange for an equal amount of 8.75% Original Notes due February 9, 2004 (the
"8.75% Exchange Notes"); (iv) $150,783,000 of 6.8% senior notes due June 15,
2007 in exchange for an equal amount of 6.8% Original Notes due June 15, 2005
(the "6.8% Exchange Notes"); (v) $399,200,000 of 9.0% senior notes due April 15,
2008 in exchange for an equal amount of 9.0% Original Notes due October 15, 2006
(the "9.0% Exchange Notes"); and (vi) $362,433,000 of 10.75% senior notes due
June 15, 2009, in exchange for an equal amount of 10.75% Original Notes due June
15, 2008 (the "10.75% Exchange Notes").

                                       15



          We sometimes refer to the foregoing series of senior notes
collectively as the "Exchange Notes." CIHC guarantees the Exchange Notes, which
are otherwise identical to the corresponding series of Original Notes in all
material respects but for their respective maturity dates and the fact of the
CIHC guarantee. As of the Petition Date, the aggregate outstanding principal
amount of the Exchange Notes was approximately $1.29 billion, and the amount of
unpaid interest on the Exchange Notes was approximately $78.3 million.

          (f)  Trust Preferred Securities and Subordinated Debentures

          The subsidiary trusts of CNC have issued the following securities:
9.16% Trust Originated Preferred Securities (the "9.16% TOPrS"); 8.70% Trust
Pass-Through Securities (the "8.70% TRuPS"); 8.796% Capital Securities (the
"8.796% Capital Securities"); 6.75% Trust Originated Preferred Securities (the
"6.75% TOPrS"); 8.70% Trust Originated Preferred Securities (the "8.70% TOPrS");
9% Trust Originated Preferred Securities (the "9% TOPrS"); and 9.44% Trust
Originated Preferred Securities (the "9.44% TOPrS"). We sometimes refer to the
9.16% TOPrS, 8.70% TRuPS, 8.796% Capital Securities, 6.75% TOPrS, 8.70% TOPrS,
9.00% TOPrS and 9.44% TOPrS collectively as the "Trust Preferred Securities."

          Each trust used the proceeds from the issuance of the Trust Preferred
Securities to purchase subordinated debentures from CNC (the "Subordinated
Debentures"). The interest rate and other terms of each series of Trust
Preferred Securities mirrors the terms of the applicable underlying Subordinated
Debentures issued by CNC. The holders of the Trust Preferred Securities are
entitled to preferred dividend payments from the trust, payable from the
interest payments received from CNC on the underlying Subordinated Debentures.
CNC provides a guarantee to the holders of the Trust Preferred Securities of the
amounts due on such Trust Preferred Securities, but only to the extent that the
trust has received interest payments on the Subordinated Debentures. As of the
Petition Date, the aggregate outstanding principal amount of the Subordinated
Debentures was approximately $1.93 billion, and the aggregate amount of unpaid
interest on the Subordinated Debentures was approximately $89.1 million.

          (g)  Preferred Stock and Common Stock

          CNC has two outstanding series of preferred stock, Series E Preferred
Stock and Series F Common-Linked Convertible Preferred Stock, and has committed
to authorize a third series of preferred stock, Series G Preferred Stock. As of
December 31, 2002, there were: (i) 90,000 shares of Series E Preferred Stock,
$10,000 stated value per share, issued and outstanding (the "Series E Preferred
Stock"), all of which is held by Bankers National Life Insurance Company, an
indirect subsidiary of CNC; (ii) 2,855,502 shares of Series F Common-Linked
Convertible Preferred Stock, $192.50 stated value per share, issued and
outstanding (the "Series F Preferred Stock"), substantially all of which is held
by Thomas H. Lee Equity Fund IV, L.P. and its affiliated investors; and (iii) no
shares of Series G Preferred Stock issued and outstanding (the "Series G
Preferred Stock").

          As of December 31, 2002, CNC had 346.0 million shares of common stock,
no par value, issued and outstanding. The common stock (and all other listed
securities of CNC) was delisted from the NYSE effective September 25, 2002.

     2.   Overview of Finance Company Debtors' Debt Structure

          The Finance Company Debtors and their non-debtor subsidiaries
historically generated the Cash they needed to finance the loans they originated
through a variety of means, including warehouse lines provided by third-party
lenders, the sale of loans in pools to third party buyers, and the sale of loans
to special purpose entities that directly or indirectly sell securities to
investors that are backed by cash flows generated by the loans
("securitizations").

          A summary of the Finance Company Debtors' primary debt obligations are
discussed below, including: (i) obligations under various credit facilities;
(ii) guarantees of certain bonds issued under securitizations; (iii)
intercompany obligations; (iv) dividends on preferred stock; and (v) obligations
under various debtor-in-possession financing facilities.

                                       16


     3.   Prepetition Credit Facilities

          The Warehouse Facilities. In the past, the Finance Company Debtors
relied on certain warehouse facilities to fund new loan originations. The
warehouse facilities are repurchase facilities under which loans originated by
CFC and its subsidiaries were sold to the lenders with an agreement by the
seller to repurchase those loans at a later date, at a higher price, with the
price differential reflecting the cost of financing. As of December 13, 2002,
the Finance Company Debtors were obligated under the following:

          (a) Lehman Warehouse Facility: Green Tree Finance Corp.-Five ("GTFC"),
     a non-debtor subsidiary, entered into the current version of this $1.2
     billion facility with Lehman Commercial Paper Inc. ("LCPI") in January 2002
     (the "Lehman Warehouse Facility"). As of March 27, 2003, approximately $200
     million was outstanding under the facility and, immediately prior to the
     Petition Date, the committed amount of the facility was $700 million. CFC
     is a guarantor and its parent, CIHC, Incorporated ("CIHC") is a partial
     guarantor under this facility.

          (b) CSFB Warehouse Facility: CFC entered into this facility with
     Credit Suisse First Boston Mortgage Capital LLC ("CSFB") in March 1999. The
     original facility limit was $500 million on an uncommitted basis. CSFB has
     stopped providing new funding through this facility. The amount outstanding
     under this facility is approximately $8.5 million.

          The Lehman Residual Facility. Green Tree Residual Finance Corp. I.
("GTRFC"), a non-debtor subsidiary, entered into this $600 million repurchase
facility with Lehman Brothers Inc. ("Lehman Brothers") in 1998 (the "Lehman
Residual Facility"). CFC is a guarantor and CIHC is a partial guarantor under
the Lehman Residual Facility, under which, as of December 13, 2002,
approximately $534.9 million was outstanding. Lehman Brothers and LCPI
(collectively, "Lehman"), who are both parties to this facility, assert that
there is a collateral deficit and, therefore, no additional availability under
this facility based on their valuation of the collateral. To address the
asserted deficit, Lehman has retained a portion of the cash flows generated by
the collateral assets, thereby depriving the Finance Company Debtors of a
sizable portion of working capital. As a result of CFC's prepetition defaults
and the agreements entered into with Lehman on December 20, 2002, (as discussed
below) CFC may not draw funds from the Residual Facility.

          The U.S. Bank Swingline Facility. CFC entered into a swingline and
cash management facility with U.S. Bank in December 2000 (the "U.S. Bank
Swingline"). This facility was secured by a lien on the stock of CFC's
non-debtor bank subsidiaries, stock in Rice Park Properties Corp., a CFC
subsidiary Debtor that owns CFC's office building headquarters, and a mortgage
on that property. As of December 13, 2002, CFC had drawn $60 million under the
U.S. Bank Swingline. Subsequently, as part of the Finance Company Debtors'
efforts to obtain post-petition debtor-in-possession financing, the U.S. Bank
Swingline Facility was "rolled into" the Secured Super-Priority
Debtor-in-Possession Credit Agreement dated December 19, 2002, (the "FPS DIP")
between CFC, certain of its subsidiaries, CIHC, certain lenders parties thereto
from time to time and FPS DIP LLC, an affiliate of Fortress Investment Group LLC
("Fortress"), J.C. Flowers & Co. LLC. ("Flowers") and Cerberus Capital
Management, L.P. ("Cerberus"). In other words, the U.S. Bank Facility was
paid-off with the approval of the Bankruptcy Court with a portion of the
proceeds of the FPS DIP.

          The Finance Company Debtors' obligations under the above-described
credit facilities (collectively, the "Credit Facilities"), as of March 27, 2003,
are as follows:


                                       17



- ------------------------------ ----------------- ------------------ ----------------------- ------------------------
                                                                    Amount Outstanding as
                                                                          of 3/27/03
        Facility Name               Lender           Borrower             (million)                Guarantor
- ------------------------------ ----------------- ------------------ ----------------------- ------------------------
- ------------------------------ ----------------- ------------------ ----------------------- ------------------------
                                                                                
Lehman Warehouse Facility      LCPI                   GTFC               $200,281,924       CFC; CIHC (partial)(3)
- ------------------------------ ----------------- ------------------ ----------------------- ------------------------
- ------------------------------ ----------------- ------------------ ----------------------- ------------------------

US Bank Swingline Facility     US Bank                CFC                   N/A             N/A
- ------------------------------ ----------------- ------------------ ----------------------- ------------------------
- ------------------------------ ----------------- ------------------ ----------------------- ------------------------

                                                                                            CFC   (limited  as  set
                                                                                            forth  in the  relevant
Lehman Residual Facility                                                                    guarantee   agreement);
                               Lehman Brothers        GTRFC              $503,619,051       CIHC (partial)
- ------------------------------ ----------------- ------------------ ----------------------- ------------------------
- ------------------------------ ----------------- ------------------ ----------------------- ------------------------

CSFB Warehouse Facility        CSFB                   CFC                    $0.5           None
- ------------------------------ ----------------- ------------------ ----------------------- ------------------------


          Certain of the aforementioned facilities contain reciprocal
cross-default provisions. Additionally, certain of those facilities contain
cross-default provisions to CNC and CIHC debt obligations. Prior to the Petition
Date, CFC obtained waivers and forbearance of defaults and cross-defaults in
order to forestall the ability of the lenders to accelerate the obligations of
the Finance Company Debtors.

     4.   Guarantees on B-2 Certificates

          In connection with the sale of loans to securitization trusts, CFC
entered into executory sale agreements whereby it issued irrevocable guarantees
of principal and interest in respect of the subordinated debt tranches referred
to as B-2 Certificates issued by certain trusts. The largest registered holder
of B-2 Certificates is Lehman by virtue of the registration in its name of those
B-2 Certificates pledged by GTRFC to Lehman under the Lehman Residual Facility
as well as its direct holdings. As of September 30, 2002, CFC had provided
guarantees with respect to B-2 Certificates with an aggregate face amount of
$2.3 billion, including approximately $1.5 billion of MH certificates and $800
million of non-MH certificates.

          Payment on these guarantees represents a major obligation of CFC.
Indeed, in the fourth quarter CFC recently suspended its payments on the
guarantees of B-2 Certificates.

     5.   Intercompany Obligations

          There are two primary intercompany notes between CFC and its direct
parent CIHC, as follows:



- ------------------------------- ---------------------------- ---------------------------- ----------------------------
           Borrower                       Lender                 Amount Outstanding                Maturity
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
                                                                                       
         CIHC                              CFC                     $310 million                    May 2005
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
- ------------------------------- ---------------------------- ---------------------------- ----------------------------

         CFC                               CIHC                    $273.2 million                  May 2005
- ------------------------------- ---------------------------- ---------------------------- ----------------------------


          There is approximately $1 million owing to CFC on account of net
interest accrued on the above intercompany notes. In addition, Conseco Services,
LLC, a non-debtor affiliate, provides services to the CNC subsidiaries and
allocates costs between companies for shared services. As of November 30, 2002,
CFC had an outstanding payable of approximately $14 million owing to Conseco
Services, LLC, and a $10 million amount owed to Mill Creek Bank, which is
secured by a lien on CFC Assets (which amount is included in Other Secured
Claims).

- -----------------
3    CIHC is a guarantor up to an aggregate of $125 million under the Lehman
     Warehouse Facility and the Lehman Residual Facility.


                                       18



     6.   Preferred Dividends

          CNC owns 100% of CFC's preferred stock in the form of 750 shares of 9%
Redeemable Cumulative Preferred Stock (the "Preferred Stock") with an aggregate
face amount of $750 million. CFC has not made a dividend payment since the
Preferred Stock was issued in September 2000. As of November 30, 2002, there was
approximately $148 million of accrued dividends owing to CNC under the Preferred
Stock.

     7.   Debtor-in-Possession Facilities

          Subsequent to the Initial Petition Date, the Finance Company Debtors
became parties to post-petition, debtor-in-possession financing facilities with
FPS DIP LLC ("FPS") and Lehman Brothers ("Lehman"). For a full discussion of
these facilities, please see Article III.A., "Debtor-in-Possession Financing
From FPS and Lehman."

C.   CIHC GUARANTEES OF FINANCE COMPANY DEBTORS' DEBT

     As mentioned above, CIHC is the guarantor of an aggregate principal amount
of $125 million in respect of CFC's residual and warehouse facilities with
Lehman Brothers, Inc. and certain of its affiliates ("Lehman"). CIHC is also the
guarantor of an aggregate principal amount of $125 million in respect of CFC's
swingline debt and cash management facility with U.S. Bank National Association
("U.S. Bank").

     CIHC's existing pre-petition guarantee in respect of CFC's swingline debt
and cash management facility with U.S. Bank was "rolled into" the Secured
Super-Priority Debtor-in-Possession Credit Agreement dated December 19, 2002,
(the "FPS DIP") between CFC, certain of its subsidiaries, CIHC, certain lenders
parties thereto and FPS DIP LLC. Accordingly, CIHC has an outstanding guarantee
for an amount of $60 million pursuant to the FPS DIP, which is prepetition
obligation of CIHC.

D.   EVENTS LEADING TO THE CHAPTER 11 CASES

     1.   Background to the Restructuring

          Our ultimate parent holding company, CNC, commenced operations in 1982
and grew rapidly through acquisitions, including the acquisition of Green Tree
Financial Corporation in 1998. The acquisition of Green Tree (renamed "Conseco
Finance Corp.") served as the platform for Conseco's entry into the consumer
finance businesses.

          In order to fund these acquisitions and grow its businesses, CNC
incurred substantial indebtedness through borrowings under bank credit
facilities and the issuance of securities in public capital markets. CIHC, our
intermediate holding company, also incurred significant indebtedness in the form
of guarantees. See Article II.C., "CIHC Guarantees of Finance Company Debtors'
Debt." Between 1998 and 2000, CNC incurred approximately $3.6 billion in new
debt and trust preferred obligations, primarily to fund the business of CFC
following its acquisition. In addition to increased indebtedness levels, we also
began to recognize impairment charges because the actual performance of CFC's
securitized loan portfolios did not meet the assumptions used to establish the
value of the retained interests (generally interest-only securities and
servicing rights) in securitization transactions accounted for as sales. We take
impairment charges to reflect reductions in the value of our retained interests
that we have recognized as losses in the statement of operations. We determine
the value of the retained interests by discounting the projected future cash
flows that we expect to receive over the life of the securitizations using our
current best estimates of prepayment, default, loss and interest rate
assumptions. The assumptions used to determine the estimated fair value are
subject to significant judgment and are determined based on internal evaluations
and consultations with outside advisors.

          During the past two years, both the Holding Company Reorganizing
Debtors and the Finance Company Debtors undertook efforts to reduce our parent
company debt. These efforts primarily focused on the sale of non-strategic
assets to meet principal and interest payment obligations. The Debtors also took
a number of other actions designed to reduce parent company debt and increase
the efficiency of our business operations. The actions

                                       19


with respect to our business included: (i) the sale, closing or runoff of
several business units (including asset-based lending, vendor leasing,
bankcards, transportation, park construction and floorplan lending); (ii)
monetizing certain on-balance sheet financial assets through sales or as
collateral for additional borrowings; (iii) adducing cost savings by
restructuring ongoing businesses, including, but not limited to, streamlining
credit origination operations in the manufactured housing and home equity
divisions; and (iv) substantially decreasing the origination of certain lines of
products in certain business segments, particularly in the manufactured housing
segment. Notwithstanding these initiatives, the Debtors' financial position
continued to deteriorate.

     2.   Announcement of Restructuring Plan; Credit Facility Events of Default

          As a result of these developments, on August 9, 2002, CNC announced
that it had engaged legal and Advisors to begin discussions with creditors in
order to effectuate a fundamental restructuring of the Debtors' capital
structure. It also announced that it did not make the August 2002 interest
payments on the 6.4% Original Notes, 6.4% Exchange Notes, 8.75% Original Notes
and 8.75% Exchange Notes. Since the August 9, 2002, announcement, the Debtors
have not made any interest or principal payments on any of their direct
corporate obligations, nor have they made any distributions on their Trust
Preferred Securities. The failure to make the interest payments on these notes
within the 30-day grace period constituted an event of default under the notes,
which gave the holders of the notes the right to accelerate the maturity of all
principal and past due interest. Moreover, the Debtors did not pay approximately
$224.9 million of principal (plus accrued interest) due on October 15, 2002,
under the 8.5% Original Notes. These defaults resulted in cross defaults of
approximately $4.0 billion in principal amount of debt obligations, including
approximately $481.3 million of obligations under the D&O Facilities and
approximately $1.9 billion of Subordinated Indentures (and the corresponding
Trust Preferred Securities) through cross-default provisions contained in the
respective governing instruments. If the holders of such indebtedness or
preferred securities had exercised their rights to accelerate the maturity of
all principal and interest due, the Debtors would have been unable to satisfy
these obligations.

          On September 9, 2002, CNC received temporary waivers of the covenant
violations with respect to the Senior Credit Facility and the D&O Facilities
from the relevant lenders. These waivers expired on October 17, 2002. On that
date, CNC obtained forbearance agreements from the relevant lenders pursuant to
which the lenders agreed to temporarily refrain from exercising default-related
remedies with respect to certain specified events of default under the Senior
Credit Facility and the guarantees of the D&O Facilities. These forbearance
agreements were scheduled to expire on November 27, 2002, but were extended on
that date to January 11, 2003, subject to various conditions. Upon filing of the
Chapter 11 Cases, the forbearance agreements terminated and were superseded by
the automatic stay provisions under section 362 of the Bankruptcy Code.

     3.   Prepetition Decline of Finance Company Debtors' Businesses; Strategic
          Alternatives Considered

          During the course of the recent economic slowdown, CFC-originated
loans were increasingly burdened by increased delinquencies, foreclosures and
losses, all of which resulted in our incurring increased costs in servicing
these loans and have materially and adversely affected our financial condition
and results of operations. These conditions, coupled with CNC's leveraged
condition and liquidity difficulties, severely impacted our operations, and
eliminated our access to the securitization markets, which were traditionally
our main source of funding. The loss of access to the securitization markets has
severely affected our ability to originate, purchase and sell loans. It has also
affected the value of the retained interests we hold in securitization
manufactured housing trusts, since we relied on the securitization markets to
finance the sale of repossessed manufactured housing units owned by those
trusts, which often helped to minimize the loss on defaulted loans (compared to
liquidating those assets through a manufactured housing wholesale channel).

          On October 22, 2002, CFC initiated a plan to sell or seek new
investors for the finance business and that the investment banking firms of
Lazard Freres & Co., LLC and Credit Suisse First Boston to pursue various
alternatives, including securing new investors and/or selling our three lines of
business: (i) manufactured housing; (ii) mortgage and home equity services; and
(iii) consumer finance (including a potential sale, joint venture or similar
transaction with respect to CFC's servicing platforms). For a discussion of the
sale process, see "Planned Sale of Substantially All of the CFC Assets."

                                       20



          As of the Petition Date, our only remaining liquidity sources were a
warehouse facility (the "Warehouse Facility") and a residual facility ("Residual
Facility") with Lehman and a bank credit facility with U.S. Bank (the "U.S. Bank
Facility," and together with the Warehouse Facility and Residual Facility, the
"CFC Facilities"). The direct borrower under (i) the Warehouse Facility is CFC's
non-debtor subsidiary Green Tree Finance Corp. - Five ("GTFC"), and (ii) the
Residual Facility is CFC's non-debtor subsidiary Green Tree Residual Finance
Corp. I ("GTRFC"). The Warehouse Facility and the Residual Facility are fully
guaranteed by CFC and, up to an aggregate of $125 million, by CIHC. CFC was the
direct borrower under the U.S. Bank Facility, which was also guaranteed by CIHC
up to an aggregate of $125 million.

          Prior to the Petition Date, CFC was in default under the CFC
Facilities as a result of (i) cross-defaults triggered by CNC's defaulting on
its debt obligations, (ii) cross-defaults among the U.S. Bank Facility, the
Warehouse Facility and the Residual Facility, (iii) failure to make payments
required by CFC's guarantees of payments on the B-2 Certificates, which were
issued to investors in certain finance receivable securitization transactions
(see the note to CNC's consolidated financial statements entitled "Guarantees"
as set forth in CNC's Annual Report on Form 10-K for the fiscal year ended
December 31, 2001, and CNC's Quarterly Report on Form 10-Q for the period ended
September 30, 2002, for further information); and (iv) breaches of several
financial covenants under the CFC Facilities. CFC entered into forbearance
agreements with Lehman with respect to the Warehouse Facility and Residual
Facility and with U.S. Bank with respect to U.S. Bank Facility, pursuant to
which Lehman and U.S. Bank agreed to temporarily refrain from exercising any
rights arising from events of default that occurred under each CFC Facility
prior to the Petition Date.

          The Warehouse Facility is a repurchase facility under which primarily
newly originated manufactured housing, home equity, home improvement and
recreational vehicle loans originated by CFC or affiliates of CFC and
transferred to GTFC are sold by GTFC to Lehman with an agreement to repurchase
those loans at a later date and at a higher price. The price differential
reflects the cost of financing. The Warehouse Facility provides funding to CFC
for new loan origination. The Warehouse Facility and the Residual Facility are
cross-collateralized.

          The Residual Facility is collateralized by retained interests in
securitizations. CFC is required to maintain collateral based on current
estimated fair values in accordance with the terms of such facility. Due to the
decrease in the estimated fair value of its retained interests, CFC's collateral
was $128.9 million deficient at September 30, 2002 (as calculated in accordance
with the relevant transaction documents, which provide that Lehman calculates
the value of CFC's collateral within its sole discretion). Pursuant to the
forbearance agreement entered into with Lehman on December 20, 2002, Lehman
agreed not to accelerate the repayment of the Residual Facility based on the
collateral deficiency through June 1, 2003. Under the terms of this forbearance
agreement, Lehman retains the cash flows from CFC's retained interests pledged
under this facility and applies those cash flows to the margin deficit. As
mentioned above, this forbearance agreement is subject to a number of conditions
that may cause it to terminate prior to June 1, 2003.

          The filing by CNC, CIHC and CFC of a Chapter 11 petition triggered
additional defaults under the CFC Facilities.

     4.   Recent Financial Results

          On November 19, 2002, CNC reported a net loss of $1,769.2 million for
the three months ended September 30, 2002. This loss was primarily the result
of: (i) impairment charges related to our interest-only securities and servicing
rights held by our finance subsidiary of $701.3 million; (ii) impairment charges
related to goodwill of $500.0 million; (iii) realized investment losses related
to our investment portfolio of $271.7 million; (iv) an increase to our reserves
with respect to long-term care insurance products for changes in estimates of
$110.0 million; and (v) a loss on the sale of Conseco Variable Insurance Company
of $139.9 million. As a result of this loss, CNC's shareholders' deficit was
$811.8 million at September 30, 2002.

          CNC will report its year end 2002 financial results in its Annual
Report on Form 10-K for the year ended December 31, 2002, which it expects to
file with the Securities and Exchange Commission on or about April 15, 2003.
This filing will be available at the SEC's website at www.sec.gov and at the
Company's website at www.conseco.com.

                                       21



     5.   The Prepetition Committees

          In the fall of 2002, CNC commenced discussions with a committee
representing the lenders under the Senior Credit Facility and the D&O Credit
Facilities with respect to the financial condition of the Company and the
proposed restructuring (the "Prepetition Bank Committee"). The members of the
Prepetition Bank Committee, as of the Petition Date, were Bank of America, N.A.,
JPMorgan Chase Bank and Angelo, Gordon & Co. Bank of America, as administrative
agent for the Senior Credit Facility and some of the D&O Credit Facilities,
retained Davis Polk & Wardwell as its legal advisor and Ernst & Young and
Greenhill & Co., LLC as its Advisors.

          In August 2002, CNC commenced discussions with certain holders of the
Original Notes and Exchange Notes with respect to the financial condition of the
Company and the proposed restructuring (the "Prepetition Noteholder Committee").
The members of the Prepetition Noteholder Committee, as of the Petition Date,
were Metropolitan West Asset Management LLC, First Pacific Advisors, Appaloosa
Management Company, Barclays Bank, PLC, Calvert Group, Ltd., HSBC Bank USA (as
indenture trustee) and Whippoorwill Associates, Inc. The Prepetition Noteholder
Committee retained Fried, Frank, Harris, Shriver & Jacobson as its legal advisor
and Houlihan Lokey Howard & Zukin LLP as its financial advisor.

          In October 2002, CNC commenced discussions with certain holders of the
Trust Preferred Securities with respect to the financial condition of the
Company and the proposed restructuring (the "Prepetition Trust Preferred
Securities Committee"). The members of the Prepetition Trust Preferred
Securities Committee, as of the Petition Date, were Oppenheimer Capital, United
Capital Markets, Marion Polk Real Estate and Smith Hayes Financial. The
Prepetition Trust Preferred Securities Committee retained Saul Ewing LLP as its
legal advisor and Raymond James as its financial advisor.

          Before the Petition Date, CNC met with and provided materials to the
Prepetition Trust Preferred Securities Committee, and entered into extensive
arms' length negotiations with the Prepetition Bank Committee and the
Prepetition Noteholder Committee regarding the terms of a consensual
restructuring. Shortly before the Petition Date, CNC reached a non-binding
agreement in principle with respect to the general terms of a restructuring for
the Holding Company Reorganizing Debtors with the Prepetition Bank Committee and
Prepetition Noteholder Committee.

E.   PLANNED SALE OF SUBSTANTIALLY ALL OF THE CFC ASSETS

     In October 2002, the Finance Company Debtors, with the aid of their
financial and legal advisors (the "Advisors"), began seeking a purchaser for
their assets in order to avoid a liquidation on unfavorable terms. After an
extensive marketing campaign, thirty-four (34) interested parties (the
"Interested Parties") signed confidentiality agreements to conduct preliminary
due diligence.

     As the process developed, however, Interested Parties began to drop out.
Eventually, the Finance Company Debtors considered the qualifications of the
remaining Interested Parties, and limited the field to four bidders.(4) In early
November, after yet another round of extensive due diligence, we established
bidding guidelines for the potential bidders and invited them to submit
proposals for all or part of the businesses. Thereafter, we delivered a draft
asset purchase agreement to the four potential bidders and asked them to submit
comments on such draft to CFC by November 29, 2002.

     During this period, the Advisors received a preliminary written proposal
from JC Flowers & Co. LLC and Fortress Investment Group LLC (collectively, the
"Potential Investors") expressing an interest in purchasing all of our
businesses, with the exception of that portion of the Consumer Finance business
relating to our private label credit card business. On November 22, 2002, CNC
and CFC received a term sheet from the Potential Investors specifying the terms
and conditions of a possible transaction, and on November 26, 2002, the Finance
Company Debtors received comments on the draft asset purchase agreement from the
Potential Investors.

- ----------------
4    The Finance Company Debtors based their decision on both the interest of
     the potential bidders and their financial wherewithal to consummate a
     transaction.



                                       22



     For nearly a month thereafter, the Finance Company Debtors and the
Potential Investors negotiated out the terms of the Asset Purchase Agreement.
Together with our Advisors, we evaluated the terms and benefits of the Potential
Investors' proposal, as well as the benefits of other alternatives. In our
reasoned business judgment, we concluded that the proposal from the Potential
Investors which formed the basis of the Asset Purchase Agreement with CFN
Investment Holdings LLC ("CFN"), a newly formed entity sponsored by the
Potential Investors and Cerberus Capital Management, L.P. (collectively, the
"Potential Purchasers") offered the most advantageous terms and greatest
economic benefit to the Finance Company Debtors. Accordingly, on December 19,
2002, the Finance Company Debtors and CFN executed the Asset Purchase Agreement
(subject to the Court's approval), pursuant to which CFN qualified as a
stalking-horse bidder and was afforded certain buyer protections.

     Notwithstanding the Asset Purchase Agreement, as part of our efforts to
seek alternative transactions that would provide the highest and best value to
us and our creditors, we elected to conduct an auction for the sale of our
businesses and assets. In contemplation thereof, on December 19, 2002, we filed
a motion with the Bankruptcy Court seeking approval of certain sale and bidding
procedures (the "Bidding Procedures"), which procedures were approved (as
modified) by an order of the Bankruptcy Court dated January 8, 2003 (the
"Bidding Procedures Order"). All parties-in-interest, including, inter alia,
creditors and prospective purchasers, were provided with (i) notice of the entry
of the Bidding Procedures Order and the contemplated sale of the CFC Assets to
CFN and (ii) the opportunity to participate in the contemplated auction or
object to the proposed sale. Our Advisors continued to actively target parties
they believed would have an interest in, and the financial wherewithal to
consummate, a purchase of our assets up through the time of the auction.

     In accordance with the Bidding Procedures, to be eligible to participate in
the auction, potential bidders were required to submit bids that, by their own
terms or aggregated with other bids, were for more than the purchase price
payable under the Asset Purchase Agreement, plus the amount of the break-up fee,
plus $5 million, plus the profit sharing rights relating to the Manufactured
Housing business. Prior to the auction, the Finance Company Debtors received
seven bids. CFN and Berkadia Equity Holdings, L.L.C. (`Berkadia") submitted
eligible bids for what purported to be for all of the CFC Assets. Five other
parties, including the Securitization Trustee, General Motors Acceptance
Corporation/Residential Funding Corporation, Charlesbank Capital Partners, LLC
("Charlesbank"), EMC Mortgage Corporation ("EMC") and GE also submitted bids for
varying portions of the CFC Assets. Ultimately, the Finance Company Debtors
aggregated the bids of Charlesbank, EMC and GE (the "Consortium") to create a
third eligible consortium bid (the "Consortium Bid"). The Finance Company
Debtors commenced the auction on February 28, 2003, and adjourned it to allow
for greater time to analyze seven competing bids, continuing it on March 4-5,
2003.

     The Finance Company Debtors analyzed each of the bids presented at the
auction and determined that CFN's bid of $970 million in cash, plus the
assumption of certain liabilities, represented the highest and best bid. The
terms of the sale provided the Finance Company Debtors the option to sell the
assets of Mill Creek Bank to GE for approximately $310 million in cash, plus
certain assumed liabilities, which option, if exercised, would provide CFN with
a credit of $270 million to its $970 million bid.

     The Consortium submitted the second highest bid at the auction for
approximately $972.5 million plus certain assumed liabilities, including the $30
million break-up fee to be paid to CFN pursuant to the terms of the Asset
Purchase Agreement. At a hearing on March 20, 2003, the Bankruptcy Court
subsequently approved CFC's motion to pay $2 million to each of Charlesbank and
EMC to compensate these parties for concluding definitive purchase agreements to
be effective in the event that CFC is not able to close its proposed sale to CFN
and GE.

     On March 6, 2003, CFC received an offer from Berkadia that purported to be
a bid in the recently concluded auction. Concurrently therewith, Berkadia filed
an objection to the sale that the Bankruptcy Court heard, and then summarily
dismissed, on March 7, 2003. After further negotiations during the March 7-14,
2003 period, CFN and GE significantly increased the amount of cash to be paid
for the CFC Assets. Ultimately, each of the major constituencies, including the
CFC Committee, the Ad Hoc Securitization Holders' Committee, U.S. Bank as
Trustee for the securitization trusts, and Fannie Mae agreed to support the sale
of the CFC Assets to CFN and GE.

     Accordingly, on March 14, 2003, CFC entered into an Amended and Restated
Asset Purchase Agreement with CFN (the "New CFN Agreement") and into an Asset
Purchase Agreement with GE (the "GE Agreement"). Upon execution of these
agreements, on March 14, 2003, the Bankruptcy Court entered an order approving
the

                                       23


terms of the sale of the CFC Assets free and clear of all liens pursuant to the
New CFN Agreement and the GE Agreement. The closings of the sales of the CFC
Assets under the New CFN Agreement and the GE Agreement, respectively, are
subject to various closing conditions, but are currently expected to occur in
May 2003. The total value to be received as part of these transactions is
expected to be approximately $1.3 billion, representing approximately $1.11
billion in cash and approximately $200 million in assumed liabilities, subject
to certain purchase price adjustments.

     One significant closing condition of the CFN Asset Purchase Agreement
requires that the Finance Company Debtors cause Green Tree Residual Finance
Corp. I and Green Tree Finance Corp. - Five, securitization entities that hold
approximately 80% of the value of the CFC entities, to file petitions under
chapter 11 at or before the closing of the CFN Sale Transaction. Similarly, a
closing condition of the GE Asset Purchase Agreement may require that the
Finance Company Debtors cause Mill Creek Servicing Corporation and Conseco
Finance Credit Card Corporation to file petitions under chapter 11 prior to the
closing of the GE Sale Transaction.

     The Finance Company Debtors believe that, considering all surrounding facts
and circumstances, the transactions with CFN and GE will maximize the value
obtainable from the CFC Assets for all relevant constituencies; however, there
can be no assurance that these transactions will be completed, or if completed,
that they will satisfy the Debtors' expectations. Assuming that the sale of the
CFC Assets is completed and CFC receives the proceeds from the sale of the CFC
Assets in the amount contemplated by the CFN and GE transactions, these proceeds
will be applied to satisfy CFC's obligations under its debtor-in-possession
credit agreements, administrative claims, priority claims and to its secured
creditors (including the 93/94 Notes Holders and Lehman). The remainder will be
allocated on a pro-rata basis to unsecured creditors of the Finance Company
Debtors.

F.   RESTRUCTURING OF THE MANUFACTURED HOUSING BUSINESS

     Just prior to the Petition Date, we were losing approximately $15 million
per month due to the inadequate MH Servicing Fee paid to CFC as servicer of the
MH Contracts held in the manufactured housing securitization trusts (the "MH
Securitization Trusts") pursuant to the Servicing Agreements between CFC and the
trustee of the MH Securitization Trusts. CFC is by far the largest servicer of
manufactured housing loan contracts in the United States, servicing
approximately 55% of the manufactured housing loan contract market. Pursuant to
the Servicing Agreements, CFC received a MH Servicing Fee of 50 basis points per
annum, which amount was at the bottom of the waterfall and was paid only from
any funds remaining after all payments owing on the debt securities issued by
the MH Securitization Trusts were paid. Various factors, including an increased
number of defaults caused by the recent economic downturn and the concomitant
increased number of defaults and the increased number of repossessed homes
injected into the market by competitor lenders exiting the market, rendered the
MH Servicing Fee grossly insufficient to cover CFC's costs of conducting the
servicing business. By the time we filed our chapter 11 petitions, it was clear
that neither CFC nor any successor servicer could sustain the MH Servicing
Business without a massive restructuring.

     Since before the chapter 11 cases commenced, CFC has worked diligently with
all relevant constituencies to restructure the MH Servicing Fee. On December 18,
2002, the Bankruptcy Court entered an interim order granting the joint motion of
CFC, Conseco Finance Servicing Corp. ("CFSC") and U.S. Bank, as trustee for
CFC's securitization trusts (the "Trustee"), providing, for 30 business days,
(i) for an increase of the MH Servicing Fee to 125 basis points per annum (the
"Revised Servicing Fee") of the principal amount outstanding of each
manufactured housing securitization trust where the Trustee acts as trustee;
(ii) that the MH Servicing Fee be paid as an expense prior to the distribution
of any amounts in respect of certificates issued by each such securitization
trust; and (iii) for a senior security interest in CFC's Manufactured Housing
servicing platform and a junior security interest in CFC's other assets in favor
of the Trustee for the benefit of itself and the corresponding
certificateholders (the "Adequate Protection Lien"), to secure (a) the continued
payment of certain of the Trustee's fees and expenses; (b) the amount, if any,
by which the Revised Servicing Fee exceeds the original servicing fee at the
contractual level of priority during the period of the interim order; and (c)
any losses to the securitization trusts relating to manufactured housing, home
equity and home improvement loans, credit card receivables and recreational
vehicle loans resulting from any misappropriation, misapplication or other
diversion of funds by the servicer.

     A hearing seeking final resolution of the matters covered by this joint
motion was held on January 29, 2003, and was subsequently continued several
times because the Trustee, the CFC Committee, and the Ad Hoc

                                       24


Securitization Holders' Committee were unable to consensually resolve the
servicing fee issues. In the interim, the parties did, however, agree to cap the
amount of the Adequate Protection Lien at $35 million. See Article II.B.3,
"Summary of Significant Motions - Motion to Increase CFC's Manufactured Housing
Securitization Servicing Fee."

     On February 19, 2003, and again on March 3, 2003, because the parties were
unable to consensually resolve the MH Servicing Fee issues, CFC filed a motion
to reject the Servicing Agreements and the Sale Agreements (the "PSA Rejection
Motion"). As part of the overall settlement of the sale of the CFC Assets, we
ultimately resolved the MH Servicing Fee issues with the Trustee, the CFC
Committee, and the Ad Hoc Securitization Holders' Committee, and the Bankruptcy
Court entered an agreed final order at the Sale Hearing on March 14, 2003.
Concurrently therewith, CFC withdrew the PSA Rejection Motion. The Adequate
Protection Lien will be waived when the CFN Sales Transaction closes.

                                      III.

                              THE CHAPTER 11 CASES

     On the Initial Petition Date, CFC and CFSC and the other Initial Debtors
filed voluntary petitions for relief under chapter 11 of the Bankruptcy Code.(5)
Subsequently, on the CFC Subsidiary Debtors' Petition Date, the CFC Subsidiary
Debtors filed voluntary petitions for relief under chapter 11 of the Bankruptcy
Code. All actions and proceedings against the Finance Company Debtors and all
acts to obtain property from them were stayed under section 362 of the
Bankruptcy Code. The Finance Company Debtors have continued to conduct their
businesses and manage their properties as debtors-in-possession pursuant to
sections 1107(a) and 1108 of the Bankruptcy Code.

     After consulting with our Advisors, we determined that a sale of
significantly all of our assets would provide the greatest recovery for the
creditors of our estates. Accordingly, we immediately sought to secure a
stalking-horse bid for our assets and to obtain debtor-in-possession financing
to enable us to maintain our businesses as going concerns pending a sale
thereof.

A.   DEBTOR-IN-POSSESSION FINANCING FROM FPS AND THE SPE

     We have been able to secure debtor-in-possession ("DIP") financing from (i)
U.S. Bank and FPS DIP LLC, an affiliate of Fortress Investment Group LLC
("Fortress"), J.C. Flowers & Co. LLC. ("Flowers") and Cerberus Capital
Management, L.P. ("Cerberus") (the "FPS DIP Facility") in an amount of up to
$125,000,000 and (ii) the SPE, in an amount of up to $25 million (the "Lehman
December 20 Agreements"). Orders approving both financing facilities were
granted by the Bankruptcy Court on January 14, 2003. We applied the proceeds of
the FPS DIP repayment in the U.S. Bank Facility.

     From time to time, CFC has failed to comply with certain covenants
regarding the maximum permissible variance of the budgets provided to the FPS
DIP lenders in connection with the FPS DIP Facility. In each instance, CFC has
obtained appropriate waivers. CFC was alleged to be in breach of the terms of
the FPS DIP Facility as a result of its failure to obtain entry of a final order
with the Securitization Trustee resolving the issues relating to servicing the
MH loan portfolio. This breach was waived through and including February 12,
2003, to allow the parties to continue to negotiate through that date. However,
as of February 12, 2003, the key affected parties had still not reached
resolution. In addition, the occurrence of events of default under the FPS DIP
may cause events of default under the Lehman December 20 Agreements.

     In light of the alleged breach of the FPS DIP, as well as the pending
auction for the CFC Assets, on March 4, 2003, the Finance Company Debtors filed
a motion with the Bankruptcy Court to obtain approval of the Secured
Super-Priority Debtor-in-Possession Credit Agreement with Goldman Sachs Credit
Partners L.P. ("Goldman Sachs") as administrative and loan agent and certain
lenders party thereto from time to time (the "GS DIP"), a form of which was
filed as an exhibit to the motion. The GS DIP called for Goldman Sachs to
provide for debtor-in-possession financing up to $845 million. The Finance
Company Debtors withdrew the GS DIP motion on March 20, 2003.

- ------------------
5    The other Initial Debtors are the Holding Company Debtors.

                                       25



     After entry of a sale order (described below) approving CFN and GE as the
successful purchasers of the CFC Assets, FPS, U.S. Bank and certain of the
Finance Company Debtors executed Amendment No. 5 to the Secured Super-Priority
Debtor-In-Possession Financing Facility dated December 19, 2002, as amended (the
"Amendment"). The Amendment provides for, among other things, a $30 million
increase in the amount of the revolving credit facility (from $60 million to $90
million) and an extension of the termination date of the FPS DIP Facility
through the termination of the Asset Purchase Agreement or the later of the
closings of the sales to CFN and GE or, upon approval of the Amendment by the
Bankruptcy Court, May 31, 2003. The Finance Company Debtors have filed a motion
for approval of the Amendment, which is scheduled to be heard by the Bankruptcy
Court on April 14, 2003.

B.   SUMMARY OF OTHER SIGNIFICANT MOTIONS

     The following summarizes significant motions that have been filed in the
Chapter 11 Cases. You may view each of these motions at www.bmccorp.net/Conseco.

     1.   Applications for Retention of Holding Company Reorganizing Debtors'
          and Finance Company Debtors' Professionals

          On January 14, 2003, the Bankruptcy Court approved the retention of
certain professionals to represent and assist the Holding Company Reorganizing
Debtors and the CFC Initial Debtors in connection with the Chapter 11 Cases(6).
These professionals were intimately involved with the negotiation and
development of the Plan. These professionals include, among others: (a) Kirkland
& Ellis, as counsel for the Holding Company Reorganizing Debtors and CFC Initial
Debtors, (b) Lazard Freres & Co., LLC as financial advisor for the Holding
Company Reorganizing Debtors and FINANCE COMPANY Debtors, (c) Bankruptcy
Management Corporation, as notice agent for the Holding Company Reorganizing
Debtors and FINANCE COMPANY Debtors and (d) Bridge Associates, LLC as crisis
managers for the FINANCE COMPANY Debtors. The Bankruptcy Court also approved a
request to retain other professionals to assist the Holding Company Reorganizing
Debtors and FINANCE COMPANY Debtors in other ongoing matters. These
professionals include, but are not limited to: (i) Baker Botts, LLC as special
SEC counsel to the Holding Company Reorganizing Debtors and FINANCE COMPANY
Debtors; (ii) PricewaterhouseCoopers LLP, as accountants to the Holding Company
Reorganizing Debtors and FINANCE COMPANY Debtors; (iii) Gregory P. Joseph Law
Offices, LLC as special litigation counsel to the Holding Company Reorganizing
Debtors and FINANCE COMPANY Debtors; (iv) Milliman USA Inc. to provide actuarial
and valuation services to the Holding Company Reorganizing Debtors, (v) Baker &
Daniels, as special corporate counsel to the Holding Company Reorganizing
Debtors and (vi) Dorsey & Whitney LLP, as special corporate and securitization
counsel to the FINANCE COMPANY Debtors.

     2.   Motion to Continue Using Existing Bank Accounts and Business Forms

          By separate orders, the Bankruptcy Court has authorized each of the
Holding Company Reorganizing Debtors' and FINANCE COMPANY Debtors' continued use
of their respective bank accounts. Additionally, the Holding Company
Reorganizing Debtors have historically received services from their subsidiary
Conseco Services pursuant to the Service Agreements. Pursuant to the Service
Agreements, Conseco Services provides the Holding Company Reorganizing Debtors
with administrative services needed for the conduct of the Holding Company
Reorganizing Debtors' businesses and incurs expenses and costs including
salaries, bonuses, payroll and other taxes, employee benefits, reimbursements,
consulting and professional fees, vendor payments and insurance premiums. The
Holding Company Reorganizing Debtors pay Conseco Services an amount equal to
such costs and expenses plus a 10% service fee. The Bankruptcy Court has
authorized the Holding Company Reorganizing Debtors to continue using Conseco
Services in this manner.

- --------------------
6    On March 20, 2003, the Bankruptcy Court approved K&E's retention as counsel
     for the CFC Subsidiary Debtors on the same terms as the January 14, 2003,
     K&E retention order.

                                       26



     3.   Motion to Increase CFC's Manufactured Housing Securitization Servicing
          Fee

          On December 18, 2002, the Finance Company Debtors filed this motion
jointly with U.S. Bank, as trustee ("Trustee") for certain manufactured housing
securitization trusts (the "MH Securitization Trusts"). The joint motion
requested the Bankruptcy Court to order a temporary increase, for a period of
thirty (30) business days, in the amount of the monthly servicing fee paid to
CFC or CFSC as servicers of the MH Securitization Trusts to 1/12 of 125 basis
points per annum and the priority of such payments (the "Revised Servicing Fee")
as an expense prior to the distribution of any amounts in respect of
certificates issued by the MH Securitization Trusts.

          Pursuant to the joint motion, CFC and CFSC have granted a senior
security interest in CFC's Manufactured Housing platform and a junior security
interest in CFC's other assets in favor of the Trustee for the benefit of itself
and the corresponding certificateholders, to secure (i) the continued payment of
certain of the Trustee's fees and expenses; (ii) the amount, if any, by which
the Revised Servicing Fee exceeds the original servicing fee at the contractual
level of priority during the period of the requested interim order; and (iii)
any losses to the securitization trusts relating to manufactured housing, home
equity and home improvement loans, credit card receivables and recreational
vehicle loans resulting from any misappropriation, misapplication or other
diversion of funds by the servicer.

          The Bankruptcy Court entered an interim order granting the requested
relief, with the final hearing scheduled for February 12, 2003. On February 12,
2003, the matter was continued to February 19, 2003 and subsequently to February
21, 2003. On February 21, the Bankruptcy Court entered an agreed order resetting
the final hearing date to March 5, 2003, at 2:00 p.m. C.S.T., and continuing the
first interim order until the final hearing, with the exception that the
security interest provided under the first interim order was capped at $35
million and the parties agreed that the security interest would no longer accrue
additional amounts.

          Additionally, the February 21, 2003, order resolved a number of other
related issues. Specifically:

          (a) In regard to the Official Committee of Unsecured Creditors of
     Conseco Finance Corp. and Conseco Finance Servicing Corp.'s Motion to
     Extend the Deadline to File Objections to the Proposed Sale and Reset the
     Hearing, the February 24, 2003, deadline was extended to February 28, 2003,
     at 5:00 p.m. C.S.T. for the following parties (as defined in the order):
     (i) The Securitization Trustees, (ii) U.S. Bank, as DIP lender; (iii)
     FannieMae; (iv) the Ad Hoc Securitization Holders' Committee; (v) Teachers
     Insurance and Annuity Association of America; and (vi) the Official
     Committee of Unsecured Creditors for CFC.

          (b) Fannie Mae made an unqualified and unconditional bid for the MH
     Servicing Business (the "Backstop Bid"). Subject to the Bankruptcy Court's
     approval, the Backstop Bid will be available for acceptance if the Debtors
     do not receive a higher and better bid. The Backstop Bid consists of an
     aggregate amount of $70 million, $35 million of which shall be paid to the
     Debtors in cash and $35 million of which shall be deemed paid to the
     Debtors through release of the Adequate Protection Lien.

          (c) CFC, along with various of its creditor constituencies,
     established as guidance a permanent revised Monthly Servicing Fee for the
     MH Servicing Business between 110 basis points per annum and 150 basis
     points per annum, inclusive of incentive based compensation.

          (d) CFC and the Securitization Trustees agreed to amend the previously
     entered cash management order to provide, in the event of a termination of
     the adequate protection lien granted therein, for replacement protection
     for the non-MH Trusts for any losses incurred by such trusts as a result of
     the misappropriation, misapplication or other diversion of funds rightfully
     owing to such Trusts, without prejudice to the rights of the banks set
     forth in the cash management order.

          (e) CFC withdrew its Emergency Motion to Reject the Pooling and
     Servicing Agreements, and agreed that the motion would not be re-filed
     before March 3, 2003 and if re-filed, the motion would not be heard on or
     before March 5, 2003.

                                       27



          Ultimately, as part of the overall settlement of the sale of the CFC
Assets, CFC resolved the MH Servicing Fee issues with the Trustee, the CFC
Committee, and the Ad Hoc Securitization Holders' Committee. The Bankruptcy
Court entered an agreed final order at the Sale Hearing on March 14, 2003.

     4.   Motion for Joint Administration of the Chapter 11 Cases

          The Bankruptcy Court has entered two orders granting the joint
administration of the Debtors' Chapter 11 Cases under section 105 of the
Bankruptcy Code and Fed.R.Bankr.P. 1015(b).

          (a) On December 18, 2002, the Bankruptcy Court entered an order
     granting the joint administration of the Initial Debtors' cases.

          (b) On February 3, 2003, the Bankruptcy Court entered an order
     granting joint administration of the CFC Subsidiary Debtors' Chapter 11
     cases with the Initial Debtors' Chapter 11 cases.

     5.   Motion for Case Management Procedures

          On December 18, 2002 (as subsequently amended on January 2, 2003, and
January 14, 2003), the Bankruptcy Court entered an order under sections 102(1)
and 105(a) of the Bankruptcy Code establishing certain notice, case management
and administrative procedures for the Debtors' Chapter 11 cases.

     6.   Motion to Pay Employee Wages and Associated Benefits

          The Holding Company Reorganizing Debtors and Finance Company Debtors
believe that their employees are a valuable asset and that any delay in paying
prepetition or postpetition compensation or benefits to their employees would
destroy their relationship with employees and irreparably harm employee morale
at a time when the dedication, confidence and cooperation of their employees is
most critical. The Bankruptcy Court granted the Finance Company Debtors' request
for authority to pay all compensation and benefits to their employees. The
authority granted allows the Holding Company Reorganizing Debtors and Finance
Company Debtors to compensate their employees for obligations payable as of the
Petition Date, as well as obligations that come due after the Petition Date.

     7.   CFC Credit Card Motion

          On December 18, 2002, the Bankruptcy Court entered an order pursuant
to sections 105 and 363 of the Bankruptcy Code (a) authorizing the Finance
Company Debtors to pay prepetition claims of certain critical private label
credit card merchants, (b) authorizing the Finance Company Debtors to pay
merchant incentive program obligations, (c) authorizing the sale of customer
accounts in the ordinary course of business; and (d) authorizing and directing
financial institutions to honor and process checks and transfers related to such
claims.

     8.   Utilities Procedures Motion

          On December 18, 2002, the Bankruptcy Court entered separate orders
pursuant to section 366 of the Bankruptcy Code (a) deeming the utilities of the
Finance Company Debtors adequately assured of future performance and (b) deeming
the utilities of the Reorganizing Debtors adequately assured of future
performance. With respect to the Finance Company Debtors, the Bankruptcy Court
established procedures for determining adequate assurances pursuant to section
366 of the Bankruptcy Code. The procedures required any utility company seeking
adequate assurance to make that request in writing addressed to the Finance
Company Debtors' counsel within thirty days after entry of the December 18,
2002, order. If the Finance Company Debtors believed the request was reasonable,
they were entitled to pay that amount without further order of the Court. If the
Finance Company Debtors disagreed with the request, however, they were to
promptly schedule a hearing to determine adequate assurance of payment to that
utility company. Nonetheless, the requesting utility company was deemed to have
adequate assurance of payment until the Bankruptcy Court entered a further order
in connection with the hearing or otherwise with respect to that utility
company's request.

                                       28



     9.   Motion to Pay Certain Essential Trade Vendors

          On December 18, 2002, the Bankruptcy Court entered an order pursuant
to sections 105 and 363 of the Bankruptcy Code (a) authorizing the Finance
Company Debtors to pay prepetition claims of critical vendors and service
providers, including those vendors providing service to the Finance Company
Debtors' non-debtor subsidiaries (the "Critical Vendors") and (b) authorizing
financial institutions to honor and process checks and transfers related to
critical vendor or service provider claims. The Finance Company Debtors are
authorized to pay prepetition claims to Critical Vendors, in their sole
discretion, in an amount not to exceed $18 million.

     10.  Motion to Perform Contractual Obligations with Certain Insurance
          Agencies

          On February 3, 2003, the Bankruptcy Court entered an order pursuant to
sections 105(a), 362, 363(b) and 553 of the Bankruptcy Code authorizing Conseco
Agency, Inc., Conseco Agency of Nevada, Inc., Conseco Agency of New York, Inc.,
Conseco Agency of Alabama, Inc., Conseco Agency of Kentucky, Inc. and Crum-Reed
General Agency, Inc. (collectively, the "Agency Debtors") to continue to (a)
perform their contractual obligations with certain insurance companies (the
"Agency Agreements"), including the collection and remittance of insurance
premiums; (b) remit any prepetition amounts owing under the Agency Agreements to
applicable insurance companies; and (c) remit insurance premium payments to
applicable insurance companies. By this order, the Bankruptcy Court also
authorized and directed financial institutions to honor and process checks and
transfers related to the foregoing transactions.

     11.  Motions for Authority to Continue the Key Employee Retention Program

          The Holding Company Reorganizing Debtors and Finance Company Debtors
believe that it is imperative to stabilize their workforces at this critical
juncture of the Chapter 11 Cases to ensure that the necessary complement of
employees required to proceed with the Debtors' respective reorganizations are
in place. On January 14, 2003, (with respect to the Finance Company Debtors) and
on January 29, 2003 (with respect to the Holding Company Reorganizing Debtors),
the Bankruptcy Court granted the request for authority to continue, and approved
the terms of, an enhanced key employee retention program. In addition, on or
about January 31, 2003, the Holding Company Reorganizing Debtors also filed a
motion to implement a key employee retention program for their senior management
(the "Senior Management KERP"). On February 21, 2003, the Bankruptcy Court
granted the Senior Management KERP requests authorizing the Holding Company
Reorganizing Debtors to implement a key employee retention program for certain
senior management that has two components: (i) an annual incentive bonus and
(ii) severance.

     12.  Motion for CFC to Continue Servicing Originating and Selling Customer
          Loans

          On December 18, 2002, the Bankruptcy Court entered an order under
sections 105(a) and 363(c) of the Bankruptcy Code (a) authorizing the Finance
Company Debtors to honor their obligations in connection with the (i) servicing
of existing loans, and (ii) the funding of approved customer loans; (b)
authorizing the Finance Company Debtors to sell and securitize loans in the
ordinary course of business and approving notice procedures thereto; and (c)
authorizing and directing banks to honor checks and wire transfers. Pursuant to
this order, the Finance Company Debtors, in their sole discretion, can choose to
honor any commitments with respect to PSA Loans or Pipeline Loans. The Finance
Company Debtors' must provide notice to interested parties of any proposed loan
sale and answer any objection to such sale at a hearing. Nothing within this
motion constitutes the assumption of any contract, the creation of any rights in
favor of any entity, or the authorization of the Holding Company Debtors to make
any of the authorized payments in the order, except to the extent later
authorized by the Bankruptcy Court.

     13.  Motion to Employ Ordinary Course Professionals

          On January 14, 2003, the Bankruptcy Court entered an order under
sections 105(a) and 327 of the Bankruptcy Code authorizing the Initial Debtors
to employ and compensate certain professionals utilized in the ordinary course
of the Debtors' business. Pursuant to this order, the Debtors are allowed to
retain all professionals

                                       29


listed in the order, with a maximum monthly compensation of $50,000 to each
professional. Any payments above $50,000 must be approved by the Bankruptcy
Court. This order was later extended to the CFC Subsidiary Debtors.

     14.  Motion to Limit Trading of Holding Company Equity

          On January 14, 2003, (as amended January 21, 2003) the Bankruptcy
Court entered an order under sections 105(a), 362(a)(3) and 541 of the
Bankruptcy Code (a) limiting certain transfers of, and trading in, equity
interests of Conseco, and (b) approving related notification procedures.
Pursuant to this order, any person or entity who directly or indirectly owns
more than 5% of the fair market value of the common stock of Conseco cannot
purchase or sell any Conseco equity securities (including options to acquire
stock) without filing a notice to the Bankruptcy Court. Upon the filing of this
notice, the Holding Company Debtors have fifteen (15) days to object or approve
the transaction. If the Holding Company Debtors do not respond within this time
period, the transaction can proceed solely under the proposed terms.

     15.  Motion for Procedures for Sale or Abandonment of De Minimis Assets

          On January 15, 2003, the Bankruptcy Court entered an order
establishing certain procedures for the sale or abandonment of de minimis assets
held by the Debtors in these chapter 11 cases (the "De Minimis Asset
Procedures"). Pursuant to the De Minimis Asset Procedures, the Debtors may sell
or abandon any de minimis asset with a value of less than $50,000 upon five (5)
day negative notice to all counterparties thereto.

     16.  Motion for an Extension of Time to Assume or Reject Nonresidential
          Real Property Leases

          The Bankruptcy Court has entered two, separate orders granting the
Debtors relief under section 365(d)(4) of the Bankruptcy Code.

          (a) On January 29, 2003, the Bankruptcy Court entered an order
     extending the time period within which the Initial Debtors are required to
     assume or reject unexpired leases of nonresidential real property. Pursuant
     to this order, the Initial Debtors' time to assume or reject nonresidential
     real property leases is extended through August 14, 2003.

          (b) On March 20, 2003, the Bankruptcy Court entered an order extending
     the time period within which the CFC Subsidiary Debtors are required to
     assume or reject unexpired leases of nonresidential real property. Pursuant
     to this order, the CFC Subsidiary Debtors' time to assume or reject
     nonresidential real property leases is extended through August 14, 2003.

     17.  CFC Subsidiary Debtors' Applicability Motion

          On February 3, 2003, the Bankruptcy Court entered an order pursuant to
     sections 101 and 105(a) of the Bankruptcy Code directing that certain
     orders entered or pending in the Chapter 11 Cases of the Initial Debtors
     apply to the CFC Subsidiary Debtors. The complete lists of the entered and
     pending orders that apply to the CFC Subsidiary Debtors pursuant to this
     applicability motion are attached to the order as Exhibits A and B.

     18.  Schedules and Statements

          On February 5, 2003, CFC and CFSC filed their respective schedules of
assets and liabilities and statements of financial affairs (the "Schedules")
with the Bankruptcy Court. Interested parties may review the Schedules at the
office of the Clerk of the Bankruptcy Court for the Northern District of
Illinois, Everett McKinley Dirksen Building, 219 S. Dearborn, Chicago, Illinois
60604, or may obtain them from the website www.bmccorp.net/conseco.

     19.  Motion to Enter Into Replacement Financing

          On February 26, 2003, the Bankruptcy Court entered an order
authorizing the Finance Company Debtors to pay Goldman Sachs Credit Partners LP
(collectively, "Goldman") an interim commitment fee and

                                       30


expense reimbursement to preserve their ability to enter into a replacement
debtor-in-possession facility. This replacement financing would secure
post-petition financing through the confirmation of the Plan, allows for pay-off
of the pre-existing debtor-in-possession financing and permits the Debtors to
convert the new financing into exit financing after confirmation of a plan of
reorganization. On March 4, 2003, the Finance Company Debtors filed a motion
seeking approval of the terms of the Goldman replacement financing, which motion
was set for a hearing on March 20, 2003. In light of the orders approving the
sale of the CFC Assets to CFN and GE, however, the Finance Company Debtors
withdrew this motion on March 20, 2003.

     20.  Motion to Extend Period to Remove Actions

          On March 20, 2003, the Bankruptcy Court entered an order extending the
period within which the Debtors may remove actions from state and non-bankruptcy
federal court pursuant to 28 U.S.C. ss. 1452 and Fed.R.Bankr.P. 9027 through and
including September 11, 2003.

     21.  Motion to Renew U.S. Bank Letter of Credit

          On March 20, 2003, the Bankruptcy Court entered an order under
authorizing CIHC, Incorporated ("CIHC") to enter into a pledge agreement and
$5,000,000 replacement letter of credit agreement with US Bank National
Association ("US Bank"). The original letter of credit, between Conseco, Inc.
("Conseco") and US Bank, and in favor of Bank One, NA ("Bank One"), would expire
on March 31, 2003. Pursuant to the replacement letter of credit, Bank One will
continue as the Debtors' automated clearing house processing bank.

     22.  Motion to Enforce the Automatic Stay, Demand the Turnover of Property,
          Settle Valid Lien Claims and Foreclose On, Sell, or Otherwise Transfer
          Property Free and Clear of All Liens

          On March 20, 2003, the Bankruptcy Court entered a final order, (i)
enforcing the automatic stay in respect of lien claims on property securing
loans owned, originated or serviced by the Finance Company Debtors, (ii)
authorizing the Finance Company Debtors to demand the turnover of certain
property of the estates, (iii) authorizing the Finance Company Debtors to settle
valid lien claims and to foreclose on, sell or otherwise transfer title to such
property free and clear of all liens.

     23.  Motion for Contract and Lease Rejection Procedures

          On March 20, 2003, the Bankruptcy Court entered an order establishing
certain procedures for the rejection of executory contracts and unexpired leases
in these chapter 11 cases (the "Rejection Procedures"). Pursuant to the
Rejection Procedures, the Debtors may reject any executory contract or unexpired
lease upon a fourteen-day negative notice to all counterparties thereto.

     24.  Motion to Establish Solicitation Procedures

          On April 1, 2003, the Debtors filed a motion to establish solicitation
procedures for the Finance Company Debtors Plan which will be heard on April
[__], 2003. By this Motion, the Debtors seek entry of an order (a) approving the
adequacy of this Disclosure Statement; (b) scheduling a confirmation hearing for
the Plan; (c) establishing a Plan Objection Deadline; (d) approving the form of
Ballots, the voting deadline and solicitation procedures; and (e) approving the
form and manner of notices.

C.   APPOINTMENT OF THE OFFICIAL COMMITTEES

     On January 3, 2003, the Office of the United States Trustee appointed three
official committees in the jointly administered Chapter 11 Cases (collectively,
the "Official Committees"): (i) Official Committee of the Holding Company
Reorganizing Debtors (the "Conseco Creditors Committee"); (ii) Official
Committee of the Finance Company Debtors (the "CFC Creditors Committee") and
(iii) Official Committee of the Trust Preferred Securities (the "TOPrS Creditors
Committee").

                                       31



     The members of the Conseco Creditors Committee are The Bank of New York,
Bank of America, N.A., Angelo, Gordon & Co., L.P., Appaloosa Mgmt., L.P., HSBC
Bank USA, Metropolitan West Asset Management LLC and First Pacific Advisors,
Inc. The Conseco Creditors Committee retained Fried, Frank, Harris, Shriver &
Jacobson and Mayer, Brown, Rowe & Maw as its legal advisors and Houlihan Lokey
Howard & Zukin LLP and Greenhill & Co, LLC as its Advisors.

     The members of the CFC Creditors Committee are U.S. Bank National
Association, Millenium Partners, L.P., Prudential Insurance Company,
Commonwealth Advisors, Inc., Deutsche Asset Management, Jefferson Pilot
Financial Insurance Company and Morgan Keegan. The CFC Creditors Committee
retained Becker & Poliakoff and Greenberg Traurig as its legal advisors and
Huron Consulting Group LLC as its Advisors. On March 20, 2003, the Bankruptcy
Court entered an order approving Becker & Poliakoff's motion to withdraw as
counsel to the CFC Creditors Committee.

     The members of the TOPrS Creditors Committee are Paul Floto, United Capital
Markets, Inc. and Oppenheimer Capital. The TOPrS Creditors Committee retained
Saul Ewing LLP and Jenner & Block as its legal advisors and Raymond James as its
Advisors. The TOPrS Creditors Committee also retained Fox-Pitt, Kelton Inc. as
its insurance company valuation expert and Watson Wyatt Insurance & Financial
Services, Inc. as its actuarial consultant.

     Since then the Official Committees were formed, the Holding Company
Reorganizing Debtors and Finance Company Debtors have consulted with them
concerning the administration of the Chapter 11 Cases. The Debtors have kept the
Official Committees informed about their operations and have sought their
concurrence to the extent that their respective constituencies would be affected
by actions and transactions taken outside of the ordinary course of their
businesses. The Official Committees have participated actively, together with
the Holding Company Reorganizing Debtors' and Finance Company Debtors'
management and professionals, in among other things, reviewing the their
business plan and operations.

D.   ASSUMPTION/REJECTION OF CONTRACTS AND LEASES

     Pursuant to section 365 of the Bankruptcy Code, the Finance Company Debtors
may either assume, assume and assign, or reject executory contracts and
unexpired leases of real and personal property, subject to the approval of the
Bankruptcy Court. As a condition to assumption, or assumption and assignment,
the Finance Company Debtors must cure all existing defaults under the contract
or lease. If the contract or lease is rejected, any resulting rejection damages
are treated as prepetition unsecured claims. Generally, and with certain
exceptions, postpetition obligations arising under a contract or lease must be
paid in full in the ordinary course of business. On March 20, 2003, the Court
entered an order, pursuant to sections 365 and 554 of the Bankruptcy Code
authorizing and approving an expedited procedure for the rejection of executory
contracts and unexpired leases of non-residential real property and abandonment
of property of the Debtors.

     On December 17, 2003, the Bankruptcy Court entered an order extending the
time for CFC and CFSC (together with the Holding Company Reorganizing Debtors)
to assume, assume and assign, or reject unexpired leases of non-residential real
property through and including August 14, 2003. Subsequently, after their
February 3, 2003, bankruptcy filing, the CFC Subsidiary Debtors filed a similar
motion to extend the time to assume, assume and assign, or reject unexpired
leases of non-residential real property through and including August 14, 2003,
which the Bankruptcy Court granted on March 20, 2003.

     The Finance Company Debtors, together with CFN and GE, are currently in the
process of identifying the executory contracts, unexpired personal leases and
unexpired non-residential real property leases that CFN and/or GE wish to
acquire as part of its respective purchase of the Finance Company Debtors'
assets. As this process continues, it is anticipated that the Finance Company
Debtors will continue to reject certain executory contracts, unexpired personal
leases and unexpired non-residential real property leases that are not sought by
CFN and/or GE and that hold no other prospect of bringing additional value to
the estate.

                                       32



E.   PENDING LITIGATION AND THE AUTOMATIC STAY

     The following are substantial litigation issues that are currently pending
by or against the Finance Company Debtors:

     1.   D&O Loans Litigation.

          Beginning in 1996, certain officers and directors of Conseco
personally borrowed money to purchase the common stock of Conseco under credit
facilities provided by Bank of America, N.A., JP Morgan Chase Bank and various
other lending institutions (the "D&O Facilities"). Conseco guaranteed the
personal loans of its officers and directors under the D&O Facilities. The
principal amount due and owing under the D&O Facilities currently exceeds $483
million. In addition to the principal amounts still owed to the lending banks,
the directors and officers also owe Conseco and/or its affiliates certain
amounts under the D&O Facilities for the amounts paid by Conseco and/or its
affiliates to the lending banks under the D&O Facilities. The Holding Company
Reorganizing Debtors' Plan proposes to pay the amounts due and owing under the
D&O Facilities directly to the lending banks. The Holding Company Reorganizing
Debtors' Plan also proposes to release certain of the directors and officers
from any responsibility to repay the amounts borrowed under the D&O Facilities.

     2.   Significant Prepetition Litigation

          (a) Bazzle v. Green Tree Financial Corporation, n/k/a Conseco Finance
Corp.

          Green Tree Financial Corporation, n/k/a Conseco Finance Corp., was
named as a defendant in three separate class action lawsuits brought in 1996 and
1997 in three different South Carolina state courts (the "Class Actions"). In
one case (the "Lackey Case"), the arbitrator awarded the plaintiff class
$14,598,742.00. In the second case (the "Bazzle Case"), the arbitrator awarded
the plaintiff class $14,598,742.00. Finally, in the third case, the Court of
Common Pleas of Richland County awarded the plaintiff class $1,078,768.00.

          CFC posted a supersedeas bond for each of its appeals in the Lackey
Case and the Bazzle Case (the "Bonds"). The Bonds were originated in amounts
sufficient to cover the judgment amount, interest on the judgment for 12 months,
and the cost of the appeal to the South Carolina Supreme Court. In the Lackey
Case, the bond amount was $14,600,000.00. The bond amount in the Bazzle Case was
originally $16,800,000.00 which was increased to a total bond amount of
$19,314,279.90.

          The arbitration awards in the Lackey Case and the Bazzle Case were
confirmed by the South Carolina Circuit Court. The Lackey Case and the Bazzle
Case were consolidated by the South Carolina Supreme Court (the "Bond Cases"),
and the South Carolina Supreme Court affirmed the arbitration awards on August
26, 2002. On October 23, 2002, CFC filed a Petition for Certiorari before the
U.S. Supreme Court. During the pendency of the appeal to the U.S. Supreme Court,
CFC was directed by circuit court order to tender periodic payments of interest
on the Bonds. However, the proceeds from the Bonds are not payable until the
final disposition of the Bond Cases by the U.S. Supreme Court.

          CFC's Petition for Certiorari was granted by the Supreme Court on
January 10, 2003. Prior to this decision, the Finance Company Debtors, including
CFC, filed the Chapter 11 Cases. On January 21, 2003, the Bankruptcy Court
granted CFC's emergency motion to lift the automatic stay pursuant to section
362(d) of the Bankruptcy Code thereby allowing the Bond Cases to be heard by the
U.S. Supreme Court. The Supreme Court will hear oral arguments in the Bond Cases
on April 22, 2003.

          (b) Casas Litigation

          Conseco Finance, Inc. was named as a defendant in a class action
lawsuit filed by David Casas, Troy Clark, Patrick Hogan, Linda Souder and
William Soule on June 21, 2000, in the United States District Court in the
District of Minnesota. The plaintiffs, who are or were employed by Conseco
Finance, Inc. as loan specialists, claim Conseco Finance, Inc. violated the
Federal Fair Labor Standards Act and the Minnesota Fair Labor Act by having the
plaintiffs routinely work in excess of forty (40) and forty-eight (48) hours
without compensation.

                                       33


Currently, as of January 6, 2003, this case is closed administratively, subject
to the automatic stay pursuant to section 362 of the Bankruptcy Code.

     3.   Adversary Proceedings Filed in the Finance Company Debtors' Chapter 11
          Cases

          Listed below are the major adversary proceedings filed in these
Chapter 11 Cases. There are certain other adversary proceedings with an impact
on the Holding Company Reorganizing Debtors' chapter 11 cases.

          (a) Peter W. Nauert v. CICH, Inc., 03-00452.

          Mr. Nauert, alleges that certain amounts of deferred income, which are
held in a so-called rabbi trust, are not property of the estate. On March 24,
2003, the Debtors answered Mr. Nauert's complaint. Discovery is ongoing in this
matter.

          (b) Conseco, Inc. v. Donald J. Trump, 03-00642.

          On January 15, 2002, Carmel Fifth, LLC ("Carmel"), an indirect, wholly
owned subsidiary of CNC, exercised its rights to require 767 Manager, LLC
("Manager"), an affiliate of Donald J. Trump, to elect within 60 days, either to
acquire Carmel's interests in 767 LLC for $499.4 million, or to sell its
interests in 767 LLC to Carmel for $15.6 million (the "Buy/Sell Right"). Such
rights were exercised pursuant to the Limited Liability Company Agreement of 767
LLC. 767 LLC is a Delaware limited liability company that indirectly owns the
General Motors Building, a 50-story office building in New York, New York (the
"GM Building"). 767 LLC is owned by Carmel and Manager. On February 6, 2002, Mr.
Trump commenced a civil action against CNC, Carmel and 767 LLC in New York State
Supreme Court, entitled Donald J. Trump v. Conseco, Inc., et al. (the "State
Court Action"). Plaintiff claims that CNC and Carmel breached an agreement,
dated July 3, 2001, to sell Carmel's interests in 767 LLC to plaintiff for $295
million on or before September 15, 2001 (the "July 3rd Agreement").
Specifically, plaintiff claims that CNC and Carmel improperly refused to accept
a reasonable guaranty of plaintiff's payment obligations, refused to complete
the sale of Carmel's interest before the September 15, 2001 deadline, repudiated
an oral promise to extend the September 15 deadline indefinitely and repudiated
the July 3rd Agreement by exercising Carmel's Buy/Sell Right. Plaintiff asserts
claims for breach of contract, breach of the implied covenant of good faith and
fair dealing, promissory estoppel, unjust enrichment and breach of fiduciary
duty. Plaintiff is seeking compensatory and punitive damages of approximately $1
billion and declaratory and injunctive relief blocking Carmel's Buy/Sell Right.
On March 25, 2002, Carmel filed a Demand for Arbitration and Petition and
Statement of Claim with the American Arbitration Association ("AAA") to have the
issues relating to the Buy/Sell Right resolved by arbitration (the
"Arbitration"). Manager and Mr. Trump requested the New York State Supreme Court
to stay that arbitration, but the Court denied Manager's and Trump's request on
May 2, 2002, allowing the arbitration to proceed. Mr. Trump and Manager appealed
that decision to the New York Appellate Division. In addition, CNC and Carmel
filed a Motion to Dismiss Mr. Trump's lawsuit on March 25, 2002. By Stipulation
and Order, dated June 14, 2002, the State Court Action was stayed, pending
resolution of the Arbitration. CNC plans to vigorously pursue its options to
compel prompt resolution of this dispute. CNC believes that Mr. Trump's lawsuit
is without merit and intends to vigorously pursue its own rights to acquire the
GM Building. The ultimate outcome cannot be predicted with certainty. On
February 21, 2003, the Trump entities filed a proof of claim asserting a general
unsecured claim of $1 billion against CNC. On March 3, 2003, CNC and Carmel
Fifth initiated an adversary proceeding against the Trump entities. CNC and
Carmel Fifth's adversary complaint seeks declaratory and injunctive relief
against the Trump entities. CNC and Carmel Fifth's adversary action requests
that the court find (1) that the July 3rd Agreement terminated due to Trump's
failure to comply with the terms of that agreement, and (2) that the Trump
entities are required to convey their interest in 767 LLC to Carmel Fifth
pursuant to Carmel Fifth's rights under the LLC Agreement. On March 5, 2003, CNC
and Carmel Fifth, in the adversary proceeding, filed an emergency motion for
preliminary injunction and an emergency motion for expedited hearing. Through
those motions, CNC and Carmel Fifth seek: an accelerated schedule for resolution
of their claims against the Trump entities, removal of Mr. Trump from management
of the GM Building, and an order restraining Mr. Trump and the Trump entities
from interference with CNC and Carmel Fifth's efforts to market the GM Building.

                                       34


          (c) Anchorage Police v. Conseco, Inc. et al., 03-00655.

          The Anchorage adversary was filed by the lead plaintiffs in a
shareholder class action that was filed in the Southern District of Indiana, and
named Conseco, Inc., Conseco Finance Corp. and various non-Debtors as
defendants. The shareholder action was settled for $120 million. $95 million of
that amount has already been paid to the shareholder plaintiffs. Under the terms
of the settlement agreement, the remaining $25 million is to be paid either by
Conseco or by Lloyd's of London (depending on which party prevails in an
insurance coverage dispute). In the adversary action, Anchorage Police seek a
declaration from the Bankruptcy Court that all 22 Debtors have a joint & several
obligation to pay the remaining $25 million in full to the shareholder
plaintiffs. Anchorage Police alleges that the $25 million in question is not
property of any of the Debtors' estates. Rather, it is being held "in trust" for
the benefit of the shareholder class. Debtors intend to move for dismissal of
this action as against all Debtors.

          (d) Matrix Asset Management Corporation v. Conseco Finance Servicing
Corp.:

          Matrix Asset Management Corporation ("Matrix") contractually agreed
(the "Agreements") to maintain and arrange for the sale of properties owned or
serviced by Conseco Finance Servicing Corp ("CSFC"). Under these Agreements,
Matrix would typically receive payment after the sale of the property for their
services and any reimbursement for expenses incurred. After filing for chapter
11 protection, CSFC started deducting any prepetition expenses from Matrix's
reimbursement pursuant to section 362 of the Bankruptcy Code. On March 6, 2003,
Matrix filed a complaint to recover these prepetition expenses. CSFC filed an
answer on March 31, 2003, and the hearing is set for April 14, 2003.

F.   CLAIMS PROCESS AND CLAIMS BAR DATES

     In chapter 11, claims against a debtor are established either as a result
of being listed in a debtor's schedules of liabilities (the "Schedules") or
through assertion by the creditor in a timely filed proof of claim (each, a
"Claim"). Claims asserted by creditors are either allowed or disallowed. If
allowed, the Claim will be recognized and treated pursuant to the plan of
reorganization. If disallowed, the creditor will have no right to obtain any
recovery on or otherwise enforce the Claim against the debtor.

     1.   Filing of Schedules of Liabilities

          On February 5, 2003, CFC and CFSC filed their Schedules with the
Bankruptcy Court. On February 19, 2003, the CFC Subsidiary Debtors filed their
Schedules with the Bankruptcy Court. The Finance Company Debtors have all
reserved the right to amend their Schedules during the remaining pendency of the
Chapter 11 Cases.

     2.   Bar Date for Nongovernmental Entities to File Proofs of Claim

          On December 17, 2003, the Reorganizing Debtors' filed their motion to
set a bar date for CNC, CIHC, Inc., CIHTC, Inc. and Partners' Health. The
Bankruptcy Court set a claims bar date of February 21, 2003, for all
nongovernmental creditor entities holding Claims against the Reorganizing
Debtors. If creditors and governmental entities do not file any claims by the
bar date, they will be barred from asserting any claims against the Reorganizing
Debtors or receiving distributions under the Plan.

          On February 20, 2003, pursuant to the Debtors' emergency motion, the
Bankruptcy Court entered an order extending the claims bar date for certain
listed D&O Credit Facility participants until the 60th day after the effective
date of any confirmed plan of reorganization for the Reorganizing Debtors.

          Also on February 20, 2003, pursuant to a joint motion of the CFC
Committee and Finance Company Debtors, the Bankruptcy Court entered an order
extending the claims bar date for the Finance Company Debtors to file claims
against the Reorganizing Debtors to April 1, 2003.

                                       35


          On March 31, 2003, the Finance Company Debtors filed a motion (the
"CFC Bar Date Motion") for an order (i) approving May 15, 2003, as the bar date
for all nongovernmental Creditors to file proofs of claim, (ii) authorizing the
Finance Company Debtors to provide notice of the bar date by direct mail and
publication, and (iii) approving a bar date notice to be sent to all creditors.
The Finance Company Debtors anticipate that the Bar Date Notice will be mailed
to approximately 89,500 parties-in-interest on or about April 15, 2003,
providing approximately 30-days notice of the proposed bar date. In addition,
the Finance Company Debtors anticipate publishing the Bar Date Notice in The
Wall Street Journal (National Edition), USA Today (National Edition), The
Chicago Tribune, Indianapolis Star, Minneapolis Star Tribune and St. Paul
Pioneer Press.

     3.   Bar Date for Governmental Units To File Proofs of Claim

          The bar date for governmental units to file proofs of claim against
the Reorganizing Debtors is June 17, 2003. Similarly, the CFC Bar Date Motion
requests that the Bankruptcy Court establish the following bar dates for all
governmental units to file proofs of claim (i) June 17, 2003, for all claims
against CFC and CFSC and (ii) August 30, 2003, for all claims against the CFC
Subsidiary Debtors.

          The CFN and GE Asset Purchase Agreements contemplate that Mill Creek
Servicing Corporation, Conseco Finance Credit Card Funding Corp., Green Tree
Residual Finance Corp. I, and Green Tree Finance Corp. - 5, presently non-debtor
CFC subsidiaries, may file petitions under chapter 11 of the Bankruptcy Court to
facilitate the Sale Transactions. To the extent that any of these entities file
such petitions, the governmental bar date shall be set at 180 days after the
petition date.

     4.   Claims Objection Process

          The Finance Company Debtors anticipate that, when the various bar
dates expire, we will begin evaluating the proofs of claim to determine whether
to file objections seeking to disallow asserted Claims. The Finance Company
Debtors anticipate that they will also reconcile the Claims listed in our
Schedules with the Claims asserted in proofs of claim and will eliminate
duplicative or erroneous Claims to ensure that the Bankruptcy Court allows only
valid Claims. If we object to a proof of claim, the Bankruptcy Court will
determine whether to allow any such Claim. To the extent that we are successful
in our claims objections, the total amount of our liabilities to be treated
under the Plan will decrease. If we do not object to a proof of claim, the Claim
will be deemed allowed and will be treated pursuant to the Plan. As appropriate,
the Finance Company Debtors may seek to negotiate and settle proofs of claim
disputes as an alternative to filing objections thereto.

G.   EXCLUSIVE PLAN PROPOSAL AND ACCEPTANCE RIGHTS

     Section 1121(b) of the Bankruptcy Code provides a debtor with an initial
period of 120 days after the commencement of a chapter 11 case during which it
has the exclusive right to file a plan or reorganization and an initial period
of 180 days to obtain acceptances to any such plan (the "Exclusive Periods"). In
addition, pursuant to section 1121(d) of the Bankruptcy Code, the Bankruptcy
Court may, upon a showing of cause, extend or increase a debtor's Exclusive
Periods.

     The Exclusive Periods to file a plan of reorganization (the "Exclusive
Filing Period") for the Initial Debtors expires on April 16, 2003, and the
Exclusive Period for the Initial Debtors to obtain acceptances to such plan (the
"Exclusive Solicitation Period") expires on June 14, 2003. The Exclusive Filing
Period for the CFC Subsidiary Debtors expires on June 3, 2003, and the Exclusive
Solicitation Period for the CFC Subsidiary Debtors expires on August 2, 2003.


                                       36


                                      IV.

                      SUMMARY OF THE PLAN OF REORGANIZATION

A.   OVERVIEW OF CHAPTER 11

     Chapter 11 is the principal business reorganization chapter of the
Bankruptcy Code. It authorizes a debtor to reorganize its business for the
benefit of itself, its creditors and its interest holders. Another chapter 11
goal is to promote equality of treatment for similarly situated creditors and
similarly situated interest holders with respect to the distribution of a
debtor's assets.

     The commencement of a chapter 11 case creates an estate that comprises all
of a debtor's legal and equitable interests as of the filing date. The
Bankruptcy Code provides that the debtor may continue to operate its business
and remain in possession of its property as a "debtor-in-possession."

     The principal objective of a chapter 11 case is to consummate a plan of
reorganization. The chapter 11 plan of reorganization sets forth the means for
satisfying claims against, and interests in, a debtor. Confirmation of a plan of
reorganization by the Bankruptcy Court makes the plan binding upon the debtor,
any issuer of securities under the plan, any person or entity acquiring property
under the plan and any creditor of or equity holder in the debtor, whether or
not such creditor or equity holder (a) is impaired under or has accepted the
plan or (b) receives or retains any property under the plan. Subject to certain
limited exceptions and other than as provided in the plan itself or the
confirmation order, the confirmation order discharges the debtor from any debt
that arose prior to the date of confirmation of the plan and substitutes
therefore the obligations specified under the confirmed plan.

     A chapter 11 plan may specify that the legal, contractual and equitable
right of the holders of claims or interests in classes are to remain unaltered
by the reorganization effectuated to be by the plan. Such classes are referred
to as "unimpaired" and, because of such favorable treatment, are deemed to
accept the plan. Accordingly, it is not necessary to solicit votes from the
holders of claims or equity interests in such classes. A chapter 11 plan also
may specify that certain classes will not receive any distribution of property
or retain any claim against a debtor. Such classes are deemed not to accept the
plan and, therefore, need not be solicited to vote to accept or reject the plan.
Any classes that are receiving a distribution of property under the plan but are
not "unimpaired" will be solicited to vote to accept or reject the plan.

     Section 1123 of the Bankruptcy Code provides that a plan of reorganization
shall classify the claims of a debtor's creditors and equity interest holders.
In compliance therewith, the Plan divides Claims and Equity Interests into
various Classes and sets forth the treatment for each Class. The Debtors also
are required, as discussed above, under section 1122 of the Bankruptcy Code, to
classify Claims and Equity Interests into Classes that contain Claims and Equity
Interests that are substantially similar to the other Claims and Equity
Interests in such Classes. The Debtors believe that the Plan has classified all
Claims and Equity Interests in compliance with the provisions of section 1122 of
the Bankruptcy Code, but it is possible that a Holder of a Claim or Equity
Interest may challenge the classification of Claims and Equity Interests and
that the Bankruptcy Court may find that a different classification is required
for the Plan to be confirmed. In such event, the Debtors intend, to the extent
permitted by the Bankruptcy Court and the Plan, to make such reasonable
modifications of the classifications under the Plan to permit confirmation and
to use the Plan acceptances received in this solicitation for the purpose of
obtaining the approval of the reconstituted Class or Classes of which the
accepting Holder is ultimately deemed to be a member. Any such reclassification
could adversely affect the Class in which such Holder was initially a member, or
any other Class under the Plan, by changing the composition of such Class and
the vote required of that Class for approval of the Plan.

     The Debtors (and each of their respective Affiliates, agents, directors,
officers, employees, advisors and attorneys), the Unofficial Noteholders'
Committee, the Unofficial Lenders' Committee, and the Official Committees, and
each of the members of such committees (and each of their respective Affiliates,
agents, directors, officers, employees, advisors, and attorneys) have, and upon
confirmation of the Plan will be deemed to have, participated in good faith and
in compliance with the applicable provisions of the Bankruptcy Code with regard
to the distributions of the securities under the Plan, and therefore are not,
and on account of such distributions will not

                                       37


be, liable at any time for the violation of any applicable law, rule, or
regulation governing the solicitation of acceptances or rejections of the Plan
or such distributions made pursuant to the Plan.

THE REMAINDER OF THIS SECTION SUMMARIZES THE STRUCTURE AND MEANS FOR
IMPLEMENTING THE PLAN AND HOW THE PLAN CLASSIFIES AND TREATS CLAIMS AND EQUITY
INTERESTS, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE PLAN (AS WELL AS
THE EXHIBITS THERETO AND DEFINITIONS THEREIN).

THE STATEMENTS CONTAINED IN THIS DISCLOSURE STATEMENT INCLUDE SUMMARIES OF THE
PROVISIONS CONTAINED IN THE PLAN AND IN THE DOCUMENTS REFERRED TO THEREIN. THE
STATEMENTS CONTAINED IN THIS DISCLOSURE STATEMENT DO NOT PURPORT TO BE PRECISE
OR COMPLETE STATEMENTS OF ALL THE TERMS AND PROVISIONS OF THE PLAN OR DOCUMENTS
REFERRED THEREIN, AND REFERENCE IS MADE TO THE PLAN AND TO SUCH DOCUMENTS FOR
THE FULL AND COMPLETE STATEMENT OF SUCH TERMS AND PROVISIONS OF THE PLAN OR
DOCUMENTS REFERRED TO THEREIN, AND REFERENCE IS MADE TO THE PLAN AND TO SUCH
DOCUMENTS FOR THE FULL AND COMPLETE STATEMENTS OF SUCH TERMS AND PROVISIONS.

THE PLAN ITSELF AND THE DOCUMENTS THEREIN CONTROL THE ACTUAL TREATMENT OF CLAIMS
AGAINST, AND EQUITY INTERESTS IN, THE FINANCE COMPANY DEBTORS UNDER THE PLAN AND
WILL, UPON THE OCCURRENCE OF THE EFFECTIVE DATE, BE BINDING UPON ALL HOLDERS OF
CLAIMS AGAINST AND EQUITY INTERESTS IN THE FINANCE COMPANY DEBTORS, THE FINANCE
COMPANY DEBTORS' ESTATES, THE LIQUIDATED DEBTORS, ALL PARTIES RECEIVING PROPERTY
UNDER THE PLAN, AND OTHER PARTIES IN INTEREST. IN THE EVENT OF ANY CONFLICT
BETWEEN THIS DISCLOSURE STATEMENT, ON THE ONE HAND, AND THE PLAN OR ANY OTHER
OPERATIVE DOCUMENT, ON THE OTHER HAND, THE TERMS OF THE PLAN AND/OR SUCH OTHER
OPERATIVE DOCUMENT SHALL CONTROL.

THE DISCUSSION OF THE PLAN SET FORTH BELOW IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO THE MORE DETAILED PROVISIONS SET FORTH IN THE PLAN AND ITS
EXHIBITS, THE TERMS OF WHICH ARE CONTROLLING. HOLDERS OF CLAIMS OR INTERESTS AND
OTHER INTERESTED PARTIES ARE URGED TO READ THE PLAN AND THE EXHIBITS THERETO IN
THEIR ENTIRETY SO THAT THEY MAY MAKE AN INFORMED JUDGMENT CONCERNING THE PLAN.

B.   GENERALLY

     1.   Liquidating Plan of Reorganization

          The Plan is a liquidating chapter 11 plan of reorganization that
provides for the orderly liquidation of all of the Finance Company Debtors and
the New Filing Entities assets, the determination of all Claims and the
distribution of the proceeds of the assets to creditors. Pursuant to the Plan,
the Finance Company Debtors on their own behalf and on behalf of holders of
Allowed Claims shall execute the Post-Consummation Estate Agreement and take all
other steps necessary to establish the Post-Consummation Estate pursuant to the
Post-Consummation Estate Agreement (as discussed below). On the Effective Date,
and in accordance with and pursuant to the terms of the Plan, the Finance
Company Debtors shall transfer to the Post-Consummation Estate all of their
right, title and interest in all of the Post-Consummation Estate Assets
(including unless otherwise provided for in the Plan, the purchase price paid by
the respective purchasers under the Purchase Agreements). In connection with the
transfer of these assets, including rights and causes of action (including
Bankruptcy Causes of Action), any attorney-client privilege, work-product
privilege, or other privilege or immunity attaching to any documents or
communications whether written or oral) transferred to the Post-Consummation
Estate shall vest in the Post-Consummation Estate and its representatives, and
the Debtors and the Post-Consummation Estate are authorized to take all
necessary actions to effectuate the transfer of such privileges.

                                       38


     2.   The Post-Consummation Estate

          The Post-Consummation Estate shall be established for the primary
purpose of liquidating its assets, in accordance with Tres. Reg. ss.
301.7701-4(d), with no objective to continue or engage in the conduct of a trade
or business, except to the extent reasonably necessary to, and consistent with,
the liquidating purpose of the Post-Consummation Estate. The Post-Consummation
Estate shall not be deemed a successor-in-interest of the Finance Company
Debtors or the Reorganizing Debtors for any purpose other than as specifically
set forth herein or in the Post Confirmation Estate Agreement. The
Post-Consummation Estate is intended to qualify as a "grantor trust" for federal
income tax purposes with the Beneficiaries treated as grantors and owners of the
trust.

     3.   Substantive Consolidation

          As set forth in Article II.A of the Plan, on the Effective Date, the
Finance Company Debtors' Estates and the New Filing Entities' Estates shall be
substantively consolidated pursuant to sections 105(a) and 1123(a)(5)(C) of the
Bankruptcy Code. As a result of the substantive consolidation, on the Effective
Date, all property and Litigation Claims of the Finance Company Debtors' Estates
and the New Filing Entities' Estates and all Claims against the Finance Company
Debtors, the New Filing Entities, or their respective Estates shall be deemed to
be pooled for purposes of allowance, treatment and distributions under the Plan.

          (a) Other Effects of Substantive Consolidation

          As set forth in Article II of the Plan, as a result of substantive
consolidation, a Holder of Claims against one or more of the Finance Company
Debtors, the New Filing Entities or their respective Estates arising from or
relating to the same underlying debt that would otherwise constitute Allowed
Claims against two or more of the Finance Company Debtors and/or the New Filing
Entities, including Claims based on joint and several liability, contribution,
indemnity, subrogation, reimbursement, surety, guaranty, co-maker and similar
concepts, shall have only one Allowed Claim on account of such Claims. In
addition, all Claims between and among the Finance Company Debtors, the New
Filing Entities and their respective Estates are eliminated as a result of
substantive consolidation under the Plan.

          (b) Procedure for Asserting Claims Against and Interests in the
Confirmation Filing Entities

          To implement the substantive consolidation of the each of the Finance
Company Debtors together with the New Filing Entities, at or before the mailing
of this Disclosure Statement to the holders of Claims and Interests and other
parties in interest, the Debtors will be mailing a separate notice informing the
creditors of the New Filing Entities of (1) the proposed substantive
consolidation of the Finance Company Debtors' Estates and the estates of the New
Filing Entities under the Plan, and (2) the requirement under the Plan that the
Bankruptcy Court issue a separate order at or before the hearing on the
Disclosure Statement ordering that any and all Claims against the New Filing
Entities must be filed with the Bankruptcy Court and delivered to the attorneys
for the Chapter 11 Trustee on or before a date set by the Bankruptcy Court that
is no later than the last day and time set by the Bankruptcy Court for the
filing and delivery of objections to the confirmation of the Plan, or such
Claims shall be forever barred from participating in any distributions from the
Finance Company Debtors' Estates, the New Filing Entities' Estates, any
consolidated bankruptcy estate of the Finance Company Debtors and/or the New
Filing Entities, the Post-Consummation Estate, the trustee thereof or any of
their current and future officers, directors, employees, professionals, agents
and representatives.

          (c) Legal Analysis of Substantive Consolidation

          Substantive consolidation is an equitable doctrine that permits the
Bankruptcy Court to merge the assets and liabilities of affiliated entities so
that the combined assets and liabilities are treated as though held by one
entity. Generally speaking, the power of the Bankruptcy Court to order
substantive consolidation is found in section 105(a) of the Bankruptcy Code,
which provides in pertinent part that the "court may issue any order, process,
or judgment that is necessary or appropriate to carry out the provisions of" the
Bankruptcy Code. There are no express criteria in the Bankruptcy Code or the
Federal Rules of Bankruptcy Procedure for substantive consolidation, but over
the years courts have articulated the legal basis for substantive consolidation.
See In re Standard Brands Paint

                                       39


Co., 154 B.R. 563 (Bankr. C.D. Cal. 1993) (motion for substantive consolidation
of five chapter 11 bankruptcy estates granted); In re Bonham, 229 F.3d 750 (9th
Cir. 2000); Meyer v. Hammes, 187 B.R. 281, 284 (S.D. Ind. 1995); Matter of
Steury, 94 B.R. 553, 554 (Bankr. N.D. Ind. 1988); Eastgroup Properties v.
Southern Motel Association, Ltd., 935 F.2d 245, 248 (11th Cir. (Fla.) 1991)
(citing Union Savings Bank v. Augie/Restivo Baking Co. (In re Augie/Restivo
Baking Co.), 860 F.2d 515, 518 & n. 1 (2d Cir. 1988); Drabkin v. Midland-Ross
Corp. (In re Auto-train Corp.), 810 F.2d 270, 276 (D.C. Cir. 1987)). As an
equitable doctrine, the doctrine of substantive consolidation is flexible and
the Bankruptcy Court has the power to modify substantive consolidation to meet
the specific needs of each particular case. In re Parkway Calabasas, Ltd., 89
B.R. 832, 837 (Bankr. C.D. Cal. 1988). Courts routinely order complete
substantive consolidation in chapter 11 cases, particularly in cases such as the
Chapter 11 Cases, where the Finance Company Debtors are liquidating and
transferring all Retained Assets to the Post-Consummation Estate.

          In determining whether to substantively consolidate debtors' estates,
a court must weigh "the economic prejudice of continued debtor separateness
versus the economic prejudice of consolidation." Matter of Steury, 94 B.R. at
554 (quoting In re Snider Bros., Inc., 18 B.R. 230, 238 (Bankr. D. Mass. 1982)).
As part of its deliberative process, the court should consider (i) whether there
is a need to substantively consolidate and (ii) whether the benefits of
consolidation outweigh whatever harm it might create. Matter of Steury, 94 B.R.
at 554. Ultimately then, the court must be persuaded that "the creditors will
suffer greater prejudice in the absence of consolidation than the debtors (and
any objecting creditors) will suffer from its imposition." Id., at 554-55
(quoting Holywell Corp. v. Bank of New York, 59 B.R. 340, 347 (D.S.D. Fla.
1986)).

          (d) The Finance Company Debtors and the Confirmation Filing Entities
     Meet the Criteria for Substantive Consolidation

          The substantial interrelationship between and among the Finance
Company Debtors together with their planned liquidation and concomitant transfer
of the Residual Assets to a single Post-Consummation Estate virtually dictates
substantively consolidating the Finance Company Debtors. For example:

          o    Joint Corporate Structure

               o    CFC functions as a parent holding company for its
                    twenty-three debtor affiliates and some of its non-debtor
                    affiliates and subsidiaries;

               o    CFC officers and directors are also officers and directors
                    of CFC's subsidiaries and the officers and directors of the
                    CFC Subsidiaries are also officers and directors of CFC;

               o    CFC provides various payroll, financial, health, and other
                    benefit programs to its non-debtor affiliates and
                    subsidiaries.

          o    Joint Business Operations

               o    CFC is a holding company and the parent company to the other
                    Finance Company Debtors. The Finance Company Debtors
                    originate loans primarily through Conseco Finance Servicing
                    Corp. ("CFSC"), which is the main operating subsidiary, and
                    through its other non-debtor subsidiaries that hold lending
                    licenses in various states. Rice Park Properties
                    Corporation, a Minnesota corporation, owns the Finance
                    Company Debtors' office headquarters in St. Paul, Minnesota.

               o    In the ordinary course of business, the Finance Company
                    Debtors use a centralized cash management system for
                    operations conducted between themselves, their affiliates,
                    and third parties, including lenders. The Finance Company
                    Debtors employ an integrated accounts payable system for
                    which CFC acts as a central processor of invoices and
                    accounts payable on behalf of its

                                       40

                    subsidiaries. Such systems are typically employed by
                    corporations of the Finance Company Debtors' size for
                    efficiency purposes. Specifically, CFC processes invoices on
                    account of subsidiaries and either charges against the
                    applicable subsidiary's account directly or logs such
                    invoice as an intercompany obligation, which is netted on a
                    quarterly basis or in the case of the Finance Company
                    Debtors' banking subsidiaries, on a daily basis.

C.   CONDITIONS PRECEDENT TO PLAN CONFIRMATION AND CONSUMMATION

     The Finance Company Debtors have proposed the Plan, the terms of which are
described in detail below, but such proposal is conditioned upon the occurrence
or non-occurrence of certain events and conditions. Specifically, there are
certain conditions precedent to the Debtors' seeking confirmation of the Plan,
and there are additional conditions precedent to the Debtors ultimately
consummating the Plan. These conditions, and the circumstances under which such
conditions may be waived, are discussed immediately below.

     1.   Conditions Precedent to Confirmation

          The following are conditions precedent to confirmation of the Plan
that must be (i) satisfied or (ii) waived in accordance with Article X.C. of the
Plan.

               (a) The entry of the Confirmation Order and the Substantive
          Consolidation Orders as Final Orders in form and substance
          satisfactory to the Finance Company Debtors.

               (b) The Finance Company Debtors shall have submitted the
          Post-Consummation Estate Budget.

               (c) The Plan Supplement and all of the schedules, documents, and
          exhibits contained therein shall have been filed in form and substance
          reasonably acceptable to the Finance Company Debtors.

               (d) The Plan Administrator shall be identified, in the sole
          discretion of the Debtors.

     2.   Conditions Precedent to Effective Date of the Plan

          The following are conditions precedent to Consummation of this Plan
that must be (i) satisfied or (ii) waived in accordance with Article X.C below:

          (a) The Sale Transactions shall have closed.

          (b) All other actions and documents necessary to implement the Plan
     shall have been effected or executed, including the Post-Consummation
     Estate Agreement.

          (c) The Post-Consummation Estate shall have sufficient cash to permit
     payment of all Claims pursuant to section 1129(a)(9) of the Bankruptcy
     Code.

          (d) The Post-Consummation Estate shall have sufficient Cash to permit
     payment of all expenses under the Post-Consummation Estate budget.

          (e) The Post-Consummation Estate Budget shall have been approved by
     the Bankruptcy Court.

          (f) The Professional Fee Escrow, the Employee Benefit Escrow Account,
     the Lehman Escrow Account, 93/94 Note Claim Escrow Account and the Consent
     Agreement Reserve Account shall be funded as required under the Plan.

                                       41


          (g) The Holding Company Debtors' plan of reorganization shall have
     been declared effective.

     3.   Waiver of Conditions Precedent

          The Debtors, in their sole discretion, may waive any of the conditions
set forth in Article X.A or X.B above. If the Confirmation Order is vacated,
this Plan shall be null and void in all respects and nothing contained in this
Plan or the Disclosure Statement shall: (1) constitute a waiver or release of
any Claims by or against, or any Equity Interests in, the Debtors; (2) prejudice
in any manner the rights of the Finance Company Debtors; or (3) constitute an
admission, acknowledgment, offer or undertaking by the Finance Company Debtors
in any respect.

     4.   Effect of Non-Occurrence of Consummation

          If the Confirmation Order is vacated, this Plan shall be null and void
in all respects and nothing contained in this Plan or the Disclosure Statement
shall: (1) constitute a waiver or release of any Claims by or against, or any
Equity Interests in, the Finance Company Debtors; (2) prejudice in any manner
the rights of the Finance Company Debtors; or (3) constitute an admission,
acknowledgment, offer or undertaking by the Finance Company Debtors in any
respect.

D.   SEVERABILITY OF PLAN PROVISIONS

     The provisions of the Plan shall not be severable unless such severance is
agreed to by the Finance Company Debtors or, if after the Effective Date, by the
Plan Administration, on behalf of the Post Confirmation Estates, and such
severance would constitute a permissible modification of the Plan pursuant to
section 1127 of the Bankruptcy Code.

E.   CLASSIFICATION AND TREATMENT OF CLAIMS AND EQUITY INTERESTS

     1.   Summary of Unclassified Claims against all Finance Company Debtors

          (a)  DIP Facility Claims

          Pursuant to the Final DIP Order, the CFN Sale Order and the GE Sale
Order, the DIP Facility Claims will be paid in full in Cash out of the Sale
Proceeds on the earlier of the CFN Closing Date or the GE Closing Date. To the
extent any DIP Facility Claim has not been fully paid prior to the Effective
Date, subject to the provisions of sections 328, 330(a) and 331 of the
Bankruptcy Code, each Holder of an Allowed DIP Facility Claim will be paid the
full unpaid amount of such Allowed DIP Facility Claim in Cash on the Effective
Date or as soon thereafter as is practicable.

          (b) Administrative Claims

          Subject to the provisions of sections 328, 330(a) and 331 of the
Bankruptcy Code, each Holder of an Allowed Administrative Claim will be paid the
full unpaid amount of such Allowed Administrative Claim in Cash (i) on the
Effective Date or as soon thereafter as is practicable, (ii) if such
Administrative Claim is Allowed after the Effective Date, on the date such
Administrative Claim is Allowed, or as soon thereafter as is practicable, or
(iii) upon such other terms as may be agreed upon by such Holder and the
respective Reorganized Debtor or otherwise upon an order of the Bankruptcy
Court; provided that Allowed Administrative Claims representing obligations
incurred in the ordinary course of business or otherwise assumed by the Debtors
pursuant to the Plan will be assumed on the Effective Date and paid or performed
by the respective Reorganized Debtor when due in accordance with the terms and
conditions of the particular agreements governing such obligations. The Finance
Company Debtors are not obliged to pay Administrative Claims against any Holding
Company Debtors or Post-Consummation Estate.

                                       42

          (c) Priority Tax Claims

          On the Effective Date or as soon as practicable thereafter, each
Holder of an Allowed Priority Tax Claim due and payable on or prior to the
Effective Date shall be paid, at the option of the respective Debtor, (d) Cash
in an amount equal to the amount of such Allowed Priority Tax Claim, or (e) Cash
over a six-year period from the date of assessment as provided in section
1129(a)(9)(C) of the Bankruptcy Code, with interest payable at a rate of 4% per
annum or such other rate as may be required by the Bankruptcy Code. The amount
of any Priority Tax Claim that is not an Allowed Claim or that is not otherwise
due and payable on or prior to the Effective Date, and the rights of the Holder
of such Claim, if any, to payment in respect thereof shall (x) be determined in
the manner in which the amount of such Claim and the rights of the Holder of
such Claim would have been resolved or adjudicated if the Chapter 11 Cases had
not been commenced, (y) survive the Effective Date and Consummation of the Plan
as if the Chapter 11 Cases had not been commenced, and (z) not be discharged
pursuant to section 1141 of the Bankruptcy Code. The Finance Company Debtors are
not obliged to pay Priority Tax Claims Allowed solely against any Holding
Company Debtors or Post-Consummation Estate.

     2.   Classification and Treatment of Classified Claims

          (a)  Class 1--Other Priority Claims

               (i)  Classification: Class 1 comprises the Other Priority Claims,
                    which are Claims against the Finance Company Debtors.

               (ii) Treatment: The legal, equitable and contractual rights of
                    the Holders of Allowed Class 1 Claims are unaltered by the
                    Plan. Unless otherwise agreed to by the Holders of the
                    Allowed Other Priority Claim and the Finance Company
                    Debtors, each Holder of an Allowed Class 1 Claim shall
                    receive, in full and final satisfaction of such Allowed
                    Class 1 Claim, one of the following treatments, in the sole
                    discretion of the Finance Company Debtors:

                    (1)  Payment of each Allowed Class 1 Claim in full in Cash
                         on the Effective Date or as soon thereafter as is
                         practicable; provided that, Class 1 Claims representing
                         obligations incurred in the ordinary course of business
                         will be paid in full in Cash when such Class 1 Claims
                         become due and owing in the ordinary course of
                         business; or

                    (2)  such Claim will be treated in any other manner so that
                         such Claim shall otherwise be rendered Unimpaired
                         pursuant to section 1124 of the Bankruptcy Code.

               (iii)Voting: Class 1 is Unimpaired and the Holders of Class 1
                    Claims are conclusively deemed to have accepted the Plan
                    pursuant to section 1126(f) of the Bankruptcy Code.
                    Therefore, the Holders of Claims in Class 1 are not entitled
                    to vote to accept or reject the Plan.

          (b)  Class 2--Other Secured Claims

               (i)  Classification: Class 2 comprises the Other Secured Claims.

               (ii) Treatment: The Plan will not alter any of the legal,
                    equitable and contractual rights of the Holders of Class 2
                    Claims. Unless otherwise agreed to by the Holder of the
                    Allowed Class 2 Claim and the Finance Company Debtors, each
                    Holder of an Allowed Class 2 Claim shall receive, in full
                    and final satisfaction of such Allowed Class 2 Claim, one of
                    the following treatments, in the sole discretion of the
                    Finance Company Debtors:

                                       43


                    (1)  the payment of such Holders' Allowed Class 2 Claim in
                         full in Cash on the Effective Date;

                    (2)  the payment to Holders of the sale or disposition
                         proceeds of the collateral securing each such Allowed
                         Class 2 Claim to the extent of the value of the
                         Holder's interest in such property;

                    (3)  the surrender to each Holder of all collateral securing
                         each such Allowed Class 2 Claim without representation
                         or warranty by or further recourse against the relevant
                         Finance Company Debtor; provided that, such surrender
                         must render each such Allowed Class 2 Claim Unimpaired
                         pursuant to section 1124 of the Bankruptcy Code; or

                    (4)  treatment in any other manner so as to render the
                         Allowed Class 2 Claim otherwise Unimpaired pursuant to
                         section 1124 of the Bankruptcy Code.

               (iii)Voting: Class 2 is Unimpaired and the Holders of Class 2
                    Claims are conclusively deemed to have accepted the Plan
                    pursuant to section 1126(f) of the Bankruptcy Code.
                    Therefore, the Holders of Claims in Class 2 are not entitled
                    to vote to accept or reject the Plan.

          (c)  Class 3--Lehman Secured Claims

               (i)  Classification: Class 3 comprises the Lehman Secured Claims.

               (ii) Treatment: Holders of Allowed Class 3 Claims shall receive,
                    in full and final satisfaction of their respective Allowed
                    Class 3 Claims, the payment of Cash equal to the amount of
                    each such Allowed Class 3 Claim, payable on the Effective
                    Date or as soon thereafter as is practicable.

               (iii)Voting: Class 3 is Impaired and the Holders of Class 3
                    Claims are entitled to vote to accept or reject the Plan.

          (d)  Class 4--93/94 Note Claims

               (i)  Classification: Class 4 consists of the 93/94 Note Claims
                    against the Finance Company Debtors.

               (ii) Treatment: Holders of Allowed 93/94 Note Claims against the
                    Finance Company Debtors shall receive, in full and final
                    satisfaction of their Claims against the Finance Company
                    Debtors and the Holding Company Debtors, the payment of Cash
                    equal to the amount of each such Allowed Class 4 Claim,
                    payable on the Effective Date or as soon thereafter as is
                    practicable.

               (iii)Voting: Class 4 is Impaired Holders of Allowed Class 4
                    Claims are entitled to vote to accept or reject the Plan.

          (e)  Class 5--General Unsecured Claims

               (i)  Classification: Class 5 consists of the General Unsecured
                    Claims against the Finance Company Debtors.

                                       44



               (ii) Treatment: Holders of Allowed Class 5 Claims shall receive,
                    in full and final satisfaction of their Allowed Class 5
                    Claims, their respective Pro Rata shares of the Residual
                    Cash Balance.

               (iii)Voting: Class 5 is Impaired and the Holders of Class 5
                    Claims are entitled to vote to accept or reject the Plan.

          (f)  Class 6--Equity Interests

               (i)  Classification: Class 6 comprises the Equity Interests in
                    the Finance Company Debtors.

               (ii) Treatment: On the Effective Date, Class 6 Equity Interests
                    will be cancelled and the Holders thereof will not receive
                    any distribution under the Plan pursuant to such Interests.

               (iii)Voting: Class 6 is Impaired. Class 6 Equity Interest
                    Holders are nonetheless not entitled to vote to accept or
                    reject the Plan because they will not receive any
                    distributions under the Plan. CIHC, directly or indirectly,
                    owns all of the Class 6 Equity Interests and is deemed to
                    reject the Plan.

F.   ACCEPTANCE AND REJECTION OF THE PLAN

     1.   Voting Classes

          Subject to Articles V.C and V.D of the Plan, Claim and Equity Interest
Holders in each Impaired Class of Claims and Equity Interests are entitled to
vote as a class to accept or reject the Plan. Each Holder of an Allowed Claim in
Classes 3, 4 and 5 shall be entitled to vote to accept or reject the Plan.

     2.   Acceptance by Impaired Classes

          An Impaired Class of Claims shall be deemed to have accepted the Plan
if (a) the Holders (other than any Holder designated under section 1126(e) of
the Bankruptcy Code) of at least two-thirds in amount of the Allowed Claims
actually voting in such Class have voted to accept the Plan and (b) the Holders
(other than any Holder designated under section 1126(e) of the Bankruptcy Code)
of more than one-half in number of the Allowed Claims actually voting in such
Class have voted to accept the Plan. An Impaired Class of Equity Interests shall
have accepted the Plan if Holders (other than any Holder designated under
Section 1126(e) of the Bankruptcy Code) that hold at least two-thirds in amount
of the Allowed Equity Interests actually voting in such Class have voted to
accept the Plan.

     3.   Presumed Acceptance of the Plan

          Classes 1 and 2 are Unimpaired under the Plan, and, therefore, are
presumed to have accepted the Plan pursuant to section 1126(f) of the Bankruptcy
Code.

     4.   Presumed Rejection of the Plan

          Class 6 is deemed to reject the Plan.

     5.   Non-Consensual Confirmation

          To the extent that any Impaired Class rejects the Plan or is deemed to
have rejected the Plan, the Debtors will request confirmation of the Plan as it
may be modified from time to time, under section 1129(b) of the Bankruptcy Code.
The Debtors reserve the right to alter, amend, modify, revoke or withdraw the
Plan or any

                                       45


document in the Plan Supplement, including to amend or modify it to satisfy the
requirements of section 1129(b) of the Bankruptcy Code, if necessary.

G.   PLAN IMPLEMENTATION

     1.   Sale of Assets

          On or prior to the Effective Date, the Finance Company Debtors shall
consummate the Sale Transactions pursuant to the terms of the Purchase
Agreements. On the Effective Date, the Residual Assets shall be transferred to
the Post-Consummation Estate as part of the Post-Consummation Estate Assets.

     2.   Establishment of the Post-Consummation Estate

          On the Effective Date, the Finance Company Debtors, on their own
behalf and on behalf of holders of Allowed Claims shall execute the
Post-Consummation Estate Agreement and shall take all other steps necessary to
establish the Post-Consummation Estate pursuant to the Post-Consummation Estate
Agreement. On the Effective Date, and in accordance with and pursuant to the
terms of the Plan, the Finance Company Debtors shall transfer to the
Post-Consummation Estate all of their right, title, and interest in all of the
Residual Assets (including, unless otherwise provided for in the Plan, the
purchase price paid by the respective purchasers under the Purchase Agreements).
In connection with the transfer of these assets, including rights and causes of
action (including Bankruptcy Causes of Action), any attorney-client privilege,
work-product privilege, or other privilege or immunity attaching to any
documents or communications (whether written or oral) transferred to the
Post-Consummation Estate shall vest in the Post-Consummation Estate and its
representatives, and the Debtors and the Post-Consummation Estate are authorized
to take all necessary actions to effectuate the transfer of such privileges.

     3.   Funding Expenses of the Post-Consummation Estate

          The Finance Company Debtors shall be obligated to provide any funding
with respect to the Post-Consummation Estate after they transfer the
Post-Consummation Estate Assets to the Post-Consummation Estate. As more fully
described in the Post-Consummation Estate Agreement, any Cash in the
Post-Consummation Estate shall be applied in accordance with the terms of the
Post-Consummation Estate Budget, first, to the fees, costs, expenses (each of
the foregoing in an amount not to exceed amounts approved pursuant to the
Post-Consummation Estate Budget) and liabilities of the Plan Administrator,
second, to satisfy any other administrative and wind down expenses of the
Post-Consummation Estate (each in an amount not to exceed amounts approved
pursuant to the Post-Consummation Estate Budget), and third, to the
distributions provided for pursuant to the Plan.

     4.   Corporate Action

          Upon the entry of the Confirmation Order by the Bankruptcy Court, all
matters provided under the Plan involving the corporate structure of the Debtors
shall be deemed authorized and approved without any requirement of further
action by the Finance Company Debtors, the Finance Company Debtors' shareholders
or the Debtors' boards of directors. To the extent such action has not been
completed subsequent to the entry of the Substantive Consolidation Order, the
Finance Company Debtors (and their boards of directors) shall dissolve or
otherwise terminate their existence following the Effective Date and are
authorized to dissolve or terminate the existence of wholly-owned non-Debtor
subsidiaries following the Effective Date as well as any remaining health,
welfare or benefit plans. As provided in the Plan, the entry of the Substantive
Consolidation Order does not adversely affect the rights, claims, liens,
mortgages or security interests of Holders of Secured Claims in their respective
Collateral.

     5.   Appointment of Plan Administrator

          On the Effective Date, compliance with the provisions of the Plan
shall become the general responsibility of the Plan Administrator and the Plan
Administrator shall be appointed in accordance with the Post-Consummation Estate
Agreement. CFC, in its sole and absolute discretion, shall appoint the Plan
Administrator.

                                       46



     6.   Cancellation of Notes, Instruments, Debentures and Equity Securities

          On the Effective Date, except to the extent provided otherwise in the
Plan, all notes, instruments, certificates and other documents evidencing Claims
and all Equity Interests in any of the Finance Company Debtors shall be canceled
and deemed terminated.

     7.   Creation of Creation of Professional Escrow Account

          On the earlier to occur of (i) the GE Closing Date, (ii) the CFN
Closing Date, or (iii) the Effective Date, the Finance Company Debtors or the
Plan Administrator, as the case may be, shall establish the Professional Escrow
Account and reserve the amounts necessary to ensure the payment of all Accrued
Professional Compensation.

     8.   Creation of Employee Benefit Escrow Account

          On the earlier to occur of (i) the GE Closing Date, (ii) the CFN
Closing Date, or (iii) the Effective Date, and to the extent funds are available
after all Administrative Claims are reserved or accrued for under the Plan, the
Post-Consummation Estate shall establish the Employee Benefit Escrow Account and
reserve the amounts necessary to ensure the payment of the Shared Employee
Benefit Liabilities. To the extent there are sufficient available funds, in no
event shall the amount so reserved on the Effective Date be less than the amount
necessary to fund the existing or potential future obligations of any Finance
Company Debtor with respect to any Shared Employee Benefit Liabilities which
have accrued or may in the future accrue with respect to Finance Company Debtor
Employees.

     9.   Creation of Lehman Escrow Account

          On the CFN Closing Date, pursuant to the CFN Sale Order, the Finance
Company Debtors or the Plan Administrator, as the case may be, shall establish
the Lehman Escrow Account and reserve the amounts necessary for the payment of
the Allowed Lehman Secured Claims under the Plan.

     10.  Creation of 93/94 Note Claim Escrow Account

          On the GE Closing Date, pursuant to the GE Sale Order, the Finance
Company Debtors or the Plan Administrator, as the case may be, shall establish
the 93/94 Note Claim Escrow Account and reserve the amounts necessary for the
payment of the Allowed 93/94 Note Claims under the Plan.

     11.  Creation of Consent Agreement Reserve Account

          On the CFN Closing Date, CFC shall fund the Consent Agreement Reserve
Account.

     12.  Retiree Benefits

          The Finance Company Debtors shall timely pay any retiree benefits as
defined in Section 1114(a) of the Bankruptcy Code to the extent that such
retiree benefits are payable by the Finance Company Debtors. Such retiree
benefits include those that arise from the plans, funds or programs described in
the Plan Supplement.

H.   EXECUTORY CONTRACTS

     1.   Assumption and Rejection of Executory Contracts and Unexpired Leases

          Any executory contracts or unexpired leases that have not expired by
their own terms on or prior to the Effective Date, which the Finance Company
Debtors have not assumed and assigned or rejected with the approval of the
Bankruptcy Court (whether as part of the Sale Transactions or otherwise), or
that are not the subject of a motion to assume the same pending as of the
Effective Date, shall be deemed rejected by the Debtors-in-

                                       47


Possession on the Effective Date and the entry of the Confirmation Order by the
Bankruptcy Court shall constitute approval of such rejections pursuant to
sections 365(a) and 1123 of the Bankruptcy Code.

     2.   Rejection Claims; Cure of Defaults

          If the rejection of an executory contract or unexpired lease results
in damages to the other party or parties to such contract or lease, any Claim
for such damages, if not heretofore evidenced by a Proof of Claim that has been
Filed, shall be forever barred and shall not be enforceable against the Finance
Company Debtors, the Post-Consummation Estate, or their properties, successors
or assigns, unless a Proof of Claim is Filed and served upon counsel for the
Debtors on or before thirty (30) days after the later to occur of (i) the
Effective Date; and (ii) the date of entry of an order by the Bankruptcy Court
authorizing rejection of a particular executory contract or unexpired lease.

          The Finance Company Debtors believe that no cure payments pursuant to
section 365(b)(1) of the Bankruptcy Code need to be made on any of the executory
contracts and unexpired leases that they are assuming under the Plan because the
Finance Company Debtors are current on all of their obligations with respect to
such contracts and leases and all prepetition obligations will have been
satisfied under the Plan. If, however, a counterparty to any such executory
contract or unexpired lease believes that cure payments are due pursuant to
section 365(b)(1) of the Bankruptcy Code, or that there is a dispute regarding
the ability of the Buyers to provide "adequate assurance of future performance"
within the meaning of the Bankruptcy Code under the contract or lease to be
assumed, or there is a dispute with regard to any other matters pertaining to
the assumption or the cure payments required by section 365(b)(1) of the
Bankruptcy Code, such counterparty must File an objection to the assumption of
its executory contract or unexpired lease by the Finance Company Debtors not
later than ten (10) days prior to the Confirmation Date. The Bankruptcy Court
shall have, and exercise, jurisdiction over any such objection, and which
objection shall be resolved by a Final Order. The effective date of the
assumption of an executory contract or unexpired lease subject to any such
objection shall be determined by any such Final Order.

I.   DISTRIBUTIONS

     1.   Time and Method of Distributions

          The Plan Administrator, on behalf of the Post-Consummation Estate, or
such other Entity as may be designated by the Plan Administrator, on behalf of
the Post-Consummation Estate, will make all distributions under the Plan. The
Plan Administrator will make initial distributions at its sole discretion after
the Effective Date. Whenever any distribution to be made under the Plan is due
on a day other than a Business Day, the Plan Administrator will make each such
distribution, without interest, on the immediately succeeding Business Day, but
will be deemed to have been made on the date due. Unless the Entity receiving a
payment agrees otherwise, the Plan Administrator, at its election will make any
payment in Cash to be made by the Post-Consummation Estate by check drawn on a
domestic bank or by wire transfer from a domestic bank. Distributions referred
to in this Article refer to Unsecured Claims and shall be made after paying all
Allowed DIP Claims, Allowed Administrative Claims, Allowed Priority Tax Claims,
Allowed Other Priority Claims, Allowed Other Secured Claims, Allowed Lehman
Secured Claims Allowed 93/94 Note Claims, and after establishing and funding the
93/94 Note Claim Escrow Account, Employee Benefit Escrow Account, Lehman Escrow
Account and Professional Escrow Account, the Consent Agreement Reserve Account.

     2.   Manner of Payment under the Plan

          Any payment in Cash to be made by the Debtors or the Plan
Administrator shall be made, at the election of the Debtors or the Plan
Administrator, as the case may be, by check drawn on a domestic bank or by wire
transfer from a domestic bank.

     3.   Delivery of Distributions

          Subject to the provisions of Fed. R. Bankr. P. 2002(g), and except as
otherwise provided in the Plan, distributions and deliveries to Holders of
record of Allowed Claims shall be made at the address of each such

                                       48


Holder set forth on the Finance Company Debtors' books and records unless
superseded by the address set forth on proofs of claim filed by any such
Holders, or at the last known address of such a Holder if no proof of claim is
filed or if the Finance Company Debtors has been notified in writing of a change
of address. Except as further provided by the Plan or the Bankruptcy Code, the
Plan Administrator will make all distributions in accordance with the provisions
of the applicable indenture participation agreement, loan agreement or analogous
instrument or agreement, if any.

     4.   Undeliverable Distributions

          (a) Holding of Undeliverable Distributions:

          If any distribution to any holder is returned to the Plan
Administrator as undeliverable, no further distributions shall be made to such
holder unless and until the Plan Administrator is notified, in writing, of such
holder's then-current address. All Entities ultimately receiving undeliverable
Cash shall not be entitled to any interest or other accruals of any kind.
Nothing contained in the Plan shall require the Plan Administrator to attempt to
locate any holder of an Allowed Claim or an Allowed Interest.

          (b) Failure to Claim Undeliverable Distributions:

          Any holder of an Allowed Claim that does not assert its rights
pursuant to the Plan to receive a distribution within six (6) months from and
after the date such distribution is returned as undeliverable shall have such
holder's Claim for such undeliverable distribution discharged and shall be
forever barred from asserting any such Claim against the Post-Consummation
Estate, the Plan Administrator or the Post-Consummation Estate Assets. In such
case, any consideration held for distribution on account of such Claim or
Interest shall revert to the Post-Consummation Estate for distribution to the
beneficiaries of the Post-Consummation Estate in accordance with the terms of
the Plan.

     5.   Compliance with Tax Requirements/Allocation

          To the extent applicable, the Post-Consummation Estate shall comply
with all tax withholding and reporting requirements imposed on it by any
Governmental Unit, and all distributions pursuant to the Plan shall be subject
to such withholding and reporting requirements. For tax purposes, distributions
received in respect of Allowed Claims will be allocated first to the principal
amount of such Claims, with any excess allocated to unpaid accrued interest.

     6.   Time Bar to Cash Payments

          Checks issued by the Plan Administrator on account of Allowed Claims
shall be null and void if not negotiated within ninety (90) days from and after
the date of issuance thereof. Requests for reissuance of any check shall be made
directly to the Plan Administrator by the holder of the Allowed Claim with
respect to which such check originally was issued. Any claim in respect of such
a voided check shall be made within six (6) months from and after the date of
issuance of such check. After such date, all Claims in respect of voided checks
shall be discharged and forever barred and the Post-Consummation Estate shall
retain all monies related thereto for distribution to the beneficiaries of the
Post-Consummation Estate in accordance with the terms of the Plan.

     7.   Distributions after Effective Date

          Distributions made after the Effective Date to Holders of Claims that
are not Allowed Claims as of the Effective Date, but which later become Allowed
Claims, shall be deemed to have been made on the Effective Date. Unless
otherwise specifically provided in the Plan, the Finance Company Debtors shall
not be obligated to pay interest on account of any Claim not paid on the
Effective Date other than interest accumulating in such respective escrow
account (if any) from which such Claim would be paid if, and when, deemed
Allowed.

                                       49


     8.   Fractional Dollars; De Minimis Distributions

          Notwithstanding anything contained in the Plan to the contrary,
payments of fractions of dollars will not be made. Whenever any payment of a
fraction of a dollar under the Plan would otherwise be called for, the actual
payment made will reflect a rounding of such fraction to the nearest dollar (up
or down), with half dollars being rounded down. The Plan Administrator will not
make any payment of less than Fifty Dollars ($50) with respect to any Allowed
Claim unless a request therefor is made in writing to the Plan Administrator on
or before ninety (90) days after the Effective Date.

     9.   Set-Offs

          The Plan Administrator may, pursuant to sections 502(d) or 553 of the
Bankruptcy Code or applicable nonbankruptcy law, set off against any Allowed
Claim and the distributions to be made pursuant to the Plan on account thereof
(before any distribution is made on account of such Claim), the Claims, rights
and Causes of Action of any nature that the Debtors may hold against the Holder
of such Allowed Claim; provided, however, that neither the failure to effect
such a set-off nor the allowance of any Claim hereunder shall constitute a
waiver or release by the Debtors of any such claims, rights and causes of action
that the Debtors may possess against such holder; and, provided, further, that
nothing contained in the Plan is intended to limit the rights of any Creditor to
effectuate a set-off prior to the Effective Date in accordance with the
provisions of sections 362 and 553 of the Bankruptcy Code.

     10.  Setoff of Certain Intercompany Notes

          As of the Petition Date CFC owed CIHC $277,376,671 under a promissory
note (the "CFC/CIHC Intercompany Note"), and CIHC owed CFC $315,030,986 under a
separate note (the "CIHC/CFC Intercompany Note"). The net pre-petition balance
owing by CIHC to CFC under those two notes is $37,654,315 (the "Pre-Petition
Note Balance"). On the Effective Date, the CFC/CIHC Intercompany Note will be
setoff against the CIHC/CFC Intercompany Note.

     11.  Preservation of Finance Company Debtors' Subordination Rights

          All subordination rights and claims relating to the subordination by
the Finance Company Debtors of the Allowed Claim of any Creditor shall remain
valid, enforceable and unimpaired in accordance with section 510 of the
Bankruptcy Code or otherwise, except as otherwise provided in the Plan.

     12.  Waiver by Creditors of All Subordination Rights

          Except as otherwise ordered by the Bankruptcy Court, each Holder of a
Claim shall be deemed to have waived all contractual, legal and equitable
subordination rights that they may have, whether arising under general
principles of equitable subordination, section 510(c) of the Bankruptcy Code or
otherwise, with respect to any and all distributions to be made under the Plan,
and all such contractual, legal or equitable subordination rights that each
holder of a Claim has individually and collectively with respect to any such
distribution made pursuant to the Plan shall be discharged and terminated, and
all actions related to the enforcement of such subordination rights will be
permanently enjoined.

     13.  Settlement of Claims and Controversies

          Pursuant to Fed. R. Bankr. P. 9019 and in consideration for the
distributions and other benefits provided under the Plan, the provisions of the
Plan shall constitute a good faith compromise and settlement of claims or
controversies relating to the contractual, legal and subordination rights that a
holder of a Claim may have with respect to any Allowed Claim with respect
thereto, or any distribution to be made on account of such an Allowed Claim.

                                       50


J.   RETENTION OF JURISDICTION

     Notwithstanding the entry of the Confirmation Order and the occurrence of
the Effective Date, the Bankruptcy Court shall retain such jurisdiction over the
Chapter 11 Cases after the Effective Date as legally permissible, including
jurisdiction to:

     1.   allow, disallow, determine, liquidate, classify, estimate or establish
          the priority or secured or unsecured status of any Claim or Equity
          Interest, including the resolution of any request for payment of any
          Administrative Claim and the resolution of any and all objections to
          the allowance or priority of Claims or Equity Interests;

     2.   grant or deny any applications for allowance of compensation or
          reimbursement of expenses authorized pursuant to the Bankruptcy Code
          or the Plan, for periods ending on or before the Effective Date;

     3.   resolve any matters related to the assumption, assumption and
          assignment or rejection of any executory contract and unexpired lease
          to which a Debtor is party or with respect to which a Debtor may be
          liable and to hear, determine and, if necessary, liquidate, any Claims
          arising therefrom;

     4.   ensure that distributions to Holders of Allowed Claims are
          accomplished pursuant to the provisions hereof;

     5.   decide or resolve any motions, adversary proceedings, contested or
          litigated matters and any other matters and grant or deny any
          applications involving a Finance Company Debtor that may be pending on
          the Effective Date, or that, pursuant to the Plan, may be instituted
          by the Plan Administrator or the Post-Consummation Estate after the
          Effective Date; provided however that the Plan Administrator and the
          Post-Consummation Estate shall reserve the right to commence
          collection actions, actions to recover receivables and other similar
          actions in all appropriate jurisdictions;

     6.   enter such orders as may be necessary or appropriate to implement or
          consummate the provisions hereof and all contracts, instruments,
          releases, indentures and other agreements or documents created in
          connection with the Plan, the Disclosure Statement or the
          Post-Consummation Estate Agreement;

     7.   resolve any cases, controversies, suits or disputes that may arise in
          connection with the Consummation, interpretation or enforcement of the
          Plan or any Person's or Entity's obligations incurred in connection
          with the Plan;

     8.   issue injunctions, enter and implement other orders or take such other
          actions as may be necessary or appropriate to restrain interference by
          any Person or Entity with Consummation or enforcement of the Plan,
          except as otherwise provided in the Plan;

     9.   resolve any cases, controversies, suits or disputes with respect to
          the releases, injunction and other provisions contained in Article XI
          of the Plan, and enter any orders that may be necessary or appropriate
          to implement such releases, injunction and other provisions;

     10.  enter and implement any orders that are necessary or appropriate if
          the Confirmation Order is for any reason modified, stayed, reversed,
          revoked or vacated;

     11.  determine any other matters that may arise in connection with or
          relate to the Plan, the Disclosure Statement, the Confirmation Order,
          the Post-Consummation Estate Agreement or any contract, instrument,
          release, indenture or other agreement or document created in
          connection with the Plan or the Disclosure Statement or the
          Post-Consummation Estate Agreement; and

                                       51


     12.  enter an order and/or final decree concluding the Chapter 11 Cases.

K.   RELEASE, INJUNCTIVE AND RELATED PROVISIONS

     1.   Compromise and Settlement

          The allowance, classification and treatment of all Allowed Claims and
Allowed Equity Interests and their respective distributions and treatments
hereunder take into account and/or conform to the relative priority and rights
of the Claims and Equity Interests in each Class in connection with any
contractual, legal and equitable subordination rights relating thereto whether
arising under general principles of equitable subordination, section 510(b) of
the Bankruptcy Code or otherwise. As of the Effective Date, any and all such
rights described in preceding sentence are settled, compromised and released
pursuant hereto. In addition, the allowance, classification and treatment of
Allowed Claims in Classes 3, 4 and 5 takes into account any Causes of Action,
claims or counterclaims, whether under the Bankruptcy Code or otherwise under
applicable law, that may exist between the Finance Company Debtors and the
Holders of such Claims or among the Holders of such Claims and other Holders of
Claims or Equity Interests, as the case may be, and, as of the Effective Date,
any and all such Causes of Action, claims and counterclaims are settled,
compromised and released pursuant hereto. The Confirmation Order shall
permanently enjoin, effective as of the Effective Date, all Persons and Entities
from enforcing or attempting to enforce any such contractual, legal and
equitable subordination rights or Causes of Action, claims or counterclaims
against such Holder satisfied, compromised and settled in this manner.

     2.   Releases by the Finance Company Debtors

          Except as otherwise specifically provided in the Plan or in the Plan
Supplement, for good and valuable consideration, including the service of the
Releasees to facilitate the expeditious reorganization of the Finance Company
Debtors and the implementation of the restructuring contemplated by the Plan,
the Releasees, on and after the Effective Date, are deemed released by the
Finance Company Debtors and the Post-Consummation Estate from any and all Claims
(as defined in section 101(5) of the Bankruptcy Code), obligations, rights,
suits, damages, Causes of Action, remedies and liabilities whatsoever, including
any derivative Claims asserted on behalf of a Finance Company Debtor, whether
known or unknown, foreseen or unforeseen, existing or hereinafter arising, in
law, equity or otherwise, that the Finance Company Debtors or their subsidiaries
would have been legally entitled to assert in their own right (whether
individually or collectively) or on behalf of the Holder of any Claim or Equity
Interest or other Person or Entity, based in whole or in part upon any act or
omission, transaction, agreement, event or other occurrence taking place on or
before the Effective Date, other than any such Releasee's obligations to repay
its obligations under the D&O Credit Facilities.

     3.   Releases by Holders of Claims

          On and after the Effective Date, each Holder of a Claim (a) who has
accepted the Plan or (b) who receives a distribution of property pursuant to the
Plan, shall be deemed to have unconditionally released the Releasees from any
and all Claims (as defined in section 101(5) of the Bankruptcy Code),
obligations, rights, suits, damages, Causes of Action, remedies and liabilities
whatsoever, including any derivative Claims asserted on behalf of a Finance
Company Debtor, whether known or unknown, foreseen or unforeseen, existing or
hereafter arising, in law, equity or otherwise, that such Person or Entity would
have been legally entitled to assert (whether individually or collectively),
based in whole or in part upon any act or omission, transaction, agreement,
event or other occurrence taking place on or before the Effective Date in any
way relating or pertaining to (w) the purchase or sale, or the rescission of a
purchase or sale, of any security of a Finance Company Debtor, (x) a Finance
Company Debtor, (y) the Chapter 11 Cases, or (z) the negotiation, formulation
and preparation of the Plan, or any related agreements, instruments or other
documents. No portion of the releases by the Holders of Claims in any way
impairs any Releasee's obligations to repay its obligations under the D&O Credit
Facilities.

                                       52


     4.   Exculpation

          The Releasees, Debtors, the Committee, and the employees, agents, and
professionals of each of the foregoing (acting in such capacity only) shall
neither have, nor incur any liability to any Person or Entity for any pre or
post-petition act taken or omitted to be taken in connection with, or related to
the formulation, negotiation, preparation, dissemination, implementation,
administration, Confirmation or Consummation of the Plan, the Disclosure
Statement or any contract, instrument, release or other agreement or document
created or entered into in connection with the Plan or any other pre or
post-petition act taken or omitted to be taken in connection with or in
contemplation of the restructuring of the Finance Company Debtors.

     5.   Preservation of Rights of Action

          (a) Maintenance of Causes of Action

          Except as otherwise provided in the Plan or the Purchase Agreements,
the Finance Company Debtors or the Post-Consummation Estate, as the case may be,
shall retain all rights to commence and pursue, as appropriate, any and all
Causes of Action, whether arising before or after the Petition Date, in any
court or other tribunal including, without limitation, in an adversary
proceeding Filed in one or more of the Chapter 11 Cases including the actions
specified in the Plan Supplement.

          Except as otherwise provided in the Plan, in accordance with section
1123(b)(3) of the Bankruptcy Code, any Claims, rights, and Causes of Action that
the respective Finance Company Debtors may hold against any Entity shall vest in
the Post-Consummation Estate. The Post-Consummation Estate, through its
authorized agents or representatives, shall retain and may exclusively enforce
any and all such Claims, rights or Causes of Action. The Post-Consummation
Estate shall have the exclusive right, authority, and discretion to institute,
prosecute, abandon, settle, or compromise any and all such Claims, rights, and
Causes of Action without the consent or approval of any third party and without
any further order of court.

          (b) Preservation of All Causes of Action Not Expressly Settled or
Released

          The Finance Company Debtors are currently investigating whether to
pursue potential Causes of Action against certain Persons or Entities. The
investigation has not been completed to date, and, subject to the Releases
granted in Article XI, hereof, the Plan Administrator shall retain, on behalf of
the Post-Consummation Estates, all rights on behalf of the Finance Company
Debtors and the Post-Consummation Estates to commence and pursue any and all
Causes of Action (under any theory of law, including, without limitation, the
Bankruptcy Code, and in any court or other tribunal including, without
limitation, in an adversary proceeding Filed in the Chapter 11 Cases) discovered
in such an investigation to the extent the Plan Administrator deem appropriate.
Potential Causes of Action currently being investigated by the Finance Committee
Debtors, which may but need not be pursued by the Finance Committee Debtors
prior to the Effective Date and by the Plan Administrator, on behalf of the
Post-Consummation Estate, after the Effective Date, to the extent warranted,
include, without limitation, (i) a list of potential Claims and Causes of Action
that will be set forth in the Plan Supplement to the extent determined as of the
date thereof; and (ii) Preference Actions that will be set forth in the Plan
Supplement to the extent determined as of the date thereof (although the Finance
Company Debtors and, after the Effective Date, the Plan Administrator, on behalf
of the Finance Company Debtors and the Post-Consummation Estate reserve all
rights to pursue any and all Preference Actions discovered subsequent to the
Filing Date of the Plan Supplement). Additionally, without limitation, the
Finance Company Debtors hereby reserve their rights to pursue:

               o    Any other Causes of Action, whether legal, equitable or
                    statutory in nature, arising out of, or in connection with
                    the Finance Company Debtors' businesses or operations,
                    including, without limitation, the following: possible
                    claims against vendors, landlords, sublessees, assignees,
                    customers or suppliers for warranty, indemnity, back
                    charge/set-off issues, overpayment or duplicate payment
                    issues and collections/accounts receivables matters;
                    deposits or other amounts owed by any creditor, lessor,
                    utility, supplier, vendor, landlord, sublessee, assignee, or
                    other Person or Entity; employee, management or

                                       53


                    operational matters; claims against landlords, sublessees
                    and assignees arising from the various leases, subleases and
                    assignment agreements relating thereto, including, without
                    limitation, claims for overcharges relating to taxes, common
                    area maintenance and other similar charges; financial
                    reporting; environmental, and product liability matters;
                    actions against insurance carriers relating to coverage,
                    indemnity or other matters; counterclaims and defenses
                    relating to notes or other obligations; contract or tort
                    claims which may exist or subsequently arise;

               o    Any and all avoidance actions pursuant to any applicable
                    section of the Bankruptcy Code, including, without
                    limitation sections 544, 545, 547, 548, 549, 550, 551,
                    553(b) and/or 724(a) of the Bankruptcy Code, arising from
                    any transaction involving or concerning any of the Finance
                    Company Debtors; and

               o    Any and all Causes of Action listed in the Schedule of
                    Causes of Action set forth in the Plan Supplement;

               o    In addition, there may be numerous other Causes of Action
                    which currently exist or may subsequently arise that are not
                    set forth in the Plan, in the Cause of Action Summary or in
                    the List of Retained Causes of Action, because the facts
                    upon which such Causes of Action are based are not currently
                    or fully known by the Finance Company Debtors and, as a
                    result, can not be raised during the pendency of the Chapter
                    11 Cases (collectively, the "Unknown Causes of Action"). The
                    failure to list any such Unknown Cause of Action in the
                    Plan, or in the Cause of Action Summary or the List of
                    Retained Causes of Action, is not intended to limit the
                    rights of the Post-Consummation Estate to pursue any Unknown
                    Cause of Action to the extent the facts underlying such
                    Unknown Cause of Action subsequently become fully known to
                    the Finance Company Debtors.

          Unless Causes of Action against a Person or Entity are expressly
waived, relinquished, released, compromised or settled in the Plan or any Final
Order, the Finance Company Debtors (before the Effective Date) and the Plan
Administrator, on behalf of the Post-Consummation Estate (post-Effective Date),
expressly reserve all Causes of Action and Unknown Causes of Action, including
the Causes of Action described in the Plan and in the Causes of Action Summary
and the List of Retained Causes of Action, as well as any other Causes of Action
or Unknown Causes of Action, for later adjudication and therefore, no preclusion
doctrine, including, without limitation, the doctrines of res judicata,
collateral estoppel, issue preclusion, claim preclusion, estoppel (judicial,
equitable or otherwise) or laches shall apply to such Causes of Action upon or
after the confirmation or Consummation of the Plan. In addition, the Finance
Company Debtors and the Post-Consummation Estate, and any successors-in-interest
thereto, expressly reserve the right to pursue or adopt any Claims not so
waived, relinquished, released, compromised on settled that are alleged in any
lawsuit in which the Finance Company Debtors are a defendant or an interested
party, including the lawsuits described in the Disclosure Statement, against any
Person or entity, including, without limitation, the plaintiffs and
co-defendants in such lawsuits.

          Moreover, Causes of Action shall also include any causes of action
that may arise after the Effective Date against any Person or Entity to whom the
Finance Company Debtors have incurred an obligation (whether on account of
services, Post-Consummation Equity, purchase or sale of goods or otherwise), or
who has received services from the Finance Company Debtors or a transfer of
money or property of the Finance Company Debtors, or who has transacted business
with the Finance Company Debtors, or leased equipment or property from the
Finance Company Debtors should assume that such obligation, transfer, or
transaction may be reviewed by the Finance Company Debtors subsequent to the
Effective Date and may, to the extent not theretofore waived, relinquished,
released, compromised or settled, be the subject of an action after the
Effective Date, whether or not o such Person or Entity has Filed a proof of
Claim against the Finance Company Debtors in the Chapter 11 Cases; o such
Person's or Entity's proof of Claim has been objected to; o such Person's or
Entity's Claim was included in the Finance Company Debtors' Schedules; or o such
Person's or Entity's scheduled Claim has been objected to by

                                       54


the Finance Company Debtors or has been identified by the Finance Company
Debtors as disputed, contingent, or unliquidated.

          Except as otherwise provided in the Plan or in any contract,
instrument, release, Indenture or other agreement entered into in connection
with the Plan, in accordance with section 1123(b)(3) of the Bankruptcy Code, any
Claims, rights, and Causes of Action that the respective Finance Company
Debtors, Estates, or Post-Consummation Estates may hold against any Person or
Entity, including but not limited to those Causes of Action listed in the
Disclosure Statement, shall vest in the Post-Consummation Estate, and the
Post-Consummation Estate shall retain and may exclusively enforce, as the
authorized representatives of the respective Estates and Post-Consummation
Estates, any and all such Claims, rights, or Causes of Action. The Plan
Administrator on behalf of the Post-Consummation Estate may pursue any and all
such Claims, rights, or Causes of Action, as appropriate, in accordance with the
best interests of the Post-Consummation Estate. Subject to Article XII of the
Plan, the Plan Administrator on behalf of the Post-Consummation Estate shall
have the exclusive right, authority, and discretion to institute, prosecute,
abandon, settle, or compromise any and all such Claims, rights, and Causes of
Action without the consent or approval of any third party and without any
further order of the Bankruptcy Court.

     6.   Discharge of Claims and Termination of Equity Interests

          Except as otherwise provided in the Plan, and except with respect to
the Post Confirmation Estate: (1) the rights afforded in the Plan and the
treatment of all Claims and Equity Interests in the Plan, shall be in exchange
for and in complete satisfaction, discharge and release of, all Claims and
Equity Interests of any nature whatsoever, including any interest accrued on
Claims from and after the Petition Date, against the Finance Company Debtors or
any of their assets or properties, (2) on the Effective Date, all such Claims
against, and Equity Interests in, the Finance Company Debtors shall be
satisfied, discharged and released in full, and (3) all Persons shall be
precluded from asserting against the Finance Company Debtors, the Post
Confirmation Estates, their successors or their assets or properties, any other
or further Claims or Equity Interests based upon any act or omission,
transaction or other activity of any kind or nature that occurred prior to the
Confirmation Date.

     7.   Injunction

          Except as otherwise expressly provided in the Plan or obligations
issued pursuant to the Plan, all Persons who have held, hold or may hold Claims
against or Equity Interests in the Finance Company Debtors or the Releasees are
permanently enjoined, from and after the Effective Date, from (a) commencing or
continuing in any manner any action or other proceeding of any kind on any such
Claim or Equity Interest against the Finance Company Debtors, Releasees, and the
Official Committee and their respective members, and the employees, agents, and
professionals of each of the foregoing (acting in such capacity); (b) enforcing,
attaching, collecting or recovering by any manner or means any judgment, award,
decree or order against those parties listed in subparagraph (a) above; (c)
creating, perfecting, or enforcing any encumbrance of any kind against those
parties listed in subparagraph (a) above, or the property or estates of those
parties listed in subparagraph (a) above; (d) asserting any right of setoff,
subrogation or recoupment of any kind against any obligation due from those
parties listed in subparagraph (a) above or against the property or estates of
those parties listed in subparagraph (a) above with respect to any such Claim or
Equity Interest; and (e) commencing or continuing in any manner any action or
other proceeding of any kind in respect of any Claim or Cause of Action released
or settled hereunder.

L.   POST-CONSUMMATION ESTATE AND PLAN ADMINISTRATOR

     1.   Generally

          The powers, authority, responsibilities and duties of the
Post-Consummation Estate and the Plan Administrator are set forth in and shall
be governed by the Post-Consummation Estate Agreement.

                                       55


     2.   Purpose of the Post-Consummation Estate

          The Post-Consummation Estate shall be established for the primary
purpose of liquidating its assets, in accordance with Treas. Reg. ss.
301.7701-4(d), with no objective to continue or engage in the conduct of a trade
or business, except to the extent reasonably necessary to, and consistent with,
the liquidating purpose of the Post-Consummation Estate. The Post-Consummation
Estate shall not be deemed a successor-in-interest of the Debtors for any
purpose other than as specifically set forth in the Plan or in the Post
Confirmation Estate Agreement. The Post-Consummation Estate is intended to
qualify as a "grantor trust" for federal income tax purposes with the
Beneficiaries treated as grantors and owners of the trust.

     3.   Transfer of Assets

          (a) The transfer of the Post-Consummation Estate Assets to the
     Post-Consummation Estate shall be made, as provided in the Plan, for the
     benefit of the holders of Allowed Claims only to the extent such holders
     are entitled to distributions under the Plan. On the Effective Date, and
     after the Finance Company Debtors' payments and/or funding of such
     reserves, on behalf of the holders of Allowed Claims, the Finance Company
     Debtors shall transfer title to all remaining assets and such reserves
     (subject only to such specified liabilities) to the Post-Consummation
     Estate. Upon the transfer of the Post-Consummation Estate Assets to the
     Post-Consummation Estate, the Finance Company Debtors shall have no
     interest in or with respect to the Post-Consummation Estate Assets or the
     Post-Consummation Estate. Notwithstanding the foregoing, to the extent the
     Finance Company Debtors determine that any such transfer may implicate an
     exclusion in any Director and Officer Insurance Policy, the cause of action
     at issue shall be assigned in another manner determined by the Finance
     Company Debtors in their sole discretion.

          (b) For all federal income tax purposes, all parties (including,
     without limitation, the Finance Company Debtors, the Plan Administrator and
     the beneficiaries of the Post-Consummation Estate) shall treat the transfer
     of assets to the Post-Consummation Estate in accordance with the terms of
     the Plan, as a transfer of such assets by the Finance Company Debtors to
     the Holders of Allowed Claims and followed by a transfer by such Holders to
     the Post-Consummation Estate, and the Post-Consummation Estate
     Beneficiaries shall be treated as the grantors and owners thereof.

     4.   Valuation of Assets

          As soon as practicable after the Effective Date, the Post-Consummation
Estate (to the extent that the Plan Administrator deems it necessary or
appropriate in the Plan Administrator's sole discretion) shall value the
Post-Consummation Estate Assets based on the good faith determination of the
Post-Consummation Estate and the Post-Consummation Estate shall apprise the
beneficiaries of the Post-Consummation Estate of such valuation. The valuation
shall be used consistently by all parties (including the Finance Company
Debtors, the Plan Administrator and the beneficiaries of the Post-Consummation
Estate) for all federal income tax purposes. The Bankruptcy Court shall resolve
any dispute regarding the valuation of these assets.

     5.   Distribution; Withholding

          At least annually, the Plan Administrator shall distribute to the
beneficiaries of the Post-Consummation Estate all net cash income plus all net
cash proceeds from the liquidation of assets; provided, however, that the
Post-Consummation Estate may retain such amounts pursuant to the terms of the
Post-Consummation Estate Budget (i) as are necessary in the discretion of the
Plan Administrator to meet contingent liabilities and to maintain the value of
the Post-Consummation Estate Assets during liquidation, (ii) to pay
administrative expenses (including any taxes imposed on the Post-Consummation
Estate or in respect of the Post-Consummation Estate Assets) and (iii) to
satisfy other liabilities incurred or assumed by the Post-Consummation Estate
(or to which the Post-Consummation Estate Assets are otherwise subject) in
accordance with the Plan or the Post-Consummation Estate Agreement. All such
distributions shall be subject to the terms of the Plan and the
Post-Consummation Estate Agreement; provided, further, that of the net amount
distributable, the Plan Administrator shall reserve, in accordance with Article
XII of the Plan, such amounts as would be distributable in respect of Disputed
Claims (treating such Claims, for this purpose, as if they were Allowed Claims).
The Post-Consummation Estate may withhold from amounts distributable to any
Entity any and all amounts, determined in the Plan

                                       56


Administrator's sole discretion, to be required by any law, regulation, rule,
ruling, directive or other governmental requirement. After appropriate reserves
have been established to fund amounts set forth above and as identified in the
Post-Consummation Estate Budget (including amounts to pay Allowed Administrative
Expense Claims, Priority Tax Claims, Other Priority Non-Tax Claims and the fees
and expenses of the Plan Administrator and the Post-Consummation Estate), the
funds to be distributed to the Holders of Allowed Class 5 Claims shall be
distributed to such Holders on a Pro Rata basis at the sole discretion of the
Plan Administrator.

     6.   Post-Consummation Estate Implementation

          On the Effective Date, the Post-Consummation Estate will be
established and become effective for the benefit of the Holders of Allowed
Claims entitled to distributions under the Plan. The Post-Consummation Estate
Agreement shall contain provisions customary to trust agreements utilized in
comparable circumstances, including, but not limited to, any and all provisions
necessary to ensure the continued treatment of the Post-Consummation Estate as a
grantor trust and the Holders of Allowed Claims as the grantors and owners
thereof for federal income tax purposes. All parties (including the Finance
Company Debtors, the Plan Administrator and holders of Allowed Claims) shall
execute any documents or other instruments as necessary to cause title to the
applicable assets to be transferred to the Post-Consummation Estate.

     7.   Disputed Claims Reserve

          The Plan Administrator shall maintain, in accordance with the Plan
Administrator's powers and responsibilities as described in the Plan and in the
Post-Consummation Estate Agreement, a reserve of any distributable amounts
required to be set aside on account of Disputed Claims. Such amounts shall be
distributed, as provided in the Plan, as such Disputed Claims are resolved by
settlement or Final Order, and shall be distributable in respect of such
Disputed Claims as such amounts would have been distributable had the Disputed
Claims been Allowed Claims as of the Effective Date.

     8.   Termination of Post-Consummation Estate

          The Post-Consummation Estate will terminate as soon as practicable,
but in no event later than the fifth (5th) anniversary of the Effective Date;
provided, however, that, on or prior to the date six (6) months prior to such
termination, the Bankruptcy Court, upon motion by a party in interest, may
extend the term of the Post-Consummation Estate for a finite period, if such an
extension is necessary to liquidate of the Post-Consummation Estate Assets.
Notwithstanding the foregoing, multiple extensions can be obtained so long as
Bankruptcy Court approval is obtained at least six (6) months prior to the
expiration of each extended term; provided, however, that the Plan Administrator
receives an opinion of counsel or a favorable ruling from the Internal Revenue
Service that any further extension would not adversely affect the status of the
Post-Consummation Estate as a grantor trust for federal income tax purposes.

     9.   Termination of Plan Administrator

          The duties, responsibilities and powers of the Plan Administrator
shall terminate in accordance with the terms of the Post-Consummation Estate
Agreement.

     10.  Exculpation; Indemnification

          Except as modified by the Post-Consummation Estate Agreement, no
Holder of a Claim or any other party-in-interest will have, or otherwise pursue,
any Claim or Cause of Action against the Plan Administrator, the
Post-Consummation Estate or the employees or professionals or representatives of
either the Plan Administrator or the Post-Consummation Estate (solely in the
performance of their duties thereas) for making payments in accordance with the
Plan or for implementing the provisions of the Plan. Any act or omission taken
with the approval of the Bankruptcy Court will be conclusively deemed not to
constitute gross negligence or willful misconduct.

                                       57



M.   MISCELLANEOUS PROVISIONS

     Certain additional miscellaneous information regarding the Plan and the
Chapter 11 Cases is set forth below.

     1.   Modification of Plan Supplement

          Modification of or amendments to the Plan Supplement, may be Filed
with the Bankruptcy Court no later than ten days before the Confirmation
Hearing. Any such modification or supplement shall be considered a modification
of the Plan and shall be made in accordance with Article XIV.E hereof. Upon its
Filing, the Plan Supplement may be inspected in the office of the clerk of the
Bankruptcy Court or its designee during normal business hours. Holders of Claims
and Equity Interests may obtain a copy of the Plan Supplement by contacting
Bankruptcy Management Corporation at 1-888-909-0100 or review such documents on
the internet at www.bmccorp.net/Conseco. The documents contained in the Plan
Supplement are an integral part of the Plan and shall be approved by the
Bankruptcy Court pursuant to the Confirmation Order.

     2.   Effectuating Documents, Further Transactions and Corporation Action

          Each of the Finance Company Debtors is authorized to execute, deliver,
file or record such contracts, instruments, releases and other agreements or
documents and take such actions as may be necessary or appropriate to
effectuate, implement and further evidence the terms and conditions hereof and
the notes and securities issued pursuant hereto.

          Prior to, on or after the Effective Date (as appropriate), all matters
provided for hereunder that would otherwise require approval of the shareholders
or directors of the Debtors shall be deemed to have occurred and shall be in
effect prior to, on or after the Effective Date (as appropriate) pursuant to the
general corporation laws of the State of Minnesota, the State of Delaware, and
the States of Delaware, New York, Pennsylvania, Minnesota, Nevada, Alabama,
Kentucky, Utah and Texas (as appropriate) without any requirement of further
action by the shareholders or directors of the Finance Company Debtors.

     3.   Dissolution of Committee(s)

          Upon the Effective Date, the Committee shall dissolve, except with
respect to any appeal of an order in the Chapter 11 Cases and applications for
Professional Fees, and Committee Members shall be released and discharged from
all rights, duties and liabilities arising from, or related to, the Chapter 11
Cases.

     4.   Payment of Statutory Fees

          All fees payable pursuant to section 1930(a) of Title 28 of the United
States Code, as determined by the Bankruptcy Court at the hearing pursuant to
section 1128 of the Bankruptcy Code, shall be paid for each quarter (including
any fraction thereof) until the Chapter 11 Cases are converted, dismissed or
closed, whichever occurs first.

     5.   Modification of Plan

          Subject to the limitations contained in the Plan:

          (a) the Finance Company Debtors reserve the right, in accordance with
     the Bankruptcy Code and the Bankruptcy Rules, to amend or modify the Plan
     prior to the entry of the Confirmation Order; and

          (b) after the entry of the Confirmation Order, the Finance Company
     Debtors, may, upon order of the Bankruptcy Court, amend or modify the Plan,
     in accordance with section 1127(b) of the Bankruptcy Code, or remedy any
     defect or omission or reconcile any inconsistency in the Plan in such
     manner as may be necessary to carry out the purpose and intent of the Plan.

                                       58


     6.   Revocation of Plan

          The Finance Company Debtors reserve the right (with the prior consent
of the Conseco Creditors Committee) to revoke or withdraw the Plan prior to the
Confirmation Date and to file subsequent plans of reorganization. If a Debtor
revokes or withdraws the Plan, or if Confirmation or Consummation does not
occur, then (a) the Plan shall be null and void in all respects, (b) any
settlement or compromise embodied in the Plan (including the fixing or limiting
to an amount certain any Claim or Equity Interest or Class of Claims or Equity
Interests), assumption or rejection of executory contracts or leases affected by
the Plan, and any document or agreement executed pursuant hereto, shall be
deemed null and void, and (c) nothing contained in the Plan shall (i) constitute
a waiver or release of any Claims by or against, or any Equity Interests in,
such Debtor or any other Person, (ii) prejudice in any manner the rights of such
Debtor or any other Person, or (iii) constitute an admission of any sort by such
Debtor or any other Person.

     7.   Successors and Assigns

          The rights, benefits and obligations of any Person or Entity named or
referred to in the Plan shall be binding on, and shall inure to the benefit of
any heir, executor, administrator, successor or assign of such Person or Entity.

     8.   Reservation of Rights

          Except as expressly set forth in the Plan, the Plan shall have no
force or effect unless the Bankruptcy Court shall enter the Confirmation Order.
None of the filing of the Plan, any statement or provision contained in the
Plan, or the taking of any action by any Finance Company Debtor with respect to
the Plan, the Disclosure Statement or the Plan Supplement shall be or shall be
deemed to be an admission or waiver of any rights of any Finance Company Debtor
with respect to the Holders of Claims or Equity Interests prior to the Effective
Date.

     9.   Section 1146 Exemption

          Pursuant to section 1146(c) of the Bankruptcy Code, under the Plan,
(i) the issuance, distribution, transfer or exchange of any debt, equity
security or other interest in the Debtors; (ii) the creation, modification,
consolidation or recording of any mortgage, deed of trust, or other security
interest, or the securing of additional indebtedness by such or other means;
(iii) the making, assignment or recording of any lease or sublease; or (iv) the
making, delivery or recording of any deed or other instrument of transfer under,
in furtherance of, or in connection with, the Plan, including any deeds, bills
of sale, assignments or other instrument of transfer executed in connection with
any transaction arising out of, contemplated by, or in any way related to the
Plan shall not be subject to any document recording tax, mortgage recording tax,
stamp tax or similar government assessment, and the appropriate state or local
government official or agent shall be directed by the Bankruptcy Court to forego
the collection of any such tax or government assessment and to accept for filing
and recording any of the foregoing instruments or other documents without the
payment of any such tax or government assessment.

          All subsequent issuances, transfers or exchanges of securities, or the
making or delivery of any instrument of transfer by the Debtors in the Chapter
11 Cases, whether in connection with a sale under section 363 of the Bankruptcy
Code or otherwise, shall be deemed to be or have been done in furtherance of the
Plan. Specifically, because the Sale Transactions are being conducted pursuant
to the Plan, any instrument of transfer that would effect transfer of the
Divested Assets as proposed in pleadings filed in these Chapter 11 Cases may not
be taxed under any law imposing a stamp tax or similar tax.

     10.  Further Assurances

          The Finance Company Debtors and all Holders of Claims or Equity
Interests receiving distributions hereunder and all other parties in interest
shall, from time to time, prepare, execute and deliver any agreements or
documents and take any other actions as may be necessary or advisable to
effectuate the provisions and intent of the Plan.

                                       59


     11.  Transactions on Business Days

          If the date on which a transaction may occur under the Plan shall
occur on a day that is not a Business Day, then such transaction shall instead
occur on the next succeeding Business Day.

     12.  Filing of Additional Documents

          On or before the Effective Date, the Debtors may file with the
Bankruptcy Court such agreements and other documents as may be necessary or
appropriate to effectuate and further evidence the terms and conditions hereof.

     13.  Post-Effective Date Fees and Expenses

          From and after the Effective Date, the Plan Administrator on behalf of
the Post Confirmation Estates shall, in the ordinary course of business and
without the necessity for any approval by the Bankruptcy Court, pay the
reasonable professional fees and expenses incurred by the Post Confirmation
Estates related to the Consummation and to the implementation of the Plan.

     14.  Conflicts

          To the extent any provision of the Post-Consummation Estate Agreement,
the Disclosure Statement, or any document executed in connection therewith or
any documents executed in connection with the Confirmation Order (or any
exhibits, schedules, appendices, supplements or amendments to any of the
foregoing) conflicts with, or is in any way inconsistent with, the terms of the
Plan, the terms and provisions of the Plan shall govern and control, provided
however that nothing in the Plan shall be deemed to modify or supercede any of
the terms of the Final DIP Order, the CFN Sale Order, the GE Sale Order or the
Cash Management Order.

     15.  Term of Injunctions or Stays

          Unless otherwise provided in the Plan or in the Confirmation Order,
all injunctions or stays in effect in the Chapter 11 Cases under sections 105 or
362 of the Bankruptcy Code or any order of the Bankruptcy Court, and still
extant on the Confirmation Date (excluding any injunctions or stays contained in
the Plan or the Confirmation Order), shall remain in full force and effect until
the Effective Date. All injunctions or stays contained in the Plan or the
Confirmation Order shall remain in full force and effect in accordance with
their terms.

     16.  Entire Agreement

          The Plan and the Plan Supplement (as amended) supersede all previous
and contemporaneous negotiations, promises, covenants, agreements,
understandings and representations on such subjects, all of which have become
merged and integrated into the Plan.

     17.  Closing of the Chapter 11 Cases

          The Post-Consummation Estate shall promptly, upon the full
administration of the Chapter 11 Cases, File with the Bankruptcy Court all
documents required by Fed. R. Bankr. P. 3022 and any applicable order of the
Bankruptcy Court to close the Chapter 11 cases.

                                       V.

                        VOTING AND CONFIRMATION PROCEDURE

     The following is a brief summary regarding the acceptance and confirmation
of the Plan. Holders of Claims are encouraged to review the relevant provisions
of the Bankruptcy Code and/or to consult their own attorneys. Additional
information regarding voting procedures is set forth in the Notices accompanying
this Disclosure Statement.

                                       60


A.   VOTING INSTRUCTIONS

     This Disclosure Statement, accompanied by a Ballot to be used for voting on
the Plan, is being distributed to Holders of Claims and Equity Interests in
Classes 3, 4 and 5. Only Holders in these Classes are entitled to vote to accept
or reject the Plan and may do so by completing the Ballot and returning it in
the envelope provided. Beneficial owners who receive a return envelope addressed
to their Nominee should allow enough time for their vote to be received by the
Nominee and processed on a Master Ballot. In light of the benefits of the Plan
for each Class of Claims, the Finance Company Debtors recommend that Holders of
Claims in each of the Impaired Classes vote to accept the Plan and return the
Ballot.

     BALLOTS AND MASTER BALLOTS CAST BY HOLDERS IN CLASSES ENTITLED TO VOTE MUST
BE RECEIVED BY THE SOLICITATION AGENT BY THE VOTING DEADLINE AT THE FOLLOWING
ADDRESSES:

If by U.S. Mail:                         If by courier/hand delivery:
- ---------------                          ---------------------------
Bankruptcy Management Corporation        Bankruptcy Management Corporation
Attention:  Finance Company Debtors'     Attention:  Finance Company Debtors'
            Solicitation Agent                       Solicitation Agent
PO Box 1098                              1330 E. Franklin Avenue
El Segundo, CA 90245-1098                El Segundo, CA 90245


     IF YOU HAVE ANY QUESTIONS ON VOTING PROCEDURES, PLEASE CALL BANKRUPTCY
MANAGEMENT CORPORATION TOLL FREE AT (888) 909-0100.

     BALLOTS ARE ACCOMPANIED BY RETURN ENVELOPES WHENEVER POSSIBLE. IF YOUR
RETURN ENVELOPE IS ADDRESSED TO YOUR NOMINEE (I.E., AN INTERMEDIARY), PLEASE
ALLOW ADDITIONAL TIME FOR YOUR VOTE TO BE PROCESSED BY THE NOMINEE AND VOTED ON
A MASTER BALLOT. IF YOU HAVE A QUESTION CONCERNING THE VOTING PROCEDURES,
CONTACT THE APPLICABLE INTERMEDIARY OR THE SOLICITATION AGENT. ANY BALLOT, OR
MASTER BALLOT VOTED BY YOUR NOMINEE ON YOUR BEHALF, RECEIVED AFTER THE VOTING
DEADLINE MAY NOT BE COUNTED.

     ANY BALLOT WHICH IS EXECUTED BY THE HOLDER OF AN ALLOWED CLAIM OR ANY
COMBINATION OF BALLOTS REPRESENTING CLAIMS OR EQUITY INTERESTS IN THE SAME CLASS
HELD BY THE SAME HOLDER BUT WHICH DOES NOT INDICATE AN ACCEPTANCE OR REJECTION
OF THE PLAN OR WHICH INDICATES BOTH AN ACCEPTANCE AND A REJECTION OF THE PLAN
SHALL BE DEEMED AN ACCEPTANCE OF THE PLAN.

     The Finance Company Debtors will publish the Confirmation Hearing Notice in
the national editions of The Wall Street Journal, The USA Today, as well as, the
Chicago Tribune, the Minneapolis Star Tribune, the Indianapolis Star, and the
St. Paul Pioneer Press, which will contain the Plan Objection Deadline and
Confirmation Hearing, in order to provide notification to persons who may not
otherwise receive notice by mail.

For all Holders:

     By signing and returning a Ballot, each Holder of Claims in Classes 3, 4
and 5 will also be certifying to the Bankruptcy Court and the Finance Company
Debtors that, among other things:

     o    such Holder has received and reviewed a copy of the Disclosure
          Statement and related Ballot and/or Master Ballot and acknowledges
          that the solicitation is being made pursuant to the terms and
          conditions set forth in the Plan;

     o    such Holder has cast the same vote on every Ballot completed by such
          Holder with respect to holdings of such Class of Claims;

                                       61


     o    no other Ballots with respect to such Class of Claims have been cast
          or, if any other Ballots have been cast with respect to such Class of
          Claims, such earlier Ballots are thereby revoked;

     o    the Finance Company Debtors have made available to such Holder or its
          agents all documents and information relating to the Plan and related
          matters reasonably requested by or on behalf of such Holder; and

     o    except for information provided by the Finance Company Debtors in
          writing, and by its own agents, such Holder has not relied on any
          statements made or other information received from any person with
          respect to the Plan.

     By signing and returning a Ballot, each Holder of Claims also acknowledges
that the securities being distributed pursuant to the Plan are not being
distributed pursuant to a registration statement filed with the United States
Securities and Exchange Commission or with any securities authority outside of
the United States and represents that any such securities will be acquired for
its own account and not with a view to any distribution of such securities in
violation of the United States Securities Act of 1933. It is expected that when
issued pursuant to the Plan, except with respect to entities deemed to be
underwriters, such securities will be exempt from the registration requirements
of the Securities Act by virtue of section 1145 of the Bankruptcy Code and may
be resold by the Holders thereof subject to the provisions of section 1145.

B.   VOTING TABULATION

     In tabulating votes, the following rules shall be used to determine the
claim amount associated with a Creditor's vote:

     o    If the Finance Company Debtors do not object to a Claim, the Claim
          amount for voting purposes shall be the Claim amount contained on a
          timely filed proof of claim or, if no proof of claim was filed, the
          non-contingent, liquidated and undisputed Claim amount listed in the
          Finance Company Debtors' schedules of liabilities.

     o    If the Finance Company Debtors object to a Claim, such Creditor's
          Ballot shall not be counted in accordance with Fed. R. Bankr. P.
          3018(a), unless temporarily allowed by the Court for voting purposes,
          after notice and a hearing.

     o    If a Creditor casts a Ballot and is listed on the Finance Company
          Debtors' schedules of liabilities as holding a Claim that is
          contingent, unliquidated or disputed, such Creditor's Ballot shall not
          be counted in accordance with Fed. R. Bankr. P. 3018(a), unless
          temporarily allowed by the Court for voting purposes, after notice and
          a hearing.

     o    If a Creditor believes that it should be entitled to vote on the Plan,
          then such Creditor must serve on the Finance Company Debtors and file
          with the Court a motion for an order pursuant to Fed. R. Bankr. P.
          3018(a) (a "Rule 3018(a) Motion") seeking temporary allowance for
          voting purposes. Such Rule 3018(a) Motion, with evidence in support
          thereof, must be filed no later than 6:00 p.m. CST, May [__], 2003
          (the "Rule 3018(a) Motion Deadline").

     o    Ballots cast by Creditors whose claims are not listed on the Finance
          Company Debtors' schedules of liabilities, but who timely file proofs
          of claim in unliquidated or unknown amounts that are not the subject
          of an objection filed before the commencement of the Confirmation
          Hearing, will count for satisfying the numerosity requirement of
          section 1126(c) of the Bankruptcy Code and will count as Ballots for
          Claims in the amount of $1.00 solely for the purpose of satisfying the
          dollar amount provisions of section 1126(c) of the Bankruptcy Code.

     o    In the case of publicly-traded securities, the principal amount or
          number of shares according to the records of the transfer agent for
          the particular series of securities, including a further breakdown, in
          the case of The Depository Trust Company ("DTC"), of the individual
          nominee holders which

                                       62


          are DTC participants, as of the Voting Record Date, shall be the Claim
          or interest amount, except that in no event shall a Nominee Holder be
          permitted to vote in excess of its position in DTC as of the Voting
          Record Date.

     The Claim amount established through the above process controls for voting
purposes only and does not constitute the Allowed amount of any Claim or Equity
Interest for distribution purposes.

     To ensure that its vote is counted, each Holder of a Claim must (a)
complete a Ballot; (b) indicate the Holder's decision either to accept or reject
the Plan in the boxes provided in the respective Ballot; and (c) sign and return
the Ballot to the address set forth on the envelope enclosed therewith.

     The Ballot does not constitute, and shall not be deemed to be, a proof of
claim or equity interest or an assertion or admission of a Claim.

     If a Holder holds Claims or Equity Interests in more than one Class under
the Plan, the Holder may receive more than one Ballot coded for each Class of
Claims held by such Holder.

     Creditors shall not split their vote within a claim; thus, each Creditor
shall be deemed to have voted the full amount of its Claims either to accept or
reject the Plan.

     Except to the extent the Finance Company Debtors determine in their
reasonable discretion, or as permitted by the Bankruptcy Court, Ballots received
after the Voting Deadline will not be accepted or counted by the Finance Company
Debtors in connection with the Finance Company Debtors' request for confirmation
of the Plan. The method of delivery of Ballots or Master Ballots to be sent to
the Solicitation Agent is at the election and risk of each Holder of a Claim,
provided that, except as otherwise provided in the Plan, such delivery will be
deemed made only when the original executed Ballot is actually received by the
Solicitation Agent. In all cases, sufficient time should be allowed to assure
timely delivery. Original executed Ballots or Master Ballots are required.
Delivery of a Ballot or Master Ballot by facsimile, e-mail or any other
electronic means will not be accepted. No Ballot or Master Ballot should be sent
to the Finance Company Debtors, any indenture trustee, or the Finance Company
Debtors' financial or legal advisors. The Finance Company Debtors expressly
reserve the right to amend, at any time and from time to time, the terms of the
Plan (subject to compliance with the requirements of section 1127 of the
Bankruptcy Code and the terms of the Plan regarding Modification). If the
Finance Company Debtors make material changes in the terms of the Plan or if the
Finance Company Debtors waive a material condition, the Finance Company Debtors
will disseminate additional solicitation materials and will extend the
solicitation, in each case to the extent directed by the Bankruptcy Court.

     If multiple Ballots or Master Ballots are received from or on behalf of an
individual Holder of a Claim with respect to the same Claims prior to the Voting
Deadline, the last ballot timely received will be deemed to reflect the voter's
intent and to supersede and revoke any prior Ballot or Master Ballot.

     If a Ballot or Master Ballot is signed by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation, or other
person acting in a fiduciary or representative capacity, such person shall be
required to (i) indicate such capacity when signing and (ii) unless otherwise
determined by the Finance Company Debtors, must submit proper evidence
satisfactory to the Finance Company Debtors to so act on behalf of a beneficial
interest Holder.

     The Finance Company Debtors, in their sole discretion, subject to contrary
order of the Bankruptcy Court, may waive any defect in any Ballot or Master
Ballot at any time, either before or after the close of voting, and without
notice. Except as otherwise provided herein, unless the Ballot or Master Ballot
being furnished is timely submitted on or prior to the Voting Deadline, the
Finance Company Debtors may, in their sole discretion, reject such Ballot or
Master Ballot as invalid and, therefore, not count it in connection with
confirmation of the Plan.

     In the event a designation is requested under section 1126(e) of the
Bankruptcy Code, any vote to accept or reject the Plan cast with respect to such
Claim or Equity Interest will not be counted for purposes of determining whether
the Plan has been accepted or rejected, unless the Bankruptcy Court orders
otherwise.

                                       63


     Any Holder of Impaired Claims who has delivered a valid Ballot voting on
the Plan may withdraw such vote solely in accordance with Bankruptcy Rule
3018(a).

     The Finance Company Debtors' interpretation of the terms and conditions of
the Plan shall be final and binding on all parties, unless otherwise directed by
the Bankruptcy Court.

     Subject to any contrary order of the Bankruptcy Court, the Finance Company
Debtors reserve the absolute right to reject any and all Ballots and Master
Ballots not proper in form, the acceptance of which would, in the opinion of the
Finance Company Debtors or their counsel, not be in accordance with the
provisions of the Bankruptcy Code. Subject to any contrary order of the
Bankruptcy Court, the Finance Company Debtors further reserve the right to waive
any defects or irregularities or conditions of delivery as to any particular
Ballot or Master Ballot unless otherwise directed by the Bankruptcy Court.
Neither the Finance Company Debtors, nor any other person or entity, will be
under any duty to provide notification of defects or irregularities with respect
to deliveries of Ballots or Master Ballots nor will any of them incur any
liabilities for failure to provide such notification. Unless otherwise directed
by the Bankruptcy Court, delivery of such Ballots or Master Ballots will not be
deemed to have been made until such irregularities have been cured or waived.
Ballots and Master Ballots previously furnished (as to which any irregularities
have not theretofore been cured or waived) will not be counted.

C.   VOTING PROCEDURES

     1.   Voting Record Date

          The Voting Record Date for purposes of determining which Holders of
Claims are entitled to vote on the Plan is April [__], 2003.

     2.   Beneficial Holders

          Any beneficial Holder of Claims holding as a record Holder in its own
name, shall vote on the Plan by completing and signing the Ballot and returning
it to the Solicitation Agent.

          Any beneficial Holder of the Beneficial Holder Claims who holds in
"street name" through a Nominee shall vote on the Plan either (i) if the Nominee
has provided a prevalidated Ballot, by completing and signing the prevalidated
Ballot and returning it directly to the Solicitation Agent or (ii) by promptly
completing and signing the Ballot and returning it to the Nominee in sufficient
time to allow the Nominee to process the Ballot and return a Master Ballot to
the Solicitation Agent by the Voting Deadline.

          Any Ballot returned to a Nominee by a beneficial Holder will not be
counted for purposes of accepting or rejecting the Plan until such Nominee
properly completes and timely delivers to the Solicitation Agent a Master Ballot
that reflects the vote of such Beneficial Holder.

     3.   Nominees

          Because of the complexity and difficulty associated with reaching
beneficial owners of publicly-traded securities, many of which hold their
securities in brokerage accounts and through several layers of ownership, the
Finance Company Debtors are distributing a Ballot (a) to each record Holder of
Claims derived from or based on publicly traded securities (collectively, the
"Beneficial Holders Claims") as of the Voting Record Date (as discussed in
Section VII.C.1 above) and (b) an appropriate number of copies to each bank or
brokerage firm (or the agent or other Nominee therefor) identified by the
Solicitation Agent as an entity through which beneficial owners hold the
Beneficial Holders Claims. Each Nominee will be requested to immediately
distribute a copy of this Disclosure Statement and accompanying materials
including the Ballots to all beneficial Holders for which it holds the
Beneficial Holders Claims. Each Nominee must summarize the individual votes of
its respective individual Beneficial Holders from their individual Beneficial
Holders' Ballots on a Master Ballot and shall return such Master Ballot to the
Solicitation Agent. These procedures will enable the Debtors to transmit
materials to the Holders of its publicly traded securities and afford Beneficial
Holders of the Beneficial Holders Claims a fair and reasonable

                                       64


opportunity to vote. In order for votes to be counted, all Ballots and Master
Ballots received from the Debtors must be returned to the Solicitation Agent by
the Voting Deadline as indicated on the Ballots.

          A Nominee may also pre-validate a Ballot for Holders of the Beneficial
Holders Claims by completing all the information to be entered on the Ballot
(the "Pre-Validated Ballot") and forwarding the Pre-Validated Ballot to the
beneficial Holder for voting. The Ballot may then be delivered directly to the
Solicitation Agent in the return envelope provided with the Ballot.

          If a beneficial Holder holds the Beneficial Holders Claims or any
combination thereof through more than one Nominee, such Beneficial Holder should
execute a separate Ballot for each block of Beneficial Holders Claims that it
holds through any Nominee and (unless the ballot is a Pre-Validated Ballot)
return the Ballot to the respective Nominee that holds the Beneficial Holders
Claims.

          If a Beneficial Holder holds a portion of its Beneficial Holders
Claims through a Nominee and another portion directly or in its own name as the
record Holder, such beneficial Holder should follow the procedures described
herein with respect to voting each such portion separately.

D.   THE CONFIRMATION HEARING

     Section 1128(a) of the Bankruptcy Code requires the Bankruptcy Court, after
notice, to hold a hearing on confirmation of the Plan (the "Confirmation
Hearing"). Section 1128(b) of the Bankruptcy Code provides that any
party-in-interest may object to confirmation of the Plan.

     The Bankruptcy Court has scheduled the Confirmation Hearing for May [__],
2003, before the Honorable Carol A. Doyle, United States Bankruptcy Judge, in
the United States Bankruptcy Court for the Northern District of Illinois,
located at the Everett McKinley Dirksen Building, 219 S. Dearborn, Chicago,
Illinois 60604. The Confirmation Hearing may be adjourned from time to time by
the Bankruptcy Court without further notice except for an announcement of the
adjourned date made at the Confirmation Hearing or any adjournment thereof.

     Objections to confirmation of the Plan must be filed and served on or
before May [__], 2003 in accordance with the Confirmation Hearing Notice
accompanying this Disclosure Statement. UNLESS OBJECTIONS TO CONFIRMATION ARE
TIMELY SERVED AND FILED IN COMPLIANCE WITH THE APPROVAL ORDER, THEY WILL NOT BE
CONSIDERED BY THE BANKRUPTCY COURT.

E.   STATUTORY REQUIREMENTS FOR CONFIRMATION OF THE PLAN

     At the Confirmation Hearing, the Bankruptcy Court will confirm the Plan
only if all of the requirements of section 1129 of the Bankruptcy Code are met.
Among the requirements for confirmation are that the Plan (i) is accepted by all
impaired Classes of Claims and Interests or, if rejected by an impaired Class,
that the Plan "does not discriminate unfairly" and is "fair and equitable" as to
such Class, (ii) is feasible, and (iii) is in the "best interests" of holders of
Claims and Interests impaired under the Plan. A Class is impaired if the Claims
in that Class will not be paid in full under the Plan.

     1.   Acceptance

          The Claims and Interests in Classes 1 and 2 are not impaired under the
Plan, and as a result the Holders of such Claims are deemed to have accepted the
Plan.

          Claims in Classes 3, 4, and 5 are impaired under the Plan, and as a
result, the holders of such Claims are entitled to vote thereon. Pursuant to
section 1129 of the Bankruptcy code, the Claims in Classes 3, 4 and 5 must
accept the Plan in order for it to be confirmed without application of the "fair
and equitable test," described below, to such Classes. As stated above, Classes
of Claims will have accepted the Plan if the Plan is accepted by at least
two-thirds in dollar amount and a majority in number of the Claims of each such
Class (other than any Claims of creditors designated under section 1126(e) of
the Bankruptcy Code) that have voted to accept or reject the Plan.

                                       65



          Interests in Class 6 are also impaired. CIHC, the only member of this
class, is deemed to reject the Plan.

     2.   Fair and Equitable Test

          The Debtors will seek to confirm the Plan notwithstanding the
nonacceptance or deemed nonacceptance of the Plan by any impaired Class of
Claims. To obtain such confirmation, it must be demonstrated to the Bankruptcy
Court that the Plan "does not discriminate unfairly" and is "fair and equitable"
with respect to such dissenting impaired Class. A plan does not discriminate
unfairly if the legal rights of a dissenting class are treated in a manner
consistent with the treatment of other classes whose legal rights are
substantially similar to those of the dissenting class and if no class receives
more than it is entitled to for its claims or interests. The Debtors believe
that the Plan satisfies this requirement.

          The Bankruptcy Code establishes different "fair and equitable" tests
for secured claims, unsecured claims and interests, as follows:

          (a) Secured Claims

          Either the plan must provide (i) that the Finance Company Holders of
such Claims retain the liens securing such Claims, whether the property subject
to such liens is retained by the Finance Company Debtors or transferred to
another entity, to the extent of the allowed amount of such Claims, and each
Holder of a Claim receives deferred cash payments totaling at least the allowed
amount of such Claim, of a value, as of the effective date of the plan, of at
least the value of such Holder's interest in the estate's interest in such
property; (ii) for the sale of any property that is subject to the liens
securing such Claims, free and clear of such liens, with such liens to attach to
the proceeds of such sale; or (iii) for the realization by such Holders of the
indubitable equivalent of such Claims.

          (b) Unsecured Claims

          Either (i) each Holder of an Impaired unsecured Claim receives or
retains under the plan property of a value equal to the amount of its Allowed
Claim or (ii) the Holders of Claims and Equity Interests that are junior to the
Claims of the dissenting class will not receive any property under the plan.

          (c) Equity Interests

          No Equity Interest Holder will receive any distributions under the
Plan.

          THE FINANCE COMPANY DEBTORS BELIEVE THAT THE PLAN MAY BE CONFIRMED ON
A NONCONSENSUAL BASIS (PROVIDED AT LEAST ONE IMPAIRED CLASS OF CLAIMS VOTES TO
ACCEPT THE PLAN). ACCORDINGLY, THE DEBTORS WILL DEMONSTRATE AT THE CONFIRMATION
HEARING THAT THE PLAN SATISFIES THE REQUIREMENTS OF SECTION 1129(b) OF THE
BANKRUPTCY CODE AS TO ANY NON-ACCEPTING CLASS.

     3.   Feasibility

          The Bankruptcy Code requires that confirmation of a plan is not likely
to be followed by the liquidation or the need for further financial
reorganization of a debtor. The Plan contemplates that all assets of the Finance
Company Debtors will ultimately be disposed of and all proceeds of the assets
will be distributed to the Creditors pursuant to the terms of the Plan. Since no
further financial reorganization of the Finance Company Debtors will be
possible, the Finance Company Debtors believe that the Plan meets the
feasibility requirement. In addition, based upon the proceeds resulting from the
Sale Transactions contemplated with CFN and GE, the Finance Company Debtors
believe that sufficient funds will exist at confirmation to make all payments
required by the Plan.

                                       66


     4.   "Best Interests" Test

          With respect to each impaired Class of Claims and Equity Interests,
confirmation of the Plan requires that each such holder either (x) accepts the
Plan or (y) receives or retains under the Plan property of a value, as of the
Effective Date of the Plan, that is not less than the value such holder would
receive or retain if the Finance Company Debtors were liquidated under chapter 7
of the Bankruptcy Code.

          This analysis requires the Bankruptcy Court to determine what the
Holders of Allowed Claims and Allowed Equity Interests in each impaired class
would receive from the liquidation of the Finance Company Debtors' assets and
properties in the context of chapter 7 liquidation cases. The cash amount which
would be available for the satisfaction of Unsecured Claims and Equity Interests
of the Finance Company Debtors would consist of the proceeds resulting from the
disposition of the unencumbered assets of the Finance Company Debtors, augmented
by the unencumbered Cash held by the Finance Company Debtors at the time of the
commencement of the liquidation cases. Such cash amount would be reduced by the
costs and expenses of the liquidation and by such additional administrative and
priority claims that may result from the termination of the Finance Company
Debtors' businesses and the use of chapter 7 for the purposes of liquidation.

          The Finance Company Debtors' costs of liquidation under chapter 7
would include the fees payable to a trustee in bankruptcy, as well as those
payable to attorneys, investment bankers and other professionals that such
trustee may engage, plus any unpaid expenses incurred by the Finance Company
Debtors during the Chapter 11 Cases, such as compensation for attorneys,
Advisors, accountants and costs and expenses of members of any official
committees that are allowed in the chapter 7 cases. In addition, claims could
arise by reason of the breach or rejection of obligations incurred and executory
contracts entered into or assumed by the Finance Company Debtors during the
pendency of the Chapter 11 Cases.

          The foregoing types of Claims and such other claims which may arise in
the liquidation cases or result from the pending Chapter 11 Cases would be paid
in full from the liquidation proceeds before the balance of those proceeds would
be made available to pay prepetition Claims.

          To determine if the Plan is in the best interests of each impaired
class, the value of the distributions from the proceeds of the liquidation of
the Finance Company Debtors' assets and properties (after subtracting the
amounts attributable to the aforesaid claims) is then compared with the value
offered to such classes of Claims and Equity Interests under the Plan.

          In applying the "best interests" test, it is possible that Claims and
Equity Interests in the chapter 7 cases may not be classified according to the
seniority of such Claims and Equity Interests. In the absence of a contrary
determination by the Bankruptcy Court, all pre-chapter 11 Unsecured Claims which
have the same rights upon liquidation would be treated as one class for the
purposes of determining the potential distribution of the liquidation proceeds
resulting from the chapter 7 cases of the Finance Company Debtors. The
distributions from the liquidation proceeds would be calculated on a Pro Rata
basis according to the amount of the Claim held by each Creditor. Therefore,
Creditors who claim to be third-party beneficiaries of any contractual
subordination provisions might have to seek to enforce such contractual
subordination provisions in the Bankruptcy Court or otherwise. The Finance
Company Debtors believe that the most likely outcome of liquidation proceedings
under chapter 7 would be the application of the rule of absolute priority of
distributions. Under that rule, no junior creditor receives any distribution
until all senior creditors are paid in full with interest and no stockholder
receives any distribution until all Creditors are paid in full with postpetition
interest. Consequently, the Finance Company Debtors believe that pursuant to
chapter 7 of the Bankruptcy Code, Holders of General Unsecured Claims and Equity
Interests would receive no distributions.

          After consideration of the effects that a chapter 7 liquidation would
have on the ultimate proceeds available for distribution to creditors in the
Chapter 11 Cases, including: (a) the increased costs and expenses of a
liquidation under chapter 7 arising from fees payable to a trustee in bankruptcy
and professional advisors to such trustee; and (b) the substantial increases in
claims which would be satisfied on a priority basis or on parity with creditors
in the Chapter 11 Cases, the Finance Company Debtors believe that Confirmation
of the Plan will provide each holder of an Allowed Claim with more than the
amount it would receive pursuant to liquidation of the Finance Company Debtors
under chapter 7 of the Bankruptcy Code.

                                       67



          The Finance Company Debtors also believe that the value of any
distributions from the liquidation proceeds to each class of Allowed Claims in a
chapter 7 case would be less than the value of distributions under the Plan
because such distributions in a chapter 7 case would not occur for a substantial
period of time. It is likely that distribution of the proceeds of the
liquidation could be delayed for at least a year or more after the completion of
such liquidation in order to resolve claims and prepare for distributions. In
the likely event litigation were necessary to resolve claims asserted in the
chapter 7 cases, the delay could be prolonged.

          Underlying the liquidation analysis are a number of estimates and
assumptions that, although developed and considered reasonable by management,
are inherently subject to significant economic and competitive uncertainties and
contingencies beyond the control of the Finance Company Debtors and management.
The liquidation analysis is also based upon assumptions with regard to
liquidation decisions that are subject to change. Accordingly, the values
reflected may not be realized if the Finance Company Debtors were, in fact, to
undergo such a liquidation. The chapter 7 liquidation period is assumed to be a
period of six to 18 months following the discontinuance of operations. This
period would allow for the collection of receivables, selling of assets and the
winding down of operations.

                                      VI.

                          PLAN-RELATED RISK FACTORS AND
              ALTERNATIVES TO CONFIRMING AND CONSUMMATING THE PLAN

     ALL IMPAIRED HOLDERS SHOULD READ AND CAREFULLY CONSIDER THE FACTORS SET
FORTH BELOW, AS WELL AS THE OTHER INFORMATION SET FORTH OR OTHERWISE REFERENCED
IN THIS AMENDED MODIFIED DISCLOSURE STATEMENT, PRIOR TO VOTING TO ACCEPT OR
REJECT THE PLAN.

     The only alternative to the Plan is the liquidation of the Finance Company
Debtors' Estates under chapter 7 of the Bankruptcy Code. After evaluating this
alternative, the Finance Company Debtors have concluded that the Plan is the
best alternative and will maximize recoveries by parties in interest assuming
confirmation of the Plan. Nonetheless, there are a number of risk factors that
Holders of Claims should consider. Moreover, Holders should also consider the
impact of a chapter 7 alternative. Included in this section is a summary of the
Finance Company Debtors' analysis supporting their conclusion that such a
chapter 7 liquidation would not provide the highest value to
parties-in-interest.

A.   CERTAIN BANKRUPTCY CONSIDERATIONS

     1.   Parties-in-Interest May Object to the Finance Company Debtors'
          Classification of Claims.

          Section 1122 of the Bankruptcy Code provides that a plan of
reorganization may place a class or an interest in a particular class only if
such claim or interest is substantially similar to the other claims or interests
in such class. The Finance Company Debtors believe that the classification of
claims and interests under the Plan complies with the requirements set forth in
the Bankruptcy Code. However, there can be no assurance that the Bankruptcy
Court will reach the same conclusion.

     2.   The Finance Company Debtors May be Unable to Close One or Both of the
          Sale Transactions.

          The Finance Company Debtors anticipate that they will be able to close
the Sale Transactions with CFN and GE. There are many factors outside of the
Finance Company Debtors control, however, including the ability of CFN and/or GE
to finance the Sale Transactions and the ability of the Finance Company Debtors
to obtain necessary governmental consents to the sale or transfer of certain of
their assets. Moreover, it is possible that the Finance Company Debtors may not
be able to meet various closing conditions, and that either CFN or GE would
elect to cancel their respective sale agreements as a result of these failures.

                                       68


     3.   The Finance Company Debtors May Not be Able to Secure Confirmation of
          the Plan.

          There can be no assurance that the Finance Company Debtors will
receive the requisite acceptances to confirm the Plan. Even if the requisite
acceptances are received, there can be no assurance that the Bankruptcy Court
will confirm the Plan. A non-accepting creditor or equity holder of the Finance
Company Debtors might challenge the adequacy of this Disclosure Statement or
contend that the balloting procedures and results are not in compliance with the
Bankruptcy Code or Bankruptcy Rules. Even if the Bankruptcy Court determined
that the Disclosure Statement and the balloting procedures and results were
appropriate, the Bankruptcy Court could still decline to confirm the Plan if it
found that any of the statutory requirements for confirmation had not been met,
including that the terms of the Plan are fair and equitable to non-accepting
Classes. Section 1129 of the Bankruptcy Code sets forth the requirements for
confirmation and requires, among other things, a finding by the Bankruptcy Court
that the Plan "does not unfairly discriminate" and is "fair and equitable" with
respect to any non-accepting Classes, confirmation of the Plan is not likely to
be followed by a liquidation or a need for further financial reorganization and
the value of distributions to non-accepting Holders of claims and interests
within a particular class under the Plan will not be less than the value of
distributions such Holders would receive if the Finance Company Debtors were
liquidated under chapter 7 of the Bankruptcy Code. While there can be no
assurance that these requirements will be met, the Finance Company Debtors
believe that the Plan will not be followed by a need for further liquidation and
that non-accepting Holders within each Class under the Plan will receive
distributions at least as great as they would receive following a liquidation
under chapter 7 of the Bankruptcy Code when taking into consideration all
administrative claims and costs associated with any such chapter 7 case. The
Finance Company Debtors believe that Holders of Unsecured Claims in the Finance
Company Debtors' would receive no distribution under a liquidation pursuant to
chapter 7.

     4.   The Confirmation and Consummation of the Plan Are Also Subject to
          Certain Conditions as Described Herein.

          If the Plan is not confirmed, it is unclear whether another
liquidating plan could be implemented and what distributions Holders of Claims
or Equity Interests ultimately would receive with respect to their Claims or
Equity Interests. If an alternative liquidating plan could not be agreed to, it
is possible that the Finance Company Debtors would have to liquidate their
assets under chapter 7, in which case it is likely that Holders of Claims would
receive substantially less favorable treatment than they would receive under the
Plan.

     5.   The Finance Company Debtors May Object to the Amount or Classification
          of a Claim.

          The Finance Company Debtors reserve the right to object to the amount
or classification of any Claim or Equity Interest. The estimates set forth in
this Disclosure Statement cannot be relied on by any creditor or equityholder
whose Claim or Equity Interest is subject to an objection. Any such Claim or
Equity Interest Holder may not receive its specified share of the estimated
distributions described in this Disclosure Statement.

     6.   Nonconsensual Confirmation.

          In the event any impaired class of claims or equity interests does not
accept a plan of reorganization, a bankruptcy court may nevertheless confirm
such plan at the proponents' request if at least one impaired class has accepted
the plan (with such acceptance being determined without including the vote of
any "insider" in such class), and as to each impaired class that has not
accepted the plan, the bankruptcy court determines that the plan "does not
discriminate unfairly" and is "fair and equitable" with respect to the
dissenting impaired classes. See Article V.E above, entitled "Voting and
Confirmation -- Statutory Requirements for Confirmation of the Plan." The
Finance Company Debtors believe that the Plan satisfies these requirements, and
pursuant to the Plan, will request such nonconsensual confirmation in accordance
with subsection 1129(b) of the Bankruptcy Code in the event either Class 3, 4, 5
or 6 accepts the Plan.

B.   LIQUIDATION UNDER CHAPTER 7

     If no plan of reorganization can be confirmed, the Finance Company Debtors'
Chapter 11 Cases may be converted to cases under chapter 7 of the Bankruptcy
Code in which a trustee would be elected or appointed to

                                       69


liquidate the assets of the Finance Company Debtors for distribution to the
holders of Claims and, if permitted, Interests in accordance with the priorities
established by the Bankruptcy Code. A discussion of the effect that a chapter 7
liquidation would have on the recovery of holders of Allowed Claims and Allowed
Interests is set forth in Section V.E.4 herein, entitled "Voting and
Confirmation Procedures - Statutory Requirements for Confirmation of the Plan -
"Best Interests" Test."

     THESE RISK FACTORS CONTAIN CERTAIN STATEMENTS THAT ARE "FORWARD-LOOKING
STATEMENTS" WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995. THESE STATEMENTS ARE SUBJECT TO A NUMBER OF ASSUMPTIONS, RISKS AND
UNCERTAINTIES, MANY OF WHICH ARE BEYOND THE CONTROL OF THE FINANCE COMPANY
DEBTORS, INCLUDING THE IMPLEMENTATION OF THE PLAN, THE CONTINUING AVAILABILITY
OF SUFFICIENT BORROWING CAPACITY OR OTHER FINANCING TO FUND OPERATIONS, THE
CLOSING OF THE SALE TRANSACTIONS, NATURAL DISASTERS AND UNUSUAL WEATHER
CONDITIONS, TERRORIST ACTIONS OR ACTS OF WAR, ACTIONS OF GOVERNMENTAL BODIES,
AND OTHER MARKET AND COMPETITIVE CONDITIONS. HOLDERS OF CLAIMS AND EQUITY
INTERESTS ARE CAUTIONED THAT THE FORWARD-LOOKING STATEMENTS SPEAK AS OF THE DATE
MADE AND ARE NOT GUARANTEES OF FUTURE PERFORMANCE. ACTUAL RESULTS OR
DEVELOPMENTS MAY DIFFER MATERIALLY FROM THE EXPECTATIONS EXPRESSED OR IMPLIED IN
THE FORWARD-LOOKING STATEMENTS, AND THE FINANCE COMPANY DEBTORS UNDERTAKE NO
OBLIGATION TO UPDATE ANY SUCH STATEMENTS.

                                      VII.

                     CERTAIN FEDERAL INCOME TAX CONSEQUENCES

     The following discussion is a summary of certain U.S. federal income tax
consequences of the Plan to the Finance Company Debtors and to holders of Claims
and Interests. This discussion is based on the Internal Revenue Code, Treasury
Regulations promulgated and proposed thereunder, judicial decisions and
published administrative rules and pronouncements of the IRS as in effect on the
date hereof. Due to the complexity of certain aspects of the Plan, the lack of
applicable legal precedent, the possibility of changes in the law, the
differences in the nature of the Claims (including Claims within the same Class)
and Equity Interests, the holders' status and method of accounting (including
holders within the same Class) and the potential for disputes as to legal and
factual matters with the IRS, the tax consequences described herein are subject
to significant uncertainties. No legal opinions have been requested from counsel
with respect to any of the tax aspects of the Plan and no rulings have been or
will be requested from the IRS with respect to the any of the issues discussed
below. Furthermore, legislative, judicial or administrative changes may occur,
perhaps with retroactive effect, which could affect the accuracy of the
statements and conclusions set forth below as well as the tax consequences to
the Finance Company Debtors and the Holders of Claims and Equity Interests.

     This discussion does not purport to address all aspects of U.S. federal
income taxation that may be relevant to the Finance Company Debtors or the
holders of Claims or Interests in light of their personal circumstances, nor
does the discussion deal with tax issues with respect to taxpayers subject to
special treatment under the U.S. federal income tax laws (including, for
example, banks, governmental authorities or agencies, pass-through entities,
brokers and dealers in securities, insurance companies, financial institutions,
tax-exempt organizations, small business investment companies, regulated
investment companies and foreign taxpayers). This discussion does not address
the tax consequences to Holders of Claims who did not acquire such Claims at the
issue price on original issue. No aspect of foreign, state, local or estate and
gift taxation is addressed.

     THE FOLLOWING SUMMARY IS NOT A SUBSTITUTE FOR CAREFUL TAX PLANNING AND
ADVICE BASED UPON THE PERSONAL CIRCUMSTANCES OF EACH HOLDER OF A CLAIM OR
INTEREST. EACH HOLDER OF A CLAIM OR INTEREST IS URGED TO CONSULT WITH SUCH
HOLDER'S TAX ADVISORS CONCERNING THE U.S. FEDERAL, STATE, LOCAL, FOREIGN AND
OTHER TAX CONSEQUENCES APPLICABLE UNDER THE PLAN.

                                       70


A.   Consequences to Finance Company Debtors

     Under the Plan, the Finance Company Debtors are transferring substantially
all their remaining assets to the Post-Consummation Estate. These transfers of
assets may result in the recognition of taxable gain or loss to the Finance
Company Debtors.

B.   Federal Income Tax Treatment of Post-Consummation Estate

     1.   Classification of Post-Consummation Estate

          Pursuant to the Plan, the Finance Company Debtors will transfer the
Post-Consummation Estate Assets to the Post-Consummation Estate and the
Post-Consummation Estate will become obligated to make Distributions in
accordance with the Plan. The Plan provides, and this discussion assumes, that
the Post-Consummation Estate will be treated for federal income tax purposes as
a "Post-Consummation Estate," as defined in Treasury Regulation Section
301.7701-4(d), and will therefore be taxed as a grantor trust, of which the
Beneficiaries will be treated as the owners and grantors thereof. Accordingly,
because a grantor trust is treated as a pass-through entity for federal income
tax purposes, no tax should be imposed on the Post-Consummation Estate itself or
on the income earned or gain recognized by the Post-Consummation Estate.
Instead, the Beneficiaries will be taxed on their allocable shares of such net
income or gain in each taxable year (determined in accordance with the
Post-Consummation Estate Agreement), whether or not they received any
distributions from the Post-Consummation Estate in such taxable year.

          Although the Post-Consummation Estate has been structured with the
intention of complying with guidelines established by the IRS in Rev. Proc.
94-45, 1994-2 C.B. 684, for the formation of Post-Consummation Estates, it is
possible that the IRS could require a different characterization of the
Post-Consummation Estate, which could result in different and possibly greater
tax liability to the Post-Consummation Estate and/or the holders of Allowed
Claims. No ruling has been or will be requested from the IRS concerning the tax
status of the Post-Consummation Estate and there can be no assurance the IRS
will not require an alternative characterization of the Post-Consummation
Estate. If the Post-Consummation Estate were determined by the IRS to be taxable
not as a Post-Consummation Estate, as described in Treasury Regulation Section
301.7701-4(d), the taxation of the Post-Consummation Estate and the transfer of
assets by the Finance Company Debtors to the Post-Consummation Estate could be
materially different than is described herein and could have a material adverse
effect on the holders of Allowed Claims.

     2.   Tax Reporting

          The Plan Administrator will file tax returns with the IRS for the
Post-Consummation Estate as a grantor trust in accordance with Treasury
Regulation Section 1.671-4(a). The Plan Administrator will also send to each
Beneficiary a separate statement setting forth the Beneficiary's allocable share
of items of income, gain, loss, deduction or credit and will instruct the
Beneficiary to report such items on such Beneficiary's federal income tax
return.

     3.   Reserve for Disputed Claims

          The Plan Administrator must establish a reserve on account of any
distributable amounts required to be set aside on account of Disputed Claims.
Such amounts, net of certain expenses, shall be distributed as such Disputed
Claims are resolved as such amounts would have been distributable had the
Disputed Claims been Allowed Claims as of the Effective Date, together with any
net earnings related thereto. The Post-Consummation Estate will pay taxes on the
taxable net income or gain allocable to holders of Disputed Claims on behalf of
such holders and, when such Disputed Claims are ultimately resolved, holders
whose Disputed Claims are determined to be Allowed Claims will receive
distributions from the Post-Consummation Estate net of taxes which the
Post-Consummation Estate had previously paid on their behalf.

                                       71



C.   Consequence to Holders of Claims

     The federal income tax consequences of the Plan to a holder of a Claim will
depend upon several factors, including but not limited to: (i) the origin of the
holder's Claim, (ii) whether the holder is a resident of the United States for
tax purposes (or falls into any of the special classes of taxpayers excluded
from this discussion as noted above), (iii) whether the holder reports income on
the accrual or cash basis method, (iv) whether the holder has taken a bad debt
deduction or worthless security deduction with respect to this Claim and (v)
whether the holder receives distributions under the Plan in more than one
taxable year. HOLDERS ARE STRONGLY ADVISED TO CONSULT THEIR TAX ADVISORS WITH
RESPECT TO THE TAX TREATMENT UNDER THE PLAN OF THEIR PARTICULAR CLAIMS.

     1.   Holders of Claims

          Generally, a holder of an Allowed Claim will recognize gain or loss
equal to the difference between the "amount realized" by such holder and such
holder's adjusted tax basis in the Allowed Claim. The "amount realized" is equal
to the sum of the Cash and the fair market value of any other consideration
received under the Plan in respect of a holder's Claim, including, to the extent
such holder is a Beneficiary of the Post-Consummation Estate, the fair market
value of each such holder's proportionate share of the assets transferred to the
Post-Consummation Estate on behalf of and for the benefit of such holder (to the
extent that such Cash or other property is not allocable to any portion of the
Allowed Claim representing accrued but unpaid interest (see discussion below)).

          The transfer of the Post-Consummation Estate Assets to the
Post-Consummation Estate by the Finance Company Debtors should be treated for
federal income tax purposes as a transfer of such Post-Consummation Estate
Assets to the holders of Allowed Claims to the extent they are Beneficiaries of
the Post-Consummation Estate, followed by a deemed transfer of such
Post-Consummation Estate Assets by such Beneficiaries to the Post-Consummation
Estate. As a result of such treatment, such holders of Allowed Claims will have
to take into account the fair market value of their pro rata share, if any, of
the Post-Consummation Estate Assets transferred on their behalf to the
Post-Consummation Estate in determining the amount of gain realized and required
to be recognized upon consummation of the Plan on the Effective Date. In
addition, since a holder's share of the assets held in the Post-Consummation
Estate may change depending upon the resolution of Disputed Claims, the holder
may be prevented from recognizing any loss in connection with consummation of
the Plan until the time that all such Disputed Claims have been resolved. The
Plan Administrator will provide the holders of Allowed Claims with valuations of
the assets transferred to the Post-Consummation Estate on behalf of and for the
benefit of such holders and such valuations should be used consistently by the
Post-Consummation Estate and such holders for all federal income tax purposes.
HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING THE RECOGNITION OF GAIN
OR LOSS, FOR FEDERAL INCOME TAX PURPOSES, ON THE SATISFACTION OF THEIR ALLOWED
CLAIMS.

     2.   Distributions in Discharge of Accrued but Unpaid Interest

          Pursuant to the Plan, distributions received in respect of Allowed
Claims will be allocated first to the principal amount of such Allowed Claims,
with any excess allocated to accrued but unpaid interest. However, there is no
assurance that the IRS will respect such allocation for federal income tax
purposes. Holders of Allowed Claims not previously required to include in their
taxable income any accrued but unpaid interest on an Allowed Claim may be
treated as receiving taxable interest, to the extent any consideration they
receive under the Plan is allocable to such accrued but unpaid interest. Holders
previously required to include in their taxable income any accrued but unpaid
interest on an Allowed Claim may be entitled to recognize a deductible loss, to
the extent that such accrued but unpaid interest is not satisfied under the
Plan. HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING THE ALLOCATION OF
CONSIDERATION RECEIVED IN SATISFACTION OF THEIR ALLOWED CLAIMS AND THE FEDERAL
INCOME TAX TREATMENT OF ACCRUED BUT UNPAID INTEREST.

                                       72


     3.   Character of Gain or Loss; Tax Basis; Holding Period

          The character of any gain or loss as long-term or short-term capital
gain or loss or as ordinary income or loss recognized by a holder of Allowed
Claims under the Plan will be determined by a number of factors, including, but
not limited to, the status of the holder, the nature of the Allowed Claim in
such holder's hands, the purpose and circumstances of its acquisition, the
holder's holding period of the Allowed Claim, and the extent to which the holder
previously claimed a deduction for the worthlessness of all or a portion of the
Allowed Claim. The holder's aggregate tax basis for any consideration received
under the Plan will generally equal the amount realized in the exchange (less
any amount allocable to interest as described in the next paragraph). The
holding period for any consideration received under the Plan will generally
begin on the day following the receipt of such consideration.

D.   Consequences to Holders of Interests

     Pursuant to the Plan, all Interests in all of the Finance Company Debtors
are being extinguished. A holder of any Interest extinguished under the Plan
should generally be allowed a "worthless stock deduction" in an amount equal to
the holder's adjusted basis in the holder's Interest. A "worthless stock
deduction" is a deduction allowed to a holder of a corporation's stock for the
taxable year in which such stock becomes worthless. If the holder held the
Interest as a capital asset, the loss will be treated as a loss from the sale or
exchange of such capital asset. Capital gain or loss will be long-term if the
Interest was held by the holder for more than one year and otherwise will be
short-term. Any capital losses realized generally may be used by a corporate
holder only to offset capital gains, and by an individual holder only to the
extent of capital gains plus $3,000 of other income.

     Under the Plan, the Finance Company Debtors are transferring their
remaining assets to the Post-Consummation Estate.

E.   Withholding

     All Distributions to holders of Allowed Claims under the Plan are subject
to any applicable withholding, including employment tax withholding. The Finance
Company Debtors and/or the Post-Consummation Estate will withhold appropriate
employment taxes with respect to payments made to a holder of an Allowed Claim
which constitutes a payment for compensation. Payors of interest, dividends, and
certain other reportable payments are generally required to withhold at a rate
not in excess of 30.5% of such payments if the payee fails to furnish such
payee's correct taxpayer identification number (social security number or
employer identification number), to the payor. The Finance Company Debtors
and/or the Post-Consummation Estate may be required to withhold a portion of any
payments made to a holder of an Allowed Claim if the holder (i) fails to furnish
the correct social security number or other taxpayer identification number
("TIN") of such holder, (ii) furnishes an incorrect TIN, (iii) has failed to
properly report interest or dividends to the IRS in the past, or (iv) under
certain circumstances, fails to provide a certified statement signed under
penalty of perjury, that the TIN provided is the correct number and that such
holder is not subject to backup withholding. Backup withholding is not an
additional tax but merely an advance payment, which may be refunded to the
extent it results in an overpayment of tax. Certain persons are exempt from
backup withholding, including, in certain circumstances, corporations and
financial institutions.

     AS INDICATED ABOVE, THE FOREGOING IS INTENDED TO BE A SUMMARY ONLY AND NOT
A SUBSTITUTE FOR CAREFUL TAX PLANNING WITH A TAX PROFESSIONAL. THE FEDERAL,
STATE, LOCAL AND OTHER TAX CONSEQUENCES OF THE PLAN ARE COMPLEX AND, IN SOME
CASES, UNCERTAIN. ACCORDINGLY, EACH HOLDER OF A CLAIM OR INTEREST IS URGED TO
CONSULT SUCH HOLDER'S TAX ADVISORS CONCERNING THE FEDERAL, STATE, LOCAL AND
OTHER TAX CONSEQUENCES APPLICABLE UNDER THE PLAN.

                                       73


                                     VIII.

                            MISCELLANEOUS PROVISIONS

     Certain additional miscellaneous information regarding the Plan and the
Chapter 11 Cases is set forth below.

A.   PENDING LITIGATION

     The Finance Company Debtors are involved from time to time in routine
litigation that is incidental to their businesses. A summary of such pending
litigation is contained in Article I.D herein. The Finance Company Debtors do
not believe that the outcome of this litigation will have a materially adverse
effect upon the Finance Company Debtors. The Finance Company Debtors expressly
reserve their rights to, among other things, enforce, pursue, prosecute and
settle (or decline to do any of the foregoing) all claims, defenses or causes of
action, among other things, that arise from or relate in any way to the
operation of their business. The Plan does not impair the rights of a person or
entity involved in any currently pending litigation with the Finance Company
Debtors of which they have knowledge.

B.   SUCCESSORS AND ASSIGNS

     The rights, benefits and obligations of any Person or Entity named or
referred to in the Plan shall be binding on, and shall inure to the benefit of
any heir, executor, administrator, successor or assign of such Person or Entity.

C.   RESERVATION OF RIGHTS

     None of the filing of the Plan, any statement or provision contained
herein, or the taking of any action by the Finance Company Debtors with respect
to the Plan shall be or shall be deemed to be an admission or waiver of any
rights of the Finance Company Debtors with respect to the Holders of Claims or
Equity Interests prior to the Effective Date.

D.   SERVICE OF DOCUMENTS

     Except as otherwise provided by order of the Bankruptcy Court, any
pleading, notice or other document required by the Plan to be served on or
delivered to Post-Consummation Estate shall be sent by first class U.S. mail,
postage prepaid to:

                                                       
Counsel to the Finance Company Debtors                       Finance Company Debtors' Solicitation Agent
- --------------------------------------                       -------------------------------------------
Kirkland & Ellis                                             Bankruptcy Management Corporation
200 East Randolph Drive                                      1330 E. Franklin Avenue
Chicago, Illinois 60601                                      El Segundo, CA 90245
Attn:  Anne Marrs Huber, Esq.                                Attn: Finance Company Debtors' Solicitation Agent
       Anup Sathy, Esq.
       Roger J. Higgins, Esq.

United States Trustee                                        Counsel to the Official Committee of the Finance
- ---------------------                                        Company Debtors
Office of the United States Trustee (Region 11)              ---------------
227 West Monroe Street, Suite 3350                           Greenberg Traurig, P.C.
Chicago, Illinois 60606                                      77 West Wacker Drive, Suite 2500
Attn: Ira Bodenstein, Esq.                                   Chicago, Illinois 60601
                                                             Attn: Keith J. Shapiro, Esq.



                                       74

                                                          

Counsel for the Official Committee of the                    Counsel to the Official Committee of the Trust
Reorganizing Debtors                                         Preferred Securities
- --------------------                                         --------------------
Fried Frank Harris Shriver & Jacobson                        Saul Ewing LLP
One New York Plaza                                           222 Delaware Avenue, Suite 1200
New York, New York 10004                                     Wilmington, Delaware 19801
Attn: Brad Eric Scheler, Esq.                                Attn: Donald J. Detweiler, Esq.

Mayer, Brown, Rowe & Maw                                     Jenner & Block, LLC
190 South LaSalle Street                                     One IBM Plaza
Chicago, Illinois 60603-3441                                 Chicago, Illinois 60611
Attn: Thomas Kiriakos, Esq.                                  Attn: Catherine L. Steege, Esq.




                                      IX.

                                 RECOMMENDATION

     In the opinion of the Finance Company Debtors, the Plan is preferable to
the alternatives described herein because it provides for a larger distribution
to the Holders than would otherwise result in a liquidation under Chapter 7 of
the Bankruptcy Code. In addition, any alternative other than confirmation of the
Plan could result in extensive delays and increased administrative expenses
resulting in smaller distributions to the Holders of Claims. Accordingly, the
Finance Company Debtors recommend that Holders of Claims entitled to vote on the
Plan support confirmation of the Plan and vote to accept the Plan.








                                       75






Dated:  March __, 2003                       Respectfully Submitted,


CONSECO FINANCE CORP.                        CRUM-REED GENERAL AGENCY, INC.

By: /s/ Charles H. Cremens                   By: /s/ Joseph E. Huguelet, III
   ------------------------------               --------------------------------
Name:    Charles H. Cremens                  Name:    Joseph E. Huguelet, III
Title:   President & CEO                     Title:   President


CONSECO FINANCE SERVICING CORP.              GREEN TREE FINANCE CORP.-TWO

By: /s/ Charles H. Cremens                 By: /s/ Charles H. Cremens
   ------------------------------             --------------------------------
Name:    Charles H. Cremens                Name:    Charles H. Cremens
Title:   President                         Title:   President



GREEN TREE RESIDUAL FINANCE CORP. I        CONSECO FINANCE CANADA COMPANY
                                           (Green Tree Financial Canada Company)

By: /s/ Charles H. Cremens                 By:  /s/ Charles H. Cremens
   ------------------------------              --------------------------------
Name:    Charles H. Cremens                Name:    Charles H. Cremens
Title:   President                         Title:   President



GREEN TREE FINANCE CORP.-FIVE

By: /s/ Charles H. Cremens                 CONSECO AGENCY OF KENTUCKY, INC.
   ------------------------------          (Green Tree Agency of Kentucky, Inc.)
Name:    Charles H. Cremens
Title:   President
                                           By: /s/ Joseph E. Huguelet, III
                                              ----------------------------------
                                           Name:    Joseph E. Huguelet, III
                                           Title:   President

CONSECO FINANCE NET INTEREST MARGIN
FINANCE CORP. I

By:  /s/ Charles H. Cremens                LANDMARK MANUFACTURED HOUSING, INC.
   ------------------------------
Name:    Charles H. Cremens
Title:   President                         By:  /s/ Brian F. Corey
                                              ----------------------------------
                                           Name:    Brian F. Corey
                                           Title:   Senior Vice President and
                                                    Secretary

CONSECO FINANCE NET INTEREST MARGIN
FINANCE CORP. II

By: /s/ Charles H. Cremens
   ------------------------------
Name:    Charles H. Cremens
Title:   President



CONSECO AGENCY OF ALABAMA, INC. (Green     CONSECO FINANCE CANADA HOLDING
Tree Agency of Alabama, Inc.)              COMPANY (Green Tree Financial Canada
                                           Holding Company)
By: /s/ Joseph E. Huguelet, III
   ------------------------------
Name:    Joseph E. Huguelet, III           By: /s/ Charles H. Cremens
Title:   President                            ----------------------------------
                                           Name:    Charles H. Cremens
                                           Title:   President


RICE PARK PROPERTIES CORPORATION
                                           CONSECO FINANCE CREDIT CORP. (Green
By: /s/ James R. Breakey                   Tree Credit Corp.)
   ------------------------------
Name:    James R. Breakey
Title:   President                         By: /s/ Charles H. Cremens
                                              ----------------------------------
                                           Name:    Charles H. Cremens
                                           Title:   President


GREEN TREE FLOORPLAN FUNDING CORP.

By: /s/ Charles H. Cremens                 CONSECO AGENCY OF NEW YORK, INC.
   ------------------------------          (GTA Agency, Inc.)
Name:    Charles H. Cremens
Title:   President
                                           By: /s/ Joseph E. Huguelet, III
                                              ----------------------------------
                                           Name:    Joseph E. Huguelet, III
                                           Title:   President



CONSECO FINANCE LOAN COMPANY (Green
Tree Financial Loan Company)

By:  /s/ Charles H. Cremens                CONSECO AGENCY INC. (Green Tree
   ------------------------------          Agency, Inc.)
Name:    Charles H. Cremens
Title:   President
                                           By: /s/ Joseph E. Huguelet, III
                                              ----------------------------------
                                           Name:    Joseph E. Huguelet, III
                                           Title:   President

CONSECO FINANCE CONSUMER DISCOUNT
COMPANY (Green Tree Consumer Discount
Company)
                                           CONSECO FINANCE CORP.-ALABAMA (Green
By:  /s/ Charles H. Cremens                Tree Financial Corp.-Alabama)
    -----------------------------
Name:    Charles H. Cremens
Title:   President
                                           By: /s/ Charles H. Cremens
                                              ----------------------------------
                                           Name:    Charles H. Cremens
                                           Title:   President




CONSECO FINANCE CREDIT CARD CORP.          MILL CREEK SERVICING CORPORATION

By: /s/ Charles H. Cremens                 By: /s/ Todd G. Woodard
   ------------------------------             ----------------------------------
Name:    Charles H. Cremens                Name:    Todd G. Woodard
Title:   President                         Title:   President



CONSECO AGENCY OF NEVADA, INC.
(Green Tree Agency of Nevada, Inc.)


By: /s/ Joseph E. Huguelet, III
   ------------------------------
Name:    Joseph E. Huguelet, III
Title:   President









Prepared by:

James H.M. Sprayregen, P.C.
Richard L. Wynne
Anne Marrs Huber
Anup Sathy
Ross Kwasteniet
KIRKLAND & ELLIS
200 East Randolph Drive
Chicago, IL 60601-6636
(312) 861-2000 (telephone)
(312) 861-2200 (facsimile)

COUNSEL TO DEBTORS AND DEBTORS IN
POSSESSION

EX-2

                                                                     Exhibit 2.5

                      IN THE UNITED STATES BANKRUPTCY COURT
                      FOR THE NORTHERN DISTRICT OF ILLINOIS
                                EASTERN DIVISION



In re:                                             )   Chapter 11
                                                   )
Conseco, Inc., et al.,(1)                          )
                                                   )   Case No. 02 B49672
                        Debtors.                   )   Honorable Carol A. Doyle
                                                   )   (Jointly Administered)



        FINANCE COMPANY DEBTORS' JOINT LIQUIDATING PLAN OF REORGANIZATION
           PURSUANT TO CHAPTER 11 OF THE UNITED STATES BANKRUPTCY CODE






James H.M. Sprayregen, P.C. (ARDC. No. 6190206)
Richard L. Wynne (Admitted pro hac vice)
Anne Marrs Huber (ARDC No. 6226828)
Anup Sathy (ARDC No. 6230191)
Roger J. Higgins (ARDC No. 6257915)
Erin N. Brady (Admitted pro hac vice)
Ross M. Kwasteniet (ARDC No. 6276604)
Kirkland & Ellis
200 East Randolph Drive
Chicago, IL 60601-6636
(312) 861-2000 (telephone)
(312) 861-2200 (facsimile)

Counsel for the Debtors and Debtors-in-Possession
Dated:  April 1, 2003

- -------------------------
1    The Debtors are the following entities: (i) Conseco, Inc., CIHC,
     Incorporated, CTIHC, Inc., Partners Health Group, Inc., (collectively the
     "Holding Company Debtors"), (ii) Conseco Finance Corp. and Conseco Finance
     Servicing Corp (the "CFC Debtors" and together with the Holding Company
     Debtors, the "Initial Debtors"), (iii) Conseco Finance Corp. - Alabama,
     Conseco Finance Credit Corp., Conseco Finance Consumer Discount Company,
     Conseco Finance Canada Holding Company, Conseco Finance Canada Company,
     Conseco Finance Loan Company, Rice Park Properties Corporation, Landmark
     Manufactured Housing, Inc., Conseco Finance Net Interest Margin Finance
     Corp. I, Conseco Finance Net Interest Margin Finance Corp. II, Green Tree
     Finance Corp. - Two, Conseco Agency of Nevada, Inc., Conseco Agency of New
     York, Inc., Green Tree Floorplan Funding Corp., Conseco Agency, Inc.,
     Conseco Agency of Alabama, Inc., Conseco Agency of Kentucky, Inc., and
     Crum-Reed General Agency, Inc. (collectively, the "CFC Subsidiary
     Debtors"), Mill Creek Servicing Corporation, Conseco Finance Credit Card
     Funding Corp., Green Tree Residual Finance Corp. I, and Green Tree Finance
     Corp.-5 (the "New CFC Filing Entities", together with the CFC Debtors and
     the CFC Subsidiary Debtors, the "Finance Company Debtors").


                                TABLE OF CONTENTS


                                                                                                               Page
                                                                                                               ----
                                                                                                     
ARTICLE I.

         DEFINED TERMS, RULES OF INTERPRETATION,
         COMPUTATION OF TIME AND GOVERNING LAW....................................................................1
                  A.       Rules of Interpretation, Computation of Time and Governing Law.........................1
                  B.       Proponents of Plan.....................................................................1
                  C.       Defined Terms..........................................................................1

ARTICLE II.

         SUBSTANTIVE CONSOLIDATION
         OF ASSETS AND LIABILITIES OF DEBTORS;
         CANCELLATION OF INTERCOMPANY CLAIMS.....................................................................11
                  A.       Substantive Consolidation.............................................................11
                  B.       Cancellation of Intercompany Claims...................................................11

ARTICLE III.

         UNCLASSIFIED CLAIMS AGAINST THE FINANCE COMPANY DEBTORS.................................................11
                  A.       DIP Facility Claims...................................................................11
                  B.       Administrative Claims.................................................................11
                  C.       Priority Tax Claims...................................................................11

ARTICLE IV.

         CLASSIFICATION AND TREATMENT OF CLASSIFIED CLAIMS
         AND EQUITY INTERESTS....................................................................................12
                  A.       Summary...............................................................................12
                  B.       Classification and Treatment of Classified Claims and Equity Interests:...............12

ARTICLE V.

         ACCEPTANCE OR REJECTION OF THE PLAN.....................................................................14
                  A.       Voting Classes........................................................................14
                  B.       Acceptance by Impaired Classes........................................................14
                  C.       Presumed Acceptance of the Plan.......................................................15
                  D.       Presumed Rejection of the Plan........................................................15
                  E.       Non-Consensual Confirmation...........................................................15

ARTICLE VI.

         PROVISIONS FOR IMPLEMENTATION OF THE PLAN...............................................................15
                  A.       Sale of Assets........................................................................15
                  B.       Establishment of the Post-Consummation Estate.........................................15
                  C.       Funding Expenses of the Post-Consummation Estate......................................15
                  D.       Corporate Action......................................................................16
                  E.       Appointment of Plan Administrator.....................................................16
                  F.       Cancellation of Notes, Instruments, Debentures and Equity Securities..................16
                  G.       Creation of Creation of Professional Escrow Account...................................16
                  H.       Creation of Employee Benefit Escrow Account...........................................16
                  I.       Creation of Lehman Escrow Account.....................................................16
                  J.       Creation of 93/94 Note Claim Escrow Account...........................................16
                  K.       Creation of Consent Agreement Reserve Account.........................................16


                                       i



                                                                                                               Page
                                                                                                               ----
                                                                                                     

                  L.       Retiree Benefits......................................................................17

ARTICLE VII.

         EXECUTORY CONTRACTS AND UNEXPIRED LEASES................................................................17
                  A.       Assumption and Rejection of Executory Contracts and Unexpired Leases..................17
                  B.       Rejection Claims; Cure of Defaults....................................................17

ARTICLE VIII.

         PROVISIONS REGARDING DISTRIBUTIONS......................................................................17
                  A.       Time and Method of Distributions......................................................17
                  B.       Manner of Payment under the Plan......................................................18
                  C.       Delivery of Distributions.............................................................18
                  D.       Undeliverable Distributions...........................................................18
                  E.       Compliance with Tax Requirements/Allocation...........................................18
                  F.       Time Bar to Cash Payments.............................................................19
                  G.       Distributions after Effective Date....................................................19
                  H.       Fractional Dollars; De Minimis Distributions..........................................19
                  I.       Set-Offs..............................................................................19
                  J.       Setoff of Certain Intercompany Notes..................................................19
                  K.       Preservation of Finance Company Debtors' Subordination Rights.........................19
                  L.       Waiver by Creditors of All Subordination Rights.......................................20
                  M.       Settlement of Claims and Controversies................................................20

ARTICLE IX.

         PROCEDURES FOR RESOLUTION OF DISPUTED, CONTINGENT
         AND UNLIQUIDATED CLAIMS OR EQUITY INTERESTS.............................................................20
                  A.       Objections to Claims; Prosecution of Disputed Claims..................................20
                  B.       Estimation of Claims..................................................................20
                  C.       Controversy Concerning Impairment.....................................................21
                  D.       Payments and Distributions on Disputed Claims.........................................21

ARTICLE X.

         CONDITIONS PRECEDENT TO CONFIRMATION
         AND EFFECTIVE DATE OF THE PLAN..........................................................................21
                  A.       Conditions Precedent to Confirmation..................................................21
                  B.       Conditions Precedent to Effective Date of the Plan....................................21
                  C.       Waiver of Conditions Precedent........................................................22
                  D.       Effect of Non-Occurrence of Consummation..............................................22

ARTICLE XI.

         RELEASE, INJUNCTIVE AND RELATED PROVISIONS..............................................................22
                  A.       Compromise and Settlement.............................................................22
                  B.       Releases by the Finance Company Debtors...............................................22
                  C.       Releases by Holders of Claims.........................................................23
                  D.       Exculpation...........................................................................23
                  E.       Preservation of Rights of Action......................................................23
                  F.       Discharge of Claims and Termination of Equity Interests...............................25
                  G.       Injunction............................................................................25

                                       ii



                                                                                                               Page
                                                                                                               ----
                                                                                                     

ARTICLE XII.

         POST-CONSUMMATION ESTATE; THE PLAN ADMINISTRATOR........................................................26
                  A.       Generally.............................................................................26
                  B.       Purpose of the Post-Consummation Estate...............................................26
                  C.       Transfer of Assets....................................................................26
                  D.       Valuation of Assets...................................................................26
                  E.       Distribution; Withholding.............................................................27
                  F.       Post-Consummation Estate Implementation...............................................27
                  G.       Disputed Claims Reserve...............................................................27
                  H.       Termination of Post-Consummation Estate...............................................27
                  I.       Termination of Plan Administrator.....................................................28
                  J.       Exculpation; Indemnification..........................................................28

ARTICLE XIII.

         RETENTION OF JURISDICTION...............................................................................28

ARTICLE XIV.

         MISCELLANEOUS PROVISIONS................................................................................29
                  A.       Modification of Plan Supplement.......................................................29
                  B.       Effectuating Documents, Further Transactions and Corporation Action...................29
                  C.       Dissolution of Committee(s)...........................................................29
                  D.       Payment of Statutory Fees.............................................................30
                  E.       Modification of Plan..................................................................30
                  F.       Revocation of Plan....................................................................30
                  G.       Successors and Assigns................................................................30
                  H.       Reservation of Rights.................................................................30
                  I.       Section 1146 Exemption................................................................30
                  J.       Further Assurances....................................................................31
                  K.       Service of Documents..................................................................31
                  L.       Transactions on Business Days.........................................................32
                  M.       Filing of Additional Documents........................................................32
                  N.       Post-Effective Date Fees and Expenses.................................................32
                  O.       Severability..........................................................................32
                  P.       Conflicts.............................................................................32
                  Q.       Term of Injunctions or Stays..........................................................32
                  R.       Entire Agreement......................................................................32
                  S.       Closing of the Chapter 11 Cases.......................................................32







                                      iii



- --------------------------------------------------------------------------------
   FINANCE COMPANY DEBTORS' JOINT LIQUIDATING PLAN OF REORGANIZATION PURSUANT
                              TO CHAPTER 11 OF THE
                          UNITED STATES BANKRUPTCY CODE
- --------------------------------------------------------------------------------

     Pursuant to Title 11 of the United States Code, 11 U.S.C. ss.ss. 101 et
seq., the Finance Company Debtors and Debtors-in-Possession (including, for
purposes of the Plan, the New CFC Filing Entities) in the above-captioned and
numbered cases, hereby respectfully propose the following Joint Liquidating Plan
of Reorganization under Chapter 11 of the Bankruptcy Code (as defined):

                                   ARTICLE I
                                   ---------

                     DEFINED TERMS, RULES OF INTERPRETATION,
                      COMPUTATION OF TIME AND GOVERNING LAW

A.   Rules of Interpretation, Computation of Time and Governing Law

     1. For purposes herein: (a) whenever from the context it is appropriate,
each term, whether stated in the singular or the plural, shall include both the
singular and the plural, and pronouns stated in the masculine, feminine or
neuter gender shall include the masculine, feminine and the neuter gender; (b)
any reference herein to a contract, instrument, release, indenture or other
agreement or document being in a particular form or on particular terms and
conditions means that such document shall be substantially in such form or
substantially on such terms and conditions; (c) any reference herein to an
existing document or exhibit Filed, or to be Filed, shall mean such document or
exhibit, as it may have been or may be amended, modified or supplemented; (d)
unless otherwise specified, all references herein to Sections and Articles are
references to Sections and Articles hereof or hereto; (e) the words "herein,"
"hereof" and "hereto" refer to the Plan in its entirety rather than to a
particular portion of this Plan; (f) captions and headings to Articles and
Sections are inserted for convenience of reference only and are not intended to
be a part of or to affect the interpretation hereof; (g) the rules of
construction set forth in section 102 of the Bankruptcy Code shall apply; and
(h) any term used in capitalized form herein that is not otherwise defined but
that is used in the Bankruptcy Code or the Bankruptcy Rules shall have the
meaning assigned to such term in the Bankruptcy Code or the Bankruptcy Rules, as
the case may be.

     2. In computing any period of time prescribed or allowed hereby, the
provisions of Fed. R. Bankr. P. 9006(a) shall apply.

     3. Except to the extent that the Bankruptcy Code or Bankruptcy Rules are
applicable, and subject to the provisions of any contract, instrument, release,
indenture or other agreement or document entered into in connection herewith,
the rights and obligations arising hereunder shall be governed by, and construed
and enforced in accordance with, the laws of the State of New York, without
giving effect to the principles of conflict of laws thereof.

B.   Proponents of Plan

     The Finance Company Debtors have proposed this Plan. Article IV contains
the classification and treatment of Claims and Equity Interests against the
Finance Company Debtors. The Holding Company Debtors are not proponents of this
Plan.

C.   Defined Terms

          Unless the context otherwise requires, the following terms shall have
the following meanings when used in capitalized form herein:

     1. "93/94 Notes" means, collectively, (i) the $200,000,000 original
principal amount 8.125% senior notes due February 15, 2003, issued by CNC, with
$67,892,689 in principal and accrued but unpaid interest outstanding as of the
Petition Date, and (ii) the $200,000,000 original principal amount 10.5% senior
notes due



December 15, 2004, issued by CNC, with $25,855,090 in principal and accrued but
unpaid interest outstanding as of the Petition Date.

     2. "93/94 Note Claims" means claims derived from or based upon the 93/94
Notes.

     3. "93/94 Note Claim Escrow Account" means an interest-bearing savings
account funded out of the Sale Proceeds pursuant to the Sale Orders and
maintained by the Finance Company Debtors or the Plan Administrator, as the case
may be, solely for the purpose of paying, and sufficient to pay, the Allowed
93/94 Note Claims.

     4. "Accrued Professional Compensation" means, at any given moment, all
accrued fees and expenses (including but not limited to success fees) for
services rendered by all Professionals in the Chapter 11 Cases that the
Bankruptcy Court has not denied by Final Order, to the extent such fees and
expenses have not been paid regardless of whether a fee application is filed for
such amount. To the extent a court denies by Final Order a Professional's fees
or expenses, such amounts shall no longer be considered Accrued Professional
Compensation.

     5. "Administrative Claim" means a Claim for costs and expenses of
administration under sections 503(b), 507(a)(1), 507(b) or 1114(e)(2) of the
Bankruptcy Code, including, but not limited to: (i) the actual and necessary
costs and expenses incurred after the Petition Date of preserving the Estate and
operating the businesses of the Finance Company Debtors (such as wages,
salaries, reimbursement obligations or commissions for services and payments for
goods and other services and leased premises); (ii) compensation for legal,
financial advisory, accounting and other services and reimbursement of expenses
awarded or allowed under sections 328, 330(a) or 331 of the Bankruptcy Code or
otherwise for the period commencing on the Petition Date and ending on the
Confirmation Date; (iii) all fees and charges assessed against the Estate under
chapter 123 of title 28 United States Code, 28 U.S.C. ss.ss. 1911-1930 and (iv)
any obligations designated as Allowed Administrative Claims pursuant to a Final
Order.

     6. "Affiliate" means any Entity that is an affiliate of the Finance Company
Debtors within the meaning of section 101(2) of the Bankruptcy Code.

     7. "Allowed" means, with respect to Claims or Equity Interests, (i) any
Claim against or Equity Interest in a Finance Company Debtor, proof of which is
timely Filed, or by order of the Bankruptcy Court is not or will not be required
to be Filed, (ii) any Claim or Equity Interest that has been or is hereafter
listed in the Schedules as neither disputed, contingent or unliquidated, and for
which no timely proof of Claim has been Filed, or (iii) any Claim Allowed
pursuant to the Plan; provided, however, that with respect to any Claim or
Equity Interest described in clauses (i) or (ii) immediately above, such Claim
or Equity Interest shall be Allowed only if (x) no objection to the allowance
thereof has been interposed within the applicable period of time fixed by the
Plan, the Bankruptcy Code, the Bankruptcy Rules or the Bankruptcy Court or (y)
such an objection is so interposed and the Claim or Equity Interest shall have
been Allowed by a Final Order (but only if such allowance was not solely for the
purpose of voting to accept or reject the Plan). Except as otherwise specified
in the Plan or a Final Order of the Bankruptcy Court, the amount of an Allowed
Claim shall not include interest on such Claim from and after the Petition Date.

     8. "Ballot" or "Ballots" mean the ballots accompanying the Disclosure
Statement upon which Holders of Impaired Claims or Impaired Equity Interests
entitled to vote shall indicate their acceptance or rejection of the Plan in
accordance with the Plan and the Voting Instructions.

     9. "Balloting Agent" means Bankruptcy Management Corporation, retained by
order of the Bankruptcy Court dated January 14, 2003

     10. "Bankruptcy Code" means Title 11 of the United States Code and
applicable portions of Titles 18 and 28 of the United States Code.

     11. "Bankruptcy Court" means the United States Bankruptcy Court for the
Northern District of Illinois, or any other court having jurisdiction over the
Chapter 11 Cases.

                                       2


     12. "Bankruptcy Rules" means the Federal Rules of Bankruptcy Procedure, as
amended from time to time, as applicable to the Chapter 11 Cases, promulgated
under 28 U.S.C. ss. 2075 and the General, Local and Chambers Rules of the
Bankruptcy Court, as amended from time to time.

     13. "Beneficial Holder" means the Person or Entity holding the beneficial
interest in a Claim or Equity Interest.

     14. "Business Day" means any day, other than a Saturday, Sunday, "legal
holiday" (as defined in Bankruptcy Rule 9006(a)) or any other day on which
commercial banks in New York, New York are required or are authorized to close
by law or executive order.

     15. "Buyers" means CFN and GE.

     16. "Cash" means legal tender of the United States of America or the
equivalent thereof, including bank deposits, checks and Cash Equivalents.

     17. "Cash Equivalents" means equivalents of Cash in the form of readily
marketable securities or instruments issued by a Person other than the Finance
Company Debtors, including, without limitation, readily marketable direct
obligations of, or obligations guaranteed by, the United States of America,
commercial paper of domestic corporations carrying a Moody's rating of "A" or
better, or equivalent rating of any other nationally recognized rating service,
or interest bearing certificates of deposit or other similar obligations of
domestic banks or other financial institutions having a shareholders' equity or
capital of not less than one hundred million dollars ($100,000,000) having
maturities of not more than one (1) year, at the then best generally available
rates of interest for like amounts and like periods.

     18. "Cash Management Order" means that certain order of the Bankruptcy
Court, entered on or about December 18, approving and authorizing the
continuation of the Finance Company Debtors' cash management system.

     19. "Causes of Action" means all Claims, actions, causes of action, choses
in action, suits, debts, dues, sums of money, accounts, reckonings, bonds,
bills, specialties, covenants, contracts, controversies, agreements, promises,
variances, trespasses, damages, judgments, third-party claims, counterclaims,
and crossclaims (including, but not limited to, all claims and any avoidance,
recovery, subordination or other actions against insiders and/or any other
Entities under the Bankruptcy Code, including sections 506, 510, 542, 543, 544,
545, 547, 548 549, 500, 551, and 553 of the Bankruptcy Code or otherwise) of the
Finance Company Debtors, the Debtors-in-Possession, and/or the Post-Consummation
Estate (including, but not limited to, those actions listed in Section 12.5 of
the Plan) that are or may be pending on the Effective Date or instituted by the
Plan Administrator, on behalf of the Post-Consummation Estate, after the
Effective Date against any Person or Entity, based in law or equity, including,
but not limited to, under the Bankruptcy Code, whether direct, indirect,
derivative, or otherwise and whether asserted or unasserted as of the date of
entry of the Confirmation Order (unless released or resolved pursuant to the
Plan or otherwise prior to the Effective Date). Causes of Action include, but
are not limited to, Third Party Actions, but do not include any such actions
included in the Divested Assets (if any)).

     20. "CFC" means Conseco Finance Corp., a Delaware corporation.

     21. "CFC/CIHC Intercompany Note" means that certain $1,460,799,080 note due
May 11, 2005, issued September 9, 2000, by CFC to CIHC, with $277,376,671 in
principal and accrued but unpaid interest outstanding as of the Petition Date.

     22. "CFC Preferred Stock" means those 750 shares of 9% Redeemable
Cumulative Preferred Stock of CFC, held by CNC, with a stated value of $1
million per share.

     23. "CFC Residual Intercompany Claims" means the amount (if any) that CIHC
owes to CFC on account of the CIHC/CFC Intercompany Note after setoff of the
CFC/CIHC Intercompany Note.

                                       3


     24. "CFC Subsidiary Debtor Petition Date" means February 3, 2003.

     25. "CFN" means CFN Investments Holdings LLC, a Delaware limited liability
company.

     26. "CFN Closing Date" means the date of the closing of the transaction
contemplated by the CFN Purchase Agreement.

     27. "CFN Purchase Agreement" means that certain amended and restated Asset
Purchase Agreement dated March 14, 2003, between CFC and certain of its
subsidiaries and CFN.

     28. "CFN Sale Order" means that certain order entered by the Bankruptcy
Court on March 14, 2003, authorizing and approving the CFN Purchase Agreement.

     29. "CFSC" means Conseco Finance Servicing Company, a Delaware corporation.

     30. "Chapter 11 Cases" means the following cases styled In re: Conseco,
Inc., et al., including (i) the chapter 11 bankruptcy proceedings filed by CFC
and CFSC on the Initial Petition Date in the Bankruptcy Court, with case numbers
02-49675-02-49676, (ii) with the chapter 11 bankruptcy proceedings filed by the
CFC Subsidiary Debtors on the CFC Subsidiary Debtor Petition Date in the
Bankruptcy Court, with case numbers 03-04692-03-04709 and (iii) the chapter 11
bankruptcy proceedings to be filed by the New CFC Filing Entities prior to
Confirmation.

     31. "CIHC" means CIHC, Incorporated, a Delaware corporation.

     32. "CIHC/CFC Intercompany Note" means the $400 million original principal
amount note dated May 11, 2002, issued by CIHC to CFC, with approximately
$315,030,986 in principal and accrued but unpaid interest as of the Petition
Date.

     33. "Claim" means a claim (as defined in section 101(5) of the Bankruptcy
Code) against a Debtor, including, but not limited to: (a) any right to payment
from a Debtor whether or not such right is reduced to judgment, liquidated,
unliquidated, contingent, matured, unmatured, disputed, undisputed, legal,
equitable, secured or unsecured; or (b) any right to an equitable remedy for
breach of performance if such performance gives rise to a right of payment from
a Debtor, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured
or unsecured.

     34. "Claims Objection Deadline" means 180 days after the Effective Date.

     35. "Class" means a category of Holders of Claims or Equity Interests as
set forth in Article IV herein .

     36. "Committee" means the Official Committee of Unsecured Creditors of the
Finance Company Debtors.

     37. "Committee Members" means any current or former members of the
Committee.

     38. "CNC" means Conseco Inc., an Indiana corporation.

     39. "Confirmation" means the entry on the docket by the Clerk of the
Bankruptcy Court of the Confirmation Order, subject to all conditions specified
in Article X.A herein having been satisfied or waived pursuant to Article X.C
herein.

     40. "Confirmation Date" means the date upon which the Confirmation Order is
entered by the Bankruptcy Court in its docket, within the meaning of Bankruptcy
Rules 5003 and 9021.

                                       4


     41. "Confirmation Hearing" means the hearing at which the Confirmation
Order is considered by the Bankruptcy Court.

     42. "Confirmation Order" means the order of the Bankruptcy Court confirming
the Plan pursuant to section 1129 of the Bankruptcy Code.

     43. "Conseco Services" means Conseco Services, LLC, a Delaware limited
liability corporation.

     44. "Consent Agreement Reserve Account" means that certain account to be
funded in the amount of $35 million by CFC on the CFN Closing Date, plus all
Third Party Reserve Account Net Litigation Proceeds (if any), to be administered
and distributed according to the terms of that certain Consent Agreement dated
March 14, 2003, by and among CFC, Wells Fargo Bank, Minnesota, National
Association, U.S. Bank National Association, Federal National Mortgage
Association, the Official Committee, the Ad Hoc Securitization Holders Committee
and CFN.

     45. "Consummation" means the occurrence of the Effective Date.

     46. "Creditor" means any Holder of a Claim.

     47. "Debtors-in-Possession" means the Finance Company Debtors, as
debtors-in-possession in the Chapter 11 Cases.

     48. "DIP Facility Claims" means claims derived from or based upon the FPS
DIP Facility and the GTFC/GTRFC DIP Facility.

     49. "Director and Officer Insurance Policy" means those policies provided
or described in the Plan Supplement.

     50. "Disclosure Statement" means the Disclosure Statement for Joint
Liquidating Plan of Reorganization of the Finance Company Debtors under Chapter
11 of the Bankruptcy Code, dated April 1, 2003, as amended, supplemented, or
modified from time to time, describing the Plan, that is prepared and
distributed in accordance with sections 1125, 1126(b) and/or 1145 of the
Bankruptcy Code and Bankruptcy Rule 3018 and/or other applicable law.

     51. "Disputed" means, with respect to any Claim or Equity Interest, as of
the date of determination, any Claim or Equity Interest: (a) listed on the
Schedules as unliquidated, disputed or contingent, unless and until it is
Allowed; (b) as to which any Finance Company Debtor or any other
party-in-interest has Filed a timely objection or request for estimation in
accordance with the Bankruptcy Code and the Bankruptcy Rules, which objection or
request for estimation has not been withdrawn or determined by a Final Order;
(c) as to which the deadline for filing objections has not passed (whether or
not an objection has been filed), unless and to the extent such Claim or Equity
Interest has been Allowed pursuant to an order that is a Final Order; or (d) is
otherwise disputed by any of the Finance Company Debtors or any other party in
interest in accordance with applicable law, which dispute has not been withdrawn
or determined by a Final Order.

     52. "Distribution Record Date" means the date for determining which Holders
of Claims and Equity Interests are eligible to receive distributions hereunder,
and shall be the Confirmation Date or such other date as designated in an order
of the Bankruptcy Court.

     53. "Divested Assets" has the meaning ascribed to "Purchased Assets" under
the CFN Purchase Agreement and GE Purchase Agreement.

     54. "Effective Date" means the date selected by the Finance Company Debtors
which is a Business Day after the Confirmation Date on which: (a) no stay of the
Confirmation Order is in effect, and (b) all conditions specified in Article X.B
herein have been (x) satisfied or (y) waived pursuant to Article X.C herein.

                                       5


     55. "Employee Benefit Escrow Account" means an interest-bearing savings
account funded out of the Sale Proceeds and maintained by the Finance Company
Debtors or the Plan Administrator, as the case may be, solely for the purpose of
paying, and sufficient to pay, all Shared Employee Benefit Liabilities, provided
that such escrow account will only be maintained to the extent funds are
available after all Administrative Claims are reserved or accrued for under the
Plan.

     56. "Entity" means an entity as defined in Section 101(15) of the
Bankruptcy Code.

     57. "Equity Interest" means all equity interests in any of the Finance
Company Debtors, including, but not limited to, all issued, unissued, authorized
or outstanding shares of stock together with any warrants, options or contract
rights to purchase or acquire such interests at any time.

     58. "Estates" means the collective estates of each of the Finance Company
Debtors created by section 541 of the Bankruptcy Code upon the commencement of
the Chapter 11 Cases for each of the Finance Company Debtors.

     59. "File" or "Filed" means file or filed with the Bankruptcy Court in the
Chapter 11 Cases.

     60. "Final Decree" means the decree contemplated under Fed. R. Bankr. P.
3022.

     61. "Final DIP Order" means that certain order of the Bankruptcy Court,
entered on or about January 14, 2003, as amended from time to time, approving
and authorizing the FPS DIP Facility.

     62. "Final Order" means an order of the Bankruptcy Court (i) as to which
the time to appeal, petition for certiorari or move for reargument,
reconsideration or rehearing has expired and as to which no appeal, petition for
certiorari or other proceedings for reargument, reconsideration or rehearing is
pending; or (ii) if an appeal, writ of certiorari, reargument or rehearing
thereof has been sought, such order has been affirmed by the highest court to
which such order was appealed or from which certiorari was sought, reargument,
reconsideration or rehearing has been denied or resulted in no modification of
such order, and the time to take any further appeal, petition for certiorari or
move for reargument, reconsideration or rehearing has expired; provided,
however, that a possibility that a motion under Rule 59 or 60 of the Federal
Rules of Civil Procedure or any analogous Bankruptcy Rule may be, but has not
been, Filed with respect to such order, shall not cause such order not to be a
Final Order.

     63. "Finance Company Debtor Employees" means employees of the Finance
Company Debtors on or prior to the Effective Date.

     64. "Finance Company Debtor" or "Debtor", as the case may be, shall mean,
as the context requires, any of the Finance Company Debtors.

     65. "Finance Company Debtors" means Conseco Finance Corp., Conseco Finance
Servicing Corp., Conseco Finance Corp. - Alabama, Conseco Finance Credit Corp.,
Conseco Finance Consumer Discount Company, Conseco Finance Canada Holding
Company, Conseco Finance Canada Company, Conseco Finance Loan Company, Rice Park
Properties Corporation, Landmark Manufactured Housing, Inc., Conseco Finance Net
Interest Margin Finance Corp. I, Conseco Finance Net Interest Margin Finance
Corp. II, Green Tree Finance Corp. - Two, Conseco Agency of Nevada, Inc.,
Conseco Agency of New York, Inc., Green Tree Floorplan Funding Corp., Conseco
Agency, Inc., Conseco Agency of Alabama, Inc., Conseco Agency of Kentucky, Inc.,
and Crum-Reed General Agency, Inc., and shall be deemed to include the New CFC
Filing Entities upon their filing of voluntary chapter 11 petitions.

     66. "FPS DIP Facility" means that certain DIP credit facility approved by
Final Order of the Bankruptcy Court on January 14, 2003, as amended from time to
time, as between the Finance Company Debtors and U.S. Bank and FPS DIP LLC, an
affiliate of Fortress Investment Group LLC, J.C. Flowers & Co. LLC., and
Cerberus Capital Management, L.P., in an amount not to exceed $150,000,000.

                                       6


     67. "GE" means General Electronic Capital Corporation, a Delaware
corporation, as purchaser under the GE Purchase Agreement.

     68. "GE Closing Date" means the date of the closing of the transaction
contemplated by the GE Purchase Agreement.

     69. "GE Purchase Agreement" means that certain Asset Purchase Agreement
dated March 14, 2003, between CFC and certain of its subsidiaries and GE.

     70. "GE Sale Order" means that certain order entered by the Bankruptcy
Court on March 14, 2003, authorizing and approving the GE Purchase Agreement.

     71. "General Unsecured Claim" means any Claim against any Finance Company
Debtor that is not a/an (i) DIP Facility Claim, (ii) Administrative Claim, (iii)
Priority Tax Claim, (iv) Other Priority Claim, (v) Other Secured Claim, or (vi)
Lehman Secured Claim.

     72. "Governmental Unit" has the meaning ascribed to it in section 101(27)
of the Bankruptcy Code.

     73. "GTFC/GTRFC DIP Facility" means that certain Final Order entered by the
Bankruptcy Court on January 14, 2003, pursuant to which CFC was authorized to
borrow up to $25 million from Green Tree Finance Corp.-Five ("GTFC") and Green
Tree Residual Finance Corp. 1 ("GTRFC").

     74. "Holder" means the Beneficial Holder of an Equity Interest or Claim.

     75. "Holding Company Debtors" means CNC, CIHC, CTIHC, Inc., a Delaware
corporation, and Partners Health Group, Inc., an Illinois corporation.

     76. "Holding Company Debtors' Plan" means that certain Reorganizing
Debtors' Joint Plan of Reorganization Pursuant to Chapter 11 of the United
States Bankruptcy Code, filed on or about January 31, 2003, as amended from time
to time.

     77. "Impaired" means with respect to any Class of Claims or Equity
Interests, a Claim or Equity Interest that is impaired within the meaning of
section 1124 of the Bankruptcy Code.

     78. "Impaired Claim" or "Impaired Equity Interest" means a Claim or Equity
Interest, as the case may be, classified in an Impaired Class.

     79. "Initial Petition Date" means December 17, 2002.

     80. "Intercompany Claim" means any Claim held by any direct or indirect
subsidiary of the Finance Company Debtors against any Finance Company Debtor or
by any Finance Company Debtor against any other Finance Company Debtor.

     81. "Intercompany Interests" means any and all Equity Securities of a
Finance Company Debtor or any subsidiary of a Finance Company Debtor that are
owned by any Finance Company Debtor or any subsidiary of any Finance Company
Debtor as of the Record Date.

     82. "Lehman Escrow Account" means an interest-bearing savings account
funded out of the Sale Proceeds and maintained by the Finance Company Debtors or
the Plan Administrator, as the case may be, solely for the purpose of paying,
and sufficient to pay, the Lehman Secured Claims.

     83. "Lehman Residuals Facility" means (a) the Master Repurchase Agreement
and Annex to Master Repurchase Agreement Supplemental Terms and Conditions, each
dated as of September 29, 1999, between Green Tree Residual Finance Corp. I and
Lehman Brothers, Inc., as amended from time to time, and as each of the same

                                       7


may be further amended in accordance with the terms thereof and of the CFN
Purchase Agreement and GE Purchase Agreement.

     84. "Lehman Secured Claims" means any and all Claims arising under, related
to or derived from the Lehman Residuals Facility and Lehman Warehouse Facility.

     85. "Lehman Warehouse Facility" means the Second Amended and Restated
Master Repurchase Agreement; dated as of January 30, 2002, between Lehman
Commercial Paper, Inc. and Green Tree Finance Corp.-Five, as amended from time
to time, and as the same may be further amended in accordance with the terms
thereof and of the CFN Purchase Agreement and GE Purchase Agreement.

     86. "Lien" means any charge against or interest in property to secure
payment of a debt or performance of an obligation, including a right of set off
to secure payment of a debt or performance of an obligation.

     87. "Master Ballots" mean the master ballots accompanying the Disclosure
Statement upon which Holders of Impaired Claims or Impaired Equity Interests
shall indicate their acceptance or rejection of the Plan in accordance with the
Voting Instructions.

     88. "Net Litigation Proceeds" means gross proceeds recovered from
litigation less any costs and expenses associated with such litigation.

     89. "New CFC Filing Entities" shall mean Mill Creek Servicing Corporation,
Conseco Finance Credit Card Funding Corp., Green Tree Residual Finance Corp. I,
and Green Tree Finance Corp.-5, which entities the Finance Company Debtors
expect will file voluntary chapter 11 petitions prior to Confirmation.

     90. "Official Bankruptcy Forms" means the Official and Procedural
Bankruptcy Forms, prescribed by the Judicial Conference of the United States, in
accordance with Fed. R. Bankr. P. 9009.

     91. "Official Committee" means the official committee of unsecured
creditors appointed in the Finance Company Debtors' Chapter 11 Cases.

     92. "Other Priority Claims" means any and all Claims accorded priority in
right of payment under section 507(a) of the Bankruptcy Code, other than a
Priority Tax Claim or an Administrative Claim.

     93. "Other Secured Claims" means any and all Secured Claims held by any
Creditors that are not otherwise specifically described herein, but not
including (1) the Lehman Secured Claims and (2) any portion of the 93/94 Note
Claims that are held to be Secured Claims against any of the Finance Company
Debtors.

     94. "Person" means an individual, corporation, partnership, joint venture,
association, joint stock company, limited liability company, limited liability
partnership, trust, trustee, United States Trustee, estate, unincorporated
organization, government, Governmental Unit (as defined in the Bankruptcy Code),
agency, or political subdivision thereof, or other entity.

     95. "Petition Date" means, collectively, the Initial Petition Date, the CFC
Subsidiary Debtor Petition Date and shall be deemed to include the dates on
which each New CFC Filing Entity files a voluntary chapter 11 petition.

     96. "Plan" means this Joint Plan of Reorganization pursuant to Chapter 11
of the Bankruptcy Code, together with all exhibits hereto, either in its present
form or as it may be altered, amended, modified or supplemented from time to
time in accordance with the terms hereof, the Bankruptcy Code and the Bankruptcy
Rules.

     97. "Plan Administrator" means the Person to be designated by CFC, in its
sole and absolute discretion, as the Person responsible for, among other things,
the matters described in Article XII hereof.

                                       8


     98. "Plan Supplement" means the compilation of documents and form of
documents, schedules and exhibits to be Filed prior to the Disclosure Statement
Hearing, as modified or supplemented prior to the Confirmation Hearing in
accordance with Article XIV.A of the Plan.

     99. "Post-Consummation Estate" means the trust to be created on the
Effective Date in accordance with the provisions of Article XII of the Plan and
the Post-Consummation Estate Agreement for the benefit of holders of certain
Allowed Claims.

     100. "Post-Consummation Estate Agreement" means the trust agreement,
substantially in the form attached as an exhibit to the Plan Supplement, that
documents the Post-Consummation Estate, describes the powers, duties and
responsibilities of the Plan Administrator and the liquidation and distribution
of proceeds of the Post-Consummation Estate Assets. CFC (or its designee) shall,
under the Post-Consummation Estate Agreement, have sole and absolute oversight
responsibility with respect to the Post-Consummation Estate and the Plan
Administrator.

     101. "Post-Consummation Estate Assets" means the Residual Assets.

     102. "Post-Consummation Estate Budget" means the budget for wind-down
expenses projected to be paid by the Post-Consummation Estate (including
Administrative and priority claims under the Plan), which budget is annexed as
an exhibit to the Plan Supplement.

     103. "Priority Non-Tax Claim" means a Claim entitled to priority pursuant
to section 507(a) of the Bankruptcy Code other than a Priority Tax Claim.

     104. "Priority Tax Claim" means a Claim of a Governmental Unit of the kind
specified in section 507(a)(8) of the Bankruptcy Code.

     105. "Professional Escrow Account" means an interest-bearing savings
account funded out of the Sale Proceeds and maintained by the Finance Company
Debtors or the Plan Administrator, as the case may be, solely for the purpose of
paying, and sufficient to pay, all Accrued Professional Compensation.

     106. "Professional", or collectively "Professionals" means a Person or
Entity employed pursuant to a Final Order in accordance with sections 327 and
1103 of the Bankruptcy Code and to be compensated for services rendered prior to
the Confirmation Date, pursuant to sections 327, 328, 329, 330 and 331 of the
Bankruptcy Code, or for which compensation and reimbursement has been allowed by
the Bankruptcy Court pursuant to section 503(b)(4) of the Bankruptcy Code.

     107. "Pro Rata" means the proportion that an Allowed Claim or an Allowed
Equity Interest in a particular Class bears to the aggregate amount of Allowed
Claims or the aggregate number of Allowed Equity Interests in such Class.

     108. "Proof of Claim" has the meaning ascribed to it in Fed. R. Bankr. P.
3001.

     109. "Purchase Agreements" means the CFN Purchase Agreement and the GE
Purchase Agreement.

     110. "Record Date" means April 25, 2003, as the date to be established for
the purpose of determining those Holders of Allowed Claims and Equity Interests
that are entitled to vote to accept or reject this Amended Modified Plan.

     111. "Releasees" means all officers, directors, employees, attorneys,
financial advisors, accountants, investment bankers, agents and representatives
of the Finance Company Debtors and their subsidiaries, whether current or
former, in each case in their capacity as such, whether serving in such capacity
before or after the Petition Date.

                                       9


     112. "Residual Assets" means all assets of the Finance Company Debtors and
their subsidiaries that are not Divested Assets, including, but not limited to,
Causes of Actions and the Net Litigation Proceeds therefrom (other than Third
Party Action Reserve Account Net Litigation Proceeds).

     113. "Residual Cash Balance" means the remainder of the Sale Proceeds after
paying the DIP Facility Claims, Administrative Claims, Priority Tax Claims,
Other Priority Claims, Other Secured Claims, Class 3 Lehman Secured Claims and
Class 4 93/94 Note Claims in full, in Cash, on the Effective Date or as soon
thereafter as practicable, including proceeds from the sale of any Residual
Assets, any escrow amounts which are not paid according to the terms of such
escrow agreements, and amounts not used under the Post-Consummation Estate
Budget.

     114. "Sale Orders" means the GE Sale Order and the CFN Sale Order.

     115. "Sale Proceeds" means the Cash to be received by the Debtors on the
Closing Date pursuant to the terms of the Purchase Agreements.

     116. "Sale Transactions" means those transactions contemplated by the CFN
Purchase Agreement and the GE Purchase Agreement.

     117. "Schedules" mean the schedules of assets and liabilities, schedules of
executory contracts, and the statement of financial affairs as the Bankruptcy
Court requires the Debtors to file pursuant to section 521 of the Bankruptcy
Code, the Official Bankruptcy Forms and the Bankruptcy Rules, as they may be
amended and supplemented from time to time.

     118. "Scheduling Order" means an order to be entered by the Bankruptcy
Court granting the Finance Company Debtors' motion to establish scheduling
procedures, to be filed on or about March 31, 2003.

     119. "Secured Claim" means (a) a Claim that is secured by a lien on
property in which the Estate has an interest, which lien is valid, perfected and
enforceable under applicable law or by reason of a Final Order, or that is
subject to setoff under section 553 of the Bankruptcy Code, to the extent of the
value of the Creditor's interest in the Estate's interest in such property or to
the extent of the amount subject to setoff, as applicable, as determined
pursuant to section 506(a) of the Bankruptcy Code, or (b) a Claim Allowed under
this Plan as a Secured Claim.

     120. "Shared Employee Benefit Liabilities" means those obligations which
have arisen or may in the future arise with respect to those employee benefit
programs where liability is shared or joint and several as between the Finance
Company Debtors and (i) the Holding Company Debtors or (ii) Conseco Services.

     121. "Substantive Consolidation Order" means the Order of the Bankruptcy
Court substantively consolidating, for limited purposes, the Chapter 11 Cases
(which may be part of the Confirmation Order).

     122. "Third Party Actions" means any Cause of Action that does not include:
(a) an action brought by the Finance Company Debtors or the Committee pursuant
to Chapter 5 of the Bankruptcy Code, (b) an action to enforce a claim or any
distribution on any intercompany claim of the CFC Debtors against the Parent
Company Debtors, and (c) an action to void and terminate the pledge of the
shares of Mill Creek Bank Inc.

     123. "Third Party Action Reserve Account Net Litigation Proceeds" means
fifty percent (50%) of any Net Litigation Proceeds exceeding $100 million in the
aggregate which are recovered from Third Party Actions.

     124. "Unimpaired" means, with respect to a Class of Claims or Equity
Interests, a Claim or Equity Interest that is unimpaired within the meaning of
section 1124 of the Bankruptcy Code.

     125. "Unimpaired Classes" means Classes 1 and 2, which are not impaired
Classes within the meaning of section 1124 of the Bankruptcy Code.

     126. "Voting Deadline" means May [___], 2003.

                                       10


     127. "Voting Instructions" means the instructions for voting on the Plan
contained in the section of the Disclosure Statement entitled "SOLICITATION;
VOTING PROCEDURES" and in the Ballots and the Master Ballots.


                                   ARTICLE II
                                   ----------

                            SUBSTANTIVE CONSOLIDATION
                      OF ASSETS AND LIABILITIES OF DEBTORS;
                       CANCELLATION OF INTERCOMPANY CLAIMS

A.   Substantive Consolidation

     Pursuant to the Substantive Consolidation Order, all of the property of the
estates and all of the debts of all of the Finance Company Debtors will be
substantively consolidated for purposes of treating the Claims pursuant to
Article IV hereof, including for voting, confirmation and distribution purposes,
provided, however, that substantive consolidation shall not be implemented with
respect to and shall not otherwise affect the distributions to be made on
account of the Lehman Secured Claims.

B.   Cancellation of Intercompany Claims

     Pursuant to the terms of the Substantive Consolidation Order, all Finance
Company Debtor Intercompany Claims were extinguished except as necessary to
preserve the Causes of Action.

                                  ARTICLE III
                                  -----------

             UNCLASSIFIED CLAIMS AGAINST THE FINANCE COMPANY DEBTORS

A.   DIP Facility Claim

     Pursuant to the Final DIP Order, the CFN Sale Order and the GE Sale Order,
the DIP Facility Claims will be paid in full in Cash out of the Sale Proceeds.
To the extent any DIP Facility Claim has not been fully paid prior to the
Effective Date, subject to the provisions of sections 328, 330(a) and 331 of the
Bankruptcy Code, each Holder of an Allowed DIP Facility Claim will be paid the
full unpaid amount of such Allowed DIP Facility Claim in Cash on the Effective
Date or as soon thereafter as is practicable.

B.   Administrative Claims

     Subject to the provisions of sections 328, 330(a) and 331 of the Bankruptcy
Code, each Holder of an Allowed Administrative Claim will be paid the full
unpaid amount of such Allowed Administrative Claim in Cash (i) on the Effective
Date or as soon thereafter as is practicable, (ii) if such Administrative Claim
is Allowed after the Effective Date, on the date such Administrative Claim is
Allowed, or as soon thereafter as is practicable, or (iii) upon such other terms
as may be agreed upon by such Holder and the respective Reorganized Debtor or
otherwise upon an order of the Bankruptcy Court; provided that Allowed
Administrative Claims representing obligations incurred in the ordinary course
of business or otherwise assumed by the Debtors pursuant to the Plan will be
assumed on the Effective Date and paid or performed by the respective
Reorganized Debtor when due in accordance with the terms and conditions of the
particular agreements governing such obligations. The Finance Company Debtors
are not obliged to pay Administrative Claims against any Holding Company Debtors
or Post-Consummation Estate.

C.   Priority Tax Claims

     On the Effective Date or as soon as practicable thereafter, each Holder of
an Allowed Priority Tax Claim due and payable on or prior to the Effective Date
shall be paid, at the option of the respective Debtor, (a) Cash in an amount
equal to the amount of such Allowed Priority Tax Claim, or (b) Cash over a
six-year period from the date of

                                       11


assessment as provided in section 1129(a)(9)(C) of the Bankruptcy Code, with
interest payable at a rate of 4% per annum or such other rate as may be required
by the Bankruptcy Code. The amount of any Priority Tax Claim that is not an
Allowed Claim or that is not otherwise due and payable on or prior to the
Effective Date, and the rights of the Holder of such Claim, if any, to payment
in respect thereof shall (x) be determined in the manner in which the amount of
such Claim and the rights of the Holder of such Claim would have been resolved
or adjudicated if the Chapter 11 Cases had not been commenced, (y) survive the
Effective Date and Consummation of the Plan as if the Chapter 11 Cases had not
been commenced, and (z) not be discharged pursuant to section 1141 of the
Bankruptcy Code. The Finance Company Debtors are not obliged to pay Priority Tax
Claims Allowed solely against any Holding Company Debtors or Post-Consummation
Estate.

                                   ARTICLE IV
                                   ----------

                CLASSIFICATION AND TREATMENT OF CLASSIFIED CLAIMS
                              AND EQUITY INTERESTS


A.   Summary

     The categories of Claims and Equity Interests listed below classify Claims
and Equity Interests in or against the Finance Company Debtors for all purposes,
including voting, confirmation and distribution pursuant hereto and pursuant to
sections 1122 and 1123(a)(1) of the Bankruptcy Code. A Claim or Equity Interest
shall be deemed classified in a particular Class only to the extent that the
Claim or Equity Interest qualifies within the description of that Class and
shall be deemed classified in a different Class to the extent that any remainder
of such Claim or Equity Interest qualifies within the description of such
different Class. A Claim or Equity Interest is in a particular Class only to the
extent that such Claim or Equity Interest is Allowed in that Class and has not
been paid or otherwise satisfied prior to the Effective Date.

THIS PLAN SEEKS SUBSTANTIVE CONSOLIDATION OF THE FINANCE COMPANY DEBTORS'
ESTATES, AS FURTHER DESCRIBED IN ARTICLE II HEREIN. IF SUCH SUBSTANTIVE
CONSOLIDATION IS AUTHORIZED AND ORDERED BY THE BANKRUPTCY COURT, ALL ALLOWED
CLAIMS AGAINST THE FINANCE COMPANY DEBTORS OR THEIR ESTATES SHALL BE SATISFIED
FROM THE COMBINED CASH AND OTHER ASSETS OF ALL OF THE FINANCE COMPANY DEBTORS
AND THE POST-CONSUMMATION ESTATE.

     Summary of Classification and Treatment of Claims and Equity Interests
     ----------------------------------------------------------------------


         ------------ ------------------------------------------------------ ----------------- ----------------------
         Class        Claim                                                  Status            Voting Right
         ------------ ------------------------------------------------------ ----------------- ----------------------
         ------------ ------------------------------------------------------ ----------------- ----------------------
                                                                                      

         1            Other Priority Claims                                  Unimpaired        Deemed to Accept
         ------------ ------------------------------------------------------ ----------------- ----------------------
         ------------ ------------------------------------------------------ ----------------- ----------------------
         2            Other Secured Claims                                   Unimpaired        Deemed to Accept
         ------------ ------------------------------------------------------ ----------------- ----------------------
         ------------ ------------------------------------------------------ ----------------- ----------------------
         3            Lehman Secured Claims                                  Impaired          Entitled to vote
         ------------ ------------------------------------------------------ ----------------- ----------------------
         ------------ ------------------------------------------------------ ----------------- ----------------------
         4            93/94 Note Claims                                      Impaired          Entitled to vote
         ------------ ------------------------------------------------------ ----------------- ----------------------
         ------------ ------------------------------------------------------ ----------------- ----------------------
         5            General Unsecured Claims                               Impaired          Entitled to vote
         ------------ ------------------------------------------------------ ----------------- ----------------------
         ------------ ------------------------------------------------------ ----------------- ----------------------
         6            Equity Interests                                       Impaired          Deemed to Reject
         ------------ ------------------------------------------------------ ----------------- ----------------------



B.   Classification and Treatment of Classified Claims and Equity Interests:

     1.   Class 1--Other Priority Claims

          (a) Classification: Class 1 comprises the Other Priority Claims, which
     are Claims against the Finance Company Debtors.

          (b) Treatment: The legal, equitable and contractual rights of the
     Holders of Allowed Class 1 Claims are unaltered by the Plan. Unless
     otherwise agreed to by the Holders of the Allowed Other Priority Claim and
     the Finance Company Debtors, each Holder of an Allowed Class 1 Claim shall
     receive, in full

                                       12


     and final satisfaction of such Allowed Class 1 Claim, one of the following
     treatments, in the sole discretion of the Finance Company Debtors:

               (i) Payment of each Allowed Class 1 Claim in full in Cash on the
          Effective Date or as soon thereafter as is practicable; provided that,
          Class 1 Claims representing obligations incurred in the ordinary
          course of business will be paid in full in Cash when such Class 1
          Claims become due and owing in the ordinary course of business; or

               (ii) such Claim will be treated in any other manner so that such
          Claim shall otherwise be rendered Unimpaired pursuant to section 1124
          of the Bankruptcy Code.

          (c) Voting: Class 1 is Unimpaired and the Holders of Class 1 Claims
     are conclusively deemed to have accepted the Plan pursuant to section
     1126(f) of the Bankruptcy Code. Therefore, the Holders of Claims in Class 1
     are not entitled to vote to accept or reject the Plan.

     2.   Class 2--Other Secured Claims

          (a) Classification: Class 2 comprises the Other Secured Claims.

          (b) Treatment: The Plan will not alter any of the legal, equitable and
     contractual rights of the Holders of Class 2 Claims. Unless otherwise
     agreed to by the Holder of the Allowed Class 2 Claim and the Finance
     Company Debtors, each Holder of an Allowed Class 2 Claim shall receive, in
     full and final satisfaction of such Allowed Class 2 Claim, one of the
     following treatments, in the sole discretion of the Finance Company
     Debtors:

               (i) the payment of such Holders' Allowed Class 2 Claim in full in
          Cash on the Effective Date;

               (ii) the payment to Holders of the sale or disposition proceeds
          of the collateral securing each such Allowed Class 2 Claim to the
          extent of the value of the Holder's interest in such property;

               (iii) the surrender to each Holder of all collateral securing
          each such Allowed Class 2 Claim without representation or warranty by
          or further recourse against the relevant Finance Company Debtor;
          provided that, such surrender must render each such Allowed Class 2
          Claim Unimpaired pursuant to section 1124 of the Bankruptcy Code; or

               (iv) treatment in any other manner so as to render the Allowed
          Class 2 Claim otherwise Unimpaired pursuant to section 1124 of the
          Bankruptcy Code.

          (c) Voting: Class 2 is Unimpaired and the Holders of Class 2 Claims
     are conclusively deemed to have accepted the Plan pursuant to section
     1126(f) of the Bankruptcy Code. Therefore, the Holders of Claims in Class 2
     are not entitled to vote to accept or reject the Plan.

     3.   Class 3--Lehman Secured Claims

          (a) Classification: Class 3 comprises the Lehman Secured Claims.

          (b) Treatment: Holders of Allowed Class 3 Claims shall receive, in
     full and final satisfaction of their respective Allowed Class 3 Claims, the
     payment of Cash equal to the amount of each such Allowed Class 3 Claim,
     payable on the Effective Date or as soon thereafter as is practicable.

          (c) Voting: Class 3 is Impaired and the Holders of Class 3 Claims are
     entitled to vote to accept or reject the Plan.

                                       13


     4.   Class 4--93/94 Note Claims

          (a) Classification: Class 4 consists of the 93/94 Note Claims against
     the Finance Company Debtors.

          (b) Treatment: Holders of Allowed 93/94 Note Claims against the
     Finance Company Debtors shall receive, in full and final satisfaction of
     their Claims against the Finance Company Debtors and the Holding Company
     Debtors, the payment of Cash equal to the amount of each such Allowed Class
     4 Claim, payable on the Effective Date or as soon thereafter as is
     practicable.

          (c) Voting: Class 4 is Impaired Holders of Allowed Class 4 Claims are
     entitled to vote to accept or reject the Plan.

     5.   Class 5--General Unsecured Claims

          (a) Classification: Class 5 consists of the General Unsecured Claims
     against the Finance Company Debtors.

          (b) Treatment: Holders of Allowed Class 5 Claims shall receive, in
     full and final satisfaction of their Allowed Class 5 Claims, their
     respective Pro Rata shares of the Residual Cash Balance.

          (c) Voting: Class 5 is Impaired and the Holders of Class 5 Claims are
     entitled to vote to accept or reject the Plan.

     6.   Class 6--Equity Interests

          (a) Classification: Class 6 comprises the Equity Interests in the
     Finance Company Debtors.

          (b) Treatment: On the Effective Date, Class 6 Equity Interests will be
     cancelled and the Holders thereof will not receive any distribution under
     the Plan pursuant to such Interests.

          (c) Voting: Class 6 is Impaired. Class 6 Equity Interest Holders are
     nonetheless not entitled to vote to accept or reject the Plan because they
     will not receive any distributions under the Plan. CIHC, directly or
     indirectly, owns all of the Class 6 Equity Interests and is deemed to
     reject the Plan.

                                   ARTICLE V
                                   ---------

                       ACCEPTANCE OR REJECTION OF THE PLAN

A.   Voting Classes

     Subject to Articles V.C and V.D hereof, Claim and Equity Interest Holders
in each Impaired Class of Claims and Equity Interests are entitled to vote as a
class to accept or reject the Plan. Each Holder of an Allowed Claim in Classes
3, 4 and 5 shall be entitled to vote to accept or reject the Plan.

B.   Acceptance by Impaired Classes

     An Impaired Class of Claims shall be deemed to have accepted the Plan if
(a) the Holders (other than any Holder designated under section 1126(e) of the
Bankruptcy Code) of at least two-thirds in amount of the Allowed Claims actually
voting in such Class have voted to accept the Plan and (b) the Holders (other
than any Holder designated under section 1126(e) of the Bankruptcy Code) of more
than one-half in number of the Allowed Claims actually voting in such Class have
voted to accept the Plan. An Impaired Class of Equity Interests shall have
accepted the Plan if Holders (other than any Holder designated under Section
1126(e) of the Bankruptcy Code) that hold at least two-thirds in amount of the
Allowed Equity Interests actually voting in such Class have voted to accept the
Plan.

                                       14



C.   Presumed Acceptance of the Plan

     Classes 1 and 2 are Unimpaired under the Plan, and, therefore, are presumed
to have accepted the Plan pursuant to section 1126(f) of the Bankruptcy Code.

D.   Presumed Rejection of the Plan

     Class 6 is deemed to reject the Plan.

E.   Non-Consensual Confirmation

     To the extent that any Impaired Class rejects this Plan or is deemed to
have rejected this Plan, the Debtors will request confirmation of this Plan as
it may be modified from time to time, under section 1129(b) of the Bankruptcy
Code. The Debtors reserve the right to alter, amend, modify, revoke or withdraw
this Plan or any document in the Plan Supplement, including to amend or modify
it to satisfy the requirements of section 1129(b) of the Bankruptcy Code, if
necessary.

                                   ARTICLE VI
                                   ----------

                    PROVISIONS FOR IMPLEMENTATION OF THE PLAN

A.   Sale of Assets

     On or prior to the Effective Date, the Finance Company Debtors shall
consummate the Sale Transactions pursuant to the terms of the Purchase
Agreements. On the Effective Date, the Residual Assets shall be transferred to
the Post-Consummation Estate as part of the Post-Consummation Estate Assets.

B.   Establishment of the Post-Consummation Estate

     On the Effective Date, the Finance Company Debtors, on their own behalf and
on behalf of holders of Allowed Claims shall execute the Post-Consummation
Estate Agreement and shall take all other steps necessary to establish the
Post-Consummation Estate pursuant to the Post-Consummation Estate Agreement. On
the Effective Date, and in accordance with and pursuant to the terms of the
Plan, the Finance Company Debtors shall transfer to the Post-Consummation Estate
all of their right, title, and interest in all of the Residual Assets
(including, unless otherwise provided for in the Plan, the purchase price paid
by the respective purchasers under the Purchase Agreements). In connection with
the transfer of these assets, including rights and Causes of Action, any
attorney-client privilege, work-product privilege, or other privilege or
immunity attaching to any documents or communications (whether written or oral)
transferred to the Post-Consummation Estate shall vest in the Post-Consummation
Estate and its representatives, and the Debtors and the Post-Consummation Estate
are authorized to take all necessary actions to effectuate the transfer of such
privileges.

C.   Funding Expenses of the Post-Consummation Estate

     The Finance Company Debtors shall be obligated to provide any funding with
respect to the Post-Consummation Estate after they transfer the
Post-Consummation Estate Assets to the Post-Consummation Estate. As more fully
described in the Post-Consummation Estate Agreement, any Cash in the
Post-Consummation Estate shall be applied in accordance with the terms of the
Post-Consummation Estate Budget, first, to the fees, costs, expenses (each of
the foregoing in an amount not to exceed amounts approved pursuant to the
Post-Consummation Estate Budget) and liabilities of the Plan Administrator,
second, to satisfy any other administrative and wind down expenses of the
Post-Consummation Estate (each in an amount not to exceed amounts approved
pursuant to the Post-Consummation Estate Budget), and third, to the
distributions provided for pursuant to the Plan.

                                       15


D.   Corporate Action

     Upon the entry of the Confirmation Order by the Bankruptcy Court, all
matters provided under the Plan involving the corporate structure of the Debtors
shall be deemed authorized and approved without any requirement of further
action by the Finance Company Debtors, the Finance Company Debtors' shareholders
or the Debtors' boards of directors. To the extent such action has not been
completed subsequent to the entry of the Substantive Consolidation Order, the
Finance Company Debtors (and their boards of directors) shall dissolve or
otherwise terminate their existence following the Effective Date and are
authorized to dissolve or terminate the existence of wholly-owned non-Debtor
subsidiaries following the Effective Date as well as any remaining health,
welfare or benefit plans. As provided herein, the entry of the Substantive
Consolidation Order does not adversely affect the rights, claims, liens,
mortgages or security interests of Holders of Secured Claims in their respective
Collateral.

E.   Appointment of Plan Administrator

     On the Effective Date, compliance with the provisions of the Plan shall
become the general responsibility of the Plan Administrator and the Plan
Administrator shall be appointed in accordance with the Post-Consummation Estate
Agreement. CFC, in its sole and absolute discretion, shall designate the Plan
Administrator.

F.   Cancellation of Notes, Instruments, Debentures and Equity Securities

     On the Effective Date, except to the extent provided otherwise in the Plan,
all notes, instruments, certificates and other documents evidencing Claims and
all Equity Interests in any of the Finance Company Debtors shall be canceled and
deemed terminated.

G.   Creation of Creation of Professional Escrow Account

     On the earlier to occur of (i) the GE Closing Date, (ii) the CFN Closing
Date, or (iii) the Effective Date, the Finance Company Debtors or the Plan
Administrator, as the case may be, shall establish the Professional Escrow
Account and reserve the amounts necessary to ensure the payment of all Accrued
Professional Compensation.

H.   Creation of Employee Benefit Escrow Account

     On the earlier to occur of (i) the GE Closing Date, (ii) the CFN Closing
Date, or (iii) the Effective Date, and to the extent funds are available after
all Administrative Claims are reserved or accrued for under the Plan, the
Post-Consummation Estate shall establish the Employee Benefit Escrow Account and
reserve the amounts necessary to ensure the payment of the Shared Employee
Benefit Liabilities. To the extent there are sufficient available funds, in no
event shall the amount so reserved on the Effective Date be less than the amount
necessary to fund the existing or potential future obligations of any Finance
Company Debtor with respect to any Shared Employee Benefit Liabilities which
have accrued or may in the future accrue with respect to Finance Company Debtor
Employees.

I.   Creation of Lehman Escrow Account

     On the CFN Closing Date, pursuant to the CFN Sale Order, the Finance
Company Debtors or the Plan Administrator, as the case may be, shall establish
the Lehman Escrow Account and reserve the amounts necessary for the payment of
the Allowed Lehman Secured Claims under the Plan.

J.   Creation of 93/94 Note Claim Escrow Account

     On the GE Closing Date, pursuant to the GE Sale Order, the Finance Company
Debtors or the Plan Administrator, as the case may be, shall establish the 93/94
Note Claim Escrow Account and reserve the amounts necessary for the payment of
the Allowed 93/94 Note Claims under the Plan.

K.   Creation of Consent Agreement Reserve Account

     On the CFN Closing Date, CFC shall fund the Consent Agreement Reserve
Account.

                                       16


L.   Retiree Benefits

     The Finance Company Debtors shall timely pay any retiree benefits as
defined in Section 1114(a) of the Bankruptcy Code to the extent that such
retiree benefits are payable by the Finance Company Debtors. Such retiree
benefits include those that arise from the plans, funds or programs described in
the Plan Supplement.

                                  ARTICLE VII
                                  -----------

                    EXECUTORY CONTRACTS AND UNEXPIRED LEASES

A.   Assumption and Rejection of Executory Contracts and Unexpired Leases

     Any executory contracts or unexpired leases that have not expired by their
own terms on or prior to the Effective Date, which the Finance Company Debtors
have not assumed and assigned or rejected with the approval of the Bankruptcy
Court (whether as part of the Sale Transactions or otherwise), or that are not
the subject of a motion to assume the same pending as of the Effective Date,
shall be deemed rejected by the Debtors-in-Possession on the Effective Date and
the entry of the Confirmation Order by the Bankruptcy Court shall constitute
approval of such rejections pursuant to sections 365(a) and 1123 of the
Bankruptcy Code.

B.   Rejection Claims; Cure of Defaults

     If the rejection of an executory contract or unexpired lease results in
damages to the other party or parties to such contract or lease, any Claim for
such damages, if not heretofore evidenced by a Proof of Claim that has been
Filed, shall be forever barred and shall not be enforceable against the Finance
Company Debtors, the Post-Consummation Estate, or their properties, successors
or assigns, unless a Proof of Claim is Filed and served upon counsel for the
Debtors on or before thirty (30) days after the later to occur of (i) the
Effective Date; and (ii) the date of entry of an order by the Bankruptcy Court
authorizing rejection of a particular executory contract or unexpired lease.

     The Finance Company Debtors believe that no cure payments pursuant to
section 365(b)(1) of the Bankruptcy Code need to be made on any of the executory
contracts and unexpired leases that they are assuming under this Plan because
the Finance Company Debtors are current on all of their obligations with respect
to such contracts and leases and all prepetition obligations will have been
satisfied under the Plan. If, however, a counterparty to any such executory
contract or unexpired lease believes that cure payments are due pursuant to
section 365(b)(1) of the Bankruptcy Code, or that there is a dispute regarding
the ability of the Buyers to provide "adequate assurance of future performance"
within the meaning of the Bankruptcy Code under the contract or lease to be
assumed, or there is a dispute with regard to any other matters pertaining to
the assumption or the cure payments required by section 365(b)(1) of the
Bankruptcy Code, such counterparty must File an objection to the assumption of
its executory contract or unexpired lease by the Finance Company Debtors not
later than ten (10) days prior to the Confirmation Date. The Bankruptcy Court
shall have, and exercise, jurisdiction over any such objection, and which
objection shall be resolved by a Final Order. The effective date of the
assumption of an executory contract or unexpired lease subject to any such
objection shall be determined by any such Final Order.

                                  ARTICLE VIII
                                  ------------

                       PROVISIONS REGARDING DISTRIBUTIONS

A.   Time and Method of Distributions

     The Plan Administrator, on behalf of the Post-Consummation Estate, or such
other Entity as may be designated by the Plan Administrator, on behalf of the
Post-Consummation Estate, will make all distributions under the Plan. The Plan
Administrator will make initial distributions at its sole discretion after the
Effective Date. Whenever any distribution to be made under the Plan is due on a
day other than a Business Day, the Plan Administrator will make each such
distribution, without interest, on the immediately succeeding Business Day, but
will be deemed to have been made on the date due. Unless the Entity receiving a
payment agrees otherwise, the

                                       17


Plan Administrator, at its election will make any payment in Cash to be made by
the Post-Consummation Estate by check drawn on a domestic bank or by wire
transfer from a domestic bank. Distributions referred to in this Article refer
to Unsecured Claims and shall be made after paying all Allowed DIP Claims,
Allowed Administrative Claims, Allowed Priority Tax Claims, Allowed Other
Priority Claims, Allowed Other Secured Claims, Allowed Lehman Secured Claims
Allowed 93/94 Note Claims, and after establishing and funding the 93/94 Note
Claim Escrow Account, Employee Benefit Escrow Account, Lehman Escrow Account and
Professional Escrow Account, the Consent Agreement Reserve Account.

B.   Manner of Payment under the Plan

     Any payment in Cash to be made by the Debtors or the Plan Administrator
shall be made, at the election of the Debtors or the Plan Administrator, as the
case may be, by check drawn on a domestic bank or by wire transfer from a
domestic bank.

C.   Delivery of Distributions

     Subject to the provisions of Fed. R. Bankr. P. 2002(g), and except as
otherwise provided herein, distributions and deliveries to Holders of record of
Allowed Claims shall be made at the address of each such Holder set forth on the
Finance Company Debtors' books and records unless superseded by the address set
forth on proofs of claim filed by any such Holders, or at the last known address
of such a Holder if no proof of claim is filed or if the Finance Company Debtors
has been notified in writing of a change of address. Except as further provided
by the Plan or the Bankruptcy Code, the Plan Administrator will make all
distributions in accordance with the provisions of the applicable indenture
participation agreement, loan agreement or analogous instrument or agreement, if
any.

D.   Undeliverable Distributions

     1.   Holding of Undeliverable Distributions:

          If any distribution to any holder is returned to the Plan
Administrator as undeliverable, no further distributions shall be made to such
holder unless and until the Plan Administrator is notified, in writing, of such
holder's then-current address. All Entities ultimately receiving undeliverable
Cash shall not be entitled to any interest or other accruals of any kind.
Nothing contained in the Plan shall require the Plan Administrator to attempt to
locate any holder of an Allowed Claim or an Allowed Interest.

     2.   Failure to Claim Undeliverable Distributions:

          Any holder of an Allowed Claim that does not assert its rights
pursuant to the Plan to receive a distribution within six (6) months from and
after the date such distribution is returned as undeliverable shall have such
holder's Claim for such undeliverable distribution discharged and shall be
forever barred from asserting any such Claim against the Post-Consummation
Estate, the Plan Administrator or the Post-Consummation Estate Assets. In such
case, any consideration held for distribution on account of such Claim or
Interest shall revert to the Post-Consummation Estate for distribution to the
beneficiaries of the Post-Consummation Estate in accordance with the terms of
the Plan.

E.   Compliance with Tax Requirements/Allocation

     To the extent applicable, the Post-Consummation Estate shall comply with
all tax withholding and reporting requirements imposed on it by any Governmental
Unit, and all distributions pursuant to the Plan shall be subject to such
withholding and reporting requirements. For tax purposes, distributions received
in respect of Allowed Claims will be allocated first to the principal amount of
such Claims, with any excess allocated to unpaid accrued interest.

                                       18


F.   Time Bar to Cash Payments

     Checks issued by the Plan Administrator on account of Allowed Claims shall
be null and void if not negotiated within ninety (90) days from and after the
date of issuance thereof. Requests for reissuance of any check shall be made
directly to the Plan Administrator by the holder of the Allowed Claim with
respect to which such check originally was issued. Any claim in respect of such
a voided check shall be made within six (6) months from and after the date of
issuance of such check. After such date, all Claims in respect of voided checks
shall be discharged and forever barred and the Post-Consummation Estate shall
retain all monies related thereto for distribution to the beneficiaries of the
Post-Consummation Estate in accordance with the terms of the Plan.

G.   Distributions after Effective Date

     Distributions made after the Effective Date to Holders of Claims that are
not Allowed Claims as of the Effective Date, but which later become Allowed
Claims, shall be deemed to have been made on the Effective Date. Unless
otherwise specifically provided in the Plan, the Finance Company Debtors shall
not be obligated to pay interest on account of any Claim not paid on the
Effective Date other than interest accumulating in such respective escrow
account (if any) from which such Claim would be paid if, and when, deemed
Allowed.

H.   Fractional Dollars; De Minimis Distributions

     Notwithstanding anything contained herein to the contrary, payments of
fractions of dollars will not be made. Whenever any payment of a fraction of a
dollar under the Plan would otherwise be called for, the actual payment made
will reflect a rounding of such fraction to the nearest dollar (up or down),
with half dollars being rounded down. The Plan Administrator will not make any
payment of less than Fifty Dollars ($50) with respect to any Allowed Claim
unless a request therefor is made in writing to the Plan Administrator on or
before ninety (90) days after the Effective Date.

I.   Set-Offs

     The Plan Administrator may, pursuant to sections 502(d) or 553 of the
Bankruptcy Code or applicable nonbankruptcy law, set off against any Allowed
Claim and the distributions to be made pursuant to the Plan on account thereof
(before any distribution is made on account of such Claim), the Claims, rights
and Causes of Action of any nature that the Debtors may hold against the Holder
of such Allowed Claim; provided, however, that neither the failure to effect
such a set-off nor the allowance of any Claim hereunder shall constitute a
waiver or release by the Debtors of any such claims, rights and causes of action
that the Debtors may possess against such holder; and, provided, further, that
nothing contained in the Plan is intended to limit the rights of any Creditor to
effectuate a set-off prior to the Effective Date in accordance with the
provisions of sections 362 and 553 of the Bankruptcy Code.

J.   Setoff of Certain Intercompany Notes

     As of the Petition Date CFC owed CIHC $277,376,671 under a promissory note
(the "CFC/CIHC Intercompany Note"), and CIHC owed CFC $315,030,986 under a
separate note (the "CIHC/CFC Intercompany Note"). The net pre-petition balance
owing by CIHC to CFC under those two notes is $37,654,315 (the "Pre-Petition
Note Balance"). On the Effective Date, the CFC/CIHC Intercompany Note will be
setoff against the CIHC/CFC Intercompany Note.

K.   Preservation of Finance Company Debtors' Subordination Rights

     All subordination rights and claims relating to the subordination by the
Finance Company Debtors of the Allowed Claim of any Creditor shall remain valid,
enforceable and unimpaired in accordance with section 510 of the Bankruptcy Code
or otherwise, except as otherwise provided in the Plan.

                                       19



L.   Waiver by Creditors of All Subordination Rights

     Except as otherwise ordered by the Bankruptcy Court, each Holder of a Claim
shall be deemed to have waived all contractual, legal and equitable
subordination rights that they may have, whether arising under general
principles of equitable subordination, section 510(c) of the Bankruptcy Code or
otherwise, with respect to any and all distributions to be made under the Plan,
and all such contractual, legal or equitable subordination rights that each
holder of a Claim has individually and collectively with respect to any such
distribution made pursuant to this Plan shall be discharged and terminated, and
all actions related to the enforcement of such subordination rights will be
permanently enjoined.

M.   Settlement of Claims and Controversies

     Pursuant to Fed. R. Bankr. P. 9019 and in consideration for the
distributions and other benefits provided under the Plan, the provisions of this
Plan shall constitute a good faith compromise and settlement of claims or
controversies relating to the contractual, legal and subordination rights that a
holder of a Claim may have with respect to any Allowed Claim with respect
thereto, or any distribution to be made on account of such an Allowed Claim.

                                   ARTICLE IX
                                   ----------

                PROCEDURES FOR RESOLUTION OF DISPUTED, CONTINGENT
                   AND UNLIQUIDATED CLAIMS OR EQUITY INTERESTS

A.   Objections to Claims; Prosecution of Disputed Claims

     1. The Finance Company Debtors or the Post-Consummation Estate shall object
to the allowance of Claims or Equity Interests Filed with the Bankruptcy Court
with respect to which they dispute liability or allowance in whole or in part.
All objections shall be litigated prior to Final Order; provided, however, that
the Plan Administrator (within any parameters as may be established by the
Post-Consummation Estate Agreement) shall have the authority to file, settle,
compromise or withdraw any objections to Claims, without approval of the
Bankruptcy Court. Unless otherwise ordered by the Bankruptcy Court, the Debtors,
the Post-Consummation Estate or the Plan Administrator, as the case may be, will
file and serve all objections to Claims as soon as practicable.

     2. Notwithstanding the foregoing, the Plan Administrator, on behalf of the
Post-Consummation Estate, shall have the exclusive right to object to the
allowance of Administrative Expense Claims and Secured Claims for (i) one
hundred eighty (180) days from the Effective Date if no deadline to object to
such Claims is set by the Bankruptcy Court or (ii) up to the forty-fifth (45th)
day prior to any deadline to object to such Claims ordered by Bankruptcy Court
(the "Objection Period") provided, however, that the Plan Administrator shall
have the right to seek extension of the Objection Period.

B.   Estimation of Claims

     The Finance Company Debtors or the Plan Administrator, on behalf of the
Post-Consummation Estate, may at any time request that the Bankruptcy Court
estimate any contingent or Disputed Claim pursuant to section 502(c) of the
Bankruptcy Code regardless of whether the Debtors or the Plan Administrator
previously have objected to such Claim or whether the Bankruptcy Court has ruled
on any such objection. The Bankruptcy Court will retain jurisdiction to estimate
any Claim at any time during litigation concerning any objection to any Claim,
including, without limitation, during the pendency of any appeal relating to any
such objection. Subject to the provisions of section 502(j) of the Bankruptcy
Code, in the event that the Bankruptcy Court estimates any contingent or
Disputed Claim, the amount so estimated shall constitute the maximum allowed
amount of such Claim. If the estimated amount constitutes a maximum limitation
on the amount of such Claim, the Debtors or the Post-Consummation Estate may
pursue supplementary proceedings to object to the allowance of such Claim. All
of the aforementioned objection, estimation and resolution procedures are
intended to be cumulative and not necessarily exclusive of one another. Claims
may be estimated and subsequently compromised, settled, withdrawn or resolved by
any mechanism approved by the Bankruptcy Court.

                                       20


C.   Controversy Concerning Impairment

     If a controversy arises as to whether any Claims or Equity Interests, or
any Class of Claims or Equity Interests, are Impaired under the Plan, the
Bankruptcy Court shall, after notice and a hearing, determine that controversy
before the Confirmation Date.

D.   Payments and Distributions on Disputed Claims

     1. Notwithstanding any provision hereof to the contrary, except as
otherwise agreed to by the Finance Company Debtors, or the Plan Administrator,
on behalf of the Post-Consummation Estate, in their sole discretion, no partial
payments or partial distributions will be made in satisfaction of a Disputed
Claim until it is resolved by settlement or a Final Order.

     2. Notwithstanding the foregoing, the Finance Company Debtors or Plan
Administrator, as the case may be, will set aside for each Holder of a Disputed
Claim such portion of Cash as necessary to provide required distributions if
that Claim were an Allowed Claim, either based upon the amount of the Claim as
filed with the Bankruptcy Court or the amount of the Claim as estimated by the
Bankruptcy Court.

     3. At such time as a Disputed Claim becomes, in whole or in part an Allowed
Claim, the Plan Administrator shall distribute to the Holder thereof the
distributions, if any, to which such Holder is then entitled under the Plan.
Such distribution, if any, will be made as soon as practicable after the date
that the order or judgment of the Bankruptcy Court allowing such Disputed Claim
becomes a Final Order. No interest will be paid on Disputed Claims that later
become Allowed or with respect to any distribution in satisfaction thereof to a
Holder.

                                   ARTICLE X
                                   ---------

                      CONDITIONS PRECEDENT TO CONFIRMATION
                         AND EFFECTIVE DATE OF THE PLAN

A.   Conditions Precedent to Confirmation

     The following are conditions precedent to confirmation of this Plan that
must be (i) satisfied or (ii) waived in accordance with Article X.C. below.

     1. The entry of the Confirmation Order and the Substantive Consolidation
Orders as Final Orders in form and substance satisfactory to the Finance Company
Debtors.

     2. The Finance Company Debtors shall have submitted the Post-Consummation
Estate Budget.

     3. The Plan Supplement and all of the schedules, documents, and exhibits
contained therein shall have been filed in form and substance reasonably
acceptable to the Finance Company Debtors.

     4. The Plan Administrator shall be identified, in the sole discretion of
CFC.

B.   Conditions Precedent to Effective Date of the Plan

     The following are conditions precedent to Consummation of this Plan that
must be (i) satisfied or (ii) waived in accordance with Article X.C below:

     1. The Sale Transactions shall have closed.

     2. All other actions and documents necessary to implement the Plan shall
have been effected or executed, including the Post-Consummation Estate
Agreement.

                                       21



     3. The Post-Consummation Estate shall have sufficient cash to permit
payment of all Claims pursuant to section 1129(a)(9) of the Bankruptcy Code.

     4. The Post-Consummation Estate shall have sufficient Cash to permit
payment of all expenses under the Post-Consummation Estate Budget.

     5. The Post-Consummation Estate Budget shall have been approved by the
Bankruptcy Court.

     6. The Professional Fee Escrow, the Employee Benefit Escrow Account, the
Lehman Escrow Account, the 93/94 Note Claim Escrow Account and the Consent
Agreement Reserve Account shall be funded as required under the Plan.

     7. The Holding Company Debtors' plan of reorganization shall have been
declared effective.

C.   Waiver of Conditions Precedent

     The Debtors, in their sole discretion, may waive any of the conditions set
forth in Article X.A or X.B above. If the Confirmation Order is vacated, this
Plan shall be null and void in all respects and nothing contained in this Plan
or the Disclosure Statement shall: (1) constitute a waiver or release of any
Claims by or against, or any Equity Interests in, the Debtors; (2) prejudice in
any manner the rights of the Finance Company Debtors; or (3) constitute an
admission, acknowledgment, offer or undertaking by the Finance Company Debtors
in any respect.

D.   Effect of Non-Occurrence of Consummation

     If the Confirmation Order is vacated, this Plan shall be null and void in
all respects and nothing contained in this Plan or the Disclosure Statement
shall: (1) constitute a waiver or release of any Claims by or against, or any
Equity Interests in, the Finance Company Debtors; (2) prejudice in any manner
the rights of the Finance Company Debtors; or (3) constitute an admission,
acknowledgment, offer or undertaking by the Finance Company Debtors in any
respect.

                                   ARTICLE XI
                                   ----------

                   RELEASE, INJUNCTIVE AND RELATED PROVISIONS

A.   Compromise and Settlement

     The allowance, classification and treatment of all Allowed Claims and
Allowed Equity Interests and their respective distributions and treatments
hereunder take into account and/or conform to the relative priority and rights
of the Claims and Equity Interests in each Class in connection with any
contractual, legal and equitable subordination rights relating thereto whether
arising under general principles of equitable subordination, section 510(b) of
the Bankruptcy Code or otherwise. As of the Effective Date, any and all such
rights described in preceding sentence are settled, compromised and released
pursuant hereto. In addition, the allowance, classification and treatment of
Allowed Claims in Classes 3, 4 and 5 takes into account any Causes of Action,
claims or counterclaims, whether under the Bankruptcy Code or otherwise under
applicable law, that may exist between the Finance Company Debtors and the
Holders of such Claims or among the Holders of such Claims and other Holders of
Claims or Equity Interests, as the case may be, and, as of the Effective Date,
any and all such Causes of Action, claims and counterclaims are settled,
compromised and released pursuant hereto. The Confirmation Order shall
permanently enjoin, effective as of the Effective Date, all Persons and Entities
from enforcing or attempting to enforce any such contractual, legal and
equitable subordination rights or Causes of Action, claims or counterclaims
against such Holder satisfied, compromised and settled in this manner.

B.   Releases by the Finance Company Debtors

     Except as otherwise specifically provided herein or in the Plan Supplement,
for good and valuable consideration, including the service of the Releasees to
facilitate the expeditious reorganization of the Finance

                                       22


Company Debtors and the implementation of the restructuring contemplated by the
Plan, the Releasees, on and after the Effective Date, are deemed released by the
Finance Company Debtors and the Post-Consummation Estate from any and all Claims
(as defined in section 101(5) of the Bankruptcy Code), obligations, rights,
suits, damages, Causes of Action, remedies and liabilities whatsoever, including
any derivative Claims asserted on behalf of a Finance Company Debtor, whether
known or unknown, foreseen or unforeseen, existing or hereinafter arising, in
law, equity or otherwise, that the Finance Company Debtors or their subsidiaries
would have been legally entitled to assert in their own right (whether
individually or collectively) or on behalf of the Holder of any Claim or Equity
Interest or other Person or Entity, based in whole or in part upon any act or
omission, transaction, agreement, event or other occurrence taking place on or
before the Effective Date, other than any such Releasee's obligations to repay
its obligations under the D&O Credit Facilities.

C.   Releases by Holders of Claims

     On and after the Effective Date, each Holder of a Claim (a) who has
accepted the Plan or (b) who receives a distribution of property pursuant to the
Plan, shall be deemed to have unconditionally released the Releasees from any
and all Claims (as defined in section 101(5) of the Bankruptcy Code),
obligations, rights, suits, damages, Causes of Action, remedies and liabilities
whatsoever, including any derivative Claims asserted on behalf of a Finance
Company Debtor, whether known or unknown, foreseen or unforeseen, existing or
hereafter arising, in law, equity or otherwise, that such Person or Entity would
have been legally entitled to assert (whether individually or collectively),
based in whole or in part upon any act or omission, transaction, agreement,
event or other occurrence taking place on or before the Effective Date in any
way relating or pertaining to (w) the purchase or sale, or the rescission of a
purchase or sale, of any security of a Finance Company Debtor, (x) a Finance
Company Debtor, (y) the Chapter 11 Cases, or (z) the negotiation, formulation
and preparation of the Plan, or any related agreements, instruments or other
documents. No portion of the releases by the Holders of Claims in any way
impairs any Releasee's obligations to repay its obligations under the D&O Credit
Facilities.

D.   Exculpation

     The Releasees, Debtors, the Committee, and the employees, agents, and
professionals of each of the foregoing (acting in such capacity only) shall
neither have, nor incur any liability to any Person or Entity for any pre or
post-petition act taken or omitted to be taken in connection with, or related to
the formulation, negotiation, preparation, dissemination, implementation,
administration, Confirmation or Consummation of the Plan, the Disclosure
Statement or any contract, instrument, release or other agreement or document
created or entered into in connection with the Plan or any other pre or
post-petition act taken or omitted to be taken in connection with or in
contemplation of the restructuring of the Finance Company Debtors.

E.   Preservation of Rights of Action

     1.   Maintenance of Causes of Action

          Except as otherwise provided in the Plan or the Purchase Agreements,
the Finance Company Debtors or the Post-Consummation Estate, as the case may be,
shall retain all rights to commence and pursue, as appropriate, any and all
Causes of Action, whether arising before or after the Petition Date, in any
court or other tribunal including, without limitation, in an adversary
proceeding Filed in one or more of the Chapter 11 Cases including the actions
specified in the Plan Supplement.

          Except as otherwise provided in the Plan, in accordance with section
1123(b)(3) of the Bankruptcy Code, any Claims, rights, and Causes of Action that
the respective Finance Company Debtors may hold against any Entity shall vest in
the Post-Consummation Estate. The Post-Consummation Estate, through its
authorized agents or representatives, shall retain and may exclusively enforce
any and all such Claims, rights or Causes of Action. The Post-Consummation
Estate shall have the exclusive right, authority, and discretion to institute,
prosecute, abandon, settle, or compromise any and all such Claims, rights, and
Causes of Action without the consent or approval of any third party and without
any further order of court.

                                       23


     2.   Preservation of All Causes of Action Not Expressly Settled or Released

          The Finance Company Debtors are currently investigating whether to
pursue potential Causes of Action against certain Persons or Entities. The
investigation has not been completed to date, and, subject to the Releases
granted in Article XI, hereof, the Plan Administrator shall retain, on behalf of
the Post-Consummation Estates, all rights on behalf of the Finance Company
Debtors and the Post-Consummation Estates to commence and pursue any and all
Causes of Action (under any theory of law, including, without limitation, the
Bankruptcy Code, and in any court or other tribunal including, without
limitation, in an adversary proceeding Filed in the Chapter 11 Cases) discovered
in such an investigation to the extent the Plan Administrator deem appropriate.
Potential Causes of Action currently being investigated by the Finance Committee
Debtors, which may but need not be pursued by the Finance Committee Debtors
prior to the Effective Date and by the Plan Administrator, on behalf of the
Post-Consummation Estate, after the Effective Date, to the extent warranted,
include, without limitation, (i) a list of potential Claims and Causes of Action
that will be set forth in the Plan Supplement to the extent determined as of the
date thereof; and (ii) Preference Actions that will be set forth in the Plan
Supplement to the extent determined as of the date thereof (although the Finance
Company Debtors and, after the Effective Date, the Plan Administrator, on behalf
of the Finance Company Debtors and the Post-Consummation Estate reserve all
rights to pursue any and all Preference Actions discovered subsequent to the
Filing Date of the Plan Supplement). Additionally, without limitation, the
Finance Company Debtors hereby reserve their rights to pursue:

          (a) Any other Causes of Action, whether legal, equitable or statutory
     in nature, arising out of, or in connection with the Finance Company
     Debtors' businesses or operations, including, without limitation, the
     following: possible claims against vendors, landlords, sublessees,
     assignees, customers or suppliers for warranty, indemnity, back
     charge/set-off issues, overpayment or duplicate payment issues and
     collections/accounts receivables matters; deposits or other amounts owed by
     any creditor, lessor, utility, supplier, vendor, landlord, sublessee,
     assignee, or other Person or Entity; employee, management or operational
     matters; claims against landlords, sublessees and assignees arising from
     the various leases, subleases and assignment agreements relating thereto,
     including, without limitation, claims for overcharges relating to taxes,
     common area maintenance and other similar charges; financial reporting;
     environmental, and product liability matters; actions against insurance
     carriers relating to coverage, indemnity or other matters; counterclaims
     and defenses relating to notes or other obligations; contract or tort
     claims which may exist or subsequently arise;

          (b) Any and all avoidance actions pursuant to any applicable section
     of the Bankruptcy Code, including, without limitation sections 544, 545,
     547, 548, 549, 550, 551, 553(b) and/or 724(a) of the Bankruptcy Code,
     arising from any transaction involving or concerning any of the Finance
     Company Debtors; and

          (c) Any and all Causes of Action listed in the Schedule of Causes of
     Action set forth in the Plan Supplement;

          (d) In addition, there may be numerous other Causes of Action which
     currently exist or may subsequently arise that are not set forth herein, in
     the Cause of Action Summary or in the List of Retained Causes of Action,
     because the facts upon which such Causes of Action are based are not
     currently or fully known by the Finance Company Debtors and, as a result,
     can not be raised during the pendency of the Chapter 11 Cases
     (collectively, the "Unknown Causes of Action"). The failure to list any
     such Unknown Cause of Action herein, or in the Cause of Action Summary or
     the List of Retained Causes of Action, is not intended to limit the rights
     of the Post-Consummation Estate to pursue any Unknown Cause of Action to
     the extent the facts underlying such Unknown Cause of Action subsequently
     become fully known to the Finance Company Debtors.

     Unless Causes of Action against a Person or Entity are expressly waived,
relinquished, released, compromised or settled in the Plan or any Final Order,
the Finance Company Debtors (before the Effective Date) and the Plan
Administrator, on behalf of the Post-Consummation Estate (post-Effective Date),
expressly reserve all Causes of Action and Unknown Causes of Action, including
the Causes of Action described herein and in the Causes of Action Summary and
the List of Retained Causes of Action, as well as any other Causes of Action or
Unknown Causes of Action, for later adjudication and therefore, no preclusion
doctrine, including, without

                                       24


limitation, the doctrines of res judicata, collateral estoppel, issue
preclusion, claim preclusion, estoppel (judicial, equitable or otherwise) or
laches shall apply to such Causes of Action upon or after the confirmation or
Consummation of the Plan. In addition, the Finance Company Debtors and the
Post-Consummation Estate, and any successors-in-interest thereto, expressly
reserve the right to pursue or adopt any Claims not so waived, relinquished,
released, compromised on settled that are alleged in any lawsuit in which the
Finance Company Debtors are a defendant or an interested party, including the
lawsuits described in the Disclosure Statement, against any Person or entity,
including, without limitation, the plaintiffs and co-defendants in such
lawsuits.

     Moreover, Causes of Action shall also include any causes of action that may
arise after the Effective Date against any Person or Entity to whom the Finance
Company Debtors have incurred an obligation (whether on account of services,
Post-Consummation Equity, purchase or sale of goods or otherwise), or who has
received services from the Finance Company Debtors or a transfer of money or
property of the Finance Company Debtors, or who has transacted business with the
Finance Company Debtors, or leased equipment or property from the Finance
Company Debtors should assume that such obligation, transfer, or transaction may
be reviewed by the Finance Company Debtors subsequent to the Effective Date and
may, to the extent not theretofore waived, relinquished, released, compromised
or settled, be the subject of an action after the Effective Date, whether or not
(i) such Person or Entity has Filed a proof of Claim against the Finance Company
Debtors in the Chapter 11 Cases; (ii) such Person's or Entity's proof of Claim
has been objected to; (iii) such Person's or Entity's Claim was included in the
Finance Company Debtors' Schedules; or (iv) such Person's or Entity's scheduled
Claim has been objected to by the Finance Company Debtors or has been identified
by the Finance Company Debtors as disputed, contingent, or unliquidated.

     Except as otherwise provided in the Plan or in any contract, instrument,
release, Indenture or other agreement entered into in connection with the Plan,
in accordance with section 1123(b)(3) of the Bankruptcy Code, any Claims,
rights, and Causes of Action that the respective Finance Company Debtors,
Estates, or Post-Consummation Estates may hold against any Person or Entity,
including but not limited to those Causes of Action listed in the Disclosure
Statement, shall vest in the Post-Consummation Estate, and the Post-Consummation
Estate shall retain and may exclusively enforce, as the authorized
representatives of the respective Estates and Post-Consummation Estates, any and
all such Claims, rights, or Causes of Action. The Plan Administrator on behalf
of the Post-Consummation Estate may pursue any and all such Claims, rights, or
Causes of Action, as appropriate, in accordance with the best interests of the
Post-Consummation Estate. Subject to Article XII herein, the Plan Administrator
on behalf of the Post-Consummation Estate shall have the exclusive right,
authority, and discretion to institute, prosecute, abandon, settle, or
compromise any and all such Claims, rights, and Causes of Action without the
consent or approval of any third party and without any further order of the
Bankruptcy Court.

F.   Discharge of Claims and Termination of Equity Interests

     Except as otherwise provided herein, and except with respect to the Post
Confirmation Estate: (a) the rights afforded herein and the treatment of all
Claims and Equity Interests herein, shall be in exchange for and in complete
satisfaction, discharge and release of, all Claims and Equity Interests of any
nature whatsoever, including any interest accrued on Claims from and after the
Petition Date, against the Finance Company Debtors or any of their assets or
properties, (b) on the Effective Date, all such Claims against, and Equity
Interests in, the Finance Company Debtors shall be satisfied, discharged and
released in full, and (c) all Persons shall be precluded from asserting against
the Finance Company Debtors, the Post Confirmation Estates, their successors or
their assets or properties, any other or further Claims or Equity Interests
based upon any act or omission, transaction or other activity of any kind or
nature that occurred prior to the Confirmation Date.

G.   Injunction

     Except as otherwise expressly provided in the Plan or obligations issued
pursuant to the Plan, all Persons who have held, hold or may hold Claims against
or Equity Interests in the Finance Company Debtors or the Releasees are
permanently enjoined, from and after the Effective Date, from (a) commencing or
continuing in any manner any action or other proceeding of any kind on any such
Claim or Equity Interest against the Finance Company Debtors, Releasees, and the
Official Committee and their respective members, and the employees, agents, and
professionals of each of the foregoing (acting in such capacity); (b) enforcing,
attaching, collecting or recovering by any manner or means any judgment, award,
decree or order against those parties

                                       25


listed in subparagraph (a) above; (c) creating, perfecting, or enforcing any
encumbrance of any kind against those parties listed in subparagraph (a) above,
or the property or estates of those parties listed in subparagraph (a) above;
(d) asserting any right of setoff, subrogation or recoupment of any kind against
any obligation due from those parties listed in subparagraph (a) above or
against the property or estates of those parties listed in subparagraph (a)
above with respect to any such Claim or Equity Interest; and (e) commencing or
continuing in any manner any action or other proceeding of any kind in respect
of any Claim or Cause of Action released or settled hereunder.

                                  ARTICLE XII
                                  -----------

                POST-CONSUMMATION ESTATE; THE PLAN ADMINISTRATOR

A.   Generally

     The powers, authority, responsibilities and duties of the Post-Consummation
Estate and the Plan Administrator are set forth in and shall be governed by the
Post-Consummation Estate Agreement. The Debtors shall have the sole discretion
to appoint the Plan Administrator, and shall have the sole authority to
administer all assets prior to their transfer to the Post-Consummation Estate.

B.   Purpose of the Post-Consummation Estate

     The Post-Consummation Estate shall be established for the primary purpose
of liquidating its assets, in accordance with Treas. Reg. ss. 301.7701-4(d),
with no objective to continue or engage in the conduct of a trade or business,
except to the extent reasonably necessary to, and consistent with, the
liquidating purpose of the Post-Consummation Estate. The Post-Consummation
Estate shall not be deemed a successor-in-interest of the Debtors for any
purpose other than as specifically set forth herein or in the Post Confirmation
Estate Agreement. The Post-Consummation Estate is intended to qualify as a
"grantor trust" for federal income tax purposes with the Beneficiaries treated
as grantors and owners of the trust.

C.   Transfer of Assets

     1. The transfer of the Post-Consummation Estate Assets to the
Post-Consummation Estate shall be made, as provided herein, for the benefit of
the holders of Allowed Claims only to the extent such holders are entitled to
distributions under the Plan. On the Effective Date, and after the Finance
Company Debtors' payments and/or funding of such reserves, on behalf of the
holders of Allowed Claims, the Finance Company Debtors shall transfer title to
all remaining assets and such reserves (subject only to such specified
liabilities) to the Post-Consummation Estate. Upon the transfer of the
Post-Consummation Estate Assets to the Post-Consummation Estate, the Finance
Company Debtors shall have no interest in or with respect to the
Post-Consummation Estate Assets or the Post-Consummation Estate. Notwithstanding
the foregoing, to the extent the Finance Company Debtors determine that any such
transfer may implicate an exclusion in any Director and Officer Insurance
Policy, the cause of action at issue shall be assigned in another manner
determined by the Finance Company Debtors in their sole discretion.

     2. For all federal income tax purposes, all parties (including, without
limitation, the Finance Company Debtors, the Plan Administrator and the
beneficiaries of the Post-Consummation Estate) shall treat the transfer of
assets to the Post-Consummation Estate in accordance with the terms of the Plan,
as a transfer of such assets by the Finance Company Debtors to the Holders of
Allowed Claims and followed by a transfer by such Holders to the
Post-Consummation Estate, and the Post-Consummation Estate Beneficiaries shall
be treated as the grantors and owners thereof.

D.   Valuation of Assets

     As soon as practicable after the Effective Date, the Post-Consummation
Estate (to the extent that the Plan Administrator deems it necessary or
appropriate in the Plan Administrator's sole discretion) shall value the
Post-Consummation Estate Assets based on the good faith determination of the
Post-Consummation Estate and the Post-

                                       26


Consummation Estate shall apprise the beneficiaries of the Post-Consummation
Estate of such valuation. The valuation shall be used consistently by all
parties (including the Finance Company Debtors, the Plan Administrator and the
beneficiaries of the Post-Consummation Estate) for all federal income tax
purposes. The Bankruptcy Court shall resolve any dispute regarding the valuation
of these assets.

E.   Distribution; Withholding

     At least annually, the Plan Administrator shall distribute to the
beneficiaries of the Post-Consummation Estate all net cash income plus all net
cash proceeds from the liquidation of assets; provided, however, that the
Post-Consummation Estate may retain such amounts pursuant to the terms of the
Post-Consummation Estate Budget (i) as are necessary in the discretion of the
Plan Administrator to meet contingent liabilities and to maintain the value of
the Post-Consummation Estate Assets during liquidation, (ii) to pay
administrative expenses (including any taxes imposed on the Post-Consummation
Estate or in respect of the Post-Consummation Estate Assets) and (iii) to
satisfy other liabilities incurred or assumed by the Post-Consummation Estate
(or to which the Post-Consummation Estate Assets are otherwise subject) in
accordance with the Plan or the Post-Consummation Estate Agreement. All such
distributions shall be subject to the terms of the Plan and the
Post-Consummation Estate Agreement; provided, further, that of the net amount
distributable, the Plan Administrator shall reserve, in accordance with Article
[__]hereof, such amounts as would be distributable in respect of Disputed Claims
(treating such Claims, for this purpose, as if they were Allowed Claims). The
Post-Consummation Estate may withhold from amounts distributable to any Entity
any and all amounts, determined in the Plan Administrator's sole discretion, to
be required by any law, regulation, rule, ruling, directive or other
governmental requirement. After appropriate reserves have been established to
fund amounts set forth above and as identified in the Post-Consummation Estate
Budget (including amounts to pay Allowed Administrative Expense Claims, Priority
Tax Claims, Other Priority Non-Tax Claims and the fees and expenses of the Plan
Administrator and the Post-Consummation Estate), the funds to be distributed to
the Holders of Allowed Class 5 Claims shall be distributed to such Holders on a
Pro Rata basis at the sole discretion of the Plan Administrator.

F.   Post-Consummation Estate Implementation

     On the Effective Date, the Post-Consummation Estate will be established and
become effective for the benefit of the Holders of Allowed Claims entitled to
distributions under the Plan. The Post-Consummation Estate Agreement shall
contain provisions customary to trust agreements utilized in comparable
circumstances, including, but not limited to, any and all provisions necessary
to ensure the continued treatment of the Post-Consummation Estate as a grantor
trust and the Holders of Allowed Claims as the grantors and owners thereof for
federal income tax purposes. All parties (including the Finance Company Debtors,
the Plan Administrator and holders of Allowed Claims) shall execute any
documents or other instruments as necessary to cause title to the applicable
assets to be transferred to the Post-Consummation Estate.

G.   Disputed Claims Reserve

     The Plan Administrator shall maintain, in accordance with the Plan
Administrator's powers and responsibilities as described herein and in the
Post-Consummation Estate Agreement, a reserve of any distributable amounts
required to be set aside on account of Disputed Claims. Such amounts shall be
distributed, as provided herein, as such Disputed Claims are resolved by
settlement or Final Order, and shall be distributable in respect of such
Disputed Claims as such amounts would have been distributable had the Disputed
Claims been Allowed Claims as of the Effective Date.

H.   Termination of Post-Consummation Estate

     The Post-Consummation Estate will terminate as soon as practicable, but in
no event later than the fifth (5th) anniversary of the Effective Date; provided,
however, that, on or prior to the date six (6) months prior to such termination,
the Bankruptcy Court, upon motion by a party in interest, may extend the term of
the Post-Consummation Estate for a finite period, if such an extension is
necessary to liquidate of the Post-Consummation Estate Assets. Notwithstanding
the foregoing, multiple extensions can be obtained so long as Bankruptcy Court
approval is obtained at least six (6) months prior to the expiration of each
extended term; provided, however, that the Plan Administrator receives an
opinion of counsel or a favorable ruling from the Internal Revenue Service that
any

                                       27


further extension would not adversely affect the status of the Post-Consummation
Estate as a grantor trust for federal income tax purposes.

I.   Termination of Plan Administrator

     The duties, responsibilities and powers of the Plan Administrator shall
terminate in accordance with the terms of the Post-Consummation Estate
Agreement.

J.   Exculpation; Indemnification

     Except as modified by the Post-Consummation Estate Agreement, no Holder of
a Claim or any other party-in-interest will have, or otherwise pursue, any Claim
or Cause of Action against the Plan Administrator, the Post-Consummation Estate
or the employees or professionals or representatives of either the Plan
Administrator or the Post-Consummation Estate (solely in the performance of
their duties thereas) for making payments in accordance with the Plan or for
implementing the provisions of the Plan. Any act or omission taken with the
approval of the Bankruptcy Court will be conclusively deemed not to constitute
gross negligence or willful misconduct.

                                  ARTICLE XIII
                                  ------------

                            RETENTION OF JURISDICTION

     Notwithstanding the entry of the Confirmation Order and the occurrence of
the Effective Date, the Bankruptcy Court shall retain such jurisdiction over the
Chapter 11 Cases after the Effective Date as legally permissible, including
jurisdiction to:

     1. allow, disallow, determine, liquidate, classify, estimate or establish
the priority or secured or unsecured status of any Claim or Equity Interest,
including the resolution of any request for payment of any Administrative Claim
and the resolution of any and all objections to the allowance or priority of
Claims or Equity Interests;

     2. grant or deny any applications for allowance of compensation or
reimbursement of expenses authorized pursuant to the Bankruptcy Code or the
Plan, for periods ending on or before the Effective Date;

     3. resolve any matters related to the assumption, assumption and assignment
or rejection of any executory contract and unexpired lease to which a Debtor is
party or with respect to which a Debtor may be liable and to hear, determine
and, if necessary, liquidate, any Claims arising therefrom;

     4. ensure that distributions to Holders of Allowed Claims are accomplished
pursuant to the provisions hereof;

     5. decide or resolve any motions, adversary proceedings, contested or
litigated matters and any other matters and grant or deny any applications
involving a Finance Company Debtor that may be pending on the Effective Date, or
that, pursuant to the Plan, may be instituted by the Plan Administrator or the
Post-Consummation Estate after the Effective Date; provided however that the
Plan Administrator and the Post-Consummation Estate shall reserve the right to
commence collection actions, actions to recover receivables and other similar
actions in all appropriate jurisdictions;

     6. enter such orders as may be necessary or appropriate to implement or
consummate the provisions hereof and all contracts, instruments, releases,
indentures and other agreements or documents created in connection with the
Plan, the Disclosure Statement or the Post-Consummation Estate Agreement;

     7. resolve any cases, controversies, suits or disputes that may arise in
connection with the Consummation, interpretation or enforcement of the Plan or
any Person's or Entity's obligations incurred in connection with the Plan;

                                       28


     8. issue injunctions, enter and implement other orders or take such other
actions as may be necessary or appropriate to restrain interference by any
Person or Entity with Consummation or enforcement of the Plan, except as
otherwise provided herein;

     9. resolve any cases, controversies, suits or disputes with respect to the
releases, injunction and other provisions contained in Article XI hereof and
enter any orders that may be necessary or appropriate to implement such
releases, injunction and other provisions;

     10. enter and implement any orders that are necessary or appropriate if the
Confirmation Order is for any reason modified, stayed, reversed, revoked or
vacated;

     11. determine any other matters that may arise in connection with or relate
to this Plan, the Disclosure Statement, the Confirmation Order, the
Post-Consummation Estate Agreement or any contract, instrument, release,
indenture or other agreement or document created in connection with the Plan or
the Disclosure Statement or the Post-Consummation Estate Agreement; and

     12. enter an order and/or final decree concluding the Chapter 11 Cases.

                                  ARTICLE XIV
                                  -----------

                            MISCELLANEOUS PROVISIONS

A.   Modification of Plan Supplement

     Modification of or amendments to the Plan Supplement, may be Filed with the
Bankruptcy Court no later than ten days before the Confirmation Hearing. Any
such modification or supplement shall be considered a modification of the Plan
and shall be made in accordance with Article XIV.E hereof. Upon its Filing, the
Plan Supplement may be inspected in the office of the clerk of the Bankruptcy
Court or its designee during normal business hours. Holders of Claims and Equity
Interests may obtain a copy of the Plan Supplement by contacting Bankruptcy
Management Corporation at 1-888-909-0100 or review such documents on the
internet at www.bmccorp.net/Conseco. The documents contained in the Plan
Supplement are an integral part of the Plan and shall be approved by the
Bankruptcy Court pursuant to the Confirmation Order.

B.   Effectuating Documents, Further Transactions and Corporation Action

     Each of the Finance Company Debtors is authorized to execute, deliver, file
or record such contracts, instruments, releases and other agreements or
documents and take such actions as may be necessary or appropriate to
effectuate, implement and further evidence the terms and conditions hereof and
the notes and securities issued pursuant hereto.

     Prior to, on or after the Effective Date (as appropriate), all matters
provided for hereunder that would otherwise require approval of the shareholders
or directors of the Debtors shall be deemed to have occurred and shall be in
effect prior to, on or after the Effective Date (as appropriate) pursuant to the
general corporation laws of the State of Minnesota, the State of Delaware, and
the States of Delaware, New York, Pennsylvania, Minnesota, Nevada, Alabama,
Kentucky, Utah and Texas (as appropriate) without any requirement of further
action by the shareholders or directors of the Finance Company Debtors.

C.   Dissolution of Committee(s)

     Upon the Effective Date, the Committee shall dissolve, except with respect
to any appeal of an order in the Chapter 11 Cases and applications for
Professional Fees, and Committee Members shall be released and discharged from
all rights, duties and liabilities arising from, or related to, the Chapter 11
Cases.


                                       29


D.   Payment of Statutory Fees

     All fees payable pursuant to section 1930(a) of Title 28 of the United
States Code, as determined by the Bankruptcy Court at the hearing pursuant to
section 1128 of the Bankruptcy Code, shall be paid for each quarter (including
any fraction thereof) until the Chapter 11 Cases are converted, dismissed or
closed, whichever occurs first.

E.   Modification of Plan

     Subject to the limitations contained in the Plan:

     1. the Finance Company Debtors reserve the right, in accordance with the
Bankruptcy Code and the Bankruptcy Rules, to amend or modify the Plan prior to
the entry of the Confirmation Order; and

     2. after the entry of the Confirmation Order, the Finance Company Debtors,
may, upon order of the Bankruptcy Court, amend or modify the Plan, in accordance
with section 1127(b) of the Bankruptcy Code, or remedy any defect or omission or
reconcile any inconsistency in the Plan in such manner as may be necessary to
carry out the purpose and intent of the Plan.

F.   Revocation of Plan

     The Finance Company Debtors reserve the right (with the prior consent of
the Creditors Committee) to revoke or withdraw the Plan prior to the
Confirmation Date and to file subsequent plans of reorganization. If a Debtor
revokes or withdraws the Plan, or if Confirmation or Consummation does not
occur, then (a) the Plan shall be null and void in all respects, (b) any
settlement or compromise embodied in the Plan (including the fixing or limiting
to an amount certain any Claim or Equity Interest or Class of Claims or Equity
Interests), assumption or rejection of executory contracts or leases affected by
the Plan, and any document or agreement executed pursuant hereto, shall be
deemed null and void, and (c) nothing contained in the Plan shall (i) constitute
a waiver or release of any Claims by or against, or any Equity Interests in,
such Debtor or any other Person, (ii) prejudice in any manner the rights of such
Debtor or any other Person, or (iii) constitute an admission of any sort by such
Debtor or any other Person.

G.   Successors and Assigns

     The rights, benefits and obligations of any Person or Entity named or
referred to herein shall be binding on, and shall inure to the benefit of any
heir, executor, administrator, successor or assign of such Person or Entity.

H.   Reservation of Rights

     Except as expressly set forth herein, this Plan shall have no force or
effect unless the Bankruptcy Court shall enter the Confirmation Order. None of
the filing of this Plan, any statement or provision contained herein, or the
taking of any action by any Finance Company Debtor with respect to this Plan,
the Disclosure Statement or the Plan Supplement shall be or shall be deemed to
be an admission or waiver of any rights of any Finance Company Debtor with
respect to the Holders of Claims or Equity Interests prior to the Effective
Date.

I.   Section 1146 Exemption

     Pursuant to section 1146(c) of the Bankruptcy Code, under this Plan, (i)
the issuance, distribution, transfer or exchange of any debt, equity security or
other interest in the Debtors; (ii) the creation, modification, consolidation or
recording of any mortgage, deed of trust, or other security interest, or the
securing of additional indebtedness by such or other means; (iii) the making,
assignment or recording of any lease or sublease; or (iv) the making, delivery
or recording of any deed or other instrument of transfer under, in furtherance
of, or in connection with, this Plan, including any deeds, bills of sale,
assignments or other instrument of transfer executed in connection with any
transaction arising out of, contemplated by, or in any way related to this Plan
shall not be subject to any document recording tax, mortgage recording tax,
stamp tax or similar government assessment, and the appropriate state or

                                       30


local government official or agent shall be directed by the Bankruptcy Court to
forego the collection of any such tax or government assessment and to accept for
filing and recording any of the foregoing instruments or other documents without
the payment of any such tax or government assessment.

     All subsequent issuances, transfers or exchanges of securities, or the
making or delivery of any instrument of transfer by the Debtors in the Chapter
11 Cases, whether in connection with a sale under section 363 of the Bankruptcy
Code or otherwise, shall be deemed to be or have been done in furtherance of
this Plan. Specifically, because the Sale Transactions are being conducted
pursuant to this Plan, any instrument of transfer that would effect transfer of
the Divested Assets as proposed in pleadings filed in these Chapter 11 Cases may
not be taxed under any law imposing a stamp tax or similar tax.

J.   Further Assurances

     The Debtors and all Holders of Claims or Equity Interests receiving
distributions hereunder and all other parties in interest shall, from time to
time, prepare, execute and deliver any agreements or documents and take any
other actions as may be necessary or advisable to effectuate the provisions and
intent of this Plan.

K.   Service of Documents

     Any pleading, notice or other document required by the Plan to be served on
or delivered to the Finance Company Debtors shall be sent by first class U.S.
mail, postage prepaid to:



Conseco Finance Corp.,                                       with copies to:
                                                             --------------
                                                               
Conseco Finance Servicing Corp.,                             Kirkland & Ellis
Conseco Finance Corp. - Alabama,                             200 E. Randolph Drive
Conseco Finance Credit Corp.,                                Chicago, Illinois 60601
Conseco Finance Consumer Discount Company,                   Attn:   James H.M. Sprayregen, P.C.
Conseco Finance Canada Holding Company,                              Anne M. Huber
Conseco Finance Canada Company,                                      Anup Sathy
Conseco Finance Loan Company,                                        Roger J. Higgins
Rice Park Properties Corporation,
Landmark Manufactured Housing, Inc.,
Conseco Finance Net Interest Margin Finance Corp. I,
Conseco  Finance Net Interest  Margin  Finance  Corp.  II,
Green Tree Finance Corp. - Two,
Conseco Agency of Nevada, Inc.,
Conseco Agency of New York, Inc.,
Green Tree Floorplan Funding Corp.,
Conseco Agency, Inc.,
Conseco Agency of Alabama, Inc.,
Conseco Agency of Kentucky, Inc.,
Crum-Reed General Agency, Inc.,
Mill Creek Servicing Corporation,
Conseco Finance Credit Card Funding Corp.,
Green Tree Residual Finance Corp. I,
Green Tree Finance Corp.-5

345 St. Peter Street
1100 Landmark Towers
Saint Paul, MN, 55102
Attn: Brian Corey, General Counsel


                                       31


L.   Transactions on Business Days

     If the date on which a transaction may occur under this Plan shall occur on
a day that is not a Business Day, then such transaction shall instead occur on
the next succeeding Business Day.

M.   Filing of Additional Documents

     On or before the Effective Date, the Debtors may file with the Bankruptcy
Court such agreements and other documents as may be necessary or appropriate to
effectuate and further evidence the terms and conditions hereof.

N.   Post-Effective Date Fees and Expenses

     From and after the Effective Date, the Plan Administrator on behalf of the
Post Confirmation Estates shall, in the ordinary course of business and without
the necessity for any approval by the Bankruptcy Court, pay the reasonable
professional fees and expenses incurred by the Post Confirmation Estates related
to the Consummation and to the implementation of this Plan.

O.   Severability

     The provisions of this Plan shall not be severable unless such severance is
agreed to by the Finance Company Debtors or, if after the Effective Date, by the
Plan Administration, on behalf of the Post Confirmation Estates, and such
severance would constitute a permissible modification of this Plan pursuant to
section 1127 of the Bankruptcy Code.

P.   Conflicts

     To the extent any provision of the Post-Consummation Estate Agreement, the
Disclosure Statement, or any document executed in connection therewith or any
documents executed in connection with the Confirmation Order (or any exhibits,
schedules, appendices, supplements or amendments to any of the foregoing)
conflicts with, or is in any way inconsistent with, the terms of this Plan, the
terms and provisions of this Plan shall govern and control, provided however
that nothing in this Plan shall be deemed to modify or supercede any of the
terms of the Final DIP Order, the CFN Sale Order, the GE Sale Order or the Cash
Management Order.

Q.   Term of Injunctions or Stays

     Unless otherwise provided herein or in the Confirmation Order, all
injunctions or stays in effect in the Chapter 11 Cases under sections 105 or 362
of the Bankruptcy Code or any order of the Bankruptcy Court, and still extant on
the Confirmation Date (excluding any injunctions or stays contained in this Plan
or the Confirmation Order), shall remain in full force and effect until the
Effective Date. All injunctions or stays contained in this Plan or the
Confirmation Order shall remain in full force and effect in accordance with
their terms.

R.   Entire Agreement

     This Plan and the Plan Supplement (as amended) supersede all previous and
contemporaneous negotiations, promises, covenants, agreements, understandings
and representations on such subjects, all of which have become merged and
integrated into this Plan.

S.   Closing of the Chapter 11 Cases

     The Post-Consummation Estate shall promptly, upon the full administration
of the Chapter 11 Cases, File with the Bankruptcy Court all documents required
by Fed. R. Bankr. P. 3022 and any applicable order of the Bankruptcy Court to
close the Chapter 11 cases.

                                       32







Dated:  March __, 2003                     Respectfully Submitted,


CONSECO FINANCE CORP.                      CRUM-REED GENERAL AGENCY, INC.

By:  /s/ Charles H. Cremens                By: /s/ Joseph E. Huguelet, III
   --------------------------------           ------------------------------
Name:    Charles H. Cremens                Name:    Joseph E. Huguelet, III
Title:   President & CEO                   Title:   President



CONSECO FINANCE SERVICING CORP.            GREEN TREE FINANCE CORP.-TWO

By:  /s/ Charles H. Cremens                By: /s/ Charles H. Cremens
   ---------------------------------          ------------------------------
Name:    Charles H. Cremens                Name:    Charles H. Cremens
Title:   President                         Title:   President


GREEN TREE RESIDUAL FINANCE CORP. I        CONSECO FINANCE CANADA COMPANY
                                           (Green Tree Financial Canada Company)

By: /s/ Charles H. Cremens                 By:  /s/ Charles H. Cremens
   --------------------------------           ------------------------------
Name:    Charles H. Cremens                Name:    Charles H. Cremens
Title:   President                         Title:   President


GREEN TREE FINANCE CORP.-FIVE

By:  /s/ Charles H. Cremens                CONSECO AGENCY OF KENTUCKY, INC.
   --------------------------------        (Green Tree Agency of Kentucky, Inc.)
Name:    Charles H. Cremens
Title:   President                         By:  /s/ Joseph E. Huguelet, III
                                              ------------------------------
                                           Name:    Joseph E. Huguelet, III
                                           Title:   President

CONSECO FINANCE NET INTEREST MARGIN
FINANCE CORP. I

By:  /s/ Charles H. Cremens                LANDMARK MANUFACTURED HOUSING, INC.
   --------------------------------
Name:    Charles H. Cremens                By:  /s/ Brian F. Corey
Title:   President                            -------------------------------
                                           Name:    Brian F. Corey
                                           Title:   Senior Vice President and
                                                    Secretary


CONSECO FINANCE NET INTEREST MARGIN
FINANCE CORP. II

By:  /s/ Charles H. Cremens
   --------------------------------
Name:    Charles H. Cremens
Title:   President



CONSECO AGENCY OF ALABAMA, INC.            CONSECO FINANCE CANADA HOLDING
(Green Tree Agency of Alabama, Inc.)       COMPANY (Green Tree Financial Canada
                                           Holding Company)
By: /s/ Joseph E. Huguelet, III
   --------------------------------
Name:    Joseph E. Huguelet, III           By: /s/ Charles H. Cremens
Title:   President                            -------------------------------
                                           Name:    Charles H. Cremens
                                           Title:   President


RICE PARK PROPERTIES CORPORATION           CONSECO FINANCE CREDIT CORP.
                                           (Green Tree Credit Corp.)
By: /s/ James R. Breakey
   --------------------------------
Name:    James R. Breakey                  By: /s/ Charles H. Cremens
Title:   President                            -------------------------------
                                           Name:    Charles H. Cremens
                                           Title:   President


GREEN TREE FLOORPLAN FUNDING CORP.

By: /s/ Charles H. Cremens
   --------------------------------        CONSECO AGENCY OF NEW YORK, INC.
Name:    Charles H. Cremens                (GTA Agency, Inc.)
Title:   President
                                           By:  /s/ Joseph E. Huguelet, III
                                              -------------------------------
                                           Name:    Joseph E. Huguelet, III
                                           Title:   President
CONSECO FINANCE LOAN COMPANY
(Green Tree Financial Loan Company)

By: /s/ Charles H. Cremens
   --------------------------------        CONSECO AGENCY INC.
Name:    Charles H. Cremens                (Green Tree Agency, Inc.)
Title:   President
                                           By:  /s/ Joseph E. Huguelet, III
                                              -------------------------------
                                           Name:    Joseph E. Huguelet, III
                                           Title:   President
CONSECO FINANCE CONSUMER DISCOUNT
COMPANY (Green Tree Consumer Discount Company)

By:  /s/ Charles H. Cremens
    -------------------------------        CONSECO FINANCE CORP.-ALABAMA
Name:    Charles H. Cremens                (Green Tree Financial Corp.-Alabama)
Title:   President
                                           By: /s/ Charles H. Cremens
                                              -------------------------------
                                           Name:    Charles H. Cremens
                                           Title:   President



CONSECO FINANCE CREDIT CARD CORP.          MILL CREEK SERVICING CORPORATION

By:  /s/ Charles H. Cremens                By: /s/ Todd G. Woodard
   --------------------------------           -------------------------------
Name:    Charles H. Cremens                Name:    Todd G. Woodard
Title:   President                         Title:   President


CONSECO AGENCY OF NEVADA, INC.
(Green Tree Agency of Nevada, Inc.)


By: /s/ Joseph E. Huguelet, III
   ------------------------------
Name:    Joseph E. Huguelet, III
Title:   President











Prepared by:

James H.M. Sprayregen, P.C. (ARDC No. 6190206)
Richard L. Wynne (Admitted pro hac vice)
Anne Marrs Huber (ARDC No. 6226828)
Anup Sathy (ARDC No. 6230191)
Roger J. Higgins (ARDC No. 6257915)
Erin N. Brady (Admitted pro hac vice)
Ross M. Kwasteniet (ARDC No. 6276604)
KIRKLAND & ELLIS
200 East Randolph Drive
Chicago, IL 60601-6636
(312) 861-2000 (telephone)
(312) 861-2200 (facsimile)

COUNSEL TO DEBTORS AND DEBTORS IN POSSESSION

EX-2

                                                                     Exhibit 2.6



================================================================================




                  AMENDED AND RESTATED ASSET PURCHASE AGREEMENT



                                  by and among



                              CONSECO FINANCE CORP.



                      THE SELLING SUBSIDIARIES NAMED HEREIN



                                       and



                           CFN Investment Holdings LLC



                                   Dated as of






                                 March 14, 2003





================================================================================
















                                TABLE OF CONTENTS



                                                                                                                Page
                                                                                                        
ARTICLE I. DEFINITIONS............................................................................................1
         1.1.          Definitions................................................................................1

ARTICLE II. PURCHASE AND SALE OF ASSETS..........................................................................27
         2.1.          Purchased Assets..........................................................................27
         2.2.          Liabilities...............................................................................31
         2.3.          Closing Transactions......................................................................34
         2.4.          Purchase Price............................................................................37
         2.5.          Post-Effective Time Amounts Received and Paid.............................................37
         2.6.          True Sale.................................................................................37
         2.7.          Assumption of Certain Leases and Contracts................................................37
         2.8.          Consents to Certain Assignments...........................................................38
         2.9.          Real Estate Apportionments and Payments...................................................39

ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE SELLERS.......................................................39
         3.1.          Organization and Power....................................................................39
         3.2.          Authorization of Transactions.............................................................40
         3.3.          Absence of Conflicts; Required Consents, Approvals and Filings............................40
         3.4.          Company Subsidiaries......................................................................41
         3.5.          Good Title................................................................................41
         3.6.          Compliance with Laws; Permits.............................................................41
         3.7.          Assets Necessary to Conduct Businesses....................................................42
         3.8.          Facilities; Real Property.................................................................42
         3.9.          Personal Property.........................................................................44
         3.10.         Receivables...............................................................................44
         3.11.         Material Agreements.......................................................................45
         3.12.         Intellectual Property.....................................................................46
         3.13.         Brokerage.................................................................................47
         3.14.         Employees.................................................................................47
         3.15.         Affiliate Transactions....................................................................47
         3.16.         ERISA; Employee Benefits..................................................................48
         3.17.         Depository Institutions...................................................................48
         3.18.         Litigation................................................................................48
         3.19.         Financial Statements......................................................................49
         3.20.         Indebtedness; Guarantees; Absence of Undisclosed Liabilities..............................49
         3.21.         Residual Assets...........................................................................50
         3.22.         Tax Matters...............................................................................50
         3.23.         Insurance.................................................................................55
         3.24.         Environment, Health and Safety............................................................56
         3.25.         Accounting Controls.......................................................................56
         3.26.         Summary of Securitizations................................................................56
         3.27.         Representations as to Certain Purchased Assets............................................56
         3.28.         Securities Offerings......................................................................56


                                       -i-

                                                                                                        
         3.29.         No Powers of Attorney.....................................................................56
         3.30.         Securities Laws Matters; No Registration..................................................56
         3.31.         Green Tree RECS II Guaranty Corporation...................................................57
         3.32.         Conseco HE/HI 2001-B-2, Inc...............................................................57
         3.33.         Conseco Finance Securitizations Corp......................................................57
         3.34.         Green Tree First GP Inc...................................................................57
         3.35.         Green Tree Second GP Inc..................................................................57
         3.36.         Conseco Finance Advance Receivables Corp..................................................58
         3.37.         Conseco Finance Liquidation Expense Advance Receivables 2002-B Corp.......................58
         3.38.         Convergent Lending Services, LLC..........................................................58

ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF THE BUYER..........................................................59
         4.1.          Organization and Corporate Power..........................................................59
         4.2.          Authorization of Transaction..............................................................59
         4.3.          No Violation..............................................................................59
         4.4.          Governmental Authorities and Consents.....................................................59
         4.5.          Litigation................................................................................59
         4.6.          Brokerage.................................................................................60
         4.7.          Availability of Funds.....................................................................60
         4.8.          Stock Purchase............................................................................60
         4.9.          Knowledge.................................................................................60

ARTICLE V. ADDITIONAL AGREEMENTS.................................................................................60
         5.1.          Tax Matters...............................................................................60
         5.2.          Access to Information and Facilities......................................................66
         5.3.          Confidentiality...........................................................................66
         5.4.          Conduct of the Businesses Prior to Closing................................................67
         5.5.          Restrictions on Certain Actions...........................................................67
         5.6.          Press Releases and Announcements..........................................................69
         5.7.          Approvals of Third Parties; Satisfaction of Conditions to Closing.........................70
         5.8.          Bankruptcy Actions........................................................................70
         5.9.          Exclusivity; No Solicitation of Transactions..............................................71
         5.10.         Employees.................................................................................72
         5.11.         Transition................................................................................76
         5.12.         Seller's Trademarks.......................................................................76
         5.13.         Notices to Obligors.......................................................................77
         5.14.         Non-Solicitation and Non-Competition......................................................77
         5.15.         Further Actions...........................................................................78
         5.16.         Further Assurances........................................................................78
         5.17.         Mail Forwarding...........................................................................78
         5.18.         DIP Loan..................................................................................78
         5.19.         REMIC Items Reflected on Tax Returns; Bring Down on Certain Information...................78
         5.20.         Title Insurance...........................................................................79
         5.21.         Preparation of License Applications.......................................................79
         5.22.         Provision of Bank Information.............................................................80
         5.23.         Access to Records After the Closing.......................................................80
         5.24.         Liens.....................................................................................81




                                      -ii-

                                                                                                        
         5.25.         Exclusion of Certain Purchased Assets.....................................................81
         5.26.         Certain Insurance Matters.................................................................81
         5.27.         Financial Information.....................................................................83
         5.28.         GE Loan Services; Transition Services.....................................................84
         5.29.         Intellectual Property Licenses............................................................84
         5.30.         GE Leases.................................................................................85
         5.31.         Waiver of B-2 Guarantee Rights............................................................85
         5.32.         Termination of HE Origination Business....................................................85
         5.33.         Seller Transition Services................................................................86

ARTICLE VI. CONDITIONS PRECEDENT TO THE BUYER'S OBLIGATIONS......................................................86
         6.1.          Representations and Warranties; Covenants; Certificates...................................86
         6.2.          Bankruptcy Condition......................................................................87
         6.3.          Litigation................................................................................87
         6.4.          Approvals.................................................................................87
         6.5.          Instruments of Conveyance and Transfer; Title.............................................87
         6.6.          Transition Services Agreement.............................................................88
         6.7.          Resignation or Removal of Officers and Directors of Subject Subsidiaries..................88
         6.8.          Lehman Facility...........................................................................88
         6.9.          No Material Adverse Effect................................................................88
         6.10.         Reserved..................................................................................88
         6.11.         Servicing Rights..........................................................................89
         6.12.         Tax Opinion...............................................................................89
         6.13.         Data Service Contracts....................................................................90
         6.14.         Acceptance of Employment Offers...........................................................90
         6.15.         Parent Guarantee..........................................................................90
         6.16.         Goldman...................................................................................91

ARTICLE VII. CONDITIONS PRECEDENT TO THE SELLERS' OBLIGATIONS....................................................91
         7.1.          Representations and Warranties; Covenants; Certificates...................................91
         7.2.          Bankruptcy Condition......................................................................91
         7.3.          Litigation................................................................................91
         7.4.          Approvals.................................................................................92
         7.5.          Reserved..................................................................................92
         7.6.          Other Documents...........................................................................92

ARTICLE VIII. TERMINATION........................................................................................92
         8.1.          Termination Prior to Closing..............................................................92
         8.2.          Break-Up Fee and Expense Reimbursement....................................................93
         8.3.          Termination by Reason of Buyer Default....................................................94
         8.4.          Effect of Termination.....................................................................95

ARTICLE IX. SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION.........................................................95
         9.1.          Survival of Representations...............................................................95
         9.2.          Indemnification...........................................................................96
         9.3.          Qualifications on Indemnification.........................................................96
         9.4.          Notice and Defense of Claims..............................................................97




                                     -iii-

                                                                                                       
         9.5.          Tax Treatment.............................................................................98
         9.6.          Remedy....................................................................................98
         9.7.          Administrative Expense; Administrative Priority...........................................98

ARTICLE X. MISCELLANEOUS.........................................................................................99
         10.1.         Expenses..................................................................................99
         10.2.         Amendment and Waiver......................................................................99
         10.3.         Notices...................................................................................99
         10.4.         Binding Agreement; Assignment............................................................100
         10.5.         Severability.............................................................................101
         10.6.         Construction.............................................................................101
         10.7.         Captions.................................................................................101
         10.8.         Entire Agreement.........................................................................101
         10.9.         Counterparts.............................................................................102
         10.10.        Governing Law............................................................................102
         10.11.        Parties in Interest......................................................................102
         10.12.        Consent to Jurisdiction..................................................................102
         10.13.        Delivery by Facsimile....................................................................102
         10.14.        Disclosure Schedules.....................................................................103
         10.15.        Specific Performance.....................................................................103



                                      -iv-




                            ASSET PURCHASE AGREEMENT

                  THIS AMENDED AND RESTATED ASSET PURCHASE AGREEMENT (this
"Agreement") is made as of March 14, 2003, by and among Conseco Finance Corp., a
Delaware corporation (the "Company"), the Subsidiaries of the Company owning
Purchased Assets, which are named on the signature pages hereof or become
parties hereto in accordance with this Agreement (the "Selling Subsidiaries"),
and CFN Investment Holdings LLC, a Delaware limited liability company (the
"Buyer") and amends and restates the Asset Purchase Agreement, dated as of
December 19, 2002, by and among the Company, the Selling Subsidiaries and the
Buyer, as amended (the "Original Agreement"). The Company and the Selling
Subsidiaries are collectively referred to herein as the "Sellers" and,
individually, as a "Seller". The Sellers, the Parent and the Buyer are
collectively referred to herein as the "Parties" and, individually, as a
"Party".

                  WHEREAS, on the terms and subject to the conditions set forth
in this Agreement, the Buyer desires to purchase from the Sellers, and the
Sellers desire to sell to the Buyer, the Purchased Assets, in a sale authorized
by the Bankruptcy Court pursuant to, inter alia, sections 105, 363, 365 and
1146(c) of the Bankruptcy Code;

                  WHEREAS, it is intended that the acquisition of the Purchased
Assets would be accomplished through the sale, transfer and assignment of assets
of the Company and the Selling Subsidiaries owning, leasing or having the right
to use the Purchased Assets and/or, as provided herein, through the sale of
capital stock of one or more direct or indirect Subsidiaries of the Company;

                  WHEREAS, the Buyer also desires to assume, and the Sellers
desire to assign and transfer, the Assumed Liabilities; and

                  WHEREAS, the Company and the Filing Company Subsidiaries
either have filed or will file a Chapter 11 Case and have obtained
debtor-in-possession financing from FPS DIP LLC.

                  NOW, THEREFORE, in consideration of the premises and mutual
promises herein made, and in consideration of the representations, warranties
and covenants herein contained, the Parties hereby agree as follows:

                                   ARTICLE I.

                                   DEFINITIONS

             1.1. Definitions. For purposes of this Agreement, the following
terms shall have the meanings set forth below:

                  "Accrued and Unpaid Interest" means, with respect to any Loan,
as of any date, the interest, fees, premiums, consignment fees, costs, advances
and other charges that have accrued on such Loan (whether or not such fees,
costs or charges have been billed) but have not been paid by the Obligor on such
Loan or otherwise collected by offset, recourse to collateral or otherwise.

                                      -1-


                  "Acquisition Proposal" means a written proposal(s) relating to
(a) any merger, consolidation, business combination, sale, reorganization or
other direct or indirect disposition of one or more of the Purchased Businesses
or of all or a portion of the Purchased Assets, pursuant to one or more
transactions, to one or more affiliated or unaffiliated parties (other than
transactions in the ordinary course of business or transactions permitted or
approved pursuant to Section 5.5), (b) the sale of 20% or more of the
outstanding shares of capital stock of the Company (including, without
limitation, by way of foreclosure or plan of reorganization or liquidation) to
one or more affiliated or unaffiliated parties or a similar transaction
involving one or more affiliated or unaffiliated parties, or (c) any transaction
or series of transactions in which a Person or group provides or commits to
provide $50 million or more of capital to the Company or its Subsidiaries
(whether as debt or equity or a combination thereof) (other than (i) debt
financing in which none of the Purchased Assets is pledged as collateral or
subjected to any Lien other than Permitted Liens, (ii) the DIP Loan, (iii) the
Additional Lehman Debt and (iv) transactions specifically contemplated by the GE
Approved Agreement).

                  "Additional Lehman Debt" means an additional warehouse
financing facility (or an amendment of an existing Lehman Facility) in an amount
not to exceed $250 million to finance the origination of Loans by the Company
and its Subsidiaries, which, subject to Section 5.5(b), would be included in the
Purchased Assets, on terms and conditions reasonably satisfactory to the Buyer.

                  "Affiliate" of any particular Person means any other Person
controlling, controlled by or under common control with such particular Person,
where "control" means the possession, directly or indirectly, of the power to
direct the management and policies of a Person whether through the ownership of
voting securities or otherwise.

                  "Affiliated Group" means any affiliated group of corporations
within the meaning of Section 1504(a) of the Tax Code as well as any other group
of corporations filing a consolidated, combined, or unitary Income Tax Return
under federal, state, local or foreign Law.

                  "Agreement" shall have the meaning set forth in the Recitals.

                  "ALTA" means the American Land Title Association. ----

                  "Assigned Receivables" means those Receivables identified in
Section 3.10(a) of the applicable Business Schedules with respect to a
particular Purchased Business, and any Receivables generated by the applicable
Purchased Business in the ordinary course from and including the last date as of
which the Business Schedules identifying such Receivables are updated under this
Agreement through the Closing Date, and including all obligations to make
additional extensions of credit under the Assumed Receivables Contracts.

                  "Assumed Agreements" means, collectively, the Assumed Leases,
the Assumed Contracts, the Assumed Retention Agreements and the Assumed
Receivables Contracts.

                  "Assumed Contracts" means those Contracts identified in
Section 2.1(a) of the applicable Business Schedules under the heading "Assumed
Contracts", but excluding (i) Assumed Leases, Assumed Receivables Contracts and
those Contracts that expire or are

                                      -2-


terminated in the ordinary course of business prior to the Closing Date and (ii)
all Employee Agreements (other than the Assumed Retention Agreements).

                  "Assumed Leases" means real property leases, subleases,
licenses or other Contracts set forth in Section 3.8(b) of the applicable
Business Schedules pursuant to which a Seller or Mill Creek Bank leases the
Leased Premises as a tenant thereof or leases all or any part of the Owned Real
Premises as the landlord thereunder.

                  "Assumed Liabilities" shall have the meaning set forth in
Section 2.2(a) hereof.

                  "Assumed Receivables Contracts" means Contracts of the
Purchased Businesses evidencing or executed and delivered in connection with the
Assigned Receivables.

                  "Assumed Retention Agreements" means the agreement, dated as
of December 19, 2002, by and between the Company and Dan Hall, the agreement,
dated as of December 19, 2002, by and between the Company and Walter Carter and,
if the GE condition is not satisfied, the agreement, dated as of December 19,
2002, by and between the Company and Todd Woodard.

                  "Auction" means the auction conducted by the Sellers pursuant
to the Bidding Procedures Order.

                  "B-2 Certificates" means the certificates identified as such
on the Residuals Schedule under the captions "Junior P&I Regular Interests -
Manufactured Housing" and all other interests (whether certificated or
uncertificated) of a substantially similar nature owned by a Seller.

                  "B-2 Guarantee Rights" shall have the meaning set forth in
Section 2.1(c) hereof.

                  "Backup Agreements" shall mean the purchase agreement between
the Sellers and EMC Mortgage Corporation (or any of its Affiliates) and the
purchase agreement between the Sellers and Charlesbank Capital Partners, LLC (or
any of its Affiliates) to acquire the assets of the Sellers and which is entered
into pursuant to the Auction and contingent upon the termination of this
Agreement and Bankruptcy Court approval.

                  "Bank Information" shall have the meaning set forth in Section
5.22 hereof.

                  "Banks" means (a) Mill Creek Bank and (b) Green Tree Retail
Services Bank.

                  "Bankruptcy Code" means title 11 of the United States Code.

                  "Bankruptcy Court" means the United States Bankruptcy Court
for the Northern District of Illinois or such other court having jurisdiction
over the Chapter 11 Case originally administered in the United States Bankruptcy
Court for the Northern District of Illinois.

                  "Bidding Procedures Order" means the order of the Bankruptcy
Court: (a) establishing procedures for the submission of higher and better
offers for the Purchased Assets; (b) prescribing the form and manner of notice
of the proposed sale of the Purchased

                                      -3-


Assets to creditors and other interested parties, including but not limited to
publication notice; (c) authorizing and approving the payment of the Break-Up
Fee and Expense Reimbursement to the Buyer in the event they become due under
the Original Agreement, without the need for any further order; and (d)
otherwise approving and implementing the provisions of Sections 5.9, 5.10 and
5.11 of the Original Agreement, such Bidding Procedures Order to be satisfactory
to the Buyer in its sole and absolute discretion.

                  "Break-Up Fee" shall have the meaning set forth in Section
8.2(a) hereof.

                  "Business Day" means any day that is not a Saturday, Sunday or
other day on which commercial banking institutions in the State of New York are
authorized or obligated by law or executive order to be closed.

                  "Business Employees" shall have the meaning set forth in
Section 5.10(a) hereof.

                  "Business Schedules" means the Residuals Schedule and the
Purchased Businesses Schedule.

                  "Buyer" shall have the meaning set forth in the Recitals.

                  "Buyer Indemnified Parties" shall have the meaning set forth
in Section 9.2(a) hereof.

                  "Buyer Information" shall have the meaning set forth in
Section 5.3(b) hereof.

                  "Buyer IT Employees" shall have the meaning set forth in
Section 5.10(a)(iv) hereof.

                  "Cap" shall have the meaning set forth in Section 9.3(a)
hereof.

                  "CFARC Contracts" shall have the meaning set forth in Section
3.36 hereof.

                  "CFC Parties" means, collectively, the Company and the
Company's Subsidiaries.

                  "CFC Party" means, individually, the Company or any of the
Company's Subsidiaries, as applicable.

                  "CFLEAR 2002-B C Contracts" shall have the meaning set forth
in Section 3.37 hereof.

                  "CFSC Contracts" shall have the meaning set forth in Section
3.33 hereof.

                  "Chapter 11 Case" means, collectively, the cases commenced or
to be commenced by the Company and the Filing Company Subsidiaries under chapter
11 of the Bankruptcy Code in the Bankruptcy Court.

                  "CL Business" means the consumer installment loan business of
the CFC Parties, excluding securities taken back or retained by any CFC Party.

                                      -4-



                  "CL Origination Business" means the consumer installment loan
origination business of the CFC Parties, excluding Securities taken back or
retained by any CFC Party.

                  "Cleanup Calls" means the rights of the Sellers, servicers,
holders of residuals or other securities or assignees thereof, exercisable by
such Persons in any capacity, to purchase Securitized Loans under the terms of
any Securitization Documents and to retire the securities issued to other
parties pursuant to such Securitizations, listed on the Residuals Schedule under
the caption, "Cleanup Calls".

                  "Clear Facility" means the Indenture, dated as of April 1,
2002, by and among Conseco Finance Liquidation Expense Advance Receivables
2002-B Corp., as issuer, U.S. Bank, as trustee, as calculation agent and as
paying agent, and the Company, together with any successor entity, individually
and as servicer of the qualified trusts pursuant to which the Clear Facility
Notes were issued.

                  "Clear Facility Notes" means the Conseco Finance Liquidation
Expense Advance Receivables Backed Notes, dated as of April 1, 2002.

                  "Closing" shall have the meaning set forth in Section 2.3(a)
hereof.

                  "Closing Date" shall have the meaning set forth in Section
2.3(a) hereof.

                  "Closing Transactions" shall have the meaning set forth in
Section 2.3(b) hereof.

                  "Company" shall have the meaning set forth in the Recitals.

                  "Confidential Information" shall have the meaning set forth in
Section 5.3 hereof.

                  "Confidentiality Agreement" means that Confidentiality
Agreement, dated as of November 8, 2002, between Parent, Fortress Investment
Group LLC and J.C. Flowers & Co., LLC and the Confidentiality Agreement, dated
as of October 28, 2002, between Parent and AEGIS Mortgage Corporation.

                  "Consent Agreement" means a fully executed agreement among the
Buyer, the Company, the trustees with respect to each of the securitization
transactions for which an MH Servicing Contract has been entered into (the
"Trustees"), the Official Committee of Unsecured Creditors of the Company (the
"Unsecured Creditors Committee"), the Ad Hoc Committee of Certificateholders
(the "Ad Hoc Committee") and Federal National Mortgage Association ("Fannie
Mae"), evidencing the consent of the Trustees, the Unsecured Creditors
Committee, the Ad Hoc Committee and Fannie Mae to the matters covered by Section
6.11(b) and (c), which agreement is in form and substance reasonably acceptable
to the Buyer.

                  "Consumer Loan" means the retail installment contracts and
direct consumer loans of the Purchased Businesses secured by a purchase money or
other security interest creating a first lien in favor of the Company or one of
its Subsidiaries on personal property such as recreational vehicles,
motorcycles, watercraft, trailers and snowmobiles, and the related promissory
notes or other evidences of indebtedness, together with any and all rights,
benefits,

                                      -5-


collateral, payments, recoveries and proceeds arising therefrom or in connection
therewith including the Servicing Rights related to such loans.

                  "Contract" means any contract, license, sublicense, franchise,
permit, mortgage, deed to secured debt or deed of trust, purchase order,
indenture, loan agreement, note, lease, sublease, agreement, obligation,
commitment, understanding, instrument or other binding arrangement or any
commitment to enter into any of the foregoing (in each case, whether written or
oral).

                  "Convergent Contracts" shall have the meaning set forth in
Section 3.38 hereof.

                  "Credit Facilities" means the Lehman Facilities; the Credit
Agreement, dated as of December 27, 2000, as amended on January 9, 2002, July 9,
2002, August 29, 2002, September 6, 2002 and November 27, 2002, between the
Company and U.S. Bank (the "U.S. Bank Credit Agreement"); and the Master
Repurchase Agreement dated April 16, 1999 between Credit Suisse First Boston
Mortgage Capital LLC and Green Tree Financial Corporation (the Company), as
amended by Annex I--Amended and Restated Supplemental Terms to Master Repurchase
Agreement, dated as of March 26, 1999, and as each of the same may be further
amended in accordance with the terms thereof and of this Agreement.

                  "Deferred Recognition Amounts" shall have the meaning set
forth in Section 3.22(d) hereof.

                  "Deutsche Bank" means Deutsche Bank National Trust Company.

                  "DIP Loan" shall have the meaning set forth in Section 5.18
hereof.

                  "Direct Claim" means any claim by an Indemnified Party on
account of a Loss which does not result from a Third Party Claim.

                  "Employee Agreements" shall have the meaning set forth in
Section 5.10(j) hereof.

                  "Employee Benefit Plans" shall have the meaning set forth in
Section 3.16 hereof.

                  "Employees" shall have the meaning set forth in Section 3.14
hereof.

                  "Environmental Law" means any Law relating to (a) the release
or threatened release of Hazardous Substances, (b) pollution or the protection
of human health, safety or the environment, including ambient air (including air
inside buildings), surface water, ground water, land surface or subsurface
strata and natural resources or (c) the manufacture, handling, transport, use,
treatment, storage or disposal of Hazardous Substances.

                  "ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time.

                  "Excess Cash" shall have the meaning set forth in the credit
agreement for the DIP Loan.

                                      -6-


                  "Excluded Assets" shall have the meaning set forth in Section
2.1(c) hereof.

                  "Excluded Business" means any Purchased Business or portion
thereof that is excluded pursuant to Section 2.1(a).

                  "Excluded Contracts" means (a) each of the Non-MH Servicing
Contracts, except with respect to the Non-MH Servicing Rights, Guarantee Fees
and Cleanup Calls thereunder or any Residual Assets related thereto, (b) each of
the MH Servicing Contracts, except with respect to the MH Servicing Rights,
Guarantee Fees and Cleanup Calls thereunder or any Residual Assets related
thereto and (c) the other Contracts set forth in Section 2.1(c) of the Purchased
Businesses Schedule under the caption, "Excluded Contracts".

                  "Excluded Covenants" has the meaning set forth in Section 5.5
hereof.

                  "Excluded Liabilities" has the meaning set forth in Section
2.2(b) hereof.

                  "Excluded Servicing Liabilities" means all Liabilities under
the Servicing Contracts other than the duty to perform the obligations solely of
a servicer or successor servicer thereunder first arising after the Closing
Date.

                  "Expense Reimbursement" shall have the meaning set forth in
Section 8.2(b) hereof.

                  "Facilities" means the Owned Real Premises and Leased
Premises.

                  "FDIC" shall have the meaning set forth in Section 3.3 hereof.

                  "Files" means, whether in paper or electronic form, books;
records; customer and vendor lists; correspondence; files; advertising,
marketing and sales materials; personnel files of employees; financial records
and statements; correspondence, reports and examinations of Governmental
Authorities other than those with respect to Mill Creek Bank; and legal
proceedings materials.

                  "Filing Company Subsidiaries" means those Selling Subsidiaries
that have commenced a Chapter 11 Case on or before February 3, 2003 and the
SPEs.

                  "Final Order" means an Order as to which the time to file an
appeal, a motion for rehearing or reconsideration (excluding any motion under
F.R.C.P. 60(b)) or a petition for writ of certiorari has expired and no such
appeal, motion or petition is pending.

                  "Finance Laws" shall have the meaning set forth in Section 3.3
hereof.

                  "Financial Statements" shall have the meaning set forth in
Section 3.19 hereof.

                  "FIRPTA" shall have the meaning set forth in Section 3.22(c)
hereof.

                  "Floorplan Certificates" means Receivables from Loans made for
the floorplan of manufactured homes and vehicle inventory at manufactured home
dealerships.

                                      -7-


                  "GAAP" means United States generally accepted accounting
principles consistently applied.

                  "GE" shall have the meaning set forth in Section 2.1(a)(iv)
hereof.

                  "GE Approved Agreement" shall have the meaning set forth in
Section 2.1(a)(iv) hereof.

                  "GE Assumed Liabilities" means the "Assumed Liabilities" as
defined in the GE Approved Agreement.

                  "GE Condition" shall have the meaning set forth in Section
2.1(a)(iv) hereof.

                  "GE IT Employees" shall have the meaning set forth in Section
5.10(a)(iv) hereof.

                  "GE Purchased Assets" means the "Purchased Assets" as defined
in the GE Approved Agreement.

                  "GE Sale Order" means the "Sale Order" as in the GE Approved
Agreement.

                  "Goldman" means Goldman Sachs Credit Partners, L.P.

                  "Goldman Commitment Letter" means the Commitment Letter, dated
February 26, 2003, between Goldman and the Company.

                  "Goldman Credit Agreement" means the Secured Super-Priority
Debtor in Possession Credit Agreement, among the Company, as debtor and debtor
in possession, as borrower, and the subsidiaries of the borrower party thereto,
in certain cases as debtors and debtors in possession, as subsidiary guarantors,
and Conseco Finance Credit Corp, as debtor and debtor in possession, and the
lenders from time to time party thereto and Goldman, as administrative agent and
loan agent attached as an exhibit to the Motion For Entry of a Final Order: (I)
Authorizing CFC Debtors In Possession to Enter Into Post-Petition Credit
Agreement Pursuant to Section 364 of the Bankruptcy Code, (II) Authorizing Use
of Cash Collateral Pursuant to Section 363 of the Bankruptcy Code, (III)
Granting Adequate Protection Pursuant to Sections 363 and 364 of the Bankruptcy
Code, and (IV) Approving the Tax Indemnity Obligations of Conseco, Inc.
hereunder filed with the Bankruptcy Court on March 4, 2003.

                  "Goldman Expense Reimbursement" means the payment of $5
million for expenses incurred prior to February 26, 2003 to the post-petition
agent and post-petition lenders associated with the Goldman Credit Agreement.

                  "Goldman Final DIP Order" means the Final DIP Order as defined
in the Goldman Credit Agreement.

                  "Goldman Interim Commitment Fee" means the payment, pursuant
to the terms of the Goldman Commitment Letter, of $3.75 million to the
post-petition agent and post-petition lenders as provided for in Section
2.10(b)(i) of the Goldman Credit Agreement.

                                      -8-


                  "Goldman Interim Order" means the order of the Bankruptcy
Court entered on February 26, 2003 (a) authorizing the Goldman Commitment
Letter, the Goldman Expense Reimbursement and the Goldman Interim Commitment
Fee; (b) declaring that the Expense Reimbursement shall not be subject to the
approval of the Bankruptcy Court and that no recipient thereof shall be required
to file any fee application associated therewith; and (c) approving the payment,
as an administrative expense, and seniority of the Goldman Expense Reimbursement
and Goldman Interim Commitment Fee with respect to any and all other
administrative expenses, except with respect to those similar claims previously
granted by the Bankruptcy Court.

                  "Governmental Authority" means any United States federal,
state or local or any foreign government, governmental regulatory or
administrative authority, agency or commission or any court, tribunal or
judicial or arbitral body.

                  "Grantor Trust" means a fixed investment trust, as defined in
Section 301.7701-4(c) of the Treasury Regulations or any entity or arrangement
that has purported to be such a fixed investment trust, irrespective of whether
such entity or arrangement qualifies as a fixed investment trust under Section
301.7701-4(c) of the Treasury Regulations.

                  "Green Tree Retail Services Bank" means Green Tree Retail
Services Bank, Inc., a South Dakota chartered limited purpose credit card bank,
and its wholly-owned subsidiaries.

                  "GTF Contracts" shall have the meaning set forth in Section
3.34 hereof.

                  "GTS Contracts" shall have the meaning set forth in Section
3.35 hereof.

                  "Guarantee Fees" means the rights of a Seller to receive
payments from any REMIC or other entity created to effect a Securitization on
account of a guarantee given by the Seller with respect to one or more classes
of securities issued in such Securitization.

                  "Guarantee Reimbursement Rights" means any and all claims the
Sellers may have to be reimbursed for payments made by any of them pursuant to
guarantees given by the Sellers with respect to any classes of securities issued
in a Securitization.

                  "Guarantees" means any and all obligations relating to
guarantees, letters of credit, support agreements, bonds and other credit
assurances or supports of a comparable nature of any CFC Party.

                  "Hazardous Substances" means any substance whether solid,
liquid, gaseous or any combination of the foregoing which is listed, defined or
regulated pursuant to any Environmental Law.

                  "HE Business" means the home equity loan business of the CFC
Parties, excluding securities taken back or retained by the Company or any
Subsidiary in a Securitization.

                  "HELOC" means all revolving, variable rate mortgage loans
secured by first or second liens on single family residential real property
(including, without limitation, condominiums and planned unit developments), and
the related promissory notes or other

                                      -9-


evidences of indebtedness, together with any and all rights, benefits,
collateral, payments, recoveries and proceeds arising therefrom or in connection
therewith.

                  "HI Business" means the home improvement business of the CFC
Parties, excluding securities taken back or retained by the Company or any
Subsidiary in a Securitization.

                  "HI Origination Business" means the home improvement
origination business of the CFC Parties, excluding securities taken back or
retained by the Company or any Subsidiary in a Securitization.

                  "Home Equity Loans" means all fixed rate mortgage loans
secured by first, second or third liens on single family residential real
property (including, without limitation, condominiums and planned unit
developments), including, without limitation, any such high loan-to-value
mortgage loans, and the related promissory notes or other evidences of
indebtedness, together with any and all rights, benefits, collateral, payments,
recoveries and proceeds arising therefrom or in connection therewith.

                  "Home Improvement Loans" means all first, second or third lien
or unsecured home improvement retail installment contracts, and the related
promissory notes or other evidences of indebtedness, whether insured or
uninsured, and the related promissory notes or other evidences of indebtedness,
together with any and all rights, benefits, collateral, payments, recoveries and
proceeds arising therefrom or in connection therewith.

                  "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, and the regulations related thereto.

                  "Income Tax" means all federal, state, local, or foreign Taxes
based upon, measured by, or calculated with respect to (i) gross or net income
or gross or net receipts or profits (including, but not limited to, any capital
gains, minimum taxes and any Taxes on items of tax preference, but not including
sales, use, goods and services, real or personal property transfer or other
similar Taxes); (ii) multiple bases (including, but not limited to, corporate
franchise, doing business or occupation Taxes) if one or more of the bases upon
which such Tax may be based upon, measured, or calculated with respect to, is
described in clause (i); or (iii) withholding taxes, measured by, or calculated
with respect to, any payments or distributions (other than wages).

                  "Income Tax Return" means any return, declaration, report,
claim for refund, or information return, amended return or statement relating to
Income Taxes, including any schedule or attachment thereto.

                  "Incremental Liabilities" shall have the meaning set forth in
Section 2.1(b) hereof.

                  "Indemnified Parties" shall have the meaning set forth in
Section 9.2(b) hereof.

                  "Indemnifying Party" means a party from whom indemnification
is sought.

                  "Indemnity Deductible" shall have the meaning set forth in
Section 9.3(a) hereof.

                                      -10-


                  "Insurance Approvals" shall have the meaning set forth in
Section 5.26(a) hereof.

                  "Insurance Assets" means the assets, properties, Contracts
(other than Excluded Contracts) and rights owned or primarily used or held for
use in the operation of the Insurance Business, including, without limitation,
all expirations, receivables and prepaid amounts relating thereto.

                  "Insurance Budget" shall have the meaning set forth in Section
5.26(c) hereof.

                  "Insurance Business" means the insurance agency assets and
businesses referred to in Section 2.1(a) of the applicable Business Schedules.

                  "Insurance Profits" shall have the meaning set forth in
Section 5.26(d) hereof.

                  "Insurance Subsidiaries" means Conseco Agency of Alabama,
Inc., Conseco Agency of Kentucky, Inc., Crum-Reed General Agency, Inc., Conseco
Agency, Inc., Conseco Agency of New York, Inc., Conseco Agency of Nevada, Inc.,
Conseco Agency Reinsurance Limited and Convergent Lending Services, LLC.

                  "Insurance Policies" means those policies of insurance which
the CFC Parties maintain with respect to their assets and operations.

                  "Intellectual Property" means all of the following in any
jurisdiction throughout the world: (a) patents, patent applications and patent
disclosures including re-issues, continuations, divisions,
continuations-in-part, renewals and extensions; (b) trademarks, service marks,
trade dress, trade names, corporate names, logos and slogans (and all
translations, adaptations, derivations and combinations of the foregoing) and
Internet domain names, together with all goodwill associated with each of the
foregoing; (c) copyrights and copyrightable works; (d) registrations and
applications for any of the foregoing; (e) trade secrets, confidential
information, know-how, processes, technology and inventions; (f) computer
software, hardware and systems (including, without limitation, source code,
executable code, data, databases and documentation); and (g) all other
intellectual property.

                  "Intellectual Property Assignment Agreements" means the
Trademark Assignment Agreement and Domain Name Transfer Agreement in customary
form as reasonably agreed by the Parties.

                  "Interim 9019 Order" means an order of the Bankruptcy Court
authorizing and approving, on an interim basis pending a final hearing on notice
to interested parties, a settlement pursuant to which the MH Servicing Fees are
increased to 1.25% and accorded the level of priority that would be accorded to
a third party successor servicer under the cash flow waterfall provisions of the
MH Servicing Contracts (except, in the case of securitization trusts for which
principal and interest insurance is in force, in which cases the MH Servicing
Fees will be paid in the highest priority that will not adversely affect the
continuation in force of such insurance), such order to be satisfactory in form
and substance to the Buyer.

                  "Investors" means J.C. Flowers I L.P., a Delaware limited
liability company, together with its Affiliates, and Fortress Investment Trust
II, a Delaware limited liability

                                      -11-


company, together with its Affiliates, Cerberus Capital Management, L.P., a
limited partnership, together with its Affiliates, and such co-investors, if
any, as may invest in the Buyer.

                  "IO Regular Interests" means the REMIC Regular Interests
listed on the Residuals Schedule under the caption, "IO Regular Interests".

                  "Junior P&I Regular Interests" means the REMIC Regular
Interests listed on the Residuals Schedule under the caption "Junior P&I Regular
Interests".

                  "JV Arrangements" shall have the meaning set forth in Section
5.10(a)(ii) hereof.

                  "Knowledge" means, with respect to the Sellers, the knowledge
of Keith A. Anderson, James R. Breakey, Cheryl A. Collins, Brian F. Corey,
Charles H. Cremens, Shawn Gensch, Dan Hall, Ron Siemers, Pamela Strauss and Todd
Woodard.

                  "Laws" means all statutes, rules, regulations, codes,
injunctions, judgments, writs, orders, decrees, rulings, constitutions,
ordinances, common laws, standards, limitations, compliance schedules, written
directions, requests or treaties, whether legislatively, judicially,
administratively or otherwise promulgated, of any Governmental Authority.

                  "Leased Premises" means real property leased by the Sellers as
the tenant thereof pursuant to the Assumed Leases.

                  "Lehman Back-Up Security Agreement" means the Back-Up Security
Agreement, dated as of January 30, 2002, among the Company, Conseco Finance
Vendor Services Corporation, Green Tree Titling Limited Partnership I, Green
Tree Titling Limited Partnership II, Green Tree Finance Corp.-Five, Conseco
Finance Leasing Trust, Lehman Commercial Paper Inc. and U.S. Bank, as custodian.

                  "Lehman Debt Amount" means, as of any date, the sum, without
duplication, of (a) the Indebtedness (as defined in the Lehman Residuals
Facility), plus, (b) the Additional Lehman Debt, plus, (c) an amount equal to
the unreimbursed out-of-pocket expenses incurred by Lehman Brothers Holdings
Inc. and its Affiliates in connection with the transactions contemplated by this
Agreement and the Lehman Facilities, but not in excess of $3 million, in each
case as of such date. Section 3.20(c) sets forth the Lehman Debt Amount as of
the close of business on March 6, 2003.

                  "Lehman Documents" means the Lehman Facilities, the Lehman
Back-Up Security Agreement, the Lehman Forbearance Agreement, the Lehman
Umbrella Agreement and the Contract evidencing the Additional Lehman Debt.

                  "Lehman Facilities" means, collectively, the Lehman Residuals
Facility and the Lehman Warehouse Facility.

                  "Lehman Forbearance Agreement" means the Amended and Restated
Forbearance Agreement, dated as of October 9, 2002, among the Company, Green
Tree Finance Corp.-Five, Green Tree Residual Finance Corp. I, Lehman Commercial
Paper, Inc. and Lehman Brothers Inc., as amended by the First Amendment to
Amended and Restated Forbearance Agreement,

                                      -12-


dated as of November 29, 2002, as the same may be amended in accordance with the
terms thereof and of this Agreement.

                  "Lehman Residuals Facility" means (a) the Master Repurchase
Agreement and Annex to Master Repurchase Agreement Supplemental Terms and
Conditions, each dated as of September 29, 1999, between Green Tree Residual
Finance Corp. I and Lehman Brothers, Inc., and as amended by the amendments
thereto dated as of September 22, 2000, January 30, 2002 and April 30, 2002 and
(b) the Asset Assignment Agreement, dated as of February 13, 1998, between Green
Tree Residual Finance Corp. I and Lehman ALI Inc., as assignee of Lehman
Commercial Paper Inc., and as amended by the amendments thereto dated as of June
23, 1998, February 23, 2000, May 10, 2000, August 1, 2000, September 22, 2000,
September 28, 2001, January 30, 2002, April 30, 2002 and October 9, 2002, and as
each of the same may be further amended in accordance with the terms thereof and
of this Agreement.

                  "Lehman Umbrella Agreement" means the Amended and Restated
Agreement, dated as of January 30, 2002, among the Company, the Parent, CIHC,
Incorporated, Green Tree Residual Finance Corp. I, Green Tree Finance Corp.-Five
and Lehman Brothers Holdings Inc., as the same may be further amended in
accordance with the terms thereof and of this Agreement.

                  "Lehman Warehouse Facility" means the Second Amended and
Restated Master Repurchase Agreement, dated as of January 30, 2002, between
Lehman Commercial Paper, Inc. and Green Tree Finance Corp.-Five, as amended by
the amendments thereto dated as of April 30, 2002, August 12, 2002 and October
9, 2002, and as the same may be further amended in accordance with the terms
thereof and of this Agreement.

                  "Liability" means any liability or obligation whether known or
unknown, whether asserted or unasserted, whether absolute or contingent, whether
accrued or unaccrued, whether matured or unmatured, whether liquidated or
unliquidated, whether incurred or consequential and whether due or to become
due, including any liability for Taxes or any other liability arising out of
applicable Law.

                  "Lien" means any mortgage, deed to secured debt or deed of
trust, pledge, security interest, encumbrance, claim, Tax, equitable interest,
negative pledge, lien or charge of any kind (including, without limitation, any
conditional sale or other title retention agreement or lease in the nature
thereof) or any agreement to file any of the foregoing, any sale of receivables
with recourse against the Sellers or any of their Affiliates, any filing or
agreement to file a financing statement as debtor under the Uniform Commercial
Code or any similar statute and all claims (including, but not limited to, all
"claims" within the meaning of section 101(5) of the Bankruptcy Code).

                  "Loan and IT Services" shall have the meaning set forth in
Section 5.33 hereof.

                  "Loans" shall mean all loans, or other extensions of credit,
either purchased by a CFC Party from Third Parties or pursuant to which the CFC
Parties have lent money, in each case, which are owned by the CFC Parties or
subject to repurchase by or similar Contract of a CFC Party, including, but not
limited to, (a) loans which have been partially or fully charged off, (b)
interests in loan participations and assignments, (c) legally binding
commitments and

                                      -13-


obligations to extend credit (including any unfunded or partially funded
revolving loans, lines of credit or similar arrangements), (d) retail
installment contracts, (e) Home Equity Loans and HELOCs, (f) Home Improvement
Loans, (g) MH Contracts and (h) Other Loans, in each case, which are owned by
the CFC Parties or subject to repurchase by or similar Contract of a CFC Party;
provided that for purposes of this Agreement, a Securitized Loan shall not be
deemed a "Loan".

                  "Loss" means any loss, Liability, demand, claim, action, cause
of action, cost, damage, deficiency, Tax, penalty, fine or expense, whether or
not arising out of third party claims (including, without limitation, interest,
penalties, reasonable attorneys' fees and expenses, court costs and all amounts
paid in investigation, defense or settlement of any of the foregoing); provided
however that Losses shall not include consequential (such as loss of business or
profits), incidental, special or punitive losses, damages, costs, expenses or
Liabilities.

                  "Material Adverse Effect" means (a) any change or effect that
is materially adverse to the business, financial condition, property,
operations, net income or assets of the Purchased Businesses (excluding the
Excluded Assets and Excluded Liabilities) taken as a whole; or (b) any material
adverse effect that would prevent or materially impair the ability of the
Sellers to consummate the transactions contemplated by this Agreement or the
Transaction Documents; provided that none of the following shall be deemed to
constitute, and none of the following shall be taken into account in determining
whether there has been, a Material Adverse Effect: (i) any adverse change,
event, development or effect arising from or relating to (A) general business or
economic conditions, including such conditions related to the businesses of the
Sellers and their Subsidiaries, except for such changes, events, developments or
effects which disproportionately impact the Purchased Businesses, or (B)
national or international political or social conditions, including the
engagement by the United States in hostilities, whether or not pursuant to the
declaration of a national emergency or war, or the occurrence of any military or
terrorist attack upon the United States, except for such changes, events,
developments or effects which disproportionately impact the Purchased
Businesses, (ii) the filing of the Chapter 11 Case and the Parent's filing of
its case under chapter 11 of the Bankruptcy Code, (iii) adverse changes in the
value of the Residual Assets related to the MH Business as a result of a
restructuring of the MH Servicing Business or the inability to consummate such a
restructuring and (iv) an Amortization Event under the Private Label Credit Card
Master Note Trust Documents unless it results in the occurrence of an event of
default under the DIP Loan.

                  "Material Agreement" shall have the meaning set forth in
Section 3.11 hereof.

                  "MESA Collateral" means the certificates representing
beneficial ownership of a Grantor Trust that holds certain REMIC regular
interests and certain other debt obligations and related assets.

                  "MESA Equity" means the ownership interest in the Mesa
Issuers.

                  "MESA Issuers" means the MESA 2001-4, 2002-1, 2002-3 and
2002-4 Global Issuance Company entities (exempted companies) created under the
laws of the Cayman Islands that are the issuers of the MESA Notes and the owners
of the MESA Collateral.

                                      -14-


                  "MESA Notes" means the debt instruments issued by the MESA
Issuers in the four transactions designated and identified as the issuance of
(a) US $73,866,000 Home Loan-Backed Notes, Series 2001-4 notes by MESA 2001-4
Global Issuance Company, pursuant to the Indenture, dated as of July 1, 2001,
with Wells Fargo, Indenture Trustee; (b) US $344,864,000 Home Loan Asset-Backed
Notes Series 2002-1 notes by MESA 2002-1 Global Issuance Company, pursuant to
the Indenture, dated as of February 1, 2002, with Wells Fargo, Indenture
Trustee; (c) US $180,000,000 Home Loan Asset-Backed Notes Series 2002-2 notes by
MESA 2002-2 Global Issuance Company, pursuant to the Indenture, dated as of
September 1, 2002, with Deutsche Bank, Indenture Trustee; and (d) US
$145,252,000 Home Loan Asset-Backed Notes Series 2002-3 notes by MESA 2002-3
Global Issuance Company, dated as of October 1, 2002, with Deutsche Bank,
Indenture Trustee.

                  "MH Business" means the manufactured housing business of the
CFC Parties, excluding securities taken back or retained by the Company or any
Subsidiary in a Securitization.

                  "MH Community Loans" means Loans made by the CFC Parties to
finance the construction of manufactured homes, parks and communities.

                  "MH Contracts" means all retail installment sales contracts
and Loan agreements for manufactured housing, including, without limitation,
retail installment sales contracts and Loan agreements for manufactured housing
that has been repossessed and refinanced.

                  "MH Servicing Assets" means (a) the rights of the servicer
under the MH Servicing Contracts; (b) with respect to each Loan and Securitized
Loan subject to a MH Servicing Contract, the escrow payments (including, without
limitation, tax and insurance escrows) or other similar payments with respect to
such Loan and any amounts actually collected and held by the CFC Parties with
respect thereto; (c) all accounts and other rights to payment related to any of
the MH Servicing Rights or MH Servicing Contracts; and (d) any and all
documents, files, records, servicing files, servicing documents, servicing
records, data tapes, computer records or other information pertaining to the
servicing of each Loan or pertaining to the past, present or prospective
servicing of such Loan, in each case that is subject to a MH Servicing Contract.

                  "MH Servicing Business" means all Servicing Rights of a CFC
Party relating to the MH Business and all assets of the CFC Parties used in the
conduct of such business, including, without limitation, all cash, deposits,
receivables and Prepaid Expenses relating thereto.

                  "MH Servicing Business Schedule" means the disclosure schedule
attached hereto containing information relating to the MH Servicing Business.

                  "MH Servicing Contracts" means collectively, (a) each of the
Contracts providing for loan servicing in connection with a Securitization or
other transaction that is identified in the MH Servicing Business Schedule under
the caption, "List of MH Servicing Contracts", and (b) all other Contracts or
documents creating, defining or evidencing the right of any CFC Party

                                      -15-


to service loans including any pooling and servicing agreement and purchase or
sale agreement pertaining to any Loan or Securitized Loan.

                  "MH Servicing Fees" means all servicing fees payable from time
to time to the Company and any of the Selling Subsidiaries with respect to the
MH Servicing Business.

                  "MH Servicing Rights" means the right to act as servicer or
successor servicer under each of the MH Servicing Contracts and all rights,
privileges and benefits of being servicer or successor servicer under each MH
Servicing Contract or that are incidental thereto (but not including any rights
included in the Insurance Business) including without limitation any and all of
the following: (a) any and all rights to service such Loan or any Securitized
Loan; (b) all servicing fees and other fees, compensation or moneys payable to
the servicer under the MH Servicing Contracts and (c) any late fees, investment
income or similar payments or penalties (including, without limitation,
prepayment penalties) with respect to such Loan or Securitized Loan payable to
the servicer under the MH Servicing Contracts.

                  "Mill Creek Bank" means Mill Creek Bank, Inc., a Utah
industrial loan corporation, and its wholly-owned Subsidiaries.

                  "Mill Creek Transition Obligations" shall have the meaning set
forth in the definition of "Sale Order" contained herein.

                  "NIMS Collateral" means any Guaranty Fees, REMIC Regular
Interests and REMIC Residual Interests, and any other related assets, pledged by
the NIMS Issuer to secure the NIMS Notes.

                  "NIMS Equity" means the ownership interest in the NIMS Issuer.

                  "NIMS I" shall have the meaning set forth in Section
2.3(b)(viii) hereof.

                  "NIMS II" shall have the meaning set forth in Section
2.3(b)(viii) hereof.

                  "NIMS Issuer" means the NIMS Trust.

                  "NIMS Notes" means the Floating Rate Variable Funding Notes
dated September 28, 2001 issued by the NIMS Trust.

                  "NIMS Trust" means the trust created by the Trust Agreement,
dated as of September 1, 2001, among NIMS I, NIMS II and Wilmington Trust
Company as trustee, as the same may be amended in accordance with the terms
thereof and of this Agreement.

                  "9019 Order" means an order of the Bankruptcy Court
authorizing and approving a settlement pursuant to which the MH Servicing Fees
are increased to 1.25%, and accorded the level of priority that would be
accorded to a third party successor servicer under the cash flow waterfall
provisions of the MH Servicing Contracts (except, in the case of securitization
trusts for which principal and interest insurance is in force, in which cases
the MH Servicing Fees will be paid in the highest priority that will not
adversely affect the continuation in force of such insurance), such order to be
reasonably satisfactory in form and substance to the Buyer.

                                      -16-


                  "Non-MH Servicing Assets" means (a) the rights of the servicer
under the Non-MH Servicing Contracts; (b) with respect to each Loan and
Securitized Loan subject to a Non-MH Servicing Contract, the escrow payments
(including, without limitation, tax and insurance escrows) or other similar
payments with respect to such Loan and any amounts actually collected and held
by the CFC Parties with respect thereto; (c) all accounts and other rights to
payment related to any of the Non-MH Servicing Rights or Non-MH Servicing
Contracts; and (d) any and all documents, files, records, servicing files,
servicing documents, servicing records, data tapes, computer records or other
information pertaining to the servicing of each Loan or pertaining to the past,
present or prospective servicing of such Loan, in each case that is subject to a
Non-MH Servicing Contract.

                  "Non-MH Servicing Business" means all Servicing Rights of a
CFC Party relating to any business of the Company other than the MH Servicing
Business and all assets of the CFC Parties primarily used in the conduct of such
business, including, without limitation, all cash, deposits, receivables and
Prepaid Expenses relating thereto.

                  "Non-MH Servicing Contracts" means, collectively, (a) each of
the Contracts providing for loan servicing in connection with a Securitization
or other transaction which has been identified in Section 2.1(a) of the
applicable Business Schedules under the Caption, "List of Non-MH Servicing
Contracts" and (b) all other Contracts or documents creating, defining or
evidencing the right of any CFC Party to service loans including any pooling and
servicing agreement and purchase or sale agreement pertaining to any Loan or
Securitized Loan.

                  "Non-MH Servicing Fees" means all servicing fees payable from
time to time to the Company and any of the Selling Subsidiaries with respect to
the Non-MH Servicing Business.

                  "Non-MH Servicing Rights" means the right to act as servicer
or successor servicer under each of the Non-MH Servicing Contracts and all
rights, privileges and benefits of being servicer or successor servicer under
each Non-MH Servicing Contract or that are incidental thereto including without
limitation any and all of the following: (a) any and all rights to service such
Loan or any Securitized Loan; (b) all servicing fees and other fees,
compensation or moneys payable to the servicer under the Non-MH Servicing
Contracts; and (c) any late fees, investment income or similar payments or
penalties (including, without limitation, prepayment penalties) with respect to
such Loan or Securitized Loan payable to the servicer under the Non-MH Servicing
Contracts.

                  "Non-Transferred Insurance Asset" shall have the meaning set
forth in Section 5.26(a) hereof.

                  "Non-Transferred Insurance Business" shall have the meaning
set forth in Section 5.26(a) hereof.

                  "November 30 Balance Sheet" means the Company's consolidated
balance sheets as of November 30, 2002 set forth in Section 2.1(a) of the
Purchased Businesses Schedule.

                                      -17-


                  "Obligor" means, with respect to any Loan, the Person(s)
obligated to make payments with respect to such Loan, including, without
limitation, the applicable borrower, or any guarantor, co-signer, surety or
other obligor therefor.

                  "Order" means any decree, order, injunction, rule, judgment,
consent of or by any Governmental Authority.

                  "Organizational Documents" means certificates of
incorporation, by-laws, certificates of formation, limited liability company
operating agreements, limited liability partnership agreements, partnership or
limited partnership agreements or other formation or governing documents of a
particular entity.

                  "Original Agreement" shall have the meaning set forth in the
Recitals.

                  "Other Assets" means assets of Green Tree Retail Services Bank
specified in Section 2.1(a) of the Business Schedules.

                  "Other Loans" means, collectively, all (a) Vehicle Leases, (b)
Consumer Loans, and (c) other consumer loans, and (in each case) the related
promissory notes or other evidences of indebtedness, together with any and all
rights, benefits, collateral, payments, recoveries and proceeds arising
therefrom or in connection therewith, including the Servicing Rights related to
such loans.

                  "Other Securitization Entity" shall have the meaning set forth
in Section 3.22(l)(i) hereof.

                  "Other Transferred Intellectual Property" means, other than
the Transferred Trademarks and the Transferred Intellectual Property Agreements,
all Intellectual Property owned by the Sellers and primarily used or held for
use in the Purchased Businesses.

                  "Owned Real Premises" means real property used in the
Purchased Businesses as set forth in Section 3.8(a) of the applicable Business
Schedules, title to which is held by the Sellers.

                  "Owned Real Premises Leases" means real property leases,
subleases, licenses or other Contracts set forth in Section 3.8(a) of the
applicable Business Schedules pursuant to which a Seller leases all or any part
of the Owned Real Premises as the landlord thereunder.

                  "Parent" means Conseco, Inc., an Indiana corporation.

                  "Parties" shall have the meaning set forth in the Recitals.

                  "Party" shall have the meaning set forth in the Recitals.

                  "Permitted Liens" shall mean: (a) statutory liens for current
Taxes or other governmental charges with respect to the assets of a CFC Party
not yet due and payable or which may thereafter be paid without penalty or the
amount or validity of which is being contested in good faith by appropriate
proceedings by the CFC Party and for which appropriate reserves have

                                      -18-


been established on the CFC Party's books and records in accordance with GAAP,
(b) mechanic's, carrier's, worker's, repairer's and similar statutory liens
arising or incurred in the ordinary course of business with respect to a
Liability which is not yet due or delinquent; (c) zoning, entitlement, building
and other land use regulations imposed by Governmental Authority having
jurisdiction over the Owned Real Premises and Leased Premises which are not
violated by the current use and operation of the Owned Real Premises and Leased
Premises; (d) covenants, conditions, restrictions, easements and other similar
matters of record affecting title and other irregularities of title to the
Purchased Assets which do not, individually or in the aggregate, materially
impair the present value, occupancy or continued use of the Purchased Assets for
the purposes for which each is currently used in the respective Purchased
Business; and (e) the Owned Real Premises Leases.

                  "Person" means an individual, a partnership, a limited
liability company, a corporation, a cooperative, an association, a joint stock
company, a trust, a joint venture, an unincorporated organization or a
Governmental Authority.

                  "Petition Date" shall have the meaning set forth in Section
5.8 hereof.

                  "PL Business" means the Company's private label credit card
business, including all business conducted by the Banks, excluding securities
taken back or retained by the Company or any Subsidiary in a Securitization.

                  "Post-Closing Tax Period" means (a) any taxable year or period
beginning after the Closing Date, and (b) for any Straddle Period, the portion
of such period beginning after the Closing Date.

                  "Post-Signing Balance Sheets" shall have the meaning set forth
in Section 5.27 hereof.

                  "Pre-Closing Period" shall have the meaning set forth in
Section 2.1(a) hereof.

                  "Pre-Closing Tax Period" means (a) any taxable year or period
ending on or before the Closing Date and (b) for any Straddle Period, the
portion of such period ending on and including the Closing Date.

                  "Prepaid Expenses" means operating costs or other expenses
incurred by the CFC Parties with respect to the Purchased Businesses and
Purchased Assets after the Closing Date which were paid by the Sellers, any
Subsidiary of Sellers or Mill Creek Bank on or prior to the Closing Date,
including any real or personal property, use or other Taxes (other than Income
Taxes, to the extent attributable to periods or portions thereof beginning after
the Closing Date).

                  "Private Label Credit Card Master Trust Certificates" means,
to the extent outstanding on the Closing Date, (a) the Conseco Private Label
Credit Card Master Note Trust 2001-A certificate and (b) the Conseco Private
Label Credit Card Master Note Trust 2001-B certificate.

                  "Private Label Credit Card Master Note Trust Documents" means
the (a) Conseco Private Label Credit Card Master Note Trust Amended and Restated
Trust Agreement, dated as

                                      -19-


of May 1, 2001, between Mill Creek Bank, as transferor, Conseco Finance Credit
Card Funding Corp., as transferor, and Wilmington Trust Company, as owner
trustee; (b) Master Indenture, dated as of May 1, 2001, by and among Conseco
Private Label Credit Card Master Note Trust, U.S. Bank, as indenture trustee and
securities intermediary, and Mill Creek Bank, as servicer; (c) Series 2001-A
Indenture Supplement, dated as of May 1, 2001, by and among Conseco Private
Label Credit Card Master Note Trust, U.S. Bank, as indenture trustee and
securities intermediary, and Mill Creek Bank, as servicer; (d) Series 2001-B
Indenture Supplement, dated as of May 1, 2001, by and among Conseco Private
Label Credit Card Master Note Trust, U.S. Bank, as indenture trustee and
securities intermediary, and Mill Creek Bank, as servicer; and (e) Class A Note
Purchase Agreement, dated as of May 31, 2001, by and among Conseco Private Label
Credit Card Master Note Trust, issuer, Mill Creek Bank, transferor and servicer,
Conseco Finance Credit Funding Corp., individually and as a transferor, Green
Tree Retail Services Bank, individually and as an account owner, the Class A
Purchasers, the agents for the Purchaser Groups, from time to time parties
thereto, and Credit Suisse First Boston, administrative agent for the Class A
Purchasers, and as amended by the amendments thereto dated as of May 30, 2002
and September 30, 2002.

                  "Purchase Price" shall have the meaning set forth in Section
2.4(a) hereof.

                  "Purchased Assets" means assets, properties, Contracts (other
than Excluded Contracts) and rights owned or primarily used or held for use in
the operation of the Purchased Businesses of whatever kind and nature, real or
personal, tangible or intangible, owned, leased, licensed, used or held for use
or license, wherever located, including, without limitation, (a) all Servicing
Rights (b) all of the outstanding capital stock of Mill Creek Bank, (c) the
Other Assets, (d) the Residual Assets, (e) the Assumed Agreements, (f) the
Assigned Receivables and related Loans, (g) the Servicing Assets, (h) the
Servicing Contracts to the limited extent the Buyer will act as servicer or
successor servicer thereunder, (i) all collateral securing the Lehman
Facilities, (j) those other assets, properties, Contracts and rights set forth
on Section 2.1(a) of the applicable Business Schedules, (k) the Floorplan
Certificates, (l) the MH Community Loans, (m) the Insurance Assets, and (n) the
Private Label Credit Card Master Trust Certificates, excluding, in each case,
Excluded Assets. The foregoing is subject to the provisions of Section 2.1(a).

                  "Purchased Businesses" means the HE Business, the CL Business,
the HI Business, the PL Business, the Non-MH Servicing Business, the MH
Servicing Business and the Insurance Business, but not including any Excluded
Business. The foregoing is subject to the provisions of Section 2.1(a).

                  "Purchased Businesses Schedule" means the schedule by that
name annexed to this Agreement.

                  "Receivables" means all financial obligations arising under
the Loans, including, but not limited to, any amounts owing for the payment of
goods and services, periodic finance charges (including unearned and billed),
Accrued and Unpaid Interest, late charges, bank advances and any other fee,
expense or charge of every nature, kind and description whatsoever, including
any amount owed by the Sellers to the holder of the account thereon as a credit
balance.

                                      -20-


                  "Records" means books and records relating to the Purchased
Businesses which are in the possession of a CFC Party, including (a) customer
and vendor lists, correspondence and files, (b) advertising, marketing and sales
materials, (c) personnel files of the Transferred Employees, and (d) financial
records and statements, but specifically excluding any such other property which
is listed as an Excluded Asset.

                  "RECS" shall have the meaning set forth in Section 3.31
hereof.

                  "RECS Contracts" shall have the meaning set forth in Section
3.31 hereof.

                  "Regulators" shall have the meaning set forth in Section 5.22
hereof.

                  "REMIC" means a real estate mortgage investment conduit under
Section 860D(a) of the Tax Code or any other entity or arrangement that has
purported to be a real estate mortgage investment conduit that is a REMIC under
Section 860D(a) of the Tax Code irrespective of whether such entity or
arrangement qualifies as a REMIC under Section 860D(a) of the Tax Code.

                  "REMIC Regular Interest" means a regular interest, as defined
in Section 860G(a)(1) of the Tax Code, in a REMIC or any interest that has been
represented or otherwise held out to be a regular interest in a REMIC
irrespective of whether such interest qualifies as a regular interest in a REMIC
as defined in Section 860G(a)(1) of the Tax Code.

                  "REMIC Residual Interest" means a residual interest, as
defined in Section 860G(a)(2) of the Tax Code, in a REMIC or any interest that
has been represented or otherwise held out to be a residual interest in a REMIC
irrespective of whether such interest qualifies as a residual interest in a
REMIC as defined in Section 860G(a)(2) of the Tax Code.

                  "Residual Assets" means the Junior P&I Regular Interests, the
IO Regular Interests, the REMIC Residual Interests listed on the Residuals
Schedule under the caption, "Residual Interests", the residuals and retained
interests listed on the Residuals Schedule under the caption, "Credit Cards",
all other assets listed on the Residuals Schedule including the Cleanup Calls,
the Guarantee Fees, the Non-MH Servicing Fees, the Guarantee Reimbursement
Rights, the Servicer Advance Reimbursement Rights and any other interest,
including equity, retained or residual interests, (whether certificated or
uncertificated) issued or created by or in connection with a Securitization or
similar transaction that the Company or any other CFC Party may hold or own
(whether or not pledged to another party or sold under a repurchase agreement),
including, without limitation, the NIMS Equity or NIMS Collateral and the MESA
Equity or the MESA Collateral, and all other cash or other proceeds and all
other rights arising from certificated or uncertificated securities, interests
or rights purchased or retained by a CFC Party, including, without limitation,
rights to prepayment penalties or charges, late fees, investment income and
other charges not required to be paid to the servicer, any servicing,
interest-only or other payment right (whether certificated or uncertificated)
arising in connection with a Ginnie Mae Pool, including, without limitation, the
pools identified on the Ginnie Mae Pool List included in Attachment A to Section
3.26 of the Purchased Businesses Schedule and repurchase options or similar
rights arising in connection with a Securitization.

                                      -21-


                  "Residuals Schedule" means the disclosure schedule attached
hereto containing information relating to the Residual Assets.

                  "Rule" or "Rules" means the Federal Rules of Bankruptcy
Procedure.

                  "Sale Order" means the order of the Bankruptcy Court: (a)
finding that the results of the auction conducted by the Sellers are authorized
and approved; (b) authorizing and approving the sale of the Purchased Assets to
the Buyer under the terms of this Agreement free and clear of any Liens, claims,
or other encumbrances of any kind or nature pursuant to sections 363 and 365 of
the Bankruptcy Code (other than Permitted Liens and Assumed Liabilities); (c)
providing that the transfers of the Purchased Assets to the Buyer are legal,
valid and effective transfers that will vest the Buyer with good and marketable
title to the Purchased Assets; (d) finding that the Buyer is entitled to the
protections provided to a good faith purchaser under section 363(m) of the
Bankruptcy Code; (e) finding that the consideration provided by the Buyer for
the Purchased Assets constitutes reasonably equivalent value and fair
consideration under the Bankruptcy Code and applicable non-bankruptcy law; (f)
finding that the form and manner of notice of the sale of the Purchased Assets
and the opportunity to submit higher and better bids for the Purchased Assets
was adequate and appropriate; (g) providing that except as expressly permitted
by this Agreement, all Persons and entities holding interests or claims of any
kind and nature with respect to the Purchased Assets shall be enjoined from
asserting, prosecuting or otherwise pursuing such interests and claims of any
kind and nature against the Buyer, its successors or assigns, or the Purchased
Assets; (h) providing that, with respect to any agreements assumed by the
Sellers and assigned to the Buyer pursuant to section 365 of the Bankruptcy
Code, that the Buyer shall have no liability for any obligations first arising
prior to the date of such assignment; (i) providing that neither the Buyer nor
its Affiliates, successors or assigns will be deemed, as a result of any action
taken in connection with the purchase of the Purchased Assets, to: (i) be a
successor to any of the Sellers; (ii) have, de facto or otherwise, merged with
or into all or any of the Sellers; or (iii) be a continuation or substantial
continuation of any of the Sellers or any enterprise of any of the Sellers; (j)
finding that the Buyer and the Sellers did not engage in any conduct that would
allow the transactions contemplated by this Agreement to be set aside pursuant
to section 363(n) of the Bankruptcy Code; (k) providing that the Sellers shall
execute, deliver, perform under, consummate and implement this Agreement, the
Transaction Documents and all additional instruments and documents that may be
reasonably necessary or desirable to implement the foregoing; (l) providing that
the notice provided in connection with the sale motion and the assignment and
transfer of Purchased Assets free and clear of all Liens and Excluded
Liabilities (other than Permitted Liens) pursuant to this Agreement, complied
with sections 363 and 365 of the Bankruptcy Code, Rules 2002, 6004, 6006, 9014
of the Federal Rules of Bankruptcy Procedure and all other provisions of the
Federal Rules of Bankruptcy or the Local Bankruptcy Rules governing the
transactions that are the subject of the sale motion; (m) providing that the
provisions of Rules 6004(g) and 6006(d) of the Federal Rules of Bankruptcy
Procedure are waived and there will be no stay of the Sale Order under Rule
62(a) of the Federal Rules of Civil Procedure; (n) providing that the provisions
of the Sale Order are nonseverable and mutually dependent; (o) providing that
the Bankruptcy Court shall retain jurisdiction to interpret and enforce the
terms and provisions of this Agreement; (p) exempting the sale of the Purchased
Assets from the imposition and payment of any and all recording taxes, stamp
taxes, transfer taxes, or similar taxes pursuant to section 1146(c) of the
Bankruptcy Code; (q) providing that no Liability shall attach to or remain with
the Purchased Businesses on

                                      -22-


account of any Liability, including without limitation, a Tax Liability,
existing as of the Closing Date for which the Sellers are jointly and/or
severally liable with any of the CFC Parties; (r) providing that any Subject
Subsidiary or Subsidiary of a Subject Subsidiary acquired by the Buyer shall
have no Liability for any Tax of Parent or any present or former Subsidiary of
Parent by virtue of Treasury Regulation Section 1.1502-6 or any comparable
provision of state, local or foreign Law; (s) authorizing and approving that
certain letter agreement dated as of December 19, 2002, pursuant to which, among
other things, Parent has agreed to indemnify the Buyer and certain other parties
for tax obligations of Parent's Affiliated Group under Treasury Regulation
Section 1.1502-6 and certain other obligations; (t) providing that CIHC,
Incorporated shall be released from its guaranty obligations related to the
Lehman Facilities; (u) confirming the installation of the Buyer (or its
appropriate Affiliate) as a successor servicer being distinct from and
independent of any CFC Party under, and in conformity with, all of the Servicing
Contracts included among the Purchased Assets and confirming the senior priority
of payment of the servicing fees payable thereunder to the Buyer or such
Affiliate as such successor servicer; (v) providing that the increase in the
servicing fees contemplated by Section 6.11(c) shall be effective; (w)
authorizing the arrangements described in Section 5.26; (x) authorizing and
directing the Sellers to pay any amounts owed by Sellers pursuant to Section
5.10(a)(ii) and Section 5.33 (the "Mill Creek Transition Obligations"), as and
when the Mill Creek Transition Obligations become due; and (y) providing that
the Mill Creek Transition Obligations shall constitute administrative expenses
of the Sellers' estates pursuant to Section 503(b)(1) of the Bankruptcy Code;
such Sale Order to be satisfactory to the Buyer in its sole and absolute
discretion.

                  "Section 338 Election" shall have the meaning set forth in
Section 5.1(i) hereof.

                  "Securitization" means any transaction in which the Company or
any of its Subsidiaries: (a) was the "sponsor", as defined in Section
1.860F-2(b)(1) of the Treasury Regulations, of a REMIC or has held itself out to
be the sponsor of a REMIC irrespective of whether it has met the requirements to
be a sponsor in a REMIC; (b) transferred Loans, other debt instruments or
interests therein to a Grantor Trust, either taking back or selling pass-through
certificates or other similar interests evidencing the ownership of such Grantor
Trust; (c) transferred Loans, REMIC Regular Interests, REMIC Residual Interests,
interests in a Grantor Trust or other assets to a NIMS Issuer or a MESA Issuer
or (d) transferred or pledged Loans either to secure an indebtedness of the
Company or any Selling Subsidiary or by way of a repurchase transaction.

                  "Securitization Documents" means all of the documents
governing the rights and obligations of the Company, the applicable Selling
Subsidiary, the issuer and the holders of securities issued in any
Securitization.

                  "Securitized Loan" shall mean all loans, or other extensions
of credit, either purchased by a CFC Party from Third Parties or pursuant to
which the CFC Parties have lent money, in each case, which are owned by the CFC
Parties or subject to repurchase by or similar Contract of a CFC Party,
including, but not limited to, (a) loans which have been partially or fully
charged off, (b) interests in loan participations and assignments, (c) legally
binding commitments and obligations to extend credit (including any unfunded or
partially funded revolving loans, lines of credit or similar arrangements), (d)
retail installment contracts, (e)

                                      -23-


Home Equity Loans and HELOCs, (f) Home Improvement Loans, (g) MH Contracts and
(h) Other Loans, in each case, which are owned by the CFC Parties or subject to
repurchase by or similar Contract of a CFC Party, in each case which are (I)
pledged by an entity or arrangement as collateral for a debt instrument issued
by such entity, (II) treated as sold by or through an entity or arrangement in
the form of pass-through certificates in a Grantor Trust or a REMIC or (III)
otherwise pledged, transferred or sold in a Securitization.

                  "Seller" shall have the meaning set forth in the Recitals.

                  "Seller Indemnified Parties" shall have the meaning set forth
in Section 9.2(b) hereof.

                  "Seller Liquidated Damages" shall have the meaning set forth
in Section 8.3 hereof.

                  "Sellers" shall have the meaning set forth in the Recitals.

                  "Selling Subsidiaries" shall have the meaning set forth in the
Recitals.

                  "Servicer Advance Facility" means the Indenture, dated as of
February 1, 2002, by and among Conseco Finance Advance Receivables Corp., as
issuer, U.S. Bank, as trustee, as verification agent and as paying agent, and
the Company, together with any successor entity, individually and as servicer of
the qualified trusts pursuant to which the Servicer Advance Facility Notes were
issued.

                  "Servicer Advance Facility Notes" means the Conseco Finance
Advance Receivables Backed Notes, Series 2002-A, dated as of February 1, 2002.

                  "Servicer Advance Reimbursement Rights" means any and all
claims any CFC Party may have to be reimbursed for advances made as servicer in
accordance with the Securitization Documents governing any Securitization.

                  "Servicing Assets" means, collectively, the MH Servicing
Assets and the Non-MH Servicing Assets.

                  "Servicing Contracts" means, collectively, the MH Servicing
Contracts and the Non-MH Servicing Contracts.

                  "Servicing Fees" means, collectively, the MH Servicing Fees
and the Non-MH Servicing Fees.

                  "Servicing Rights" means, collectively, the MH Servicing
Rights and the Non-MH Servicing Rights.

                  "Shares" shall have the meaning set forth in Section 2.1(b)
hereof.

                  "Specified Cure Payment" shall have the meaning set forth in
Section 2.7(b)(i) hereof.

                                      -24-


                  "SPEs" shall mean, collectively, Green Tree Residual Finance
Corp. I and Green Tree Finance Corp.-Five.

                  "State Banking Authority" shall have the meaning set forth in
Section 3.3 hereof.

                  "Statement" shall have the meaning set forth in Section 5.1(c)
hereof.

                  "Stock Sale" shall have the meaning set forth in Section
2.1(b) hereof.

                  "Straddle Period" shall mean any taxable year or period
beginning on or before and ending after the Closing Date.

                  "Subject Subsidiary" shall have the meaning set forth in
Section 2.1(b) hereof.

                  "Subject Subsidiary Owner" shall have the meaning set forth in
Section 2.1(b) hereof.

                  "Subsidiary" means, with respect to any Person, any
corporation, partnership, limited liability company, association or other
business entity of which (a) if a corporation, a majority of the total voting
power of shares of stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by that Person or
one or more of the other Subsidiaries of that Person or a combination thereof,
or (b) if a partnership, limited liability company, association or other
business entity, a majority of the partnership or other similar ownership
interest thereof is at the time owned or controlled, directly or indirectly, by
any Person or one or more Subsidiaries of that Person or a combination thereof.
For purposes hereof, a Person or Persons shall be deemed to have a majority
ownership interest in a partnership, limited liability company, association or
other business entity if such Person or Persons shall be allocated a majority of
partnership, limited liability company, association or other business entity
gains or losses or shall be or control the managing director or general partner
of such partnership, limited liability company, association or other business
entity.

                  "Support Employees" shall have the meaning set forth in
Section 5.10(a) hereof.

                  "Surveyors" shall have the meaning set forth in Section 5.20
hereof.

                  "Surveys" shall have the meaning set forth in Section 5.20
hereof.

                  "Tax" or "Taxes" means (a) any federal, state, local or
foreign income, gross receipts, capital gains, franchise, alternative or add-on
minimum, excess inclusion income, estimated, sales, use, goods and services,
transfer, registration, value added, excise, natural resources, severance,
stamp, occupation, premium, windfall profit, environmental, customs, duties,
real property, personal property, capital stock, social security, unemployment,
employment, disability, payroll, license, employee or other withholding,
contribution or other tax, of any kind whatsoever, including any interest,
penalties or additions to tax or additional amounts in respect of the foregoing;
(b) any Liability for Taxes as a transferee under a Contract indemnity; (c) any
Liability for Taxes under Treasury Regulation ss. 1.1502-6 or similar Law

                                      -25-


applicable in the case of a group that files on a consolidated, combined or
unitary basis; and (d) any applicable Liability for Taxes due to application of
bulk sale laws.

                  "Tax Code" means the Internal Revenue Code of 1986 as amended
from time to time.

                  "Tax Proceeding" shall mean any claim, examination, suit,
action, negotiation or proceeding, or other proposed change or adjustment by any
Tax authority involving Liability for Taxes.

                  "Tax Return" means any return, declaration, report, claim for
refund, information return, amended return or other documents (including any
related or supporting schedules, statements or information) filed or required to
be filed in connection with the determination, assessment or collection of Taxes
of any Person or the administration of any laws, regulations or administrative
requirements relating to any Taxes.

                  "Taxable Period" shall have the meaning set forth in Section
5.1(b) hereof.

                  "Terminated Employees" shall have the meaning set forth in
Section 5.32 hereof.

                  "Third Party" means any Person other than (a) the Parent, the
CFC Parties or any of their Affiliates and (b) the Buyer, the Investors and
their Affiliates.

                  "Third Party Claim" means any claim or the commencement of any
claim, action or proceeding made or brought by a Third Party.

                  "Title Commitments" shall have the meaning set forth in
Section 5.20 hereof.

                  "Title Company" shall have the meaning set forth in Section
5.20 hereof.

                  "Title Insurance Policies" shall have the meaning set forth in
Section 5.20 hereof.

                  "Transaction Documents" means this Agreement and any other
agreement, certificate, consent, waiver, document or instrument to be executed
and/or delivered at Closing, including, but not limited to, those agreements,
certificates, consents, waivers, documents and other instruments required to be
delivered by or on behalf of a Person under ARTICLE VI and ARTICLE VII herein,
as applicable.

                  "Transfer Date" shall have the meaning set forth in Section
5.26(b) hereof.

                  "Transferred Employees" shall have the meaning set forth in
Section 5.10(b) hereof.

                  "Transferred Intellectual Property" means the Transferred
Trademarks, Other Transferred Intellectual Property, and the Transferred
Intellectual Property Agreements, together with all income, royalties, damages,
and payments due or payable at the Closing or thereafter (including, without
limitation, damages and payments for past or future infringements or
misappropriations thereof), the right to sue and recover for past infringements
or

                                      -26-


misappropriations thereof, any and all corresponding rights that, now or
hereafter, may be secured throughout the world.

                  "Transferred Intellectual Property Agreements" means all
licenses and other Intellectual Property agreements to which a Seller or Mill
Creek Bank is a party that are primarily used or held for use in the operation
or conduct of the Purchased Businesses, including the agreements set forth in
Section 3.12 of the Business Schedules.

                  "Transferred Trademarks" means all trademarks, service marks,
trade names, corporate names, logos and slogans and all registrations and
applications of the foregoing, owned by a Seller or Mill Creek Bank and
primarily for use in the operation or conduct of the Purchased Businesses
together with the goodwill associated therewith.

                  "Transition Services Agreement" shall have the meaning set
forth in Section 6.6 hereof.

                  "Treasury Regulation" means a regulation promulgated by the
Treasury Department under the Tax Code, including a temporary regulation and a
proposed regulation to the extent that, by reason of their actual or proposed
effective date, would or could, as of the date of any determination or opinion
as to the Tax consequences of any action or proposed action or transaction, be
applied to the Purchased Businesses and Purchased Assets.

                  "URM Employees" shall have the meaning set forth in Section
5.10(a)(ii) hereof.

                  "U.S. Bank" means U.S. Bank National Association, a national
banking association, and its successors.

                  "Vehicle Leases" means all open-ended leases of trucks or
other commercial vehicles entered into by a CFC Party as lessor.

                  "WARN Act" shall have the meaning set forth in Section 5.10(a)
hereof.

                  "Welfare Benefits" shall have the meaning set forth in Section
5.10(h) hereof.

                  "Wells Fargo" means Wells Fargo Bank Minnesota, National
Association.

                                  ARTICLE II.

                           PURCHASE AND SALE OF ASSETS

             2.1. Purchased Assets.

                  (a) Purchase and Sale of Assets. On the terms and subject to
the conditions contained in this Agreement, on the Closing Date, the Company
will sell, convey, transfer, assign and deliver to (or cause to be sold,
conveyed, transferred, assigned and delivered by the relevant Selling
Subsidiaries owning, leasing or having the right to use the Purchased Assets to)
the Buyer, and the Buyer will purchase and take assignment and delivery from the
Sellers of all of the legal and beneficial right, title and interest of the
Sellers in and to the Purchased Assets,

                                      -27-


free and clear of any Lien of any kind whatsoever other than a Permitted Lien
and the Lien identified in Section 3.8(a) of the applicable Business Schedules
with respect to the Owned Real Premises located in Rapid City, South Dakota;
provided, however, that if the GE Condition is satisfied, then the Owned Real
Premises located in Rapid City, South Dakota shall be transferred free and clear
of such Lien identified in Section 3.8(a) of the applicable Business Schedules.
The Buyer will acquire such Purchased Assets in exchange for the Buyer's payment
of the cash portion of the Purchase Price (as set forth in Section 2.4 hereof)
and the assumption of the Assumed Liabilities (as set forth in Section 2.2(a)
hereof).

                        (i) The Purchased Assets will include any additions to
                  such assets, properties, Contracts and rights in the ordinary
                  course of business between December 19, 2002 and the Closing
                  Date (such period of time, the "Pre-Closing Period"), but
                  specifically excluding (x) the Excluded Assets, (y) any
                  deletions, dispositions or expirations of such assets,
                  properties, Contracts and rights pursuant to Section 5.4 and
                  (z) subject to compliance with Section 5.5(b), any deletions,
                  dispositions or expirations of such assets, properties,
                  contracts and rights in the ordinary course of business
                  consistent with past practice during the Pre-Closing Period.

                        (ii) Upon written notice to the Company during the
                  Pre-Closing Period and at the Buyer's option, in its sole
                  discretion, the Buyer may determine to exclude any assets,
                  properties, Contracts and rights from the Purchased Assets
                  (including, without limitation, any "asset" having a negative
                  value and the capital stock of Mill Creek Bank) which shall
                  then be deemed Excluded Assets hereunder; provided that such
                  exclusion shall not reduce the Purchase Price, except as
                  provided in Section 2.1(a)(iv) and Section 2.4 hereof. The
                  Buyer may not determine to exclude any Purchased Businesses
                  pursuant to this Section 2.1(a)(ii). In the event the Buyer
                  elects to exclude any Residual Assets from the Purchased
                  Assets pursuant to this Section 2.1(a)(ii), the Purchased
                  Assets shall include all related Cleanup Calls, to the extent
                  such Cleanup Calls are separately transferable, unless the
                  Buyer elects otherwise. In the event the Buyer elects to
                  exclude the capital stock of Mill Creek Bank, pursuant to this
                  Section 2.1(a)(ii), then as of the Closing (x) the Buyer
                  agrees to lease on commercially reasonable terms consistent
                  with a lease for a similar type of property in the same
                  geographic region with similar mortgage debt on such property
                  to the Sellers the Owned Real Premises located in Rapid City,
                  South Dakota (as listed on Section 3.8(a) of the applicable
                  Business Schedules), which Owned Real Premises shall not be
                  deemed an Excluded Asset, but shall be transferred subject to
                  the mortgage in favor of Mill Creek Bank, as in effect on the
                  date hereof and (y) at the option of the Buyer, Mill Creek
                  Bank shall continue to service the portion of the PL Business
                  conducted outside of Mill Creek Bank on terms and conditions
                  substantially the same as in effect on the date hereof.

                        (iii) Nothing contained in this Agreement, shall be
                  construed to imply that the Buyer will assume the Excluded
                  Servicing Liabilities or any Guarantees given to any holders
                  of interests in a Securitization.

                                      -28-


                        (iv) The Company and General Electric Capital
                  Corporation or one or more of its affiliates ("GE") shall not
                  enter into an asset purchase agreement for the purchase and
                  sale of assets of the PL Business, CL Origination Business
                  and/or HI Origination Business without the prior written
                  approval of the Buyer. If the Company and GE enter into an
                  asset purchase agreement in form and substance reasonably
                  satisfactory to the Buyer and which is also approved on the
                  Bankruptcy Court's docket pursuant to the GE Sale Order (the
                  "GE Approved Agreement"), then (x) the Purchase Price shall be
                  computed in accordance with Section 2.4 hereof, (y) the stock
                  of Mill Creek Bank and the GE Purchased Assets shall be
                  Excluded Assets and the PL Business, CL Origination Business
                  and HI Origination Business shall be Excluded Businesses and
                  (z) all GE Assumed Liabilities and other Liabilities arising
                  from, related to, in connection with or with respect to Mill
                  Creek Bank, the PL Business, the HI Origination Business, the
                  CL Origination Business shall be Excluded Liabilities. The
                  entry by the Company and GE into the GE Approved Agreement and
                  the entry on the Bankruptcy Court's docket of the GE Sale
                  Order shall be referred to herein as the "GE Condition." If
                  the GE Sale Order is not entered by March 14, 2003, then this
                  Section 2.1(a)(iv) shall thereafter be of no force and effect.

                  (b) Stock Sale. At any time prior to the Closing, the Buyer
may, with the consent of the Company (not to be unreasonably withheld), elect to
acquire the Purchased Assets, in part, through the purchase of all of the
outstanding capital stock or other equity interests (the "Shares") of one or
more of the Selling Subsidiaries (a "Subject Subsidiary") which own, lease or
have the right to use Purchased Assets ("Stock Sale"), it being agreed that,
with respect to any Subject Subsidiary, such consent of the Company may not be
withheld if (i) the sale of the Shares of such Subject Subsidiary would not
result in the CFC Parties incurring any net incremental Liabilities (which are
not Assumed Liabilities and other than reasonable attorneys' fees and
disbursements and similar transaction costs associated with the implementation
of such Stock Sale), as compared to a sale of the Purchased Assets owned by such
Subject Subsidiary, as determined in good faith by the Parties ("Incremental
Liabilities"), or (ii) the Buyer, at its option, elects to pay or hold the
Company harmless (under arrangements reasonably satisfactory to the Company)
from such Incremental Liabilities. Upon the request of the Buyer, the Company
shall use commercially reasonable efforts to cause the conversion prior to the
Closing of the Subject Subsidiaries specified by the Buyer into limited
liability companies properly organized in the same jurisdiction as the Subject
Subsidiary whether by way of amendments to the Organizational Documents of the
Subject Subsidiaries or by merger or otherwise. If the Company reasonably
determines that the Buyer is not likely to be able to obtain the licenses
required for the operation of the Purchased Businesses from Governmental
Authorities prior to August 1, 2003, the Company may elect to sell the Purchased
Assets, in part, through a Stock Sale of the Subject Subsidiaries set forth in
Section 2.1(b) of the Business Schedules that own such licenses, provided that,
with respect to any such Subject Subsidiary, such election may not be made (x)
if it results in any Incremental Liabilities to the Buyer, unless the Company
elects to pay or hold the Buyer harmless (under arrangements reasonably
satisfactory to the Buyer) from such Incremental Liabilities or (y) if the
purchase of the Shares otherwise adversely affects, in any material manner, the
value of the Purchased Assets transferred to the Buyer thereby because of the
tax or other attributes of such Subject Subsidiary (unless arrangements
reasonably satisfactory to the Buyer are made with respect thereto). In

                                      -29-


connection with any Stock Sale (whether at the election of the Buyer or the
Company as provided herein), the Company shall cause any such Subject Subsidiary
to become a Filing Company Subsidiary and shall take all reasonable actions to
obtain an order from the Bankruptcy Court pursuant to Federal Rule of Bankruptcy
Procedure 3003(c) establishing a bar date for prepetition claims and shall
diligently prosecute objections to such claims, as appropriate, in order to
ensure that the Liabilities of such Subject Subsidiary consist only of those
Liabilities that would be Assumed Liabilities if the Buyer would have acquired
the Purchased Assets of such Subject Subsidiary free and clear of all Liens
other than Permitted Liens. In the event the Buyer elects to acquire or the
Company elects to sell a portion of the Purchased Assets through a Stock Sale,
then the Shares which are the subject of the Stock Sale shall be deemed
Purchased Assets hereunder. If the Buyer and/or the Company elect one or more
Stock Sales:

                        (i) prior to the Closing Date, the Company shall
                  unconditionally assume, or shall cause one of its Affiliates
                  (other than another Subject Subsidiary) to unconditionally
                  assume all Liabilities of the Subject Subsidiary (other than
                  the Assumed Liabilities) in a manner and in form and substance
                  reasonably satisfactory to the Buyer and the Company;

                        (ii) prior to the Closing Date, the Company shall, or
                  shall cause the Subject Subsidiary to, transfer any Excluded
                  Assets of the Subject Subsidiary to the Company or one of its
                  Affiliates (other than another Subject Subsidiary) in a manner
                  and in form and substance reasonably satisfactory to the Buyer
                  and the Company; and

                        (iii) the Company shall, or shall cause its Subsidiary
                  which directly owns the Shares (the "Subject Subsidiary
                  Owner") to, sell, assign, transfer, convey and deliver the
                  Shares, free and clear of all Liens (other than Permitted
                  Liens), to the Buyer, and the Buyer shall purchase and accept
                  the Shares, at the Closing (in which case, the Subject
                  Subsidiary Owner shall be deemed a Selling Subsidiary
                  hereunder, and the Company shall cause such Subject Subsidiary
                  Owner to execute a counterpart signature page hereto).

                  Notwithstanding the foregoing, this Section 2.1(b) shall not
apply to Mill Creek Bank or Green Tree Retail Services Bank.

                  (c) Excluded Assets. (i) The Excluded Contracts; (ii) the
assets, properties, Contracts and rights, if any, set forth in Section 2.1(c) of
the applicable Business Schedules; (iii) the outstanding capital stock of Green
Tree Retail Services Bank; (iv) cash of an Excluded Business or representing the
proceeds of the disposition of an Excluded Asset, provided that all required
payments under the DIP Loan shall have been made; (v) up to $4.5 million of cash
and cash equivalents owned by Green Tree Retail Services Bank; (vi) if the GE
Condition is satisfied, the stock of Mill Creek Bank and the GE Purchased
Assets; (vii) all rights and claims as holders of B-2 Certificates, or rights
derivative of B-2 Certificates, solely to the extent arising from Guarantees by
the CFC Parties pursuant to the MH Servicing Contracts (the "B-2 Guarantee
Rights"), notwithstanding the fact B-2 Certificates constitute Purchased Assets
(it being agreed that if and to the extent such separation of the B-2 Guarantee
Rights from the B-2 Certificates is not permitted under the relevant Contract or
applicable law or is not ordered by the

                                      -30-


Bankruptcy Court by a Final Order, the provisions of Section 5.31 shall apply),
(viii) the Sellers' rights under this Agreement; (ix) if the GE Condition is
satisfied, all Loans and Receivables with respect to the HE Business on the
balance sheet of Mill Creek Bank as of January 31, 2003 valued at $35.5 million
and all Loans and Receivables originated by Mill Creek Bank after January 31,
2003; (x) if the GE Condition is satisfied, all Community Reinvestment Act
assets, (xi) if the GE Condition is satisfied, all reaffirmed accounts; (xii) if
the GE Condition is satisfied, all Excluded Receivables as defined in the GE
Approved Agreement; (xiii) the Excluded Contracts; (xiv) rights in and with
respect to tax refunds, credits and claims for periods prior to the Closing;
(xv) all defenses, claims, counter-claims, rights of offset and other actions
against any person asserting or seeking to enforce any Excluded Liability
against any of the Sellers or any rights with respect to Excluded Assets, solely
to the extent such defense, claim, counter-claim, right of offset or other
action relates to such Excluded Liability or Excluded Asset; (xvi) any avoidance
or similar actions, including, but not limited to actions under sections 544,
545, 547, 548, 550 and 553 of the Bankruptcy Code, including without limitation
any avoidance or similar action with respect to the stock of Mill Creek Bank;
and (xvii) those other assets, properties, contracts and rights, if any, that
become Excluded Assets (the "Excluded Assets") shall be excluded from the
Purchased Assets to be sold, assigned, transferred, conveyed and delivered to
the Buyer hereunder and, to the extent in existence on the Closing Date, shall
be retained by the Sellers (as applicable).

             2.2. Liabilities.

                  (a) Assumed Liabilities. Subject to the conditions set forth
herein, the Buyer will assume, effective as of the Closing Date, and thereafter
will pay, perform and discharge in accordance with their terms, as and when due,
only those liabilities specifically identified in Section 2.2(a) of the
applicable Business Schedules and the Liabilities with respect to the Permitted
Liens (the "Assumed Liabilities"); provided, however, that Liabilities
associated with assets, properties, Contracts and rights excluded from the
Purchased Assets or any Liabilities associated with any Excluded Business in
accordance with Section 2.1(a)(i) and 2.1(a)(iv) shall not be Assumed
Liabilities.

                  (b) Excluded Liabilities. Except for the Assumed Liabilities,
the Buyer shall not assume, perform or be liable for, and the Sellers shall
retain and pay, perform and discharge in accordance with their terms (as the
same may be modified in connection with the Chapter 11 Case or otherwise), as
and when due, all Liabilities of the CFC Parties that are not expressly Assumed
Liabilities (the "Excluded Liabilities") which include, but are not limited to,
any Liability of the CFC Parties or the Parent or any Subsidiary of the Parent
or Affiliate thereof:

                        (i) arising from, related to or in connection with any
                  of the Parent's or the Sellers' transaction expenses;

                        (ii) except for the Liabilities specifically assumed
                  pursuant to Section 2.2(a)-(iv) of the applicable Business
                  Schedules, for (A) any indebtedness or other Liability arising
                  under or with respect to any indebtedness of the CFC Parties
                  or the Parent including intercompany indebtedness between
                  Affiliates or (B) any Guarantees of the CFC Parties or the
                  Parent, including intercompany Guarantees

                                      -31-


                  between Affiliates and any Guarantees given to any holders of
                  interests in a Securitization;

                        (iii) for any Taxes, whether or not relating to the
                  Purchased Businesses, the Purchased Assets or the transactions
                  contemplated hereby other than Taxes of any Subject Subsidiary
                  (or a Subsidiary of a Subject Subsidiary after the Closing
                  Date) for any Post-Closing Tax Period, provided, that Taxes of
                  a Subject Subsidiary (or Subsidiary thereof) for a
                  Post-Closing Tax Period shall not include any Liability of
                  Parent or any Affiliate that a Subject Subsidiary or
                  Subsidiary thereof is required to pay by virtue of Treasury
                  Regulation Section 1.1502-6 or comparable provision of state,
                  local or foreign law;

                        (iv) attributable to the Purchased Assets or the
                  operation of the Purchased Businesses for all periods up to
                  and including the Closing including, without limitation, any
                  Liabilities for any default or breach, or for any event,
                  occurrence, condition or act which, with the giving of notice,
                  the passage of time or both, would result in a default or
                  breach, of any of the Assumed Agreements to the extent such
                  default or breach or event, occurrence, condition or act
                  existed on or prior to the Closing Date;

                        (v) to indemnify any Person by reason of the fact that
                  such Person was a director or officer of any of the CFC
                  Parties or the Parent or was serving at the request of the CFC
                  Parties or the Parent as a partner, trustee, director,
                  officer, employee or agent of another Person;

                        (vi) with respect to any principal, partner, employee,
                  officer, director, consultant, independent contractor, agent
                  or Affiliate of the CFC Parties or the Parent (other than
                  Liabilities with respect to the Transferred Employees and
                  Business Employees specifically assumed pursuant to Section
                  5.10 and the Assumed Retention Agreements) arising out of
                  employment, compensation, severance, change of control,
                  stay-pay, sale bonus, retention bonus or other special
                  compensation or golden parachute agreements, plans or
                  arrangements, including any such Liability incurred in
                  connection with the execution and performance of this
                  Agreement and the consummation of the transactions
                  contemplated hereby and not expressly assumed herein;

                        (vii) arising under, out of, with respect to or in
                  connection with any Employee Benefit Plan and not expressly
                  assumed by the Buyer herein;

                        (viii) arising out of or resulting from any
                  noncompliance with or violation of any Laws (including,
                  without limitation, any securities Laws or Environmental Laws)
                  occurring prior to the Closing;

                        (ix) arising out of any occurrences of bodily injury,
                  property damage or personal injury which take place on or
                  prior to the Closing Date;

                        (x) arising out of, related to, in connection with or
                  with respect to any deferred purchase price payment
                  obligations or non-competition payment

                                      -32-


                  obligations associated with (A) any acquisition prior to the
                  Closing of any business, Subsidiary, security or assets of any
                  Person or (B) any disposition of any business, Subsidiary,
                  security or assets of any Person;

                        (xi) to indemnify any Third Party in connection with the
                  disposition of any subsidiary, business, properties or assets
                  or operations of any Person;

                        (xii) arising from, in connection with or with respect
                  to such Person's direct or indirect ownership (beneficial or
                  otherwise) at any time of any capital stock of or other
                  beneficial interest in (or any right to acquire such stock of
                  or interest in) any of the CFC Parties or the Parent;

                        (xiii) arising from, related to or in connection with
                  any cure or other amount payable with respect to the
                  assignment of any contractual obligation to the Buyer
                  hereunder;

                        (xiv) arising from, related to, in connection with or
                  with respect to any Excluded Asset;

                        (xv) under this Agreement;

                        (xvi) for infringement or misappropriation arising from
                  the development, modification or use of intellectual property
                  on or before the Closing Date;

                        (xvii) relating to any claim, dispute or litigation
                  asserted or threatened or governmental proceeding or
                  investigation instituted or threatened, arising out of any act
                  or omission of the CFC Parties or the Parent or any of their
                  Affiliates on or prior to the Closing Date, or arising out of
                  the conduct, on or prior to the Closing Date, of the Purchased
                  Businesses;

                        (xviii) arising out of (A) any noncompliance with or
                  violation of any Environmental Law on or before the Closing
                  Date, (B) any existing environmental condition (whether or not
                  relating to any noncompliance) of the Purchased Assets, or (C)
                  any release of Hazardous Substances on or before the Closing
                  Date, in each case, regardless of whether any of the foregoing
                  was known to or disclosed to the Parties or any of their
                  Affiliates;

                        (xix) under any insurance coverage, self-insurance or
                  retention program provided to customers in connection with the
                  Purchased Businesses;

                        (xx) arising from, related to or in connection with any
                  Owned Real Premises or Assumed Leases arising or accruing
                  prior to the Closing Date and/or due to a breach by the
                  Sellers or any of their Subsidiaries under any contractual
                  obligation due to the consummation of the transactions
                  contemplated hereby, except to the extent relating to any
                  Permitted Lien;

                                      -33-


                        (xxi) to any equity holder or former equity holder of
                  the CFC Parties or the Parent;

                        (xxii) relating to any repurchase, assumption or similar
                  Liability under any Contract pursuant to which loans were sold
                  to a Third Party;

                        (xxiii) which are Excluded Servicing Liabilities;

                        (xxiv) if the GE Condition is satisfied, all of the
                  Liabilities arising from, relating to, in connection with or
                  with respect to Mill Creek Bank, the HI Origination Business,
                  the PL Business and the CL Origination Business, except as
                  specifically set forth in Section 2.2(a) of the applicable
                  Business Schedules;

                        (xxv) if the GE Condition is satisfied, all of the
                  Liabilities arising from, relating to, in connection with or
                  with respect to the GE Purchased Assets and all of the GE
                  Assumed Liabilities; or

                        (xxvi) assumed by the Company or one if its Affiliates
                  pursuant to Section 2.1(b)(i).

             2.3. Closing Transactions.

                  (a) Closing. Subject to the satisfaction or waiver of the
conditions contained in this Agreement, the closing of the transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of Kirkland & Ellis, 200 East Randolph Drive, Chicago, Illinois 60601, at 10:00
a.m. on the second Business Day following the satisfaction or waiver of the
conditions to the Buyer's and the Sellers' obligations set forth in ARTICLE VI
and ARTICLE VII, respectively, or at such other place or time and on such other
date as the Parties may agree to in writing; provided that the Company may in
its sole discretion delay the Closing until any Business Day prior to or on the
calendar month-end next following the second Business Day following the
satisfaction or waiver of the conditions to the Buyer's and the Sellers'
obligations set forth in ARTICLE VI and ARTICLE VII, respectively provided the
Buyer receives at least 11 Business Days advance notice of the Closing. The date
and time of the Closing are herein referred to as the "Closing Date".

                  (b) Closing Transactions. Subject to the conditions set forth
in this Agreement, the Parties shall consummate the following "Closing
Transactions" on the Closing Date:

                        (i) The Sellers shall convey all of the Purchased Assets
                  to the Buyer in accordance with Section 2.1 and shall deliver
                  to the Buyer such appropriately executed instruments of sale,
                  transfer, assignment, conveyance and delivery, warranty deeds,
                  warranty assignments of leases, assignments, stock
                  certificates or evidence of limited liability company equity
                  interests (in the event of a Stock Sale), certificates duly
                  registered in the Buyer's name representing the Residual
                  Assets (to the extent such Residual Assets are certificated),
                  vehicle titles, transfer Tax declarations, title policies (if
                  required pursuant to Section 5.20 hereof) and all other
                  instruments of conveyance which are necessary or desirable to
                  effect

                                      -34-


                  transfer to the Buyer of good and marketable title to the
                  Purchased Assets (subject however to any Permitted Liens).

                        (ii) On and prior to the Closing Date, the Sellers
                  shall, with respect to all Purchased Assets that are owned of
                  record by any Person other than the Company or a Selling
                  Subsidiary (including, without limitation, the Residual
                  Assets, Assigned Receivables or other Purchased Assets subject
                  to a repurchase agreement or otherwise transferred to Lehman
                  Brothers Holdings Inc. or any of its Affiliates under the
                  Lehman Forbearance Agreement or any of the other Lehman
                  Facilities and, to the extent the Buyer elects to acquire the
                  NIMS Collateral directly rather than the NIMS Equity, the NIMS
                  Collateral, and to the extent the Buyer elects to acquire the
                  MESA Collateral directly rather than the MESA Equity, the MESA
                  Collateral), exercise all rights, and take all such other
                  actions, as may be necessary to effect the conveyance of the
                  Purchased Assets to the Buyer on the Closing Date (subject to
                  the receipt on the Closing Date of the Purchase Price). The
                  Sellers shall reasonably cooperate with the Buyer, at Buyer's
                  expense, in completion of any financing arrangements arranged
                  by the Buyer with respect to the purchase of the Purchased
                  Assets, including, without limitation, any such arrangements
                  with Lehman Brothers Holdings Inc. or its Affiliates under
                  which the Residual Assets or the Assigned Receivables are to
                  be held or financed. If any Purchased Assets are owned of
                  record by any CFC Party other than the Company or a Selling
                  Subsidiary, then the Company shall cause such CFC Party to
                  become a party to this Agreement and execute a counterpart
                  signature page to this Agreement as a Selling Subsidiary
                  hereunder.

                        (iii) The Buyer shall deliver to the Company or its
                  designee, by wire transfer of immediately available funds to
                  an account or accounts designated not less than three Business
                  Days before the Closing Date by the Sellers, the cash portion
                  of the Purchase Price as set forth in Section 2.4 hereof;
                  provided, however, that cash at least equal to the portion of
                  the Lehman Debt Amount that is owed by the SPEs shall be paid
                  directly to the applicable SPEs to enable such SPE to repay
                  such portion of the Lehman Debt Amount at Closing.

                        (iv) The Buyer shall assume the Assumed Liabilities and
                  shall deliver to the Sellers such appropriately executed
                  assumption agreements and all other instruments which are
                  necessary or desirable to effect the assumption by the Buyer
                  of the Assumed Liabilities.

                        (v) The Sellers and the Buyer shall deliver all other
                  Transaction Documents required to be delivered by or on behalf
                  of such Person, as applicable.

                        (vi) The Company shall deliver, or cause to be
                  delivered, at the Closing, to the Buyer or to such Person as
                  the Buyer may designate (including, without limitation, any
                  custodian appointed by the Buyer to hold such items) all
                  documentation and other items pertaining to the Assigned
                  Receivables, including, without limitation, original notes
                  (with appropriate endorsements), installment contracts,
                  guarantees, mortgages and other security agreements and all

                                      -35-


                  assignments, assumptions, modifications, consolidations and
                  extensions thereof, UCC financing statements or such other
                  evidence of perfection of a security interest in the
                  applicable collateral in the relevant jurisdictions, powers of
                  attorney, certificates of title, all evidence of title
                  insurance policies, hazard or flood insurance policies, loan
                  applications, closing statements, credit reports, appraisals,
                  surveys, disclosure statements, sales contracts, tax and
                  insurance receipts, verification statements delivered by the
                  borrowers, and all other documentation related to the loan
                  files associated with the applicable Assigned Receivables. If,
                  after the Closing Date, a CFC Party (or any other Person
                  acting on its behalf) comes into possession of any additional
                  documentation, books and records relating to the Assigned
                  Receivables, such additional documentation shall be deemed to
                  have been received and held in trust for the benefit of the
                  Buyer and promptly shall be delivered to the Buyer or such
                  other Person as the Buyer may direct. Effective as of the
                  Closing, the Company shall (i) have caused to be terminated
                  any existing custodial or other similar arrangement under
                  which any of the documentation relating to the Assigned
                  Receivables is held and shall obtain and deliver to the Buyer
                  appropriate releases in connection therewith and (ii) execute
                  and deliver to the Buyer (or its designees) on the Closing
                  Date powers of attorney in form and substance reasonably
                  satisfactory to the Buyer giving the Buyer or such designees
                  full power and authority to execute any further agreements,
                  assignments, endorsements or other documentation as may be
                  deemed necessary by the Buyer to allow the Buyer (and its
                  designees) to exercise full rights of ownership with respect
                  to the Assigned Receivables. The Company shall fully cooperate
                  with the Buyer from and after the Closing to take all other
                  actions necessary or appropriate to effect the transfer of,
                  and vest in the Buyer, all right, title and interest in and to
                  the Assigned Receivables.

                        (vii) The Sellers shall deliver to the Buyer the
                  Post-Signing Balance Sheets and the Closing Date Balance Sheet
                  within the time periods specified in Section 5.27 hereof.

                        (viii) Upon the request of the Buyer prior to the
                  Closing, the Sellers shall cause each of (x) the limited
                  recourse note, dated September 28, 2001, in the amount of
                  $192,921,000 issued by Conseco Finance Net Interest Margin
                  Finance Corp. I ("NIMS I") to Conseco Finance Net Interest
                  Margin Finance Corp. II ("NIMS II"), (y) the Security
                  Agreement, dated as of September 1, 2002, between NIMS I and
                  NIMS II and (z) the Participation Agreement, dated as of
                  September 1, 2002 by and between NIMS II and the NIMS Issuer
                  to be cancelled immediately prior to the Closing and shall
                  deliver to the Buyer evidence of such cancellation in form and
                  substance satisfactory to the Buyer.

Notwithstanding anything to the contrary in the foregoing in this Section
2.3(b)(vi), no Seller shall be in breach of this Section 2.3 for failure to
deliver any item set forth herein which is not within its control to deliver;
provided that the foregoing shall not limit any of Seller's obligations under
Section 5.7 hereof; provided further, however, that the condition contained in
Section 6.5 shall not be satisfied unless all items set forth herein are
delivered.

                                      -36-


             2.4. Purchase Price.

                  (a) The aggregate purchase price for the Purchased Assets (the
"Purchase Price") shall be equal to (i) the Lehman Debt Amount as of 12:01 A.M.
on the Closing Date, plus (ii) $399 million, minus (iii) $270 million, but such
subtraction shall be made only if the GE Condition is satisfied. The Purchase
Price shall be paid in cash.

                  (b) The Sellers shall cause all cash proceeds in excess of the
Lehman Debt Amount paid for the Purchased Assets to be used to repay amounts
outstanding under the DIP Loan at the time of the Closing. If a Consent
Agreement is executed by the Buyer, the Company, Trustees, Unsecured Creditors
Committee and the Ad Hoc Committee and is in full force and effect as of the
Closing Date, the Company shall allocate $25 million of the cash portion of the
Purchase Price to a $35 million aggregate reserve account to be established to
resolve claims based on pre-Closing breaches of the MH Servicing Contracts as
shall be provided in such Consent Agreement.

             2.5. Post-Effective Time Amounts Received and Paid. All funds
collected on or after the Closing Date from Receivables which constitute
Purchased Assets shall belong to, and if received by the Company or any of its
Affiliates, shall be received for the benefit and the account of the Buyer, and
the Sellers shall, on a weekly basis, transfer by way of wire transfer, and
remit to the Buyer all such amounts received by or paid to the Company or any of
its Affiliates on or after the Closing Date. To the extent that Buyer receives
any funds or other payments on account of any Excluded Assets, then
notwithstanding such receipt, such funds and other payments shall belong to
Sellers and be held in trust for the benefit of Sellers and, as promptly as
practicable, shall be remitted to such account as Sellers may designate in
writing to Buyer from time to time.

             2.6. True Sale. Each of the Parties acknowledge and agree that a
true sale of the Purchased Assets is intended pursuant to this Agreement, the
Buyer will have legal and equitable title to all Purchased Assets upon payment
of the Purchase Price, and there is no intent by any Party to create a lending
relationship between the Buyer and the Sellers. Upon the sale of the Purchased
Assets, the Sellers shall have no legal or equitable title or interest
whatsoever in the Purchased Assets or any collections thereunder, and the
Sellers shall have no right to redeem any Purchased Assets.

             2.7. Assumption of Certain Leases and Contracts. The Sale Order
shall provide for the assumption by the Sellers and assignment to the Buyer,
effective upon the Closing, of the Assumed Agreements set forth on a pleading
submitted to the Bankruptcy Court on the following terms and conditions:

                  (a) As of the Closing, the Sellers (as applicable) shall
assign to the Buyer the Assumed Agreements. The Assumed Agreements shall be
identified by the date of the Assumed Agreements (if available), the other party
to the Contract and the address of such party, all included on an exhibit
attached to either the motion filed in connection with the Sale Order or a
motion for authority to assume and assign such Assumed Agreements. Such exhibit
shall set forth the amounts necessary to cure defaults under each of such
Assumed Agreements as determined by the Sellers based on the Sellers' books and
records.

                                      -37-


                  (b) If there exists on the Closing Date any default related to
an Assumed Agreement, the Sellers shall be responsible for any amounts to be
cured pursuant to section 365(a) of the Bankruptcy Code as a condition to the
assumption and assignment of such Assumed Agreement. At or prior to the Closing
Date, the Sellers shall pay all cure amounts for the Assumed Agreements.
Notwithstanding the foregoing, if

                        (i) a Seller is required to make a cure payment in
                  connection with a Non-MH Servicing Contract in respect of
                  which the Buyer becomes the successor servicer thereunder as
                  of the Closing Date, which cure payment is attributable to the
                  failure of such Seller prior to the Closing Date to make a
                  servicing advance in respect of a delinquent Securitized Loan
                  and where such advance was not made solely because the Seller
                  deferred or rescheduled such delinquent payment (a "Specified
                  Cure Payment");

                        (ii) the Specified Cure Payment is made with the
                  proceeds received from the Buyer as part of the Purchase
                  Price; and

                        (iii) after the Closing Date, the Buyer, in its capacity
                  as the Person entitled, under the terms of the relevant Non-MH
                  Servicing Contract, to the recovery of the servicing advances
                  deemed to have occurred as a result of such Specified Cure
                  Payment, actually receives a cash payment directly
                  attributable to the fact that such Purchase Price proceeds
                  were applied to the Specified Cure Payment and such cash
                  payment is not subject to any custody arrangement, claim,
                  offset or other right in favor of any other person under the
                  relevant Non-MH Servicing Contract, then

the Buyer shall, within 10 Business Days of receipt of any such cash payment,
reimburse to the Company an amount equal to any such cash payment actually
received in such capacity; provided that the total amount reimbursed hereunder
shall not exceed $57 million. Nothing contained herein shall be deemed an
admission by any Seller that any cure payment is required in respect of the
foregoing.

                  (c) Except as set forth in Section 2.7(b), the Buyer shall be
responsible for all costs and expenses, incurred after the Closing Date, that
are necessary in connection with providing adequate assurance of future
performance with respect to the Assumed Agreements.

             2.8. Consents to Certain Assignments. Without limiting the effect
of Section 6.4 or Section 6.13, the Buyer and the Sellers agree that there shall
be excluded from the Purchased Assets any Assumed Agreements that are not
assignable or transferable pursuant to the Bankruptcy Code or otherwise without
the consent of any Person other than the Sellers or any Affiliate of the
Sellers, to the extent that such consent shall not have been given prior to the
Closing; provided, however, that the Sellers shall have the continuing
obligation (both before and after the Closing) to use all commercially
reasonable efforts (including, without limitation, prosecution of appropriate
motions pursuant to Section 365 of the Bankruptcy Code) to endeavor to obtain
all necessary consents to the assignment thereof and, upon obtaining the
requisite Third Party consents thereto, such Assumed Agreement shall be assigned
to the Buyer at no cost free and clear of all Liens other than the Permitted
Liens; provided, that, the Sellers shall not be

                                      -38-


required to incur any unreasonable costs or make any material payment to any
Third Party (other than cure costs) to obtain any consent. With respect to any
Assumed Agreement which is not transferred at the Closing as contemplated by the
immediately preceding sentence, effective as of the Closing, the Sellers shall
enter into arrangements reasonably requested by the Buyer designed to provide
the Buyer the full and exclusive benefits of such asset (as between the Buyer
and the Sellers) provided the Buyer assumes the duty to perform the obligations
relating to such Assumed Agreements accruing on and after the Closing (and
provides indemnification to the Sellers with respect thereto). If and to the
extent such arrangements cannot be made, the Buyer shall have no obligation with
respect to such Assumed Agreement. For the avoidance of doubt, this Section 2.8
shall not be applicable to Servicing Rights.

             2.9. Real Estate Apportionments and Payments. With respect to the
Facilities, all income from and expenses relating to the Facilities of every
type and nature as is customary with a closing of this type (including, without
limitation, accrued expenses not yet due and payable and income collected prior
to the Closing) shall be apportioned and prorated over the appropriate period in
a manner that fairly apportions such income and expenses among the Buyer and the
Sellers at the Closing as of the close of business on the day immediately
preceding the Closing Date. The prorations and apportionments hereunder shall be
jointly prepared by the Buyer and the Sellers before the Closing on the basis of
actual and estimated amounts as provided. Notwithstanding anything to the
contrary herein, the Sellers shall be responsible for payment of all real
property Taxes for all years prior to the year the Closing takes place. The
obligations of the Parties under this Section 2.9 shall survive the Closing;
provided, however, with respect to Owned Real Premises Leases, the Sellers shall
be responsible for only that portion of the real property Taxes that are not
required to be paid by the tenants under the Owned Real Premises Leases.

                                  ARTICLE III.

                  REPRESENTATIONS AND WARRANTIES OF THE SELLERS

                  Except as set forth in the Business Schedules, which schedules
will be arranged in sections corresponding to the sections contained in this
ARTICLE III (provided that each section of which qualifies the correspondingly
numbered representation and warranty in this ARTICLE III to the extent specified
therein and such other representations and warranties in this ARTICLE III to the
extent a matter in such section is disclosed in such a way as to make its
relevance to the information called for by such other representation and
warranty in this ARTICLE III reasonably apparent), as a material inducement to
the Buyer to enter into this Agreement, the Sellers hereby represent and warrant
to the Buyer the following:

             3.1. Organization and Power.

                  (a) The Company is a Delaware corporation duly organized,
validly existing and in good standing under the laws of Delaware. Mill Creek
Bank is an industrial loan corporation duly organized, validly existing and in
good standing under the laws of Utah. Each of the Selling Subsidiaries is listed
in Section 3.1(a) of the applicable Business Schedules and is duly organized,
validly existing and in good standing under the laws of its state of
incorporation or organization (as applicable). Each of the Sellers and Mill
Creek Bank is qualified to do

                                      -39-


business and is in good standing as a foreign corporation or entity (as
applicable) in each jurisdiction listed in Section 3.1(a) of the applicable
Business Schedules, which jurisdictions are the only jurisdictions where the
nature of the activities conducted by it or the character of the property owned,
leased or operated by it makes such qualification necessary, except for any
failure to be so qualified or in good standing that has not had and could not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect. The Sellers and Mill Creek Bank have the requisite corporate or
other entity power and authority to own and operate the Purchased Assets and to
carry on the Purchased Businesses as currently conducted. The Company has
delivered or otherwise made available to the Buyer complete and correct copies
of the Organizational Documents of the Sellers and Mill Creek Bank and
represents that such documents are in full force and effect. None of the Sellers
or Mill Creek Bank is in default under or in violation of any provision of its
Organizational Documents.

                  (b) A complete and correct chart showing the Company and its
direct and indirect Subsidiaries is set forth in Section 3.1(b) of the
applicable Business Schedules.

             3.2. Authorization of Transactions. The execution, delivery and
performance of this Agreement and the other Transaction Documents, and the
consummation of the transactions contemplated hereby and thereby to be
consummated by the Sellers and Mill Creek Bank, have been duly and validly
authorized by all necessary corporate or other entity action (as applicable) on
the part of each of the Sellers and Mill Creek Bank. This Agreement has been,
and each of the Transaction Documents after execution and delivery thereof at
the Closing will have been, duly and validly executed and delivered by the
Sellers and Mill Creek Bank, as applicable, and, subject to any necessary
authorization from the Bankruptcy Court, this Agreement constitutes, and each of
the Transactions Documents will constitute, its legal, valid and binding
obligation, enforceable in accordance with its terms.

             3.3. Absence of Conflicts; Required Consents, Approvals and
Filings. The execution and delivery of this Agreement and the other Transaction
Documents and the consummation of the transactions contemplated hereby and
thereby by the Sellers and Mill Creek Bank do not and shall not (a) constitute a
material breach or violation of or default under any Law, governmental permit or
license of the CFC Parties or to which any of the foregoing is subject, in each
case relating to the Purchased Businesses, including but not limited to state
usury laws, state laws requiring licenses to engage in consumer lending,
consumer finance, mortgage lending and the other businesses of the Sellers and
Mill Creek Bank, the Truth in Lending Act, the Real Estate Settlement Procedures
Act, the Home Mortgage Disclosure Act, the Consumer Credit Protection Act, the
Right to Financial Privacy Act, the Equal Credit Opportunity Act, the Fair
Credit Reporting Act, the Homeowners Ownership and Equity Protection Act, the
Federal Trade Commission Act, the Fair Debt Collection Practices Act and other
Laws regulating lending (the "Finance Laws"), which breach, violation or default
would prevent or materially delay the Sellers and Mill Creek Bank from being
able to perform their obligations under this Agreement and the other Transaction
Documents to which they are a party, (b) constitute a breach or violation of or
default under the Organizational Documents of the Sellers or Mill Creek Bank,
which breach, violation or default would prevent or materially delay the Sellers
from being able to perform their obligations under this Agreement and the other
Transaction Documents to which they are a party, or (c) with respect to the
Assumed Agreements, require the affirmative consent or approval of any
Governmental Authority or other Third Party, in each case, except for (i) the

                                      -40-


expiration or earlier termination of the waiting period under the HSR Act, (ii)
filings in respect of, and approvals and authorizations of, any Governmental
Authority having jurisdiction over the consumer lending, banking, insurance or
other financial services businesses set forth in Section 3.3 of the applicable
Business Schedules, (iii) filings required as a result of the particular status
of the Buyer, (iv) consents and approvals set forth in Section 3.3 of the
applicable Business Schedules, (v) the approval of the Department of Financial
Institutions of the State of Utah (the "State Banking Authority") and (vi) the
approval of the Federal Deposit Insurance Corporation (the "FDIC") under the
Change in Bank Control Act or the expiration of the waiting period thereunder.

             3.4. Company Subsidiaries. All of the outstanding shares of capital
stock of, or other ownership interests in, each Selling Subsidiary and Mill
Creek Bank, are owned by the Company, directly or indirectly. All of the issued
and outstanding shares and interests (as applicable) of the Selling Subsidiaries
and Mill Creek Bank and their Subsidiaries have been duly authorized, are
validly issued, fully paid and assessable, were issued free of pre-emptive or
similar rights and are held of record or beneficially by the Persons indicated
on Section 3.1(b) of the applicable Business Schedules. Other than this
Agreement, there are no outstanding or authorized options, warrants, purchase
rights, subscription rights, conversion rights, exchange rights or other
contracts or commitments that could require any of the Selling Subsidiaries and
their Subsidiaries or Mill Creek Bank and its Subsidiaries to issue, sell or
otherwise cause to become outstanding any of its capital stock or rights in
respect thereof. There are no outstanding or authorized stock appreciation,
phantom stock, profit participation or similar rights with respect to the
Selling Subsidiaries and their Subsidiaries.

             3.5. Good Title. Other than Owned Real Premises, Assumed Leases and
Transferred Intellectual Property, as to each Purchased Asset (including,
without limitation, the Private Label Credit Card Master Trust Certificates), a
Seller has good and valid title to, or a valid leasehold interest in or other
valid right to use, and, subject to obtaining the consents and approvals and
making the filings set forth in Section 3.3 of the applicable Business Schedules
and Section 3.3 of this Agreement, the power and authority to sell, transfer and
assign to the Buyer the Purchased Assets, free and clear of all Liens (other
than Permitted Liens and Liens which will be discharged by the Bankruptcy Court
prior to the Closing Date).

             3.6. Compliance with Laws; Permits.

                  (a) The Sellers and Mill Creek Bank have conducted and are
conducting the Purchased Businesses in compliance with all applicable Laws,
including, without limitation, the Finance Laws, except to the extent such
failures to comply would not, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect. Except as set forth in Section
3.6 of the applicable Business Schedules, as of the date hereof, there are no
material proceedings pending or, to the Knowledge of the Sellers, threatened
alleging any violation of any such applicable Laws which would reasonably be
expected to result in a Material Adverse Effect.

                  (b) The CFC Parties have in effect all material
authorizations, permits, licenses, certificates of authority, consents, orders
and approvals of, and have made all material filings, applications and
registrations with, Governmental Authorities that are necessary in order

                                      -41-


for the CFC Parties to own and operate the Purchased Assets and to conduct the
Purchased Businesses in all material respects as presently conducted, and such
authorizations, permits, licenses, certificates of authority, consents, orders
and approvals (which are set forth on Section 3.6(b) of the applicable Business
Schedules opposite the name of the CFC Party which is the holder thereof) are in
full force and effect and the CFC Parties are in compliance therewith in all
material respects. Except as set forth on Section 3.6(b) of the applicable
Business Schedules, as of the date hereof, there are no material proceedings
pending or, to the Knowledge of the Sellers, threatened seeking to terminate or
suspend or to adversely modify any such authorization, permit, license,
certificate of authority, consent, order or approval.

             3.7. Assets Necessary to Conduct Businesses. Except as set forth in
Section 3.7 of the applicable Business Schedules, subject to Section 2.8 above
and satisfaction of the conditions in ARTICLES VI and VII, the Purchased Assets
including any assets, properties, Contracts and rights identified by the Buyer
pursuant to Section 2.1(a)(ii) and the GE Purchased Assets, together with the
Buyer's rights under this Agreement and the Transaction Documents (including the
assets, rights and services to be made available under the Transition Services
Agreement), constitute all of the assets, properties, contracts and rights
primarily used in the Purchased Businesses and which are necessary to carry on
the Purchased Businesses by the CFC Parties as currently conducted on the date
of this Agreement and there are no assets or properties used in or necessary for
the conduct of the Purchased Businesses as presently conducted which are not
owned, leased or licensed by the Sellers or Mill Creek Bank and its
Subsidiaries. Except as set forth on Section 3.15 of the applicable Business
Schedules, no part of the Purchased Businesses is conducted by or through any
Person other than the Sellers.

             3.8. Facilities; Real Property.

                  (a) Owned Real Premises. Section 3.8(a) of the applicable
Business Schedules contains a true and complete list of all Owned Real Premises
included in the Purchased Assets of each Purchased Business. Subject to the
entry of the Sale Order, the Sellers own such Owned Real Premises listed on the
Business Schedules (and all of the improvements located thereon) in good and
marketable fee simple title free and clear of all Liens (including any
restrictions on transfer, restrictions on use or restrictions on leases to third
parties), other than the Permitted Liens and except as set forth on Section
3.8(a) of the Business Schedules. Except for the Owned Real Premises Leases,
matters set forth on Section 3.8(a) of the applicable Business Schedules and
matters that will be satisfied pursuant to the Sale Order, none of the Owned
Real Premises is subject to any right or option of any Person to purchase or
otherwise obtain title to such property. Except for the Owned Real Premises
Leases and as set forth on Section 3.8(a) of the applicable Business Schedules,
no Person other than the Sellers or Mill Creek Bank have any right to use,
occupy or lease all or any portion of the Owned Real Premises. To the Knowledge
of the Sellers, there are no Tax abatements or exemptions specifically affecting
the Owned Real Premises, and neither the Sellers nor their Affiliates have
received any written notice of (and the Sellers do not have any Knowledge of)
any proposed increase in the assessed valuation of the property or of any
proposed public improvement assessments.

                  (b) Leased Premises. Section 3.8(b) of the applicable Business
Schedules contains a true and complete list of each written Assumed Lease (and
any amendments or modifications thereto) included in the Purchased Assets of
each applicable Business Schedule

                                      -42-


and the GE Purchased Assets and indicates with respect to each Assumed Lease (i)
the current rent (including any additional rent) under each Assumed Lease, (ii)
the expiration date of the Assumed Leases, (iii) the security deposits being
held pursuant to the Owned Real Premises Leases and (iv) any guarantees
thereunder. Except as set forth in Section 3.8(b) of the applicable Business
Schedules and subject to the entry of the Sale Order, all of the Assumed Leases
are in full force and effect and have not been modified, altered or amended in
any material respect. Except in connection with matters that will be cured
pursuant to the Sale Order, neither the Sellers nor their Affiliates have
received written notice of any material default under any Assumed Lease by the
Sellers, Mill Creek Bank or any of their Affiliates a party thereto and, except
as set forth in Section 3.8(b) of the applicable Business Schedules and, to the
Sellers' Knowledge, there has not occurred any material default thereunder by
any other party thereto (other than those breaches that resulted from the filing
of the Chapter 11 Case). True, complete and accurate copies of the Assumed
Leases have been delivered to the Buyer. Except as set forth in Section 3.8(b)
of the of the applicable Business Schedules, neither the Sellers, Mill Creek
Bank nor any of their Affiliates have assigned their interest under any Assumed
Leases, or subleased all or any part of the space demised thereby, to any Third
Party.

                  (c) Restrictive Covenants. To the Knowledge of the Sellers,
there is no material violation of a condition or agreement contained in any
covenant, easement or any similar agreement affecting the Owned Real Premises
(except for violations that will be remedied in connection with the entry of the
Sale Order that would, individually or in the aggregate, have a Material Adverse
Effect on the use, occupancy or value of the Owned Real Premises). To the
Knowledge of the Sellers, the covenants affecting the Owned Real Premises do not
with respect to each Owned Real Premises materially impair the ability of the
Sellers and Mill Creek Bank to use any such Owned Real Premises in the operation
of the Purchased Businesses as currently conducted.

                  (d) Insurance Notices. Except as set forth in Section 3.8(d)
of the applicable Business Schedules, neither the Sellers nor any of their
Affiliates have received any notice from any insurance carrier regarding defects
or inadequacies in the Owned Real Premises, which, if not corrected, would
result in the termination of the insurance coverage therefor or a material
increase in the cost thereof.

                  (e) Eminent Domain. There is no pending or, to the Knowledge
of the Sellers, threatened condemnation of any part of the Owned Real Premises
by any Governmental Authority.

                  (f) Utilities. Neither the Sellers nor any of their Affiliates
have received any notice from any utility company or municipality of any fact or
condition which could result in the discontinuation of currently available or
otherwise necessary sewer, water, electric, gas, telephone or other utilities or
services for the Owned Real Premises or the Leased Premises.

                  (g) No Commissions. All brokerage commissions and other
compensation and fees payable by Sellers, Mill Creek Bank or any of their
Affiliates in connection with the Owned Real Premises or the Leased Premises,
have been paid in full.

                                      -43-


                  (h) Improvements. To the Knowledge of the Sellers, all
improvements on the Owned Real Premises conform in all material respects to all
Laws, zoning, land use and building ordinances and health and safety ordinances
(including, without limitation, the Americans with Disabilities Act), and
neither the Sellers nor any of their Affiliates, have received any notice of any
violation of any such Laws or ordinances that would, individually or in the
aggregate, have a Material Adverse Effect on the use, occupancy or value of the
Owned Real Premises. To the Knowledge of the Sellers, the Owned Real Premises
are zoned for the various purposes for which the real estate and improvements
have been used in connection with the normal operation of the Purchased
Businesses. All improvements on the Owned Real Premises, including the leasehold
improvements, have not suffered any casualty or other material damage that has
not been repaired in all material respects. To the Knowledge of the Sellers,
there is no material structural, mechanical or other significant defect, soil
condition or deficiency in the improvements located on the Owned Real Premises
that would, individually or in the aggregate, have a Material Adverse Effect on
the use, occupancy or value of the Owned Real Premises.

                  (i) Intentionally Deleted.

                  (j) Contracts. Except as set forth on Section 3.8(j) of the
applicable Business Schedules, there are no property management agreements
affecting any of the Owned Real Premises and Leased Premises to which the
Sellers, Mill Creek Bank or any of their Affiliates is a party.

                  (k) Construction Allowances/Reimbursements. To the Knowledge
of the Sellers, Section 3.8(k) of the applicable Business Schedules sets forth a
summary of all construction allowances or reimbursements payable in connection
with the Assumed Leases and the amounts thereof which, as of December 19, 2002,
have not been paid or reimbursed, as applicable, by the Sellers, Mill Creek Bank
or any of their Affiliates.

             3.9. Personal Property. Section 3.9 of the applicable Business
Schedules contains a complete and accurate list of all furniture, fixtures and
equipment which the Sellers can identify based on their books and records and
limited review, as of November 30, 2002, located on the Leased Premises or the
Owned Real Premises that is primarily used in connection with the applicable
Purchased Businesses and Excluded Businesses.

             3.10. Receivables.

                  (a) Section 3.10(a) of the applicable Business Schedules
contains the following information regarding the Assigned Receivables with
respect to the Purchased Businesses and the Excluded Businesses identified
thereon as of November 30, 2002: (i) account number; (ii) name of each Obligor;
(iii) secured status; (iv) the outstanding principal balance; and (v) the
outstanding Accrued and Unpaid Interest.

                  (b) Each Assigned Receivable was made or purchased by a Seller
or its Affiliates (or by a predecessor of such Seller or such Affiliate): (i) in
the ordinary course of business at the time such Assigned Receivable was made or
purchased; (ii) in all material respects in accordance with then existing
applicable Laws; and (iii) in all material respects in

                                      -44-


accordance with such Seller's or such Affiliate's applicable underwriting and
documentation guidelines then in effect at the time of origination or purchase.

                  (c) Each Assigned Receivable has been originated or purchased
and serviced and administered in all material respects in accordance with (i)
the CFC Parties' standard Loan servicing and operating procedures as in effect
from time to time; (ii) all applicable Laws; and (iii) the respective Loan
documents governing such Assigned Receivable.

                  (d) Each Assigned Receivable is evidenced by an Assumed
Receivables Contract and constitutes a legal, valid and binding obligation of
the respective Obligor(s), enforceable against such Obligor(s) in accordance
with its terms, subject to bankruptcy, insolvency, moratorium, reorganization or
similar laws in effect which affect the enforcement of creditors' rights
generally, or rules of law governing equitable relief and other equitable
remedies, or public policy.

                  (e) Each secured Assigned Receivable is secured by a valid,
enforceable and perfected Lien on the secured property described in the
applicable security agreement, mortgage, deed to secured debt or deed of trust,
pledge, collateral assignment or other security agreement. No such Assigned
Receivable which is so secured has been waived or modified in any manner which
would interfere in any material respect with the security interest.

                  (f) There is no material breach existing under an Assigned
Receivable and the Sellers have not waived any material breach. The Sellers have
performed their obligations in all material respects under the Assigned
Receivables.

             3.11. Material Agreements. Section 3.11 of the applicable Business
Schedules collectively contains a complete and accurate list of the Material
Agreements with respect to the applicable Purchased Business and Excluded
Business, except for the Loan files. For purposes hereof, "Material Agreement"
shall mean (a) any Contract which requires payments by, on behalf of, or to the
CFC Parties of $500,000 or more in the aggregate, (b) any Assumed Agreement, (c)
the Credit Facilities (and any forbearance agreements or waivers related
thereto) and (d) the Lehman Documents, in each case including all amendments and
modifications thereto; provided, however, excluding Contracts that are
terminable on 60 days notice or less without penalty. Except to the extent
affected by the Chapter 11 Case, all Material Agreements are valid, in full
force and effect and have not been modified or amended in any material respect.
Except as set forth in Section 3.11 of the applicable Business Schedules, to the
Sellers' Knowledge, there are no material disputes, oral agreements or
forbearance programs in effect as to any of the Material Agreements. None of the
Sellers or any of their Affiliates that is a party to any Material Agreement has
received written notice of any material default by the Sellers or their
Affiliates of any of the Material Agreements to which it is a party and, to the
Knowledge of the Sellers, there has not occurred any material default thereunder
by any other party thereto (except to the extent resulting under the terms of
any such Material Agreement as a result of the Chapter 11 Case). Each such
Material Agreement constitutes the legal, valid and binding obligations of the
Sellers or any of their Affiliates that is a party thereto and, to the Knowledge
of the Sellers, the respective Third Party, and is enforceable in accordance
with its terms, except as such enforceability may be limited by bankruptcy,
insolvency, moratorium, reorganization or similar laws in effect which affect
the enforcement of creditors' rights generally, or rules of law

                                      -45-


governing specific performance, equitable relief and other equitable remedies,
or public policy (including without limitation the Chapter 11 Case). All
Material Agreements, except for the Loan files, Assumed Receivables Contracts
and dealer agreements relating to the PL Business, HI Business and CL Business,
have been made available to the Buyer.

             3.12. Intellectual Property.

                  (a) Section 3.12(a) of the applicable Business Schedules sets
forth a complete and correct list of all: (i) registrations and applications
pertaining to the Transferred Trademarks and Other Transferred Intellectual
Property and the registration or application number, registration or filing
date, jurisdiction and record owner as to each; (ii) material unregistered
Transferred Trademarks; (iii) material unregistered copyrights and material
computer software owned by the Sellers or Mill Creek Bank in the Purchased
Businesses; and (iv) Transferred Intellectual Property Agreements. All
registered Transferred Trademarks and registered Other Transferred Intellectual
Property are unexpired, and all renewal fees and other maintenance fees that
have fallen due on or prior to the effective date of this Agreement have been
paid. Except as set forth in Section 3.12(a) of the applicable Business
Schedules, no registered Transferred Trademarks or registered Other Transferred
Intellectual Property is the subject of any proceedings before any governmental,
registration or other authority in any jurisdiction, including any office action
or other form of preliminary or final refusal of registration. The consummation
of the transactions contemplated hereby will not alter or impair any Transferred
Intellectual Property in any material respect except to the extent any
Transferred Intellectual Property Agreements require a Third Party's consent
prior to transfer.

                  (b) Except as set forth in Section 3.12(b) of the applicable
Business Schedules and except for any Permitted Liens, the Sellers or Mill Creek
Bank own all right, title and interest in and to, or have a valid and
enforceable right to use the Transferred Intellectual Property. The Transferred
Intellectual Property and the GE Purchased Assets represent all Intellectual
Property rights necessary for the conduct of the Purchased Businesses as now
conducted and presently contemplated. The Sellers and Mill Creek Bank are in
compliance with all material contractual obligations relating to the protection
of the Transferred Intellectual Property Agreements. To the Knowledge of the
Sellers, there are no conflicts with, or infringements of, the Transferred
Trademarks and Other Transferred Intellectual Property by any third party. To
the Knowledge of the Sellers, the Transferred Trademarks and Other Transferred
Intellectual Property do not conflict with or infringe any Intellectual Property
of any Third Party. There is no claim, suit, action or proceeding pending or, to
the Knowledge of the Sellers, threatened against any Seller or Mill Creek Bank:
(i) alleging any such conflict or infringement with any Third Party's
Intellectual Property; or (ii) challenging such Seller's or Mill Creek Bank's
ownership or use of, or the validity or enforceability of, the Transferred
Trademarks and Other Transferred Intellectual Property. Except as set forth in
Section 3.12(b) of the applicable Business Schedules, no written claims of
infringement or misappropriation of Intellectual Property have been received
from Third Parties with respect to the applicable Purchased Business.

                  (c) Except as set forth in Section 2.8 and in Section 3.12(c)
of the applicable Business Schedules, none of the Sellers or Mill Creek Bank is
under any obligation to pay royalties or other payments in connection with any
agreement, or is restricted from assigning its

                                      -46-


rights respecting any Intellectual Property, nor will any Seller or Mill Creek
Bank otherwise be, as a result of the execution and delivery of this Agreement
or the performance of a Seller's obligations under this Agreement, in breach of
any agreement relating to the Intellectual Property.

                  (d) To the Knowledge of the Sellers, except as set forth in
Section 3.12(d) of the applicable Business Schedules, no present or former
employee, officer or director of any of the Sellers or Mill Creek Bank, or agent
or outside contractor of any of the Sellers or Mill Creek Bank, holds any right,
title or interest, directly or indirectly, in whole or in part, in or to any
Transferred Intellectual Property (except to the extent that the foregoing would
be a Permitted Lien or would otherwise not be material).

                  (e) (i) To the Knowledge of the Sellers, none of the Sellers'
trade secrets have been used, disclosed or appropriated to the detriment of any
of the Sellers or Mill Creek Bank for the benefit of any Person other than the
Sellers or Mill Creek Bank; and (ii) to the Knowledge of the Sellers, no
employee, independent contractor or agent of any of the Sellers or Mill Creek
Bank, in each case in any manner which, individually or in the aggregate, could
reasonably be expected to be material, has misappropriated any trade secrets or
other confidential information of any other Person in the course of the
performance of his or her duties as an employee, independent contractor or agent
of such Seller or Mill Creek Bank, in each case in any manner which,
individually or in the aggregate, could reasonably be expected to be material.

             3.13. Brokerage. Other than Credit Suisse First Boston, the fees
and disbursements of which will be a prepetition claim against the CFC Parties,
and Lazard Freres & Co. LLC, the fees and disbursements of which are to be paid
by Parent, no Person has any claim for brokerage commissions, finders' fees or
similar compensation in connection with the transactions contemplated by this
Agreement based on any arrangement or agreement made by or on behalf of the
Sellers or Mill Creek Bank.

             3.14. Employees. Section 3.14 of each Business Schedule sets forth
the employee identification numbers, names, positions, years of service and
place of employment of all employees of the Sellers and Mill Creek Bank and any
of their Affiliates for each applicable Purchased Business and Excluded Business
who are as of the date hereof working primarily in the applicable Purchased
Business, Excluded Business or Mill Creek Bank (the "Employees"). A separate
corresponding list which sets forth severance and current compensation for the
Employees was provided to the Buyer. None of the Sellers or Mill Creek Bank or
any of their Affiliates is a party to a collective bargaining agreement covering
any of the Employees and, to the Knowledge of the Sellers, no union organizing
activities have occurred with respect to any Employees.

             3.15. Affiliate Transactions. Section 3.15 of the applicable
Business Schedules describes all intercompany or affiliated transactions which
are material (individually or in the aggregate) or Contracts under which credits
or services are provided to or on behalf of the applicable Purchased Business
and Excluded Business by the Sellers or Mill Creek Bank (including any
"subsidiary" of Mill Creek Bank, as that term is defined in section 23A of the
Federal Reserve Act) and to or on behalf of the Sellers or Mill Creek Bank
(including any such "subsidiary") by the applicable Purchased Business and
Excluded Business and all intercompany

                                      -47-


transactions or Contracts among the Sellers with respect to the applicable
Purchased Business and Excluded Business (including, in each case, a description
of the costs and expenses charged to the applicable Purchased Business and
Excluded Business in connection therewith). Mill Creek Bank (and any such
"subsidiary") is not, and has not been since January 1, 2000, in violation of
section 23A or section 23B of the Federal Reserve Act, whether or not any such
violation is known by any Governmental Authority.

             3.16. ERISA; Employee Benefits. The Sellers have furnished or made
available to the Buyer complete and correct copies of all employee benefit
plans, as defined in Section 3(3) of ERISA, and all other retirement, deferred
compensation, incentive compensation, insurance, bonus, medical, stock option,
severance, retention, vision, dental, vacation policy and other material
employee benefit plans in which the Employees participate ("Employee Benefit
Plans"), the current summary plan description for each Employee Benefit Plan
subject to ERISA and any similar description of any other Employee Benefit Plan.
None of the Employee Benefit Plans are multiemployer plans (as defined in
Section 3(37) of ERISA). Each Employee Benefit Plan which is a defined
contribution pension plan intended to be qualified under Section 401(a) of the
Tax Code is so qualified. None of the Employee Benefit Plans are established
under, or subject to, the laws of any country other than the United States.

             3.17. Depository Institutions.

                  (a) Mill Creek Bank is "well-capitalized" (as that term is
defined at 12 C.F.R. 225.2(r)(2)(i) and 325.103(b)(1)) and "well managed" (as
that term is defined at 12 C.F.R. 225.81(c)) and its examination rating under
the Community Reinvestment Act of 1977 is satisfactory or outstanding. Mill
Creek Bank is not in a "troubled condition" (as that term is defined at 12
C.F.R. 303.101(c)).

                  (b) Except as set forth in Section 3.17 of the applicable
Business Schedules, Mill Creek Bank is not, and has not been since January 1,
2000, subject to any supervisory or remedial agreement of any kind, including
but not limited to any memorandum of understanding, agreement, cease-and-desist
order, consent order or enforcement order with or from any Governmental
Authority.

                  (c) Mill Creek Bank is in compliance in all material respects
with all applicable Laws. There are no material investigations or proceedings
pending or, to the Knowledge of the Sellers, threatened, alleging or
contemplating any material violation of any applicable Law.

             3.18. Litigation. Except for the Chapter 11 Case, as of the date
hereof, there are no claims, actions, suits, investigations, proceedings or
orders pending, except as set forth in Section 3.18 of the applicable Business
Schedules, or to the Knowledge of the Sellers threatened against or affecting
the CFC Parties at law or in equity, or before or by any Governmental Authority,
that, individually or in the aggregate, are reasonably likely to (a) have a
Material Adverse Effect, (b) materially and adversely affect the Sellers' or
Mill Creek Bank's performance under this Agreement and the other Transaction
Documents to which the Sellers or Mill Creek Bank are a party or (c) materially
delay or impair the consummation of the transactions contemplated hereby or
thereby.

                                      -48-


             3.19. Financial Statements. Section 3.19 of the applicable Business
Schedules sets forth the unaudited consolidated balance sheet of the applicable
Purchased Business and Excluded Business as of December 31, 2001, December 31,
2002 and September 30, 2002 and the related unaudited statements of income for
the fiscal years ended December 31, 2001 and December 31, 2002 and the period
ended September 30, 2002, and the unaudited consolidated balance sheets of the
Purchased Businesses and Excluded Businesses as of December 31, 2001, December
31, 2002 and September 30, 2002 and the related unaudited statements of income
for the fiscal years ended December 31, 2001 and December 31, 2002 and the
period ended September 30, 2002 (collectively, including the notes thereto, the
"Financial Statements"). The Financial Statements have been prepared from the
accounting Records of the Purchased Businesses and Excluded Businesses and
fairly present, in all material respects, the financial position as of the dates
thereof and the results of the operations of the Purchased Businesses and
Excluded Businesses for the periods therein described, in each case in
accordance with GAAP, consistently applied, except as otherwise provided in the
Financial Statements and the notes thereto; provided that the Financial
Statements reflect intercompany allocations of overhead and other non-specific
expenses between the Purchased Businesses and Excluded Businesses which the
Sellers believe are reasonable which have been disclosed to the Buyer in
reasonable detail. The November 30 Balance Sheet sets forth the unaudited
consolidated balance sheet of the Company as of November 30, 2002 and was
prepared from the accounting Records of the Company and fairly presents, in all
material respects, the financial position of the Company as of the date thereof,
except with respect to Residual Interests, B-2 Certificates, servicing
liabilities and the net present value of guaranteed liabilities for others. The
Records from which the Financial Statements and the November 30 Balance Sheet
were prepared were complete and accurate in all material respects at the time of
such preparation.

             3.20. Indebtedness; Guarantees; Absence of Undisclosed Liabilities.

                  (a) Except as set forth in the Financial Statements, no CFC
Party has any outstanding indebtedness for borrowed money. Except as set forth
in Section 3.20(a) of each Business Schedule, no CFC Party is a party to any
Loan agreement whereby the CFC Party has borrowed money, structured in the form
of a loan or purchase and sale, has any outstanding Guarantees in favor of any
other Person or is otherwise liable for any indebtedness for borrowed money of
any other Person. Except as set forth in Section 3.20(a) of each Business
Schedule, no CFC Party has any Liabilities, individually or in the aggregate, of
the type required to be reflected on a balance sheet or in the notes thereto
prepared in accordance with GAAP which were not fully reflected or reserved
against in the Financial Statements (other than current Liabilities incurred in
the ordinary course of business), except for those that would not reasonably be
expected to have a Material Adverse Effect.

                  (b) In the event that a Stock Sale is consummated, as of the
Closing Date, each Subject Subsidiary and its Subsidiaries will have transferred
all Liabilities other than Assumed Liabilities as contemplated by Section
2.1(b).

                  (c) As of the close of business on March 6, 2003, the
outstanding Lehman Debt Amount was $676,215,802.00.

                                      -49-


             3.21. Residual Assets. As of September 30, 2002, the amount of
$198.6 million included in the consolidated balance sheets of the Company under
the heading "Guaranty Liability related to interests in Securitization Trusts
held by Others" reflects amounts due to the holders of the B-2 Certificates from
the CFC Parties and has been determined in accordance with GAAP by the use of
reasonable estimates and assumptions in calculating values. The Residuals
Schedule identifies, among other things, all of the assets within the categories
set forth therein that are owned by the Company or any other CFC Party and the
information contained therein is accurate in all material respects as of
December 19, 2002. The Sellers own all assets identified on the Residuals
Schedule and all servicing, interest-only or other payment rights (whether
certificated or uncertificated) in the nature of a retained or residual interest
arising in connection with a Ginnie Mae loan pool identified on the Ginnie Mae
Pool List included in Attachment A to Section 3.26 of the Purchased Businesses
Schedule, which list includes all Ginnie Mae loan pools in which the Company or
any other CFC Party holds any interest.

             3.22. Tax Matters.

                  (a) Each of the CFC Parties has filed all Tax Returns that it
was required to file, and each has paid all Taxes, whether or not required to be
paid in connection with the filing of a Tax Return. Such Tax Returns are true,
correct and complete. The reserves for Taxes in the Financial Statements are
adequate. Except as set forth in Section 3.22(a) of the applicable Business
Schedules, none of the CFC Parties has waived any statute of limitations in
respect of any Tax Returns or Taxes or agreed to any extension of time with
respect to a Tax assessment or deficiency.

                  (b) Section 3.22(b) of the applicable Business Schedules sets
forth (i) all Income Tax Returns filed with respect to the CFC Parties, the
Purchased Businesses and the Excluded Businesses for all open Tax years, (ii)
those Tax Returns that have been audited, (iii) those Tax Returns that currently
are the subject of audit, and (iv) any dispute or claim concerning Tax Liability
relating to the Purchased Businesses, the Excluded Businesses or the CFC
Parties. The Company has made available to the Buyer correct and complete copies
of all federal and state Tax Returns, examination reports, and statements of
deficiencies assessed against or agreed to by the CFC Parties with respect to
the Purchased Businesses and the Excluded Businesses for all open Tax years.

                  (c) Except as set forth in Section 3.22(c) of the applicable
Business Schedules, (i) for all open Tax years all Taxes required to be
withheld, collected or deposited by each CFC Party have been timely withheld,
collected and deposited and, to the extent required by law, all such Taxes have
been paid when due to the appropriate taxing authority and each CFC Party is in
compliance with respect to all withholding and information and reporting
requirements in the Tax Code; (ii) there are no closing agreements pursuant to
Section 7121 of the Tax Code (or corresponding provision of state, local or
foreign law) or rulings or requests for rulings relating to any CFC Party; (iii)
none of the assets of any CFC Party is "tax-exempt use property" within the
meaning of Section 168(h) of the Tax Code; (iv) none of the CFC Parties have
filed a consent under Section 341(f) of the Tax Code concerning collapsible
corporations; (v) no transaction contemplated by this Agreement is subject to
withholding under Section 1445 of the Tax Code (relating to "FIRPTA"); (vi) none
of the CFC Parties will be required to include any adjustment under Section
481(c) of the Tax Code (or any corresponding provision of state,

                                      -50-


local or foreign law) in taxable income as a result of a change in accounting
method for a Tax period beginning on or before the Closing Date; (vii) no claim
has ever been made by a Taxing authority in a jurisdiction where any CFC Party
has never paid Taxes or filed Tax Returns asserting that such CFC Party is or
may be subject to Taxes assessed by such jurisdiction; (viii) no power of
attorney has been granted with respect to any matter relating to Taxes of any
CFC Party that is currently in effect; (ix) none of the CFC Parties has made,
changed or revoked, or permitted to be made, changed or revoked, any election or
method of accounting with respect to Taxes affecting or relating to any CFC
Party; and (x) no election has been made under Section 754 of the Tax Code for a
partnership or other entity treated as a partnership for U.S. federal income tax
purposes in which any of the CFC Parties is a partner or member or holds a
residual interest.

                  (d) Except as set forth in Section 3.22(d) of the applicable
Business Schedules, as to each of the entities or arrangements identified as a
REMIC in Section 3.22(d) of the applicable Business Schedules, it:

                        (i) has at all times since its "startup day" (as defined
                  in Section 860G(a)(9) of the Tax Code) duly qualified as a
                  "real estate mortgage investment conduit" under Section
                  860D(a) of the Tax Code, and will not, by virtue of the
                  transactions contemplated by this Agreement, including without
                  limitation changes in the amount of certain servicing fees
                  provided for by the Securitization Documents, fail to qualify
                  as a real estate mortgage investment conduit under Section
                  860D(a) of the Tax Code;

                        (ii) has engaged in no " prohibited transactions" (as
                  defined in Section 860F(a)(2) of the Tax Code) and has never
                  received any contributions after its startup day subject to
                  the tax imposed by Section 860G(d) of the Tax Code;

                        (iii) has not held for more than 30 months any assets
                  intended to be treated as "foreclosure property" under Section
                  860G(a)(8) of the Tax Code;

                        (iv) had an aggregate basis in its assets, as of
                  December 31, 2001 equal to that set forth in Section 3.22(d)
                  of the applicable Business Schedules;

                        (v) has reported bad debt losses with respect to
                  defaults on Loans that it held at the time by writing off the
                  loans upon liquidation of the underlying collateral;

                        (vi) has reported cancellation of indebtedness income,
                  or has reduced interest or original issue discount deductions,
                  with respect to REMIC Regular Interests it has issued, (A) on
                  the basis of claiming no deduction for original issue discount
                  or interest for Regular Interests to which cash distributions
                  are currently due but remain unpaid and (B) by treating
                  payments by the guarantor of the Junior P&I Regular Interests
                  to a REMIC as a result of defaults as gross income to such
                  REMIC;

                        (vii) treats Guarantee Fees as an item of expense and
                  not as an item distributable to the holder of its related
                  REMIC Residual Interest;

                                      -51-


                        (viii) has reported deductions for original issue
                  discount and interest accruals with respect to the REMIC
                  Regular Interests it issued based on their issue prices
                  determined in accordance with Section 1273 of the Tax Code and
                  Section 1.1273-2 of the Treasury Regulations;

                        (ix) has based original issue discount deductions with
                  respect to REMIC Regular Interests in each period on (A) the
                  projected cash flow remaining to be distributed on such REMIC
                  Regular Interests, taking into account the prepayment
                  assumption used in pricing, but a zero loss assumption, with
                  respect to the Loans it holds, (B) making present value
                  computations with respect to such projected cash flow based on
                  the original yield to maturity of such REMIC Regular
                  Interests, and (C) if such computations resulted in negative
                  original issue discount or positive premium amortization
                  ("Deferred Recognition Amounts") with respect to any REMIC
                  Regular Interest, suspending the recognition of such Deferred
                  Recognition Amounts until there is subsequent positive
                  original issue discount or negative premium amortization with
                  respect to such REMIC Regular Interest;

                        (x) has timely filed all Tax Returns required to be
                  filed by such REMIC;

                        (xi) has withheld and paid over in a timely fashion all
                  Taxes or other amounts required to be withheld by such REMIC
                  and paid over to any governmental taxing authority; and

                        (xii) has never itself been examined by, or itself
                  entered into any closing agreement with, the Internal Revenue
                  Service, and is not bound by any such closing agreement
                  entered into between the Company or the Selling Subsidiaries
                  and the Internal Revenue Service.

                  (e) As to each REMIC Residual Interest included in, or held by
an entity included in, the Purchased Assets:

                        (i) as of December 31, 2001, such REMIC Residual
                  Interest had (A) an adjusted basis and remaining unrecognized
                  gain or loss in the hands of its holder and (B) an adjusted
                  issue price as set forth in Section 3.22(e) of the applicable
                  Business Schedules;

                        (ii) except as set forth in Section 3.22(e) of the
                  applicable Business Schedules, "excess inclusions", as defined
                  in Section 860E(c) of the Tax Code, are computed correctly on
                  the Schedule Qs sent to the holder of such REMIC Residual
                  Interest;

                        (iii) Guarantee Fees are not treated as an item of
                  income that is received with respect to such REMIC Residual
                  Interest, but as a fee;

                        (iv) all schedules and projections of taxable income and
                  distributions furnished by the Company or the Selling
                  Subsidiaries to the Buyer with respect to


                                      -52-


                  any such REMIC Residual Interest are correct based on their
                  assumptions; provided, however, that no representation is made
                  regarding the accuracy of those assumptions; and

                        (v) it has been held at all times by the Company or the
                  Selling Subsidiaries.

                  (f) As to each REMIC Regular Interest included in, or held by
an entity included in, the Purchased Assets:

                        (i) as of December 31, 2001, such REMIC Regular Interest
                  had (A) an adjusted basis and remaining unrecognized gain or
                  loss in the hands of its holder and (B) an adjusted issue
                  price as set forth in Section 3.22(f) of the applicable
                  Business Schedules;

                        (ii) all schedules and projections of taxable income and
                  distributions furnished by the Company or the Selling
                  Subsidiaries to the Buyer with respect to any such REMIC
                  Regular Interest are correct based on their assumptions;
                  provided, however, that no representation is made regarding
                  the accuracy of those assumptions; and

                        (iii) it has been held at all times by the Company or
                  the Selling Subsidiaries.

                  (g) With respect to the NIMS Issuer:

                        (i) it is not an association taxable as a corporation, a
                  publicly traded partnership within the meaning of Section 7704
                  of the Tax Code, or a taxable mortgage pool within the meaning
                  of Section 7701(i) of the Tax Code;

                        (ii) the NIMS Notes are indebtedness of the NIMS Issuer
                  for all purposes of the Tax Code;

                        (iii) as of December 31, 2001, it had a basis in its
                  assets and adjusted issue price for the NIMS Notes it issued
                  in the amounts set forth in Section 3.22(g) of the applicable
                  Business Schedules;

                        (iv) it has timely filed all Tax Returns required to be
                  filed by it;

                        (v) the 2001 Tax Return of the NIMS Issuer furnished by
                  the Sellers to the Buyer is true, correct and complete in all
                  material respects, with the exception that it does not reflect
                  certain adjustments in the basis of certain Residual Interests
                  and IO Regular Interests held by the NIMS Issuer that are
                  intended to be made to reflect a revaluation of such Residual
                  Interests and IO Regular Interests as of the startup day of
                  the REMIC that issued them, with such revaluation as of such
                  date to be consistent with the revaluation of similar REMIC
                  interests made in the audit of the Sellers' Tax Returns for
                  the period ended December 31, 1997, and with

                                      -53-


                  such adjustments to be made in an amended Tax Return of the
                  NIMS Issuer prepared in accordance with Section 5.19(c); and

                        (vi) the basis of the NIMS Equity in the hands of its
                  holder or holders as of December 31, 2001 was the amount set
                  forth in Section 3.22(g) of the applicable Business Schedules.

                  (h) Except as set forth in Section 3.22(h) of the applicable
Business Schedules as to each of the MESA Issuers:

                        (i) it is classified as a corporation for United States
                  federal income tax purposes;

                        (ii) it is not subject to taxation in any domestic or
                  foreign jurisdiction;

                        (iii) the MESA Notes it has issued are indebtedness of
                  the MESA Issuers for all purposes of the Tax Code;

                        (iv) it is not engaged, and has never been engaged, in a
                  United States trade or business, and will not be so treated
                  assuming continued compliance with the terms of the
                  Securitization Documents governing the issuance of the related
                  MESA Notes by the parties thereto;

                        (v) it holds no assets, or interests in assets, that
                  produce income that is subject to withholding under Sections
                  1441 through 1446 of the Tax Code or are otherwise subject to
                  withholding by any domestic or foreign jurisdiction;

                        (vi) it has at all times during its existence been
                  controlled by the Company and the Selling Subsidiaries;

                        (vii) any Grantor Trust created to hold the MESA
                  Collateral in connection with a Securitization qualifies as an
                  "investment trust" within the meaning of Treasury Regulation
                  Section 301.7701-4(c)(2) and is classified as a grantor trust
                  for federal income tax purposes;

                        (viii) as of December 31, 2001, it had a basis in its
                  REMIC assets, and an adjusted issue price for the MESA Notes
                  it issued, equal to those shown in Section 3.22(h) of the
                  applicable Business Schedules;

                        (ix) with respect to its REMIC assets, it has determined
                  its income and deductions in the same manner as the REMICs
                  listed in Section 3.22(g) of the applicable Business
                  Schedules; and

                        (x) the basis of the MESA Equity in the hands of its
                  holder or holders as of December 31, 2001 was the amount shown
                  in Section 3.22(g) of the applicable Business Schedules.

                                      -54-


                  (i) The transactions contemplated, including without
limitation any changes in servicing fees or guarantee arrangements with respect
to any REMIC, by this Agreement will not adversely affect the tax
characterizations of any of the Securitizations as originally represented in
connection with such Securitizations, whether or not such representations were
the subject of confirming legal opinions.

                  (j) No elections have been made to treat any Securitizations,
or parts thereof, as "financial asset securitization investment trusts" within
the meaning of Section 860L(a) of the Tax Code.

                  (k) Each CFC Party has filed all material sales and use Tax
Returns that it was required to file, and paid all Taxes shown as due thereon.
Such Tax Returns are true, correct and complete. Except as provided in Section
3.22(k) of the Business Schedules, a CFC Party has collected all but an
immaterial number of resale certificates or other applicable documents as
required for the application of any exemption with respect to any sales or use
Tax applicable to the transfer of a repurchased or repossessed asset by a CFC
Party, including all but an immaterial number of resale certificates for sales
of repossessed manufactured housing.

                  (l) As to any Securitization, or interest therein, not
described in subsections (d) through (h) of this Section 3.22:

                        (i) the entity ("Other Securitization Entity") holding
                  the assets and issuing the securities issued in such
                  Securitization is either a grantor trust, a partnership or a
                  disregarded entity, and not an association taxable as a
                  corporation, a publicly traded partnership or a taxable
                  mortgage pool, for federal income tax purposes;

                        (ii) the Other Securitization Entity has filed Tax
                  Returns throughout its existence that are true, correct and
                  complete in all material respects;

                        (iii) to the extent the Other Securitization Entity has
                  issued instruments designated as notes, bonds, debentures or
                  other evidences of indebtedness, such instruments will be
                  characterized as indebtedness for federal income tax purposes;
                  and

                        (iv) to the extent the Other Securitization Entity has
                  issued instruments designated as certificates, units or other
                  equity instruments, such instruments will be characterized as
                  either evidencing a beneficial ownership interest in the
                  assets held by such Other Securitization Entity or as
                  evidencing ownership of an equity interest in such Other
                  Securitization Entity itself.

             3.23. Insurance. Set forth in Section 3.23 of the applicable
Business Schedules is a list of all Insurance Policies for such Purchased
Business and Excluded Businesses, including summary coverage terms and
expiration dates. All premiums due and payable with respect to the Insurance
Policies have been timely paid. No notice of cancellation of, or indication of
an intention not to renew, any material Insurance Policy has been received by
the Sellers. To the Knowledge of the Sellers, all such Insurance Policies are in
full force and effect and the Sellers and Mill Creek Bank are not in default
under any provisions of the Insurance Policies.

                                      -55-


             3.24. Environment, Health and Safety. The CFC Parties are in
compliance in all material respects with all Environmental Laws applicable to
the Purchased Businesses and the Purchased Assets and have not received written
notice from any Governmental Authority or other Person alleging non-compliance
or that they are otherwise liable for the clean-up or other environmental
response costs pursuant to any Environmental Law.

             3.25. Accounting Controls. The CFC Parties have devised and
maintained systems of internal accounting controls which they believe are
sufficient to provide reasonable assurances that (a) all material transactions
are executed in accordance with its management's general or specific
authorization; (b) all material transactions are recorded as necessary to permit
the preparation of financial statements in conformity with GAAP or any other
criteria applicable to such statements; (c) access to its material property and
assets is permitted only in accordance with management's general or specific
authorization; and (d) the recorded accountability for items is compared with
the actual levels thereof at reasonable intervals and appropriate action is
taken with respect to any variances.

             3.26. Summary of Securitizations. The information set forth in
Section 3.26 of the applicable Business Schedules which identifies, among other
things, all Securitizations, is true, complete and correct as of December 19,
2002.

             3.27. Representations as to Certain Purchased Assets. Exhibit A
sets forth certain additional representations and warranties with respect to the
Loans and the Residual Assets.

             3.28. Securities Offerings. The offering memoranda, offering
circulars, prospectuses and any other offering documents or registration
statements for the offering of securities, and any amendments or supplements
thereto, distributed, delivered or filed in connection with the Securitizations
of the CFC Parties, including, without limitation, the offering materials
related to the NIMS Trust and the MESA Notes, as of their dates, did not contain
any untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.

             3.29. No Powers of Attorney. Except as set forth in Section 3.29 of
the applicable Business Schedules, no CFC Party has any powers of attorney or
comparable delegations of authority outstanding with respect to the Purchased
Assets.

             3.30. Securities Laws Matters; No Registration. No trust,
arrangement, issuer or other entity will be required to register as an
investment company under the Investment Company Act of 1940, as amended, and no
issue of securities or securities transaction will be required to be registered
under the Securities Act of 1933, as amended, as a result of the sale of
Purchased Assets pursuant to this Agreement. The Buyer will be an eligible
transferee of any Residual Assets to be transferred to the Buyer under this
Agreement in accordance with the documents governing each Securitization and any
such transfer will be completed in accordance with such documents. The statutory
or regulatory foundations for exemptions from registration under the Investment
Company Act of 1940, as amended, on which the Securitizations rely include only
Rule 3a-7, Section 3(c)(5)(C) and Section 3(c)(5)(A) of the Investment Company
Act of 1940, as amended.

                                      -56-


             3.31. Green Tree RECS II Guaranty Corporation. Except as set forth
in Section 3.31 of the applicable Business Schedules, Green Tree RECS II
Guaranty Corporation ("RECS") has no outstanding indebtedness or other
Liabilities or Guarantees in favor of any other Person. Section 3.31 of the
applicable Business Schedules contains a complete and accurate list of all
Contracts to which RECS is a party, in each case including all amendments and
modifications thereto (the "RECS Contracts"). To the Sellers' Knowledge, there
are no disputes, oral agreements or forbearance programs in effect as to any of
the RECS Contracts. There has not occurred any default by RECS under any of the
RECS Contracts, and to the Knowledge of the Sellers, there has not occurred any
default thereunder by any other party thereto. RECS has complied with all terms
and conditions of its Organizational Documents.

             3.32. Conseco HE/HI 2001-B-2, Inc. Conseco HE/HI 2001-B-2, Inc. has
no assets, properties, Contracts or rights which constitute Purchased Assets.

             3.33. Conseco Finance Securitizations Corp. Except as set forth in
Section 3.33 of the applicable Business Schedules, Conseco Finance
Securitizations Corp. has no assets, properties or rights which constitute
Purchased Assets. Except as set forth in Section 3.33 of the applicable Business
Schedules, Conseco Finance Securitizations Corp. has no indebtedness or other
Liabilities or Guarantees in favor of any other Person. Section 3.33 of the
applicable Business Schedules contains a complete and accurate list of all
Contracts to which Conseco Finance Securitizations Corp. is a party, in each
case including all amendments and modifications thereto (the "CFSC Contracts").
Except as set forth in Section 3.33 of the applicable Business Schedules, to the
Sellers' Knowledge, there are no disputes, oral agreements or forbearance
programs in effect as to any CFSC Contracts. Except as set forth in Section 3.33
of the applicable Business Schedules, there has not occurred any default by
Conseco Finance Securitizations Corp. under any of the CFSC Contracts. To the
Knowledge of the Sellers, there has not occurred any default thereunder by any
other party thereto. Conseco Finance Securitizations Corp. has complied with all
terms and conditions of its Organizational Documents.

             3.34. Green Tree First GP Inc. Except as set forth in Section 3.34
of the applicable Business Schedules, Green Tree First GP Inc. has no
outstanding indebtedness or other Liabilities or Guarantees in favor of any
other Person. Section 3.34 of the applicable Business Schedules contains a
complete and accurate list of all Contracts to which Green Tree First GP Inc. is
a party, in each case including all amendments and modifications thereto (the
"GTF Contracts"). To the Sellers' Knowledge, there are no disputes, oral
agreements or forbearance programs in effect as to any of the GTF Contracts.
There has not occurred any default by Green Tree First GP Inc. under any of the
GTF Contracts, and to the Knowledge of the Sellers, there has not occurred any
default thereunder by any other party thereto. Green Tree First GP Inc. has
complied with all terms and conditions of its Organizational Documents.

             3.35. Green Tree Second GP Inc. Except as set forth in Section 3.35
of the applicable Business Schedules, Green Tree Second GP Inc. has no
outstanding indebtedness or other Liabilities or Guarantees in favor of any
other Person. Section 3.35 of the applicable Business Schedules contains a
complete and accurate list of all Contracts to which Green Tree Second GP Inc.
is a party, in each case including all amendments and modifications thereto (the
"GTS Contracts"). To the Sellers' Knowledge, there are no disputes, oral
agreements or forbearance

                                      -57-


programs in effect as to any of the GTS Contracts. There has not occurred any
default by Green Tree Second GP Inc. under any of the GTS Contracts, and to the
Knowledge of the Sellers, there has not occurred any default thereunder by any
other party thereto. Green Tree Second GP Inc. has complied with all terms and
conditions of its Organizational Documents.

             3.36. Conseco Finance Advance Receivables Corp. Except for the
Servicer Advance Facility, Conseco Finance Advance Receivables Corp. has no
outstanding indebtedness or other Liabilities or Guarantees in favor of any
other Person. The Contracts executed in connection with the Servicer Advance
Facility, including all amendments and modifications thereto (the "CFARC
Contracts"), are all of the Contracts to which Conseco Finance Advance
Receivables Corp. is a party. The Sellers have delivered all CFARC Contracts to
the Buyer. To the Sellers' Knowledge, there are no disputes, oral agreements or
forbearance programs in effect as to any of the CFARC Contracts. Except as set
forth in Section 3.36 of the applicable Business Schedules, there has not
occurred any default by Conseco Finance Advance Receivables Corp. under any of
the CFARC Contracts, and to the Knowledge of the Sellers, there has not occurred
any default thereunder by any other party thereto. Conseco Finance Advance
Receivables Corp. has complied with all terms and conditions of its
Organizational Documents.

             3.37. Conseco Finance Liquidation Expense Advance Receivables
2002-B Corp. Except for the Clear Facility, Conseco Finance Liquidation Expense
Advance Receivables 2002-B Corp. has no outstanding indebtedness or other
Liabilities or Guarantees in favor of any other Person. The Contracts executed
in connection with the Clear Facility, including all amendments and
modifications thereto (the "CFLEAR 2002-B C Contracts"), are all of the
Contracts to which Conseco Finance Liquidation Expense Advance Receivables
2002-B Corp. is a party. The Sellers have delivered all CFLEAR 2002-B C
Contracts to the Buyer. To the Sellers' Knowledge, there are no disputes, oral
agreements or forbearance programs in effect as to any of the CFLEAR 2002-B C
Contracts. Except as set forth in Section 3.37 of the applicable Business
Schedules, there has not occurred any default by Conseco Finance Liquidation
Expense Advance Receivables 2002-B Corp. under any of the CFLEAR 2002-B C
Contracts, and to the Knowledge of the Sellers, there has not occurred any
default thereunder by any other party thereto. Conseco Finance Liquidation
Expense Advance Receivables 2002-B Corp. has complied with all terms and
conditions of its Organizational Documents.

             3.38. Convergent Lending Services, LLC. Except as set forth in
Section 3.38 of the applicable Business Schedules, Convergent Lending Services,
LLC has no outstanding indebtedness or other Liabilities or Guarantees in favor
of any other Person. Section 3.38 of the applicable Business Schedules contains
a complete and accurate list of all Contracts to which Convergent Lending
Services, LLC is a party, in each case including all amendments and
modifications thereto (the "Convergent Contracts"). To the Sellers' Knowledge,
there are no disputes, oral agreements or forbearance programs in effect as to
any of the Convergent Contracts. There has not occurred any default by
Convergent Lending Services, LLC under any of the Convergent Contracts, and to
the Knowledge of the Sellers, there has not occurred any default thereunder by
any other party thereto. Convergent Lending Services, LLC has complied with all
terms and conditions of its Organizational Documents.

                                      -58-


                                  ARTICLE IV.

                   REPRESENTATIONS AND WARRANTIES OF THE BUYER

                  As a material inducement to the Sellers to enter into this
Agreement, the Buyer hereby represents and warrants to the Sellers the
following:

             4.1. Organization and Corporate Power. The Buyer is a limited
liability company duly organized, validly existing and in good standing under
the laws of the State of Delaware, with the requisite power and authority to
enter into this Agreement and the other Transaction Documents to which the Buyer
is a party and perform its obligations hereunder and thereunder.

             4.2. Authorization of Transaction. The execution, delivery and
performance of this Agreement and the other Transaction Documents to which the
Buyer is a party have been duly and validly authorized by all requisite action
on the part of the Buyer, and no other corporate proceedings on its part are
necessary to authorize the execution, delivery or performance of this Agreement.
This Agreement constitutes, and each of the other Transaction Documents to which
the Buyer is a party shall when executed constitute, a valid and binding
obligation of the Buyer, enforceable in accordance with their respective terms,
except as such enforceability may be limited by applicable receivership,
conservatorship and supervisory powers of bank regulatory agencies generally as
well as by bankruptcy, insolvency, moratorium, reorganization or similar laws in
effect which affect the enforcement of creditors' rights generally, or rules of
law governing specific performance, equitable relief and other equitable
remedies.

             4.3. No Violation. The Buyer is not subject to or obligated under
its Organizational Documents, any applicable Law or any Contract, or any
license, franchise or permit, which would be breached or violated by its
execution, delivery or performance of this Agreement and the other Transaction
Documents to which the Buyer is a party.

             4.4. Governmental Authorities and Consents. Except as required by
(a) the Finance Laws, (b) the Insurance Laws and (c) the Change in Bank Control
Act and Utah banking Laws with respect to the change of control of Mill Creek
Bank, the Buyer is not required to submit any notice, report or other filing
with any Governmental Authority, and no consent, approval or authorization of
any Governmental Authority or any other Person is required to be obtained by the
Buyer, in connection with the execution or delivery by it of this Agreement and
the other Transaction Documents to which the Buyer is a party or the
consummation of the transactions contemplated hereby or thereby, except for the
filing and expiration or termination of the waiting period under the HSR Act.
Except for the consents, approvals and authorizations related to the conditions
set forth in Section 6.11(b) and (c) hereof, the Buyer is not aware of any fact
or circumstance relating to the Buyer which would prohibit or unduly restrict
the Buyer or any of the Sellers from obtaining any consent, approval or
authorization of any Governmental Authority or any other person which is
required to be obtained in connection with the transactions contemplated by this
Agreement.

             4.5. Litigation. As of the date hereof, there are no claims,
actions, suits, investigations, proceedings or orders pending or, to the Buyer's
knowledge, threatened against or affecting the Buyer at law or in equity, or
before or by any Governmental Authority, which

                                      -59-


would adversely affect the Buyer's performance under this Agreement and the
other Transaction Documents to which the Buyer is a party or the consummation of
the transactions contemplated hereby or thereby.

             4.6. Brokerage. No Person has any claim for brokerage commissions,
finders' fees or similar compensation in connection with the transactions
contemplated by this Agreement based on any arrangement or agreement made by or
on behalf of the Buyer.

             4.7. Availability of Funds. The Buyer has obtained commitment
letters (true and correct copies of which have heretofore been provided to the
Company) from financial institutions to borrow sufficient funds to enable it to
consummate the transactions contemplated by this Agreement. At the Closing, the
Buyer will have sufficient funds to enable it to consummate the transactions
contemplated by this Agreement.

             4.8. Stock Purchase. The Shares of any Subject Subsidiary purchased
by the Buyer pursuant to this Agreement, if any, are being purchased for
investment only and not with a view to any public distribution thereof, and the
Buyer will not offer to sell or otherwise dispose of such Shares so purchased by
it in violation of any of the registration requirements of the Securities Act of
1933, as amended, or any applicable state securities laws.

             4.9. Knowledge. As of the date hereof, the Buyer has no actual
knowledge of any change, circumstance, breach or event which constitutes or has
resulted in a Material Adverse Effect.

                                   ARTICLE V.

                              ADDITIONAL AGREEMENTS

             5.1. Tax Matters.

                  (a) Transfer Taxes. All transfer, documentary, sales, use,
stamp, registration and other such Taxes and fees (including any penalties and
interest thereon) incurred in connection with this Agreement shall be paid by
the Sellers when due, and the Sellers shall, at their own expense, file all
necessary Tax Returns and other documentation with respect to all such transfer,
documentary, sales, use, stamp, registration and other Taxes and fees, and if
required by applicable law, the Buyer shall join in the execution of any such
Tax Returns and other documentation; provided, however, the Sellers and the
Buyer hereby waive any requirements under any bulk sale rule arising from any
transaction under this Agreement that relates to the application of any sales or
use Taxes.

                  (b) Tax Sharing and Indemnification.

                        (i) The Sellers shall indemnify and hold harmless the
                  Buyer and its Affiliates, each Subject Subsidiary, each
                  Subsidiary of any Subject Subsidiary, and their respective
                  directors, officers, employees, representatives, agents,
                  successors and assigns with respect to any and all Losses that
                  may be imposed on the Buyer, any Subject Subsidiary, any
                  Subsidiary of any Subject Subsidiary, or in respect of the
                  Purchased Assets resulting from (A) any Taxes of any CFC Party


                                      -60-


                  for any Pre-Closing Tax Period, (B) any Taxes of any
                  Affiliated Group that includes Parent or any CFC Party,
                  including any Liability for Tax under Treasury Regulation
                  Section 1.1502-6 or any comparable state, local or foreign Tax
                  provision, except for any Taxes of any Subject Subsidiary (or
                  a Subsidiary of a Subject Subsidiary after the Closing Date)
                  for any Post-Closing Tax Period relating to an Affiliated
                  Group of which the Subject Subsidiary (or such Subsidiary of a
                  Subject Subsidiary) is a member after the Closing Date, (C)
                  any breach of any representation or warranty of the Sellers
                  contained in Section 3.22 or any schedule delivered pursuant
                  thereto, (D) any Taxes arising ------------ from a Section 338
                  Election with respect to any CFC Party, or (E) any Taxes
                  arising out of the application of any bulk sale rule under
                  federal, state, local or foreign law to any transaction
                  contemplated by this Agreement including Taxes resulting from
                  the failure to comply with any such bulk sale rule applicable
                  in respect of any sales and use taxes.

                        (ii) For any federal, state, local or foreign Tax
                  purposes, Taxes, if any, attributable to a Straddle Period of
                  any Subject Subsidiary or any Subsidiary of a Subject
                  Subsidiary shall be allocated to (A) the Sellers for the
                  Pre-Closing Tax Period, and (B) the Buyer for the Post-Closing
                  Tax Period. For purposes of the preceding sentence, Taxes for
                  the Pre-Closing Tax Period and for the Post-Closing Tax Period
                  of each Straddle Period shall be determined on the basis of an
                  interim closing of the books as of the close of business on
                  the Closing Date as if such Straddle Period consisted of one
                  Taxable period ending at the close of business on the Closing
                  Date followed by a Taxable period beginning on the day
                  following the Closing Date. For purposes of this subparagraph
                  (ii), exemptions, allowances or deductions that are calculated
                  on an annual basis, such as the deduction for depreciation,
                  shall be apportioned on a daily basis. Real, personal and
                  intangible property Taxes of any Selling Subsidiary or any
                  Subsidiary of any Subject Subsidiary or any Subsidiary of a
                  Subject Subsidiary shall be equal to the amount of such
                  property Taxes for the entire Straddle Period multiplied by a
                  fraction, the numerator of which is the number of days during
                  the Straddle Period that are in the Pre-Closing Tax Period and
                  the denominator of which is the total number of days in the
                  Straddle Period. For purposes of this Section 5.1 and the
                  representation contained in Section 3.22, any Tax that is
                  based in whole or in part on income earned during a particular
                  Taxable period shall be deemed to be a Tax attributable to and
                  imposed in respect of such Taxable period; provided, that for
                  purposes of this sentence, the term "Taxable period" shall
                  include any portion of a Taxable period that ends on and
                  includes the Closing Date.

                        (iii) Except as otherwise provided in Section 5.1, if a
                  payment is required under Section 5.1, the Sellers shall
                  discharge their obligation by paying the amount due not later
                  than 10 days after notice to the Sellers stating that an
                  amount is owed under Section 5.1 to the Buyer, the amount
                  thereof, and that an indemnity payment is requested.

                        (iv) For the avoidance of doubt, any amount payable by
                  the Sellers pursuant to Section 5.1(a) shall be reduced by any
                  estimated tax paid prior to

                                      -61-


                  Closing with respect to the Tax for which Buyer would
                  otherwise have been liable under Section 5.1(b)(i).

                  (c) Tax Returns.

                        (i) The Sellers shall prepare or cause to be prepared,
                  and file or cause to be filed, all Tax Returns of each CFC
                  Party, including consolidated, combined or unitary Tax Returns
                  which include any CFC Party, for all Taxable periods of each
                  CFC Party that end on or prior to the Closing Date. All such
                  Tax Returns shall be prepared on a basis that is consistent
                  with the manner in which the Sellers prepared or filed such
                  Tax Returns for prior periods. No later than 30 days prior to
                  the due date of such Tax Returns, the Sellers shall provide
                  the Buyer with copies of (A) in the case of consolidated,
                  combined or unitary Tax Returns that include a Subject
                  Subsidiary and any Subsidiary of such Subject Subsidiary, pro
                  forma materials for each Subject Subsidiary to be included in
                  such consolidated, combined or unitary Tax Returns, (B) all
                  other Tax Returns prepared by Sellers pursuant to Section
                  5.1(c), and (C) such work papers and other documents as may be
                  reasonably necessary to determine the accuracy and
                  completeness of such materials or Tax Returns. If the Buyer
                  notifies the Sellers in writing within 10 days after receiving
                  such materials or a Tax Return of any comments of the Buyer,
                  the Sellers shall incorporate any such reasonable comments
                  provided by the Buyer. If Sellers dispute the reasonableness
                  of any such comment by the Buyer, such dispute shall be
                  resolved by a "Big Four" accounting firm as selected by the
                  Buyer in its discretion (other than an accounting firm
                  regularly and materially used by the Buyer or its Affiliates)
                  and such Tax Returns (or any amendment to such return) shall
                  be filed in a manner consistent with resolution of such
                  dispute. The Sellers shall, upon the Buyer's request, make
                  reasonably available to the Buyer at a mutually convenient
                  time and location any personnel involved in the preparation of
                  any materials or Tax Return subject to this Section
                  5.1(c)(i)(A) and (B) for the purpose of answering any
                  questions the Buyer may have regarding any such materials or
                  Tax Return or the manner in which the same was prepared. The
                  Buyer shall be responsible for filing all Tax Returns required
                  to be filed by or on behalf of each Subject Subsidiary and
                  each Subsidiary of any Subject Subsidiary for Taxable periods
                  ending after the Closing Date.

                        (ii) With respect to any Tax Return required to be filed
                  by the Buyer pursuant to subparagraph (i) above for a Straddle
                  Period of any Subject Subsidiary or any Subsidiary of a
                  Subject Subsidiary, the Buyer shall provide the Company with
                  true copies of each of such completed Tax Returns, such work
                  papers and other documents as may be reasonably necessary to
                  determine the accuracy and completeness of such Tax Returns,
                  and a statement setting forth the amount of Tax shown on such
                  Tax Return that is allocable to the Sellers pursuant to
                  subparagraph (ii) of paragraph (b) above (the "Statement") at
                  least 30 days prior to the due date for the filing of such Tax
                  Return. If the Company notifies the Buyer in writing within 10
                  days after receiving the Statement that the Company questions
                  the information contained therein, then a "Big Four"
                  accounting firm as selected by the Buyer in its discretion
                  (other than an

                                      -62-


                  accounting firm regularly and materially used by the Buyer or
                  its Affiliates) shall be instructed to review the Statement
                  and determine its accuracy and reasonableness within 15 days.
                  If such accounting firm determines that the Statement is
                  accurate, or if the Company does not provide any such
                  notification, then not later than five days before the due
                  date for payment of Taxes with respect to such Tax Return, the
                  Sellers shall pay to the Buyer an amount equal to the Taxes
                  shown on the Statement as being allocable to the Sellers
                  pursuant to subparagraph (ii) of paragraph (a) above. If the
                  accounting firm appointed to review a Statement pursuant to
                  the foregoing procedure in this Section 5.1(c)(ii) determines
                  that the Statement is inaccurate, the Buyer will amend the
                  Statement and any related Tax Returns in a manner consistent
                  with removing any such inaccuracy, and the Sellers shall pay
                  the amount due to the Buyer within five days of the receipt of
                  the amended Statement.

                        (iii) After the Closing Date, the Buyer and the Sellers
                  shall provide each other with reasonable cooperation in
                  connection with the preparation of Tax Returns of the CFC
                  Parties and shall make available to the other and to any
                  Taxing authority, as reasonably requested, all information,
                  records or documents relating to Tax liabilities or potential
                  Tax liabilities of the Selling Subsidiaries and their
                  Subsidiaries for all periods prior to or including the Closing
                  Date and shall preserve all such information, records and
                  documents until the expiration of any statute of limitations
                  or extensions thereof.

                  (d) Tax Contests. The Buyer shall promptly notify the Company
in writing upon receipt by the Buyer, any Subject Subsidiary or any Subsidiary
thereof of written notice of any Tax Proceeding in respect of any Subject
Subsidiary or any Affiliate of any Subject Subsidiary which, if determined
adversely to the taxpayer, may be grounds for indemnification under this Section
5.1. Notwithstanding the foregoing, the failure of the Buyer to give notice
under the preceding sentence shall not affect the Buyer's right to
indemnification or relieve the Sellers of any other obligations hereunder unless
such failure shall preclude the defense of such claim and the Sellers have been
materially prejudiced by the Buyer's failure to give such notice, in which case
the Sellers shall be relieved from their obligations under Section 5.1 only to
the extent of such material prejudice. After notice to the Buyer, the Sellers
will have the right to elect to assume the defense of any such Tax Proceeding at
the Sellers' own expense. The Buyer and its representatives shall have the right
to observe any such Tax Proceeding with counsel of its choice and at its own
expense and to receive in advance copies of all submissions to be made to any
Tax authority or to any court. The Sellers, in exercising their control of any
such Tax Proceeding, shall consider in good faith all comments and suggestions
of the Buyer in respect of such Tax Proceeding, including but not limited to
comments on submissions and overall strategy. In the event that issues relating
to potential adjustment for which the Sellers may be held liable are required to
be dealt with in the same Tax Proceeding as separate issues relating to a
potential adjustment for which the Buyer, a Subject Subsidiary, a Subsidiary of
a Subject Subsidiary or an Affiliate thereof may be liable, the Buyer shall have
the right, at its own expense, to control the Tax Proceeding with respect to the
latter issues. Under waiver of its right to indemnity hereunder, the Buyer may
take sole control of any Tax Proceeding, at its sole cost and expense, and in
such case the Sellers shall have no right to observe or participate in such Tax
Proceeding. The Sellers shall not enter into any compromise or agreement to
settle any claim in a Tax

                                      -63-


Proceeding involving Liability for Taxes of a Subject Subsidiary, a Subsidiary
of a Subject Subsidiary, or for which the Sellers may otherwise be required to
indemnify the Buyer under this Agreement without the consent of the Buyer, such
consent not to be unreasonably withheld. Any refund received by the Buyer or any
Affiliate thereof of Taxes with respect to which the Sellers have made payment
pursuant to its obligation under Section 5.1(b) shall be for the account of the
Sellers.

                  (e) Tax Sharing Agreements. Any and all Tax sharing, Tax
indemnity or Tax allocation agreements between any Seller, a Subject Subsidiary
and/or any Affiliate thereof that were in effect at any time on or prior to the
Closing shall terminate not later than the Closing. No further amounts shall be
payable by any the Buyer, any Subject Subsidiary, any Subsidiary of a Subject
Subsidiary or any Affiliate thereof under such agreements following the Closing
and the Buyer, any Subject Subsidiary, any Subsidiary of a Subject Subsidiary,
or any Affiliate thereof shall have no further obligations thereunder following
the Closing. Notwithstanding the foregoing, with respect to the filing of
consolidated income Tax Returns to the extent permitted by law each Subject
Subsidiary shall elect to relinquish any carryback period which would include
any Pre-Closing Tax Period with respect to carrybacks of net operating losses,
net capital losses, unused tax credits and other deductible or creditable tax
attributes.

                  (f) Claims Adjusted for Tax Benefits. The amount of any
indemnity payment owed by the Sellers to the Buyer under this Section 5.1 shall
be adjusted if such indemnity payment is made in connection with (i) the
purchase of Purchased Businesses or (ii) the purchase of any Subject Subsidiary
or any Subsidiary of any Subject Subsidiary if a Section 338 Election is made
with respect to such purchase. The amount of any such indemnity payment shall be
reduced to take account of any net Tax benefit realized by the Buyer arising
from the item resulting in such indemnity payment, and increased by any net Tax
cost realized by the Buyer as a result of the receipt of such indemnity payment
being treated as income or as a reduction in purchase price. For purposes of
this Section 5.1(f), (x) any net Tax benefit shall be calculated by discounting
(based on semi-annual compounding) the Tax benefit from the date it is expected
to be realized to the date the indemnity payment is made using a discount rate
equal to the overpayment rate contained in Section 6621(a)(1) of the Tax Code
and (y) any net Tax cost shall be calculated by increasing the indemnity payment
by an interest factor (based on semi-annual compounding) equal to the
overpayment rate contained in Section 6621(a)(1) of the Tax Code from the
Closing Date to the date the indemnity payment is made.

                  (g) Allocation. Prior to the Closing, the Parties shall
endeavor to agree upon an allocation of the Purchase Price and the Assumed
Liabilities among the Purchased Assets. If the Parties agree upon such an
allocation, such allocation shall be used for all purposes, including Tax and
financial accounting purposes and including with respect to any Section 338
Election. The Sellers, their Affiliates and the Buyer will file all Tax Returns
(including amended returns and claims for refund) and information reports in a
manner consistent with such allocation. Without limiting the generality of the
foregoing, the Buyer's allocation of the adjusted grossed-up basis (within the
meaning of Treasury Regulation Section 1.338-5) and the Sellers' allocation of
the aggregate deemed sales price (within the meaning of Treasury Regulation
Section 1.338-4) shall be consistent with such allocation.

                                      -64-


                  (h) Cooperation on Tax Matters.

                        (i) The Buyer and the Sellers shall cooperate fully, as
                  and to the extent reasonably requested by any Party, in
                  connection with the filing of Tax Returns for the Purchased
                  Businesses, including without limitation any REMICs listed on
                  the Business Schedules, and any Tax Proceeding in respect of
                  the Purchased Businesses. Such cooperation shall include the
                  retention and (upon any Party's request) the provision of
                  records and information which are reasonably relevant to any
                  such Tax Proceeding and making employees available on a
                  mutually convenient basis to provide additional information
                  and explanation of any material provided hereunder. The Buyer
                  and the Sellers agree (A) to retain all books and records with
                  respect to Tax matters and pertinent to the Purchased
                  Businesses until the expiration of the statute of limitations
                  (and, to the extent notified by the other Party, any
                  extensions thereof) for the respective taxable periods, and to
                  abide by all record retention agreements entered into with any
                  taxing authority, and (B) to give the other Party reasonable
                  written notice prior to transferring, destroying or discarding
                  any such books and records and, if the other Party so
                  requests, such Party shall allow the other Party to take
                  possession of such books and records.

                        (ii) To facilitate the Buyer's decision on whether to
                  acquire assets through an election to purchase the Shares of a
                  Subject Subsidiary under Section 2.1(b), and whether to effect
                  a Section 338 Election in respect to one or more Subject
                  Subsidiaries, the Sellers shall deliver to the Buyer as
                  promptly as practicable following the execution and delivery
                  of this Agreement any and all information reasonably requested
                  by the Buyer in connection with determining the expected Tax
                  consequences of the transactions contemplated by this
                  Agreement (such information to include, without limitation,
                  information regarding the Tax attributes of the Sellers
                  including information regarding the adjusted tax basis of each
                  asset owned by any Selling Subsidiary). Such information shall
                  be provided at the Sellers' expense and shall be the most
                  current information reasonably available; provided, however,
                  that all such information shall be current as of a date no
                  earlier than September 30, 2002.

                  (i) Tax Election. In any case in which the Buyer elects a
Stock Sale, the Sellers will, at the Buyer's request no later than six months
after the Closing Date join in treating the transaction as a purchase of assets
for Tax purposes through an election under Tax Code Section 338(h)(10) and any
analogous provision of state, local or foreign Law (a "Section 338 Election").
The Buyer shall provide to the Sellers (i) a draft Internal Revenue Service Form
8023 no later than eight months after the Closing Date prepared in a manner
consistent with Section 5.1(g) and (ii) any other forms necessary to effect the
Section 338 Election under state, local or foreign Law no later than 30 days
prior to the due date thereof. Any dispute with respect to such forms shall be
resolved in the manner set forth in Section 5.1(c)(i) and such forms shall be
executed on behalf of the Sellers and delivered to the Buyer at least 15 days
prior to the last day for filing such forms when due and in the manner required
under applicable Law. The Buyer may make such requests separately with respect
to a Section 338 Election with respect to any Subject Subsidiary and any
Subsidiary of any Subject Subsidiary. If the Buyer requests that one

                                      -65-


or more Section 338 Elections be made with respect to any Subject Subsidiary
and/or any Subsidiary of any Subject Subsidiary, then Section 5.1(g) shall apply
to determine the allocation of the Purchase Price and other relevant items among
the assets of the Subject Subsidiaries and, if applicable, one or more of its
Subsidiaries. The Sellers shall deliver to the Buyer as promptly as practicable,
and in any event no later than May 1, 2003, any and all information in
connection with determining whether to make any Section 338 Election (such
information to include, without limitation, the adjusted tax basis of each asset
owned by any Selling Subsidiary and the Sellers' (and any Affiliate of the
Sellers') tax basis in the stock of each Selling Subsidiary). Any and all
information provided pursuant to this Section 5.1(i) shall be provided at the
Sellers' expense and shall be the most current information reasonably available;
provided, however, that (x) all such information provided shall be current as of
no earlier than September 30, 2002, (y) the Sellers shall deliver to the Buyer
as promptly as practicable, and in any event within 20 days of receipt of the
Buyer's request therefor, updates of the information provided pursuant to (x) of
this proviso that is current as of no earlier than December 31, 2002.

             5.2. Access to Information and Facilities. The Sellers agree that,
during the Pre-Closing Period, the Buyer and its representatives shall, upon
reasonable notice and so long as such access does not unreasonably interfere
with the business operations of any CFC Party, have full access to all
Facilities, officers and management employees (and the Sellers shall use their
commercially reasonable efforts to cause the CFC Parties' independent
accountants to be available to the Buyer on the same basis) and shall be
entitled to make such reasonable investigation of the properties, businesses and
operations of the CFC Parties and such examination of the Records and financial
condition of the CFC Parties as it reasonably requests.

             5.3. Confidentiality.

                  (a) The Buyer acknowledges that all information provided to it
and any of its Affiliates, employees, agents and representatives by the Sellers
and their respective Affiliates, employees, agents and representatives
("Confidential Information") is subject to the terms of the Confidentiality
Agreement, the terms of which are hereby incorporated herein by reference
although, notwithstanding such agreement, the Buyer may disclose Confidential
Information to any nationally recognized securities or statistical rating agency
if and to the extent that the Buyer determines that doing so is desirable.
Effective upon, and only upon, the Closing, the Confidentiality Agreement shall
terminate; provided, however, that Buyer acknowledges that the Confidentiality
Agreement shall terminate only with respect to Confidential Information that
relates solely to the Purchased Businesses.

                  (b) The Company agrees that, after the Closing Date, the
Company shall, and shall use all reasonable efforts to cause its Affiliates and
its and their directors, officers, employees and advisors to, keep the Buyer
Information (as defined below) confidential following the Closing Date, except
that any such Buyer Information required by law or legal or administrative
process to be disclosed may be disclosed without violating the provisions of
this Section 5.3(b). For purposes of this Agreement, the term "Buyer
Information" shall mean all information concerning the Buyer and its Affiliates
(including information relating to the Purchased Businesses or any client,
customer or supplier of the Purchased Businesses).

                                      -66-


             5.4. Conduct of the Businesses Prior to Closing. Subject to the
obligations of a debtor-in-possession and any limitations on operations imposed
by the Bankruptcy Court, except as otherwise expressly contemplated by this
Agreement (including without limitation the filing of the Chapter 11 Case) or
with the prior written consent of the Buyer, during the Pre-Closing Period, the
CFC Parties shall (a) conduct the Purchased Businesses in the ordinary course of
business consistent with past practice; (b) use commercially reasonable efforts
to preserve intact the Purchased Businesses and the value of the Purchased
Assets, to keep available the services of its current employees and agents and
to maintain its relations and good will with its customers, regulators and any
others with whom or with which it has business relations; (c) not take any
action in violation of this Agreement; (d) file all Tax Returns when due (taking
into account all extensions) and pay all Taxes when due; and (e) use all Excess
Cash to repay the DIP Loan in accordance with the terms thereof, to the extent
there is then outstanding indebtedness under the DIP Loan.

             5.5. Restrictions on Certain Actions. Without limiting the
generality of Section 5.4, and except as otherwise set forth in Section 5.5 of
the Business Schedules or as otherwise expressly provided in this Agreement,
prior to the Closing, the Company shall not and shall not permit any Subsidiary,
without the prior written consent of the Buyer, to:

                  (a) mortgage, pledge, assign, grant any participation or
security interest in or otherwise further encumber any of the Purchased Assets;

                  (b) sell, transfer or liquidate Purchased Assets unless such
sale, transfer or liquidation is in the ordinary course of business consistent
with past practice and all proceeds from such activities are used to (i) reduce
the Lehman Debt Amount, (ii) eliminate, discharge or reduce Assumed Liabilities
or (iii) purchase, originate or acquire additional assets, properties, contracts
and rights of the same type as the assets, properties, contracts and rights
sold, transferred or liquidated and which are acceptable to the Buyer as
Purchased Assets; provided, however, that in no event shall more than $10
million in aggregate outstanding principal balance of Purchased Assets be sold,
transferred or liquidated during the Pre-Closing Period; and provided, further,
that (I) the Company may sell to Lehman Brothers Holdings Inc. or its Affiliates
during the period from December 19, 2002 to the Closing Date (A) up to $318
million in outstanding principal balance of Loans subject to the Lehman
Warehouse Facility and (B) up to $150 million per month in outstanding principal
balance of Loans originated with the proceeds of the Additional Lehman Debt, in
each case provided there is a corresponding reduction in the Lehman Debt Amount
and at a price at not less than such outstanding principal balance, without the
prior written consent of the Buyer and (II) the Company may sell the MH
Community Loans and Floorplan Certificates on economic terms not materially
different than as set forth in Section 5.5 of the applicable Business Schedules
and apply the net proceeds received therefrom (after repayment of related
indebtedness) as required by the DIP Loan;

                  (c) amend its Organizational Documents; provided that the
Company shall be entitled to convert Conseco Finance Servicing Corp., Conseco
Finance Credit Corp., Conseco Finance Corp.-Alabama, Conseco Finance Advance
Receivables Corp. and Conseco Finance Liquidation Expense Advance Receivables
Corp. to a limited liability company;

                                      -67-


                  (d) except for the potential sale of Conseco Finance Credit
Card Funding Corp. pursuant to the transactions contemplated by the GE Approved
Agreement, (i) issue, sell or deliver (whether through the issuance or granting
of options, warrants, commitments, subscriptions, rights to purchase, or
otherwise) any shares of its capital stock of any class or any other securities
or equity equivalents; or (ii) amend in any material respect any of the terms of
any such securities outstanding as of the date hereof;

                  (e) (i) split, combine or reclassify any shares of its capital
stock or any other securities or equity equivalents; (ii) declare, set aside or
pay any dividend or other distribution (whether in cash, stock or property or
any combination thereof) in respect of its capital stock or any other securities
or equity equivalents; (iii) repurchase, redeem or otherwise acquire any of its
securities; (iv) adopt a plan of complete or partial liquidation or resolutions
providing for or authorizing a liquidation, dissolution, merger, consolidation,
restructuring, recapitalization, or other reorganization of any CFC Party; or
(iv) repay intercompany indebtedness owed to Affiliates except in payment of
services rendered;

                  (f) (i) create, incur, guarantee, or assume any indebtedness
for borrowed money or otherwise become liable or responsible for the obligations
of any other Person; or (ii) other than in the ordinary course of business, make
any loans, advances, or capital contributions to, or investments in, any other
Person (other than to wholly owned Subsidiaries or another CFC Party, except
Mill Creek Bank or Mill Creek Bank Servicing Corp.) other than the DIP Loan or
Additional Lehman Debt;

                  (g) except as specifically set forth in the GE Approved
Agreement, or as may be required by applicable Laws, enter into, adopt or make
any material amendments to or terminate any collective bargaining agreement,
bonus, profit sharing, compensation, severance, termination, stock option, stock
appreciation right, restricted stock, performance unit, stock equivalent, stock
purchase, pension, retirement, deferred compensation, employment, severance or
other employee benefit agreement, trust, plan, fund or other arrangement for the
benefit or welfare of any director, officer or employee; provided that the
Company and its Subsidiaries shall not be restricted from entering into, making
any amendment to or terminating any agreement with an immaterial number of
individual directors, officers or employees or an immaterial group of employees
in the ordinary course of business;

                  (h) acquire (by merger, consolidation, or acquisition of stock
or assets or otherwise) any Person, or other business organization or division
thereof which would be included in the Purchased Businesses;

                  (i) make any capital expenditure or expenditures in the
Purchased Businesses in excess of the aggregate amount set forth in the capital
expenditures budget agreed upon by the Parties or, in the absence of such an
agreement, not consistent with past practices;

                  (j) enter into, assume, amend, modify, cancel, waive or change
in any respect any Assumed Agreement, any material Contract other than solely
with respect to an Excluded Business or Excluded Asset, the Lehman Documents
(other than any amendment to continue the forbearance period under the Lehman
Forbearance Agreement, provided no such amendment includes any provision which
adversely affects the Purchased Assets, the Assumed Liabilities, or

                                      -68-


the Purchase Price) or the GE Approved Agreement; provided however that the
Company or any of its Subsidiaries may amend the GE Approved Agreement without
the consent of the Buyer if such amendment does not adversely affect the Buyer;

                  (k) enter into any Contract with an Affiliate other than
Contracts entered into in the ordinary course of business consistent with past
practices, involving no more than $100,000 per Contract or series of related
Contracts and that do not affect or impact the Purchased Assets or the Assumed
Liabilities or interfere with or impede the consummation of the transactions
contemplated hereby;

                  (l) with respect to the Purchased Businesses, change in any
material respect any of the accounting principles or practices used by it,
except for any change required by reason of a concurrent change in generally
accepted accounting principles, or write-down the value of any assets, revalue
any asset or write-off as uncollectible any receivables except in the ordinary
course of business consistent with past practices;

                  (m) make any changes in material servicing, billing or
collection operations or policies of the Purchased Businesses;

                  (n) with respect to the Purchased Businesses, deviate in any
material respect from existing policies and procedures with respect to (i)
classification of assets; (ii) accrual of interest; (iii) underwriting, pricing,
originating, selling and servicing; and (iv) obtaining or extending financing
and credit; or

                  (o) breach or otherwise fail to perform any of their material
duties under their asset-backed securities transactions and servicing agreements
other than as contemplated by the Parties in connection with the Chapter 11
Case.

                  If, prior to the Closing, the DIP Loan has been terminated,
the Sellers shall agree to amend this Agreement to incorporate in all material
respects into this Agreement those covenants (or portions thereof) of the
"Borrower" thereunder contained in ARTICLES VI, VII and VIII of the DIP Loan as
may be requested by the Buyer in good faith, other than the Excluded Covenants
(as defined below) and those covenants (or portions thereof) that are not
reasonably applicable to an asset seller (as opposed to a borrower). "Excluded
Covenants" means the covenants contained in Section 7.9, 7.11, 8.1, 8.2, 8.3,
8.4, 8.5, 8.6, 8.9, 8.10 and 8.12 of the DIP Loan.

             5.6. Press Releases and Announcements. No press releases or public
disclosure related to this Agreement and the transactions contemplated herein,
or other announcements to the employees, customers or suppliers of any Party
shall be issued without the mutual prior written approval of the Parties, except
for any public disclosure which is required by applicable law or regulation.
Prior to making any public disclosure required by applicable Law or regulation,
the disclosing Party shall give the other Party a copy of the proposed
disclosure and reasonable opportunity to comment on the same to the extent
practicable.

                                      -69-


             5.7. Approvals of Third Parties; Satisfaction of Conditions to
Closing.

                  (a) Subject to the terms of this Agreement, the Parties will
use their reasonable best efforts to cause the Closing to occur, and will
cooperate with one another, to secure all necessary consents, approvals,
authorizations and exemptions from Governmental Authorities and other third
parties, including all consents required by Sections 6.4 and 7.4, as promptly as
possible. The Sellers, with the Buyer's reasonable cooperation, will use their
reasonable best efforts to obtain the satisfaction of the conditions specified
in ARTICLE VI. The Buyer, with the Sellers' reasonable cooperation, will use its
reasonable best efforts to obtain the satisfaction of the conditions specified
in ARTICLE VII.

                  (b) The Parties shall cooperate in preparing, submitting,
filing, updating and publishing (as applicable), as expeditiously as possible,
all applications, notifications and other filings as may be required by or may
be advisable under applicable Laws with respect to the transactions contemplated
by this Agreement, including, without limitation, those of the FDIC, the State
Banking Authority and any other applicable state or federal regulatory agency
and those under the HSR Act. The Parties shall bear the costs and expenses of
their respective filings; provided, however, that each of the Buyer and the
Company shall pay one-half the filing fees in connection with the filing under
the HSR Act. The Parties shall use their respective reasonable best efforts to
make such filings as promptly as practicable (and in any event within 10
Business Days) following December 19, 2002. The Parties will use their
commercially reasonable best efforts to obtain such approvals and accomplish
such actions as expeditiously as possible (provided, however, that neither Party
shall be required to agree to commercially unreasonable and materially
burdensome conditions, other than any requirement that it be well-capitalized).

                  (c) The Parties shall respond to any requests for additional
information made by either of such agencies, as expeditiously as possible, and
to cause the waiting periods under applicable laws and regulations, including
the HSR Act, to terminate or expire at the earliest possible date and to resist
in good faith, at each of their respective cost and expense (including the
institution or defense of legal proceedings), any assertion that the
transactions contemplated hereby constitute a violation of the antitrust or
competition Laws, all to the end of expediting consummation of the transactions
contemplated hereby. Each of the Buyer, on the one hand, and the Sellers, on the
other, shall consult with the other prior to any meetings, by telephone or in
person, with the staff of the applicable Governmental Authorities, and each of
Buyer and the Sellers shall have the right to have a representative present at
any such meeting.

                  (d) Each Party represents, warrants and agrees that any
information furnished by it for inclusion in any regulatory application will be
true and complete as of the date so furnished.

             5.8. Bankruptcy Actions.

                  (a) The Company and Conseco Finance Servicing Corp. filed
their respective Chapter 11 Cases on December 17, 2002. The Filing Company
Subsidiaries except the SPEs commenced their Chapter 11 Cases on or before
February 3, 2003. The Company may defer the commencement of a Chapter 11 Case
with respect to the SPEs until such date prior to the Closing Date as shall be
agreed between the Company and the Buyer, it being expressly

                                      -70-


understood that, (A) such deferred filing date shall not be later than a date as
will allow, in the reasonable judgment of the Buyer and assuming, for this
purpose, that the other conditions set forth in this Agreement would be
satisfied, (I) the Closing to occur on a date not later than the date the
Closing would have occurred but for such delayed filing and (II) the provisions
of the Sale Order to be fully effective as to the SPEs and binding on holders of
claims against, and interests in, the SPEs and (B) the Company and the SPEs
shall take all actions within their power (including, without limitation, giving
notice and taking other actions in connection with the Company's Chapter 11
Case) to allow the transfer of the Purchased Assets owned by the SPEs to take
place on the Closing Date. Except for the SPEs, any other Selling Subsidiary
that has not commenced a Chapter 11 Case shall not be required to file without a
written amendment to this Purchase Agreement signed by the Company, the Selling
Subsidiary, and the Buyer. The Sellers who have commenced a Chapter 11 Case
shall obtain enter of the Sale Order by March 14, 2003 and the entry of a final
9019 Order not later than the date provided in the DIP Loan.

                  (b) The Buyer covenants and agrees that it shall cooperate
with the Sellers in connection with furnishing information or documents to
Sellers to satisfy the requirements of adequate assurance of future performance
under section 365(f)(2)(B) of the Bankruptcy Code.

                  (c) In the event an appeal is taken, or a stay pending appeal
is requested from any of the Orders of the Bankruptcy Court in connection with
the sale of the Purchased Assets, the Sellers shall immediately notify the Buyer
of such appeal or stay request and, upon the Buyer's request, shall provide to
the Buyer within three Business Days after the Sellers' receipt thereof a copy
of the related notice of appeal or order of stay. The Sellers shall also provide
the Buyer with written notice of any motion or application filed in connection
with any appeal from any of such Orders.

             5.9. Exclusivity; No Solicitation of Transactions. The Sellers
represent that, other than the transactions contemplated by this Agreement, they
are not parties to or bound by any agreement with respect to a possible merger,
sale, restructuring, refinancing or other disposition of all or any material
part of the Purchased Businesses or the Purchased Assets. Prior to the entry of
the Bidding Procedures Order on the Bankruptcy Court's docket, the Sellers shall
not, directly or indirectly, (a) solicit or participate in negotiations or
discussions regarding any Acquisition Proposal, regardless of whether such offer
was unsolicited, or furnish any information with respect to, assist or
participate in or facilitate in any other manner any effort or attempt by any
Person (other than the Buyer and its Affiliates) to do or seek to do any of the
foregoing, (b) execute an agreement with respect to an Acquisition Proposal, or
(c) except as provided in this Agreement, seek or support Bankruptcy Court
approval of a motion or Order inconsistent in any way with the transactions
contemplated in this Agreement. Subsequent to the entry of the Bidding
Procedures Order on the Bankruptcy Court's docket, the Sellers shall not,
directly or indirectly, through any officer, director, employee, agent,
professional or advisor, solicit any Acquisition Proposal (other than as
expressly permitted under the Bidding Procedures Order) or participate in any
negotiations or discussions with respect to any Acquisition Proposal; provided,
however, that after entry of the Bidding Procedures Order on the Bankruptcy
Court's docket, nothing herein shall preclude the Sellers from taking any action
in the Chapter 11 Case seeking to sell, pursuant to a Qualifying Bid (as defined
in the Original Agreement) in connection with the Auction process established in
the Bidding Procedures Order, the Purchased Assets. From the date of the
issuance of the Sale Order and until the Closing Date and provided that the
Buyer

                                      -71-


is proceeding in good faith to consummate the transactions contemplated hereby
in a timely manner, neither the Sellers nor any of their Affiliates shall
discuss, negotiate or consummate any transaction involving (i) the issuance,
redemption, sale or exchange or other disposition of any equity interest in the
Sellers or (ii) the sale, exchange, liquidation, reorganization, or other
disposition of all or any part of the Purchased Assets. Notwithstanding the
foregoing, the Sellers shall not be restricted from entering into the Backup
Agreements.

             5.10. Employees.

                  (a)

                        (i) Subject to Section 5.10(a)(iii), the Buyer shall
                  offer employment, effective as of the Closing Date, to those
                  Employees who are employed primarily in the Purchased
                  Businesses as identified in Section 5.10(a) of the applicable
                  Business Schedules (the "Business Employees") as of the
                  Closing Date (other than any such Employees in respect of whom
                  a notice of termination of employment has been given by the
                  Company or one of its Subsidiaries); provided, however, that
                  the Buyer shall have the option not to offer employment to
                  some or all of the Business Employees and in lieu thereof pay
                  severance to any such Business Employee not offered employment
                  in accordance with the amount of severance set forth on the
                  list which was provided to the Buyer in accordance with
                  Section 3.14. To the extent permitted under applicable Law,
                  the payment of severance to any Business Employee not offered
                  employment shall be reduced by any liability of the Buyer to
                  such Business Employee under the Federal Worker Adjustment
                  Retraining and Notification Act of 1988, as amended (the "WARN
                  Act"), and the Sellers shall take such actions as are
                  reasonably required, including the amendment of any severance
                  plan or agreement covering the Business Employees, to allow
                  for such reductions. Each Business Employee who is paid
                  severance by the Buyer shall be required as a condition to the
                  receipt of such severance to execute a general release in
                  favor of the Buyer and its Affiliates and the Sellers and
                  their Affiliates in form and substance satisfactory to the
                  Buyer. Subject to Section 5.10(a)(iii), Liabilities for paid
                  time off, sick leave and vacation pay for Business Employees
                  as set forth under the heading "PTO" in Section 5.10(a) of the
                  applicable Business Schedules shall be Assumed Liabilities
                  hereunder.

                        (ii) Promptly following the execution of this Agreement,
                  the Sellers shall provide the Buyer with such assistance as
                  the Buyer may request with respect to identifying employees
                  who are not Business Employees but who perform significant
                  support functions for the Purchased Businesses ("Support
                  Employees"). The Buyer shall have until April 30, 2003 to
                  determine which Support Employees shall be offered employment.
                  The Buyer, in its sole discretion, shall have the right to
                  offer employment to any Support Employee provided, however,
                  that if the GE Condition is satisfied, the Buyer shall have
                  the right to offer employment to any Support Employee (A) who
                  performs significant support functions for the Purchased
                  Businesses, (unless the Buyer agrees that GE may offer
                  employment to any such employee), (B) who performs significant

                                      -72-


                  support functions in the HI Origination Business or the PL
                  Business, subject to the prior consent of GE unless GE does
                  not offer employment to such employees, (C) listed under the
                  "Unallocated" heading on Section 5.10(a) of the Business
                  Schedules, subject to the fourth sentence of this Section
                  5.10(a)(ii) and except for Gayle Mines and Ann Heefer and (D)
                  except Chad Cook and Kevin Van Voorst listed on Section
                  5.10(a) of the Business Schedules. Support Employees listed
                  under the heading "Unallocated Risk Management Employees" on
                  Section 5.10(a) of the Business Schedules ("URM Employees")
                  shall be offered employment by such joint venture as the Buyer
                  and GE shall establish (the "JV Arrangements") in accordance
                  with such terms as mutually agreed upon by the parties to the
                  JV Arrangements, including an allocation of costs within the
                  joint venture based on the proportion of work done for each
                  respective joint venture party, and Buyer shall not offer
                  employment to any URM Employee, except that if the Closing
                  Date occurs prior to the closing of the transactions
                  contemplated by the GE Approved Agreement, the Buyer may offer
                  employment to URM Employees. If the Buyer has offered
                  employment to URM Employees (pursuant to the above sentence),
                  any such employees who accept the Buyer's offer shall remain
                  employees of Buyer until the closing of transactions
                  contemplated by the GE Approved Agreement, and thereafter
                  shall be employed pursuant to the JV Arrangements, except that
                  if the GE Approved Agreement is terminated, such URM Employees
                  shall continue as employees of the Buyer. During such time as
                  any URM Employees are employed by the Buyer prior to either
                  the closing of the transactions contemplated by the GE
                  Approved Agreement or, in the event of the termination of the
                  GE Approved Agreement, such time that the Sellers sell or
                  liquidate the Excluded Businesses (but in no event later than
                  six months following the Closing Date) such employees shall
                  continue to provide support services to the Excluded
                  Businesses, and the Sellers (or GE if appropriate) shall
                  reimburse the Buyer for the proportionate cost of employing
                  such URM Employees, based on the percentage of such employees'
                  time dedicated to the Excluded Businesses, as mutually
                  determined by the Buyer and the Sellers in good faith. Except
                  with respect to URM Employees who are employed jointly
                  pursuant to the JV Arrangements as described herein, the Buyer
                  shall have no Liability whatsoever for Support Employees who
                  are not offered employment or who do not accept such offers of
                  employment. Liabilities for paid time off, sick leave and
                  vacation pay for Support Employees who are hired pursuant to
                  this paragraph (ii) as set forth under the heading, "PTO", on
                  a schedule that was provided to the Buyer shall be Assumed
                  Liabilities hereunder.

                        (iii) Promptly following the execution of this
                  Agreement, the Sellers shall provide the Buyer and its
                  representatives, advisors and accountants with such assistance
                  as the Buyer may request with respect to identifying any
                  Employees who are included in Section 5.10(a) of the
                  applicable Business Schedules who are corporate-level
                  Employees whose costs may have been allocated to one or more
                  of the Purchased Businesses. Any such employees whose salary
                  and wages have been historically (over the past 12 months)
                  allocated to, or otherwise treated as, corporate overhead
                  expense may, at the Buyer's option, be excluded from the
                  definition of Business Employees (and therefore

                                      -73-


                  from Section 5.10(a) of the applicable Business Schedules).
                  The Buyers shall have no Liability whatsoever for Employees
                  who are so excluded from the definition of Business Employees
                  (and Section 5.10(a) of the applicable Business Schedules).

                        (iv) If the GE Condition is satisfied, notwithstanding
                  anything to the contrary in Section 5.10(a), the Buyer shall
                  offer employment to all employees listed on the IT Employees
                  portion of Section 5.10(a) of the applicable Business
                  Schedules where such employees are listed under the "CFN"
                  column ("Buyer IT Employees") and the Buyer shall not offer
                  employment to any employees listed on the IT Employees portion
                  of Section 5.10(a) of the applicable Business Schedules where
                  such employees are listed under the "GE PL/HI/CI" column ("GE
                  IT Employees"). If the GE Condition is satisfied, (A) the
                  Buyer will assume severance and paid time off, sick leave and
                  vacation pay obligations (on a basis otherwise consistent with
                  this Section 5.10 and as set forth on the list provided
                  pursuant to Section 3.14) with respect to Buyer IT Employees
                  and will assume no Liabilities for paid time off, sick leave
                  and vacation pay as set forth under the heading "PTO" on the
                  schedule that was provided to the Buyer pursuant to Section
                  3.14 or severance with respect to GE IT Employees and (B) no
                  GE IT Employees will be Business Employees.

                  (b) Those Business Employees and Support Employees who are
offered employment and accept such offers of employment and become employees of
the Buyer are referred to herein as the "Transferred Employees". Each such offer
of employment shall be at the same salary or wage level (and on substantially
the same terms and conditions) applicable to each such Transferred Employee
immediately prior to the Closing and the Buyer shall not reduce such salary or
wage level during the 12-month period following the Closing. The Buyer also
agrees to provide the Transferred Employees and their covered dependents with
welfare and retirement benefits that are reasonable and customary for a business
of the type and size of the Buyer. Except with respect to URM Employees who are
employed pursuant to the JV Arrangements as described herein, the Buyer shall
have no obligation to offer employment to, and shall assume no liability with
respect to, any employees other than the Business Employees.

                  (c) Within 45 days of the Closing Date, the Buyer shall pay
Business Employees the commissions relating to pre-Closing loan originations for
the month in which the Closing occurs, as calculated under the commission
program in effect immediately prior to the Closing, regardless of whether such
program is in effect at any time following the Closing.

                  (d) As soon as reasonably practicable following the Closing,
the Buyer or one of its Affiliates shall establish a tax-qualified deferred
contribution retirement plan and, to the extent allowable by Law, the Buyer
shall take any and all necessary action to cause the trustee of such plan, if
requested to do so by a Transferred Employee, to accept a direct "rollover" of
all or a portion of such employee's distribution (excluding "employer
securities" as defined in ERISA) from any Employee Benefit Plan which is a
tax-qualified retirement plan, provided that, with respect to each such plan,
the Sellers have provided to the Buyer such information as requested by the
Buyer sufficient to establish that such plan is qualified under Section 401(a)
of the Tax Code.

                                      -74-


                  (e) The Buyer shall pay to each Transferred Employee whose
employment is terminated by the Buyer or one of its Affiliates within 12 months
of the Closing Date severance equivalent to that set forth on the list which was
provided to the Buyer in accordance with Section 3.14.

                  (f) The CFC Parties agree to timely perform and discharge all
requirements under the WARN Act to the extent applicable and under applicable
state and local laws and regulations for the notification of its Employees
arising from the sale of the Purchased Assets to the Buyer up to and including
the Closing Date for those employees who will become Transferred Employees
effective as of the Closing Date. After the Closing Date, the Buyer shall be
responsible for performing and discharging all requirements under the WARN Act
and under applicable state and local laws and regulations for the notification
of its employees with respect to the Purchased Assets and the Businesses. The
Parties shall provide one another with all assistance reasonably requested by
each Party to ensure that the Parties can comply with their respective
notification requirements of the WARN Act, including assistance with the
provision of such notices to Employees prior to Closing. The Buyer agrees to
indemnify the Sellers and their Affiliates and their respective directors,
officers, employees, consultants and agents for, and to hold them harmless from
and against, any and all Losses arising or resulting, or alleged to arise or
result from liabilities arising under the WARN Act with respect to any
Transferred Employees or to any Business Employees not offered employment by the
Buyers, provided that the Sellers have complied with the covenants set forth in
Section 5.10(a).

                  (g) To the extent permitted under the Buyer's welfare benefit
plans, the Buyer shall (i) waive pre-existing condition requirements (except
with respect to any pre-existing condition for which coverage was denied under
any welfare benefit plan of the CFC Parties), evidence of insurability
provisions, waiting period requirements or any similar provisions under any
welfare benefit plans maintained by the Buyer for Transferred Employees after
the Closing Date, and (ii) apply toward any deductible requirements and
out-of-pocket maximum limits under its Employee welfare benefit plans any
amounts paid (or accrued) by each Transferred Employee under the CFC Parties'
welfare benefit plans during the applicable plan year in which the Closing Date
occurs. The Buyer shall recognize for purposes of eligibility and vesting under
its policies and employee benefit plans, the service of any Transferred Employee
with the CFC Parties or any of their Affiliates prior to the Closing Date.

                  (h) Claims of Transferred Employees and their eligible
beneficiaries and dependents for medical, dental, prescription drug, life
insurance, and/or other welfare benefits ("Welfare Benefits") (other than
disability benefits as described below) that are incurred before the Closing
Date shall be the sole responsibility of the Sellers and the Sellers' welfare
benefit plans. Claims of Transferred Employees and their eligible beneficiaries
and dependents for Welfare Benefits (other than disability benefits) that are
incurred on or after the Closing Date shall be the sole responsibility of the
Buyer and the Buyer's welfare benefit plans. For purposes of the preceding
provisions of this paragraph, a medical/dental claim shall be considered
incurred on the date when the medical/dental services are rendered or
medical/dental supplies are provided, and not when the condition arose or when
the course of treatment began. Claims of individuals receiving long-term
disability benefits under a disability plan of the Sellers or any CFC Party as
of the Closing Date shall be the sole responsibility of the Sellers and such
plan. Claims of Transferred Employees and their eligible beneficiaries and
dependents for short-term

                                      -75-


or long-term disability benefits that are made on or after the Closing Date
shall be the sole responsibility of the Buyer.

                  (i) The CFC Parties shall be responsible for satisfying
obligations under Section 601 et seq. of ERISA and Section 4980B of the Tax
Code, to provide continuation coverage to or with respect to any of the CFC
Parties' employees and their covered dependents in accordance with law with
respect to any "qualifying event" occurring on or prior to the Closing Date
(including any termination of employment of an Employee which occurs in
connection with the transaction contemplated herein). The Buyer shall be
responsible for satisfying obligations under Section 601 et seq. of ERISA and
Section 4980B of the Tax Code, to provide continuation coverage to or with
respect to any of the Transferred Employees and their covered dependents in
accordance with law with respect to any "qualifying event" which occurs after
the Closing Date.

                  (j) Section 5.10(j) of the Business Schedules identifies all
employment, retention, severance, change in control and any other similar
agreements between the Sellers or any Affiliate of the Seller and any
Transferred Employee (the "Employee Agreements"). The Buyer shall have no
Liability with respect to any Employee Agreement except for the Assumed
Retention Agreements, copies of which have been provided to the Buyer, and then
only to the extent the Employee who is a party to the Assumed Retention
Agreement is not employed primarily in an Excluded Business.

             5.11. Transition. Subject to the obligations of a
debtor-in-possession and any limitations on operations imposed by the Bankruptcy
Court, the Sellers shall operate in good faith in an effort not to take any
action which is designed, intended or might reasonably be anticipated to have
the effect of discouraging customers, suppliers, vendors, service providers,
employees, lessors, licensors and other business relations from maintaining the
same business relationships with the Purchased Businesses after the date of this
Agreement and during the Pre-Closing Period, the Sellers shall use their
commercially reasonable good faith efforts to encourage customers, suppliers,
vendors, service providers, employees, lessors, licensors and other business
relations to maintain the same business relationships with the Purchased
Businesses after the date of this Agreement. On and after the date hereof, the
Sellers shall cooperate with the Buyer to identify and provide all reasonable
information and access with respect to the transition services referred to in
Section 5.28 and Section 6.6.

             5.12. Seller's Trademarks. After the Closing, the Buyer may use and
distribute in connection with the ownership or operation of the Purchased
Business shipping materials, stationery, invoices, sales, promotional or other
forms and literature comprising part of the Purchased Assets and which bear the
name "Conseco" or "Conseco Finance" or the Conseco design (except as are
transferred to the Buyer at Closing) only if the Buyer uses all commercially
reasonable efforts to attach a sticker, name plate or other notice previously
approved by the Seller which discloses the acquisition of such Purchased
Asset(s) by the Buyer. Such right shall terminate 180 days following the Closing
Date. Once such right has terminated, the Buyer shall deliver (or cause to be
delivered) to the Sellers, destroy or cause to be destroyed (with a
certification of destruction), all of such items and the Buyer further agrees
that it shall immediately cease to use or display names or materials bearing the
name "Conseco", "Conseco Finance" or the Conseco design trademarks or any
derivative thereof.

                                      -76-


             5.13. Notices to Obligors. No later than 15 days prior to the
Closing Date, the Company shall prepare, and transmit to each Obligor on each
Loan that is part of the Purchased Assets, a notice in a form satisfying the
requirements, as applicable, of Regulation X of the Department of Housing and
Urban Development under the Real Estate Settlement Procedures Act, as well as
all other applicable legal requirements, and reasonably acceptable to the Buyer,
to the effect that the Loan and, as applicable, the servicing of the Loan, will
be transferred to the Buyer at Closing and directing that payments be made after
the Closing Date to the Buyer at any address of the Buyer specified by the
Buyer, with the Buyer's name as payee on any checks or other instruments used to
make such payments and the Buyer will notify each Obligor of the effectiveness
of the Closing. The Company and the Buyer shall consult and cooperate with each
other in the preparation of such notices and they each shall bear one-half of
the expenses incurred for the preparation and transmission of such notices. With
respect to all such Loans on which payment notices or coupon books have been
issued, the Buyer shall have the opportunity to prepare new payment notices or
coupon books reflecting the name and address of the Buyer as the Person to whom
and the place at which payments are to be made and to have such new payment
notices or coupon books included with the notices prepared and transmitted by
the Company.

             5.14. Non-Solicitation and Non-Competition.

                  (a) The Sellers acknowledge that the agreements and covenants
contained in this Section 5.14 are essential to protect the value of the
Purchased Assets being acquired by the Buyer.

                  (b) During the period commencing on the date of the Original
Agreement and ending on the fifth anniversary of the Closing Date, neither the
Sellers nor any of their Subsidiaries shall for themselves or on behalf of or in
conjunction with any Person, directly or indirectly, solicit, endeavor to entice
away from the Buyer, or otherwise directly or indirectly interfere with the
relationship of the Buyer with any Person who within the prior 12 months had
been an employee of the Buyer; provided, however, that the foregoing provision
will not prevent the Sellers from hiring any such Person (i) who responds to a
public advertisement placed by the Sellers or any of their Subsidiaries, or (ii)
who has been terminated by Buyer or any of its Affiliates.

                  (c) During the period commencing on the date of the Original
Agreement and ending on the fifth anniversary of the Closing Date, neither the
Sellers nor any of their Subsidiaries shall participate or engage, directly or
indirectly, whether as an employee, agent, officer, consultant, director,
stockholder, partner, joint venturer, investor or otherwise, in the businesses
of the Purchased Businesses anywhere in the world.

                  (d) The Parties agree that a monetary remedy for a breach of
the agreements set forth in this Section 5.14 will be inadequate and
impracticable and further agree that such a breach would cause irreparable harm,
and that the non-breaching party shall be entitled to temporary and permanent
injunctive relief without the necessity of proving actual damages. In the event
of such a breach, the breaching party agrees that the non-breaching party shall
be entitled to such injunctive relief, including temporary restraining orders,
preliminary injunctions and permanent injunctions as a court of competent
jurisdiction shall determine.

                                      -77-


                  (e) If any of the provisions of this Section 5.14 is invalid
in part, it shall be curtailed, as to time, location or scope, to the minimum
extent required for its validity under the laws of the United States and shall
be binding and enforceable with respect to the Sellers, as applicable, as so
curtailed; it being the intention of the Parties that the provisions of this
Section 5.14 be enforced to the fullest extent permissible under the laws and
policies of each jurisdiction in which enforcement may be sought, and that the
unenforceability (or the modification to conform to such laws and policies of
any provision of this Section 5.14) shall not render unenforceable or impair the
remainder of the provision of this Section 5.14.

             5.15. Further Actions. Following the Closing, the Sellers agree not
to take any action in the Chapter 11 Case, including, but not limited to, any
action in connection with proposing or confirming any plan of reorganization
that would limit, impair or adversely alter the Buyer's rights under this
Agreement (but this Section shall not limit the Sellers' rights under this
Agreement or the enforcement thereof).

             5.16. Further Assurances. Upon the request of the Buyer or its
successors and assigns at any time after the Closing Date, the Sellers will
forthwith execute and deliver such further instruments of assignment, transfer,
conveyance, endorsement, direction or authorization and other documents as the
requesting party or parties or its or their counsel may request in order to
perfect title of the Buyer and its successors and assigns to the Purchased
Assets (including the Shares purchased in a Stock Sale) or otherwise to
effectuate the purposes of this Agreement and the Transaction Documents. In
particular, the Sellers shall, at the Buyer's request, to the extent permitted
by the documents governing the NIMS Notes and MESA Notes, take all steps
reasonably requested by Buyer to cause the NIMS Notes, the MESA Notes or both to
be retired and the NIMS Collateral, the MESA Collateral or both to be purchased
by the Buyer rather than the NIMS Equity or the MESA Equity.

             5.17. Mail Forwarding. For a period of one year after the Closing
Date, the Sellers shall maintain adequate staff or engage an outside service at
their own expense to accept and forward to the Buyer all mail and other
communications received by the CFC Parties relating to the Purchased Assets.

             5.18. DIP Loan. Contemporaneously with the execution and delivery
of the Original Agreement, the Sellers entered into a debtor-in-possession
credit facility with FPS DIP LLC and the other lenders party thereto (including
the revolving credit loans and term loans thereunder and as amended from time to
time, the "DIP Loan").

             5.19. REMIC Items Reflected on Tax Returns; Bring Down on Certain
Information.

                  (a) For each entity described as a REMIC on the Business
Schedules, if so requested by the Buyer, the Sellers shall, no later than the
due date (including extensions) of the 2002 Tax Returns of such entity, reflect
on the 2002 Tax Returns of the related REMICs, in a manner reasonably
satisfactory to the Buyer, the adjustments resulting from the revaluation of
certain REMIC Regular Interests and REMIC Residual Interests as a result of the
Sellers' tax audit for the period ended December 31, 1997, with such Tax Returns
reflecting prior years' adjustments. The Buyer shall be provided with a draft of
such Tax Returns at least 30 days prior

                                      -78-


to the date the same is filed. The Sellers shall make all changes to such drafts
as reasonably requested by the Buyer.

                  (b) The Sellers shall deliver, or cause to be delivered, to
the Buyer by the earlier of the 20th day prior to the Closing Date or April 15,
2003 updated, true, correct and complete information as of December 31, 2002
with respect to the basis, adjusted issue price and remaining unrecognized gain
of various instruments or assets as to which the Sellers are making
representations and warranties as of December 31, 2001 pursuant Sections
3.22(d)(iv), (e)(i), (f)(i), (g)(iii), g(vi), h(vii) and h(ix) hereof.

                  (c) The Sellers may, with the consent of the Buyer, and shall,
at the request of the Buyer, file an amended 2001 Tax Return for the NIMS Issuer
to reflect certain adjustments in the basis of REMIC Residual Interests and IO
Regular Interests held by the NIMS Issuer in order to reflect a revaluation of
such REMIC Residual Interests and IO Regular Interests as of the startup day of
the REMIC that issued them, consistent with the revaluation as of the startup
day of similar REMIC interests made in the audit of the Sellers' Tax Returns for
the period ended December 31, 1997.

             5.20. Title Insurance. Not later than 30 days after the date of
this Agreement, the Sellers shall cause to be delivered to the Buyer a
commitment for a 1992 form ALTA title insurance policy (the "Title Commitments")
for each Owned Real Premises from Chicago Title Insurance Company (the "Title
Company"). At the Buyer's sole discretion, the Buyer may deliver written notice
to the Sellers not later than the later of (i) 30 days prior to the Closing or
(ii) 15 days after receipt by the Buyer of the Title Commitments, whereupon the
Seller shall (x) make an application with the Title Company for the issuance of
title insurance policies (the "Title Insurance Policies") for the Owned Real
Premises in such insured amounts equal to the current fair market value of each
Owned Real Premises, as reasonably agreed to by the Buyer and the Sellers, and
(y) order an ALTA survey or survey update of the Owned Real Premises (the
"Surveys") from surveyors licensed to do business in the States of Minnesota and
South Dakota (the "Surveyors"). The Sellers shall give instructions to the Title
Company and the Surveyors to deliver directly to the Buyer and the Sellers
copies of the Title Company's report, the results of any searches for Uniform
Commercial Code financing statements filed against the Owned Real Premises, the
Tax and departmental searches and the survey reading and the Surveys, and any
updates or continuations thereof and any supplements thereto. Such Title
Insurance Policies and Surveys shall be delivered to the Buyer at Closing. At or
prior to the Closing, the Sellers shall be responsible for clearing all Liens
(other than Permitted Liens and matters shown on Section 3.8(a) of the Business
Schedules) on title to the Owned Real Premises objected to by the Buyer in a
timely manner. Payment of all title and Survey costs in connection with this
Agreement shall be borne equally by the Company and the Buyer.

             5.21. Preparation of License Applications. As promptly as possible
after the date hereof, the Sellers shall prepare drafts, which drafts shall be
as complete as possible, of all notifications or other filings or applications
that are advisable or are required to be filed by the Buyer pursuant to the
Finance Laws in order to consummate the transactions contemplated hereby, for
the Buyer's reasonable review, augmentation and filing. The Sellers shall
provide all reasonable assistance and cooperation with respect to the Buyer's
efforts to obtain such licenses.

                                      -79-


             5.22. Provision of Bank Information. The Sellers shall use
commercially reasonable efforts to arrange for a meeting between representatives
of the FDIC and state banking authorities (collectively, the "Regulators") and
representatives of the Buyer and their financing sources, at which the
Regulators shall be asked to discuss with them the results of examinations of
Mill Creek Bank and other regulatory issues or concerns. The Company shall seek
to schedule the meeting as soon as reasonably practicable after the date of this
Agreement, but in no event more than 15 Business Days after the date of this
Agreement. In addition, as soon as reasonably practicable after the date of this
Agreement, but in no event more than 10 Business Days after the date of this
Agreement, the Sellers shall provide to the Buyer to the extent permitted by Law
the following information with respect to Mill Creek Bank: (i) copies of all
examination reports issued by the FDIC or state banking authorities since
January 1, 2000; (ii) copies of all supervisory or remedial agreements of any
kind, including, but not limited to, memoranda of understanding, agreements,
cease-and-desist orders, consent orders and enforcement orders outstanding at
any time since January 1, 2000; (iii) copies of all supervisory correspondence,
including, but not limited to, correspondence related to (i) and (ii) above; and
(iv) copies of all internal analyses, including, but not limited to, memoranda,
notes, correspondence and messages, and data, including, but not limited to,
financial reports and reports concerning intercompany balances, regarding
compliance with sections 23A and 23B of the Federal Reserve Act with respect to
intercompany agreements with Mill Creek Bank (together with the discussions
between the Buyer and the Regulators described above, the "Bank Information").

             5.23. Access to Records After the Closing.

                  (a) For a period of eight years after the Closing Date, the
Sellers and their representatives shall have reasonable access to all of the
Files transferred to the Buyer hereunder to the extent that such access may
reasonably be required by the Sellers in connection with matters relating to or
affected by the Excluded Assets, the Excluded Liabilities and other reasonable
requests related to the Company's remaining activities and obligations. Such
access shall be afforded by the Buyer upon receipt of reasonable advance notice
and during normal business hours. The Sellers shall be solely responsible for
any costs or expenses incurred by them pursuant to this Section 5.23(a). If the
Buyer shall desire to dispose of any such Files prior to the expiration of such
eight-year period, the Buyer shall, prior to such disposition, give the Sellers
a reasonable opportunity, at their expense, to segregate and remove such Files
as the Sellers may select. Notwithstanding the foregoing, the Buyer recognizes
and understands that the Sellers are party to litigation, and may become engaged
in future litigation, regarding the Sellers' acquisition, operation and
management of the Company and its Subsidiaries. The Buyer agrees to reasonably
cooperate with the Sellers in the prosecution and defense of any such
litigation. The Buyer also agrees to provide the Sellers with access to its
employees, and to make its employees available for testimony upon reasonable
terms and upon reasonable notice given by the Sellers. The Sellers will pay any
reasonable costs associated with the Buyer's cooperation in such litigation
matters.

                  (b) For a period of eight years after the Closing Date, the
Buyer and its representatives shall have reasonable access to all of the Files
relating to the Purchased Businesses which the Sellers or any of their
respective Affiliates may retain after the Closing Date. Such access shall be
afforded by the Sellers and their respective Affiliates upon receipt of

                                      -80-


reasonable advance notice and during normal business hours. The Buyer shall be
solely responsible for any costs and expenses incurred by it pursuant to this
Section 5.23(b). If the Sellers or any of their respective Affiliates shall
desire to dispose of any such Files prior to the expiration of such eight-year
period, the Sellers shall, prior to such disposition, give the Buyer a
reasonable opportunity, at the Buyer's expense, to segregate and remove such
Files as the Buyer may select. If the GE Condition is met and in the event any
Records are acquired by GE, the Sellers shall cause GE to provide the Buyer and
its representatives access to Records on terms and conditions substantially
similar to the terms and conditions set forth in this Section 5.23(b).

                  (c) In the event that the Buyer acquires any Records that
relate to any GE Purchased Assets, the Buyer shall provide GE and its
representatives access to such Records on terms and conditions substantially
similar to the terms and conditions in Section 5.23(b); provided, however, that
GE shall be solely responsible for any costs and expenses incurred by it and the
Buyer pursuant to this Section 5.23(c).

             5.24. Liens. The Sellers have provided to the Buyer written notice
of a description of all Liens (except Permitted Liens) on the Purchased Assets.
On or prior to the Closing, the Sellers shall deliver to the Buyer evidence of
the satisfaction, discharge or other termination of all such Liens (except
Permitted Liens) on the Purchased Assets.

             5.25. Exclusion of Certain Purchased Assets. If, during the
Pre-Closing Period, the Buyer, pursuant to Section 2.1(a)(ii) hereof, determines
to exclude all of the outstanding capital stock of Mill Creek Bank from the
Purchased Assets, thereby deeming such capital stock or other assets as Excluded
Assets hereunder, the Parties agree to negotiate reasonably in good faith to
modify the terms and conditions of this Agreement, the Transaction Documents and
the Business Schedules to address any separation or transition issues which may
arise upon such determination, including, without limitation, such issues with
respect to Assigned Agreements, Intellectual Property, Facilities, Employees and
the Insurance Business.

             5.26. Certain Insurance Matters.

                  (a) The Sellers acknowledge that, pursuant to Section
2.1(a)(ii), the Buyer may at its option elect not to purchase any Insurance
Assets and that, pursuant to Section 2.1(b), the Buyer may elect to purchase the
Insurance Business through a Stock Sale of one or more of the Insurance
Subsidiaries. To the extent that the Buyer does not elect to purchase the
Insurance Business through a Stock Sale and (ii) the transfer to the Buyer of
any of the Insurance Assets may not be made without (x) the consent or waiver of
any other party to any such asset or of any other Person or (y) the approval of
any Governmental Authority under the laws and regulations of the applicable
jurisdictions in which the Insurance Business operates, or if such transfer
would constitute a breach thereunder or otherwise violate applicable law (such
consents, waivers and approvals, collectively, the "Insurance Approvals"), this
Agreement shall not constitute an actual or attempted transfer of any such asset
unless and until such consent, waiver or approval has been duly obtained or such
transfer otherwise becomes lawful (such Insurance Assets included in the
Purchased Assets and not transferred as a result of this Section 5.26, a
"Non-Transferred Insurance Asset"; and the portion of the Insurance Business to
which such Non-Transferred Insurance Assets relate, the "Non-Transferred
Insurance Business"). Any portion of the Insurance Business that consists of a
reinsurance business shall be transferred to the Buyer

                                      -81-


through a reinsurance arrangement or novation and assumption (subject to the
consent of the ceding insurers), as elected by the Buyer.

                  (b) If any Insurance Approvals referenced in Section 5.26(a)
are not obtained prior to the Closing Date, and until the impracticalities of
transfer referred to therein are resolved to the Buyer's satisfaction, the
Sellers shall (i) provide or cause to be provided to the Buyer the Insurance
Profits (as defined below) and other benefits earned or received by the Sellers
in respect of the Non-Transferred Insurance Assets, (ii) cooperate in any
arrangement, lawful as to both the Sellers and the Buyer, designed to provide
such Insurance Profits and other benefits to the Buyer and (iii) enforce for the
account of the Buyer any rights of the Sellers arising from the Non-Transferred
Insurance Assets, in each case after consulting with and upon the advice and
direction of the Buyer until the date such transfer may occur in compliance with
Section 5.26(a) (with respect to any portion of the Non-Transferred Insurance
Business, the date on which such transfer to the Buyer may occur is referred to
herein as the "Transfer Date").

                  (c) Without limiting the generality of the foregoing, until
the Transfer Date, (i) the Sellers shall continue to conduct the Non-Transferred
Insurance Business in the manner in which such business has been conducted prior
to the date hereof, including, without limitation, securing or placing new and
renewal business with respect to the insurance products sold through the
Non-Transferred Insurance Business, and shall maintain adequate staff for such
purpose, (ii) the Sellers shall provide all reasonable assistance to the Buyer
in obtaining all Insurance Approvals necessary or advisable to effect the
transfer of the Non-Transferred Insurance Assets to the Buyer as promptly as
practicable, (iii) the Sellers shall continue to provide all support services
(including referral, billing and collection services) provided by them as of the
date hereof with respect to the Non-Transferred Insurance Business (other than
any such services that are provided by the MH Servicing Business, if the MH
Servicing Business is purchased by the Buyer on the Closing Date), and (iv) the
Sellers shall not amend, terminate or otherwise dispose of any Non-Transferred
Insurance Assets, and shall otherwise use their reasonable best efforts to keep
in place their relationships with the insurance companies providing the
insurance products sold through the Non-Transferred Insurance Business and with
any other Persons through which such insurance products are marketed or sold
(including, without limitation, obtaining any necessary approvals from such
insurance companies or other Persons to the transfer to the Buyer of the
Insurance Business). The Buyer and the Sellers shall, prior to the Closing Date,
develop a budget for the Non-Transferred Insurance Business (such agreed budget,
the "Insurance Budget"). Until the Transfer Date, (x) the Sellers shall grant
the Buyer reasonable access to the books, records, and personnel of the
Non-Transferred Insurance Business, (y) the Sellers shall not, and shall not
permit any Subsidiary to, take any of the actions set forth in Section 5.5 with
respect to the Non-Transferred Insurance Business or incur, without the prior
written consent of the Buyer, any cost, expense or liability not included in the
Insurance Budget, and (z) the Sellers shall advise the Buyer promptly of any
material developments with respect to the Non-Transferred Insurance Business and
the Non-Transferred Insurance Assets.

                  (d) If the Closing occurs, until the applicable Transfer Date,
the Buyer shall be entitled to receive all "Insurance Profits" earned by the
Sellers in respect of the Non-Transferred Insurance Business and the
Non-Transferred Insurance Assets during the period commencing on the Closing
Date and ending on the applicable Transfer Date. "Insurance Profits" shall mean,
for any period, the difference between (i) all commissions and other

                                      -82-


payments earned by the Sellers pursuant to the Non-Transferred Insurance Assets
during such period, whether in respect of insurance placed before or after the
Closing Date, and (ii) any direct, out-of-pocket costs incurred during such
period in providing the services referred to in clause (c)(iii) above to the
extent included in the Insurance Budget. Insurance Profits shall be computed on
a bi-weekly basis, if possible under the Sellers' existing systems (but in any
event not less frequent than monthly), during the period between the Closing
Date and Transfer Date, and the Sellers shall pay to the Buyer, by wire
transfer, an amount equal to the Insurance Profit for such period within two
Business Days after computation thereof. The Buyer shall have the right to
review and contest all such computations.

                  (e) Upon the receipt of the applicable Insurance Approvals,
the Sellers shall promptly transfer or cause to be transferred the applicable
Non-Transferred Insurance Assets to the Buyer free and clear of all Liens (other
than Permitted Liens) for no additional consideration.

                  (f) Reserved.

                  (g) Any claims by the Buyer for Insurance Profits shall,
pursuant to section 364(c)(1) of the Bankruptcy Code, enjoy super-priority over
administrative expense claims against the Sellers under section 503(b) or 507(b)
of the Bankruptcy Code.

                  (h) The foregoing provisions shall be binding on all
successors and permitted assigns of the Sellers (including permitted assigns of
all or a portion of the MH Servicing Business) and shall terminate five years
after the Closing. Without limiting the foregoing, the Sellers shall ensure that
any successor servicer or subservicer with respect to all or a portion of the MH
Servicing Business, including, without limitation, any purchaser of all or a
portion of the MH Servicing Business, shall, as a condition to becoming such,
agree in writing to the foregoing terms and the other arrangements contemplated
herein.

             5.27. Financial Information.

                  (a) The Sellers shall prepare and deliver to the Buyer, within
10 Business Days after every calendar month-end between the date hereof and the
Closing Date (the "Post-Signing Balance Sheets") a true, complete and correct
consolidated balance sheet of the Company which shall not be materially
different in form and substance from the items on the November 30 Balance Sheet
other than any change to reflect a transaction contemplated by this Agreement or
otherwise approved by the Buyer or other than in respect of any Excluded Assets
or Excluded Liabilities. The Sellers shall also prepare and deliver to the Buyer
as soon as reasonably practicable after every calendar month-end between the
date hereof and the Closing Date, true, complete and correct ledger information
of the Company which shall be in the form previously delivered to the Buyer.

                  (b) Five days prior to the Closing Date, the Sellers shall
prepare and deliver to the Buyer a consolidated balance sheet which represents
the Company's good faith and best estimate of the Company's consolidated balance
sheet as of the Closing Date which shall not be materially different in form and
substance from the items on the November 30 Balance Sheet other than any change
to reflect a transaction contemplated by this Agreement or otherwise

                                      -83-


approved by the Buyer or other than in respect of any Excluded Assets or
Excluded Liabilities (the "Closing Date Balance Sheet").

             5.28. GE Loan Services; Transition Services. If the GE Condition is
met, the Buyer agrees to negotiate in good faith with GE to provide certain loan
servicing for up to 18 months, relating to the home improvement and consumer
loans originated by the HI Origination Business and the CL Origination Business
and any such loans on the balance sheet of Mill Creek Bank at the time of
closing of the GE Approved Agreement, on terms and conditions reasonably
acceptable to the Buyer. If the GE Condition is met, the Buyer further agrees to
negotiate the provision of certain interim transition services including, but
not limited to, network administration, data center support and system
maintenance on terms and conditions reasonably acceptable to the Buyer and the
Buyer agrees use all commercially reasonable efforts to endeavor to provide all
necessary notices and obtain all necessary consents or approvals in connection
with the provision of such interim transition services. If the GE Closing occurs
before the Closing, then Sellers shall negotiate in good faith one or more
agreements with GE concerning any of the above matters; provided, however, that
the Sellers shall not, prior to the Closing, enter into any such agreements with
GE which may extend to any time after the Closing Date unless the Buyer shall
have approved the terms and conditions thereof. Notwithstanding anything to the
foregoing, if the Sellers shall have entered into one or more agreements with
respect to any of the above matters in a form reasonably acceptable to the Buyer
prior to Closing, the Buyer agrees to assume such agreements from the Sellers;
provided however that the Buyer shall only assume Liabilities thereunder arising
after the Closing Date.

             5.29. Intellectual Property Licenses.

                  (a) In the event the Buyer elects to exclude the capital stock
of Mill Creek Bank pursuant to Section 2.1(a)(ii), the Buyer shall grant to the
Sellers a non-exclusive, royalty-free, worldwide license to use any Intellectual
Property necessary for the conduct of Mill Creek Bank. Such license shall be
perpetual (subject to customary termination provisions) and the Sellers shall
have the right to grant sublicenses with the prior written consent of the Buyer.

                  (b) If the GE Condition is met, the Buyer agrees to negotiate
in good faith with GE to grant GE a non-exclusive, worldwide, royalty-free
license to use the trademarks "Mill Creek Bank," "Mill Creek Financial
Services," "Mill Creek Mortgage," "Mill Creek Servicing Corporation," "green
tree" and "Speaking of Credit" in connection with servicing loans, which shall
include a right for GE to use any materials that incorporate these trademarks
and that were created by the Sellers prior to the Closing for use with servicing
loans. Notwithstanding anything to the foregoing, if the Sellers shall have
entered into one or more such license agreements in a form reasonably acceptable
to the Buyer prior to Closing, the Buyer agrees to assume such agreements from
the Sellers; provided however that the Buyer shall only assume Liabilities
thereunder arising after the Closing Date.

                  (c) If the GE Condition is satisfied and if Sellers enter into
a license agreement with GE as contemplated by Section 5.31(d) of the GE
Approved Agreement, the Sellers shall seek to assign and shall, if permitted by
GE, assign such license agreement to Buyer at the Closing and, if so assigned,
such license agreement shall become an Assumed Agreement hereunder.

                                      -84-


             5.30. GE Leases. If the GE Condition shall have been satisfied, the
Buyer agrees to negotiate in good faith to enter into a lease for premises at
1400 Turbine Drive, Rapid City, South Dakota and an agreement to provide access
to the data center located at 7360 South Kyrene Road, Building C/1, Tempe
Arizona with GE or its Affiliate on substantially similar terms as those set
forth on Exhibit C hereto and in a form reasonably acceptable to the Buyer (or,
if the Sellers shall have entered into agreements for such premises with GE or
its Affiliate on substantially similar terms as those set forth on Exhibit C
hereto and in a form reasonably acceptable to the Buyer prior to Closing, the
Buyer agrees to assume such agreements from the Sellers; provided however that
the Buyer shall only assume Liabilities thereunder arising after the Closing
Date).

             5.31. Waiver of B-2 Guarantee Rights. If and to the extent that the
separation of the B-2 Guarantee Rights from the B-2 Certificates is not
permitted under the MH Servicing Contracts or applicable law or is not ordered
by the Bankruptcy Court by a Final Order, (x) the Buyer agrees to irrevocably
waive and not assert any B-2 Guarantee Rights against any CFC Party or otherwise
and shall cause any direct or indirect transferee to abide by such waiver and
(y) the Sellers agree, and shall cause the CFC Parties to agree, that all other
cash flows associated with or derivative of the B-2 Certificates shall
immediately be assigned, transferred and delivered to Buyer and all rights and
claims associated with or derivative of the B-2 Certificates shall be enforced,
at the direction and expense of the Buyer, for the exclusive benefit of the
Buyer.

             5.32. Termination of HE Origination Business. Notwithstanding any
provision of this Agreement to the contrary, including without limitation
Section 5.4 and Section 5.5 above, (a) the Buyer acknowledges that the Sellers
intend to discontinue and terminate the origination portion of the HE Business
(the "HE Origination Business"), including without limitation, the termination
of certain employees and the rejection of certain contracts associated with the
HE Origination Business and (b) the Sellers are hereby permitted to take all
actions reasonably necessary or desirable to effect (i) the termination of the
HE Origination Business and (ii) the termination, as mutually determined by the
Buyer and the Company, of any Business Employee or group of Business Employees
or any employees that the Buyer elects to hire pursuant to Section 5.10(a)(ii),
whether or not related to the HE Origination Business (the "Terminated
Employees"). Notwithstanding any provision to the contrary in this Agreement, in
the event the Sellers discontinue or terminate the HE Origination Business or
terminate any Terminated Employees, (i) the Buyer hereby agrees to reimburse the
Sellers at the Closing for all out-of-pocket costs or expenses paid by any of
the Sellers or any of their respective Affiliates in connection with the
discontinuation or termination of the HE Origination Business or termination of
Terminated Employees, as appropriate, prior to the Closing, including without
limitation severance to all employees who are terminated in connection with the
discontinuation of the HE Origination Business and all Liabilities for paid time
off, sick leave and vacation pay, (ii) all such out-of-pocket costs or expenses
in connection with the termination of the HE Origination Business or in
connection with the termination of Terminated Employees incurred by any of the
Sellers or any of their respective Affiliates in connection with the
discontinuation or termination of the HE Origination Business or termination of
Terminated Employees prior to the Closing which have not been paid by the Buyer
to the Sellers at Closing shall be Assumed Liabilities, including (x) severance
to all employees who are terminated in connection with the discontinuation of
the HE Origination Business in accordance with the amount of severance set forth
on the list which was provided to the Buyer in accordance with Section 3.14, and
(y) all

                                      -85-


Liabilities for paid time off, sick leave and vacation pay for such employees as
set forth under the heading "PTO" in Section 5.10(a) of the applicable Business
Schedules, in each case to the extent such costs and expenses have not been paid
prior to the Closing by the Sellers and reimbursed by the Buyer at the Closing.

             5.33. Seller Transition Services. If the transaction contemplated
by the GE Agreement does not close, then (A) Buyer shall provide the Sellers
with (i) loan servicing relating to the home improvement and consumer loans
originated by the HI Origination Business and the CL Origination Business and
any such loans on the balance sheet of Mill Creek Bank at the time of the
Closing Date and (ii) services including, without limitation, network
administration, data center support and system maintenance on terms and
conditions reasonably acceptable to Sellers (collectively, the "Loan and IT
Services") until such time as the Excluded Businesses are sold or liquidated,
but in any event not more than six months after the Closing Date; provided that,
upon Sellers' request, Buyer agrees to negotiate in good faith for the provision
of such Loan and IT Services to Sellers after such six-month period upon
mutually acceptable terms; and (B) Buyer shall use reasonable efforts (and
Seller shall ensure that any applicable purchase agreement for the Excluded
Businesses contains a provision requiring the buyer of such Excluded Businesses
to use such reasonable efforts) to reach mutual agreement with the buyer of the
Excluded Businesses as to the provision by Buyer of the Loan and IT Services to
such buyer in a manner that is reasonable with respect to the Excluded
Businesses.

                                  ARTICLE VI.

                 CONDITIONS PRECEDENT TO THE BUYER'S OBLIGATIONS

                  The obligation of the Buyer to consummate the transactions
contemplated by this Agreement is subject to the fulfillment of the following
conditions as of the Closing Date:

             6.1. Representations and Warranties; Covenants; Certificates.

                  (a) The representations and warranties of the Sellers
contained in this Agreement, and in any agreement, instrument, or document
executed and delivered by them in connection with the Closing, shall be true and
correct on and as of the Closing Date as if made on and as of such date, except
as affected by transactions permitted by this Agreement and except to the extent
that any such representation or warranty is made as of a specified date, in
which case such representation or warranty shall have been true and correct as
of such specified date, except in each case to the extent that the failures in
the aggregate of such representations and warranties (disregarding any
qualifications as to materiality contained therein) to be true and correct would
not reasonably be expected to have, and have not had, a Material Adverse Effect.

                  (b) The Sellers shall have performed and complied in all
material respects with all agreements, obligations, covenants and conditions
required by this Agreement to be performed or complied with by it on or prior to
the Closing, including, without limitation, the covenants set forth in Sections
5.4 and 5.5.

                                      -86-


                  (c) The Buyer shall have received a certificate, dated as of
the Closing Date, signed by authorized officers of the Sellers to the effect
that such conditions set forth in Sections 6.1(a) and (b) hereof have been
satisfied in all respects.

             6.2. Bankruptcy Condition. The Bankruptcy Court shall have entered
the Sale Order, which shall be a Final Order which has not been vacated,
reversed, modified, rescinded or stayed as of the Closing Date.

             6.3. Litigation. There shall be in effect no pending or threatened
injunction, decree or order of, or any other action or proceeding before, any
Governmental Authority that could reasonably be expected to (a) prevent the
consummation of the transactions contemplated hereby, (b) cause the transactions
to be rescinded following the consummation thereof or (c) have a material
adverse effect on the Buyer to operate the Purchased Businesses post-Closing.

             6.4. Approvals. All authorizations, permits, licenses, certificates
of authority, consents, Orders, filings, notices and approvals (other than bulk
sale approvals) necessary to permit the Sellers to perform the transactions
contemplated hereby and required for the Buyer to own the Purchased Assets and
to operate the Purchased Businesses post-Closing from any Government Authority
shall have been duly obtained, made or given, shall be in form and substance
reasonably satisfactory to the Buyer, shall not be subject to the satisfaction
of any material condition that has not been satisfied or waived and shall be in
full force and effect; provided, however, that the Buyer shall not unreasonably
withhold a waiver of this Section 6.4 based on a failure to obtain an
insignificant authorization, permit, license, certificate of authority, consent
or approval. All material authorizations, permits, licenses, certificates of
authority, consents, Orders, filings, notices and approvals (other than bulk
sale approvals) necessary to permit the Sellers to perform the transactions
contemplated hereby and required for the Buyer to own the Purchased Assets and
to operate the Purchased Businesses post-Closing from any Third Party shall have
been duly obtained, made or given, shall be in form and substance reasonably
satisfactory to the Buyer, shall not be subject to the satisfaction of any
material condition that has not been satisfied or waived and shall be in full
force and effect. All terminations or expirations of waiting periods imposed by
any Governmental Authority necessary for the transactions contemplated under
this Agreement, if any, shall have occurred. This includes, but is not limited
to, the termination or expiration of all applicable waiting periods relating to
the HSR Act and the satisfactory conclusion of any proceedings that may have
been filed or instituted thereunder.

             6.5. Instruments of Conveyance and Transfer; Title. The Sellers
shall have delivered to the Buyer such bills of sale, deeds, endorsements,
assignments and other good and sufficient instruments of conveyance and
transfer, including the Intellectual Property Assignment Agreements, in form and
substance, reasonably satisfactory to the Buyer and its counsel, as are
reasonably necessary to vest in the Buyer good and marketable title to all of
the interest of the Sellers in the Purchased Assets, free and clear of all
Liens, other than Permitted Liens and the Lien identified in Section 3.8(a) of
the applicable Business Schedules with respect to the Owned Real Premises
located in Rapid City, South Dakota, opinions of counsel (including with respect
to the matters covered in Section 3.30) and other documents and instruments
referred to in Section 2.3(b); provided, however, that if the GE Condition is
satisfied, then the Owned Real Premises located in Rapid City, South Dakota
shall be transferred free and clear of such Lien

                                      -87-


identified in Section 3.8(a) of the applicable Business Schedules. With respect
to each Residual Asset, the Buyer or its designee shall have been made the
registered owner of such Residual Asset pursuant to the terms of the related
governing documents. In the case of a Stock Sale, the Company shall deliver to
the Buyer or its designees (a) stock certificates representing the Shares, duly
endorsed in blank for transfer or accompanied by appropriate stock powers duly
executed in blank, with all taxes, direct or indirect, attributable to the
transfer of the Shares paid or provided for; (b) the minutes and stock records
of the Subject Subsidiary; and (c) signature cards from all banks or financial
institutions with which the Subject Subsidiary has an account designating
signatures approved by the Buyer to become effective immediately following the
Closing.

             6.6. Transition Services Agreement. The Buyer and the Sellers shall
have entered into and delivered a transition services agreement, on terms to be
agreed upon by the Parties acting reasonably and to cover such services as the
Buyer reasonably determines (by written notice to Sellers) by the later of the
date of April 1, 2003 or 15 days after the Sellers have identified the (x)
relevant services pursuant to Section 5.13 and (y) the terms under which they
are provided are necessary to operate the Purchased Businesses post-Closing to
the extent such services were provided by the Sellers prior to the Closing (the
"Transition Services Agreement"); provided, however, that the foregoing shall
not be a condition to Closing if the Sellers shall have used their good faith
efforts to negotiate the Transition Services Agreement and notwithstanding such
good faith efforts no agreement is reached with respect thereto. Notwithstanding
anything to the contrary contained in ARTICLE III of this Agreement, to the
extent that certain assets or services are so identified by the Sellers as to be
provided to the Buyer pursuant to the Transition Services Agreement, it is
expressly understood and agreed that the fact that such assets or services are
not owned by the Buyer after the Closing shall not be deemed to be a breach of
any of the representations or warranties contained in ARTICLE III.

             6.7. Resignation or Removal of Officers and Directors of Subject
Subsidiaries. In the case of a Stock Sale, the directors and officers of the
Subject Subsidiary identified by the Buyer shall have: (a) delivered letters of
resignation from their respective positions at the Subject Subsidiary in form
and substance satisfactory to the Buyer or (b) been removed from their
respective positions at the Subject Subsidiary by the taking of the requisite
corporate action in form and substance satisfactory to the Buyer.

             6.8. Lehman Facility. The outstanding Lehman Debt Amount shall not,
during any time from December 19, 2002 to the Closing Date, be in excess of a
total aggregate amount of $975 million, and there shall not have occurred any
sale, transfer or liquidation of the Purchased Assets held under the Lehman
Facilities except as permitted by Section 5.5(b). On and as of the Closing Date,
and without limiting the foregoing, no Purchased Asset that is in whole or in
part an asset subject to a repurchase agreement shall be liquidated, set off or
otherwise the subject of an exercise of remedies thereunder.

             6.9. No Material Adverse Effect. Since December 31, 2002, there
shall not have been any change, circumstance or event which constitutes or has
resulted in, or that, in the Buyer's reasonable judgment, could reasonably be
expected to result in, a Material Adverse Effect.

             6.10. Reserved.

                                      -88-


             6.11. Servicing Rights.

                  (a) The Buyer shall be the servicer or successor servicer with
respect to all Non-MH Servicing Rights under each Non-MH Servicing Contract and
the Buyer shall be recognized as the servicer or successor servicer with respect
to all Non-MH Servicing Rights under each Non-MH Servicing Contract, and any
servicing fees or reimbursement for servicer advances shall be of the priority
accorded to a successor servicer in the cash flow waterfall with respect to the
Securitization covered by such Non-MH Servicing Contract, in each case as
evidenced by the Sale Order.

                  (b) The Buyer shall be the servicer or successor servicer with
respect to all MH Servicing Rights under each MH Servicing Contract and the
Buyer shall be recognized as the servicer or successor servicer with respect to
all MH Servicing Rights under each MH Servicing Contract, any servicing fees
shall be senior in the cash flow waterfall with respect to the Securitization
covered by such MH Servicing Contract (except in the case of the securitization
trusts set forth on Exhibit E for which P&I insurance is in force, in which
cases, the Revised Monthly Servicing Fee (as defined in the 9019 Order) will be
paid in the highest priority that will not adversely affect the continuation in
force of such insurance) and any reimbursement for servicer advances shall be as
set forth in the Consent Agreement, in each case as evidenced by (x) the Sale
Order, (y) the 9019 Order, and (z) a Consent Agreement which is in full force
and effect and the conditions precedent of which shall have been satisfied or
waived by the parties thereto as of the Closing Date (provided that if a Consent
Agreement is not entered into or does not remain in full force and effect, the
Buyer shall be satisfied that the foregoing orders or other arrangements as may
be in effect are sufficient to provide the Buyer with the foregoing rights).

                  (c) The servicing fees under each MH Servicing Contract shall
have been increased to 125 basis points (or such other amount as shall be
provided in a Consent Agreement which is in full force and effect) and such
increase shall have been confirmed by a Final Order of the Bankruptcy Court.

             6.12. Tax Opinion.

                  (a) In respect of each Securitization in which a Residual
Asset, the MESA Equity or the NIMS Equity was issued or created, the Sellers
shall furnish to the Buyer an opinion of counsel to the effect that:

                        (i) in the case of a Securitization involving the
                  creation of one or more REMICs, each such REMIC will, assuming
                  that compliance with the terms of its governing documents, be
                  qualified as a real estate mortgage investment conduit within
                  the meaning of Section 860D(a) of the Code;

                        (ii) in the case of the NIMS Issuer, that it will not be
                  classified as an association treated as a corporation for
                  federal income tax purposes, as a publicly traded partnership
                  within the meaning of Section 7704 of the Code, or as a
                  taxable mortgage pool within the meaning of Section 7701(i) of
                  the Code and that the NIMS Notes will be treated as
                  indebtedness for federal income tax purposes;

                                      -89-


                        (iii) in the case of the MESA Issuers, each will be
                  classified as a corporation for federal income tax purposes,
                  if each is managed in accordance with the terms of its
                  governing documents, it will not be considered engaged in a
                  United States trade or business within the meaning of Section
                  864 of the Code, and the MESA Notes will be treated as
                  indebtedness for federal income tax purposes; and

                        (iv) in the case of an Other Securitization Entity, it
                  will be classified as a grantor trust, a partnership or a
                  disregarded entity, and not an association taxable as a
                  corporation, a publicly traded partnership or a taxable
                  mortgage pool, for federal income tax purposes, and, to the
                  extent that it has issued instruments designated as notes,
                  bonds, debentures or other evidences of indebtedness, such
                  instruments will be characterized as indebtedness for federal
                  income tax purposes;

provided, however, that with respect to Section 6.12(a)(i), such an opinion of
counsel shall be required only with respect to 75 percent of the total value of
such Securitizations and Sellers shall use their best efforts to obtain such an
opinion of counsel with respect to the remaining 25 percent of such
Securitizations.

                  (b) The requirement of this Section 6.12 may be satisfied by
the delivery of a letter from the law firm that rendered the opinion as to the
U.S. federal income tax treatment of the Securitization in which the relevant
Residual was created, which letter states that the Buyer is entitled to rely on
such opinion to the same extent as the party to whom the opinion was originally
issued. A copy of the relevant opinion shall be attached to the letter that
states that the Buyer is entitled so to rely.

             6.13. Data Service Contracts. The Sellers shall have secured for
the Buyer the intellectual property, systems, data and telecommunications
contracts set forth in Section 6.13 of the applicable Business Schedules,
including, without limitation, the following contracts: (a) telecommunications
and data communications services with AT&T; (b) telecommunications and data
communications services with MCI/Worldcom; (c) database management and data
analysis services with Acxiom; and (d) database license with Oracle. Without
limiting the foregoing, at the reasonable request of any of the Sellers, whether
due to an inability to obtain consent or otherwise, the Buyer and the Sellers
shall cooperate and use their good faith efforts to make alternate arrangements
which will be reasonably satisfactory to the Buyer.

             6.14. Acceptance of Employment Offers. With respect to each of the
Purchased Businesses, the Buyer shall have received acceptances of offers of
employment from a sufficient number of employees of the Purchased Business so as
to be able to operate the Purchased Business in a manner reasonably consistent
with its operating history, as reasonably determined by the Buyer in the
exercise of its good faith discretion.

             6.15. Parent Guarantee. The Bankruptcy Court (with respect to the
bankruptcy proceeding of Parent) shall have entered an Order which shall be a
Final Order approving the letter agreement delivered by Parent on December 19,
2002 with respect to certain tax matters.

                                      -90-


             6.16. Goldman. The Goldman Final DIP Order shall not have been
entered by the Bankruptcy Court. The Goldman Credit Agreement and the Goldman
Commitment Letter shall have been terminated in all respects. Except for the
$8.75 million fee approved in the Goldman Interim Order, the Company and its
Subsidiaries shall have no Liability to Goldman or its Affiliates under the
Goldman Commitment Letter or the Goldman Credit Agreement.

                  Any condition specified in this ARTICLE VI may be waived by
the Buyer; provided, however, that no such waiver shall be effective unless it
is set forth in a writing executed by the Buyer or unless the Buyer agrees in
writing to consummate the transactions contemplated by this Agreement without
fulfillment of such condition.

                                  ARTICLE VII.

                CONDITIONS PRECEDENT TO THE SELLERS' OBLIGATIONS

                  The obligation of the Sellers to consummate the transactions
contemplated by this Agreement is subject to the fulfillment of the following
conditions as of the Closing Date:

             7.1. Representations and Warranties; Covenants; Certificates.

                  (a) The representations and warranties of the Buyer contained
in this Agreement, and in any agreement, instrument, or document executed and
delivered by it in connection with the Closing, shall be true and correct on and
as of the Closing Date as if made on and as of such date, except as affected by
transactions permitted by this Agreement and except to the extent that any such
representation or warranty is made as of a specified date, in which case such
representation or warranty shall have been true and correct as of such specified
date, except in each case to the extent that the failures in the aggregate of
such representations and warranties (disregarding any qualifications as to
materiality contained therein) to be true and correct would not reasonably be
expected to have, and have not had, a material adverse effect on the Buyer or
its ability to perform its obligations hereunder or to consummate the
transactions contemplated herein.

                  (b) The Buyer shall have performed and complied in all
material respects with all agreements, obligations, covenants and conditions
required by this Agreement to be performed or complied with by it on or prior to
the Closing.

                  (c) The Sellers shall have received a certificate, dated as of
the Closing Date, signed by authorized officers of the Buyer to the effect that
such conditions set forth in Section 7.1(a) and (b) hereof have been satisfied
in all respects.

             7.2. Bankruptcy Condition. The Bankruptcy Court shall have entered
the Sale Order, which shall be a Final Order which has not been vacated,
reversed, modified, rescinded or stayed as of the Closing Date.

             7.3. Litigation. There shall be in effect no pending or threatened
injunction, decree or order of, or any other action or proceeding before, any
Governmental Authority that could reasonably be expected to prevent the
consummation of the transactions contemplated hereby or cause the transactions
to be rescinded following the consummation thereof.

                                      -91-


             7.4. Approvals. The authorizations, permits, licenses, certificates
of authority, consents, notices, filings, orders and approvals (other than bulk
sale approvals) set forth in Section 7.4 of the applicable Business Schedules
shall have been duly obtained, made or given, shall be in form and substance
reasonably satisfactory to the Sellers, shall not be subject to the satisfaction
of any material condition that has not been satisfied or waived and shall be in
full force and effect. All terminations or expirations of waiting periods
imposed by any Governmental Authority necessary for the transactions
contemplated under this Agreement, if any, shall have occurred. This includes,
but is not limited to, the termination or expiration of waiting periods under
the HSR Act.

             7.5. Reserved.

             7.6. Other Documents. The Sellers shall have received all other
documents and instruments referred to in Section 2.3(b).

                  Any condition specified in this ARTICLE VII may be waived by
the Sellers; provided that no such waiver shall be effective against the Sellers
unless it is set forth in a writing executed by the Sellers or unless the
Sellers agree in writing to consummate the transactions contemplated by this
Agreement without the fulfillment of such condition.

                                  ARTICLE VIII.

                                   TERMINATION

             8.1. Termination Prior to Closing. This Agreement may be terminated
prior to the Closing as follows:

                  (a) by mutual written agreement of the Buyer and the Company;

                  (b) by the Buyer or the Company, if there shall be in effect a
Final Order restraining, enjoining or otherwise prohibiting the consummation of
the transactions contemplated by this Agreement;

                  (c) by the Buyer (provided that Buyer is not then in material
breach of any representation, warranty, covenant or other agreement contained
herein), if there shall have been a breach of any of the representations or
warranties of Sellers which would have a Material Adverse Effect or a material
breach of any of the covenants set forth in this Agreement on the part of the
Sellers, which breach is not cured within 30 days following written notice to
the Company (so long as such breach is capable of being cured);

                  (d) by the Company (provided that none of the Sellers is then
in material breach of any representation, warranty, covenant or other agreement
contained herein), if there shall have been a breach of any of the
representations or warranties which would have a material adverse effect on
Buyer's ability to perform its obligations hereunder or to consummate the
transactions contemplated herein or a material breach of any of the covenants
set forth in this Agreement on the part of the Buyer, which breach is not cured
within 30 days following written notice to the Buyer (so long as such breach is
capable of being cured);

                                      -92-


                  (e) by the Buyer, if by the respective dates required by
Section 5.8 hereof the Chapter 11 Case shall not have commenced or the Interim
9019 Order, the Bidding Procedures Order, the 9019 Order or the Sale Order shall
not have been entered, or if any such Orders are vacated, reversed, modified,
amended or stayed;

                  (f) by the Buyer or the Company, if the Company accepts a
higher and better offer for the Purchased Assets in accordance with Section 5.8
hereof and the Bidding Procedures Order (other than of the Buyer);

                  (g) by the Buyer or the Company, if the Bankruptcy Court
enters an order approving any Acquisition Proposal (other than a sale of the
Purchased Assets to the Buyer);

                  (h) by the Buyer or the Company, if the Closing has not
occurred by June 1, 2003, provided such failure of the Closing to occur is not
caused by a breach of this Agreement by the terminating party, provided, that
the Buyer shall be entitled to extend such date for an additional period of up
to 90 days if such failure to close is a result of the condition set forth in
Section 6.4 to be satisfied;

                  (i) by the Buyer, if the Credit Commitments (as defined in the
DIP Loan) shall have been terminated or the Loans (as defined in the DIP Loan)
shall have been declared due and payable, in each case pursuant to Section 9.2
of the DIP Loan; or

                  (j) if the Bankruptcy Court declines to enter the Sale Order
because the Bankruptcy Court finds that the sale of the Purchased Assets under
this Agreement can only be approved through or in the context of a plan of
reorganization.

             8.2. Break-Up Fee and Expense Reimbursement.

                  (a) If this Agreement is terminated pursuant to Sections
8.1(f), 8.1(g) or 8.1(j) the Sellers shall, jointly and severally, pay to the
Buyer in immediately available funds a cash fee equal to $30 million (the
"Break-Up Fee"), such fee to be paid upon the earliest to occur of (i) the
closing of the Acquisition Proposal; (ii) the consummation of a plan under
chapter 11 of the Bankruptcy Code by the CFC Parties; (iii) the date which is 20
Business Days after the entry of a sale order with respect to an Acquisition
Proposal or (iv) the date which is 20 Business Days after the Bankruptcy Court
declines to enter the Sale Order for the reason set forth in Section 8.1(j)
hereof. If this Agreement is terminated pursuant to Section 8.1(h) as a result
of the failure of the Company to deliver the capital stock of Mill Creek Bank
free and clear of all Liens at the Closing (other than in the case where the
Buyer has elected not to purchase such stock pursuant to Section 2.1(a)(ii)) the
Sellers shall, jointly and severally, pay to the Buyer in immediately available
funds the Break-Up Fee, such fee to be paid within two days after such
termination. If this Agreement is terminated for any other reason permitted by
Section 8.1 (other than pursuant to Section 8.1(d)), and the Sellers (or any of
them) within one year thereafter consummate an Acquisition Proposal which
constituted a higher and better offer (whether or not constituting a Qualifying
Bid) (as defined in the Original Agreement), the Sellers shall, jointly and
severally, pay to the Buyer in immediately available funds the Break-Up Fee,
such fee to be paid upon consummation of such Acquisition Proposal. The Break-Up
Fee shall not be payable except under the circumstances provided in this Section
8.2(a).

                                      -93-


                  (b) If this Agreement is terminated pursuant to Sections
8.1(b), 8.1(c), 8.1(e) or 8.1(h) (without regard to the second proviso thereof),
then the Sellers shall, jointly and severally, pay or reimburse the Buyer for
all of the Buyer's actual out-of-pocket costs, fees, expenses (including,
without limitation, the Buyer's half of the HSR Act filing fee and the
reasonable fees and expenses of consultants, financial advisors, accountants,
counsel and financing sources), incurred by the Buyer (or the Investors) in
connection with the transactions contemplated by this Agreement, whether or not
incurred before or after the date of this Agreement, in an amount not to exceed
$5 million, which shall consist of the Buyer's actual and reasonable costs and
fees incurred (the "Expense Reimbursement"). The Expense Reimbursement shall be
made within five Business Days after the Buyer presents reasonable supporting
documentation therefor to the Sellers and the official committee of unsecured
creditors appointed in the Chapter 11 Case. The Expense Reimbursement shall not
be payable except under the circumstances provided in this Section 8.2(b).

                  (c) The Sellers' obligation to pay the Break-Up Fee and the
Expense Reimbursement pursuant to this Section 8.2 shall survive termination of
this Agreement and shall constitute an administrative expense of the Sellers
under section 364(c)(1) of the Bankruptcy Code with priority over any and all
administrative expenses of the kind specified in section 503(b) or 507(b) of the
Bankruptcy Code.

                  (d) The Break-Up Fee, payable under the circumstances provided
in Section 8.2(a), and the Expense Reimbursement, payable under the
circumstances provided in Section 8.2(b), shall be the exclusive remedies of the
Buyer and its Affiliates for any termination of this Agreement prior to the
Closing. In no event shall the Sellers or any of their respective Affiliates or
representatives have any Liability with respect to the Buyer or any other Person
hereunder in excess of the applicable Break-Up Fee and Expense Reimbursement in
the event that this Agreement terminates for any reason permitted by Section
8.1, and any claim, right or cause of action by the Buyer or any other Person
against the Sellers or their respective Affiliates or representatives in excess
of the applicable Break-Up Fee and Expense Reimbursement is hereby fully waived,
released and forever discharged. In no event shall the Sellers or their
respective Affiliates have any Liability to the Buyer or any other Person for
any special, consequential or punitive damages, and any such claim, right or
cause of action for any damages that are special, consequential or punitive or
for specific performance of this Agreement is hereby fully waived, released and
forever discharged.

             8.3. Termination by Reason of Buyer Default. If this Agreement is
terminated pursuant to Section 8.1(d), the sole and exclusive remedy of the CFC
Parties and their Affiliates shall be strictly limited to retention of the
Purchased Assets and the prompt payment by the Buyer to the Company of an amount
not to exceed $100 million for any Losses on an after Tax basis actually
incurred or suffered by the Sellers as a result of such breach, as liquidated
damages (the "Seller Liquidated Damages"). In no event shall the Buyer or any of
its Affiliates or representatives have any Liability to the CFC Parties or their
respective Affiliates or any other Person hereunder in excess of the Seller
Liquidated Damages in the event that this Agreement terminates pursuant to
Section 8.1(d), and any claim, right or cause of action by the CFC Parties or
their respective Affiliates or any other Person against the Buyer or its
Affiliates or representatives in excess of the Seller Liquidated Damages is
hereby fully waived, released and forever discharged. In no event shall the
Buyer or any of its Affiliates or representatives have

                                      -94-


any liability to the CFC Parties or their respective Affiliates in the event
that this Agreement is terminated for any other reason other than pursuant to
Section 8.1(d), and any claim, right or cause of action by the CFC Parties or
their respective Affiliates or any other Person against the Buyer or its
Affiliates or representatives is hereby fully waived, released and forever
discharged. In no event shall the Buyer or its Affiliates have any Liability to
the CFC Parties or their respective Affiliates or any other Person for any
special, consequential or punitive damages, and any such claim, right or cause
of action for any damages that are special, consequential or punitive or for
specific performance of this Agreement is hereby fully waived, released and
forever discharged. Concurrently with the execution of this Agreement, J.C.
Flowers I L.P., Fortress Investment Trust II and Cerberus Capital Management,
L.P. shall have delivered to the Company an indemnification letter in the form
of Exhibit D attached hereto.

             8.4. Effect of Termination. If none of the transactions
contemplated hereby are consummated then this Agreement shall become null and
void and of no further force and effect and there shall be no Liability on the
part of any Party to any other Party or its shareholders, directors or officers,
except as contemplated by ARTICLE VIII and ARTICLE X hereof. The Parties hereby
acknowledge that the amounts payable pursuant to this ARTICLE VIII are
commercially reasonable and necessary to induce the Buyer to enter into and
consummate the transactions contemplated by this Agreement.

                                  ARTICLE IX.

                  SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION

             9.1. Survival of Representations.

                  (a) The respective representations and warranties of the
Parties contained herein and in any Transaction Document or in any other
agreement, certificate, instrument or other document delivered pursuant thereto
or hereto shall survive the Closing until a date 12 months from the Closing
Date, provided that representations and warranties contained in Section 3.22
shall survive until 60 days after the lapse of the applicable statute of
limitations. No claim may be asserted nor may any action be commenced against
the Sellers pursuant to Section 9.2(a)(ii) or against the Buyer pursuant to
Section 9.2(b)(i) unless written notice of such claim or action is received by
the Sellers, in the case of Section 9.2(a)(ii), and Buyer, in the case of
Section 9.2(b)(i), on or prior to the date on which the representation or
warranty is based ceases to survive as set forth in the prior sentence (it being
agreed and understood that if a claim for a breach of a representation or
warranty is timely made, the representation or warranty shall, solely for
purposes of such claim, survive until the date on which such claim is finally
liquidated or otherwise resolved).

                  (b) Except as otherwise provided herein, the respective
post-Closing covenants of the Parties contained in this Agreement, the
Transaction Documents or in any other agreement, certificate, instrument or
other document delivered pursuant hereto or thereto shall survive the Closing
indefinitely. Pre-Closing covenants and failure to satisfy any condition to the
other party's obligation to consummate the transactions contemplated by this
Agreement shall not survive the Closing. Notwithstanding anything to the
contrary set forth herein, the representations and warranties pertaining to any
claim filed prior to the expiration of the relevant

                                      -95-


survival period specified in Section 9.1(a) hereof, shall, solely for purposes
of such claim survive until the resolution of such claim.

             9.2. Indemnification.

                  (a) From and after the Closing and in addition to any other
remedies available to the Buyer Indemnified Parties pursuant to Section 10.15 in
equity (but subject to Section 9.6), subject to Section 9.3 hereof, the Sellers
shall indemnify, defend and hold the Buyer, the Investors, their Affiliates and
their respective directors, officers, employees, representatives, agents,
successors and assigns (collectively, the "Buyer Indemnified Parties") harmless
from and against all Losses on an after-Tax basis that may be incurred or
suffered by any Buyer Indemnified Party resulting or arising from, related to or
incurred or suffered in connection with:

                        (i) any failure of the Sellers to assume, pay, perform
                  and discharge any Excluded Liability;

                        (ii) any breach of any representation or warranty of the
                  Sellers contained in this Agreement or the certificate
                  delivered pursuant to Section 6.1(c) above; or

                        (iii) any breach of any covenant, obligation or
                  agreement of the Sellers contained herein or in any
                  Transaction Document or in any other agreement, certificate,
                  instrument or other document delivered pursuant thereto or
                  hereto which is required to be performed by any Sellers after
                  the Closing.

                  (b) From and after the Closing, subject to Section 9.3 hereof,
the Buyer shall indemnify, defend and hold the Sellers, their Affiliates and
their respective directors, officers, employees, representatives, agents,
successors and assigns (collectively, the "Seller Indemnified Parties", and
together with the Buyer Indemnified Parties, the "Indemnified Parties") harmless
from and against all Losses, that may be incurred or suffered by any Seller
Indemnified Party resulting or arising from, related to or incurred or suffered
in connection with:

                        (i) any breach of any representation or warranty of the
                  Buyer contained in this Agreement or the certificate delivered
                  pursuant to Section 7.1(c) above;

                        (ii) any breach of any covenant, obligation or agreement
                  of the Buyer contained herein or in any Transaction Document
                  or in any other agreement, certificate, instrument or other
                  document delivered pursuant thereto or hereto which is
                  required to be performed by the Buyer after the Closing; or

                        (iii) any failure of the Buyer to assume, pay, perform
                  and discharge any Assumed Liability.

             9.3. Qualifications on Indemnification. Notwithstanding anything to
the contrary contained in this Agreement,

                                      -96-


                  (a) the Sellers shall not be required to indemnify the Buyer
Indemnified Parties for any Losses pursuant to Section 9.2(a)(ii) (other than
with respect to representations under Sections 3.22, 3.31, 3.32, 3.33, 3.34,
3.35, 3.36, 3.37 and 3.38) until the aggregate amount of such Losses exceeds $10
million (the "Indemnity Deductible"), and then only for the excess of such
Losses over such Indemnity Deductible; provided, however, that the Sellers shall
not be required to indemnify the Buyer Indemnified Parties for any Losses
pursuant to Section 9.2(a)(ii) (other than with respect to representations under
Sections 3.22, 3.31, 3.32, 3.33, 3.34, 3.35, 3.36, 3.37 and 3.38) for any Losses
in the aggregate in excess of $100 million (the "Cap");

                  (b) the Buyer shall not be required to indemnify the Seller
Indemnified Parties for any Losses (i) pursuant to Section 9.2(b)(i) until the
aggregate amount of such Losses exceeds the Indemnity Deductible, and then only
for the excess of such Losses over such Indemnity Deductible; provided, however,
that the Buyer shall not be required to indemnify the Seller Indemnified Parties
for any Losses pursuant to Section 9.2(b)(i) for any Losses in the aggregate in
excess of the Cap;

                  (c) for the purposes of determining whether the Indemnity
Deductible has been attained (but not for purposes of determining whether any
Indemnified Party is entitled to indemnification for Losses pursuant to Section
9.2(a)(ii) or Section 9.2(b)(i) once such Indemnity Deductible has been met),
all qualifications as to "material," "materiality," "Material Adverse Effect,"
or similar exception or qualifier contained therein shall be disregarded; and

                  (d) after the Buyer has recovered $10 million for Losses
pursuant to this ARTICLE IX, the Sellers shall not be required to indemnify the
Buyer Indemnified Parties for any Losses resulting or arising from, related to
or incurred or suffered in connection with any breach of any representation or
warranty of the Sellers contained in this Agreement or the certificate delivered
pursuant to Section 6.1(c) above or which are actually known by the Buyer prior
to the Closing.

             9.4. Notice and Defense of Claims.

                  (a) Notice of Claims. If an Indemnified Party desires to
assert a Direct Claim or receives notice of the assertion of any claim or of the
commencement of any Third Party Claim with respect to which indemnification is
to be sought from an Indemnifying Party, the Indemnified Party will give such
Indemnifying Party reasonable prompt notice thereof, but the failure to give
timely notice will not affect the rights or obligations of the Indemnifying
Party except to the extent that, as a result of such failure, the Indemnifying
Party has been materially prejudiced by the Indemnified Party's failure to give
such notice, in which case the Indemnifying Party shall be relieved from its
obligations hereunder only to the extent of such material prejudice. Such notice
shall describe the nature of the Third Party Claim in reasonable detail and will
indicate the estimated amount, if practicable, of the Loss that has been or may
be sustained by the Indemnified Party. Any Notice of a Direct Claim will state
the nature of such claim in reasonable detail and indicate the estimated amount,
if practicable.

                  (b) Third Party Claim Defense. The Indemnifying Party will
have the right to participate in or, by giving Notice to the Indemnified Party,
to elect to assume the defense of, any Third Party Claim at such Indemnifying
Party's own expense and by such Indemnifying Party's

                                      -97-


own counsel. The Indemnified Party shall have the right, but not the obligation,
to participate at its own expense in the defense thereof by counsel of the
Indemnified Party's choice and shall in any event use its commercially
reasonable efforts to cooperate with and assist the Indemnifying Party;
provided, however, that any Indemnified Party shall be entitled to participate
in the defense of any such Third Party Claim with counsel of its own choice at
the expense of the Indemnifying Party if, in the good faith judgment of the
Indemnified Party's counsel, representation by the Indemnifying Party's counsel
presents a material conflict of interest or if the Indemnified Party has
conflicting defenses. If within 10 calendar days after an Indemnified Party
provides notice to the Indemnifying Party of any Third Party Claim, the
Indemnified Party receives notice from the Indemnifying Party that such
Indemnifying Party has elected to assume the defense of such Third Party Claim,
the Indemnifying Party will not be liable for any legal expenses subsequently
incurred by the Indemnified Party in connection with the defense thereof.
Without the prior written consent of the Indemnified Party (not to be
unreasonably withheld), the Indemnifying Party will not enter into any
settlement or compromise of any Third Party Claim unless the sole relief
provided is monetary damages that are paid in full by the Indemnifying Party.

                  (c) Direct Claim. The Indemnifying Party will have a period of
45 calendar days from the receipt of notice of a Direct Claim within which to
respond to such Direct Claim. If the Indemnifying Party does not respond within
such 45-day period, the Indemnifying Party will be deemed to have accepted such
Direct Claim. If the Indemnifying Party rejects such Direct Claim, the
Indemnified Party will be free to seek enforcement of its rights to
indemnification under this Agreement.

             9.5. Tax Treatment. The Parties agree that any indemnification
payments made pursuant to this Agreement shall be treated for Tax purposes as an
adjustment to the Purchase Price, unless otherwise required by applicable Law.
All indemnification payments under this Agreement shall include an amount
sufficient to hold the recipient harmless on a net after-Tax basis from all
Taxes imposed with respect to the receipt or on account of the payment.

             9.6. Remedy. Absent fraud, from and after the Closing, the sole
remedy of a party in connection with a breach of any representation or warranty
contained in this Agreement or in any certificate delivered pursuant to Section
6.1(c) or Section 7.1(c) shall be as set forth in this ARTICLE IX.

             9.7. Administrative Expense; Administrative Priority. The first
$10.0 million of the Sellers' obligations under Section 5.1(b)(i) and this
ARTICLE IX shall constitute an administrative expense of the Sellers under
section 364(c)(1) of the Bankruptcy Code with priority over any and all
administrative expenses of the kind specified in section 503(b) or 507(b) of the
Bankruptcy Code and the balance of such obligations shall be an unsecured
prepetition claim. Notwithstanding anything to the contrary contained herein,
the Parties acknowledge and agree that the obligations of the CFC Parties
pursuant to Section 5.10(a)(ii) and Section 5.33 shall be separately enforceable
at law or in equity and shall not constitute a claim under ARTICLE IX hereof.
The Sellers' obligations under Section 5.10(a)(ii) and Section 5.33 shall
constitute an administrative expense of the Sellers' estates pursuant to Section
503(b)(1) of the Bankruptcy Code.

                                      -98-


                                   ARTICLE X.

                                  MISCELLANEOUS

             10.1. Expenses. Except as otherwise specifically provided in this
Agreement, the Sellers and the Buyer will each pay all costs and expenses
incurred by each of them, or on their behalf respectively, in connection with
this Agreement and the transactions contemplated hereby, including fees and
expenses of their own financial consultants, accountants and counsel.

             10.2. Amendment and Waiver. This Agreement may be amended and any
provision of this Agreement may be waived, provided that any such amendment or
waiver shall be binding upon a Party hereto only if such amendment or waiver is
set forth in a writing executed by such Party. No course of dealing between or
among any persons having any interest in this Agreement shall be deemed
effective to modify, amend or discharge any part of this Agreement or any rights
or obligations of any Party hereto under or by reason of this Agreement.

             10.3. Notices. All notices, demands and other communications given
or delivered under this Agreement shall be in writing and shall be deemed to
have been given when personally delivered, mailed by first class mail, return
receipt requested, or delivered by express courier service or telecopied (with
hard copy to follow). Notices, demands and communications to the Sellers and the
Buyer shall, unless another address is specified in writing, be sent to the
address or telecopy number indicated below:

Notices to the Sellers:         Conseco Finance Corp.
- ----------------------          1100 Landmark Towers
                                Saint Paul, Minnesota 55102
                                Attention: Charles H. Cremens
                                Telecopy No.: (651) 293-5746

                                with copies (which shall not constitute
                                notice) to:

                                Kirkland & Ellis
                                200 East Randolph Drive
                                Chicago, IL 60601
                                Attention:        James H.M. Sprayregen, P.C.
                                Telecopy:         (312) 861-2200

                                Official Committee of Unsecured Creditors of
                                Conseco Finance Corp. and
                                Conseco Finance Servicing Corp.
                                c/o Commonwealth Advisors
                                247 Florida St.
                                Baton Rouge, LA 70821
                                Telecopy: (225) 343-1645
                                Attention: Walter A. Morales

                                      -99-


                                and

                                Greenberg Traurig, LLP
                                77 W. Wacker Drive, Suite 2400
                                Chicago, IL 60601
                                Telecopy: (312) 456-8435
                                Attention: Keith J. Shapiro

Notices to the Buyer:           c/o J.C. Flowers I L.P.
- --------------------            399 Park Avenue, 27th Floor
                                New York, New York 10022
                                Attention: David I. Schamis
                                Telecopy No: (646) 349-4889

                                c/o Fortress Investment Trust II
                                1251 Avenue of the Americas
                                New York, New York 10020
                                Attention: William Doniger
                                Telecopy No: (212) 798-6070

                                and

                                c/o Cerberus Capital Management, L.P.
                                450 Park Avenue, 28th Floor
                                New York, New York 10022
                                Attention: Mark Neporent
                                Telecopy No: (212) 891-1540


                                with copies (which shall not constitute
                                notice) to:

                                Willkie Farr & Gallagher
                                787 Seventh Avenue
                                New York, NY 10019
                                Attention:        Thomas M. Cerabino
                                Telecopy:         (212) 728-8111

                                and

                                Milbank Tweed Hadley & McCloy LLP
                                601 South Figueroa Street, 30th Floor
                                Los Angeles, CA 90017
                                Attention: Neil J. Wertlieb
                                Telecopy: (213) 629-5063

             10.4. Binding Agreement; Assignment. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns; provided that
neither this Agreement nor any of the rights,

                                     -100-


interests or obligations hereunder may be assigned by the Sellers without the
prior written consent of the Buyer or by the Buyer without the prior written
consent of the Sellers. Notwithstanding the foregoing, without the prior written
consent of the Sellers, each of the Buyer and its permitted assigns may at any
time, in its sole discretion, assign, in whole or in part, (a) its rights and
obligations pursuant to this Agreement and the other Transaction Documents to
one or more of its Affiliates or to one or more other Persons controlled,
directly or indirectly, by any of the Investors, (b) its rights under this
Agreement and the other Transaction Documents for collateral security purposes
to any lender providing financing to the Buyer, such permitted assign or any of
their Affiliates and any such lender may exercise all of the rights and remedies
of the Buyer or such permitted assign hereunder and thereunder; and (c) its
rights under this Agreement and the other Transaction Documents, in whole or in
part, to any subsequent purchaser of the Buyer, such permitted transferee or any
of their divisions or any material portion of their assets (whether such sale is
structured as a sale of stock, sale of assets, merger, recapitalization or
otherwise). However, the Buyer and its permitted assigns shall not be released
or novated from any obligations assigned by the Buyer or its permitted assigns
pursuant to this Section 10.4.

             10.5. Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provisions or the remaining provisions of this Agreement.

             10.6. Construction. The language used in this Agreement shall be
deemed to be the language chosen by the Parties to express their mutual intent,
and no rule of strict construction shall be applied against any Person. Any
reference to any federal, state, local or foreign statute or law shall be deemed
also to refer to all rules and regulations promulgated thereunder, unless the
context otherwise requires. The word "including" shall mean "including without
limitation".

             10.7. Captions. The captions used in this Agreement are for
convenience of reference only and do not constitute a part of this Agreement and
shall not be deemed to limit, characterize or in any way affect any provision of
this Agreement, and all provisions of this Agreement shall be enforced and
construed as if no caption had been used in this Agreement.

             10.8. Entire Agreement. The annexes, exhibits and schedules
identified in this Agreement are incorporated herein by reference. This
Agreement and the documents referred to herein (including the Confidentiality
Agreement) contain the entire agreement between the Parties and supersede any
prior understandings, agreements or representations by or between the Parties,
written or oral, which may have related to the subject matter hereof in any way,
including without limitation the Original Agreement. Except as expressly set
forth in ARTICLE III and ARTICLE IV of this Agreement (or in the certificates to
be delivered pursuant to Section 6.1(c) and Section 7.1(c), no Party makes any
representation or warranty of any kind, express or implied, and it is further
understood and agreed that Sellers make no representation or warranty of any
kind with respect to the future value or profitability of the Purchased
Businesses or the Purchased Assets.

                                     -101-


             10.9. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original but all of which taken
together shall constitute one and the same instrument.

             10.10. Governing Law. All questions concerning the construction,
validity and interpretation of this Agreement shall be governed by and construed
in accordance with the domestic laws of the State of New York, without giving
effect to any choice of law or conflict of law provision (whether of the State
of New York or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of New York.

             10.11. Parties in Interest. Nothing in this Agreement, express or
implied, is intended to confer on any Person other than the Parties and their
respective successors and assigns any rights or remedies under or by virtue of
this Agreement.

             10.12. Consent to Jurisdiction. THE PARTIES AGREE THAT JURISDICTION
AND VENUE IN ANY ACTION BROUGHT BY ANY PARTY PURSUANT TO THIS AGREEMENT SHALL
PROPERLY (BUT NOT EXCLUSIVELY) LIE IN ANY FEDERAL OR STATE COURT LOCATED IN NEW
YORK, NEW YORK; PROVIDED, HOWEVER, THE PARTIES AGREE THAT JURISDICTION AND VENUE
IN ANY ACTION BROUGHT BY ANY PARTY PURSUANT TO THIS AGREEMENT OVER ANY DISPUTE
RELATING TO THE AUCTION OR THE PURCHASED ASSETS OR THIS AGREEMENT SHALL
EXCLUSIVELY LIE WITH THE BANKRUPTCY COURT SO LONG AS THE BANKRUPTCY COURT SHALL
BE WILLING TO HEAR SUCH DISPUTE. BY EXECUTION AND DELIVERY OF THIS AGREEMENT,
EACH PARTY IRREVOCABLY SUBMITS TO THE JURISDICTION OF SUCH COURTS FOR ITSELF AND
IN RESPECT OF ITS PROPERTY WITH RESPECT TO SUCH ACTION. THE PARTIES IRREVOCABLY
AGREE THAT VENUE WOULD BE PROPER IN SUCH COURT, AND HEREBY WAIVE ANY OBJECTION
THAT SUCH COURT IS AN IMPROPER OR INCONVENIENT FORUM FOR THE RESOLUTION OF SUCH
ACTION. THE PARTIES FURTHER AGREE THAT THE MAILING BY CERTIFIED OR REGISTERED
MAIL, RETURN RECEIPT REQUESTED, OF ANY PROCESS REQUIRED BY ANY SUCH COURT SHALL
CONSTITUTE VALID AND LAWFUL SERVICE OF PROCESS AGAINST THEM, WITHOUT NECESSITY
FOR SERVICE BY ANY OTHER MEANS PROVIDED BY STATUTE OR RULE OF COURT.

             10.13. Delivery by Facsimile. This Agreement and any Transaction
Document, and any amendments hereto or thereto, to the extent signed and
delivered by means of a facsimile machine, shall be treated in all manner and
respects as an original Contract and shall be considered to have the same
binding legal effects as if it were the original signed version thereof
delivered in person. At the request of any Party hereto or to any such Contract,
each other Party hereto or thereto shall re-execute original forms thereof and
deliver them to all other parties. No Party hereto or to any such Contract shall
raise the use of a facsimile machine to deliver a signature or the fact that any
signature or Contract was transmitted or communicated through the use of a
facsimile machine as a defense to the formation of a Contract and each such
Party forever waives any such defense.

                                     -102-


             10.14. Disclosure Schedules. All schedules attached hereto or
referred to herein are hereby incorporated in and made a part of this Agreement
as if set forth in full herein. The description or listing of a matter, event or
thing within the schedules (whether in response for a description or listing of
material items or otherwise) shall not be deemed an admission or acknowledgment
that such matter, event or thing is "material" for any purpose. In addition,
matters reflected in the schedules are not necessarily limited to matters
required by this Agreement to be reflected in such schedules. Such additional
matters are set forth for informational purposes only and do not necessarily
include other matters of a similar nature.

             10.15. Specific Performance. The Buyer shall be entitled to seek
specific performance of the obligations to be performed by the Sellers in
accordance with the provisions of this Agreement.

                                    * * * * *


                                     -103-





                  IN WITNESS WHEREOF, the undersigned have executed this Asset
Purchase Agreement as of the date first written above.

                                         CONSECO FINANCE CORP.



                                         By:      /s/ Keith A. Anderson
                                                  ------------------------------
                                         Name:    Keith A. Anderson
                                         Its:     Senior Vice President



                                         CONSECO FINANCE SERVICING CORP.



                                         By:      /s/ Keith A. Anderson
                                                  ------------------------------
                                         Name:    Keith A. Anderson
                                         Its:     Senior Vice President



                                         CONSECO FINANCE CORP. - ALABAMA



                                         By:      /s/ Keith A. Anderson
                                                  ------------------------------
                                         Name:    Keith A. Anderson
                                         Its:     Senior Vice President



                                         CONSECO FINANCE CREDIT CORP.



                                         By:      /s/ Keith A. Anderson
                                                  ------------------------------
                                         Name:    Keith A. Anderson
                                         Its:     Senior Vice President




                                         CONSECO FINANCE CONSUMER DISCOUNT
                                         COMPANY



                                         By:      /s/ Keith A. Anderson
                                                  ------------------------------
                                         Name:    Keith A. Anderson
                                         Its:     Senior Vice President



                                         CONSECO FINANCE LOAN COMPANY



                                         By:      /s/ Keith A. Anderson
                                                  ------------------------------
                                         Name:    Keith A. Anderson
                                         Its:     Senior Vice President



                                         CONSECO FINANCE CANADA HOLDING COMPANY



                                         By:      /s/ Keith A. Anderson
                                                  ------------------------------
                                         Name:    Keith A. Anderson
                                         Its:     Senior Vice President



                                         CONSECO FINANCE CANADA COMPANY



                                         By:      /s/ Keith A. Anderson
                                                  ------------------------------
                                         Name:    Keith A. Anderson
                                         Its:     Senior Vice President


                                         CONVERGENT LENDING SERVICES, LLC



                                         By:      /s/ Albert J. Rudnickas
                                                  ------------------------------
                                         Name:    Albert J. Rudnickas
                                         Its:     President




                                         GREEN TREE FINANCE CORP. - FIVE



                                         By:      /s/ Keith A. Anderson
                                                  ------------------------------
                                         Name:    Keith A. Anderson
                                         Its:     Senior Vice President



                                         GREEN TREE RESIDUAL FINANCE CORP. I



                                         By:      /s/ Keith A. Anderson
                                                  ------------------------------
                                         Name:    Keith A. Anderson
                                         Its:     Senior Vice President



                                         CONSECO FINANCE CREDIT CARD
                                         FUNDING CORP.



                                         By:      /s/ Keith A. Anderson
                                                  ------------------------------
                                         Name:    Keith A. Anderson
                                         Its:     Senior Vice President

                                         CONSECO FINANCE SECURITIZATIONS CORP.


                                         By:      /s/ Keith A. Anderson
                                                  ------------------------------
                                         Name:    Keith A. Anderson
                                         Its:     Senior Vice President



                                         CONSECO HE/HI 2001-B-2, INC.



                                         By:      /s/ Keith A. Anderson
                                                  ------------------------------
                                         Name:    Keith A. Anderson
                                         Its:     Senior Vice President




                                         CONSECO FINANCE ADVANCE RECEIVABLES
                                         CORP.



                                         By:      /s/ Keith A. Anderson
                                                  ------------------------------
                                         Name:    Keith A. Anderson
                                         Its:     Senior Vice President



                                         CONSECO FINANCE LIQUIDATION EXPENSE
                                         ADVANCE RECEIVABLES 2002-B-CORP.



                                         By:      /s/ Keith A. Anderson
                                                  ------------------------------
                                         Name:    Keith A. Anderson
                                         Its:     Senior Vice President



                                         GREEN TREE RECS II GUARANTY CORPORATION



                                         By:      /s/ Keith A. Anderson
                                                  ------------------------------
                                         Name:    Keith A. Anderson
                                         Its:     Senior Vice President



                                         GREEN TREE SECOND GP INC.



                                         By:      /s/ Keith A. Anderson
                                                  ------------------------------
                                         Name:    Keith A. Anderson
                                         Its:     Senior Vice President




                                         CONSECO AGENCY, INC.



                                         By:      /s/ Keith A. Anderson
                                                  ------------------------------
                                         Name:    Keith A. Anderson
                                         Its:     Senior Vice President



                                         CONSECO AGENCY OF ALABAMA, INC.



                                         By:      /s/ Keith A. Anderson
                                                  ------------------------------
                                         Name:    Keith A. Anderson
                                         Its:     Senior Vice President



                                         CONSECO AGENCY OF KENTUCKY, INC.



                                         By:      /s/ Keith A. Anderson
                                                  ------------------------------
                                         Name:    Keith A. Anderson
                                         Its:     Senior Vice President


                                         CONSECO AGENCY OF NEVADA, INC.



                                         By:      /s/ Keith A. Anderson
                                                  ------------------------------
                                         Name:    Keith A. Anderson
                                         Its:     Senior Vice President



                                         CONSECO AGENCY OF NEW YORK, INC.



                                         By:      /s/ Keith A. Anderson
                                                  ------------------------------
                                         Name:    Keith A. Anderson
                                         Its:     Senior Vice President




                                         CRUM-REED GENERAL AGENCY, INC.



                                         By:      /s/ Keith A. Anderson
                                                  ------------------------------
                                         Name:    Keith A. Anderson
                                         Its:     Senior Vice President



                                         CONSECO AGENCY REINSURANCE LIMITED



                                         By:      /s/ Keith A. Anderson
                                                  ------------------------------
                                         Name:    Keith A. Anderson
                                         Its:     Senior Vice President



                                         RICE PARK PROPERTIES CORPORATION



                                         By:      /s/ Keith A. Anderson
                                                  ------------------------------
                                         Name:    Keith A. Anderson
                                         Its:     Senior Vice President



                                         GREEN TREE RETAIL SERVICES BANK



                                         By:      /s/ Daniel J. Finn, Jr.
                                                  ------------------------------
                                         Name:    Daniel J. Finn, Jr.
                                         Its:     President



                                         CONSECO FINANCE NET INTEREST MARGIN
                                         FINANCE CORP. I



                                         By:      /s/ Keith A. Anderson
                                                  ------------------------------
                                         Name:    Keith A. Anderson
                                         Its:     Senior Vice President





                                         CONSECO FINANCE NET INTEREST MARGIN
                                         FINANCE CORP. II



                                         By:      /s/ Keith A. Anderson
                                                  ------------------------------
                                         Name:    Keith A. Anderson
                                         Its:     Senior Vice President



                                         LANDMARK MANUFACTURING HOUSING INC.



                                         By:      /s/ Keith A. Anderson
                                                  ------------------------------
                                         Name:    Keith A. Anderson
                                         Its:     Senior Vice President



                                         GREEN TREE FLOORPLAN FUNDING CORP.



                                         By:      /s/ Keith A. Anderson
                                                  ------------------------------
                                         Name:    Keith A. Anderson
                                         Its:     Senior Vice President



                                         GREEN TREE FIRST GP INC.



                                         By:      /s/ Keith A. Anderson
                                                  ------------------------------
                                         Name:    Keith A. Anderson
                                         Its:     Senior Vice President




                                         GREEN TREE FINANCE CORP. -TWO



                                         By:      /s/ Keith A. Anderson
                                                  ------------------------------
                                         Name:    Keith A. Anderson
                                         Its:     Senior Vice President






                                         CFN INVESTMENT HOLDINGS LLC



                                         By:      /s/ Wesley R. Edens
                                                  ------------------------------
                                         Name:    Wesley R. Edens
                                         Its:     CEO








                          PURCHASED BUSINESSES SCHEDULE






                               RESIDUALS SCHEDULE










                         MH SERVICING BUSINESS SCHEDULE








                                INDEX OF EXHIBITS



Exhibit A  -  Additional Representations and Warranties with Respect to the
              Loans and the Residual Assets

Exhibit B  -  Form of Lost Document Affidavit

Exhibit C  -  GE Lease Term Sheet

Exhibit D  -  Form of Indemnification Letter of J.C. Flowers I L.P., Fortress
              Investment Trust II and Cerberus Capital Management, L.P.

Exhibit E  -  List of Securitization Trusts for which P&I Insurance is in Force








                                    EXHIBIT A

             1. Loans. The Sellers make the following representations with
respect to the Loans:

                  (a) Binding Obligation. The Loans are the legal, valid and
binding obligations of the Obligor thereunder and are enforceable in accordance
with their terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally.

                  (b) No Defenses. The Loans are not subject to any right of
rescission, setoff, counterclaim or defense, including the defense of usury, and
the operation of any of the terms of the Loans or the exercise of any right
thereunder will not render the Loans unenforceable, in whole or in part, or
subject to any right of rescission, setoff, counterclaim or defense, including
the defense of usury.

                  (c) Insurance. In the case of all applicable Loans, including,
but not limited to Home Improvement Loans, Home Equity Loans, HELOC and MH
Contracts relating to real property, other than unsecured Loans, as of the date
a CFC Party originated or purchased (as applicable) such Loan, all improvements
on the related real property were covered by a hazard insurance policy as of the
date a CFC Party originated or purchased (as applicable) such Loan. All premiums
due on such insurance had been paid in full. All Loans insured under the FHA's
Title 1 Program that were originated by a CFC Party were originated in
compliance with FHA regulations and are insured, without setoff, surcharge or
defense, by FHA insurance. The Sellers have, in conformity with FHA regulations,
filed all reports necessary for the such Loans to be registered for FHA
insurance. Following the sale, transfer or assignment of such Loans, the Buyer
will be entitled to the full benefits of the FHA insurance. If upon origination
of such Loans by a CFC Party, the property securing such Loans was in an area
identified in the Federal Register by the Federal Emergency Management Agency as
having special flood hazards (and if flood insurance was required by federal
regulation and such flood insurance has been made available in the locale where
the property is located), the property was, at the date of origination, covered
by a flood insurance policy of the nature and in an amount which is consistent
with the Company's servicing standards. "FHA" means the Fair Housing
Administration, an agency with the United States Department of Housing and Urban
Development.

                  (d) Origination. The Loans were originated by the Sellers in
the ordinary course of business, and if not originated by the Sellers, then
purchased by or assigned to a Seller from a home improvement contractor, home
equity lender, manufactured housing dealer or any similarly situated dealer or
Person in the ordinary course of business. The origination practices with
respect to each Loan (i) have been and are in all material respects legal and
proper in the mortgage origination business and consumer finance business and
(ii) are in accordance with the Sellers' underwriting guidelines in all material
respects (except that, with respect to each Loan that was originated by a Person
other than a Seller, the Sellers make such origination practices representation
and warranty only to their Knowledge).

                  (e) Lawful Assignment. The Loans were not originated in and
are not subject to the Laws of any jurisdiction whose Laws would make the
transfer or ownership thereof unlawful or unenforceable. The assignment and any
and all documents executed and delivered

                                      A-1


by the Sellers pursuant to this Agreement each constitutes the legal, valid and
binding obligation of the Sellers enforceable in accordance with their terms. As
of the Closing Date, the Sellers will have executed a valid blanket assignment
of the Loans transferred to the Buyer, and will have transferred all their
right, title and interest in such Loans including all rights the Sellers may
have against the originating Person with respect to Loans originated by Persons
other than a Seller.

                  (f) Compliance with Laws. All requirements of any Law,
including without limitation, the Finance Laws, and FHA regulations, if
applicable, have been complied with in all material respects and such compliance
is not affected by the holding or ownership of the Loans.

                  (g) Loans In Force. The Loans have not been satisfied,
subordinated or rescinded, in whole or in part, and, in the case of such Loans
secured by collateral, such collateral has not been released, in whole or in
part (except as released in the ordinary course of business consistent with past
practices), from the Lien created thereby.

                  (h) Liens. With respect to Loans that are Home Equity Loans
and HELOC, such Loans have been duly executed and delivered by the Obligors and
the related mortgages are valid and subsisting first, second or third Liens on
the property described therein. With respect to Loans that are Home Improvement
Loans, such Loans have been duly executed and delivered by the Obligors and the
related mortgage are valid and subsisting first, second or third Liens on the
property described therein or the Home Improvement Loans are unsecured
borrowings of the Obligor. As of the Closing Date, the Sellers will assign any
related mortgage to the Buyer, and the Buyer will have valid and subsisting
Liens on the property therein described. The Sellers have full right to sell and
assign such Loans to the Buyer.

                  (i) Originals. The Sellers have in their possession (either
directly or through a custodian) and, as of the Closing Date, will have
delivered to the Buyer, all originals of the mortgage notes, promissory notes,
contracts and certificates that constitute or evidence the Loans, together with
an allonge affixed to each such note and certificate showing a complete chain of
endorsements to Buyer. As to any missing mortgage note, promissory note ,
contract or certificate, the Sellers shall deliver or cause to be delivered, a
copy of the lost document and a lost document affidavit with respect thereto,
the form of which is attached hereto at Exhibit B. In the case of Loans secured
by real property, including but not limited to Home Improvement Loans, Home
Equity Loans, HELOC and certain MH Contracts, the Sellers will deliver, or cause
to be delivered, to the Buyer as of the Closing Date, the original mortgage,
with evidence of recording thereon, or if the original mortgage has not yet been
returned from the recording office, a true copy of the mortgage which has been
delivered for recording in the appropriate recording office of the jurisdiction
in which the real property has been delivered, and executed assignments of
mortgage showing a complete chain of assignment of mortgage to the Buyer.

                  (j) Notation of Security Interest. With respect to the Loans
where the underlying collateral, such as manufactured homes or consumer
products, is located in a state in which notation of a security interest on the
title document is required or permitted to perfect such security interest, the
title document shows, or if a new or replacement title document with respect to
such collateral is being applied for, then such title document will be issued
within 180 days and will show a Seller as the holder of a first priority
security interest in such collateral. If the collateral is located in a state in
which the filing of a financing statement under the UCC is

                                      A-2


required to perfect a security interest in goods of the type of such collateral,
such filings or recording have been duly made and show a Seller as a secured
party.

                  (k) Purchase Money Security Interest. The retail installment
contracts create a "purchase money security interest" (as defined in the UCC) in
favor of the Sellers in the consumer product covered thereby as security for
payment of the outstanding principal balance of such retail installment contract
and all other obligations of the Obligor under such retail installment contract;
such security interest has been assigned by the Sellers to the Buyer and the
Buyer will have a valid purchase money security interest in such consumer
product.

                  (l) FHA/VA MH Contracts. If the Loans are MH Contracts
regulated by the FHA or VA, then such MH Contract has been serviced in
accordance with such regulations, the insurance or guarantee of the MH Contract
under such regulations and related Laws is in full force and effect, and no
event has occurred which, with or without notice or lapse of time or both, would
impair such insurance or guarantee.

                  (m) Home Ownership and Equity Protection Act. With respect to
any Loan subject to the Home Ownership and Equity Protection Act of 1994, each
such Loan has been originated and serviced in compliance with the provisions
thereof.

                  (n) Licensing Requirements. All CFC Parties which have had any
interest in the Loan, whether as mortgagee, assignee, pledgee or otherwise, are
(or, during the period in which they held and disposed of such interest, were)
(1) in compliance with any and all applicable licensing requirements of the laws
of the state where the related mortgaged property is located, except where
failure to comply with such licensing requirements will not adversely affect the
Buyer's interest in the Loan, all parties were (2)(a) organized under the laws
of such a state, or (b) qualified to do business in such state, or (c) federal
savings and loan associations, savings banks, or national banks having principal
offices in such state, or (d) not doing business in such state, and all parties
had (3) capacity to execute the Loans.

                  (o) MH Contracts. With respect to each MH Contract,

                      (i) The MH Contract is either (A) secured by chattel
property, creates a valid, subsisting, enforceable and perfected first lien on
the related manufactured home, or (B) The related manufactured home is
permanently affixed to a foundation which is suitable for the soil conditions of
the site; (b) all foundations, both perimeter and interior, have footings that
are located below the frost line; (c) any wheels, axles and trailer hitches are
removed from the manufactured home; (d) the MH Contract is covered under a
standard real estate title insurance policy or attorney's title opinion or
certificate that identified the manufactured home as part of the real property
and insures or indemnifies against any loss if the manufactured home is
determined not to be part of the real property.

                      (ii) If the related manufactured home is located in a
state in which notation of a security interest on the title document is required
or permitted to perfect such security interest, the title document shows, or if
a new or replacement title document with respect to such manufactured home is
being applied for such title document will be issued within 150 days and will
show, the Buyer as the holder of a first priority security interest in such

                                      A-3


manufactured home; if the related manufactured home is located in a state in
which the filing of a financing statement under the UCC is required to perfect a
security interest in manufactured housing, such filings or recordings have been
duly made and show the Buyer as secured party.

                      (iii) The related manufactured home is a "manufactured
home" within the meaning of 42 United States Code, Section 5402(6). Each
manufactured housing dealer from whom the Seller purchased such MH Contract, if
any, was then approved by the Seller in accordance with the requirements of the
Secretary of Housing and Urban Development set forth in 24 CFR ss. 201.27. At
the origination of each MH Contract, the Seller was approved for insurance by
the Secretary of Housing and Urban Development ("HUD") pursuant to Section 2 of
the National Housing Act.

             2. Residual Assets. The Sellers make the following representations
with respect to the Residual Assets:

                  (a) All of the Residual Assets that are certificated
securities have been validly issued, and are fully paid and non-assessable, and
have been offered, issued and sold in compliance with all applicable laws. There
are no outstanding rights, options, warrants or agreements for the purchase
from, or sale or issuance, in connection with such Residual Assets. There are no
agreements on the part of the Sellers to issue, sell or distribute the Residual
Assets and the Sellers have no obligation (contingent or otherwise) to purchase,
redeem or otherwise acquire any securities or interest therein or to pay any
dividend or make any distribution in respect of the Residual Assets.

                  (b) Except as indicated in the Residuals Schedule, no
servicing termination or over collateralization triggers or early amortization
events have occurred on any Securitization.

                  (c) The servicing practices used by each of the CFC Parties in
Securitizations are in compliance in all material respects with the requirements
of the related agreements and federal, state and local laws, rules and
regulations.


                                      A-4



                                    EXHIBIT B


                         FORM OF LOST DOCUMENT AFFIDAVIT


                  The undersigned does hereby certify as follows

                  1.   The undersigned has made a diligent search for the
documents listed in the attached Exhibit A (the "Documents") and has been unable
to locate said Documents;

                  2.  The undersigned has not assigned, transferred or
hypothecated said documents;

                  3.  The  undersigned  will,  in the event any said  Document
is  recovered,  cause the same to be  delivered  to ______________;

                  IN WITNESS WHEREOF, the undersigned has executed this Lost
Document Affidavit as of the ___ day of __________, ______.


                            _____________________________________

                            Signature:        ___________________

                            Name:             ___________________

                            Title:            ___________________

                                      C-5



                                    EXHIBIT C

                                 Term Sheet for
                1400 Turbine Drive, Rapid City, South Dakota, and
                 7360 Kyrene Road, Building C/1, Tempe, Arizona

The Lease Agreement for 1400 Turbine Drive, Rapid City, South Dakota (the
"Lease")

Landlord:                           Conseco Finance Servicing Corp. or the
                                    Bankruptcy Acquiror ("CFSC")

Tenant:                             General Electric Corporation or an entity
                                    designated by GECC ("GECC")

Rapid City Building:                1400 Turbine Drive, Rapid City, South Dakota

Leased Premises:                    Entire 1st Floor (other than the raised
                                    floor space housing the data and
                                    telecommunications equipment (the "Rapid
                                    City Data Center"))

Possession:                         The effective date of the Lease shall be the
                                    Funding Date (as defined in the Asset
                                    Purchase Agreement between GECC, Conseco
                                    Finance Corp. and its subsidiaries).

Term:                               2 years plus, if applicable, the period
                                    between the Funding Date and the Closing
                                    Date (as defined in the Asset Purchase
                                    Agreement between CFN Investment Holdings
                                    LLC ("CFN"), Conseco Finance Corp. and its
                                    subsidiaries), with an option to extend the
                                    term of the Lease (subject to mutually
                                    agreeable terms)

Annual Base and
Additional Rent:                    Lease will be triple net, with a base
                                    rent in an amount to be reasonably agreed to
                                    between CFN and GECC, which shall be based
                                    on prevailing market prices for similar
                                    locations.

Rapid City Data Center:             Control of the Rapid City Data Center shall
                                    be held by CFN; provided, however, that GECC
                                    shall have reasonable access and use of the
                                    Rapid City Data Center and shall be provided
                                    data center services related to the PL
                                    Business, HI Business and CL Business under
                                    the Transitional Services Agreement.

Entrance:                           Landlord shall have the right, in its sole
                                    discretion, to choose either entrance to the
                                    Rapid City Building for the purposes of
                                    accessing the 2nd floor space of the Rapid
                                    City Building, provided that GECC shall
                                    continue to have reasonable and exclusive
                                    access to the other entrance of the Leased
                                    Premises and any costs and expenses related
                                    to the modification or addition of any
                                    entrance chosen by Landlord shall be solely
                                    borne by CFN.

Initial Capital Expenditure:        Landlord and Tenant shall equally bear the
                                    reasonable costs for segregating the Lease
                                    Premises (other than with respect to any
                                    capital expenditures directly relating to
                                    the entrance chosen by CFN, which shall be
                                    borne solely by CFN) from the remainder of

                                      C-1


                                    the Rapid City Building (which in no event
                                    shall exceed $200,000 without the prior
                                    written agreement of the parties).

Pre-Closing Date Liabilities        GECC shall pursue all claims or causes of
                                    actions arising out of any breach by
                                    Landlord under the Lease in the ordinary
                                    course of business, it being understood that
                                    Seller shall be liable for any such breach
                                    by Landlord prior to the Closing Date.

The Lease shall contain customary terms and conditions.

7360 Kyrene Road, Building C/1, Tempe, Arizona ("Tempe Building One")

Subject to obtaining any approval required by the current landlord at Tempe
Building One, CFN shall provide GECC with reasonable access and use of the
raised floor space housing the data and telecommunications equipment located at
Tempe Building One (the "Tempe Data Center") and GECC shall be provided PLCC, HI
and CI related data center services under the Transitional Services Agreement.







                             AMENDMENT NUMBER ONE TO
                  AMENDED AND RESTATED ASSET PURCHASE AGREEMENT

                  THIS AMENDMENT NUMBER ONE TO AMENDED AND RESTATED ASSET
PURCHASE AGREEMENT (this "Amendment") is made as of April 1, 2003, by and among
Conseco Finance Corp., a Delaware corporation (the "Company"), the Subsidiaries
of the Company owning Purchased Assets, which are named on the signature pages
hereof or become parties hereto (the "Selling Subsidiaries"), and CFN Investment
Holdings LLC, a Delaware limited liability company (the "Buyer"). This Amendment
amends the Amended and Restated Asset Purchase Agreement, dated as of March 14,
2003, by and among the Company, the Selling Subsidiaries and the Buyer (the
"Asset Purchase Agreement"). Capitalized terms used herein that are not defined
shall have the meanings ascribed to them in the Asset Purchase Agreement.

                  WHEREAS, the Parties desire to amend the Asset Purchase
Agreement on the terms and conditions contained herein in accordance with
Section 10.2 of the Asset Purchase Agreement.

                  NOW, THEREFORE, in consideration of the premises and mutual
promises herein made, and in consideration of the representations, warranties
and covenants herein contained, the Parties hereby agree as follows:

                              ARTICLE 1. AMENDMENT

                  1.1. Additional Definitions. The following defined terms shall
be added in alphabetical order to Section 1.1 of the Asset Purchase Agreement:

                  " "ATM" means ATM Corporation of America, a Pennsylvania
corporation, and its successors and assigns."

                  " "ATM Approved Agreement" means a membership interest
purchase agreement by and between Conseco Finance Servicing Corp. and ATM in
form and substance reasonably satisfactory to the Buyer."

                  " "ATM Closing" means the "Closing" as defined in the ATM
Approved Agreement."

                  " "ATM Condition" means that the ATM Closing occurs."

                  " "ATM Sale Order" means the "Section 363 Order" as defined in
the ATM Approved Agreement."

                  " "ATM Vendor Contract" means the Vendor Management Company
Agreement, dated as of February 5, 2002, by and between ATM and the Company."

                  " "Convergent Assets" means any and all assets, properties,
Contracts and rights owned by Convergent LLC of whatever kind and nature, real
or personal, tangible or intangible, owned, leased, licensed, used or held for
use or license, wherever located, including, without limitation, the Convergent
Contracts."

                                      -1-


                  " "Convergent Liabilities" means any and all Liabilities of
Convergent LLC."

                  " "Convergent LLC" means Convergent Lending Services, LLC, a
Pennsylvania limited liability company."

                  " "Convergent Purchase Price" means the "Purchase Price" as
defined in the ATM Approved Agreement."

                  " "LLC Conversion" shall have the meaning set forth in Section
5.34 hereof."

                  1.2. Additional Definitions. The following defined terms in
Section 1.1 of the Asset Purchase Agreement are hereby deleted and replaced in
their entirety with the following:

                  " "Acquisition Proposal" means a written proposal(s) relating
to (a) any merger, consolidation, business combination, sale, reorganization or
other direct or indirect disposition of one or more of the Purchased Businesses
or of all or a portion of the Purchased Assets, pursuant to one or more
transactions, to one or more affiliated or unaffiliated parties (other than
transactions in the ordinary course of business or transactions permitted or
approved pursuant to Section 5.5), (b) the sale of 20% or more of the
outstanding shares of capital stock of the Company (including, without
limitation, by way of foreclosure or plan of reorganization or liquidation) to
one or more affiliated or unaffiliated parties or a similar transaction
involving one or more affiliated or unaffiliated parties, or (c) any transaction
or series of transactions in which a Person or group provides or commits to
provide $50 million or more of capital to the Company or its Subsidiaries
(whether as debt or equity or a combination thereof) (other than (i) debt
financing in which none of the Purchased Assets is pledged as collateral or
subjected to any Lien other than Permitted Liens, (ii) the DIP Loan, (iii) the
Additional Lehman Debt and (iv) transactions specifically contemplated by the GE
Approved Agreement and the ATM Approved Agreement)."

                  1.3. GE Condition. The Parties hereby acknowledge and agree
that the GE Condition has been satisfied.

                  1.4. Section 2.1(a)(v). The following Section 2.1(a)(v) shall
be added to ARTICLE II of the Asset Purchase Agreement:

                  "(v) If the ATM Condition is satisfied, then (x) the Purchase
Price shall be computed in accordance with Section 2.4 hereof, (y) the
membership interests of Convergent LLC, the Convergent Assets and the ATM Vendor
Contract shall be Excluded Assets and (z) all Convergent Liabilities and other
Liabilities arising from, related to, in connection with or with respect to
Convergent LLC, the Convergent Assets or the employees of Convergent LLC shall
be Excluded Liabilities."

                  1.5. Section 2.1(c). Section 2.1(c) of the Asset Purchase
Agreement is hereby deleted in its entirety and replaced with the following:

                  "(i) The Excluded Contracts; (ii) the assets, properties,
Contracts and rights, if any, set forth in Section 2.1(c) of the applicable
Business Schedules; (iii) the outstanding capital stock of Green Tree Retail
Services Bank; (iv) cash of an Excluded Business or representing the

                                      -2-


proceeds of the disposition of an Excluded Asset, provided that all required
payments under the DIP Loan shall have been made; (v) up to $4.5 million of cash
and cash equivalents owned by Green Tree Retail Services Bank; (vi) if the GE
Condition is satisfied, the stock of Mill Creek Bank and the GE Purchased
Assets; (vii) all rights and claims as holders of B-2 Certificates, or rights
derivative of B-2 Certificates, solely to the extent arising from Guarantees by
the CFC Parties pursuant to the MH Servicing Contracts (the "B-2 Guarantee
Rights"), notwithstanding the fact B-2 Certificates constitute Purchased Assets
(it being agreed that if and to the extent such separation of the B-2 Guarantee
Rights from the B-2 Certificates is not permitted under the relevant Contract or
applicable law or is not ordered by the Bankruptcy Court by a Final Order, the
provisions of Section 5.31 shall apply), (viii) the Sellers' rights under this
Agreement; (ix) if the GE Condition is satisfied, all Loans and Receivables with
respect to the HE Business on the balance sheet of Mill Creek Bank as of January
31, 2003 valued at $35.5 million and all Loans and Receivables originated by
Mill Creek Bank after January 31, 2003; (x) if the GE Condition is satisfied,
all Community Reinvestment Act assets, (xi) if the GE Condition is satisfied,
all reaffirmed accounts; (xii) if the GE Condition is satisfied, all Excluded
Receivables as defined in the GE Approved Agreement; (xiii) the Excluded
Contracts; (xiv) rights in and with respect to tax refunds, credits and claims
for periods prior to the Closing; (xv) all defenses, claims, counter-claims,
rights of offset and other actions against any person asserting or seeking to
enforce any Excluded Liability against any of the Sellers or any rights with
respect to Excluded Assets, solely to the extent such defense, claim,
counter-claim, right of offset or other action relates to such Excluded
Liability or Excluded Asset; (xvi) any avoidance or similar actions, including,
but not limited to actions under sections 544, 545, 547, 548, 550 and 553 of the
Bankruptcy Code, including without limitation any avoidance or similar action
with respect to the stock of Mill Creek Bank; (xvii) if the ATM Condition is
satisfied, the membership interests of Convergent LLC, the Convergent Assets and
the ATM Vendor Contract; and (xviii) those other assets, properties, contracts
and rights, if any, that become Excluded Assets (the "Excluded Assets") shall be
excluded from the Purchased Assets to be sold, assigned, transferred, conveyed
and delivered to the Buyer hereunder and, to the extent in existence on the
Closing Date, shall be retained by the Sellers (as applicable)."

                  1.6. Section 2.2(b).

                       1.6.1. The word "or" at the end of Section 2.2(b)(xxv) of
the Asset Purchase Agreement is hereby deleted.

                       1.6.2. The "." at the end of Section 2.2(b)(xxvi) of the
Asset Purchase Agreement is hereby deleted and replaced with ";".

                       1.6.3. The following Section 2.2(b)(xxvii) and Section
2.2(b)(xxviii) shall be added to ARTICLE II of the Asset Purchase Agreement:

                   "(xxvii) if the ATM Condition is satisfied, all of the
Liabilities arising from, relating to, in connection with or with respect to
Convergent LLC; or

                   (xxviii) if the ATM Condition is satisfied, all of the
Liabilities arising from, relating to, in connection with or with respect to the
Convergent Assets, the ATM Vendor Contract and the employees of Convergent LLC
and all of the Convergent Liabilities."

                                      -3-


                   1.7. Section 2.4(a). The first sentence of Section 2.4(a) of
the Asset Purchase Agreement is hereby deleted in its entirety and replaced with
the following:

                   "The aggregate purchase price for the Purchased Assets (the
"Purchase Price") shall be equal to (i) the Lehman Debt Amount as of 12:01 A.M.
on the Closing Date, plus (ii) $159 million, minus (iii) the Convergent Purchase
Price, but such subtraction shall be made only if the ATM Condition is
satisfied."

                   1.8. Section 3.7. The first sentence of Section 3.7 of the
Asset Purchase Agreement is hereby deleted in its entirety and replaced with the
following:

                   "Except as set forth in Section 3.7 of the applicable
Business Schedules, subject to Section 2.8 above and satisfaction of the
conditions in ARTICLES VI and VII, the Purchased Assets including any assets,
properties, Contracts and rights identified by the Buyer pursuant to Section
2.1(a)(ii), the GE Purchased Assets and the Convergent Assets, together with the
Buyer's rights under this Agreement and the Transaction Documents (including the
assets, rights and services to be made available under the Transition Services
Agreement), constitute all of the assets, properties, contracts and rights
primarily used in the Purchased Businesses and which are necessary to carry on
the Purchased Businesses by the CFC Parties as currently conducted on the date
of this Agreement and there are no assets or properties used in or necessary for
the conduct of the Purchased Businesses as presently conducted which are not
owned, leased or licensed by the Sellers or Mill Creek Bank and its
Subsidiaries."

                   1.9. Section 3.8. The first sentence of Section 3.8(b) of the
Asset Purchase Agreement is hereby deleted in its entirety and replaced with the
following:

                   "Section 3.8(b) of the applicable Business Schedules contains
a true and complete list of each written Assumed Lease (and any amendments or
modifications thereto) included in the Purchased Assets of each applicable
Business Schedule, the GE Purchased Assets and the Convergent Assets and
indicates with respect to each Assumed Lease (i) the current rent (including any
additional rent) under each Assumed Lease, (ii) the expiration date of the
Assumed Leases, (iii) the security deposits being held pursuant to the Owned
Real Premises Leases and (iv) any guarantees thereunder."

                   1.10. Section 5.5(c). Section 5.5(c) of the Asset Purchase
Agreement is hereby deleted in its entirety and replaced with the following:

                   "(c) amend its Organizational Documents; provided that the
Company shall be entitled to convert Conseco Finance Servicing Corp. and Conseco
Finance Corp.-Alabama to a Delaware limited liability company so long as (i)
such conversion is effected in compliance will all applicable Laws, including
without limitation all Finance Laws and Laws of the Government National Mortgage
Association and (ii) such conversion is effected in a manner that does not
result, directly or indirectly, in a breach of Section 3.6, except to the extent
that such breach would not reasonably be expected to have a Material Adverse
Effect;"

                                      -4-


                   1.11. Section 5.5(d). Section 5.5(d) of the Asset Purchase
Agreement is hereby deleted in its entirety and replaced with the following:

                   "(d) except for the potential sale of Conseco Finance Credit
Card Funding Corp. pursuant to the transactions contemplated by the GE Approved
Agreement and the potential sale of Convergent LLC pursuant to the transactions
contemplated by the ATM Approved Agreement, (i) issue, sell or deliver (whether
through the issuance or granting of options, warrants, commitments,
subscriptions, rights to purchase, or otherwise) any shares of its capital stock
of any class or any other securities or equity equivalents; or (ii) amend in any
material respect any of the terms of any such securities outstanding as of the
date hereof;"

                   1.12. Section 5.5(f). Section 5.5(f) of the Asset Purchase
Agreement is hereby deleted in its entirety and replaced with the following:

                   "(i) create, incur, guarantee, or assume any indebtedness for
borrowed money or otherwise become liable or responsible for the obligations of
any other Person; or (ii) other than in the ordinary course of business, make
any loans, advances, or capital contributions to, or investments in, any other
Person (other than to wholly owned Subsidiaries or another CFC Party, except
Mill Creek Bank or Mill Creek Bank Servicing Corp.) other than the DIP Loan or
Additional Lehman Debt or as specifically provided under Section 5.9 of the ATM
Approved Agreement; provided, that neither the Company nor its Subsidiaries
shall transfer or contribute to Convergent LLC more than $400,000 of cash during
the period commencing on March 31, 2003 and terminating on the ATM Closing,
except as specifically provided under Section 5.9 of the ATM Approved Agreement,
and no other loans, advances or capital contributions to, or investments in,
Convergent LLC may be made;"

                   1.13. Section 5.5(j). Section 5.5(j) of the Asset Purchase
Agreement is hereby deleted in its entirety and replaced with the following:

                   "(j) enter into, assume, amend, modify, cancel, waive or
change in any respect any Assumed Agreement, any material Contract other than
solely with respect to an Excluded Business or Excluded Asset, the Lehman
Documents (other than any amendment to continue the forbearance period under the
Lehman Forbearance Agreement, provided no such amendment includes any provision
which adversely affects the Purchased Assets, the Assumed Liabilities, or the
Purchase Price), the GE Approved Agreement or the ATM Approved Agreement;
provided, however, that the Company or any of its Subsidiaries may amend the GE
Approved Agreement or the ATM Approved Agreement without the consent of the
Buyer if such amendment does not adversely affect the Buyer;"

                   1.14. Section 5.5(k). Section 5.5(k) of the Asset Purchase
Agreement is hereby deleted in its entirety and replaced with the following:

                   "(k) enter into any Contract with an Affiliate other than
Contracts entered into in the ordinary course of business consistent with past
practices, involving no more than $100,000 per Contract or series of related
Contracts and that do not affect or impact the Purchased Assets or the Assumed
Liabilities or interfere with or impede the consummation of the

                                      -5-


transactions contemplated hereby; provided, however, no Contracts shall be
entered into with Convergent LLC;"

                   1.15. Section 5.34. The following Section 5.34 shall be added
to ARTICLE V of the Asset Purchase Agreement:

                   "5.34. LLC Conversions. The Company shall keep the Buyer
informed of all material aspects of the process to convert Conseco Finance
Servicing Corp. and Conseco Finance Corp.-Alabama into Delaware limited
liability companies and obtaining any regulatory approvals related thereto
(each, an "LLC Conversion"), including, without limitation, the timing for
effecting such LLC Conversion. Prior to effecting the LLC Conversions, the
Company and the Buyer shall cooperate in good faith (a) to determine if the LLC
Conversions would require an application or filing with, or notification to, any
Governmental Authority under the Finance Laws and (b) to coordinate any such
applications, filings or notifications with the applications, filings and
notifications necessary or required pursuant to Section 6.4. In the event that
the Company and Buyer reasonably determine that the LLC Conversions would
require an application or filing with, or notification to, any Governmental
Authority under the Finance Laws, then, prior to effecting any such
applications, filings or notifications, the Company shall prepare drafts of all
such documents and provide the Buyer with copies of such documents and
reasonable opportunity to review and comment on the same. The Company shall
consider in good faith all suggestions of the Buyer in respect of the LLC
Conversions, including but not limited to comments on timing and overall
strategy on effecting such applications, filings and notifications required
under the Finance Laws as a result of the LLC Conversions. Notwithstanding the
foregoing, no application, filing or notification under the Finance Laws shall
be made with respect to the LLC Conversions without the prior consent of the
Buyer (which consent shall not be unreasonably withheld). In the event that the
Company elects to make the LLC Conversions, the Company shall bear the costs and
expenses of the LLC Conversions and shall indemnify, defend and hold the Buyer
Indemnified Parties harmless from and against all Losses suffered by the Buyer
Indemnified Parties and any incremental Liabilities incurred by the Buyer
Indemnified Parties arising from, related to, or as a result of the LLC
Conversions."

                   1.16. Consent. Notwithstanding anything to the contrary set
forth in the Asset Purchase Agreement, the Buyer hereby consents to Conseco
Finance Servicing Corp. entering into the membership interest purchase agreement
with ATM in the identical form provided to the Buyer (including the schedules
thereto, the "MIPA"), and to the consummation of the transactions contemplated
thereby, including, without limitation, (i) the sale of the membership interests
of Convergent LLC and the Convergent Assets to ATM, (ii) the termination of the
Vendor Management Company Agreement, dated as of February 5, 2002, by and
between ATM and the Company, and (iii) the contribution by Conseco Finance
Servicing Corp. of the intercompany payable balances to the Company created
through the transfer of assets to Convergent LLC (including, but not limited to,
the transfer of fixed assets and cash required to operate its business) to the
capital of the Convergent LLC. The Buyer acknowledges and agrees that the MIPA
constitutes the ATM Approved Agreement.

                                      -6-


                            ARTICLE 2. MISCELLANEOUS

                   2.1. Effectiveness and Ratification. All of the provisions of
this Amendment shall be effective as of the date hereof. Except as specifically
provided for in this Amendment, the terms of the Asset Purchase Agreement are
hereby ratified and confirmed and remain in full force and effect.

                   2.2. Effect of Amendment. Whenever the Asset Purchase
Agreement is referred to in the Asset Purchase Agreement or in any other
agreements, documents and instruments, such reference shall be deemed to be to
the Asset Purchase Agreement as amended by this Amendment.

                   2.3. Captions. The captions used in this Amendment are for
convenience of reference only and do not constitute a part of this Amendment and
shall not be deemed to limit, characterize or in any way affect any provision of
this Amendment, and all provisions of this Amendment shall be enforced and
construed as if no caption had been used in this Amendment.

                   2.4. Entire Agreement. The Asset Purchase Agreement (as
amended by this Amendment) and the documents referred to therein (including the
Confidentiality Agreement) contain the entire agreement between the Parties and
supersede any prior understandings, agreements or representations by or between
the Parties, written or oral, which may have related to the subject matter
hereof in any way, including without limitation the Original Agreement. Except
as expressly set forth in ARTICLE III and ARTICLE IV of the Asset Purchase
Agreement (or in the certificates to be delivered pursuant to Section 6.1(c) and
Section 7.1(c) thereof), no Party makes any representation or warranty of any
kind, express or implied, and it is further understood and agreed that Sellers
make no representation or warranty of any kind with respect to the future value
or profitability of the Purchased Businesses or the Purchased Assets.

                   2.5. Counterparts. This Amendment may be executed in multiple
counterparts, each of which shall be deemed an original but all of which taken
together shall constitute one and the same instrument.

                   2.6. Governing Law. All questions concerning the
construction, validity and interpretation of this Amendment shall be governed by
and construed in accordance with the domestic laws of the State of New York,
without giving effect to any choice of law or conflict of law provision (whether
of the State of New York or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of New York.

                   2.7. Consent to Jurisdiction. THE PARTIES AGREE THAT
JURISDICTION AND VENUE IN ANY ACTION BROUGHT BY ANY PARTY PURSUANT TO THE ASSET
PURCHASE AGREEMENT SHALL PROPERLY (BUT NOT EXCLUSIVELY) LIE IN ANY FEDERAL OR
STATE COURT LOCATED IN NEW YORK, NEW YORK; PROVIDED, HOWEVER, THE PARTIES AGREE
THAT JURISDICTION AND VENUE IN ANY ACTION BROUGHT BY ANY PARTY PURSUANT TO THE
ASSET PURCHASE AGREEMENT OVER ANY DISPUTE RELATING TO THE AUCTION OR THE
PURCHASED ASSETS OR THE ASSET PURCHASE AGREEMENT SHALL EXCLUSIVELY LIE WITH THE
BANKRUPTCY COURT SO LONG AS THE

                                      -7-


BANKRUPTCY COURT SHALL BE WILLING TO HEAR SUCH DISPUTE. BY EXECUTION AND
DELIVERY OF THE ASSET PURCHASE AGREEMENT, EACH PARTY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF SUCH COURTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY WITH
RESPECT TO SUCH ACTION. THE PARTIES IRREVOCABLY AGREE THAT VENUE WOULD BE PROPER
IN SUCH COURT, AND HEREBY WAIVE ANY OBJECTION THAT SUCH COURT IS AN IMPROPER OR
INCONVENIENT FORUM FOR THE RESOLUTION OF SUCH ACTION. THE PARTIES FURTHER AGREE
THAT THE MAILING BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, OF
ANY PROCESS REQUIRED BY ANY SUCH COURT SHALL CONSTITUTE VALID AND LAWFUL SERVICE
OF PROCESS AGAINST THEM, WITHOUT NECESSITY FOR SERVICE BY ANY OTHER MEANS
PROVIDED BY STATUTE OR RULE OF COURT.

                   2.8. Delivery by Facsimile. This Amendment, to the extent
signed and delivered by means of a facsimile machine, shall be treated in all
manner and respects as an original Contract and shall be considered to have the
same binding legal effects as if it were the original signed version thereof
delivered in person. At the request of any Party hereto or to any such Contract,
each other Party hereto or thereto shall re-execute original forms thereof and
deliver them to all other parties. No Party hereto or to any such Contract shall
raise the use of a facsimile machine to deliver a signature or the fact that any
signature or Contract was transmitted or communicated through the use of a
facsimile machine as a defense to the formation of a Contract and each such
Party forever waives any such defense.

                   2.9. Specific Performance. The Buyer shall be entitled to
seek specific performance of the obligations to be performed by the Sellers in
accordance with the provisions of the Asset Purchase Agreement.

                                    * * * * *


                                      -8-







                  IN WITNESS WHEREOF, the undersigned have executed this
Amendment Number One to Amended and Restated Asset Purchase Agreement as of the
date first written above.

                                         CONSECO FINANCE CORP.



                                         By:      /s/ Charles H. Cremens
                                                  ------------------------------
                                         Name:    Charles H. Cremens
                                         Its:     President and CEO



                                         CONSECO FINANCE SERVICING CORP.



                                         By:      /s/ Charles H. Cremens
                                                  ------------------------------
                                         Name:    Charles H. Cremens
                                         Its:     President



                                         CONSECO FINANCE CORP. - ALABAMA



                                         By:      /s/ Brian F. Corey
                                                  ------------------------------
                                         Name:    Brian F. Corey
                                         Its:     Senior Vice President
                                                    and Secretary



                                         CONSECO FINANCE CREDIT CORP.



                                         By:      /s/ Brian F. Corey
                                                  ------------------------------
                                         Name:    Brian F. Corey
                                         Its:     Senior Vice President
                                                    and Secretary




                                         CONSECO FINANCE CONSUMER DISCOUNT
                                         COMPANY



                                         By:      /s/ Brian F. Corey
                                                  ------------------------------
                                         Name:    Brian F. Corey
                                         Its:     Senior Vice President
                                                    and Secretary



                                         CONSECO FINANCE LOAN COMPANY



                                         By:      /s/ Brian F. Corey
                                                  ------------------------------
                                         Name:    Brian F. Corey
                                         Its:     Senior Vice President
                                                    and Secretary



                                         CONSECO FINANCE CANADA HOLDING COMPANY



                                         By:      /s/ Brian F. Corey
                                                  ------------------------------
                                         Name:    Brian F. Corey
                                         Its:     Senior Vice President
                                                    and Secretary



                                         CONSECO FINANCE CANADA COMPANY



                                         By:      /s/ Brian F. Corey
                                                  ------------------------------
                                         Name:    Brian F. Corey
                                         Its:     Senior Vice President
                                                    and Secretary


                                         CONVERGENT LENDING SERVICES, LLC



                                         By:      /s/ Albert J. Rudnickas
                                                  ------------------------------
                                         Name:    Albert J. Rudnickas
                                         Its:     President




                                         GREEN TREE FINANCE CORP. - FIVE



                                         By:      /s/ Brian F. Corey
                                                  ------------------------------
                                         Name:    Brian F. Corey
                                         Its:     Senior Vice President
                                                    and Secretary



                                         GREEN TREE RESIDUAL FINANCE CORP. I



                                         By:      /s/ Brian F. Corey
                                                  ------------------------------
                                         Name:    Brian F. Corey
                                         Its:     Senior Vice President
                                                    and Secretary



                                         CONSECO FINANCE CREDIT CARD
                                         FUNDING CORP.



                                         By:      /s/ Brian F. Corey
                                                  ------------------------------
                                         Name:    Brian F. Corey
                                         Its:     Senior Vice President
                                                    and Secretary


                                         CONSECO FINANCE SECURITIZATIONS CORP.



                                         By:      /s/ Brian F. Corey
                                                  ------------------------------
                                         Name:    Brian F. Corey
                                         Its:     Senior Vice President
                                                    and Secretary



                                         CONSECO HE/HI 2001-B-2, INC.



                                         By:      /s/ Brian F. Corey
                                                  ------------------------------
                                         Name:    Brian F. Corey
                                         Its:     Senior Vice President
                                                    and Secretary




                                         CONSECO FINANCE ADVANCE
                                         RECEIVABLES CORP.



                                         By:      /s/ Brian F. Corey
                                                  ------------------------------
                                         Name:    Brian F. Corey
                                         Its:     Senior Vice President
                                                    and Secretary



                                         CONSECO FINANCE LIQUIDATION EXPENSE
                                         ADVANCE RECEIVABLES 2002-B-CORP.



                                         By:      /s/ Brian F. Corey
                                                  ------------------------------
                                         Name:    Brian F. Corey
                                         Its:     Senior Vice President
                                                    and Secretary



                                         GREEN TREE RECS II GUARANTY CORPORATION



                                         By:      /s/ Brian F. Corey
                                                  ------------------------------
                                         Name:    Brian F. Corey
                                         Its:     Senior Vice President
                                                    and Secretary



                                         GREEN TREE SECOND GP INC.



                                         By:      /s/ Brian F. Corey
                                                  ------------------------------
                                         Name:    Brian F. Corey
                                         Its:     Senior Vice President
                                                    and Secretary




                                         CONSECO AGENCY, INC.



                                         By:      /s/ Brian F. Corey
                                                  ------------------------------
                                         Name:    Brian F. Corey
                                         Its:     Senior Vice President
                                                    and Secretary



                                         CONSECO AGENCY OF ALABAMA, INC.



                                         By:      /s/ Brian F. Corey
                                                  ------------------------------
                                         Name:    Brian F. Corey
                                         Its:     Senior Vice President
                                                    and Secretary


                                         CONSECO AGENCY OF KENTUCKY, INC.



                                         By:      /s/ Brian F. Corey
                                                  ------------------------------
                                         Name:    Brian F. Corey
                                         Its:     Senior Vice President
                                                    and Secretary

                                         CONSECO AGENCY OF NEVADA, INC.



                                         By:      /s/ Brian F. Corey
                                                  ------------------------------
                                         Name:    Brian F. Corey
                                         Its:     Senior Vice President
                                                    and Secretary



                                         CONSECO AGENCY OF NEW YORK, INC.



                                         By:      /s/ Brian F. Corey
                                                  ------------------------------
                                         Name:    Brian F. Corey
                                         Its:     Senior Vice President
                                                    and Secretary




                                         CRUM-REED GENERAL AGENCY, INC.



                                         By:      /s/ Brian F. Corey
                                                  ------------------------------
                                         Name:    Brian F. Corey
                                         Its:     Senior Vice President
                                                    and Secretary



                                         CONSECO AGENCY REINSURANCE LIMITED


                                         By:      /s/ Brian F. Corey
                                                  ------------------------------
                                         Name:    Brian F. Corey
                                         Its:     Senior Vice President
                                                    and Secretary



                                         RICE PARK PROPERTIES CORPORATION



                                         By:      /s/ James R. Breakey
                                                  ------------------------------
                                         Name:    James R. Breakey
                                         Its:     President



                                         GREEN TREE RETAIL SERVICES BANK



                                         By:      /s/ Brian F. Corey
                                                  ------------------------------
                                         Name:    Brian F. Corey
                                         Its:     Senior Vice President
                                                    and Secretary



                                         CONSECO FINANCE NET INTEREST
                                         MARGIN FINANCE CORP. I



                                         By:      /s/ Brian F. Corey
                                                  ------------------------------
                                         Name:    Brian F. Corey
                                         Its:     Senior Vice President
                                                    and Secretary


                                         CONSECO FINANCE NET INTEREST
                                         MARGIN FINANCE CORP. II



                                         By:      /s/ Brian F. Corey
                                                  ------------------------------
                                         Name:    Brian F. Corey
                                         Its:     Senior Vice President
                                                    and Secretary

                                         LANDMARK MANUFACTURING HOUSING INC.



                                         By:      /s/ Brian F. Corey
                                                  ------------------------------
                                         Name:    Brian F. Corey
                                         Its:     Senior Vice President
                                                    and Secretary

                                         GREEN TREE FLOORPLAN FUNDING CORP.



                                         By:      /s/ Brian F. Corey
                                                  ------------------------------
                                         Name:    Brian F. Corey
                                         Its:     Senior Vice President
                                                    and Secretary

                                         GREEN TREE FIRST GP INC.



                                         By:      /s/ Brian F. Corey
                                                  ------------------------------
                                         Name:    Brian F. Corey
                                         Its:     Senior Vice President
                                                    and Secretary

                                         GREEN TREE FINANCE CORP. -TWO



                                         By:      /s/ Brian F. Corey
                                                  ------------------------------
                                         Name:    Brian F. Corey
                                         Its:     Senior Vice President
                                                    and Secretary








                                         CFN INVESTMENT HOLDINGS LLC



                                         By:      /s/ Randal A. Nardone
                                                  ------------------------------
                                         Name:    Randal A. Nardone
                                         Its:     COO and Secretary

EX-2

                                                                     Exhibit 2.7


                            ASSET PURCHASE AGREEMENT


                  THIS ASSET PURCHASE AGREEMENT is made as of March 14, 2003, by
and among Conseco Finance Corp., a Delaware corporation (the "Company"), the
Subsidiaries of the Company owning Purchased Assets, which are named on the
signature pages hereof or become parties hereto in accordance with this
Agreement (the "Selling Subsidiaries"), and General Electric Capital
Corporation, a Delaware corporation (the "Buyer"). The Company and the Selling
Subsidiaries are collectively referred to herein as the "Sellers" and,
individually, as a "Seller". The Sellers, the Parent and the Buyer are
collectively referred to herein as the "Parties" and, individually, as a
"Party".

                  WHEREAS, on the terms and subject to the conditions set forth
in this Agreement, the Buyer desires to purchase from the Sellers, and the
Sellers desire to sell to the Buyer, the Purchased Assets and, with respect to
the Company and the Filing Company Subsidiaries, in a sale authorized by the
Bankruptcy Court pursuant to, inter alia, sections 105, 363, 365 and 1146(c) of
the Bankruptcy Code;

                  WHEREAS, it is intended that the acquisition of the Purchased
Assets be accomplished through the sale, transfer and assignment of assets of
the Company and the Selling Subsidiaries owning, leasing or having the right to
use the Purchased Assets and/or, as provided herein, through the sale of capital
stock of one or more direct or indirect Subsidiaries of the Company;

                  WHEREAS, the Buyer also desires to assume, and the Sellers
desire to assign and transfer, the Assumed Liabilities; and

                  WHEREAS, the Company and the Filing Company Subsidiaries
either have filed or will file one or more Chapter 11 Cases.

                  NOW, THEREFORE, in consideration of the premises and mutual
promises herein made, and in consideration of the representations, warranties
and covenants herein contained, the Parties hereby agree as follows:

                                    ARTICLE 1
                                   DEFINITIONS

         1.1  Definitions. For purposes of this Agreement, the following terms
shall have the meanings set forth below:

              "Accounting Principles" means the accounting principles (including
accounting methods, practices and procedures) set forth in Part II of Section
1.1A of the Business Schedules. When the accounting principles (including
accounting methods,




practices and procedures) set forth in Part II of Section
1.1A of the Business Schedules do not specifically address a particular matter
necessary to prepare the Schedule of Assets Acquired and Liabilities Assumed,
then the accounting principles (including accounting methods, practices and
procedures) set forth in Part II of Section 1.1A of the Business Schedules shall
be supplemented in accordance with GAAP, but only to the extent necessary to
address such matter.

              "Accrued and Unpaid Interest" means, with respect to any Loan, as
of any date, the interest, fees, premiums, consignment fees, costs, advances and
other charges that have accrued on such Loan (whether or not such fees, costs or
charges have been billed) but have not been paid by the Obligor on such Loan or
otherwise collected by offset, recourse to collateral or otherwise.

              "Acquired Securitization Assets" means the PL Residual Assets.

              "Active Merchant Agreements" means program agreements set forth in
Section 2.1(a)(A)(iii) of the Business Schedules.

              "Acxiom Models" means (a) all of the models set forth in
Attachment E to Section 3.12(a) of the Business Schedules, that are designated
therein as Purchased Assets, other than the Credit Lifecycle and Clustering
Models, and all associated software programs, algorithms, scripts, interfaces,
data layouts, database schema, decision engines and strategies and all other
data and documentation related thereto and (b) any other models and associated
software programs, algorithms, scripts, interfaces, data layouts, database
schema, decision engines and strategies and all other data and documentation
related thereto, which are used exclusively in the Purchased Businesses as
operated by the CFC Parties prior to the Cut-Off Time, and were created (i)
pursuant to the Acxiom Contracts set forth in Attachment A to 2.1(a) of the
Business Schedules and Section 6.13 of the Business Schedules or (ii) developed
by a CFC Party or a Third Party and administered pursuant to the Acxiom
Contracts set forth in Attachment A to 2.1(a) of the Business Schedules and
Section 6.13 of the Business Schedules.

              "Additional Lehman Debt" means an additional warehouse financing
facility (or an amendment of an existing Lehman Facility) to be provided by
Lehman Brothers Holdings, Inc. or any of its Affiliates in an amount not to
exceed $250 million to finance the origination of loans by the Company and its
Subsidiaries.

              "Administrative Claims Escrow Agent" means Deutsche Bank Trust
Company Americas.

              "Administrative Claims Escrow Agreement" means an escrow agreement
between the Administrative Claims Escrow Agent, the Buyer and the Company in
form and substance reasonably satisfactory to the Buyer and the Company.

              "Affiliate" of any particular Person means any other Person
controlling, controlled by or under common control with such particular Person,
where "control" means the possession, directly or indirectly, of the power to
direct the management and policies of a Person whether through the ownership of
voting securities or otherwise.

                                       2


              "Affiliated Group" means any affiliated group of corporations
within the meaning of Section 1504(a) of the Tax Code as well as any other group
of corporations filing consolidated, combined or unitary Income Tax Return under
federal, state, local or foreign Law.

              "Agreement" means this Asset Purchase Agreement and the schedules,
exhibits and annexes attached hereto, as such Asset Purchase Agreement,
schedules, exhibits or annexes may be amended, restated, supplemented or
otherwise modified from time to time.

              "Allocation Statement" shall have the meaning set forth in Section
5.1(g) hereof.

              "Allowed Operating Expenses" shall have the meaning set forth in
Section 5.5(a)(xix)(b).

              "Assigned Contracts" means (a) the Discount Accounts Receivables
and (b) the Insurance Accounts Receivables.

              "Assigned Receivables" means (a) all Receivables and Loans of the
PL Business, (b) the HI and CL Mill Creek Bank Loans and (c) those Receivables
and Loans constituting part of the Visa/Mastercard Portfolio, including, without
limitation, in each case any Receivable and Loan that has been charged-off, but
shall not mean, in any case, the Excluded Receivables.

              "Assumed Agreements" means, collectively, the Assumed Leases, the
Assumed Contracts, the Assumed Receivables Contracts, the Private Label Credit
Card Master Trust Documents and the Assumed Retention Agreement.


              "Assumed Contracts" means those Contracts identified in Section
2.1(a) of the Business Schedules but excluding (i) Assumed Leases, Assumed
Receivables Contracts and those Contracts that expire or are terminated in the
ordinary course of business, consistent with past practices of the Sellers prior
to the Cut-Off Time and (ii) all Employee Agreements (other than the Assumed
Retention Agreement).

              "Assumed Leases" means the real property leases, subleases,
licenses or other Contracts set forth in Section 2.1(a)(B)(ii) of the Business
Schedules.

              "Assumed Liabilities" shall have the meaning set forth in Section
2.2(a) hereof.

              "Assumed Receivables Contracts" means Contracts evidencing or
executed and delivered in connection with the Assigned Receivables and the
Securitized Receivables.

              "Assumed Retention Agreement" means that certain agreement dated
as of December 19, 2002, by and between the Company and Todd Woodard.

                                       3


              "Auction" means the auction conducted by the Sellers pursuant to
the Bidding Procedures Order.

              "Auditor" means Ernst & Young LLP.

              "Backlog" means any commitment by any Seller to enter into a
financing transaction, which transaction (i) has not been entered into on or
prior to the Cut-Off Time and (ii) would, had it been entered into prior to the
Cut-Off Time, have constituted an Assumed Receivables Contract.

              "Backup Agreements" shall mean the purchase agreement among
certain of the CFC Parties and EMC Mortgage Corporation (or any of its
Affiliates) and the purchase agreement among certain of the CFC Parties and
Charlesbank Capital Partners, LLC (or any of its Affiliates) to acquire certain
assets of the Sellers and entered into pursuant to the Auction.

              "Bank Information" shall have the meaning set forth in Section
5.24 hereof.

              "Bank Merger Act" means the federal Bank Merger Act, Section 18(a)
of the Federal Deposit Insurance Act, 12 U.S.C. 1828(c).

              "Banks" means (a) Mill Creek Bank and (b) Green Tree Retail
Services Bank.

              "Bankruptcy Acquiror" means any purchaser of the rights, title and
interest of any Seller in any of the Properties of the Company and its
Subsidiaries pursuant to a Final Order of the Bankruptcy Court approving such
sale, other than the Buyer.

              "Bankruptcy Code" means title 11 of the United States Code.

              "Bankruptcy Court" means (i) with respect to the Company and the
Filing Subsidiaries, the United States Bankruptcy Court for the Northern
District of Illinois or such other court having jurisdiction over the Chapter 11
Case originally administered in the United States Bankruptcy Court for the
Northern District of Illinois, and (ii) with respect to the Parent or any other
Affiliate of the Company, the United States Bankruptcy Court for the Northern
District of Illinois or such other court having jurisdiction over the cases
commenced under the chapter 11 of the Bankruptcy Code by the Parent or any other
Affiliate of the Company, as applicable.

              "Bankruptcy Event" means, with respect to any Person, that such
Person:

         (a)  commences any case, proceeding or other action (i) under any
              existing Laws of any jurisdiction, domestic or foreign, relating
              to bankruptcy, insolvency, reorganization or relief of debtors,
              seeking to have an order for relief entered with respect to it, or
              seeking to adjudicate such Person as bankrupt or insolvent, or
              seeking reorganization, arrangement, adjustment, winding-up,

                                      4


              liquidation, dissolution, composition or other relief with respect
              to such Person or such Person's debts, or (ii) seeking appointment
              of a receiver, trustee, custodian, conservator or other similar
              official for it or for all or any substantial part of its assets,
              or making a general assignment for the benefit of such Person's
              creditors;

         (b)  has commenced against such Person any case, proceeding or other
              action of a nature referred to in clause (a) above which (i)
              results in the entry of an order for relief or any such
              adjudication or appointment or (ii) remains undismissed,
              undischarged or unbonded for a period of 60 days;

         (c)  has commenced against such Person any case, proceeding or other
              action seeking issuance of a warrant of attachment, execution,
              distraint or similar process against all or any substantial part
              of such Person's assets which results in the entry of an order for
              any such relief which shall not have been vacated, discharged, or
              stayed or bonded pending appeal within 60 days from the entry
              thereof;

         (d)  fails generally to pay such Person's debts as such debts become
              due; or

         (e)  takes any corporate action in furtherance of, or indicating such
              Person's consent to, approval of, or acquiescence in, any of the
              acts set forth above.

              "Base Amount" means, subject to Section 2.4(f) hereof, $221
million.

              "Bid Adjustment Amount" means $66 million.

              "Bidding Procedures Order" means (a) the order of the Bankruptcy
Court dated December 20, 2002 granting in part, CFC debtors' motion for order
pursuant to Sections 105(a), 363, 365, and 1146(c) of the Bankruptcy Code (I)
(A) establishing the bidding procedures in connection with the sale of
substantially all of the assets of the CFC debtors, including certain buyer
protections; (B) approving the form and manner of notices; (C) approving the
form of the asset purchase agreement, (D) setting a sale hearing, and (E)
granting related relief; (II) approving the sale of the CFC debtors assets free
and clear of all liens, claims and encumbrances to the successful bidder; and
(III) authorizing the assumption and assignment of certain executory contracts
and leases; and (b) the order of the Bankruptcy Court dated January 8, 2003: (I)
Approving Bidding Procedures in Connection with the Sale of Substantially All of
the Assets of the CFC Debtors, Including Certain Buyer Protections; (II)
Approving the Form and Manner of Notices and (III) Approving Procedures for
Approval of the Sale.

              "Book Value" means, at any time, with respect to any Property, the
value set forth for such Property on the books and records of the applicable
Seller as of such time.

              "Business Area Balance Sheets" means the November 30 Balance
Sheet, the December 31 Balance Sheet and the January 31 Balance Sheet.

                                       5


              "Business Day" means any day that is not a Saturday, Sunday or
other day on which commercial banking institutions in the State of New York are
authorized or obligated by law or executive order to be closed.

              "Business Employee" means, as of the Cut-Off Time, (A) the
Employees primarily engaged in the PL Business and (B) those employees primarily
engaged in the origination platform (but not servicing platforms) of the CL
Business and HI Business, in each case as identified in Section 5.12 of the
Business Schedules.

              "Business Leased Premises" means the real property leased,
subleased or otherwise used or occupied by the CFC Parties that are required to
be listed in Section 3.8(b) of the Business Schedules.

              "Business Schedules" means the Purchased Businesses Schedule.

              "Buyer" shall have the meaning set forth in the Preamble.

              "Buyer Indemnified Parties" shall have the meaning set forth in
Section 9.2(a) hereof.

              "Buyer Information" shall have the meaning set forth in Section
5.3(b)) hereof.

              "Buyer's Knowledge" means, with respect to the Buyer, the
knowledge of Renier Lemmens, Rick Buckley and Beverly A. Belcamino, in each case
in the exercise of their respective duties as employees of the Buyer.

              "Cap" shall have the meaning set forth in Section 9.3(b) hereof.

              "CFC Parties" means, collectively, the Company, the Company's
Subsidiaries and their respective Affiliates.

              "CFC Party" means, individually, the Company, any of the Company's
Subsidiaries or any of their respective Affiliates, as applicable.

              "CFN" means CFN Investment Holdings LLC.

              "CFN Agreement" means the Amended and Restated Asset Purchase
Agreement dated as of March 14, 2003 among certain of the CFC Parties and CFN to
acquire assets of the Sellers.

              "Change of Control Event" means, with respect to any Person, any
sale of all or substantially all of the assets of such Person (whether in one or
a series of transactions) or a merger or consolidation of such Person into
another Person or the transfer of the capital stock or other equity interest of
such Person.

                                       6


              "Chapter 11 Case" means, collectively, the cases commenced and to
be commenced by the Company and the Filing Company Subsidiaries under chapter 11
of the Bankruptcy Code in the Bankruptcy Court.

              "Charged-Off Accounts" means Receivables that have been
charged-off by the CFC Parties prior to the Cut-Off Time.

              "CL Business" means the consumer installment loan business of the
CFC Parties, excluding securities taken back or retained by any CFC Party in
connection with a Securitization.

              "CL Origination Platform" means the Property and employees that,
in the ordinary course of business and consistent with the past practices of the
CFC Parties, are utilized in the making or purchasing of, or necessary to make
or purchase, Loans and Receivables (including, without limitation, the
origination and activation of dealers, consumer application processing, credit
underwriting, document preparation and funding) that constitute the CL Business.

              "Company" shall have the meaning set forth in the Preamble.

              "Confidentiality Agreement" means that letter agreement, dated as
of November 5, 2002, between the Parent and the Buyer.

              "Consumer Loan" means the retail installment contracts and direct
and indirect consumer loans, whether or not secured by a purchase money or other
security interest creating a first lien in favor of the lender or obligee on
personal property such as recreational vehicles, motorcycles, watercraft,
trailers and snowmobiles, and the related promissory notes or other evidences of
indebtedness, together with any and all rights, benefits, collateral, payments,
recoveries and proceeds arising therefrom but shall not mean any Receivable or
Loan constituting part of the PL Business.

              "Contract" means any contract, license, sublicense, franchise,
permit, terms and conditions of a revolving account, the account relationship,
mortgage, deed to secure debt or deed of trust, purchase order, indenture, loan
agreement, note, lease, sublease, agreement, obligation, commitment,
understanding, instrument or other arrangement or any commitment to enter into
any of the foregoing (in each case, whether written or oral including the terms
of an offer of credit which may be accepted by a purchaser or a credit card user
and the relationship between such Person and the Sellers), including, without
limitation, any schedules, exhibits, annexes, attachments, amendments or other
modifications thereto.

              "CRA" means any Property that is held, made or extended by any
Person for Community Reinvestment Act purposes.

              "Credit Lifecycle and Clustering Models" means (a) all of the
models set forth in Attachment E to Section 3.12(a) of the Business Schedules,
that are designated therein as Purchased Assets, other than the Acxiom Models,
and all associated software programs, algorithms, scripts, interfaces, data
layouts, database schema, decision engines

                                       7


and strategies and all other data and documentation related thereto and (b) any
other models and all associated software programs, algorithms, scripts,
interfaces, data layouts, database schema, decision engines and strategies and
all other data and documentation related thereto, which are used exclusively in
the Purchased Businesses as operated by the CFC Parties prior to the Cut-Off
Time and were created or developed by a CFC Party or a Third Party.

              "Cut-Off Time" means 12:01 a.m. Eastern time on the Effective
Closing Date.

              "December 31 Balance Sheet" means the Restricted and Unrestricted
Balance Sheets as of December 31, 2002 set forth on Annex B hereto.

              "Deferred Promotional Discount Amount" means an amount, calculated
as of the Cut-Off Time, equal to that portion of any merchant discounts or
similar amounts collected by or owed to any CFC Party relating to purchases
initially subject to a promotional discount with respect to any Receivables of
the PL Business but not yet, as of the Cut-Off Time, accreted by the CFC Parties
into income. The Deferred Promotional Discount Amount shall be computed in a
manner consistent with CFC's past practices as described in Conseco's accounting
policy labeled "Promotional Discount Deferral and Amortization for Revolving
Products" set forth in Section 10 of the Accounting Principles.

              "DIP Loan" means any debtor-in-possession extension of credit for
the benefit of the Company and the Filing Company Subsidiaries approved by the
Bankruptcy Court in connection with the Chapter 11 Cases.

              "Disposition Agreement" means any agreement, contract or other
arrangement (other than this Agreement) pursuant to which any interest in any
Purchased Asset or any payment due with respect to any Purchased Asset has been
sold, used as collateral, transferred to or otherwise disposed of to any Person
or Persons by any Seller.

              "Disposition Proceeds" means the amount of the cash proceeds of
any sale, transfer or assignment of Home Equity Loans, Reaffirmed Accounts, CRAs
and Charged-off Accounts owned by Mill Creek Bank Inc., as certified by the
Company in accordance with Section 5.40 hereof and provided that such amounts
are reflected on the Final Schedule of Assets Acquired and Liabilities Assumed
as cash or cash equivalents.

              "Direct Claim" means any claim by an Indemnified Party on account
of a Loss which does not result from a Third Party Claim.

              "Direct Initial Payment" means an amount equal to 92.5% of the
Initial Payment.

              "Discount Accounts Receivable" means any receivable associated
with any Active Merchant Agreement and that represents promotional discounts
billed, but not collected by the CFC Parties, prior to the Cut-Off Time.

                                       8


              "Domain Name Transfer Agreement" means the assignment agreement to
be executed by the Parties on or prior to the Funding Date, effective as of the
Cut-Off Time, in customary form and substance as reasonably agreed by the
Parties, that effects the assignment from the Sellers to the Buyer of all
Internet domain names included in the Purchased Assets.

              "Drop Dead Date" means September 30, 2003 or such later date as
may be extended by the Buyer for an additional period of up to 90 days if the
failure of the Funding Date to occur prior to September 30, 2003 is a result of
the conditions set forth in Sections 6.4 and 6.13 not having been satisfied.

              "Effective Closing Date" means the first day of the month in which
the conditions set forth ARTICLES 6 and 7 are satisfied or waived in accordance
with the terms thereof.

              "Employee Agreements" means employment, retention, severance,
long-term incentive, change in control and any other similar agreements between
the Sellers or any Affiliate of the Sellers and any Employee.

              "Employee Benefit Plans" shall have the meaning set forth in
Section 3.16(a) hereof.

              "Employment Costs" means, with respect to the Business Employees
and the Shared Services Employees to whom Buyer offers employment in accordance
with Section 5.12(a)(ii) hereof: (1) base salary or wages, including any
overtime pay, deferred amounts and other payroll amounts, if applicable; (2)
bonus or incentive compensation, if any; (3) benefits and premiums payable to or
for the benefit of such employees and their eligible dependents (if applicable),
including, without limitation: (a) the actual costs of benefits, including,
without limitation, the actual cost of welfare benefits incurred during the
period from the Cut-Off Time through the Funding Date; (b) the employer portion
of applicable payroll taxes; (c) premiums paid by the Sellers and/or CFC Parties
with respect to health, dental, life, disability and other welfare benefit
coverages or expenses under the welfare plans, including paid time off, sick
pay, vacation and severance benefits; and (d) contributions to any qualified
retirement plan or supplemental retirement plan made on behalf of such
employees; (4) statutory benefits and unemployment contributions; and (5) actual
workers compensation benefits (if uninsured) paid to such employees and workers
compensation premiums.

              "Employees" shall have the meaning set forth in Section 3.14
hereof.

              "Environmental Law" means any Law relating to (a) the release or
threatened release of Hazardous Substances, (b) pollution or the protection of
human health, safety or the environment, including ambient air (including air
inside buildings), surface water, ground water, land surface or subsurface
strata and natural resources or (c) the manufacture, handling, transport, use,
treatment, storage or disposal of Hazardous Substances.

                                       9


              "Equipment" means any personal property set forth in Section
2.1(a)(B)(iii) of the Business Schedules, as such section may be updated from
time to time in accordance with this Agreement.

              "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time.

              "ERISA Affiliate" means any trade or business (whether or not
incorporated) which is or has ever been under common control, or which is or has
ever been treated as a single employer, with Sellers under Section 414(b), (c),
(m) or (o) of the Tax Code.

              "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

              "Exchange Act Rules" means the rules and regulations promulgated
under the Exchange Act.

              "Excluded Assets" means any and all assets of any Seller other
than those included in the definition of the Purchased Assets and shall include,
without limitation, the Specified Excluded Assets.

              "Excluded Businesses" means any business or operation of the CFC
Parties or portions thereof that is not part of the Purchased Businesses.

              "Excluded Contracts" means any Contract that is not an Assumed
Agreement, including, without limitation, (a) any Contract with respect to any
Reaffirmed Account (whether or not designated as such on the Final Data Tape),
(b) any Assumed Receivable Contract that in any manner does not comply with
applicable Law, which non-compliance impairs enforceability or validity of such
Assumed Receivable Contract, (c) the Contracts set forth in Section 2.1(c) of
the Purchased Businesses Schedule, (d) all Employment Agreements (other than the
Assumed Retention Agreement) and (e) the Contracts set forth in Section 2.1(a)
of the Business Schedule designated as Excluded Contracts.

              "Excluded Liabilities" has the meaning set forth in Section 2.2(b)
hereof.

              "Excluded Receivables" means any Loan or Receivable (a) that is a
Reaffirmed Account (whether or not designated as such on the Final Data Tape),
(b) the terms or conditions of which violate or contravene any applicable Law
and such violation or contravention impairs enforceability or validity of such
Loan or Receivable and (c) that has not been made or purchased in the ordinary
course of business consistent with the past practices of the CFC Parties.

              "Facilities" means the Leased Premises.

              "FDIC" shall have the meaning set forth in Section 3.3 hereof.

              "FFIEC" means the Federal Financial Institutions Examination
Council.

                                       10


              "Files" means, whether in paper or electronic form, books;
records; customer and vendor lists; correspondence; files; advertising,
marketing and sales materials; personnel files of employees; financial records
and statements; correspondence, reports and examinations of Governmental
Authorities other than those with respect to Mill Creek Bank and legal
proceedings materials.

              "Filing Company Subsidiaries" means the Selling Subsidiaries and
such other Subsidiaries of the Company and of any Selling Subsidiary as the
Buyer may elect by notice to the Company; provided, however, that neither Mill
Creek Bank Inc. nor Green Tree Retail Services Bank shall be deemed Filing
Company Subsidiaries.

              "Final Data Tape" means the Month's End Data Tape prepared as of
the Effective Closing Date which is to be delivered by the Sellers to the Buyer,
pursuant to Section 5.38 hereof, setting forth the Portfolio Information as of
the Cut-Off Time for all Loans and Assigned Receivables included in the
Purchased Assets and all Securitized Receivables in existence as of such time.

              "Final Order" means an order or judgment of the Bankruptcy Court
(i) that is not the subject of a pending appeal, petition for certiorari, motion
for reconsideration or other proceeding for review, rehearing or reargument,
(ii) that has not been reversed, stayed, modified or amended, and (iii)
respecting which the time to appeal, to petition for certiorari, to move for
reconsideration or to seek review, rehearing or reargument shall have expired,
as a result of which such order shall have become final in accordance with Rule
8002 of the Federal Rules of Bankruptcy Procedure and other applicable Laws.

              "Final Schedule of Assets Acquired and Liabilities Assumed" means
the Schedule of Assets Acquired and Liabilities Assumed delivered by the Buyer
to the Company pursuant to Section 5.39(e) hereof.

              "Finance Laws" shall have the meaning set forth in Section 3.3
hereof.

              "Financial Statements" shall have the meaning set forth in Section
3.19 hereof.

              "FIRPTA" shall have the meaning set forth in Section 3.22(c)
hereof.

              "Funding" shall have the meaning set forth in Section 2.3(a)
hereof.

              "Funding Date" means the 10th day (or if such date is not a
Business Day, the next Business Day after such date) of the month following the
Effective Closing Date.

              "GAAP" means United States generally accepted accounting
principles consistently applied.

              "Governmental Authority" means any federal, state, provincial,
local, department, county, municipal, governmental regulatory or administrative
authority, agency, bureau, department or commission or any court, tribunal or
judicial or arbitral

                                       11


body or other governmental authority or instrumentality, in each case, whether
domestic or foreign.

              "Green Tree Retail Services Bank" means Green Tree Retail Services
Bank, Inc., a South Dakota chartered limited purpose credit card bank, and its
wholly-owned Subsidiaries.

              "Guarantees" means any and all obligations relating to guarantees,
letters of credit, support agreements, bonds and other credit assurances or
supports of a comparable nature, of any CFC Party.

              "Hazardous Substances" means any substance, whether solid, liquid,
gaseous or any combination of the foregoing which is listed, defined or
regulated pursuant to any Environmental Law.

              "HE Business" means the home equity loan business of the CFC
Parties, excluding securities taken back or retained by any CFC Party in a
Securitization.

              "HELOC Loans" means all revolving, variable rate mortgage loans
secured by first or junior liens on single-family residential real property
(including, without limitation, condominiums and planned unit developments), and
the related promissory notes or other evidences of indebtedness, together with
any and all rights, benefits, collateral, payments, recoveries and proceeds
arising therefrom or in connection therewith.

              "HI Business" means the home improvement loan business of the CFC
Parties, excluding (a) securities taken back or retained by any of the CFC
Parties in a Securitization and (b) Loans pledged to the Lehman Warehouse
Facility.

              "HI and CL Mill Creek Bank Loans" means those Loans and
Receivables that are either Home Improvement Loans or Consumer Loans of the HI
Business and the CL Business (and, in each case, the corresponding Receivables)
and that were owned by Mill Creek Bank as of December 31, 2002 or, subject to
Section 5.5 hereof, made (but not purchased) by Mill Creek Bank during the
period from December 31, 2002 though the Cut-Off Time and for the avoidance of
doubt excluding any Home Equity Loans.

              "HI and CL Servicing Assets" means all Intellectual Property,
fixtures equipment and all computer hardware required for the Servicing of the
Home Improvement Loans and Consumer Loans originated by the HI Origination
Platform and the CL Origination Platform and the HI and CL Mill Creek Bank
Loans, including, without limitation, (a) the Intellectual Property, (b) the
fixtures, equipment and computer hardware, and (c) the Contracts, in each case
as set forth in Section 5.31(a) of the Business Schedules and designated as "HI
and CL Servicing Assets."

              "HI Origination Platform" means the Property and employees that,
in the ordinary course of business and consistent with the past practices of the
CFC Parties, are utilized in the making or purchasing of, or necessary to make
or purchase, Loans and Receivables (including, without limitation, the
origination and activation of dealers,

                                       12


consumer application processing, credit underwriting, document preparation and
funding) that constitute the HI Business.

              "Home Equity Loans" means all fixed or variable rate Loans secured
by first or junior liens on residential real Property (including, without
limitation, condominiums and planned unit developments), including, without
limitation, any such high loan-to-value mortgage loans, and the related
promissory notes or other evidences of indebtedness, together with any and all
rights, benefits, collateral, payments, recoveries and proceeds arising
therefrom or in connection therewith.

              "Home Improvement Loans" means all first or junior liens or
unsecured home improvement Loans, and the related promissory notes or other
evidences of indebtedness, whether insured or uninsured, and the related
promissory notes or other evidences of indebtedness, together with any and all
rights, benefits, collateral, payments, recoveries and proceeds arising
therefrom or in connection therewith.

              "Honda Purchase Agreement" means that certain Purchase and Sale
Agreement, dated as of May 28, 2001, among Transamerica Bank, N.A., Transamerica
Retail Financial Services and Conseco Bank, Inc.

              "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended, and the regulations related thereto.

              "Inactive Employees" shall have the meaning set forth in Section
5.12(a) hereof.

              "Income Tax" means all domestic or foreign federal, state, local
Taxes based upon, measured by, or calculated with respect to (i) gross or net
income or gross or net receipts or profits (including, but not limited to, any
capital gains, minimum taxes and any Taxes on items of tax preference, but not
including sales, use, goods and services, real or personal property transfer or
other similar Taxes); (ii) multiple bases (including, but not limited to,
corporate franchise, doing business or occupation Taxes) if one or more of the
bases upon which such Tax may be based upon, measured, or calculated with
respect to, is described in clause (i); or (iii) withholding taxes, measured by,
or calculated with respect to, any payments or distributions (other than wages).

              "Income Tax Return" means any return, declaration, report, claim
for refund, information return, amended return or statement relating to Income
Taxes, including any schedule or attachment thereto.

              "Incremental Liabilities" shall have the meaning set forth in
Section 2.1(b) hereof.

              "Indemnified Parties" shall have the meaning set forth in Section
9.2(b) hereof.

              "Indemnifying Party" means a Person from whom indemnification is
sought.

                                       13


              "Indemnity Deductible" shall have the meaning set forth in Section
9.3(b) hereof.

              "Insurance Accounts Receivable" means (a) any forced placed
insurance premium due from an Obligor in respect of an Assumed Receivable
Contract and (b) any charge card insurance premium due from an Obligor in
respect of an Assumed Receivables Contract relating to the PL Business.

              "Insurance Policies" means those policies of insurance which the
CFC Parties maintain with respect to their assets and operations, including,
without limitation, liability, property, workers' compensation, directors and
officers liability.

              "Intellectual Property" means all of the rights arising from or in
respect of the following in any U.S. or foreign jurisdiction: (a) patents,
patent applications and patent disclosures including re-issues, continuations,
divisions, continuations-in-part, renewals and extensions; (b) trademarks,
service marks, trade dress rights, trade names, corporate names, logos and
slogans (whether registered or unregistered, and all translations, adaptations,
derivations and combinations of the foregoing), and Internet domain names,
together with all goodwill associated with each of the foregoing; (c) copyrights
and copyrightable works; (d) trade secrets, confidential information, know-how,
processes, technology and inventions; (e) computer software and systems
(including, without limitation, in source code, executable code or other form,
data, databases and documentation); (f) all other intellectual property and
proprietary rights and rights of a similar nature; and (g) registrations,
applications and licenses related to any of the foregoing.

              "Intellectual Property Assignment Agreements" means the Trademark
Assignment Agreement and Domain Name Transfer Agreement.

              "January 31 Balance Sheet" means the Restricted and Unrestricted
Balance Sheets as of January 31, 2003 set forth on Annex C attached hereto.

              "Knowledge" means, with respect to the Sellers, the knowledge of
Keith A. Anderson, James R. Breakey, Cheryl A. Collins, Brian F. Corey, Charles
H. Cremens, Dan Finn, Tony Foster, Shawn R. Gensch, Dan Hall, Ron Siemers,
Pamela Strauss, Barbara Thornton and Todd Woodard, in each case in the exercise
of their respective duties as an employee of the applicable CFC Party.

              "Laws" means any and all statutes, rules, regulations, codes,
injunctions, judgments, writs, orders, decrees, rulings, constitutions,
ordinances, common laws, standards, limitations, compliance schedules, written
directions, requests or treaties, whether legislatively, judicially,
administratively or otherwise promulgated, of any Governmental Authority.

              "Leased Premises" means the real property, premises and facilities
leased or otherwise used or occupied by any CFC Party as the tenant, licensee or
occupant thereof pursuant to the Assumed Leases.

                                       14


              "Lehman Facilities" means, collectively, the Lehman Residuals
Facility and the Lehman Warehouse Facility.

              "Lehman Residuals Facility" means (a) the Master Repurchase
Agreement and Annex to Master Repurchase Agreement Supplemental Terms and
Conditions, each dated as of September 29, 1999, between Green Tree Residual
Finance Corp. I and Lehman Brothers, Inc., and as amended by the amendments
thereto dated as of September 22, 2000, January 30, 2002, April 30, 2002 and
December 20, 2002 and (b) the Asset Assignment Agreement, dated as of February
13, 1998, between Green Tree Residual Finance Corp. I and Lehman ALI Inc., as
assignee of Lehman Commercial Paper Inc., and as amended by the amendments
thereto dated as of June 23, 1998, February 23, 2000, May 10, 2000, August 1,
2000, September 22, 2000, September 28, 2001, January 30, 2002, April 30, 2002,
October 9, 2002 and December 20, 2002, and as each of the same may be further
amended in accordance with the terms thereof and of this Agreement.

              "Lehman Warehouse Facility" means the Second Amended and Restated
Master Repurchase Agreement, dated as of January 30, 2002, between Lehman
Commercial Paper, Inc. and Green Tree Finance Corp.-Five, as amended by the
amendments thereto dated as of April 30, 2002, August 12, 2002, October 9, 2002
and December 20, 2002, and as the same may be further amended in accordance with
the terms thereof and of this Agreement.

              "Liability" means any liability or obligation, whether known or
unknown, whether asserted or unasserted, whether absolute or contingent, whether
accrued or unaccrued, whether matured or unmatured, whether liquidated or
unliquidated, whether incurred or consequential and whether due or to become
due, including any liability for Taxes or any other liability arising out of
applicable Law.

              "Lien" means any mortgage, deed to secure debt or deed of trust,
pledge, security interest, encumbrance, claim, Tax, equitable interest, negative
pledge, lien or charge of any kind (including, without limitation, any
conditional sale or other title retention agreement or lease in the nature
thereof) or any agreement to file any of the foregoing, any sale of receivables
with recourse against the Sellers or any of their Affiliates, any filing or
agreement to file a financing statement as debtor under the Uniform Commercial
Code or any similar statute and all claims (including, but not limited to, all
"claims" within the meaning of section 101(5) of the Bankruptcy Code).

              "Loans" means all loans, or other extensions of credit, either
purchased by a CFC Party from Third Parties or pursuant to which the CFC Parties
have lent money, advanced funds or extended credit or are obligated to do so in
each case, which are owned by the CFC Parties or subject to repurchase by or
similar Contract of a CFC Party, including, but not limited to, (a) loans which
have been partially or fully charged off, (b) interests in loan participations
and assignments, (c) legally binding commitments and obligations to extend
credit (including any unfunded or partially funded revolving loans, lines of
credit or similar arrangements) and (d) retail installment contracts or
revolving credit arrangements, in each case that are not Securitized Loans as of
the Cut-Off Time.

                                       15


              "Loss" means any loss, Liability, judgment, equitable relief
granted, settlements, awards (including back-pay awards), demand, claim, action,
cause of action, cost, damage, deficiency, Tax, penalty, fine or expense,
whether or not arising out of third party claims (including, without limitation,
interest, penalties, reasonable attorneys' fees and expenses, court costs and
all amounts paid in investigation, defense or settlement of any of the foregoing
and enforcement of any rights of indemnification against any Indemnitor or with
respect to any appeal). With respect to the Buyer or any of its Affiliates, Loss
shall also be deemed to include, without limitation, any and all Losses
resulting from the failure of the Buyer or any of its Affiliates to receive any
amounts payable with respect to any Assumed Receivables Contract resulting from
any breach of any representation, warranty or covenant made by the Sellers in
this Agreement.

              "Material Adverse Effect" means (a) any change or effect that is
materially adverse to the business, financial conditions, property, operations,
net income or assets of the Purchased Businesses taken as a whole; or (b) any
material adverse effect that would prevent or materially impair the ability of
the Sellers to consummate the transactions contemplated by this Agreement or the
Transaction Documents, including, without limitation, the appointment of the
FDIC as receiver, trustee, custodian or conservator for Mill Creek Bank Inc. or
the initiation of any proceeding for the termination of insurance or the
initiation of any other enforcement action against Mill Creek Bank Inc.
undertaken by the FDIC; provided that none of the following shall be deemed to
constitute, and none of the following shall be taken into account in determining
whether there has been, a Material Adverse Effect: (i) any adverse change,
event, development or effect arising from or relating to (A) general business or
economic conditions, including such conditions related to the businesses of the
Sellers and their Subsidiaries, except for such changes, events, developments or
effects which disproportionately impact the Purchased Businesses, or (B)
national or international political or social conditions, including the
engagement by the United States in hostilities, whether or not pursuant to the
declaration of a national emergency or war, or the occurrence of any military or
terrorist attack upon the United States, except for such changes, events,
developments or effects which disproportionately impact the Purchased Businesses
and (ii) the filing of the Chapter 11 Case and the Parent's filing of its case
under chapter 11 of the Bankruptcy Code.

              "Material Agreement" shall have the meaning set forth in Section
3.11 hereof.

              "MH Business" means the manufactured housing business of the CFC
Parties.

              "Mill Creek Bank" means Mill Creek Bank Inc., a Utah industrial
loan corporation, and its wholly-owned Subsidiaries.

              "Month's End Data Tape" means, with respect to each month to occur
between the date hereof (including April) and the Funding Date, a CD-ROM to be
delivered by the Sellers to the Buyer, pursuant to Section 5.38 hereof, setting
forth the Portfolio Information as of 12:01 a.m. Eastern Time on the first day
of such month for all

                                       16


Loans and Receivables that will be included in the Purchased Assets if such day
is the Effective Closing Date and all Securitized Receivables that are in
existence as of such time.

              "Net Assets Value" means an amount equal to (i) the excess of the
aggregate amount of (A) the Specified Purchased Assets over (B) the Assumed
Liabilities, in each case, as reflected on the Final Schedule of Assets Acquired
and Liabilities Assumed minus (ii) the Deferred Promotional Discount Amount.

              "Net NAV" means an amount equal to (a) the Net Asset Value minus
(b) the Disposition Proceeds.

              "Non-Assumable Claim" means any claim, action or proceeding (i)
involving any Governmental Authority, (ii) seeking injunctive relief, (iii)
involving a class action, (iv) involving an allegation of criminal activities,
or (v) involving allegations of any violation of any domestic or foreign federal
or state Laws governing extension of credit (including, without limitation, any
Finance Laws), any domestic or foreign federal or state securities Laws or
regulations or any domestic or foreign federal or state antitrust Laws, and such
claim, action or proceeding involves or relates to, in any material respect, any
of the Purchased Assets or the operation or conduct of any of the Purchased
Businesses.

              "November 30 Balance Sheet" means the Restricted and Unrestricted
Balance Sheets as of November 30, 2002 set forth on Annex A.

              "Obligor" means, with respect to any Loan, the Person(s) obligated
to make payments with respect to such Loan, including, without limitation, the
applicable borrower, or any guarantor, co-signer, surety or other obligor
therefor, but shall not include the lender or obligee thereunder.

              "Order" means any decree, order, injunction, rule, judgment or
consent of or by any Governmental Authority.

              "Organizational Documents" means certificates of incorporation,
by-laws, certificates of formation, limited liability company operating
agreements, limited liability partnership agreements, partnership or limited
partnership agreements or other formation or governing documents of a particular
entity.

              "Other Transferred Intellectual Property" means, other than the
Transferred Trademarks and the Transferred Intellectual Property Agreements, (a)
all other Intellectual Property that is used exclusively in the Purchased
Businesses as operated by the CFC Parties prior to the Cut-Off Time, and (b) all
of the other Intellectual Property set forth in Section 3.12 of the Business
Schedules and designated therein as Purchased Assets.

              "Overvalue Amount" means the amount by which the Net NAV exceeds
the Base Amount.

                                       17


              "Owned Real Property" means each of (i) Units 1, 2, 33 through 44
and 47 through 62 of Condominium Number 199, Ramp Condominium; Units 1, 2, 101,
201, 202, 301, 401, 501, 601, 701, 801, 901, 1001, 1101, 1201, 1301, 1401, 1501,
1601, 1701 and 1801 of Condominium Number 200, Amhoist Tower Condominium; and
Units 19A through 19E and 20A through 20E of Condominium Number 201, Park
Towers, all located in St. Paul, MN and (ii) 1400 Turbine Drive, Rapid City, SD.

              "Parent" means Conseco, Inc., an Indiana corporation.

              "Parties" shall have the meaning set forth in the Preamble.

              "Participating Affiliates" shall have the meaning set forth in
Section 6.4(a)(ii)(E) hereof.

              "Party" shall have the meaning set forth in the Preamble.

              "Permitted Liens" shall mean: (a) statutory liens for current
Taxes or other governmental charges with respect to the assets of a CFC Party
not yet due and payable or which may thereafter be paid without penalty or the
amount or validity of which is being contested in good faith by appropriate
proceedings by the CFC Party and for which appropriate reserves have been
established on the CFC Party's books and records in accordance with GAAP, (b)
mechanic's, carrier's, worker's, repairer's and similar statutory liens arising
or incurred in the ordinary course of business of the Sellers with respect to a
Liability which is not yet due or delinquent; (c) zoning, entitlement, building
and other land use regulations imposed by any Governmental Authority having
jurisdiction over the Leased Premises which are not violated by the current use
and operation of the Leased Premises; and (d) covenants, conditions,
restrictions, easements and other similar matters of record affecting title to
any Purchased Assets which do not, individually or in the aggregate, materially
impair the present value, occupancy or continued use of any Purchased Assets for
the purposes for which each is currently used in the respective Purchased
Business.

              "Person" means an individual, a partnership, a limited liability
company, a corporation, a cooperative, an association, a joint stock company, a
trust, a joint venture, an unincorporated organization or a Governmental
Authority.

              "PL Business" means the private label credit card business of the
CFC Parties, including, without limitation, the private label credit card
business conducted by Mill Creek Bank, but excluding, in all cases, (x)
securities taken back or retained by any CFC Party in a Securitization (other
than the PL Residual Assets), (y) all Properties of Green Tree Retail Services
Bank and (z) any business related to Visa or Mastercard credit cards or
accounts.

              "PL Excluded Servicing Liabilities" means all Liabilities under
the PL Servicing Contracts other (i) than the duty to act as a servicer or
successor thereunder and (ii) any Liabilities arising from conduct of the Buyer
or its designee as servicer or successor servicer after the Cut-Off Time.

                                       18


              "PL Residual Assets" means the residuals, retained interests
listed on the PL Residuals Schedule under the caption "Credit Cards", and any
other interest, including equity, retained or residual interests, the
Transferors' Interest (as defined in the Private Label Credit Card Master Trust
Documents), the Transferors' Amount (as defined in the Private Label Credit Card
Master Trust Documents) (whether certificated or uncertificated), issued or
created by or in connection with a Securitization relating to the PL Business or
similar transaction relating to the PL Business in each case, that the Company
or any other CFC Party holds or owns (whether or not pledged to another Person
or sold under a repurchase agreement), including, without limitation, all other
cash or other proceeds, and all other rights arising from certificated or
uncertificated securities, interests or rights purchased or retained by a CFC
Party in connection with a Securitization relating to the PL Business,
including, without limitation, rights to prepayment penalties or charges, late
fees, investment income, cash collateral accounts, spread accounts, reserve
accounts and similar accounts and other charges not required to be paid to the
servicer, and repurchase options or similar rights arising in connection with a
Securitization relating to the PL Business.

              "PL Residuals Schedule" means Section 3.21 of the disclosure
schedules attached hereto containing information relating to the PL Residual
Assets.

              "PL Servicing Business" means all PL Servicing Rights of a CFC
Party relating to the PL Business and all assets of the CFC Parties primarily
used in the conduct of such business, including, without limitation, all cash,
deposits, receivables and Prepaid Expenses relating thereto.

              "PL Servicing Contracts" means the Contracts providing for loan
servicing in connection with all Securitizations relating to the PL Business
that are outstanding at the Cut-Off Time and all related documents.

              "PL Servicing Fees" means all servicing and other fees,
compensation or moneys payable from time to time to the Servicer under the PL
Servicing Contracts.

              "PL Servicing Rights" means the right to act as servicer or
successor servicer under each of the PL Servicing Contracts and all rights,
privileges and benefits of being servicer or successor servicer under each PL
Servicing Contract or that are incidental thereto including, without limitation,
any and all of the following: (a) any and all rights to service any Securitized
Loan relating to the PL Business; (b) all Servicing Fees; and (c) any late fees,
investment income or similar payments or penalties (including, without
limitation, prepayment penalties) with respect to each Securitized Loan relating
to the PL Business payable to the servicer under the PL Servicing Contracts.

              "Portfolio Information" means, with respect to any Receivable,

              (a) the following information, which information is required to
appear, or which appears on the Pre-Signing Data Tapes:

                                       19


                   A. with respect to the accounts in the PL Business: (i)
              "cdrelease2.txt", created November 10, 2002 (12 months of history
              - excluded historical charge offs and historical information for
              accounts not on the books as of most recent date); (ii)
              "cdrelease3.txt", created November 15, 2002 (13 through 24 months
              of history for accounts missing history in cdrelease2.txt, does
              not include charge off history); (iii) "cdrelease4.txt", created
              November 18, 2002 (24 months of account balance history and
              deferred credit plan balance information as of most recent date);
              (iv) "losses24.txt", created November 18, 2002 (24 months of
              historical charge offs, includes history prior to the charge
              offs); and (v) "old24all.txt" created November 21, 2002 (24 months
              of history for accounts not on the books of the CFC Parties as of
              most recent date);

                   B. with respect to the accounts and contracts in the HI
              Business: (i) "HIDdatatape.txt", created November 27, 2002 (HID
              Account History from December 2000 - October 2002 excludes Charge
              offs), and (ii) "HIDLOSSdata.txt", created November 27, 2002 (HID
              Charge off History from December 2000 - October 2002);

                   C. with respect to the accounts and contracts in the CL
              Business: (i) "Nov00.txt", created November 27, 2002 (status at
              end of month for November, 2000), (ii) "Dec00.txt", created
              November 27, 2002 (status at end of month for December, 2000),
              (iii) "Jan01.txt", created November 27, 2002 (status at end of
              month for January, 2001), (iv) "Feb01.txt", created November 27,
              2002 (status at end of month for February, 2001), (v) "Mar01.txt",
              created November 27, 2002 (status at end of month for March,
              2001), (vi) "Apr01.txt", created November 27, 2002 (status at end
              of month for April, 2001), (vii) "May01.txt", created November 27,
              2002 (status at end of month for May, 2001), (viii) "Jun01.txt",
              created November 27, 2002 (status at end of month for June, 2001),
              (ix) "Jul01.txt", created November 27, 2002 (status at end of
              month for July, 2001), (x) "Aug01.txt", created November 27, 2002
              (status at end of month for August, 2001), (xi) "Sept01.txt",
              created November 27, 2002 (status at end of month for September,
              2001), (xii) "Oct01.txt", created November 27, 2002 (status at end
              of month for October, 2001), (xiii) "Nov01.txt", created November
              27, 2002 (status at end of month for November, 2001), (xiv)
              "Dec01.txt", created November 27, 2002 (status at end of month for
              December, 2001), (xv) "Jan02.txt", created November 27, 2002
              (status at end of month for January, 2002), (xvi) "Feb02.txt",
              created November 27, 2002 (status at end of month for February,
              2002), (xvii) "Mar02.txt", created November 27, 2002 (status at
              end of month for March, 2002), (xviii) "Apr02.txt", created
              November 27, 2002 (status at end of month for April, 2002), (xix)
              "May02.txt", created November 27, 2002 (status at end of month for
              May, 2002), (xx) "Jun02.txt", created November 27, 2002 (status at
              end of month for June, 2002), (xxi) "Jul02.txt", created November
              27, 2002 (status at end of month for July, 2002), (xxii)
              "Aug02.txt", created November 27, 2002

                                       20


              (status at end of month for August, 2002) (xxiii) "Sept02.txt",
              created November 27, 2002 (status at end of month for September,
              2002), and (xxiv) "Oct02.txt", created November 27, 2002 (status
              at end of month for October, 2002).

              and (b) the following information that is required to appear or
will appear on each Month's End Data Tape:

                   A. with respect to Assigned Receivables from the PL Business
              which are open-end revolving accounts (other than the Assigned
              Receivables associated with the VISA/MasterCard Portfolio) and
              Securitized Receivables: (i) the account number, (ii) the name(s)
              of the Obligor(s) that appears on such account, (iii) the street,
              city, state, zip code and apartment number, if applicable, and the
              country if not the United States, (iv) the Social Security Number
              of the Obligor(s), (v) the Retailer to which the account is
              associated, (vi) the total balance of the account as of the date
              the file is created and the date as of which the file is created,
              (vii) the code of such account's level of delinquency (e.g.,
              Current, 1-29 days, 30-59 days, 60-89 days, etc.) (viii) the code
              indicating the account's status (e.g., Closed, Bankrupt, Legal,
              Lost/Stolen, etc.) and if Bankrupt the type of bankruptcy, (ix)
              the date the account was opened, (x) the date the account charged
              off, (xi) the gross charge off amount, (xii) the type of charge
              off (e.g., Bankrupt, Deceased, Fraud, Aging, etc.) and if Bankrupt
              the type of bankruptcy, (xiii) the date the account was last
              reaged, (xiv) the day of the month the account cycles, (xv) the
              most recent credit limit, (xvi) the most recent refreshed credit
              score, (xvii) the date the most recent refreshed credit score was
              received, (xviii) the code indicating if the balance on the
              account is tied to an item which has been repossessed, (xix) the
              code indicating if the debt is a reaffirmation, (xx) the code
              indicating to which Bank the account belongs (e.g., Mill Creek
              Bank Inc.), (xxi) the portion of the balance that is finance
              charges, (xxii) the portion of the balance that is fees, (xxiii)
              whether such Receivable is a Securitized Receivable and (xxiv) any
              other information necessary to determine the Principal Balance of
              such Receivables;

                   B. with respect to Assigned Receivables that are open-end
              revolving accounts associated with the Visa/MasterCard Portfolio:
              (i) the account number, (ii) the name(s) of the Obligor(s) that
              appears on such account, (iii) the street, city, state, zip code
              and apartment number, if applicable, and the country if not the
              United States, (iv) the Social Security Number of the Obligor(s),
              (v) the Retailer, if any, to which the account is associated, (vi)
              the total balance of the account as of the date the file is
              created and the date as of which the file is created, (vii) the
              code of such account's level of delinquency (e.g., Current, 1-29
              days, 30-59 days, 60-89 days, etc.) (viii) the code indicating
              such account's status (e.g., Closed, Bankrupt, Legal, Lost/Stolen,
              etc.) and if Bankrupt the type of bankruptcy, (ix) the date the
              account was opened, (x) the date the

                                       21


              account charged off, (xi) the gross charge off amount, (xii) the
              type of charge off (e.g., Bankrupt, Deceased, Fraud, Aging, etc.)
              and if Bankrupt the type of bankruptcy, (xiii) the date the
              account was last reaged, (xiv) the day of the month the account
              cycles, (xv) the most recent credit limit, (xvi) the most recent
              refreshed credit bureau score, (xvii) the date the most recent
              refreshed credit bureau score was received, (xviii) the code
              indicating if the debt is a reaffirmation, (xix) the date the
              credit card expires, (xx) whether the account is Visa or
              MasterCard and (xxi) the code indicating to which Bank the account
              belongs (e.g., Mill Creek Bank);

                   C. with respect to Assigned Receivables from the CL Business:
              (i) the account or contract number, (ii) the name(s) of the
              Obligor(s), (iii) the street, city, state, zip code and apartment
              number, if applicable, and the country if not the United States,
              (iv) the Social Security Number of the Obligor(s), (v) the
              Collateral Type Identifier (specific product type within
              category), (vi) the Collateral Category Identifier (e.g., RV,
              Motorcycle, Marine Product, etc.), (vii) the initial amount
              financed, (viii) the Annual Percentage Rate the customer is being
              charged, (ix) the balance net of finance charges and fees and the
              date as of which the file is created, (x) the code of the level of
              delinquency (e.g., Current, 1-29 days, 30-59 days, 60-89 days,
              etc.) (xi) the code indicating the status (e.g., Closed, Bankrupt,
              Legal, Lost/Stolen, etc.) and if Bankrupt the type of bankruptcy,
              (xii) the date the account or contract was applied for, (xiii) the
              date the account or contract was funded, (xiv) if the account or
              contract was charged off, the date the account or contract charged
              off, (xv) the charge off amount net of finance charges and fees,
              (xvi) the type of charge off (e.g., Bankrupt, Deceased, Fraud,
              Aging, etc.) and if Bankrupt the type of bankruptcy, (xvii) the
              FICO bureau score at time of application, (xviii) the code
              indicating if the balance on the account or contract is tied to an
              item which has been repossessed, (xix) the date of repossession,
              if any, (xx) the code indicating if the debt is a reaffirmation,
              (xxi) the code indicating to which Bank the account or contract
              belongs (e.g., Mill Creek Bank Inc.), and the finance charges bill
              not yet collected, and (xxiv) any other information necessary to
              the determination of the Principal Balance of such Assigned
              Receivables;

                   D. with respect to Assigned Receivables from the HI Business:
              (i) the account or contract number, (ii) the name(s) of the
              Obligor(s), (iii) the street, city, state, zip code and apartment
              number, if applicable, and the country if not the United States,
              (iv) the Social Security Number of the Obligor(s), (v) the
              Collateral Type Identifier (specific product type within
              category), (vi) the Collateral Category Identifier (e.g., Pool,
              Siding, Room Addition, etc.), (vii) the initial amount financed,
              (viii) the Annual Percentage Rate the customer is being charged,
              (ix) the balance net of finance charges and fees and the date as
              of which the file is created, (x) the code of the level of
              delinquency (e.g., Current, 1-29 days, 30-59 days, 60-89 days,
              etc.) (xi) the code indicating the status (e.g., Closed, Bankrupt,

                                       22


              Legal, Lost/Stolen, etc.) and if Bankrupt the type of bankruptcy,
              (xii) the date the account or contract was applied for, (xiii) the
              date the account or contract was funded, (xiv) if the account or
              contract was charged off, the date the account or contract charged
              off, (xv) the charge off amount net of interest and fees, (xvi)
              the type of charge off (e.g., Bankrupt, Deceased, Fraud, Aging,
              etc.) and if Bankrupt the type of bankruptcy, (xvii) the FICO
              bureau score at time of application, (xviii) the code indicating
              if the balance on the account or contract is tied to an item which
              has been repossessed, (xix) the date of repossession, if any, (xx)
              the code indicating if the debt is a reaffirmation, (xxi) the code
              indicating to which Bank the account or contract belongs (e.g.,
              Mill Creek Bank Inc.), (xxii) the finance charges but not yet
              collected of each account or contract, (xxiii) whether the
              obligation is open- or closed-end credit and (xxiv) any other
              information necessary to the determination of the Principal
              Balance of such Assigned Receivable.

              "Post-Funding Tax Period" means (a) any taxable year or period
beginning after the Funding Date, and (b) for any Straddle Period, the portion
of such period beginning after the Funding Date.

              "Post-Signing Balance Sheets" shall have the meaning set forth in
Section 5.29(a) hereof.

              "Pre-Cut-Off Period" shall have the meaning set forth in Section
2.1(a) hereof.

              "Pre-Funding Period" means the period commencing on the date
hereof and ending at and including the Funding Date.

              "Pre-Funding Tax Period" means (a) any taxable year or period
ending on or before the Funding Date and (b) for any Straddle Period, the
portion of such period ending on and including the Funding Date.

              "Prepaid Expenses" means operating costs or other expenses which
were paid by the Sellers or any Subsidiary of Sellers on or prior to the Cut-Off
Time in respect of the Purchased Business and the Purchased Assets but that are
attributable to periods or portions thereof beginning after the Cut-Off Time,
including any real or personal property, use or other Taxes (other than Income
Taxes).

              "Pre-Signing Data Tape" means:

              a. with respect to the PL Business, the following electronic files
delivered to Buyer prior to the date hereof: (i) "cdrelease2.txt", created
November 10, 2002, (ii) "cdrelease3.txt", created November 15, 2002, (iii)
"cdrelease4.txt", created November 18, 2002, (iv) "losses24.txt", created
November 18, 2002 and (v) "old24all.txt" created November 21, 2002;

                                       23


              b. with respect to the HI Business, the following electronic files
delivered to Buyer prior to the date hereof: (i) "HIDdatatape.txt", created
November 27, 2002, (ii) "HIDLOSSdata.txt", created November 27, 2002;

              c. with respect to the CL Business, the following electronic files
delivered to Buyer prior to the date hereof: (i) "Nov00.txt", created November
27, 2002, (ii) "Dec00.txt", created November 27, 2002, (iii) "Jan01.txt",
created November 27, 2002, (iv) "Feb01.txt", created November 27, 2002, (v)
"Mar01.txt", created November 27, 2002, (vi) "Apr01.txt", created November 27,
2002, (vii) "May01.txt", created November 27, 2002, (viii) "Jun01.txt", created
November 27, 2002, (ix) "Jul01.txt", created November 27, 2002, (x) "Aug01.txt",
created November 27, 2002, (xi) "Sept01.txt", created November 27, 2002, (xii)
"Oct01.txt", created November 27, 2002, (xiii) "Nov01.txt", created November 27,
2002, (xiv) "Dec01.txt", created November 27, 2002, (xv) "Jan02.txt", created
November 27, 2002, (xvi) "Feb02.txt", created November 27, 2002, (xvii)
"Mar02.txt", created November 27, 2002, (xviii) "Apr02.txt", created November
27, 2002, (xix) "May02.txt", created November 27, 2002, (xx) "Jun02.txt",
created November 27, 2002, (xxi) "Jul02.txt", created November 27, 2002, (xxii)
"Aug02.txt", created November 27, 2002, (xxiii) "Sept02.txt", created November
27, 2002, (xiv) "Oct02.txt", created November 27, 2002.

              "Principal Balance" means, as of any time, for any Assigned
Receivable, the amount of the outstanding unpaid indebtedness incurred by an
Obligor with respect to the applicable Assumed Receivables Contract as of such
time (including the amount of the liabilities of the Company or any of its
Subsidiaries incurred by it in the ordinary course of its business and
consistent with its past practices in respect of checks, drafts, wire transfers
or other similar payment instructions which checks, drafts, wire transfers or
other similar payment instructions have not, as of such time, been charged as a
final matter against its applicable account), any properly posted charges for
goods and services purchased by such Obligor from any Person (whether or not
billed to such Obligor) that have not been paid as of such time, finance charges
charged with respect to such Assigned Receivable (including the Accrued and
Unpaid Interest) that are unpaid as of such time, and any fees, interest,
penalties or other charges (whether or not billed to Obligor) that are accrued
and unpaid as of such time, as determined in accordance with GAAP; provided,
however, that (i) the Principal Balance shall be calculated without regard to
any allowance for bad debt except as required by Section 5 of the Accounting
Principles and (ii) with respect to Assigned Receivables from the PL Business
and Assigned Receivables of the VISA/Mastercard Portfolio, the amount of finance
charges accrued but not yet billed in respect thereof for the period from the
last billed date to the Effective Closing Date shall be computed in the manner
set forth in Section 9 of the Accounting Principles (determined as if the
Effective Closing Date was the end of a month, but prorated appropriately if the
Effective Closing Date is not the end of a month).

              "Private Label Credit Card Master Trust Certificates" means the
Conseco Private Label Credit Card Master Note Trust 2001-A, Class C and Class D
notes.

                                       24


              "Private Label Credit Card Master Trust Documents" means (a) the
Conseco Private Label Credit Card Master Note Trust Amended and Restated Trust
Agreement, dated as of May 1, 2001, between Mill Creek Bank Inc., as transferor,
Conseco Finance Credit Card Funding Corp., as transferor, and Wilmington Trust
Company, as owner trustee; (b) the Master Indenture, dated as of May 1, 2001, by
and among Conseco Private Label Credit Card Master Note Trust, trust, U.S. Bank,
indenture trustee and securities intermediary, and Mill Creek Bank Inc.,
servicer; (c) the Series 2001-A Indenture Supplement, dated as of May 1, 2001,
by and among Conseco Private Label Credit Card Master Note Trust, U.S. Bank,
indenture trustee and securities intermediary, and Mill Creek Bank Inc.,
servicer; (d) the Series 2001-B Indenture Supplement, dated as of May 1, 2001,
by and among Conseco Private Label Credit Card Master Note Trust, U.S. Bank,
indenture trustee and securities intermediary, and Mill Creek Bank Inc.,
servicer; (e) the Class A Note Purchase Agreement, dated as of May 31, 2001, by
and among Conseco Private Label Credit Card Master Note Trust, issuer, Mill
Creek Bank Inc., transferor and servicer, Conseco Finance Credit Card Funding
Corp., individually and as a transferor, Green Tree Retail Services Bank,
individually and as an account owner, the Class A Purchasers, the agents for the
Purchaser Groups, from time to time parties thereto, and Credit Suisse First
Boston, administrative agent for the Class A Purchasers, and as amended by the
amendments thereto dated as of May 30, 2002 and September 30, 2002 and (f)
Transfer and Servicing Agreement, dated as of May 1, 2001, among Mill Creek Bank
Inc., as a transferor and as servicer, Conseco Finance Credit Card Funding
Corp., as a transferor, and Conseco Private Label Credit Card Master Note Trust.

              "Property" means all property and assets of whatever nature,
including, but not limited to, personal property, whether tangible or
intangible, and claims, rights and choses in action.

              "Purchase Price" shall have the meaning set forth in Section
2.4(a) hereof.

              "Purchased Assets" means:

              (a) all assets, Properties, Contracts (other than the Excluded
Contracts) and rights that constitute a part of, or are used in or necessary
for, the operation of any of the PL Business, the HI Origination Platform or the
CL Origination Platform, of whatever kind and nature, real or personal, tangible
or intangible, owned, leased, licensed, used or held for use or license,
wherever located (excluding, in each case, (i) any Intellectual Property and
(ii) other intangible Properties, in each case that are provided pursuant to the
Servicing Agreements entered into pursuant to Section 5.27 hereof);

              (b) the Assumed Agreements, including, without limitation, the
Assumed Receivables Contracts;

              (c) the Assigned Receivables and the Assigned Contracts;

                                       25


              (d) those other assets, Properties, Contracts (other than the
Excluded Contracts) and rights set forth on Section 2.1(a) of the Business
Schedules;

              (e) Backlog entered into in the ordinary course of business and
consistent with past practice of the CFC Parties;

              (f) the Transferred Intellectual Property; and

              (g) the Private Label Credit Card Master Trust Documents, the PL
Residual Assets, the PL Residual Certificates, the PL Servicing Rights and the
PL Servicing Contracts, in each case only if the CFC Parties have not repaid,
redeemed and discharged the obligations represented by the Trust and terminated
the Private Label Credit Card Master Trust Documents, and the owners of the
Receivables and other Property that is subject thereto have not transferred such
Receivables and other Property to Mill Creek Bank Inc. and/or Conseco Finance
Credit Card Funding Corp. prior to the Cut-Off Time; and

              (h) subject to Section 5.31(a), the HI and CL Servicing Assets,

but shall not mean, in any case, any Specified Excluded Assets.

              "Purchased Businesses" means the PL Business and the CL
Origination Platform and the HI Origination Platform.

              "Purchased Businesses Schedule" means the schedule by that name
annexed to this Agreement.

              "Reaffirmed Account" means any Loan or Receivable with respect to
which an Obligor has reaffirmed such Obligor's obligation with respect to such
indebtedness in connection with any proceeding under the Bankruptcy Code
(whether or not designated as such on the Final Data Tape).

              "Receivables" means all financial obligations of any Obligor
arising under the Loans, including, but not limited to, any amounts owing for
the payment of goods and services, periodic finance charges (including unearned
and billed), Accrued and Unpaid Interest, late charges, charge-off amounts,
accounts without a balance, bank advances and any other fee, expense or charge
of any nature, kind and description whatsoever.

              "Records" means books and records of the CFC Parties (wherever
located) relating to the Purchased Businesses, the Purchased Assets or the
Assumed Liabilities, including (a) customer and vendor lists, correspondence and
files, (b) advertising, marketing and sales materials, (c) personnel files of
the Transferred Employees, (d) all accounting books and records, financial
records and statements, subject to Section 2.3(b)(vii) and Section 5.25 hereof,
in each case specifically excluding any such other property that is listed as an
Excluded Asset.

              "Registration Statements" means the registration statements in
respect of the Securitizations relating to the PL Business outstanding as of the
Cut-Off Time.

                                       26


              "Regulators" shall have the meaning set forth in Section 5.24
hereof.

              "REMIC" means a real estate mortgage investment conduit under
Section 860D(a) of the Tax Code or any other entity or arrangement that has
purported to be a real estate mortgage investment conduit that is a REMIC under
Section 860D(a) of the Tax Code irrespective of whether such entity or
arrangement qualifies as a REMIC under Section 860D(a) of the Tax Code.

              "Residual Assets" means the interests, including equity, retained
or residual interests (whether certificated or uncertificated), issued or
created by or in connection with a Securitization (not related to the PL
Business) or similar transaction that the Company or any other CFC Party may
hold or own (whether or not pledged to another party or sold under a repurchase
agreement), and all other cash or other proceeds and all other rights arising
from certificated or uncertificated securities, interests or rights purchased or
retained by a CFC Party including, without limitation, rights to prepayment
penalties or charges, late fees, investment income, cash collateral accounts,
spread accounts, reserve accounts and similar accounts and other charges not
required to be paid to the servicer, and repurchase options or similar rights
arising in connection with a Securitization not relating to the PL Business.
Residual Assets shall exclude any PL Residual Assets.

              "Restricted and Unrestricted Balance Sheets" means balance sheets
of the Company and its Subsidiaries setting forth the assets and liabilities of
Parties by entity and by whether the assets set forth therein are restricted or
unrestricted, as classified by the Company.

              "Rule" or "Rules" means the Federal Rules of Bankruptcy Procedure.

              "Sale Hearing" means the hearing of the Bankruptcy Court to
approve this Agreement and the transactions contemplated herein.

              "Sale Order" means an order of the Bankruptcy Court substantially
in the form of Annex E hereto, together with such changes as shall be reasonably
satisfactory to the Company and the Buyer.

              "Schedule of Assets Acquired and Liabilities Assumed" means with
respect to the first day of a month, a schedule of assets acquired and
liabilities assumed reflecting, without duplication, the assets and liabilities
that will be Specified Purchased Assets and the Assumed Liabilities, and the
respective amounts thereof as of 12:01 a.m. on such day, prepared as if (a) such
day is the Effective Closing Date and (b) in accordance with Section 5.39.

              "Section 338 Election" shall have the meaning set forth in Section
5.1(i) hereof.

              "Securities Act" means the Securities Act of 1933, as amended.

                                       27


              "Securities Act Rules" means the rules and regulations promulgated
under the Securities Act.

              "Securitization" means, generally, any transaction in which any
Person transferred loans, other debt instruments or interests therein to a
trust, either taking back or selling securities or other similar interests
evidencing the ownership of such trust.

              "Securitization Documents" means each pooling and servicing
agreement, transfer agreement, sale and servicing agreement, indenture,
assignment agreement and each and every document to which a CFC Party is or was
a party in connection with any Securitization relating to the PL Business that
is outstanding as of Cut-Off Time.

              "Securitized Loan" means any loan (or other debt instrument) (a)
pledged by an entity or arrangement as collateral for a debt instrument issued
by such entity, (b) treated as sold by or through an entity or arrangement in
the form of securities in a trust or a REMIC or (c) otherwise pledged,
transferred or sold in a Securitization related to the PL Business.

              "Securitized Receivables" means all receivables and loans subject
to the Private Label Credit Card Master Trust Documents.

              "Seller" shall have the meaning set forth in the Preamble.

              "Seller Indemnified Parties" shall have the meaning set forth in
Section 9.2(b) hereof.

              "Sellers" shall have the meaning set forth in the Recitals.

              "Selling Subsidiaries" shall have the meaning set forth in the
Recitals.

              "Servicing" means the performance of all customer and merchant
services and functions, including without limitation, management and servicing
of inbound calls, backline functions, managing correspondence, disputes, fraud
claims, accounting services, payment settlements, payment processing and
management of collections.

              "Servicing Agreements" shall have the meaning set forth in Section
5.27 hereof.

              "Settlement Interest" means the amount of accrued interest on the
Purchase Price (subject to Section 2.4(b)(ii) hereof) calculated at the
Settlement Rate, as in effect on the date prior to the Funding Date for the
period from the Effective Closing Date to, but not including, the Funding Date
(calculated on the basis of the actual number of days elapsed in a year of 365
or 366 days, as the case may be).

              "Settlement Rate" means, on any date, the "Target" federal funds
rate reported in the "Money Rates" section of the eastern edition of The Wall
Street Journal published for such date. In the event The Wall Street Journal
ceases publication of the federal funds rate or fails on any particular date to
publish the federal funds rate, the

                                       28


federal funds rate shall refer to the rate for the last transaction in overnight
federal funds arranged prior to such date by a financial institution mutually
agreed upon by the Buyer and the Company.

              "Shared Service Employees" shall have the meaning set forth in
Section 5.12(a)(ii) hereof.

              "Shortfall Amount" means the amount by which the Net NAV is less
than the Base Amount.

              "Shares" shall have the meaning set forth in Section 2.1(b)
hereof.

              "Specified Excluded Assets" means (i) the Excluded Contracts; (ii)
the Properties, Contracts and rights, if any, set forth in Section 2.1(c) of the
applicable Business Schedules; (iii) the outstanding capital stock of Green Tree
Retail Services Bank and Mill Creek Bank Inc.; (iv) any Properties of Green Tree
Retail Services Bank; (v) any deferred tax assets or other tax assets; (vi) any
motor vehicles owned or leased by any CFC Party; (vii) any Properties subject to
a Securitization (other than any Property transferred to the Trust); (viii) any
Securitized Loan and any Residual Assets (other than the PL Residual Assets);
(ix) any Consumer Loans or Home Improvement Loans (other than HI and CL Mill
Creek Bank Loans); (x) any HELOC Loans; (xi) any Home Equity Loans; (xii) any
Properties constituting part of the MH Business of the CFC Parties; (xiii) any
cash or cash equivalents of any Person other than Mill Creek Bank Inc. (other
than the PL Residual Assets); (xiv) any real Property owned by any CFC Parties,
including, without limitation, any Owned Real Property; (xv) any Contracts that
after giving effect to the transactions specifically contemplated hereby are
between or among the Company's Affiliates (other than the Trust); (xvi) any
receivable due to or due from any of the Company's Affiliates (other than the
Trust) to any other Affiliate(s) of the Company (other than the Trust); (xvii)
any CRA; (xviii) all other claims, rights and courses of action which do not
relate to the ownership, use or operation of the Purchased Assets following the
Funding Date, it being understood and agreed that without limiting the
generality of the foregoing, claims, rights and causes of actions against the
holders of liens, pledges or security interests in the capital stock of Mill
Creek Bank Inc. constitute Specified Excluded Assets; and (xvix) any right of
any CFC party under this Agreement and the CFN Agreement.

              "Specified Purchased Assets" means the following Purchased Assets:
cash and cash equivalents of Mill Creek Bank, the Assigned Receivables, the PL
Residual Assets (but only if the CFC Parties have not repaid, redeemed and
discharged the obligations represented by the Trust and terminated the Private
Label Credit Card Master Trust Documents, and the owners of the Receivables and
other property that is subject thereto have not transferred such Receivables and
other Property to Mill Creek Bank Inc. prior to the Cut-Off Time), fixed
tangible assets, capitalized intellectual property, repossessed property and
Prepaid Expenses.

              "State Banking Authority" shall have the meaning set forth in
Section 3.3 hereof.

                                       29


              "Statement" shall have the meaning set forth in Section 5.1(c)(ii)
hereof.

              "Stock Sale" shall have the meaning set forth in Section 2.1(b)
hereof.

              "Straddle Period" shall mean any taxable year or period beginning
on or before and ending after the Funding Date.

              "Subject Subsidiary" shall have the meaning set forth in Section
2.1(b) hereof.

              "Subject Subsidiary Owner" shall have the meaning set forth in
Section 2.1(b)(iii) hereof.

              "Subsidiary" means, with respect to any Person, any corporation,
partnership, limited liability company, association or other business entity of
which (a) if a corporation, a majority of the total voting power of shares of
stock entitled (without regard to the occurrence of any contingency) to vote in
the election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof, or (b) if a partnership,
limited liability company, association or other business entity, a majority of
the partnership or other similar ownership interest thereof is at the time owned
or controlled, directly or indirectly, by any Person or one or more Subsidiaries
of that Person or a combination thereof. For purposes hereof, a Person or
Persons shall be deemed to have a majority ownership interest in a partnership,
limited liability company, association or other business entity if such Person
or Persons shall be allocated a majority of partnership, limited liability
company, association or other business entity gains or losses or shall be or
control the managing director or general partner of such partnership, limited
liability company, association or other business entity.

              "Tax" or "Taxes" means (a) any federal, state, local or foreign
income, gross receipts, capital gains, franchise, alternative or add-on minimum,
excess inclusion income, prohibited transaction, estimated, sales, use, goods
and services, transfer, registration, value added, excise, natural resources,
severance, stamp, occupation, premium, windfall profit, environmental, customs,
duties, real property, personal property, capital stock, social security,
unemployment, employment, disability, payroll, license, employee or other
withholding, contribution or other tax, of any kind whatsoever, including any
interest, penalties or additions to tax or additional amounts in respect of the
foregoing; (b) any Liability for Taxes as a transferee under a Contract
indemnity; (c) any Liability for Taxes under Treasury Regulation ss. 1.1502-6 or
similar Law applicable in the case of a group that files on a consolidated,
combined or unitary basis; and (d) any applicable Liability for Taxes due to
application of bulk sale laws.

              "Tax Code" means the Internal Revenue Code of 1986 as amended from
time to time.

                                       30


              "Tax Proceeding" means any claim, examination, suit, action,
negotiation or proceeding, or other proposed change or adjustment by any Tax
authority involving Liability for Taxes.

              "Tax Return" means any return, declaration, report, claim for
refund, information return, amended return or other documents (including any
related or supporting schedules, statements or information) filed or required to
be filed in connection with the determination, assessment or collection of Taxes
of any Person or the administration of any laws, regulations or administrative
requirements relating to any Taxes.

              "Taxable Period" shall have the meaning set forth in Section
5.1(b)(iii) hereof.

              "Third Party" means any Person other than (a) the Parent, the
Company and its Subsidiaries or any of their Affiliates and (b) the Buyer and
its Affiliates.

              "Third Party Claim" means any claim or the commencement of any
claim, action or proceeding made or brought by a Third Party.

              "Trademark Assignment Agreement" means the assignment agreement to
be executed by the Parties on or prior to the Funding Date, to be effective as
of the Cut-Off Time, in customary form and substance as reasonably agreed by the
Parties, that effects the assignment from the Sellers to the Buyer of the
Transferred Trademarks.

              "Transaction Documents" means this Agreement and any other
agreement, certificate, consent, waiver, document or instrument to be executed
and/or delivered at Funding, including, but not limited to, those agreements,
certificates, consents, waivers, documents and other instruments required to be
delivered by or on behalf of a Person under ARTICLE 6 or ARTICLE 7 herein, as
applicable.

              "Transferred Employees" shall have the meaning set forth in
Section 5.12(b) hereof.

              "Transferred Intellectual Property" means the Transferred
Trademarks, Other Transferred Intellectual Property, and the Transferred
Intellectual Property Agreements, together with all income, royalties, damages,
and payments due or payable as of the Cut-Off Time or thereafter (including,
without limitation, damages and payments for past or future infringements or
misappropriations thereof), the right to sue and recover for past infringements
or misappropriations thereof, any and all corresponding rights that, now or
hereafter, may be secured throughout the world.

              "Transferred Intellectual Property Agreements" means all licenses
and other agreements that relate to any Intellectual Property, used or held for
use exclusively in the Purchased Businesses as operated by the CFC Parties prior
to the Cut-Off Time, including, without limitation, the agreements required to
be set forth in Attachment D to Section 3.12 of the Business Schedules,
Attachment A to Section 2.1(a) of the Business Schedules and Section 6.13 of the
Business Schedules.

                                       31


              "Transferred Trademarks" means all trademarks, service marks,
trade dress rights, trade names, corporate names, logos and slogans (whether
registered or unregistered), and all registrations and applications related to
any of the foregoing, owned or held by a Seller or any Affiliate of a Seller
exclusively for use in the Purchased Businesses as operated by the CFC Parties
prior to the Cut-Off Time, including, without limitation, the marks required to
be set forth in Attachment B to Section 3.12 of the Business Schedules together
with the goodwill associated therewith.

              "Treasury Regulation" means a regulation promulgated by the
Treasury Department under the Tax Code, including a temporary regulation and a
proposed regulation to the extent that, by reason of their actual or proposed
effective date, would or could, as of the date of any determination or opinion
as to the Tax consequences of any action or proposed action or transaction, be
applied to the Purchased Businesses and Purchased Assets.

              "Trust" means the Conseco Private Label Credit Card Master Note
Trust.

              "U.S. Bank" means U.S. Bank National Association, a national
banking association, and its successors.

              "VISA/MasterCard Portfolio" means Receivables, Loans, account
relationship and all documentation relating thereto, including, without
limitation, Charged-Off Accounts and zero balance accounts, owned by Mill Creek
Bank Inc. in connection with credit cards bearing the trademark/name Visa or
Mastercard, either alone or in connection with other trademarks/names.

              "WARN Act" means the Workers Adjustment and Retraining
Notification Act and any state and local "plant closing" or "mass layoff" law.

              "Welfare Benefits" shall have the meaning set forth in Section
5.12(i) hereof.

                                   ARTICLE 2
                           PURCHASE AND SALE OF ASSETS

         2.1  Purchased Assets.

              (a) Purchase and Sale of Assets. On the terms and subject to the
conditions contained in this Agreement, on the Funding Date, effective as of the
Cut-Off Time, the Company will sell, convey, transfer, assign and deliver to (or
cause to be sold, conveyed, transferred, assigned and delivered by the relevant
Selling Subsidiaries owning, leasing or having the right to use the Purchased
Assets) the Buyer, and the Buyer will purchase and take assignment and delivery
from the Sellers of good and marketable title to the Purchased Assets in
existence at the Cut-Off Time, free and clear of any Lien of any kind whatsoever
other than a Permitted Lien. The Purchased Assets will include any additions to
such assets, properties, Contracts and rights that constitute the Purchased
Assets as of the date hereof that have arisen in the ordinary

                                       32


course of business and consistent with the past practices of the CFC Parties
between the date hereof and the Cut-Off Time (the "Pre-Cut-Off Period"), but
specifically excluding (x) the Specified Excluded Assets and (y) subject to
compliance with Section 5.5(b), any deletions, dispositions or expirations of
such assets, properties, Contracts and rights during the Pre-Cut-Off Period, in
all cases, in the ordinary course of business consistent with the past practice
of the CFC Parties.

              (b) Stock Sale. At any time prior to the Effective Closing Date,
the Buyer may, with the consent of the Company (not to be unreasonably
withheld), elect to acquire the Purchased Assets, in part, through the purchase
of all of the outstanding capital stock (the "Shares") of one or more of the
Selling Subsidiaries (a "Subject Subsidiary") that own, lease or have the right
to use Purchased Assets ("Stock Sale"), it being agreed that, with respect to
any Subject Subsidiary, such consent of the Company may not be withheld if (i)
the sale of the Shares of such Subject Subsidiary would not result in the CFC
Parties incurring any net incremental Liabilities (which are not Assumed
Liabilities), as compared to a sale of the Purchased Assets owned by such
Subject Subsidiary, as determined in good faith by the Parties ("Incremental
Liabilities"), or (ii) the Buyer, at its option, elects to pay or hold the
Company harmless (under arrangements reasonably satisfactory to the Company)
from such Incremental Liabilities. In connection with any Stock Sale, the
Company shall cause any such Subject Subsidiary to become a Filing Company
Subsidiary and shall take all reasonable actions to obtain an order from the
Bankruptcy Court pursuant to Federal Rule of Bankruptcy Procedure 3003(c)
establishing a bar date for prepetition claims and shall diligently prosecute
objections to such claims, as appropriate, in order to ensure that the
Liabilities of such Subject Subsidiary consist only of those Liabilities that
would be Assumed Liabilities if the Buyer would have acquired the Purchased
Assets of such Subject Subsidiary free and clear of all Liens other than
Permitted Liens. In the event the Buyer elects to acquire a portion of the
Purchased Assets through a Stock Sale, then the Shares which are the subject of
the Stock Sale shall be deemed Purchased Assets hereunder. If the Buyer elects
one or more Stock Sales:

                   (i) prior to the Funding Date, effective as of the Cut-Off
              Time, the Company shall unconditionally assume, or shall cause one
              of its Affiliates (other than another Subject Subsidiary) to
              unconditionally assume all Liabilities of the Subject Subsidiary
              (other than the Assumed Liabilities) in a manner and in form and
              substance reasonably satisfactory to the Buyer and the Company;

                   (ii) prior to the Funding Date, effective as of the Cut-Off
              Time, the Company shall, or shall cause the Subject Subsidiary to,
              transfer any Excluded Assets of the Subject Subsidiary to the
              Company or one of its Affiliates (other than another Subject
              Subsidiary) in a manner and in form and substance reasonably
              satisfactory to the Buyer and the Company; and

                   (iii) the Company shall, or shall cause its Subsidiary which
              directly owns the Shares (the "Subject Subsidiary Owner") to,
              sell, assign, transfer, convey and deliver the Shares, free and
              clear of all Liens, to the

                                       33


              Buyer, and the Buyer shall purchase and accept the Shares, at the
              Funding, effective as of the Cut-Off Time, (in which case, the
              Subject Subsidiary Owner shall be deemed a Selling Subsidiary
              hereunder, and the Company shall cause such Subject Subsidiary
              Owner to execute a counterpart signature page hereto).

              Notwithstanding the foregoing, this Section 2.1(b) shall not apply
to Mill Creek Bank Inc. or Green Tree Retail Services Bank, and the Buyer hereby
waives any and all of its rights under this Section 2.1(b) except to the extent
this Section 2.1(b) may apply to any Seller's right, title to, or interest in
the Trust.

              (c) Excluded Assets. No Seller shall sell, assign, transfer or
convey to the Buyer, nor shall the Buyer purchase, any Seller's right, title or
interest in and to any Excluded Asset.

         2.2  Liabilities.

              (a) Assumed Liabilities.

                   (i) Subject to the conditions set forth herein, the Buyer
              will assume at the Funding, effective as of the Cut-Off Time, and
              will pay, perform and discharge in accordance with their terms, as
              and when due, only those liabilities specifically identified in
              Section 2.2(a) of the Business Schedules (the "Assumed
              Liabilities").

                   (ii) Notwithstanding anything to the contrary herein, the
              Sellers shall pay, perform and discharge the Assumed Liabilities
              from the Cut-Off Time through the Funding Date, in accordance with
              the terms of such Assumed Liabilities.

                   (iii) On the Funding Date, the Buyer shall reimburse the
              Sellers, without duplication, for (A) the amounts advanced under
              any Loan that is a Purchased Asset during the period commencing as
              of the Cut-Off Time and ending on the Funding Date, (B) the
              amounts advanced by any Seller with respect to the Backlog, in
              accordance with the terms of such Backlog during the period
              commencing as of the Cut-Off Time and ending on the Funding Date,
              (C) the amount of Employment Costs paid by the Sellers and other
              CFC Parties and attributable to (x) Business Employees and (y)
              Shared Service Employees to whom the Buyer offers employment in
              accordance with Section 5.12(a)(ii) hereof for the period
              commencing at the Cut-Off Time and ending on the Funding Date, and
              (D) the amount of any payment made by the Sellers with respect of
              the Assumed Liabilities in accordance with their terms during the
              period commencing as of the Cut-Off Time and ending on the Funding
              Date; provided, however, the Buyer's obligations hereunder shall
              be offset to the extent that the Sellers have failed to comply
              with Sections 2.5, 5.4 and 5.5 hereof that relate to cash or cash
              equivalents, the sale, transfer or assignment of any Purchased

                                       34


              Asset or the incurrence or discharge of Liabilities; provided,
              further, that in each case the amount of such reimbursements shall
              be reduced by any amounts paid by Mill Creek Bank Inc. in
              accordance with Section 5.5(a)(xix)(C).

              (b) Excluded Liabilities. The Sellers shall retain and pay,
perform and discharge in accordance with their terms (as the same may be
modified in connection with the Chapter 11 Case or otherwise), as and when due,
all Liabilities of the CFC Parties or the Parent (arising before, on or after
the Cut-Off Time) that are not expressly Assumed Liabilities (the "Excluded
Liabilities"). The Excluded Liabilities include, but are not limited to, the
following Liabilities of the CFC Parties or the Parent (the "Specified Excluded
Liabilities")

                   (i) arising from, related to or in connection with any of the
              Parent's or the Sellers' transaction expenses;

                   (ii) except for the Liabilities specifically set forth in
              Section 2.2(a) of the applicable Business Schedules, for (A) any
              indebtedness or any other Liability of the CFC Parties or the
              Parent, including intercompany indebtedness between or among their
              respective Affiliates or (B) any Liabilities arising from or in
              connection with any Securitization or Residual Assets (other than
              Liabilities with respect to PL Residual Assets arising after the
              Cut-Off Time) or any Guarantees of the CFC Parties or the Parent,
              including intercompany Guarantees between Affiliates and any
              Guarantees given to any holders of interests in a Securitization;

                   (iii) for any Taxes, whether or not relating to the Purchased
              Businesses, the Purchased Assets or the transactions contemplated
              hereby, whether before, on or after the Funding Date, other than
              Taxes of any Subject Subsidiary (or a Subsidiary of a Subject
              Subsidiary after the Funding Date) for any Post-Funding Tax Period
              solely to the extent the Buyer purchases the Shares of such
              Subject Subsidiary in a Stock Sale, provided, that Taxes of a
              Subject Subsidiary (or Subsidiary thereof) for a Post-Funding Tax
              Period shall not include any Liability of Parent or any Affiliate
              of the Company that a Subject Subsidiary or Subsidiary thereof is
              required to pay by virtue of Treasury Regulation Section 1.1502-6
              or comparable provision of state, local or foreign Law;

                   (iv) attributable to the Purchased Assets or the operation of
              the Purchased Businesses for all periods up to and including the
              Cut-Off Time, including, without limitation, any Liabilities for
              any default or breach, or for any event, occurrence, condition or
              act which, with the giving of notice, the passage of time or both,
              would result in a default or breach, of any of the Assumed
              Agreements, to the extent such default or breach or event,
              occurrence, condition or act existed on or prior to the Cut-Off
              Time;

                                       35



                   (v) to indemnify any Person by reason of the fact that such
              Person was a director or officer of any of the CFC Parties or was
              serving at the request of the CFC Parties as a partner, trustee,
              director, officer, employee or agent of another Person;

                   (vi) with respect to any principal, partner, employee,
              officer, director, consultant, independent contractor, agent or
              Affiliate of the CFC Parties or the Parent (other than Liabilities
              assumed by the Buyer under Section 5.12 hereof and the Assumed
              Retention Agreement) arising out of employment, compensation,
              severance, change-of-control, stay-pay, sale bonus, retention
              bonus or other special compensation or golden parachute
              agreements, plans or arrangements, including any such Liability
              incurred in connection with the execution and performance of this
              Agreement or any other Transaction Documents and the consummation
              of the transactions contemplated hereby and not expressly assumed
              herein, including any Employee Agreement.

                   (vii) arising under, out of, with respect to or in connection
              with any Employee Benefit Plan and any other employee benefit plan
              (within the meaning of Section 3(3) of ERISA) maintained or
              sponsored by any Seller or any ERISA Affiliate and not expressly
              assumed by the Buyer herein;

                   (viii) arising out of or resulting from any noncompliance
              with or violation of any Laws (including, without limitation, any
              securities Laws or Environmental Laws);

                   (ix) arising out of any occurrences of bodily injury,
              property damage or personal injury which take place on or prior to
              the Cut-Off Time;

                   (x) arising out of, related to, in connection with or with
              respect to any deferred purchase price payment obligations or
              non-competition payment obligations associated with (A) any
              acquisition prior to the Cut-Off Time of any business, Subsidiary,
              security or assets of any Person or (B) any disposition of any
              business, Subsidiary, security or assets of any Person;

                   (xi) to indemnify any Third Party in connection with the
              disposition of any subsidiary, business, properties or assets or
              operations of any Person;

                   (xii) arising from, in connection with or with respect to
              such Person's direct or indirect ownership (beneficial or
              otherwise) at any time of any capital stock of or other beneficial
              interest in (or any right to acquire such stock of or interest in)
              any of the CFC Parties;

                                       36


                   (xiii) arising from, related to or in connection with any
              cure or other amount payable with respect to the assignment of any
              contractual obligation to the Buyer hereunder;

                   (xiv) arising from, related to, in connection with or with
              respect to any Excluded Asset;

                   (xv) under this Agreement;

                   (xvi) for infringement or misappropriation of any
              intellectual property rights of a third party arising from the
              operation of the Purchased Businesses on or before the Cut-Off
              Time;

                   (xvii) relating to any claim, dispute, litigation or
              arbitration asserted or threatened or governmental proceeding or
              investigation instituted or threatened, arising out of any act or
              omission of the CFC Parties or the Parent or any of their
              Affiliates on or prior to the Cut-Off Time, or arising out of the
              conduct, on or prior to the Cut-Off Time, of the Purchased
              Businesses or any other businesses of CFC Parties (including,
              without limitation, any claim, dispute, litigation or arbitration
              with respect to or in connection with unpaid wages or Fair Labor
              Standards Act classification and any other litigation and
              arbitration listed in Section 3.18 of the Business Schedules);

                   (xviii) arising out of (A) any noncompliance with or
              violation of any Environmental Law on or before the Cut-Off Time,
              (B) any existing environmental condition (whether or not relating
              to any noncompliance) of the Purchased Assets, or (C) any release
              of Hazardous Substances on or before the Cut-Off Time, in each
              case, regardless of whether any of the foregoing was known to or
              disclosed to the Parties or any of their Affiliates;

                   (xix) under any insurance coverage, self-insurance or
              retention program provided to customers in connection with the
              Purchased Businesses;

                   (xx) arising from, related to or in connection with Assumed
              Leases arising or accruing on or prior to the Cut-Off Time and/or
              due to a breach by the Sellers or any of their Subsidiaries under
              any contractual obligation, except to the extent relating to any
              Permitted Lien;

                   (xxi) to any equity holder or former equity holder of the CFC
              Parties;

                   (xxii) relating to any repurchase, assumption or similar
              Liability under any Contract pursuant to which loans were sold to
              a Third Party or pursuant to any Securitization not relating to
              the PL Business;

                                       37


                   (xxiii) that are PL Excluded Servicing Liabilities;

                   (xxiv) under the Honda Purchase Agreement; or

                   (xxv) assumed by the Company or one of its Affiliates
              pursuant to Section 2.l(b)(i).

              The Buyer shall not assume or otherwise become liable for any
Excluded Liabilities (whether or not such Excluded Liability is specifically set
forth above). Nothing contained in this Agreement shall be construed to imply
that the Buyer will assume the PL Excluded Servicing Liabilities or any
Guarantees given to any holders of interests in a Securitization.

         2.3  Funding Transactions.

              (a) Closing. Subject to the satisfaction or waiver of the
conditions contained in this Agreement, the closing of the transactions
contemplated by this Agreement (the "Funding") shall take place at the offices
of Kirkland & Ellis, 200 East Randolph Drive, Chicago, Illinois 60601, at 10:00
a.m., on the Funding Date, or at such other place or time and on such other date
as the Parties may agree to in writing. The Funding shall be deemed effective as
of the Cut-Off Time.

              (b) Funding Transactions. Subject to the conditions set forth in
this Agreement, the Parties shall consummate the following transactions on the
Funding Date:

                   (i) The Sellers shall convey all of the Purchased Assets to
              the Buyer in accordance with Section 2.1 and shall deliver to the
              Buyer such appropriately executed instruments of sale, transfer,
              conveyance and delivery, deeds, assignments, certificates duly
              registered in the Buyer's name representing the PL Residual Assets
              (to the extent such PL Residual Assets are certificated), vehicle
              titles, transfer Tax declarations, and all other instruments of
              conveyance which are necessary or desirable to effect transfer to
              the Buyer of good and marketable title to the Purchased Assets and
              which are in form and substance reasonably satisfactory to the
              Buyer and the Sellers.

                   (ii)  (A) On and prior to the Funding Date, the Sellers
                             shall, with respect to all Purchased Assets that
                             are owned of record by any Person other than the
                             Company or a Selling Subsidiary (including, without
                             limitation, the PL Residual Assets), exercise all
                             rights, and take all such other actions, as may be
                             necessary to effect the conveyance of the Purchased
                             Assets to the Buyer as of the Cut-Off Time. If any
                             Purchased Assets are owned of record or
                             beneficially by any CFC Party other than the
                             Company or a Selling Subsidiary, then the Company
                             shall cause such CFC

                                       38


                             Party to become a party to this Agreement and
                             execute a counterpart signature page to this
                             Agreement as a Selling Subsidiary hereunder;
                             provided, however, that neither the Parent nor any
                             other Affiliate of the Company that is not a
                             Subsidiary of the Company shall be required to
                             become a party to this Agreement; provided,
                             further, that on or prior to the Funding the Parent
                             and such Affiliates that own (legally or
                             beneficially) any of the Purchased Assets shall
                             have entered into an agreement or agreements with
                             the Buyer in form and substance reasonably
                             satisfactory to the Parent or such Affiliates and
                             the Buyer with respect to the sale of the Purchased
                             Assets owned by the Parent and such Affiliates to
                             the Buyer and, with respect to the Parent and any
                             such Affiliate that is a debtor-in-possession, a
                             Final Order shall have been entered by the
                             Bankruptcy Court approving the terms and conditions
                             of such agreement or agreements on or prior to the
                             Funding Date. Such agreements shall incorporate by
                             reference the representations and warranties set
                             forth in this Agreement to the extent such
                             representations and warranties are applicable to
                             the parties to such agreements and the Properties
                             to be transferred and assigned to the Buyer
                             pursuant to such agreements and contain an
                             acknowledgement by the Parent and such other
                             Affiliates that the Parent and such Affiliates have
                             conducted the Purchased Businesses and operated the
                             Purchased Assets owned by them in accordance with
                             the covenants set forth in this Agreement. For the
                             avoidance of doubt such agreements shall be deemed
                             "Transaction Documents".

                         (B) Subject to Section 2.4(b)(ii), 2.4(e), 2.4(f)
                             and Section 5.8, the Buyer shall deliver to the
                             Company or its designee, by wire transfer of
                             immediately available funds to an account or
                             accounts designated not less than three Business
                             Days before the Funding Date by the Sellers the
                             amount equal to the Purchase Price.

                   (iii) The Buyer shall assume the Assumed Liabilities as set
              forth in Section 2.2(a) hereof and shall deliver to the Sellers
              such appropriately executed assumption agreements and all other
              instruments which are necessary or desirable to effect the
              assumption by the Buyer of the Assumed Liabilities.

                                       39


                   (iv) Each Seller and the Buyer shall deliver all other
              Transaction Documents required to be delivered by or on behalf of
              such Person, as applicable, which Transaction Documents shall be
              in form and substance reasonably satisfactory to the Buyer and the
              Sellers.

                   (v)   (A) The Company shall deliver, or cause to be
                             delivered, at the Funding, to the Buyer or to such
                             Person or Persons as the Buyer may designate
                             (including, without limitation, any custodian
                             appointed by the Buyer to hold such items) all
                             documentation and other items pertaining to the
                             Assigned Receivables and, to the extent in the
                             possession of the Sellers, Securitized Receivables,
                             including, without limitation, original notes (with
                             appropriate endorsements), applications, account
                             agreements, installment contracts, original
                             guarantees, original mortgages and originals of all
                             other security agreements and all assignments,
                             assumptions, modifications, consolidations and
                             extensions thereof, UCC financing statements or
                             such other evidence of perfection of a security
                             interest in the applicable collateral in the
                             relevant jurisdictions, powers of attorney,
                             original certificates of title, all evidence of
                             title insurance policies, hazard or flood insurance
                             policies, loan applications, closing statements,
                             credit reports, appraisals, surveys, disclosure
                             statements, sales contracts, tax and insurance
                             receipts, verification statements delivered by the
                             borrowers, and all other documentation related to
                             the loan files associated with the applicable
                             Assigned Receivables and Securitized Receivables,
                             in each case duly executed by all parties thereto
                             and notarized as applicable. If, after the Funding
                             Date, a CFC Party (or any other Person acting on
                             its behalf) comes into possession of any additional
                             documentation, books and records relating to the
                             Assigned Receivables and Securitized Receivables,
                             such additional documentation shall be deemed to
                             have been received and held in trust for the
                             benefit of the Buyer and promptly shall be
                             delivered to the Buyer or such other Person or
                             Persons as the Buyer may direct. Effective as of
                             the Cut-Off Time, the Company shall (i) have caused
                             to be terminated any existing custodial or other
                             similar arrangement under which any of the
                             documentation relating to the Assigned Receivables
                             is held and shall obtain

                                       40


                             and deliver to the Buyer appropriate releases in
                             connection therewith and (ii) execute and deliver,
                             and shall cause other CFC Parties to execute and
                             deliver, to the Buyer (or its designees) on the
                             Funding Date powers of attorney in form and
                             substance reasonably satisfactory to the Buyer
                             giving the Buyer or such designees full power and
                             authority to execute any further agreements,
                             assignments, endorsements or other documentation as
                             may be deemed necessary by the Buyer to allow the
                             Buyer (and its designees) to exercise full rights
                             of ownership with respect to the Assigned
                             Receivables. The Company shall fully cooperate with
                             the Buyer from and after the Funding to take all
                             other actions necessary or appropriate to effect
                             the transfer of, and vest in the Buyer, all right,
                             title and interest in and to the Assigned
                             Receivables.

                         (B) The Company shall execute and deliver, and
                             shall cause other CFC Parties to execute and
                             deliver, on the Funding Date powers of attorney in
                             form and substance reasonably satisfactory to the
                             Buyer giving the Buyer or its designees full power
                             and authority to execute any further agreements,
                             assignments, endorsements or other documentation as
                             may be deemed necessary by the Buyer to allow the
                             Buyer (and its designees) to exercise full rights
                             of ownership with respect to the Purchased Assets
                             (other than the Assigned Receivables). The Company
                             shall fully cooperate with the Buyer from and after
                             the Funding to take all other actions necessary or
                             appropriate to effect the transfer of, and vest in
                             the Buyer or its designees, all right, title and
                             interest in and to the Purchased Assets (other than
                             the Assigned Receivables).

                         (C) The Sellers shall use commercially reasonable
                             efforts to deliver to the Buyer at the Funding
                             amendments to the Active Merchant Agreements duly
                             executed by all parties thereto to ensure that
                             after the Cut-Off Time no Bankruptcy Event or
                             Change of Control Event of any Seller or any of its
                             Affiliates may constitute an event of default under
                             such Active Merchant Agreements.

                   (vi) The Sellers shall deliver all the Records or copies
              thereof in the Sellers' possession to the Buyer which Records
              relate primarily to the

                                       41


              Purchased Businesses, the Purchased Assets or the Assumed
              Liabilities (including, without limitation, true, correct and
              complete copies of all closing documents relating to the Private
              Label Credit Card Master Trust, including but not limited to the
              Conseco Private Label Credit Card Master Note 2001-A transaction).

         2.4  Purchase Price.

              (a) Purchase Price. The aggregate price for the Purchased Assets
(the "Purchase Price") shall be equal to the sum of (i) the Net Assets Value and
(ii) the Bid Adjustment Amount.

              (b) (i) If the Net NAV is less than the Base Amount, then in
addition to the amounts payable pursuant to Section 2.4(a) hereof, the Buyer
shall pay to the Company an amount equal to the sum of (a) 0% of the first $20
million of the Shortfall Amount, (b) 100% of the next $10 million of the
Shortfall Amount (if and to the extent of such Shortfall Amount), (c) 50% of
next $20 million of the Shortfall Amount (if and to the extent of such Shortfall
Amount), and (d) subject to Section 8.1(j) hereof, 100% of the remaining amount
of the Shortfall Amount (if and to the extent of such Shortfall Amount).

                   (ii) If the Net NAV is greater than the Base Amount, then the
              amounts payable by the Buyer pursuant to Section 2.4(a) hereof
              shall be reduced by the sum of (a) 0% of up to the first $5
              million of the Overvalue Amount and (b) 50% of the remaining
              Overvalue Amount.

              (c) Settlement Interest. At the Funding, the Buyer shall pay to
the Company by wire transfer in immediately available funds the Settlement
Interest.

              (d) All amounts payable pursuant to Sections 2.4(b)(i) and 2.4(c)
hereof shall be payable at Funding by wire transfer in immediately available
funds to an account or accounts designated in writing by the recipient thereof
to the other party three Business Days prior to the Funding Date.

              (e) Notwithstanding anything in this Agreement to the contrary, in
the event that the Buyer and the Company have not been able to resolve any and
all disputes with respect to the draft Schedule of Assets Acquired and
Liabilities Assumed that was prepared as of the Cut-Off Time and neither the
Buyer, on the one hand, nor the Sellers, on the other hand, have exercised their
rights, if any, to terminate this Agreement pursuant to Section 8.1(j), then the
Buyer will make the payments or reduce the payments required to be made by it,
as the case may be, by subsection (b) on the basis of the amount of the Net NAV
not in dispute. Once all such disputes have been resolved (either by the Auditor
in accordance with Section 5.39 or by the mutual agreement of the Buyer and the
Company), then:

                   (i) the Buyer shall make the payments required to be made by
              it by Section 2.3(b)(ii)(B) hereof after giving effect to any
              payments previously made by it pursuant to such section, so that
              the aggregate
                                       42


              amounts paid by the Buyer pursuant to such section equal those
              amounts that would have been payable by the Buyer had the final
              amount of the Net Assets Value been known on the Funding Date;

                   (ii) if there is a Shortfall Amount at such time that is less
              than the Shortfall Amount used for the calculation of the amounts
              due on the Funding Date (or an Overvalue Amount at such time), the
              Buyer will make the payments required to be made by it by
              subsection (b)(i) hereof (or in case of an Overvalue Amount, by
              subsection (b)(ii)), after giving effect to any payments
              previously made by it pursuant to such subsection so that the
              aggregate amounts paid by the Buyer pursuant to such subsection
              (b)(i) (or (b)(ii)) equals the amounts that would have been
              payable by it had the final amount of the Shortfall Amount (or
              Overvalue Amount, as the case may be) been known on the Funding
              Date; and

                   (iii) if there is a final Overvalue Amount that is greater
              than the Overvalue Amount used for the calculation of the amounts
              due on the Funding Date, the Buyer shall pay to the Company an
              amount (if any) that after giving effect to any payments made
              pursuant to this Section 2.4 (including, without limitation
              payment of the Purchase Price) previously made by the Buyer, the
              Company shall have received the amounts that it would have
              received had the final amount of the Overvalue Amount been known
              on the Funding Date (i.e., 100% of up to the first $5 million of
              the Overvalue Amount and 50% of the remaining Overvalue Amount).

              (f) The parties hereto agree that the Base Amount shall be reduced
by the amount of Allowed Operating Expenses paid by Mill Creek Bank Inc. during
the Pre-Cut-Off Period.

         2.5  Post-Effective Time Amounts Received and Paid; Assignment of New
              Loans; Securitized Receivables.

              (a) All amounts which are received by the Company or any of its
Affiliates in respect of the Purchased Assets which are properly allocable to
periods after the Cut-Off Time, shall be received by such Person as agent, in
trust for and on behalf of the Buyer, and at the Funding and following the
Funding, on a weekly basis, the Sellers shall transfer, or cause to be
transferred, by wire transfer of immediately available funds, and remit (or
cause to be remitted) to the Buyer all such amounts received by or paid to the
Company or any of its Affiliates as of such date and shall provide the Buyer
information as to the nature and source of such payments, including any invoice
related thereto. All amounts included in the Excluded Assets (or which are paid
in respect of the Excluded Assets) and received by the Buyer following the
Funding Date shall be received by the Buyer as agent, in trust for and on behalf
of the applicable Seller, and the Buyer shall pay or cause to be paid all such
amounts over to such Seller and shall provide such Seller information as to the
nature and source of such payments, including any invoice relating thereto.

                                       43


              (b) Subject to Section 2.8 hereof, at the Funding, the Sellers
shall transfer and assign to the Buyer good and marketable title to all
Properties acquired, originated or entered into by the Sellers in accordance
with this Agreement during the period from the Cut-Off Time through the Funding
Date that would have been Purchased Assets if acquired, originated or entered
into prior to the Cut-Off Time.

              (c) At the Funding, the Sellers shall deliver to the Buyer by wire
transfer of immediately available funds the amount equal to all cash and cash
equivalents that constituted the Purchased Assets as of the Cut-Off Time.

              (d) If the Trust is terminated after the Cut-Off Time, upon such
termination the Sellers shall deliver to the Buyer good and marketable title to
Receivables that were Securitized Receivables as of the Cut-Off Time (other than
the Excluded Receivables) free and clear of all Liens other than Permitted
Liens.

         2.6  Sale of Assets. Upon the sale of the Purchased Assets, the Sellers
shall have no legal or equitable title or interest whatsoever in the Purchased
Assets or any collections thereunder, and the Sellers shall have no right to
redeem any Purchased Assets.

         2.7  Assumption of Certain Leases and Contracts. The Sale Order shall
provide for the assumption by the Sellers and assignment to the Buyer, upon the
Funding but effective as of the Cut-Off Time, of the Assumed Agreements set
forth on a pleading submitted to the Bankruptcy Court on the following terms and
conditions:

              (a) As of the Cut-Off Time, the Sellers (as applicable) shall
assign to the Buyer the Assumed Agreements. The Assumed Agreements shall be
identified by the date of the Assumed Agreements (if available), the other party
to the Contract and the address of such party, all included on an exhibit
attached to either the motion filed in connection with the Sale Order or a
motion for authority to assume and assign such Assumed Agreements. Such exhibit
shall set forth the amounts necessary to cure defaults under each of such
Assumed Agreements as determined by the Sellers based on the Sellers' Records.

              (b) If there exists at the Cut-Off Time any default related to an
Assumed Agreement, the Sellers shall be responsible for any amounts needed to be
cured pursuant to Section 365(a) of the Bankruptcy Code as a condition to the
assumption and assignment of such Assumed Agreement. Upon the Funding but
effective as of the Cut-Off Time, the Sellers shall pay all cure amounts for the
Assumed Agreements.

              (c) Except as set forth in Section 2.7(b) and subject to Section
2.2(a)(ii) hereof, the Buyer shall be responsible for all costs and expenses
(other than the costs and expenses that are the Excluded Liabilities), incurred
after the Cut-Off Time, that are determined by the Buyer to be necessary in
connection with providing adequate assurance of future performance with respect
to the Assumed Agreements.

                                       44


         2.8  Consents to Certain Assignments.

              Without limiting the effect of ARTICLE 6, the Buyer and the
Sellers agree that there shall be excluded from the Purchased Assets any Assumed
Agreements that are not assignable or transferable pursuant to the Bankruptcy
Code or otherwise without the consent of any Person other than the Sellers or
any Affiliate of the Sellers, to the extent that such consent shall not have
been given prior to the Funding; provided, however, that the Sellers shall have
the continuing obligation (both before and after the Funding) to use all
commercially reasonable efforts (including, without limitation, prosecution of
appropriate motions pursuant to Section 365 of the Bankruptcy Code) to endeavor
to obtain all necessary consents to the assignment thereof and, upon obtaining
the requisite Third Party consents thereto, such Purchased Asset shall be
assigned to the Buyer at no cost free and clear of all Liens other than the
Permitted Liens; provided, further, that the Sellers shall not be required to
incur any unreasonable costs or make any material payment to any Third Party
(other than cure costs) to obtain any consent. With respect to any Assumed
Agreement which is not transferred at the Funding as contemplated by the
immediately preceding sentence, effective as of the Cut-Off Time, the Sellers
shall enter into arrangements reasonably requested by the Buyer designed to
provide the Buyer the full and exclusive benefits of such asset; provided,
however, that subject to Section 2.2(a)(ii) hereof, the Buyer assumes the duty
to perform the obligations relating to such Assumed Agreements accruing after
the Cut-Off Time. If and to the extent such arrangements cannot be made, the
Buyer shall have no obligation with respect to such Assumed Agreement. For the
avoidance of doubt, this Section 2.8 shall not be applicable to the PL Servicing
Rights.

         2.9 Real Estate Taxes. Notwithstanding anything to the contrary herein,
the Sellers shall be responsible for payment of all real property Taxes for all
years prior to the year in which the Cut-Off Time occurs. The obligations of the
Parties under this Section 2.9 shall survive the Funding.

                                   ARTICLE 3
                  REPRESENTATIONS AND WARRANTIES OF THE SELLERS

         Except as set forth in the Business Schedules, which schedules will be
arranged in sections corresponding to the sections contained in this ARTICLE 3,
as a material inducement to the Buyer to enter into this Agreement, the Sellers
hereby represent and warrant to the Buyer the following:

         3.1  Organization and Power.

              (a) The Company is a Delaware corporation duly organized, validly
existing and in good standing under the Laws of Delaware. Mill Creek Bank Inc.
is an industrial loan corporation duly organized, validly existing and in good
standing under the Laws of Utah and the FDIC. Each of the Selling Subsidiaries
is listed in Section 3.1(a) of the Business Schedules and is duly organized,
validly existing and in good standing under the Laws of its state of
incorporation or organization (as

                                       45


applicable). Each of the Sellers is qualified to do business and is in good
standing as a foreign corporation or entity (as applicable) in each jurisdiction
listed in Section 3.1(a) of the Business Schedules, which jurisdictions are the
only jurisdictions where the nature of the activities conducted by it or the
character of the property owned, leased or operated by it makes such
qualification necessary, except for any failure to be so qualified or in good
standing that has not had and could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect. The Sellers have
the requisite corporate or other entity power and authority to own and operate
the Purchased Assets and to carry on the Purchased Businesses as currently
conducted. The Company has delivered or otherwise made available to the Buyer
complete and correct copies of the Organizational Documents of the Sellers and
represents that such documents are in full force and effect and have not been
amended, restated supplemented or otherwise modified in any respect. None of the
Sellers is in default under or in violation of any provision of its
Organizational Documents.

              (b) A complete and correct chart showing the Company and its
direct and indirect Subsidiaries is set forth in Section 3.1(b) of the
applicable Business Schedules.

         3.2 Authorization of Transactions. Each Seller has all the requisite
corporate (or other similar organizational authority) power and authority to
execute and deliver, and to perform its obligations under this Agreement and the
other Transaction Documents to which such Seller is a party. The execution,
delivery and performance of this Agreement and the other Transaction Documents,
and the consummation of the transactions contemplated hereby and thereby to be
consummated by the Sellers, have been duly and validly authorized by all
necessary corporate or other entity action (as applicable) on the part of each
Seller. This Agreement has been, and each of the other Transaction Documents
after execution and delivery thereof at the Funding will have been, duly and
validly executed and delivered by each Seller, and, subject to any necessary
authorization from the Bankruptcy Court, this Agreement constitutes, and each of
the other Transaction Documents will constitute, such Seller's legal, valid and
binding obligation, enforceable against such Seller in accordance with its
terms.

         3.3 Absence of Conflicts; Required Consents, Approvals and Filings. The
execution and delivery of this Agreement and the other Transaction Documents,
the compliance by the Sellers with the terms and provisions hereof and thereof
and the consummation of the transactions contemplated hereby and thereby by the
Sellers do not and will not (a) except as described in clause (d) below,
constitute a material breach or violation of or default under any Law,
governmental permit or license of the CFC Parties or to which any of the
foregoing is subject, in each case relating to the Purchased Businesses,
including but not limited to state usury laws, state laws requiring licenses to
engage in consumer lending, consumer finance, mortgage lending and the other
businesses of the Sellers, the U.S.A. Patriot Act, the Truth in Lending Act,
Laws prohibiting deceptive, misleading and unfair acts and practices, the
Gramm-Leach-Bliley Act, the Real Estate Settlement Procedures Act, the Home
Mortgage Disclosure Act, the Consumer Credit Protection Act, the Right to
Financial Privacy Act, the Equal Credit Opportunity Act, the Fair Credit
Reporting Act, the Homeowners Ownership and Equity

                                       46


Protection Act, the Federal Trade Commission Act, the Fair Debt Collection
Practices Act and other Laws regulating lending (including any Laws of any
Governmental Authority) and all rules and regulations promulgated pursuant to
any of the foregoing (the "Finance Laws") which breach, violation or default
would prevent or materially delay the Sellers from being able to perform their
obligations under this Agreement and the other Transaction Documents to which
they are a party, (b) constitute a breach or violation of or default under the
Organizational Documents of the Sellers, (c) except as set forth in Section 3.3
of the Business Schedules, conflict with or result in a breach of any terms,
conditions or provisions of any agreement, Contract or commitment to which any
Seller is a party or to which any Seller or any of its Properties is subject
(including, without limitation, any Purchased Asset), which conflict or breach
would prevent or delay in any material respect the Sellers from being able to
perform their obligations under this Agreement and the other Transaction
Documents to which they are party, (d) require the affirmative consent, approval
of or filing with, any Governmental Authority, except for (i) the expiration or
earlier termination of the waiting period under the HSR Act, (ii) filings in
respect of, and approvals and authorizations of, any Governmental Authority
having jurisdiction over the consumer lending, banking, insurance or other
financial services businesses set forth in Section 3.3 of the Business
Schedules, (iii) filings by the Buyer listed in Section 4.4, (iv) the approval
required by a state banking regulatory authority under applicable state Law and
listed in Section 3.3 of the Business Schedules (the "State Banking Authority")
and (v) the approval of the Federal Deposit Insurance Corporation (the "FDIC")
or any other applicable bank regulatory authority under the Bank Merger Act and
the expiration of the required waiting period thereafter, or (e) with respect to
any Assumed Agreement, require the affirmative consent or approval of any Third
Party, except for consents and approvals set forth in Section 3.3 of the
Business Schedules and consents and approvals which failure to obtain,
individually or in the aggregate, would not adversely affect the conduct and
operation of any Purchased Business or any of the Purchased Assets in any
material respect.

         3.4 Company Subsidiaries. All of the outstanding shares of capital
stock of, or other ownership interests in, each Selling Subsidiary, are owned by
the Company, directly or indirectly. All of the issued and outstanding shares
and interests (as applicable) of the Selling Subsidiaries and their Subsidiaries
have been duly authorized, are validly issued, fully paid and assessable, were
issued free of pre-emptive or similar rights and are held of record and
beneficially by the Persons indicated on Section 3.1(b) of the Business
Schedules. Other than this Agreement, the CFN Agreement and the Backup
Agreements, there are no outstanding or authorized options, warrants, purchase
rights, subscription rights, conversion rights, exchange rights or other
contracts or commitments that could require the Company, any of the Selling
Subsidiaries, or their respective Subsidiaries to issue, sell or otherwise cause
to become outstanding any of its capital stock or rights in respect thereof.
There are no outstanding or authorized stock appreciation, phantom stock, profit
participation or similar rights with respect to the Selling Subsidiaries and
their Subsidiaries.

         3.5 Good Title. Other than the Assumed Leases and the Transferred
Intellectual Property, as to each Purchased Asset (including, without
limitation, the Private Label Credit Card Master Trust Certificates) a Seller
has good and valid title to,

                                       47


and, subject to obtaining the consents and approvals and making the filings set
forth in Section 3.3 of the Business Schedules and Section 3.3 of this
Agreement, the power and authority to sell, transfer and assign to the Buyer the
Purchased Assets, free and clear of all Liens (other than Permitted Liens and
Liens which will be discharged by the Bankruptcy Court prior to the Cut-Off
Time).

         3.6  Compliance with Laws; Permits.

              (a) Each Seller has conducted and is conducting the Purchased
Businesses and has owned and operated the Purchased Assets in all material
respects in compliance with all applicable Laws, including, without limitation,
the Finance Laws. Except as set forth in Section 3.6(a) of the Business
Schedules, there are no material proceedings pending or, to the Knowledge of the
Sellers, threatened alleging any material violation of any such applicable Laws.
Except as set forth in Section 3.6(a) of the Business Schedules and except for
any violations previously rectified, no CFC Party has received since January 1,
2000, any written notice of violation of any Law from any Governmental Authority
relating to any of the Purchased Assets, the Purchased Business or the ownership
or operation thereof the consequence of which violation (including, without
limitation, any cure to be undertaken in connection therewith or penalty
incurred as a result thereof) would adversely affect the operation and conduct
of any of the Purchased Businesses or any of the Purchased Assets in any
material respect. Except as set forth in Section 3.6 of the Business Schedules,
no Seller is subject to any judgment, writ, decree, injunction or order of any
federal, state or local court (domestic or foreign) or Governmental Authority
relating to the acquisition, collection, administration or enforcement of any
Loan or Assigned Receivable or the foreclosure, acquisition or disposition of
any Purchased Assets subject thereto or, in each case, any transactions or
activities indicated thereto.

              (b) The CFC Parties have in effect all material authorizations,
permits, licenses, certificates of authority, consents, orders and approvals of,
and have made all material filings, applications and registrations with,
Governmental Authorities that are necessary in order for the CFC Parties to own
and operate the Purchased Assets and to conduct the Purchased Businesses in all
material respects as presently conducted, and such authorizations, permits,
licenses, certificates of authority, consents, orders and approvals (each of
which is set forth on Section 3.6(b) of the Business Schedules opposite the name
of the CFC Party which is the holder thereof) are in full force and effect and
the CFC Parties are in compliance therewith in all material respects. Except as
set forth in Section 3.6(b) of the Business Schedules, there are no material
proceedings pending or, to the Knowledge of the Sellers, threatened seeking to
terminate or suspend or to adversely modify any such authorization, permit,
license, certificate of authority, consent, order or approval.

         3.7 Assets Necessary and Sufficient to Conduct Businesses. Except as
set forth in Section 3.7 of the Business Schedules, subject to satisfaction of
the conditions in ARTICLES 6 and 7, the Purchased Assets, together with the
Buyer's rights under this Agreement and after taking into account the access to
assets and services that are required to be provided to the Buyer pursuant to
the Servicing Agreements with the applicable

                                       48


CFC Parties, (a) constitute all of the assets, Properties, Contracts and rights
used in the Purchased Businesses and which are necessary and (b) are sufficient
to, carry on the Purchased Businesses from and after the Cut-Off Time without
interruption in the same manner as the Purchased Businesses have been conducted
by the Sellers prior to the Cut-Off Time and consistent with the Sellers' past
practices. No part of the Purchased Businesses is conducted by or through any
Person other than the Sellers.

         3.8  Facilities; Real Property.

              (a) [Intentionally Omitted].

              (b) Leased Premises. Section 3.8(b) of the applicable Business
Schedules indicates with respect to each Assumed Lease (i) the current rent
(including any additional rent) under such Assumed Lease, (ii) the expiration
date of such Assumed Leases, (iii) the security deposits being held by any
Person (and the identity of such Person) pursuant thereto, (iv) any guarantees
provided or held pursuant to any Assumed Lease. Subject to the entry of the Sale
Order, the Sellers hold good, valid and marketable leasehold title to the
Assumed Leases, free and clear of all Liens, other than Permitted Liens. All of
the Assumed Leases are in full force and effect and have not been modified,
altered or amended in any material respect, except as set forth in Section
3.8(b) of the Business Schedules. Except in connection with matters that will be
cured pursuant to the Sale Order, neither the Sellers nor any of their
Affiliates have received written notice of any material default or event that
with notice or lapse of time, or both, would constitute a default, under any
Assumed Lease by the Sellers, or any of their Affiliates a party thereto and, to
the Sellers' Knowledge, there has not occurred any default or event that with
notice or lapse of time, or both, would constitute a default thereunder by any
other party thereto. True, complete and accurate copies of the Assumed Leases
(including amendments or modifications thereto and any non-disturbance
agreements in connection therewith) have been delivered to the Buyer. Except as
set forth in Section 3.8(b) of the Business Schedules, neither the Sellers, nor
any of their Affiliates have assigned their interest under any Assumed Lease, or
subleased all or any part of the space demised thereby, to any Third Party.

         3.9 Personal Property. Attachments A, B and C to Section 3.9(a) of the
Business Schedules contains a complete and accurate list of all furniture,
fixtures and equipment which the Sellers can identify based on their Records and
limited review, as of December 31, 2002, located on the Business Leased Premises
that are used or is necessary to be used in connection with the applicable
Purchased Businesses.

         3.10 Receivables.

              (a) Each of the Pre-Signing Data Tapes sets forth all Receivables
in existence as of the date the applicable Pre-Signing Data Tape was created
that have been made or purchased in the ordinary course of business and
consistent with past practices of the Sellers.

                                       49


              (b) Each Assigned Receivable and Securitized Receivable was made
or purchased by a Seller or its Affiliates (or by a predecessor of such Seller
or such Affiliate): (i) in the ordinary course of business at the time such
Assigned Receivable or Securitized Receivable was made or purchased, (ii) in all
material respects in accordance with then existing applicable Laws; and (iii) in
all material respects in accordance with such Seller's or such Affiliate's
applicable underwriting and documentation guidelines then in effect at the time
of origination or purchase.

              (c) Each Assigned Receivable and Securitized Receivable (i) has
been originated or purchased and serviced and administered in all material
respects in accordance with the CFC Parties' standard Loan origination,
servicing and operating procedures as in effect from time to time and (ii) has
otherwise complied with standards of evaluating, originating, underwriting and
funding new business which are in all material respects consistent with the past
practices of the CFC Parties; (iii) have been serviced and administered in
accordance with all applicable Laws; and (iv) have been serviced and
administered in accordance with the respective Loan documents governing such
Assigned Receivable or Securitized Receivable.

              (d) Each Assigned Receivable and Securitized Receivable is
evidenced by an Assumed Receivables Contract and constitutes a legal, valid and
binding obligation of the respective Obligor(s), enforceable by the applicable
Seller against such Obligor(s) in accordance with its written terms, subject to
bankruptcy, insolvency, moratorium, reorganization or similar laws in effect
which affect the enforcement of creditors' rights generally, or rules of law
governing equitable relief and other equitable remedies, or public policy. Each
Assumed Receivables Contract is, or as of the Cut-Off Time will be, in full
force and effect, free and clear of all Liens other than Permitted Liens.

              (e) Each secured Assigned Receivable and Securitized Receivable is
secured by a valid, enforceable and perfected Lien on the secured property
described in the applicable security agreement, mortgage, deed to secure debt or
deed of trust, pledge, collateral assignment or other security agreement. No
such Assigned Receivable or Securitization Receivable which is so secured has
been waived or modified in any manner which would interfere in any material
respect with the security interest.

              (f) There is no material breach or default existing under any
Assumed Receivables Contract and the Sellers have not waived any material breach
or default thereunder. The Sellers have performed their obligations in all
material respects under all Assumed Receivables Contracts.

         3.11 Material Agreements.

              (a) Section 3.11 of the Business Schedules contains a complete and
accurate list of the Material Agreements with respect to the Purchased
Businesses, except for Loan files. For purposes hereof, "Material Agreement"
shall mean (a) any Contract which requires payments by, on behalf of, or to the
CFC Parties of $500,000

                                       50


or more in the aggregate and (b) any Assumed Agreement, in each case including
all amendments and modifications thereto; provided, however, that Contracts
(other than the agreements listed on Attachment A to Section 2.1(a) of the
Business Schedules) that are terminable on 60 days' notice or less without
penalty shall not be deemed Material Agreements for the purposes of Section 3.11
of the Business Schedules. All Material Agreements are valid, in full force and
effect and have not been modified or amended in any material respect. Except as
set forth in Section 3.11 of the Business Schedules, to the Sellers' Knowledge,
there are no material disputes, oral agreements or forbearance programs in
effect as to any of the Material Agreements. None of the Sellers or any of their
Affiliates that is a party to any Material Agreement has received written notice
from any Third Party of any material default or breach by the Sellers or their
Affiliates of any of the Material Agreements to which it is a party or given any
written notice to any Third Party indicating that it or such other party, as the
case may be, is presently in breach or violation of any Material Agreement. None
of the Sellers is in material breach of or in material default under any
Material Agreement except for any breach arising out of the filing of Chapter 11
Cases by any Seller. To the Knowledge of the Sellers, there has not occurred any
material default or material breach thereunder by any other party thereto. Each
such Material Agreement constitutes the legal, valid and binding obligations of
the Sellers or any of their Affiliates that is a party thereto and, to the
Knowledge of the Sellers, the respective Third Party thereto, and is enforceable
against such Third Party in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, moratorium,
reorganization or similar Laws in effect which affect the enforcement of
creditors' rights generally, or rules of law governing specific performance,
equitable relief and other equitable remedies, or public policy. All Material
Agreements, except for the Loan files, Assumed Receivables Contracts and dealer
agreements relating to the PL Business, the HI Origination Business and the CL
Origination Business, have been made available to the Buyer.

              (b) [Intentionally Omitted].

              (c) Section 2.1(a)(A)(iii) of the Business Schedules sets forth
all program agreements with merchants to which the Sellers are party and that
are in effect.

         3.12 Intellectual Property.

              (a) Attachments A through F to Section 3.12 of the Business
Schedules set forth a complete and correct list of all (i) patents, and patent
applications, registrations and applications pertaining to the Transferred
Trademarks and registered Other Transferred Intellectual Property; and the
patent, registration, or application number, the issuance, registration or
filing date, the jurisdiction and record owner as to each; (ii) material
unregistered Transferred Trademarks; (iii) material software, applications and
tools; (iv) Transferred Intellectual Property Agreements; (v) Acxiom Models and
Credit Lifecyle and Clustering Models; and (vi) Internet domain names, all of
which items (i) - (vi) above are included in the Transferred Intellectual
Property. All registered Transferred Trademarks and patented or registered Other
Transferred

                                       51


Intellectual Property are unexpired, and all renewal fees and other maintenance
fees that have fallen due on or prior to the effective date of this Agreement
have been paid. Except as set forth in Section 3.12(a) of the Business
Schedules, no registered Transferred Trademarks or patented or registered Other
Transferred Intellectual Property (i) is the subject of any proceedings before
any governmental, registration or other authority in any jurisdiction, including
any office action or other form of preliminary or final refusal of patent or
registration, and (ii) the Sellers have not previously assigned, transferred,
conveyed or otherwise encumbered ownership thereof and none of the Sellers has
granted to any Third Party a license to use such registered Transferred
Trademarks or Other Transferred Intellectual Property in any manner. The
consummation of the transactions contemplated hereby will not alter or impair
any Transferred Intellectual Property in any material respect except to the
extent any Transferred Intellectual Property Agreements require a Third Party's
consent prior to transfer.

              (b) Except as set forth in Section 3.12(b) of the Business
Schedules, the Sellers (i) own all right, title and interest in and to, or (ii)
have a valid and enforceable right to use (A) all of the Transferred
Intellectual Property, which right includes a valid and enforceable right to use
the subject matter of the Transferred Intellectual Property Agreements, and (B)
all of the Intellectual Property which is the subject of the rights and licenses
granted by the Sellers or their Affiliates to the Buyer pursuant to Section 5.31
hereof and pursuant to the Servicing Agreements. Subject to Section 2.8 hereof
and except as set forth in Section 3.7 of the Business Schedules, all of the
Transferred Intellectual Property and the other Intellectual Property rights in
item (ii) above in this Section 3.12(b), will be available to the Buyer
following the Cut-Off Time in the same manner and to the same extent as they
presently are available to the Sellers. The Sellers are in compliance with all
material contractual obligations relating to the protection of the Transferred
Intellectual Property Agreements. To the Knowledge of the Sellers, there are no
conflicts with, or infringements of, the Transferred Trademarks and Other
Transferred Intellectual Property by any Third Party. To the Knowledge of the
Sellers, the Transferred Trademarks and Other Transferred Intellectual Property
and the making, using, copying, selling or distributing thereof, either alone or
in combinations, do not conflict with or infringe any Intellectual Property
rights of any Third Party. There is no claim, suit, action or proceeding pending
or, to the Knowledge of the Sellers, threatened against any Seller: (i) alleging
any such conflict with or infringement of any Third Party's Intellectual
Property; or (ii) challenging such Seller's ownership or use of, or the validity
or enforceability of, the Transferred Trademarks and Other Transferred
Intellectual Property. Except as set forth in Section 3.12(b) of the Business
Schedules, no written claims of infringement or misappropriation of Intellectual
Property have been received from Third Parties with respect to the applicable
Purchased Businesses.

              (c) Except as set forth in Section 3.12(c) of the Business
Schedules, none of the Sellers is under any obligation to pay royalties or other
payments in connection with any agreement or, subject to Section 2.8 hereof, is
restricted from assigning its rights respecting any Transferred Intellectual
Property, nor will any Seller otherwise be, as a result of the execution and
delivery of this Agreement or the

                                       52


performance of a Seller's obligations under this Agreement, in breach of any
agreement relating to the Transferred Intellectual Property.

              (d) To the Knowledge of the Sellers, except as set forth in
Section 3.12(d) of the applicable Business Schedules, no present or former
employee, officer or director of any of the Sellers, or agent or outside
contractor of any of the Sellers, holds any right, title or interest, directly
or indirectly, in whole or in part, in or to any Transferred Intellectual
Property.

              (e) (i) To the Knowledge of the Sellers, none of the Sellers'
trade secrets have been used, disclosed or appropriated to the detriment of any
of the Sellers for the benefit of any Person other than the Sellers; and (ii) to
the Knowledge of the Sellers, no employee, independent contractor or agent of
any of the Sellers has misappropriated any trade secrets or other confidential
information of any other Person in the course of the performance of his or her
duties as an employee, independent contractor or agent of such Seller.

              (f) With respect to the material computer software comprising
Transferred Intellectual Property developed by or on behalf of the Sellers, to
the Knowledge of the Sellers, (i) Sellers maintain readable master reproducible
copies, and source code listings for the most current releases or versions
thereof; (ii) in each case, the machine-readable copy conforms to the
corresponding source code listing; and (iii) it operates without material
operating defects.

         3.13 Brokerage. Other than Credit Suisse First Boston, the fees and
disbursements of which will be a prepetition claim against the CFC Parties, and
Lazard Freres & Co. LLC, the fees and disbursements of which are to be paid by
the Parent, no Person has any claim for brokerage commissions, finders' fees or
similar compensation in connection with the transactions contemplated by this
Agreement based on any arrangement or agreement made by or on behalf of the
Sellers or any of their respective Affiliates.

         3.14 Employees. Section 3.14 of the applicable Business Schedules sets
forth the names, employee identification numbers, positions (including
department name, corporate area and business title), years of service, place of
employment and the amount of paid time off of all employees of the Sellers and
any of their Affiliates for each applicable Purchased Business who are as of the
date hereof working primarily in the applicable Purchased Business (the
"Employees"). A separate corresponding list which includes each Employee's
current compensation and severance entitlement was provided to the Buyer. None
of the Sellers or any of their ERISA Affiliates is, or has within the last six
years been, a party to a collective bargaining agreement covering any of the
Employees and, to the Knowledge of the Sellers, no union organizing activities
have occurred with respect to any Employees.

         3.15 Affiliate Transactions. Section 3.15 of the Business Schedules
describes all intercompany or affiliated transactions or Contracts under which
credits or services are provided to or on behalf of the applicable Purchased
Business by the Sellers

                                       53


(including any "subsidiary" of Mill Creek Bank Inc., as that term is defined in
section 23A of the Federal Reserve Act) and to or on behalf of the Sellers
(including any such "subsidiary") by the applicable Purchased Business and all
intercompany transactions or Contracts among the Sellers with respect to the
applicable Purchased Business (including, in each case, a description of the
costs and expenses charged to the applicable Purchased Business in connection
therewith). Mill Creek Bank Inc. (and any such "subsidiary") is not, and has not
been since January 1, 2000, in violation of section 23A or section 23B of the
Federal Reserve Act, whether or not any such violation is known by any
Governmental Authority.

         3.16 ERISA; Employee Benefit.

              (a) The Sellers have furnished or made available to the Buyer
complete and correct copies of all employee benefit plans, as defined in Section
3(3) of ERISA, and all other retirement, deferred compensation, incentive
compensation, insurance, bonus, medical, stock option, severance, retention,
vision, dental, vacation policy and other material employee benefit plans in
which the Employees participate (the "Employee Benefit Plans"), the current
summary plan description for each Employee Benefit Plan subject to ERISA and any
similar description of any other Employee Benefit Plan. None of the Employee
Benefit Plans are multiemployer plans (as defined in Section 3(37) of ERISA).
Each Employee Benefit Plan which is a defined contribution pension plan intended
to be qualified under Section 401(a) of the Tax Code is so qualified. None of
the Employee Benefit Plans are established under, or subject to, the Laws of any
country other than the United States.

         3.17 Depository Institutions.

              (a) Mill Creek Bank Inc. is "well-capitalized" (as that term is
defined at 12 C.F.R. 225.2(r)(2)(i) and 325.103(b)(1)) and "well managed" (as
that term is defined at 12 C.F.R.225.8 1(c)) and its examination rating under
the Community Reinvestment Act of 1977 is satisfactory or outstanding. Mill
Creek Bank Inc. is not in a "troubled condition" (as that term is defined at 12
CFR 303.101(c)).

              (b) Except as set forth in Section 3.17 of the Business Schedules,
Mill Creek Bank Inc. is not, and has not been since January 1, 2000, subject to
any supervisory or remedial agreement of any kind, including but not limited to
any memorandum of understanding, agreement, cease-and-desist order, consent
order or enforcement order with or from any Governmental Authority.

              (c) Mill Creek Bank Inc. is in compliance in all material respects
with all applicable Laws. There are no material investigations or proceedings
pending or, to the Knowledge of the Sellers, threatened, alleging or
contemplating any material violation of any applicable Law.

         3.18 Litigation. Except as set forth in Section 3.18 of the Business
Schedules, there are no civil, criminal or administrative actions, suits,
claims, hearings, arbitrations, investigations or proceedings pending (including
but not limited to any counterclaims) or,

                                       54


to the Knowledge of any Seller, threatened, against any Seller relating to or
affecting any of the Purchased Assets, the Purchased Businesses or any of the
Assumed Liabilities that, if determined adversely to the interest of any Seller
would be reasonably likely to give rise to a Liability or cost to any Seller in
excess of $50,000 in any one instance or material injunctive relief or otherwise
adversely affect the operations or the conduct of any of the Purchased
Businesses or any of the Purchased Assets in any material respect. No Seller has
been the subject of any proceeding nor to any Seller's Knowledge have there been
any investigations by or before any Governmental Authority, in either case
relating to any of the Purchased Assets or Assumed Liabilities or the business
practices of the Purchased Businesses since January 1, 2000.

         3.19 Financial Statements. Section 3.19(i) of the Business Schedules
sets forth true and complete copies of the unaudited Restricted and Unrestricted
Balance Sheet of the Company and its Subsidiaries as of September 30, 2002 and
as of December 31, 2002 and the related unaudited statements of income for the
fiscal years ended September 30, 2002 and December 31, 2002 (collectively, the
"Financial Statements"). The Financial Statements have been prepared from the
Records of the Company and its Subsidiaries and fairly present, in all material
respects, the financial position of the Company and its Subsidiaries as of the
dates thereof and the results of all operations of the businesses of the Company
and its Subsidiaries for the periods therein described, in each case in
accordance with GAAP, consistently applied and consistent with the accounting
principles set forth in Part I of Section 1.1A of the Business Schedules, except
as otherwise provided in the Financial Statements; provided, however, that the
Financial Statements reflect intercompany allocations of overhead and other
non-specific expenses between the businesses of the Company and its Subsidiaries
which the Sellers believe are reasonable and which have been disclosed to the
Buyer in reasonable detail. Except as set forth in Section 3.19(ii) of the
Business Schedules, each of the November 30 Balance Sheet, December 31 Balance
Sheet and January 31 Balance Sheet sets forth the unaudited Restricted and
Unrestricted Balance Sheet of the Company and its Subsidiaries as of November
30, 2002, December 31, 2002 and January 31, 2003, respectively, and was prepared
from the Records of the Company and fairly presents, in all material respects,
the financial position of the Company as of the date thereof in each case in
accordance with GAAP consistently applied and consistent with the accounting
principles set forth in Part I of Section 1.1A of the Business Schedules. The
Records from which the Financial Statements and the November 30 Balance Sheet,
December 31 Balance Sheet and January 31 Balance Sheet were prepared were
complete and accurate in all material respects at the time of such preparation.

         3.20 Indebtedness; Guarantees; Absence of Undisclosed Liabilities.

              (a) Except as set forth in the Financial Statements, no CFC Party
has any outstanding indebtedness. Except as set forth in Section 3.20(a) of the
Business Schedules, no CFC Party is a party to any Loan agreement whereby such
CFC Party has borrowed money, structured in the form of a loan or purchase and
sale, has any outstanding Guarantees in favor of any other Person or is
otherwise liable for any indebtedness of any other Person. Except as set forth
in Section 3.20(a) of the Business Schedules, no CFC Party has any Liabilities,
individually or in the aggregate,

                                       55


of the type required to be reflected on a balance sheet or in the notes thereto
prepared in accordance with GAAP which were not fully reflected or reserved
against in the Financial Statements (other than current Liabilities incurred in
the ordinary course of business) consistent with past practices of the Sellers,
except for those that would not reasonably be expected to have a Material
Adverse Effect.

              (b) In the event that a Stock Sale is consummated, as of the
Cut-Off Time, no Subject Subsidiary or any of its Subsidiaries will have any
Liabilities other than the Assumed Liabilities.

         3.21 PL Residual Assets. The PL Residuals Schedule identifies, among
other things, all of the assets relating to the Private Label Credit Card Master
Note Trust that are owned by the Company or any other CFC Party and the
information contained therein is accurate in all material respects as of the
date hereof. The Sellers own all assets identified on the PL Residuals Schedule.

         3.22 Tax Matters.

              (a) Each of the CFC Parties has filed all Tax Returns that it was
required to file, and each has paid all Taxes, whether or not required to be
paid in connection with the filing of a Tax Return. Such Tax Returns are true,
correct and complete. The reserves for Taxes in the Financial Statements are
adequate. Except as set forth in Section 3.22(a) of the applicable Business
Schedules, none of the CFC Parties has waived any statute of limitations in
respect of any Tax Returns or Taxes or agreed to any extension of time with
respect to a Tax assessment or deficiency.

              (b) Section 3.22(b) of the Business Schedules sets forth (i) all
Income Tax Returns filed with respect to the CFC Parties and the Purchased
Businesses for all open Tax years, (ii) those Tax Returns that have been
audited, (iii) those Tax Returns that currently are the subject of audit, and
(iv) any dispute or claim concerning Tax Liability relating to the Purchased
Businesses or the CFC Parties. The Company has made available to the Buyer
correct and complete copies of all federal and state Tax Returns, examination
reports, and statements of deficiencies assessed against or agreed to by the CFC
Parties with respect to the Purchased Businesses for all open Tax years.

              (c) Except as set forth in Section 3.22(c) of the Business
Schedules, (i) for all open Tax years all Taxes required to be withheld,
collected or deposited by each CFC Party have been timely withheld, collected
and deposited and, to the extent required by law, all such Taxes have been paid
when due to the appropriate taxing authority and each CFC Party is in compliance
with respect to all withholding and information and reporting requirements in
the Tax Code; (ii) there are no closing agreements pursuant to Section 7121 of
the Tax Code (or corresponding provision of state, local or foreign law) or
rulings or requests for rulings relating to any CFC Party; (iii) none of the
Purchased Assets is (A) property required to be treated as owned by another
person pursuant to Section 168(f)(8) of the Internal Revenue Code of 1954 (as
amended and in effect prior to the 1986 act), (B) "tax-exempt use property"
within the

                                       56


meaning of Code Section 168(h)(1), (C) "tax-exempt bond financed property"
within the meaning of Code Section 168(g), (D) subject to Code Section
168(g)(1)(A), or (E) "limited use property" as defined in Revenue Procedure
76-30; (iv) none of the CFC Parties has filed a consent under Section 341 (f) of
the Tax Code concerning collapsible corporations; (v) no transaction
contemplated by this Agreement is subject to withholding under Section 1445 of
the Tax Code (relating to "FIRPTA"); (vi) none of the CFC Parties will be
required to include any adjustment under Section 481(c) of the Tax Code (or any
corresponding provision of state, local or foreign law) in taxable income as a
result of a change in accounting method for a Tax period beginning on or before
the Funding Date; (vii) no claim has ever been made by a Taxing authority in a
jurisdiction where any CFC Party has never paid Taxes or filed Tax Returns
asserting that such CFC Party is or may be subject to Taxes assessed by such
jurisdiction; (viii) no power of attorney has been granted with respect to any
matter relating to Taxes of any CFC Party that is currently in effect; (ix) none
of the CFC Parties has made, changed or revoked, or permitted to be made,
changed or revoked, any election or method of accounting with respect to Taxes
affecting or relating to any CFC Party; (x) no Purchased Asset is an interest in
a partnership or other entity treated as a partnership for U.S. federal income
tax purposes; (xi) none of the Purchased Assets is a debt instrument the
interest on which is, or purports to be excludable, in whole or in part, from
gross income for federal income Tax purposes; (xii) none of the Purchased Assets
constitutes an interest in a "taxable mortgage pool" within the meaning of
Section 7701(i) of the Tax Code; and (xiii) none of the Purchased Assets is a
debt obligation that (A) was issued with "original issue discount" as defined in
Section 1273(a) of the Tax Code, (B) is a "registration-required obligation" as
defined in Section 163(f)(2) of the Tax Code, (C) is an "applicable high yield
discount obligation" as defined in Section 163(i)(1) of the Tax Code, or (D) is
a "disqualified debt instrument" as defined in Section 163(l)(2) of the Tax
Code.

              (d) Except as set forth in Section 3.22(d) of the Business
Schedules, none of the CFC Parties is a party to any contract, plan or
arrangement that, individually or collectively, could give rise to the payment
of any amount that would not be deductible by the Buyer or any of its
Subsidiaries by reason of Sections 280G or 162(m) of the Tax Code.

              (e) [Intentionally Omitted.]

              (f) [Intentionally Omitted.]

              (g) [Intentionally Omitted.]

              (h) [Intentionally Omitted.]

              (i) To the extent any Securitizations relating to the PL Business
are outstanding at the Cut-Off Time, the transactions contemplated by this
Agreement will not adversely affect the tax characterizations of any of the
Securitizations

                                       57


relating to the PL Business as originally represented in connection with such
Securitizations relating to the PL Business, whether or not such representations
were the subject of confirming legal opinions.

              (j) To the extent any Securitizations relating to the PL Business
are outstanding at the Cut-Off Time, no elections have been made to treat any
Securitizations relating to the PL Business, or parts thereof, as "financial
asset securitization investment trusts" within the meaning of Section 860L(a) of
the Tax Code.

              (k) Except as provided in Section 3.22(k) of the Business
Schedules, a CFC Party has collected all but an immaterial number of resale
certificates or other applicable documents as required for the application of
any exemption with respect to any sales or use Tax applicable to the transfer of
a repurchased or repossessed asset by a CFC Party, including all but an
immaterial number of resale certificates for sales of repossessed manufactured
housing.

              (l) With respect to the Securitizations relating to the PL
Business:

                   (i) the Trust is either a grantor trust, a partnership or a
              disregarded entity, and not an association taxable as a
              corporation, a publicly traded partnership or a taxable mortgage
              pool, for federal income tax purposes;

                   (ii) no employer identification number has ever been issued
              to the Trust by the Internal Revenue Service; and

                   (iii) to the extent that the Trust has issued instruments
              designed as notes, bonds, debentures or other evidences of
              indebtedness, such instruments will be characterized as
              indebtedness for federal income tax purposes.

         3.23 Insurance. Set forth in Section 3.23 of the Business Schedules is
a list of all Insurance Policies for such Purchased Business, including summary
coverage terms and expiration dates. All premiums due and payable with respect
to the Insurance Policies have been timely paid. No notice of cancellation of,
or indication of an intention not to renew, any material Insurance Policy has
been received by the Sellers. To the Knowledge of the Sellers, (i) all such
Insurance Policies are in full force and effect and (ii) the Sellers are not in
default under any provisions of the Insurance Policies.

         3.24 Environment; Health and Safety. The CFC Parties are in compliance
in all material respects with all Environmental Laws applicable to the Purchased
Businesses and the Purchased Assets and have not received written notice from
any Governmental Authority or other Person alleging non-compliance or that they
are otherwise liable for the clean-up or other environmental response costs
pursuant to any Environmental Law. The Sellers have provided the Buyer with
copies of all material environmental, health and safety reports relating to the
Purchased Business and Purchased Assets.

                                       58


         3.25 Accounting Controls. Each CFC Party has devised and maintained
systems of internal accounting controls which it believes are sufficient to
provide reasonable assurances that (a) all material transactions are executed in
accordance with its management's general or specific authorization; (b) all
material transactions are recorded as necessary to permit the preparation of
financial statements in conformity with GAAP or any other criteria applicable to
such statements; (c) access to its material property and assets is permitted
only in accordance with management's general or specific authorization; and (d)
the recorded accountability for items is compared with the actual levels thereof
at reasonable intervals and appropriate action is taken with respect to any
variances.

         3.26 Summary of Securitizations Relating to PL Business. The
information set forth in Section 3.26 of the applicable Business Schedules which
identifies, among other things, all Securitizations relating to the PL Business,
is true, complete and correct as of the date hereof.

         3.27 Representations as to Certain Purchased Assets. Exhibit A hereto
sets forth certain additional representations and warranties with respect to the
Loans and the PL Residual Assets, which Exhibit A is incorporated herein by
reference.

         3.28 Securities Offerings. The offering memoranda, offering circulars,
prospectuses and any other offering documents or registration statements for the
offering of securities, and any amendments or supplements thereto, distributed,
delivered or filed in connection with the Securitizations of the CFC Parties
relating to the PL Business, as of their dates, did not contain any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading.

         3.29 No Powers of Attorney. Except as set forth in Section 3.29 of the
applicable Business Schedules, no CFC Party has any powers of attorney or
comparable delegations of authority outstanding with respect to the Purchased
Assets.

         3.30 Securities Laws Matters; No Registration. No trust, arrangement,
issuer or other entity will be required to register as an investment company
under the Investment Company Act of 1940, as amended, and no issue of securities
or securities transaction will be required to be registered under the Securities
Act as a result of the sale of Purchased Assets pursuant to this Agreement. The
statutory or regulatory foundations for exemptions from registration under the
Investment Company Act of 1940, as amended, on which the Securitizations
relating to the PL Business rely include only Rule 3a-7, Section 3(c)(5)(C) and
Section 3(c)(5)(A) of the Investment Company Act of 1940, as amended.

         3.31 Securitizations Relating to PL Business.

              (a) The representations and warranties of the CFC Parties
contained in the Securitization Documents shall be true and correct as of the
date hereof and the Cut-Off Time.

                                       59


              (b) Each of the CFC Parties has complied with each of their
covenants and agreements set forth in the Securitization Documents. No event of
default, servicer termination event, early amortization event (other than those
specified in the PL Residuals Schedule), servicer default or similar event
(whether now cured or uncured) and no event (whether now cured or uncured) that
with the giving of notice or the passage of time or both would constitute any
such event, has occurred, and no CFC Party is aware of any allegation that any
such event has occurred. The ratings assigned to any class of securities issued
in any Securitization relating to the PL Business upon issuance thereof have not
been reduced, qualified or withdrawn, and no series thereof is on "watchlist" or
similar rating agency status or under review by any rating agency for possible
downgrade.

              (c) No Securitization Document is required to be qualified under
the Trust Indenture Act of 1939.

              (d) The Registration Statements, as of their respective effective
dates, were declared effective under the Securities Act and no stop order
suspending the effectiveness of such Registration Statements has been issued.
The Registration Statements, as of their respective effective dates, conformed
in all material respects to the requirements of the Securities Act and the
Securities Act Rules. On the dates of their use, each prospectus and preliminary
prospectus conformed in all material respects to the requirements of the
Securities Act and the Securities Act Rules. Neither the Registration
Statements, as of their respective effective dates, nor the prospectuses or
preliminary prospectuses, on the dates of their use, or any amendments or
supplements to the foregoing, contained or incorporated by reference any untrue
statement of any material fact or omitted to state any material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading. A CFC Party has timely
filed each servicer (or similar) report required by the Securitization Documents
on a form 8-K and has timely filed each form 10-K with respect to each Trust,
and each such filing complied with the applicable requirements of the Exchange
Act and the Exchange Act Rules and the information set forth in each such filing
was true and correct in all material respects. To the Sellers' Knowledge, the
appropriate officer of the Seller could provide the certification with respect
thereto required by Section 302 of the Sarbanes-Oxley Act of 2002 and Rules
13a-14 or 15d-14, as applicable, under the Exchange Act Rules if the same were
required to be provided on the date hereof.

              (e) There are no pending or, to the Knowledge of the Sellers,
threatened proceedings, lawsuits, or administrative actions or investigations
alleging violations of the Securities Act, the Exchange Act, the Securities Act
Rules or the Exchange Act Rules relating to any of the Registrations,
preliminary prospectuses or prospectuses.

              (f) No provision of any Securitization Document has been amended,
modified, waived or supplemented since the original date thereof.

                                       60


              (g) The Sellers have not, as part of the conduct and operation of
the PL Business, entered into or otherwise engaged in any outstanding
securitization other than the Conseco Private Label Credit Card Master Note
Trust 2001-A transaction. The Conseco Private Label Credit Card Master Note
Trust 2001-B transaction has been terminated and no liabilities (fixed or
contingent) remain outstanding thereunder.

         3.32 Conduct of Business.

              (a) Since December 17, 2002, each Seller has used all reasonable
efforts to preserve substantially intact the business organization of the
Sellers and to preserve the present relationships of the Sellers with each
Person having any business relationships with any Seller that is advantageous to
the Purchased Businesses, or the discontinuance of which could have a Material
Adverse Effect. Except as set forth on Section 3.32(a) of the Business
Schedules, since December 17, 2002, each Seller has conducted business with its
Affiliates only in the ordinary course and consistent with the practices of such
Seller and has not dealt with or entered into any Contracts, commitments or
arrangements with its Affiliates on terms and conditions less favorable to it
than would be available in a comparable transaction with a Person not an
Affiliate of such Seller.

              (b) Except as set forth on Section 3.32(b) of the Business
Schedules, (i) each Seller has conducted the Purchased Businesses only in the
ordinary course consistent with the past practices of such Seller and has not
deviated from or changed in any respect its credit policy or collateral
eligibility standards; and (ii) to the extent that any Seller has approved
credit applications with respect to (A) any financing constituting any Backlog,
which, as of the Cut-Off Time, have not become an Assumed Receivables Contract
or (B) any Assumed Receivables Contract entered into after December 17, 2002,
but prior to the Cut-Off Time, such Seller has complied with standards of
evaluating, originating, underwriting and funding new businesses which are in
all respects consistent with the past practices of the CFC Parties.

              (c) Since January 1, 2000, Mill Creek Bank has complied with all
of the applicable policies of the FFIEC including the charge-off policies.

         3.33 Absence of Certain Changes.

              (a) Except as set forth on Section 3.33(a) of the Business
Schedules, since December 17, 2002, no Seller has deviated from or changed in
any material respect their forms of notes, retail installment, revolving
accounts, account holder agreements, guarantees, financing statements and other
documents or instruments necessary for, or used in connection with, the conduct
of the Purchased Businesses except for deviations or changes made in the
ordinary course of business and consistent with the past practices of the
applicable Seller.

              (b) Except as set forth on Section 3.33(b) of the Business
Schedules, since December 17, 2002, no Seller has (i) made or agreed to make any
increase in the compensation payable or to become payable to any Employee,
except for regularly

                                       61


scheduled increases in compensation payable or increases otherwise occurring in
the ordinary course of business consistent with the past practices of such
Seller, or (ii) entered into, adopted, made any material amendments to or
terminated any collective bargaining agreement, any Employee Benefit Plan or any
other employee benefit agreement, trust, plan, fund or other arrangement for the
benefit or welfare of any director, officer or employee. Except as set forth on
Section 3.33(b) of the Business Schedules, (i) since December 17, 2002, Mill
Creek Bank has not failed promptly to pay and discharge current Liabilities of
Mill Creek Bank Inc. or any of its Subsidiaries, except in the case of such
Liabilities which are disputed in good faith and for which adequate reserves are
maintained by Mill Creek Bank (as applicable) in accordance with GAAP and (ii)
since December 17, 2002, no other Seller has failed promptly to pay and
discharge any Liabilities of such Seller arising after December 17, 2002, except
in the case of such Liabilities which are disputed in good faith and for which
adequate reserves are maintained by such Seller in accordance with GAAP.

         3.34 Maintenance of Books. Each Seller has maintained its books,
accounts and records with respect to the Purchased Assets in the usual, regular
and ordinary manner, in accordance with its past practices.

              For purposes of this Agreement, Mill Creek Bank Inc. is not making
and shall not make any representation or warranty with respect to any Purchased
Asset or a Purchased Business to the extent not owned by Mill Creek Bank Inc.

                                   ARTICLE 4
                   REPRESENTATIONS AND WARRANTIES OF THE BUYER

              As a material inducement to the Sellers to enter into this
Agreement, the Buyer hereby represents and warrants to the Sellers the
following:

         4.1 Organization and Corporate Power. The Buyer is a corporation duly
organized, validly existing and in good standing under the Laws of the State of
Delaware, with the requisite corporate power and authority to enter into this
Agreement and the other Transaction Documents to which the Buyer is a party and
perform its obligations hereunder and thereunder.

         4.2 Authorization of Transaction. The Buyer has all the requisite power
and authority to execute and deliver, and to perform its obligations under this
Agreement and the other Transaction Documents to which it is a party. The
execution, delivery and performance of this Agreement and the other Transaction
Documents to which the Buyer is a party have been duly and validly authorized by
all requisite action on the part of the Buyer, and no other corporate
proceedings on its part are necessary to authorize the execution, delivery or
performance of this Agreement. This Agreement constitutes, and each of the other
Transaction Documents to which the Buyer is a party will, when executed,
constitute, a valid and binding obligation of the Buyer, enforceable against the
Buyer in accordance with their respective terms, except as such enforceability
may be limited by applicable receivership, conservatorship and supervisory
powers of bank

                                       62


regulatory agencies generally as well as by bankruptcy, insolvency, moratorium,
reorganization or similar laws in effect which affect the enforcement of
creditors' rights generally, or rules of law governing specific performance,
equitable relief and other equitable remedies.

         4.3 No Violation. The execution and delivery of this Agreement and the
other Transaction Documents and the consummation of the transactions
contemplated hereby and thereby by the Buyer do not and will not (a) constitute
a material breach or violation of or default under any applicable Law, or
license, franchise or permit, in each case to which the Buyer is subject and
which breach, violation or default would prevent or materially delay the Sellers
from being able to perform their obligations under this Agreement and the other
Transaction Documents to which they are party, or (b) constitute a breach or
violation of or default under the Organizational Documents of the Buyer.

         4.4 Governmental Authorities and Consents. Except as required by (a)
the Finance Laws, (b) the Bank Merger Act and federal and state banking Laws,
the Buyer is not required to submit any notice, report or other filing with any
Governmental Authority, and no consent, approval or authorization of any
Governmental Authority or any other person is required to be obtained by the
Buyer, in connection with the execution or delivery by it of this Agreement and
the other Transaction Documents to which the Buyer is a party or the
consummation of the transactions contemplated hereby or thereby, except for the
filing and expiration or termination of the waiting period under the HSR Act.

         4.5 Litigation. As of the date hereof, there are no claims, actions,
suits, investigations, proceedings or orders pending or, to the Buyer's
Knowledge, threatened against or affecting the Buyer at law or in equity, or
before or by any Governmental Authority, which would reasonably be expected to
materially and adversely affect the Buyer's performance under this Agreement and
the other Transaction Documents to which the Buyer is a party or the
consummation of the transactions contemplated hereby or thereby.

         4.6 Brokerage. Except for Morgan Stanley Dean Witter, no Person has any
claim for brokerage commissions, finders' fees or similar compensation in
connection with the transactions contemplated by this Agreement based on any
arrangement or agreement made by or on behalf of the Buyer.

         4.7 Availability of Funds. On the Funding Date, the Buyer will have
sufficient funds to enable it to consummate the transactions contemplated by
this Agreement.

         4.8 Stock Purchase. The Shares of any Subject Subsidiary purchased by
the Buyer pursuant to this Agreement, if any, are being purchased for investment
only and not with a view to any public distribution thereof, and the Buyer will
not offer to sell or otherwise dispose of such Shares so purchased by it in
violation of any of the registration

                                       63


requirements of the Securities Act of 1933, as amended, or any applicable state
securities Laws.

         4.9 Approvals. To Buyer's Knowledge, there is no fact or circumstance
which is reasonably likely to result in Buyer's failing to obtain any consent,
approval or authorization of the type referred to in Section 4.4 of this
Agreement.

         4.10 Knowledge. As of the date hereof, the Buyer has no actual
knowledge of any change, circumstance, breach or event which constitutes or has
resulted in a Material Adverse Effect.

                                   ARTICLE 5
                              ADDITIONAL AGREEMENTS

         5.1 Tax Matters.

              (a) Transfer Taxes. All transfer, documentary, sales, use, stamp,
registration and other such Taxes and fees (including any penalties and interest
thereon) incurred in connection with this Agreement shall be paid by the Sellers
when due, and the Sellers shall, at their own expense, file all necessary Tax
Returns and other documentation with respect to all such transfer, documentary,
sales, use, stamp, registration and other Taxes and fees, and if required by
applicable law, the Buyer shall join in the execution of any such Tax Returns
and other documentation; provided, however, that except as provided in the
following sentence, the Sellers and the Buyer hereby waive any requirements
under any bulk sale rule arising from any transaction under this Agreement that
relates to the application of any sales or use Taxes. At the request of the
Buyer not more than 20 days after the execution and delivery of this Agreement,
the Sellers will comply with the bulk sales procedures applicable in respect of
sales and use tax in the jurisdiction specified by the Buyer.

              (b) Tax Sharing and Indemnification.

                   (i) The Sellers shall indemnify and hold harmless the Buyer
              and its Affiliates, each Subject Subsidiary, each Subsidiary of
              any Subject Subsidiary, the Trust and their respective directors,
              officers, employees, representatives, agents, successors and
              assigns with respect to any and all Losses that may be imposed on
              the Buyer, any Subject Subsidiary, any Subsidiary of any Subject
              Subsidiary, or in respect of the Purchased Assets resulting from
              (A) any Taxes of any CFC Party for any Pre-Funding Tax Period, (B)
              any Taxes of any Affiliated Group that includes Parent or any
              other CFC Party, including any Liability for Tax under Treasury
              Regulation Section 1.1502-6 or any comparable state, local or
              foreign Tax provision, except for any Taxes of any Subject
              Subsidiary (or a Subsidiary of a Subject Subsidiary after the
              Funding Date) for any Post-Funding Tax Period relating to an
              Affiliated Group of which the Subject Subsidiary (or such
              Subsidiary of a Subject Subsidiary) is a member after

                                       64


              the Funding Date, (C) any breach of any representation or warranty
              of the Sellers contained in Section 3.22 hereof or any schedule
              delivered pursuant thereto, (D) any Taxes arising from a Section
              338 Election with respect to any CFC Party, or (E) any Taxes
              arising out of the application of any bulk sale rule under
              federal, state, local or foreign law to any transaction
              contemplated by this Agreement including Taxes resulting from the
              failure to comply with any such bulk sale rule applicable in
              respect of any sales and use taxes.

                   (ii) For any federal, state, local or foreign Tax purposes,
              Taxes, if any, attributable to a Straddle Period of any Subject
              Subsidiary or any Subsidiary of a Subject Subsidiary shall be
              allocated to (A) the Sellers for the Pre-Funding Tax Period, and
              (B) the Buyer for the Post-Funding Tax Period. For purposes of the
              preceding sentence, Taxes for the Pre-Funding Tax Period and for
              the Post-Funding Tax Period of each Straddle Period shall be
              determined on the basis of an interim closing of the books as of
              the close of business on the Funding Date as if such Straddle
              Period consisted of one Taxable period ending at the close of
              business on the Funding Date followed by a Taxable period
              beginning on the day following the Funding Date. For purposes of
              this subparagraph (ii), exemptions, allowances or deductions that
              are calculated on an annual basis, such as the deduction for
              depreciation, shall be apportioned on a daily basis. Real,
              personal and intangible property Taxes of any Selling Subsidiary,
              any Subject Subsidiary or any Subsidiary of a Subject Subsidiary
              shall be equal to the amount of such property Taxes for the entire
              Straddle Period multiplied by a fraction, the numerator of which
              is the number of days during the Straddle Period that are in the
              Pre-Funding Tax Period and the denominator of which is the total
              number of days in the Straddle Period. For purposes of this
              Section 5.1 and the representation contained in Section 3.22
              hereof, any Tax that is based in whole or in part on income earned
              during a particular Taxable period shall be deemed to be a Tax
              attributable to and imposed in respect of such Taxable period;
              provided, that for purposes of this sentence, the term "Taxable
              period" shall include any portion of a Taxable period that ends on
              and includes the Funding Date.

                   (iii) Except as otherwise provided in Section 5.1, if a
              payment is required under Section 5.1, the Sellers shall discharge
              their obligation by paying the amount due not later than 10 days
              after notice to the Sellers stating that an amount is owed under
              Section 5.1 to the Buyer, the amount thereof, and that an
              indemnity payment is requested.

                   (iv) For the avoidance of doubt, any amount payable by the
              Sellers pursuant to Section 5.1(b) hereof shall be reduced by any
              estimated tax paid prior to the Funding with respect to the Tax
              for which the Buyer would otherwise have been liable under Section
              5.1(b)(i).

                                       65


              (c) Tax Returns.

                   (i) The Sellers shall prepare or cause to be prepared, and
              file or cause to be filed, all Tax Returns of each CFC Party,
              including consolidated, combined or unitary Tax Returns which
              include any CFC Party, for all Taxable periods of each CFC Party
              that end on or prior to the Funding Date. All such Tax Returns
              shall be prepared on a basis that is consistent with the manner in
              which the Sellers prepared or filed such Tax Returns for prior
              periods. No later than 30 days prior to the due date of such Tax
              Returns, the Sellers shall provide the Buyer with copies of (A) in
              the case of consolidated, combined or unitary Tax Returns that
              include a Subject Subsidiary and any Subsidiary of such Subject
              Subsidiary, pro forma materials for each Subject Subsidiary to be
              included in such consolidated, combined or unitary Tax Returns,
              (B) all other Tax Returns prepared by Sellers pursuant to Section
              5.1(c), and (C) such work papers and other documents as may be
              reasonably necessary to determine the accuracy and completeness of
              such materials or Tax Returns. If the Buyer notifies the Sellers
              in writing within 10 days after receiving such materials or a Tax
              Return of any comments of the Buyer, the Sellers shall incorporate
              any such reasonable comments provided by the Buyer. If Sellers
              dispute the reasonableness of any such comment by the Buyer, such
              dispute shall be resolved by a "Big Four" accounting firm as
              selected by the Buyer in its discretion (other than an accounting
              firm regularly and materially used by the Buyer or its Affiliates)
              and such Tax Returns (or any amendment to such return) shall be
              filed in a manner consistent with resolution of such dispute. The
              Sellers shall, upon the Buyer's request, make reasonably available
              to the Buyer at a mutually convenient time and location any
              personnel involved in the preparation of any materials or Tax
              Return subject to this Section 5.1(c)(i)(A) and (B) for the
              purpose of answering any questions the Buyer may have regarding
              any such materials or Tax Return or the manner in which the same
              was prepared. The Buyer shall be responsible for filing all Tax
              Returns required to be filed by or on behalf of each Subject
              Subsidiary and each Subsidiary of any Subject Subsidiary for
              Taxable periods ending after the Funding Date.

                   (ii) With respect to any Tax Return required to be filed by
              the Buyer pursuant to subparagraph (i) above for a Straddle Period
              of any Subject Subsidiary or any Subsidiary of a Subject
              Subsidiary, the Buyer shall provide the Company with true copies
              of each of such completed Tax Returns, such work papers and other
              documents as may be reasonably necessary to determine the accuracy
              and completeness of such Tax Returns, and a statement setting
              forth the amount of Tax shown on such Tax Return that is allocable
              to the Sellers pursuant to subparagraph (ii) of paragraph (b)
              above (the "Statement") at least 30 days prior to the due date for
              the filing of such Tax Return. If the Company notifies the Buyer
              in writing within 10 days after receiving the Statement that the
              Company questions the information contained therein, then a "Big
              Four" accounting

                                       66


              firm as selected by the Buyer in its discretion (other than an
              accounting firm regularly and materially used by the Buyer or its
              Affiliates) shall be instructed to review the Statement and
              determine its accuracy and reasonableness within 15 days. If such
              accounting firm determines that the Statement is accurate, or if
              the Company does not provide any such notification, then not later
              than five days before the due date for payment of Taxes with
              respect to such Tax Return, the Sellers shall pay to the Buyer an
              amount equal to the Taxes shown on the Statement as being
              allocable to the Sellers pursuant to subparagraph (ii) of
              paragraph (a) above. If the accounting firm appointed to review a
              Statement pursuant to the foregoing procedure in this Section
              5.l(c)(ii) determines that the Statement is inaccurate, the Buyer
              will amend the Statement and any related Tax Returns in a manner
              consistent with removing any such inaccuracy, and the Sellers
              shall pay the amount due to the Buyer within five days of the
              receipt of the amended Statement.

                   (iii) After the Funding Date, the Buyer and the Sellers shall
              provide each other with reasonable cooperation in connection with
              the preparation of Tax Returns of the CFC Parties and shall make
              available to the other and to any Taxing authority, as reasonably
              requested, all information, records or documents relating to Tax
              liabilities or potential Tax liabilities of the Selling
              Subsidiaries and their Subsidiaries for all periods prior to or
              including the Funding Date and shall preserve all such
              information, records and documents until the expiration of any
              statute of limitations or extensions thereof.

              (d) Tax Contests. The Buyer shall promptly notify the Company in
writing upon receipt by the Buyer, any Subject Subsidiary or any Subsidiary
thereof of written notice of any Tax Proceeding in respect of the Trust, any
Subject Subsidiary or any Affiliate of any Subject Subsidiary which, if
determined adversely to the taxpayer, may be grounds for indemnification under
this Section 5.1. Notwithstanding the foregoing, the failure of the Buyer to
give notice under the preceding sentence shall not affect the Buyer's right to
indemnification or relieve the Sellers of any other obligations hereunder unless
such failure shall preclude the defense of such claim and the Sellers have been
materially prejudiced by the Buyer's failure to give such notice, in which case
the Sellers shall be relieved from its obligations under Section 5.1 only to the
extent of such material prejudice. After notice to the Buyer, the Sellers will
have the right to elect to assume the defense of any such Tax Proceeding at the
Sellers' own expense. The Buyer and its representatives shall have the right to
observe any such Tax Proceeding with counsel of its choice and at its own
expense and to receive in advance copies of all submissions to be made to any
Tax authority or to any court. The Sellers, in exercising their control of any
such Tax Proceeding, shall consider in good faith all comments and suggestions
of the Buyer in respect of such Tax Proceeding, including but not limited to
comments on submissions and overall strategy. In the event that issues relating
to potential adjustment for which the Sellers may be held liable are required to
be dealt with in the same Tax Proceeding as separate issues relating to a
potential adjustment for which the Buyer, a Subject Subsidiary, a

                                       67


Subsidiary of a Subject Subsidiary or an Affiliate thereof may be liable, the
Buyer shall have the right, at its own expense, to control the Tax Proceeding
with respect to the latter issues. Under waiver of its right to indemnity
hereunder, the Buyer may take sole control of any Tax Proceeding, at its sole
cost and expense, and in such case the Sellers shall have no right to observe or
participate in such Tax Proceeding. The Sellers shall not enter into any
compromise or agreement to settle any claim in a Tax Proceeding involving
Liability for Taxes of a Subject Subsidiary, a Subsidiary of a Subject
Subsidiary, or for which the Sellers may otherwise be required to indemnify the
Buyer under this Agreement without the consent of the Buyer, such consent not to
be unreasonably withheld. Any refund received by the Buyer or any Affiliate
thereof of Taxes with respect to which the Sellers have made payment pursuant to
its obligation under Section 5.1(b) shall be for the account of the Sellers.

              (e) Tax Sharing Agreements. Any and all Tax sharing, Tax indemnity
or Tax allocation agreements between any Seller, a Subject Subsidiary and/or any
Affiliate thereof that were in effect at any time on or prior to the Funding
shall terminate not later than the Funding. No further amounts shall be payable
by any the Buyer, any Subject Subsidiary, any Subsidiary of a Subject Subsidiary
or any Affiliate thereof under such agreements following the Funding and the
Buyer, any Subject Subsidiary, any Subsidiary of a Subject Subsidiary, or any
Affiliate thereof shall have no further obligations thereunder following the
Funding. Notwithstanding the foregoing, with respect to the filing of
consolidated income Tax Returns to the extent permitted by law each Subject
Subsidiary shall elect to relinquish any carryback period which would include
any Pre-Funding Tax Period with respect to carrybacks of net operating losses,
net capital losses, unused tax credits and other deductible or creditable tax
attributes.

              (f) Claims Adjusted for Tax Benefits. The amount of any indemnity
payment owed by the Sellers to the Buyer under this Section 5.1 shall be
adjusted if such indemnity payment is made in connection with (i) the purchase
of the Purchased Businesses or (ii) the purchase of any Subject Subsidiary or
any Subsidiary of any Subject Subsidiary if a Section 338 Election is made with
respect to such purchase. The amount of any such indemnity payment shall be
reduced to take account of any net Tax benefit realized by the Buyer arising
from the item resulting in such indemnity payment, and increased by any net Tax
cost realized by the Buyer as a result of the receipt of such indemnity payment
being treated as income or as a reduction in purchase price. For purposes of
this Section 5.1(f), (x) any net Tax benefit shall be calculated by discounting
(based on semi-annual compounding) the Tax benefit from the date it is expected
to be realized to the date the indemnity payment is made using a discount rate
equal to the overpayment rate contained in Section 662 1(a)(1) of the Tax Code
and (y) any net Tax cost shall be calculated by increasing the indemnity payment
by an interest factor (based on semi-annual compounding) equal to the
overpayment rate contained in Section 6621(a)(1) of the Tax Code from the
Funding Date to the date the indemnity payment is made.

              (g) Allocation. Within 90 days after the Funding, the Company
shall provide to the Company copies of a schedule allocating the Purchase Price
(and

                                       68


any other items required to be treated as additional Purchase Price) among
the Purchased Assets (the "Allocation Statement"). Within 60 days after the
receipt of such Allocation Statement, the Buyer shall propose to the Buyer any
changes to such Allocation Statement or shall indicate its concurrence
therewith, which concurrence shall not be unreasonably withheld. The failure by
the Buyer to propose any change or to indicate its concurrence within such 60
days shall be deemed to be an indication of its concurrence with such Allocation
Statement. The Buyer and the Company shall file, and shall cause their
Affiliates to file, all Tax Returns and statements (including Form 8594), forms
and schedules in connection therewith in a manner consistent with such
allocation of the Purchase Price and shall take no position contrary thereto
unless required to do so by applicable Tax laws. Any disputes with respect to
the items on the Allocation Statement that the Buyer and the Company, acting in
good faith, are unable to resolve shall be resolved by a "Big Four" accounting
firm mutually acceptable by the Buyer and the Company. Each of the parties to
this Agreement shall be bound by such resolution. Without limiting the
generality of the foregoing, the Buyer's allocation of the adjusted grossed-up
basis (within the meaning of Treasury Regulation Section 1.338-5) and the
Sellers' allocation of the aggregate deemed sales price (within the meaning of
Treasury Regulation Section 1.338-4) shall be consistent with such allocation.

              (h) Cooperation on Tax Matters.

                   (i) The Buyer and the Sellers shall cooperate fully, as and
              to the extent reasonably requested by any Party, in connection
              with the filing of Tax Returns for the Purchased Businesses, and
              any Tax Proceeding in respect of the Purchased Businesses. Such
              cooperation shall include the retention and (upon any Party's
              request) the provision of records and information which are
              reasonably relevant to any such Tax Proceeding and making
              employees available on a mutually convenient basis to provide
              additional information and explanation of any material provided
              hereunder. The Buyer and the Sellers agree (A) to retain all books
              and records with respect to Tax matters and pertinent to the
              Purchased Businesses until the expiration of the statute of
              limitations (and, to the extent notified by the other Party, any
              extensions thereof) for the respective taxable periods, and to
              abide by all record retention agreements entered into with any
              taxing authority, and (B) to give the other Party reasonable
              written notice prior to transferring, destroying or discarding any
              such books and records and, if the other Party so requests, such
              Party shall allow the other Party to take possession of such books
              and records.

                   (ii) To facilitate the Buyer's decision on whether to acquire
              assets through an election to purchase the Shares of a Subject
              Subsidiary under Section 2.1(b), and whether to effect a Section
              338 Election in respect to one or more Subject Subsidiaries, the
              Sellers shall deliver to the Buyer as promptly as practicable
              following the execution and delivery of this Agreement any and all
              information reasonably requested by the Buyer in connection with
              determining the expected Tax consequences of the

                                       69


              transactions contemplated by this Agreement (such information to
              include, without limitation, information regarding the Tax
              attributes of the Sellers including information regarding the
              adjusted tax basis of each asset owned by any Selling Subsidiary).
              Such information shall be provided at the Sellers' expense and
              shall be the most current information reasonably available;
              provided, however, that all such information shall be current as
              of a date no earlier than September 30, 2002.

              (i) Tax Election. In any case in which the Buyer elects a Stock
Sale, the Sellers will, at the Buyer's request no later than six months after
the Funding Date join in treating the transaction as a purchase of assets for
Tax purposes through an election under Tax Code Section 338(h)(10) and any
analogous provision of state, local or foreign Law (a "Section 338 Election").
The Buyer shall provide to the Sellers (i) a draft Internal Revenue Service Form
8023 to Sellers no later than eight months after the Funding Date prepared in a
manner consistent with Section 5.1 (g) and (ii) any other forms necessary to
effect the Section 338 Election under state, local or foreign Law no later than
30 days prior to the due date thereof. Any dispute with respect to such forms
shall be resolved in the manner set forth in Section 5.l(c)(i) and such forms
shall be executed on behalf of the Sellers and delivered to the Buyer at least
15 days prior to the last day for filing such forms when due and in the manner
required under applicable Law. The Buyer may make such requests separately with
respect to a Section 338 Election with respect to any Subject Subsidiary and any
Subsidiary of any Subject Subsidiary. If the Buyer requests that one or more
Section 338 Elections be made with respect to any Subject Subsidiary and/or any
Subsidiary of any Subject Subsidiary, then Section 5.1(g) shall apply to
determine the allocation of the Purchase Price and other relevant items among
the assets of the Subject Subsidiaries and, if applicable, one or more of its
Subsidiaries. The Sellers shall deliver to the Buyer as promptly as practicable,
and in any event no later than May 1, 2003, any and all information in
connection with determining whether to make any Section 338 Election (such
information to include, without limitation, the adjusted tax basis of each asset
owned by any Selling Subsidiary and the Sellers' (and any Affiliate of the
Sellers') tax basis in the stock of each Selling Subsidiary). Any and all
information provided pursuant to this Section 5.1(i) shall be provided at the
Sellers' expense and shall be the most current information reasonably available;
provided, however, that (x) all such information provided shall be current as of
no earlier than September 30, 2002, (y) the Sellers shall deliver to the Buyer
as promptly as practicable, and in any event within 20 days of receipt of the
Buyer's request therefor, updates of the information provided pursuant to (x) of
this proviso that is current as of no earlier than December 31, 2002.

         5.2 Access to Information and Facilities. With respect to Mill Creek
Bank Inc., to the extent permitted by Law, and with respect to all other
Sellers, the Sellers agree that, during the Pre-Funding Period, the Buyer and
its representatives shall, upon reasonable notice to the Sellers and so long as
such access does not unreasonably interfere with the business operations of any
CFC Party, have full access to all premises of the CFC Parties, officers and
management employees, as necessary to prepare for the integration and its
monitor compliance by the CFC Parties with their obligations under this
Agreement including, without limitation, the finance, accounting, marketing,

                                       70


sales, underwriting, risk and operational covenants (and the Sellers shall use
their commercially reasonable efforts to cause the CFC Parties' independent
accountants to be available to the Buyer on the same basis), and shall be
entitled to make such reasonable investigation of the properties, businesses and
operations of the CFC Parties and such examination of the Records and financial
condition of the CFC Parties as it reasonably requests. Without any limitation
of the foregoing, during the Pre-Funding Period, (a) the Sellers shall allow the
Buyer reasonable access to the Business Employees in connection with payroll and
benefit enrollment with the Buyer and (b) the Buyer shall have full access to
any Property that is subject to an Assumed Lease for the purposes of conducting
a Phase I environmental review.

         5.3 Confidentiality.

              (a) The Buyer acknowledges that all Evaluation Materials (as such
term is defined in the Confidentiality Agreement) provided to the Buyer and any
of its Affiliates, employees, agents and representatives by the Sellers and
their respective Affiliates, employees, agents and representatives in connection
with the transactions contemplated by this Agreement and other Transaction
Documents to which Buyer is a party are subject to the terms of the
Confidentiality Agreement, the terms of which are hereby incorporated herein by
reference; provided, however, that notwithstanding such agreement, the Buyer may
disclose Evaluation Materials to (i) any nationally recognized securities or
statistical rating agency if and to the extent that the Buyer determines that
doing so is desirable or, (ii) any other Person if required by Law or legal or
administrative process. Upon Funding and effective as of the Cut-Off Time, the
Confidentiality Agreement shall terminate; provided, however, the Buyer shall
not disclose to a Third Party any Evaluation Materials (other than the
Evaluation Materials related to the Purchased Assets or Purchased Businesses)
except in connection with a potential acquisition or other transaction involving
all or a portion of the Property of the CFC Parties.

              (b) The Company agrees that, the Company shall, and shall use all
reasonable efforts to cause its Affiliates and its and their directors,
officers, employees and advisors to, keep the Buyer Information (as defined
below) confidential, except that any such Buyer Information required by Law or
legal or administrative process to be disclosed may be disclosed without
violating the provisions of this Section 5.3(b). For purposes of this Agreement,
the term "Buyer Information" shall mean all information concerning the Buyer and
its Affiliates (including information relating to the Purchased Businesses or
any client, customer or supplier of the Purchased Businesses).

              (c) Notwithstanding anything to the contrary set forth herein or
in any other agreement to which the parties hereto are parties or by which they
are bound, the obligations of confidentiality contained herein and therein, as
they relate to the transactions contemplated in this Agreement, shall not apply
to the tax structure or tax treatment of such transactions, and each party
hereto (and any employee, representative, or agent of any party hereto) may
disclose to any and all persons, without limitation of any kind, the tax
structure and tax treatment of such transactions.

                                       71


The preceding sentence is intended to cause such transactions not to be treated
as having been offered under conditions of confidentiality for purposes of
Section 1.6011-4(b)(3) (or any successor provision) of the Treasury Regulations
promulgated under Section 6011 of the Code, and shall be construed in a manner
consistent with such purpose. In addition, each party hereto acknowledges that
it has no proprietary or exclusive rights to the tax structure of such
transactions or any tax matter or tax idea related to such transactions.

         5.4 Conduct of the Businesses Prior to Funding.

              (a) Subject to the obligations of a debtor-in-possession and any
limitations on operations imposed by the Bankruptcy Court, except as otherwise
expressly contemplated by this Agreement or with the prior written consent of
the Buyer, during the Pre-Funding Period, the CFC Parties shall (i) conduct the
Purchased Businesses in the ordinary course of business consistent with the past
practices of the CFC Parties and shall perform all of their obligations with
respect to the Private Label Credit Card Master Trust Documents in accordance
with their terms; (ii) use commercially reasonable efforts to preserve intact
the Purchased Businesses and the value of the Purchased Assets, to keep
available the services of its current employees and agents and to maintain its
relations and good will with its customers, regulators and any others with whom
or with which it has business relations; (iii) not take any action in violation
of this Agreement; and (iv) file all Tax Returns when due (taking into account
all extensions) and pay all Taxes when due; and (v) conduct the Purchased
Business and operate the Purchased Assets in compliance in all material respects
with all applicable Laws (including, without limitation, Finance Laws). In the
event any of the Active Merchant Agreements are scheduled to expire or terminate
prior to the Funding Date, the Company shall, and shall cause the applicable
Seller to seek to renew and extend any such agreement on terms and conditions
approved by the Buyer. On or prior to the Funding Date, effective as of the
Cut-Off Time, the CFC Parties shall make all adjustments or modifications as may
be necessary to cause their books and records to conform to the valuation and
reserve methodologies set forth on Annex H hereto (which adjustments and
methodologies shall not be used in the calculation of the Net Assets Value).
Without limiting the foregoing, any Purchased Asset that is not a Specified
Purchased Asset shall be reflected on the books and records of the applicable
Seller with a zero value.

              (b) Except as otherwise expressly contemplated by this Agreement
or with the prior written consent of the Buyer, during the period from the
Cut-Off Time through the Funding Date, the CFC Parties shall continue to provide
the (i) Business Employees and (ii) Shared Service Employees to whom Buyer
offers employment in accordance with Section 5.12(a)(ii) hereof, with the same
level of base pay or wages and bonus or incentive compensation and the same
employee benefit plans, programs and arrangements (including statutory benefits)
in effect as of the date hereof.

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         5.5 Restrictions on Certain Actions.

              (a) Without limiting the generality of Section 5.4, and except as
otherwise set forth in Section 5.5 of the Business Schedules (solely with
respect to the period prior to the Cut-Off Time) or in Section 5.5(b) hereof or
as otherwise expressly provided in this Agreement, on or prior to the Funding
Date, the Company shall not, and shall not permit the Company or any of its
Subsidiaries or any Affiliates of the Company to the extent such Affiliates own
Purchased Assets, without the prior written consent of the Buyer, to:

                   (i) mortgage, pledge, assign, grant any participation or
              security interest in or otherwise further encumber any of the
              Purchased Assets;

                   (ii) (1) sell, transfer or liquidate any Property that would,
              but for such sale, be a Purchased Asset; provided, however, that
              the foregoing shall not prohibit (i) the sale of worn-out,
              unserviceable or obsolete equipment and fixtures, (ii) transfers
              resulting from any casualty or condemnation of Properties, in each
              case at a consideration no less than the Book Value of such
              Property as of January 31, 2003, and (iii) the sale of any
              Charged-off Accounts and repossessed collateral in the ordinary
              course of business and consistent with the past practices of the
              CFC Parties;

                        (2) change the composition of the Assigned Receivables
                   pool with respect to credit quality except in the ordinary
                   course of business and consistent with the past practices of
                   the CFC Parties;

                   (iii) amend its Organizational Documents, other than to
              convert any CFC Party (other than the Trust) into a limited
              liability company;

                   (iv) (A) issue, sell or deliver (whether through the issuance
              or granting of options, warrants, commitments, subscriptions,
              rights to purchase, or otherwise) any shares of its capital stock
              of any class or any other securities or equity equivalents; or (B)
              amend in any material respect any of the terms of any such
              securities outstanding as of the date hereof;

                   (v) (A) split, combine or reclassify any shares of its
              capital stock or any other securities or equity equivalents; (B)
              declare, set aside or pay any dividend or other distribution
              (whether in cash, stock or property or any combination thereof) in
              respect of its capital stock or any other securities or equity
              equivalents; (C) repurchase, redeem or otherwise acquire any of
              its securities; (D) adopt a plan of complete or partial
              liquidation or resolutions providing for or authorizing a
              liquidation, dissolution, merger, consolidation, restructuring,
              recapitalization, or other reorganization of any CFC Party; or (E)
              repay intercompany indebtedness owed to Affiliates, except in
              payment of services rendered;

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                   (vi) with respect to Mill Creek Bank Inc., (A) create, incur,
              guarantee or assume any indebtedness for borrowed money or
              otherwise become liable or responsible for the obligations of any
              other Person other than certificates of deposit issued by Mill
              Creek Bank Inc. to the extent such certificates of deposit is
              issued by Mill Creek Bank Inc. as reviewed weekly with the Buyer
              or (B) other than in the ordinary course of business, make any
              loans, advances or capital contributions to, or investments in,
              any other Person (other than to wholly owned Subsidiaries or to
              another CFC Party);

                   (vii) except as may be required by applicable Laws, (A) make
              or agree to make any increase in the compensation payable or to
              become payable to any Employee, except for regularly scheduled
              increases in compensation payable or increases otherwise occurring
              in the ordinary course of business consistent with past practices
              or (B) enter into, adopt, make any material amendments to or
              terminate any collective bargaining agreement, any Employee
              Benefit Plan or any other employee benefit agreement, trust, plan,
              fund or other arrangement for the benefit or welfare of any
              director, officer or employee.

                   (viii) acquire (by merger, consolidation or acquisition of
              stock or assets or otherwise) any Person, or other business
              organization or division thereof which would be included in the
              Purchased Businesses;

                   (ix) make any capital expenditure or expenditures in the
              Purchased Businesses in excess of the aggregate amount set forth
              in the capital expenditures budget agreed upon by the Company and
              the Buyer;

                   (x) enter into, assume, amend, modify, cancel, waive or
              change in any respect any Assumed Agreement, including, without
              limitation, directly or indirectly extend or otherwise restructure
              the payment schedule, payment terms or any other terms or
              conditions of any Assumed Receivables Contract, or make any
              advance, extension, novation, modification or other accommodation
              to any Obligor, except for extensions, restructuring, advances,
              novations, modifications or other accommodations made or entered
              into in the ordinary course of business as consistent with past
              practices of the Sellers;

                   (xi) enter into any Contract with an Affiliate other than
              Contracts entered into in the ordinary course of business
              consistent with past practices, involving no more than $100,000
              per Contract or series of related Contracts and that do not affect
              or impact the Purchased Assets or the Assumed Liabilities or
              interfere with or impede the consummation of the transactions
              contemplated hereby; or

                   (xii) with respect to the Purchased Businesses, (1) change in
              any material respect any of the accounting principles or practices
              used by it for

                                       74


              Tax or accounting purposes, except for any change required by
              reason of a concurrent change in GAAP or (2) write-down the value
              of any assets, revalue any asset or write-off as uncollectible any
              receivables except in the ordinary course of business consistent
              with the past practices of the CFC Parties other than in
              accordance with the Accounting Principles;

                   (xiii) make any changes in dealer concessions, servicing,
              billing or collection operations or policies (including, without
              limitation, any modifications with respect to the existing
              collector incentive program) of the Purchased Businesses or change
              the existing service level and operating hours except in the
              ordinary course of business consistent with the past practices of
              the CFC Parties;

                   (xiv) with respect to the Purchased Businesses, deviate in
              any material respect from existing policies and procedures with
              respect to (i) classification of assets; (ii) accrual of interest;
              (iii) dealer and consumer underwriting, pricing, originating
              selling and servicing; and (iv) obtaining or extending financing
              and credit;

                   (xv) breach or otherwise fail to perform any of their
              material duties under the Private Label Credit Card Master Trust
              Documents;

                   (xvi) permit any Assigned Receivable to become subject to a
              Securitization;

                   (xvii) reject any Contract or transfer, sell or otherwise
              dispose of any Property that is necessary to operate the Purchased
              Businesses in ordinary course and consistent with the past
              practices of the CFC Parties;

                   (xviii) modify any terms or conditions of any deposit held or
              accepted by Mill Creek Bank Inc. except as reviewed weekly with
              the Buyer;

                   (xix) use any cash owned by Mill Creek Bank, Inc. or proceeds
              from any sale, transfer or other disposition of any Purchased
              Assets to pay any of the Excluded Liabilities except for the
              following:

                        (A) payments of Taxes due as required to be made
                   pursuant to Section 5.4(a)(iv) hereof,

                        (B) subject to Sections 2.4(f) and 5.38 hereof, payments
                   prior to the Cut-Off Time of operating expenses incurred by
                   Mill Creek Bank Inc. in the ordinary course of its business
                   and consistent with its past practices ("Allowed Operating
                   Expenses"); and

                                       75


                        (C) subject to Sections 2.2(a)(iii) and 5.38 hereof,
                   payments of Allowed Operating Expenses after the Cut-Off Time
                   through the Funding Date; or

                   (xx) enter into an agreement, contract or commitment to
              undertake any of the foregoing (other than this Agreement or the
              other Transaction Documents).

              (b) Without limiting the generality of Section 5.4, and except as
otherwise set forth in Section 5.5(a) of the Business Schedules or as otherwise
expressly provided in this Agreement, from the Cut-Off Time and through the
Funding Date, the Company shall not, and shall not permit any CFC Party, without
the prior written consent of the Buyer, to:

                   (i) sell, transfer or liquidate any Property that is a
              Purchased Asset;

                   (ii) enter into, assume, amend, modify, cancel, waive or
              change in any respect any Assumed Agreement or make any advance,
              extension, novation, modification or other accommodation to any
              Obligor (other than with respect to any Assigned Receivable, any
              Assumed Receivables Contract or any dealer agreement in the
              ordinary course of business consistent with the past practices of
              the CFC Parties);

                   (iii) with respect to the Purchased Businesses, (1) change in
              any respect any of the accounting principles or practices used by
              it for Tax or accounting purposes, except for any change required
              by reason of a concurrent change in GAAP or (2) write-down the
              value of any assets, revalue any asset or write-off as
              uncollectible any receivables except in accordance with the
              Accounting Principles;

                   (iv) make any changes in dealer concessions, servicing,
              billing or collection operations or policies (including, without
              limitation, any modifications with respect to the existing
              collector incentive program) of the Purchased Businesses or change
              the existing service level and operating hours;

                   (v) with respect to the Purchased Business, deviate in any
              respect from existing policies and procedures with respect to (A)
              classification of assets; (B) accrual of interest; (C) dealer and
              consumer underwriting, pricing, originating, selling and
              servicing; and (D) obtaining or extending financing and credit;

                   (vi) reject any Contract or transfer, sell or otherwise
              dispose of any Property that is a Purchased Asset;

                   (vii) incur, assume or acquire any other obligation or
              liability (contingent or otherwise) with respect to the Purchased
              Assets except

                                       76


              normal trade or business obligations incurred in the ordinary and
              usual course of businesses consistent with the past practices of
              the Sellers;

                   (viii) cancel or compromise any debt or claim that is a
              Purchased Asset, or waive or release any right that is a Purchased
              Asset (in each case, other than with respect to any Assigned
              Receivable, in the ordinary course of business and consistent with
              the past practices of the CFC Parties);

                   (ix) initiate or settle any pending legal proceeding with
              respect to the Purchased Assets (other than any collection
              proceedings conducted in the ordinary course of business and
              consistent with the past practices of the CFC Parties); or

                   (x) enter into an agreement, contract or commitment to
              undertake any of the foregoing (other than this Agreement or the
              other Transaction Documents).

         5.6 Press Releases and Announcements. No press releases or public
disclosures related to this Agreement and the transactions contemplated herein,
or other announcements to the employees, customers or suppliers of any Party
shall be issued without the mutual prior written approval of the Parties, except
for any public disclosure which is required by applicable Law or regulation.
Prior to making any public disclosure required by applicable Law or regulation,
the disclosing Party shall give the other Party a copy of the proposed
disclosure and reasonable opportunity to comment on the same to the extent
practicable.

         5.7 Approvals of Third Parties; Satisfaction of Conditions to Closing.

              (a) Subject to the terms of this Agreement, the Parties shall use
their reasonable best efforts to cause the Funding to occur, and will cooperate
with one another, to secure all necessary consents, approvals, authorizations
and exemptions from Governmental Authorities and other third parties, including
all consents required by Sections 6.4 and 7.4, as promptly as possible. The
Sellers, with the Buyer's cooperation, shall use their reasonable best efforts
to obtain the satisfaction of the conditions specified in ARTICLE 6. The Buyer,
with the Sellers' cooperation, shall use its reasonable best efforts to obtain
the satisfaction of the conditions specified in ARTICLE 7. The Sellers shall
permit the Buyer to participate in negotiations with any merchant who is party
to any Active Merchant Agreement with respect to any consent to transfer of such
Active Merchant Agreement to the Buyer, any waivers and/or amendments to such
Active Merchant Agreements referred to in Section 6.4(d) hereof. The Buyer shall
have no duty to waive any rights or to assume any Liabilities other than the
Assumed Liabilities to be assumed pursuant to the terms of this Agreement in
order to obtain such consents, waivers or amendments.

              (b) The Parties shall cooperate in preparing, submitting, filing,
updating and publishing (as applicable), as expeditiously as possible, all
applications, notifications and other filings as may be required by or may be
advisable under

                                       77


applicable Laws with respect to the transactions contemplated by this Agreement,
including, without limitation, those of the FDIC, the State Banking Authority
and any other applicable state or federal regulatory agency and those under the
HSR Act, if required. The Parties shall bear the costs and expenses of their
respective filings; provided, however that each of the Buyer and the Company
shall pay one-half the filing fees in connection with the filing under the HSR
Act. The Parties shall use their respective reasonable best efforts to make such
filings as promptly as practicable (and in any event within 30 days) following
the date hereof. The Parties will use their commercially reasonable best efforts
to obtain such approvals and accomplish such actions as expeditiously as
possible.

              (c) The Parties shall respond to any requests for additional
information made by either of such agencies, as expeditiously as possible, and
to cause the waiting periods under applicable laws and regulations, including
the HSR Act and the Bank Merger Act, to terminate or expire at the earliest
possible date and to resist in good faith, at the respective cost and expense of
each, any assertion that the transactions contemplated hereby constitute a
violation of the antitrust or competition Laws, all to the end of expediting
consummation of the transactions contemplated hereby; provided, however, that in
no event shall the Buyer or any Seller be required to initiate or defend any
proceeding before any Governmental Authority with respect to such assertions.
Each of the Buyer, on the one hand, and the Sellers, on the other, shall consult
with the other prior to making any substantive presentation by telephone or in
person, in connection with the filings under the HSR (if any) and the Bank
Merger Act, required to be obtained by any party in connection with this
Agreement, to the staff of the applicable Governmental Authorities.
Notwithstanding any provision of clauses (b) and (c) of this Section 5.7,
neither Party shall be required to agree to commercially unreasonable and
materially burdensome conditions, other than any requirement that it be
well-capitalized, and in no event shall the Buyer or any of its Affiliates have
any obligation to dispose of, hold separate or otherwise restrict its respective
enjoyment of any of its Properties (including, without limitation, after the
Cut-Off Time, the Purchased Assets).

              (d) Each Party represents, warrants and agrees that any
information furnished by it for inclusion in any regulatory application will be
true and complete as of the date so furnished.

         5.8 Bankruptcy Actions.

              (a) (i) The Filing Company Subsidiaries, that as of the date of
this Agreement have not commenced the Chapter 11 Case, shall commence the
Chapter 11 Case on a date (the "Petition Date") either prior to or, as soon as
reasonably practicable after the execution of this Agreement (but not later than
March 21, 2003), and serve notice of the execution of this Agreement on
interested parties as required by the Bankruptcy Code and Rules. Notwithstanding
the foregoing, the Buyer and the Company shall cooperate in determining any
adverse impact of the filing of Mill Creek Servicing Corporation ("MCSC") and
Conseco Finance Credit Card Corp. ("CFCCC") on the consummation of the
transactions contemplated hereby. Notwithstanding the

                                       78


terms of Section 2.3(b)(ii)(B), in the event that MCSC or CFCCC does not become
a Filing Company Subsidiary on or prior to March 21, 2003, then that portion of
the Purchase Price allocable to the Purchased Assets and Assumed Liabilities of
the non-Filing Company Subsidiary (calculated on the basis of the Final Schedule
of Assets Acquired and Liabilities Assumed) shall be paid directly to such
non-Filing Company Subsidiary. The Sellers (other than the Banks) shall obtain
entry of the Sale Order by March 14, 2003. The Sellers who have commenced a
Chapter 11 Case shall file, in accordance with this Agreement and applicable
Law, all pleadings with the Bankruptcy Court as are necessary or appropriate to
secure entry of the Sale Order, shall serve all parties entitled to notice of
such pleadings under applicable provisions of the Bankruptcy Code and Bankruptcy
Rules, including, but not limited to, all parties to the Assumed Agreements
(other than to Assumed Agreements relating solely to Subsidiaries that are not
required to commence a Chapter 11 Case under this Agreement, and as to which
neither the Company nor any Filing Company Subsidiaries that have commenced a
Chapter 11 Case are parties) and all Governmental Authorities having or
asserting jurisdiction over the Sellers, or the Purchased Assets and shall
diligently pursue the obtaining of such orders.

                   (ii) The Sellers and their counsel shall consult with the
              Buyer and its counsel in advance of the Sale Hearing regarding the
              evidence to be presented in support of the Sale Order. The Sellers
              agree that the direct evidence to be presented to the Bankruptcy
              Court by the Sellers in support of the Sale Order, whether by
              written proffer, affidavit, or otherwise, shall be in form and
              substance reasonably satisfactory to the Buyer.

              (b) The Buyer covenants and agrees that it shall cooperate with
the Sellers in connection with furnishing information or documents to the
Sellers to satisfy the requirements of adequate assurance of future performance
under section 365(f)(2)(B) of the Bankruptcy Code.

              (c) In the event an appeal is taken, or a stay pending appeal is
requested from any of the Orders of the Bankruptcy Court in connection with the
sale of the Purchased Assets, the Sellers shall immediately notify the Buyer of
such appeal or stay request and, upon the Buyer's request, shall provide to the
Buyer within three Business Days after the Sellers' receipt thereof a copy of
the related notice of appeal or order of stay. The Sellers shall also provide
the Buyer with written notice of any motion or application filed in connection
with any appeal from any of such Orders.

              (d) The Parties hereby agree that, notwithstanding any provision
to the contrary contained in this Agreement neither Mill Creek Bank Inc., any of
its Subsidiaries, nor Green Tree Retail Services Bank Inc., or any of its
Subsidiaries is required to commence a case under chapter 11 of the Bankruptcy
Code.

              (e) (i) If requested by Buyer, the Seller shall seek a Final Order
from the Bankruptcy Court on or before the Funding Date permitting the Buyer to
use, in accordance with the terms and conditions of the existing lease, the
space and other facilities currently occupied by the CFC Parties in connection
with the PL Business at

                                       79


332 Minnesota Street, St. Paul, Minnesota, for such period after the Funding and
extending, pursuant to section 365(d)(4) of the Bankruptcy Code, the time within
which the CFC Debtors may assume or reject such lease through and including
December 31, 2003, which date may be further extended upon motion. If the Buyer
is permitted to use the aforementioned space and facilities, the Buyer shall pay
to the Seller all rent and other occupancy costs arising under such lease and
shall comply in all material respects with the terms, conditions and provisions
of such leases during the period of such occupancy, in each case for such period
after the Funding. The CFC Debtors shall not seek to reject the leases covering
such premises until in each case for such period after the Funding and ending on
the earliest to occur of (i) receipt by Seller of written notice from Buyer of
Buyer's decision to vacate such premises, (ii) a default by Buyer in its
obligations under this Section 5.8(e), or (iii) December 31, 2003.

                   (ii) If the amendment contemplated under Section
              6.15(a)(ii)(B) hereof is obtained within the time period
              contemplated thereunder, such lease for 7140 S. Roosevelt Rd.,
              Bldg. F/2, Tempe, AZ (as so amended) shall be deemed to be an
              Assumed Lease as of the Funding Date. If such an amendment is not
              so obtained, the terms, conditions and agreements in Section
              5.8(e)(i) above shall, at the election of Buyer, also apply in all
              respects to such Tempe, AZ lease.

         5.9 [Intentionally Omitted].

         5.10 [Intentionally Omitted].

         5.11 Exclusivity; No Solicitation of Transactions.

              (a) The Sellers represent that, other than the transactions
contemplated by this Agreement, they are not parties to or bound by any
agreement with respect to a possible merger, sale, restructuring, refinancing or
other disposition of all or any material part of the Purchased Businesses or the
Purchased Assets.

              (b) From the date of the issuance of the Sale Order and until the
Funding Date, neither the Sellers nor any of their Affiliates shall discuss,
negotiate or consummate any transaction involving the sale, exchange,
liquidation, reorganization, or other disposition of all or any part of the
Purchased Assets or any of the Purchased Businesses.

         5.12 Employees.

              (a) (i) Effective as of the Funding Date, the Buyer shall offer
employment to all Business Employees employed by the Sellers or their Affiliates
as of the Funding Date. The Buyer shall have no obligation to offer employment
to any Business Employees other than those identified in Section 5.12(a) of the
applicable Business Schedules.

                   (ii) Promptly following the execution of this Agreement, the
              Sellers shall provide the Buyer with such assistance as the Buyer
              may

                                       80


              request with respect to identifying those employees whose services
              are shared among both the Purchased Businesses and other
              businesses of the Company (the "Shared Service Employees"). At the
              same time, the Sellers shall also identify for the Buyer which
              Shared Service Employees are primarily engaged in performing
              services for, or are allocated to, the Purchased Businesses. The
              Buyer shall have until April 30, 2003 to determine and notify the
              Sellers which Shared Service Employees shall be offered
              employment. The Buyer, in its sole discretion, shall have the
              right to offer employment, effective as of the Funding Date, to
              any Shared Service Employee (A) primarily engaged in performing
              services for any Purchased Business (unless the Buyer agrees that
              the Bankruptcy Acquiror may offer employment to any such
              employee), (B) primarily engaged in performing services for the HE
              or MH Businesses, subject to the prior consent of the Bankruptcy
              Acquiror (unless the Bankruptcy Acquiror does not offer employment
              to such employee) and (C) listed under the "Unallocated" heading
              in Section 5.12(a) of the Business Schedules and who is designated
              for the Buyer on such schedule. Notwithstanding the above, the
              Shared Services Employees listed under the heading "Unallocated
              Risk Management Employees" on Section 5.12(a) of the Business
              Schedules (the "URM Employees") shall be offered employment by
              such joint venture as the Buyer and CFN shall establish (the "JV
              Arrangements") in accordance with such terms as mutually agreed
              upon by the parties to the JV Arrangements, including an
              allocation of costs within the joint venture based on the
              proportion of the work done for each respective joint venture
              party, and Buyer shall not offer employment to any URM Employee,
              except that if the Funding Date occurs prior to the closing of the
              transactions contemplated by the CFN Agreement, Buyer may offer
              employment to URM Employees. If Buyer has offered employment to
              URM Employees (pursuant to the above sentence), any such employees
              who accept Buyer's offer shall remain employees of Buyer until the
              closing of the transactions contemplated by the CFN Agreement, and
              thereafter shall be employed pursuant to the JV Arrangements,
              except that if the CFN Agreement is terminated, such URM Employees
              shall continue as employees of Buyer. During such time as any URM
              Employees are employed by Buyer prior to either the closing of the
              transactions contemplated by the CFN Agreement or, in the event of
              the termination of the CFN Agreement, until such time as the
              Sellers either liquidate or sell the Excluded Businesses (but in
              no event later than six months following the Funding Date), such
              employees shall continue to provide support services to the
              Excluded Businesses, and Sellers (or CFN if appropriate) shall
              reimburse Buyer for the proportionate cost of employing such URM
              Employees, based on the percentage of such employees' time
              dedicated to the Excluded Businesses, as mutually determined by
              Buyers and Sellers in good faith. Except with respect to URM
              Employees who are employed pursuant to the JV Arrangements as
              described herein, the Buyer shall have no Liability whatsoever for
              any

                                       81


              Shared Service Employees who are not offered employment by the
              Buyer or who do not accept the Buyer's offer of employment.

                   (iii) The Buyer shall (A) assume liability and responsibility
              for the Assumed Retention Agreement and (B) assume the severance
              and sick pay, vacation and paid time off liability for any
              Business Employee who is not offered employment in accordance with
              Section 5.12 as such severance, sick pay, vacation and paid time
              off is set forth on the list provided under Section 3.14 hereof.

                   (iv) Notwithstanding anything to the contrary in Section
              5.12(a), the Buyer shall not offer employment to any employee
              listed on the "IT Employees" portion of Section 5.12(a) of the
              Business Schedules that is listed under the "CFN" column (the
              "Bankruptcy Acquiror IT Employees"), and the Buyer shall offer
              employment to all employees listed on the "IT Employees" portion
              of Section 5.12(a) of the Business Schedules where such employees
              are listed under the "GE PL/HI/CI" column (the "Buyer IT
              Employees"). The Buyer will assume severance and paid time off,
              sick leave, and vacation pay obligations (as set forth on the list
              provided under Section 3.14) with respect to Buyer IT Employees
              and will assume no Liabilities for severance, paid time off, sick
              leave and vacation pay with respect to the Bankruptcy Acquiror IT
              Employees.

              (b) Business Employees, Shared Service Employees and employees of
the HE Business who accept offers of employment in accordance with Section
5.12(a) hereof and become employees of the Buyer are referred to herein as the
"Transferred Employees" as of the date such employee commences employment with
Buyer. Each such offer of employment shall be in accordance with Buyer's normal
terms and conditions (including "OFAC" list checks but not drug screening and
background checks) and at the same base salary or wage level and bonus
opportunity applicable to each such Transferred Employee immediately prior to
the Funding Date and the Buyer shall not reduce such base salary, wage level or
bonus opportunity during the 12-month period following the Funding Date. The
Buyer also agrees to provide the Transferred Employees and their covered
dependents with welfare and retirement benefits that are no less favorable, in
the aggregate, than those welfare and retirement benefits provided by Sellers to
such Transferred Employees immediately prior to the Funding Date. Except as
provided by Section 5.12(a)(ii), the Buyer shall assume no liability with
respect to, any employees other than the Business Employees and Transferred
Employees.

              (c) Within 45 days of the Funding Date, the Buyer shall pay the
Business Employees and Transferred Employees the commissions relating to
pre-Funding originations of Loans that constitute Purchased Assets for the month
in which the Funding occurs, as calculated under the commission program in
effect immediately prior to the Funding (regardless of whether such program is
in effect at any time

                                       82


following the Funding), and as reflected on the Final Schedule of Assets
Acquired and Liabilities Assumed.

              (d) Prior to the Funding Date, or as soon as reasonably
practicable thereafter, Sellers shall contribute, or cause to be contributed, to
the ConsecoSave Plan an amount equal to the salary deferral relating to such
deferrals from January 1, 2003 through the Funding Date for each Transferred
Employee who participates in the ConsecoSave Plan. Each Transferred Employee
shall be fully vested in his or her accounts in such plan. As soon as reasonably
practicable following the Funding, the Buyer or one of its Affiliates shall
designate or establish a tax-qualified defined contribution retirement plan and,
to the extent allowable by Law, the Buyer shall take any and all necessary
action to cause the trustee of such plan, if requested to do so by a Transferred
Employee, to accept a direct "rollover" in cash of all or a portion of such
employee's distribution in accordance with the terms and conditions of such plan
from the ConsecoSave Plan. In the case of a Transferred Employee with an
outstanding loan under the ConsecoSave Plan, the Buyer and the Sellers shall
take any and all necessary action, to the extent allowable by Law, to permit the
Transferred Employee to rollover such outstanding loan balance to the plan or
plans designated or established by the Buyer, provided, however, that the
Transferred Employee may transfer such loan only if such Transferred Employee
elects to rollover his or her entire account balance under the ConsecoSave Plan
to the Buyer's plan.

              (e) The Buyer shall pay to each Transferred Employee whose
employment is terminated by the Buyer or one of its Affiliates within 12 months
of the Funding Date, at the election of the Transferred Employee either (i)
severance equivalent to that set forth in Section 5.12(a) of the applicable
Business Schedules or (ii) severance benefits in accordance with the Buyer's
applicable severance policy.

              (f) Liabilities for severance, paid time off, sick leave and
vacation pay for Business Employees and Transferred Employees as set forth under
the heading "PTO" in Section 5.12(a) of the applicable Business Schedules (or as
set forth on the list provided under Section 3.14 hereof) shall be Assumed
Liabilities hereunder as reflected on the Final Schedule of Assets Acquired and
Liabilities Assumed.

              (g) The CFC Parties agree to timely perform and discharge all
requirements under the WARN Act to the extent applicable and under applicable
state and local laws and regulations for the notification of its Employees
arising from the sale of the Purchased Assets to the Buyer up to and including
the Funding Date for those employees who will become Transferred Employees
effective as of the Funding Date. After the Funding Date, the Buyer shall be
responsible for performing and discharging all requirements under the WARN Act
and under applicable state and local laws and regulations for the notification
of its employees with respect to the Purchased Assets and the Businesses. The
Parties shall provide one another with all assistance reasonably requested by
each Party to ensure that the Parties can comply with their respective
notification requirements of the WARN Act, including assistance with the
provision of such notices to Employees prior to the Funding Date. The Buyer
agrees to indemnify the Sellers and their Affiliates and their respective
directors, employees,

                                       83


consultants and agents for, and to hold them harmless from and against, any and
all Losses arising or resulting, or alleged to arise or result, from liabilities
arising under the WARN Act with respect to any Transferred Employees or any
Business Employees not offered employment by the Buyers, provided that the
Sellers have complied with the covenants set forth in Section 5.12(a).

              (h) To the extent permitted under the Buyer's welfare benefit
plans, the Buyer shall (i) waive pre-existing condition requirements (except
with respect to any pre-existing condition for which coverage was denied under
any welfare benefit plan of the CFC Parties), evidence of insurability
provisions, waiting period requirements or any similar provisions under any
welfare benefit plans maintained by the Buyer for Transferred Employees after
the Funding Date, and (ii) apply toward any deductible requirements and
out-of-pocket maximum limits under its Employee welfare benefit plans any
amounts paid (or accrued) by each Transferred Employee under the CFC Parties'
welfare benefit plans during the applicable plan year in which the Funding Date
occurs. The Buyer shall recognize for purposes of eligibility and vesting (but
not benefit accruals under any defined benefit pension plan) under its policies
and employee benefit plans, the service of any Transferred Employee with the CFC
Parties or any of their Affiliates prior to the Funding Date.

              (i) Except for the reimbursement by the Buyer of Employment Costs
pursuant to Section 2.2(a)(iii)(C), claims of Transferred Employees and their
eligible beneficiaries and dependents for medical, dental, prescription drug,
life insurance, and/or other welfare benefits ("Welfare Benefits") that are
incurred before the Funding Date shall be the sole responsibility of the Sellers
and the Sellers' welfare benefit plans. Claims of Transferred Employees and
their eligible beneficiaries and dependents for Welfare Benefits that are
incurred on or after the Funding Date shall be the sole responsibility of the
Buyer and the Buyer's welfare benefit plans. For purposes of the preceding
provisions of this paragraph, a medical/dental claim shall be considered
incurred on the date when the medical/dental services are rendered or
medical/dental supplies are provided, and not when the condition arose or when
the course of treatment began. Claims of individuals receiving long-term
disability benefits under a disability plan of the Sellers or any CFC Party
("Seller LTD Plan") as of the Funding Date shall be the sole responsibility of
the Sellers and the Seller LTD Plan. Claims for long-term disability benefits
based on an illness or injury arising prior to the Funding Date by any
Transferred Employees (and their eligible beneficiaries and dependents) who were
covered under the Seller LTD Plan, but not receiving benefits as of the Funding
Date, shall be provided by the Seller LTD Plan in accordance with the terms of
such plan as of the Funding Date.

              (j) The CFC Parties shall be responsible for satisfying
obligations under Section 601 et seq. of ERISA and Section 4980B of the Tax
Code, to provide continuation coverage to or with respect to any of the CFC
Parties' employees and their covered dependents in accordance with law with
respect to any "qualifying event" occurring on or prior to the Funding Date
(including any termination of employment of an Employee which occurs in
connection with the transaction contemplated herein). The Buyer shall be
responsible for satisfying obligations under Section 601 et seq. of

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ERISA and Section 4980B of the Tax Code, to provide continuation coverage to or
with respect to any of the Transferred Employees and their covered dependents in
accordance with law with respect to any "qualifying event" which occurs after
the Funding Date.

         5.13 Transition. The Sellers shall not in any manner take any action
which is designed, intended or might reasonably be anticipated to have the
effect of discouraging customers, suppliers, vendors, service providers,
employees, lessors, licensors and other business relations from maintaining the
same business relationships with the Purchased Businesses after the date of this
Agreement; and during the Pre-Funding Period, the Sellers shall make such
commercially reasonable efforts to encourage customers, suppliers, vendors,
service providers, employees, lessors, licensors and other business relations to
maintain the same business relationships with the Purchased Businesses after the
date of this Agreement; provided, that actions required to be taken by the
Sellers and their Subsidiaries pursuant to the Chapter 11 Cases shall not be
deemed to be a breach by the Sellers of the foregoing. During the Pre-Funding
Period, the Sellers shall also use all commercially reasonable efforts to obtain
for the Buyer and the Buyer shall use all commercially reasonable efforts to
cooperate with the Sellers in obtaining all of the rights under the agreements
designated as "Share/Split Contracts" in Attachment A to Section 2.1(a) of the
Business Schedules, which is necessary to operate the Purchased Businesses, to
the extent such rights were provided to the Sellers or their Affiliates prior to
the Funding Date; it being understood that such contracts designated as
"Share/Split Contracts" shall in any event be Excluded Assets. During the
Pre-Funding Period, subject to the consent of the Company, which consent shall
not be unreasonably withheld, the Buyer may contact Third Parties that are
parties to any Assumed Agreements. On and after the date hereof, the Sellers
shall cooperate with the Buyer to identify and provide all reasonable
information and access with respect to the transition services referred to in
Section 6.6 hereof.

         5.14 Seller's Trademarks. After the Funding, the Buyer may use and
distribute solely in connection with the Purchased Businesses or the Purchased
Assets, shipping materials, stationery, invoices, sales, promotional or other
forms and literature comprising part of the Purchased Assets and which bear the
name "Conseco" or "Conseco Finance" or the Conseco design (except as are
transferred to the Buyer at Funding) only if the Buyer uses all commercially
reasonable efforts to attach a sticker, name plate or other notice previously
approved by the Seller which discloses the acquisition of such Purchased
Asset(s) by the Buyer. Such right shall terminate 180 days following the Funding
Date. Once such right has terminated, the Buyer shall destroy or cause to be
destroyed all of such items and the Buyer further agrees that it shall use all
commercially reasonable efforts to cease to use or display names or materials
bearing the name "Conseco", "Conseco Finance" or the Conseco design trademarks
or any derivative thereof as promptly as practicable. Notwithstanding the
foregoing, in no event shall this Section 5.14 apply to any existing Contract on
which such names or designs appear as of the Cut-Off Time and the Buyer shall be
under no obligation to remove such names or designs from any Contract or any
other Records or Files received from the Sellers.

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         5.15 Notices to Obligors. No later than 15 days prior to the Funding
Date, the Company shall prepare, and transmit to each Obligor (of an Assigned
Receivable or Securitized Receivable) under each Assumed Receivables Contract a
notice in a form satisfying the requirements, as applicable, of Regulation X of
the Department of Housing and Urban Development under the Real Estate Settlement
Procedures Act, as well as all other applicable legal requirements, and
reasonably acceptable to the Buyer, to the effect that the Assumed Receivables
Contract and, as applicable, the servicing of the Assumed Receivables Contract,
will be transferred to the Buyer or another Person and directing that payments
be made after the Funding Date to the Buyer or its designee at any address of
the Buyer specified by the Buyer, with the Buyer's or its designee's name as
payee on any checks or other instruments used to make such payments. The Company
and the Buyer shall consult and cooperate with each other in the preparation of
such notices and they each shall bear one-half of the expenses incurred for the
preparation and transmission of such notices. With respect to all such Assumed
Receivables Contracts on which payment notices or coupon books have been issued,
the Buyer shall have the opportunity to prepare new payment notices or coupon
books reflecting the name and address of the Buyer as the Person to whom and the
place at which payments are to be made and to have such new payment notices or
coupon books included with the notices prepared and transmitted by the Company.

         5.16 Non-Solicitation and Non-Competition.

              (a) The Sellers acknowledge that the agreements and covenants
contained in this Section 5.16 are essential to protect the value of the
Purchased Assets being acquired by the Buyer.

              (b) During the period commencing on the date of this Agreement and
ending on the fifth anniversary of the Funding Date, neither the Sellers nor any
of their Subsidiaries shall for themselves or on behalf of or in conjunction
with any Person, directly or indirectly, solicit, endeavor to entice away from
the Buyer, or otherwise directly or indirectly interfere with the relationship
of the Buyer with any Person who within the prior 12 months had been an employee
of the Buyer; provided, however, that the foregoing provision will not prevent
the Sellers from hiring any such Person (i) who responds to a public
advertisement placed by the Sellers or any of their Subsidiaries, or (ii) who
has been terminated by Buyer or any of its Affiliates.

              (c) During the period commencing on the date of this Agreement and
ending on the fifth anniversary of the Funding Date, neither the Sellers nor any
of their Subsidiaries shall participate or engage, directly or indirectly,
whether as an agent, consultant, stockholder, member, partner, joint venturer,
investor or otherwise, in the same or similar type of business as the Purchased
Businesses or in any activity which is the same as or similar to the Purchased
Businesses, in all cases anywhere in the world.

              (d) The Parties agree that a monetary remedy for a breach of the
agreements set forth in this Section 5.16 will be inadequate and impracticable
and further agree that such a breach would cause irreparable harm, and that the
non-

                                       86


breaching party shall be entitled to temporary and permanent injunctive relief
without the necessity of proving actual damages. In the event of such a breach,
the breaching party agrees that the non-breaching party shall be entitled to
such injunctive relief, including temporary restraining orders, preliminary
injunctions and permanent injunctions as a court of competent jurisdiction shall
determine.

              (e) If any of the provisions of this Section 5.16 is invalid in
part, it shall be curtailed, as to time, location or scope, to the minimum
extent required for its validity under the Laws of the United States and shall
be binding and enforceable with respect to the Sellers, as applicable, as so
curtailed; it being the intention of the Parties that the provisions of this
Section 5.16 be enforced to the fullest extent permissible under the laws and
policies of each jurisdiction in which enforcement may be sought, and that the
unenforceability (or the modification to conform to such laws and policies) of
any provision of this Section 5.16 shall not render unenforceable or impair the
remainder of the provision of this Section 5.16.

         5.17 Further Actions. The Sellers agree not to take any action in the
Chapter 11 Case, including, but not limited to, any action in connection with
proposing or confirming any plan of reorganization, that would limit, impair or
alter the Buyer's rights under this Agreement.

         5.18 Further Assurances. Upon the request of the Buyer or its
successors and assigns at any time after the Funding Date, the Sellers will
forthwith execute and deliver to the Buyer or its designee such further
instruments of assignment, transfer, conveyance, endorsement, direction or
authorization and other documents as the requesting party or parties or its or
their counsel may reasonably request in order to perfect title of the Buyer and
its successors and assigns to the Purchased Assets (including the Shares
purchased in a Stock Sale) consistent with the terms and conditions of this
Agreement, or otherwise to effectuate the purposes of this Agreement and the
other Transaction Documents.

         5.19 Mail Forwarding. For a period of one year after the Funding Date,
the Sellers shall maintain adequate staff or engage an outside service at their
own expense to accept and forward to the Buyer all mail and other communications
received by the CFC Parties relating to the Purchased Assets.

         5.20 [Intentionally Omitted].

         5.21 [Intentionally Omitted].

         5.22 [Intentionally Omitted].

         5.23 Preparation of License Applications. As promptly as possible after
the date hereof, the Sellers shall prepare drafts, which drafts shall be as
complete as possible, of all notifications or other filings or applications that
are advisable or are required to be filed by the Buyer pursuant to the Finance
Laws in order to consummate the transactions contemplated hereby, for the
Buyer's review, augmentation and filing. The Sellers shall provide all
reasonable assistance and cooperation with respect to the Buyer's efforts to
obtain such licenses.

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         5.24 Provision of Bank Information. The Sellers shall use all best
efforts to arrange for a meeting between representatives of the FDIC and state
banking authorities (collectively, the "Regulators") and representatives of the
Buyer and its financing sources (if any), at which the Regulators shall be asked
to discuss with them the results of examinations of Mill Creek Bank and other
regulatory issues or concerns. The Company shall seek to schedule the meeting as
soon as reasonably practicable after the date of this Agreement, but in no event
more than 10 Business Days after the date of this Agreement. In addition, as
soon as reasonably practicable after the date of this Agreement, but in no event
more than 5 Business Days after the date of this Agreement, the Sellers shall
provide to the Buyer to the extent permitted by Law the following information
with respect to Mill Creek Bank: (i) copies of all examination reports issued by
the FDIC or state banking authorities since January 1, 2000; (ii) copies of all
supervisory or remedial agreements of any kind, including, but not limited to,
memoranda of understanding, agreements, cease-and-desist orders, consent orders
and enforcements orders outstanding at any time since January 1, 2000; (iii)
copies of all supervisory correspondence, including, but not limited to,
correspondence related to (i) and (ii) above; and (iv) copies of all internal
analyses, including, but not limited to, memoranda, notes, correspondence and
messages, and data, including, but not limited to, financial reports and reports
concerning intercompany balances, regarding compliance with sections 23A and 23B
of the Federal Reserve Act with respect to intercompany agreements with Mill
Creek Bank (together with the discussions between the Buyer and the Regulators
described above, the "Bank Information").

         5.25 Access to Records After the Funding.

              (a) For a period of eight years after the Funding Date, the
Sellers and their representatives shall have reasonable access to all of the
Files transferred to the Buyer hereunder to the extent that such access may
reasonably be required by the Sellers. Such access shall be afforded by the
Buyer upon receipt of reasonable advance notice and during normal business
hours. The Sellers shall be solely responsible for any costs or expenses
incurred by them pursuant to Section 5.23(a). If the Buyer shall desire to
dispose of any such Files prior to the expiration of such eight-year period, the
Buyer shall, prior to such disposition, give the Sellers a reasonable
opportunity, at their expense, to segregate and remove such Files as the Sellers
may select.

              (b) For a period of eight years after the Funding Date, the Buyer
and its representatives shall have reasonable access to all of the Files
relating to the Purchased Businesses which the Sellers or any of their
respective Affiliates may retain after the Funding Date. Such access shall be
afforded by the Sellers and their respective Affiliates upon receipt of
reasonable advance notice and during normal business hours. The Buyer shall be
solely responsible for any costs and expenses incurred by it pursuant to this
Section 5.25(b). If the Sellers or any of their respective Affiliates shall
desire to dispose of any such Files prior to the expiration of such eight-year
period, the Sellers shall, prior to such disposition, give the Buyer a
reasonable opportunity, at the Buyer's expense, to segregate and remove such
Files as the Buyer may select. In the event any Records are acquired by any
Bankruptcy Acquiror, the

                                       88


Sellers shall cause such Bankruptcy Acquiror to provide the Buyer and its
representatives access to Records on terms and conditions substantially similar
to the terms and conditions set forth in this Section 5.25(b).

              (c) In the event that the Buyer acquires any Records that relate
to any Property acquired by any Bankruptcy Acquiror or retained by the Company,
the Buyer shall provide such Bankruptcy Acquiror or the Company, as applicable,
and their respective representatives access to such Records on terms and
conditions substantially similar to the terms and conditions in Section 5.25(c)
hereof; provided, however, the Bankruptcy Acquiror shall be solely responsible
for any costs and expenses incurred by it and the Buyer pursuant to this Section
5.25(c) with respect to the access to such Records by the Bankruptcy Acquiror
and the Company shall be solely responsible for any costs and expenses incurred
by it and the Buyer pursuant to this Section 5.25(c) with respect to access by
the Company to such Records.

         5.26 Liens. The Sellers shall provide to the Buyer, within five
Business Days of the date hereof, written notice of a description of all Liens
(except Permitted Liens) on the Purchased Assets, and a copy of all UCC searches
conducted with respect thereof. On or prior to the Funding, the Sellers shall
deliver to the Buyer evidence of the satisfaction, discharge or other
termination of all such Liens (except Permitted Liens) on the Purchased Assets.

         5.27 Separation Matters. The Sellers shall cooperate with the Buyers
with respect to all separation or transition issues which may arise in
connection with the separation of various businesses of the CFC Parties as a
result of the sale of the assets of the CFC Parties pursuant to the Auction.
Without limiting the foregoing, the Sellers and the Buyer shall negotiate in
good faith with each other and with any applicable Bankruptcy Acquiror
(including, without limitation, CFN) to enter into (a) in case of the Sellers,
an agreement in form and substance mutually acceptable to the Company and the
Buyer whereby the Company would provide servicing to the Buyer for a period
beginning from and after the Funding Date until the earlier of (i) the date
which is four (4) months from the Funding Date or (ii) the closing date pursuant
to the terms of the CFN Agreement; and (b) in case of a Bankruptcy Acquiror, an
agreement incorporating the terms set forth on Annex D attached hereto and such
other terms as may be agreed by the parties thereto whereby the Sellers or such
Bankruptcy Acquiror shall agree to provide to the Buyer such services as the
Buyer reasonably determines are necessary to operate the Purchased Businesses,
to the extent such services were provided by the Sellers or its Affiliates prior
to the Funding Date (the "Servicing Agreements"). The Servicing Agreements shall
include, without limitation, certain transitional services provided pursuant to
the agreements designated in Attachment A to Section 2.1(a) of the Business
Schedules as required to be included under the Servicing Agreements. The Buyer
agrees to grant CFN, from and after the closing date under the CFN Agreement, a
perpetual, worldwide, royalty-free, sublicenseable, and transferable license to
use the trademarks "FUNANCING," "MAKING EXCITEMENT AFFORDABLE," and
"AQUAVANTAGE" in connection with the Purchased Businesses as defined in the CFN
Agreement (the "CFN Purchased Assets"), which shall include a right for CFN to
use any materials that incorporate these trademarks and that were created by the
Sellers prior to

                                       89


the Cut-Off Time for use with the CFN Purchased Assets, in each case to the
extent the Seller has transferred and assigned good and marketable title to such
Property to the Buyer.

         5.28 [Intentionally Omitted].

         5.29 Financial Information. The Sellers shall prepare and deliver to
the Buyer, within 10 Business Days after every calendar month-end between the
date hereof and the Funding Date (the "Post-Signing Balance Sheets") a
Restricted and Unrestricted Balance Sheet of the Company which shall fairly
present, in all material respects, the financial position of the Company and its
Subsidiaries as of the dates thereof in accordance with GAAP, consistently
applied and consistent with the accounting principles set forth in Part I of
Section 1.1A of the Business Schedules (subject, in the case of interim balance
sheets, to normal year-end audit adjustments which will not be material in
amount or effect and in the case of unaudited balance sheets, the omission of
notes), together with delinquency reports in the same form and containing the
same type of information and content as those created by the CFC Parties in
their ordinary course of business. The Sellers shall also prepare and deliver to
the Buyer as soon as reasonably practicable after every calendar month-end
between the date hereof and the Funding Date, true, complete and correct ledger
information of the Company which shall be in the form previously delivered to
the Buyer.

         5.30 [Intentionally Omitted].

         5.31 Intellectual Property Licenses; Shared Services; Shared Systems.

              (a) In the event that the Buyer does not enter into an agreement
with a Third Party on or prior to the Effective Closing Date pursuant to which
such Third Party agrees to provide all Servicing required to service and manage
the Home Improvement Loans and Consumer Loans originated by the HI Origination
Platform and the CL Origination Platform and the HI and CL Mill Creek Bank
Loans, and the Closing Date as defined in the CFN Agreement has not yet
occurred, then the Sellers or their Affiliates shall provide such Servicing to
Buyer for a period beginning from and after the Funding Date until the earlier
of (i) the date which is four (4) months from the Funding Date or (ii) the
closing date pursuant to the terms of the CFN Agreement.

              (b) On or prior to the Funding Date and effective as of the
Cut-Off Time, the Sellers or their Affiliates hereby grants to the Buyer a
non-exclusive perpetual, irrevocable, worldwide royalty-free, sublicensable
right and license to use the Intellectual Property set forth in Section 5.31(b)
of the Business Schedules and any other software developed by any Seller or for
any Seller and necessary for any Seller to run the Purchased Businesses, and
such license shall include the right to create and use enhancements,
modifications and other derivative works of computer software included within
such Intellectual Property. In the event that any of the Intellectual Property
set forth in Section 5.31(b) of the Business Schedules is acquired by any
Bankruptcy Acquiror, the Sellers shall cause such Bankruptcy Acquiror to (i)
assume

                                       90


the obligations of the Sellers under the license described in this Section
5.31(b) or (ii) provide the Buyer all of the rights equivalent to those provided
to the Buyer pursuant to the terms of the license described in this Section
5.31(b), on terms and conditions substantially equivalent to those set forth
herein.

              (c) In the event that the Sellers or their Affiliates retain
certain Intellectual Property after the Funding Date, which is necessary for the
Buyer to conduct the Purchased Businesses, substantially in the manner in which
they were conducted pre-Funding the Sellers shall grant to the Buyer a
non-exclusive, perpetual, irrevocable, worldwide, royalty-free, sublicensable
right and license to use such Intellectual Property, and such license shall
include the right to create and use enhancements, modifications and other
derivative works thereof.

              (d) In the event that the Buyer acquires certain Intellectual
Property pursuant to the terms of this Agreement which is necessary for the
Sellers to conduct their business after the Funding Date, substantially in the
manner in which it was conducted on or prior to the Funding Date (other than the
business which they are prohibited from conducting pursuant to Section 5.16 (the
"Restricted Business")), the Parties shall negotiate in good faith the terms of
a license agreement pursuant to which the Buyer shall grant to the Sellers the
right and license to use such Intellectual Property for the conduct of the
Seller's business after the Funding Date; provided, however, that such license
shall not include the Intellectual Property set forth in Section 5.31(d) of the
Business Schedules.

         5.32 Pending or Threatened Litigation. Between the date of this
Agreement and the Funding Date, the Sellers and the Buyer shall inform each
other, promptly upon obtaining knowledge thereof, of any pending or threatened
litigation or any investigation by any Governmental Authority which reasonably
could be anticipated to (i) render inaccurate in any material respect any
representation or warranty made by any Seller or the Buyer (as the case may be);
or (ii) prohibit or restrain or materially and adversely affect the consummation
of the transactions contemplated hereby or the performance by any Seller or the
Buyer of their respective obligations hereunder.

         5.33 Insurance; Risk of Loss.

              (a) Without the prior written consent of the Buyer, no Seller
shall effect any termination of any occurrence liability policies (belonging to
such Seller) with respect to the Purchased Assets owned by such Seller so as to
prevent the Buyer from recovering under such policies for Losses from events
occurring prior to the Cut-Off Time to the extent that coverage for such Losses
was otherwise provided by any such policy. For a period commencing on the
Effective Closing Date and ending on the earlier of (i) the date a plan of
liquidation with respect to the applicable Seller becomes effective and (ii) the
date that is the second anniversary of the Funding Date, the Sellers shall also
take all commercially reasonable steps necessary to assure the continuation
and/or extension of all claims-made insurance policies in order to permit the
Buyer to recover under such policies to the extent provided therein.

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              (b) Notwithstanding Section 5.33(a) hereof, to the extent that (i)
any insurance policies owned or controlled by any Seller (collectively, the
"Sellers' Insurance Policies") cover any loss, liability, claim, damage or
expense resulting from, arising out of, based on or relating to, any Seller (the
"Sellers Liabilities") and resulting from, arising out of, based on or relating
to occurrences prior to the Cut-Off Time and (ii) the Sellers' Insurance
Policies permit claims to be made thereunder with respect to the Sellers
Liabilities resulting from, arising out of, based on or relating to occurrences
prior to the Cut-Off Time (the "Seller Claims"), the Sellers shall take
commercially reasonable steps to cooperate and shall cause these respective
Affiliates to cooperate with the Buyer, in submitting any and all Seller Claims
(or pursuing any Seller Claim previously made) on behalf of the Buyer under any
Sellers' Insurance Policies.

         5.34 Supplements to Schedules; Post-Signing Information. Not earlier
than ten (10) nor later than five (5) Business Days prior to the Effective
Closing Date and Funding Date, the Sellers and the Buyer will (a) supplement or
amend the Business Schedules relating to their respective representations and
warranties in this Agreement (other than the representations and warranties that
are made as of a date other than the date hereof, the Cut-Off Time or the
Funding Date) with respect to any matter, condition or occurrence hereafter
arising which, if existing or occurring at the date of this Agreement, would
have been required to have been set forth or described in such Business
Schedules. No supplement or amendment by either party shall be deemed to cure
(or affect the rights of any party with respect to) any breach of any
representation or warranty made in this Agreement or have any effect for the
purpose of determining satisfaction of the conditions set forth in ARTICLES 6
and 7.

         5.35 Payment of Brokers' or Finders' Fees. The Sellers shall pay any
and all brokers' or finders' fees, and any other commissions or similar fees,
payable to any Person acting on behalf of the Sellers or any of their Affiliates
or under the authority of any of them, in connection with any of the
transactions contemplated herein, and the Buyer shall pay any and all brokers'
or finders' fees, and any other commissions or similar fees, payable to any
Person acting on behalf of the Buyer or any of its Affiliates or under the
authority of any of them, in connection with any of the transactions
contemplated herein, in each case regardless of whether any claim for payment is
asserted before or after the Funding, or before or after any termination of this
Agreement.

         5.36 Powers of Attorney. Upon request by the Buyer, the Sellers shall
revoke any or all powers of attorney applicable to the Purchased Assets.

         5.37 Non-Competition Waivers. Each Seller hereby waives, effective as
of the Cut-Off Time, any provision of any document to which such Seller is a
party restricting the ability of any Transferred Employee of such Seller, who
accepts an offer of employment from the Buyer or any of its Affiliates and
commences such employment, to accept, commence and continue such employment.

         5.38 Post-Effective Closing Date Deliverables. Immediately after the
first day of each month to occur prior to the Funding Date (including, without
limitation, April

                                       92


2003) but in no event later than the 3rd day of each such month, (i) the Sellers
shall deliver to the Buyer a Month's End Data Tape, and the Portfolio
Information set forth thereon shall be true, correct and complete as of the date
of such Month's End Data Tape, (ii) the Sellers shall deliver to the Buyer a
CD-ROM containing a true, correct and complete list of Excluded Receivables, and
each such list shall set forth the basis on which the Sellers determined that
each such Receivable thereon is an Excluded Receivable and (iii) a certificate
of an authorized officer of Mill Creek Bank Inc. certifying the amount of
Allowed Operating Expenses paid by Mill Creek Bank during the preceeding month
except (A) with respect to the certificate to be delivered on April 1, 2003,
during the period commencing on the date hereof and ending on April 1, 2003, (B)
with respect to the last period prior to the Cut-Off Time, the period commencing
on the second day of the month in which the Cut-Off Time occurs and ending as of
the Cut-Off Time, (c) with respect to the first period after the Cut-Off Time,
the period commencing on the Effective Closing Date and ending on the first day
of the month after the Effective Closing Date and (D) with respect to the last
period prior to the Funding Date, the period commencing on the second day of the
month in which the Funding Date occurs and ending on the Funding Date.

         5.39 Final Schedule of Assets Acquired and Liabilities Assumed.

              (a) Promptly and in no event later than 28 days after the Buyer's
receipt of each Month's End Data Tape, the Buyer shall prepare and deliver to
the Company a draft Schedule of Assets Acquired and Liabilities Assumed using
the information reflected on such Month's End Data Tape and on the basis that
such Month's End Data Tape is the Final Data Tape. Each such draft Schedule of
Assets Acquired and Liabilities Assumed shall be prepared in accordance with the
Accounting Principles and shall be based upon the information contained in the
applicable Month's End Data Tape and such other documentation or information as
is necessary or appropriate, including the results of any audit that the Buyer,
at its sole option and expense, may cause to be conducted with respect to the
assets reflected on such Month's End Data Tape and the liabilities of the
Sellers that would be Assumed Liabilities if the date of the Month's End Data
Tape is the Effective Closing Date, and the results of a physical inventory that
the Buyer, at its sole option and expense, may conduct or cause to be conducted
with respect to the fixed tangible assets and repossessed property that would be
included in the Specified Purchased Assets as of the Cut-Off Time. The Buyer
shall provide prior notice to the Company of any such physical inventory and
shall provide representatives of the Sellers the opportunity to observe any such
inventory. The Sellers shall provide to the Buyer any documentation and
information in any Seller's possession or control, that are necessary and
appropriate to conduct any such audit and inspection and that are reasonably
requested by the Buyer.

                   (i) The Sellers shall provide the Buyer's auditors with full
              access to all information necessary to perform an audit of each
              Month's End Data Tape including, without limitation, with respect
              to the Final Data Tape and the Effective Closing Date, and an
              audit of the Purchased Assets and Assumed Liabilities. Without
              limiting the foregoing,

                                       93


              the Sellers shall timely deliver to the Buyer all such other
              documentation as may be reasonably be requested by the Buyer in
              connection with the determination of the Purchase Price, Net NAV
              or the Disposition Proceeds. The Buyer shall have a right to audit
              any certificates required to be delivered pursuant to Section 5.38
              hereof.

                   (ii) The Seller shall cooperate and comply with all
              reasonable requests of the Buyer and its representatives to assist
              such Persons in accomplishing the preparation of each Schedule of
              Assets Acquired and Liabilities Assumed, any audit of the Schedule
              of Assets Acquired and Liabilities Assumed and the preparation of
              the Final Schedule of Assets Acquired and Liabilities Assumed.
              Without limiting the foregoing, from and after the date hereof,
              (A) each of the Buyer, the Sellers, and their respective
              representatives shall have full access to all relevant accounting,
              financial and other records reasonably requested by such Persons
              in connection with the preparation, confirmation or review of each
              Schedule of Assets Acquired and Liabilities Assumed and (B) each
              party shall make available to the other party and its accountants
              such personnel as they may reasonably request in connection with
              the preparation or confirmation of each Schedule of Assets
              Acquired and Liabilities Assumed and audit thereof including,
              without limitation, in the case of clause (A) and (B) above, the
              preparation, confirmation and review of the Schedule of Assets
              Acquired and Liabilities Assumed prepared as of the Effective
              Closing Date (and any audit thereof) and the determination of the
              Purchase Price, Net NAV and the Disposition Proceeds.

                   (iii) The Sellers shall promptly inform the Buyer if any
              information set on Annex I does not comply with Part II of the
              Accounting Principles.

              (b) The Company may review each such draft Schedule of Assets
Acquired and Liabilities Assumed. The Buyer shall provide any additional
information requested by the Company and used by the Buyer in its preparation of
any draft Schedule of Assets Acquired and Liabilities Assumed promptly after the
Company's request therefor. The draft Schedule of Assets Acquired and
Liabilities Assumed prepared as of the Cut-Off Time shall become the Final
Schedule of Assets Acquired and Liabilities Assumed unless, within 10 days after
the receipt of such draft schedule, the Company notifies the Buyer in writing of
any disagreement the Sellers may have with the draft Schedule of Assets Acquired
and Liabilities Assumed, which notice shall identify each item in the draft
Schedule of Assets Acquired and Liabilities Assumed to which the Sellers object
and describe in reasonable detail the reasons for each such objection based on
information available to the Sellers. The Buyer and the Company shall confer in
good faith to attempt to resolve any such disagreements on the draft Schedule of
Assets Acquired and Liabilities Assumed. In the event the Buyer and the Company
are unable to reach agreement on such draft Schedule of Assets Acquired and
Liabilities Assumed, the Purchase Price, Net NAV or the Disposition Proceeds
prior to the date that is two Business Days prior to the Funding Date, then so

                                       94


long as neither the Buyer nor the Sellers shall have exercised their rights to
terminate this Agreement pursuant to Section 8.1(j), the Company and the Buyer
shall jointly hire the Auditor to resolve any disagreements with respect to the
draft Schedule of Assets Acquired and Liabilities Assumed, and shall jointly pay
the costs of such resolution.

              (c) The Auditor hired in accordance with this Section 5.39(b)
shall resolve any such disagreements on the basis of the terms of this Agreement
(including, without limitation, the Accounting Principles) and whether changes
or adjustments (if any) are required in order for such Schedule to have been
prepared in accordance with this Agreement (including, without limitation, the
Accounting Principles). The Buyer and the Sellers shall use their commercially
reasonable best efforts to cause the Auditor to issue a report (the "Report of
the Auditor") to each of the Buyer and the Company within 10 days following
appointment of the Auditor.

              (d) The Report of the Auditor shall include the following: (i) the
Auditor's determination of the proper resolution of each disputed item (based on
the terms of this Agreement, including, without limitation, the Accounting
Principles) and a description in reasonable detail of the basis for such
determination and (ii) a calculation of the Purchase Price, Net NAV and
Disposition Proceeds, in each case, after giving effect to all disputes resolved
by it or previously mutually resolved by agreement of the Buyer and the Company.
(e) Upon the earlier to occur of (i) the Company failing to object on a timely
basis to the draft Schedule of Assets Acquired and Liabilities Assumed that was
prepared as of the Cut-Off Time and delivered by the Buyer to the Company
pursuant to Section 5.39(a), (ii) the Company and the Buyer agreeing on the
final version of the Schedule of Assets Acquired and Liabilities Assumed or
(iii) five (5) Business Days after delivery of the Report of the Auditor, the
Buyer shall deliver to the Company, as applicable, the version described in
clause (i) hereof, the agreed version, or the version prepared by the Auditor,
of the Schedule of Assets Acquired and Liabilities Assumed (which shall be
deemed to be the "Final Schedule of Assets Acquired and Liabilities Assumed").

         5.40 Home Equity Loan, Reaffirmed Accounts, CRAs and Charged-Off
Accounts Sales.

              (a) Prior to the Cut-Off Time, Mill Creek Bank Inc. shall use its
commercially reasonable efforts to sell, transfer and assign all of its rights,
title and interest in any and all Home Equity Loans owned by it for cash or cash
equivalents. All proceeds of such sales, transfers and assignments shall be
retained by Mill Creek Bank through the Cut-Off Time.

              (b) Prior to the Cut-Off Time, Mill Creek Bank Inc. shall use its
commercially reasonable efforts to sell, transfer and assign all of its rights,
title and interest in any and all Reaffirmed Accounts and any CRA owned by Mill
Creek Bank

                                       95


Inc. for cash or cash equivalents. All proceeds of such sales, transfers and
assignments shall be retained by Mill Creek Bank Inc. through the Cut-Off Time.

              (c) Promptly after any sale, transfer or assignment by Mill Creek
Bank Inc. of any Home Equity Loan, Reaffirmed Account, CRA or Charged-Off
Account (to the extent permitted by Section 5.5(a)(ii)(1)(iii) hereof), Mill
Creek Bank Inc. shall deliver to the Buyer a certificate certifying the amount
of the cash proceeds received by Mill Creek Bank Inc. with respect to such sale,
transfer or assignment.

              (d) For the avoidance of doubt, cash proceeds of any of the sales
described in subsections (a), (b) and (c) that are owned by Mill Creek Bank Inc.
as of the Cut-Off Time shall be deemed Purchased Assets.

         5.41 Other Notices. During the Pre-Funding Period, the Sellers shall
promptly notify the Buyer of (i) any termination of any agreement with any
merchant that but for such termination would be included in the Purchased Assets
and of any agreement set forth on Attachment A to Section 2.1(a) of the Business
Schedules and (ii) any departure of (A) an exempt employee or (B) an information
technology employee (who otherwise received or would have received an offer of
employment pursuant to Section 5.12 herein) and (iii) an employee turnover rate
in any month which exceeds 4% for the PL Business, 2% for the CL Business and 4%
for the HI Business and (iv) at the end of every calendar month, notify the
Buyer of the dealer agreements (if any) that have been terminated during the
preceding month.

         5.42 Limited Power of Attorney. Without limiting the provisions of
Section 2.3(b)(v), on or prior to the Funding Date, the Sellers shall deliver to
the Buyer a duly executed and notarized limited power of attorney, in form and
substance reasonably satisfactory to the Buyer and the Company, authorizing the
Buyer to execute on behalf of the Sellers any Assumed Agreement.

         5.43 Wind-Down of PL Securitization. No later than 2 Business Days
prior to the Cut-Off Time, the Company shall, or shall cause Mill Creek Bank
Inc. and/or Conseco Finance Credit Card Funding Corp. to, use their commercially
reasonable efforts to repay, redeem and discharge the obligations represented by
the certificates issued by the Trust, to terminate the Private Label Credit Card
Master Trust Documents and to cause the owner of the Receivables and other
Property that is subject thereto to transfer such Receivables and Property to
Mill Creek Bank Inc. and/or Conseco Finance Credit Card Funding Corp. on terms
and conditions reasonably acceptable to the Buyer.

                                   ARTICLE 6
                 CONDITIONS PRECEDENT TO THE BUYER'S OBLIGATIONS

              The obligation of the Buyer to consummate the transactions
contemplated by this Agreement is subject to the fulfillment, or waiver by the
Buyer in accordance with this ARTICLE 6, of the following conditions as of the
Funding:

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         6.1 Representations and Warranties; Covenants; Certificates.

              (a) The representations and warranties of the Sellers contained in
this Agreement, and in any agreement, instrument or document executed and
delivered by them in connection with the Closing (including the other
Transaction Documents to which the Sellers are parties), shall be true and
correct on and as of the Effective Closing Date as if made on and as of such
date, except as affected by transactions permitted by this Agreement and except
to the extent that any such representation or warranty is made as of a specified
date, in which case such representation or warranty shall have been true and
correct as of such specified date, except in each case to the extent that the
failures in the aggregate of such representations and warranties (disregarding
any qualifications as to materiality or Material Adverse Effect contained in
such representations and warranties) to be true and correct would not reasonably
be expected to have, and have not had, a Material Adverse Effect.

              (b) Each Seller shall have performed and complied in all material
respects with all agreements, obligations, covenants and conditions required by
this Agreement to be performed or complied with by such Seller on or prior to
the Effective Closing Date and the Funding Date, including, without limitation,
the covenants set forth in Sections 5.4 and 5.5 hereof.

              (c) The Buyer shall have received a certificate, dated as of the
Funding Date, signed by authorized officers of the Sellers, in their respective
representative capacities and not individually, to the effect that such
conditions set forth in Sections 6.1(a) and (b), 6.3 and 6.9 hereof have been
satisfied in all respects.

         6.2 Bankruptcy Condition. The Bankruptcy Court shall have entered the
Sale Order, which shall be a Final Order that has not been reversed, modified,
rescinded or stayed as of the Cut-Off Time and as of the Funding Date.

         6.3 Litigation.

              (a) There shall be in effect no pending or threatened injunction,
writ, decree or preliminary restraining order or other order of, or any other
action or proceeding before, any Governmental Authority of competent
jurisdiction that could reasonably be expected to (i) prevent or prohibit the
sale of the Purchased Assets to the Buyer or the performance of the material
obligations of the parties hereto (or result in substantial damages from the
Buyer or any of its Affiliates as a result thereof), (ii) cause the transactions
to be rescinded following the consummation thereof, (iii) materially modify the
terms of the transactions contemplated hereby or result in the imposition of
material liability on the Buyer or its Affiliates or (iv) have a material
adverse effect on the Buyer's operation of the Purchased Businesses after the
Cut-Off Time.

              (b) No Governmental Authority shall have notified any Party that
the consummation of the transactions contemplated hereby would constitute a
violation of the Laws of the United States or any State thereof or the Laws of
the jurisdiction to

                                       97


which such Governmental Authority is subject and that it intends to commence
proceedings to restrain the consummation of such transactions, to force
divestiture if the same are consummated or to materially modify the terms or
results of such transactions unless such Governmental Authority shall have
withdrawn such notice, or has otherwise indicated in writing that it will not
take any action, prior to what would otherwise have been the Effective Closing
Date and the Funding Date.

         6.4 Approvals.

              (a) All authorizations, permits, licenses, certificates of
authority, consents and waivers, Orders, filings, notices and approvals (other
than bulk sale approvals) from Governmental Authorities necessary to permit the
CFC Parties to perform the transactions contemplated hereby and required for the
Buyer to own the Purchased Assets and to operate the Purchased Businesses
post-Funding shall have been duly obtained, made or given, shall be in form and
substance reasonably satisfactory to the Buyer, shall not be subject to the
satisfaction of any material condition that has not been satisfied or waived and
shall be in full force and effect.

              (b) All terminations or expirations of waiting periods imposed by
any Governmental Authority necessary for the transactions contemplated under
this Agreement, if any, shall have occurred. This includes, but is not limited
to, the termination or expiration of all applicable waiting periods relating to
the HSR Act, the Bank Merger Act and the satisfactory conclusion of any
proceedings that may have been filed or instituted thereunder.

              (c) (i) All material consents and waivers from non-governmental
third parties with respect to the Assumed Agreements (other than any Active
Merchant Agreements) necessary to permit the Sellers to perform the transactions
contemplated hereby and required for the Buyer to own the Purchased Assets and
to operate the Purchased Businesses shall have been duly obtained, made or
given, shall be in form and substance reasonably satisfactory to the Buyer,
shall not be subject to the satisfaction of any material condition that has not
been satisfied or waived and shall be in full force and effect. The Sellers
shall have provided copies of such consents, waivers and amendments to the
Buyer.

                   (ii) For the avoidance of doubt, the following consents and
              waivers shall be deemed material:

                   (A)  waivers duly executed by Acxiom Corporation of
                        exclusivity provisions contained in any of the Acxiom
                        Contracts; and

                   (B)  an acknowledgment by Acxiom Corporation that the CFC
                        Parties own all of the right, title and interest in and
                        to all of the Acxiom Models.

              (d) The Sellers shall have delivered to the Buyer the following
consents, waivers, amendments and novations:

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                   (i) written consent to assignment and transfer to the Buyer
              or its designee of the Active Merchant Agreements that are
              associated with at least 75% of the aggregate amount of Assigned
              Receivables generated by all Active Merchant Agreements, such
              amount to be calculated as of December 31, 2002; provided,
              however, for the purposes of such calculation (x) the Revolving
              Credit Program Agreement among the Company, Mill Creek Bank Inc.
              and Select Comfort Corporation dated May 17, 1999 (as amended)
              and/or the agreement with Carter Lumber may, at the Sellers'
              option, be excluded from both the denominator and the numerator of
              such calculation and (y) the Revolving Credit Program Agreement
              between the Company and Conseco Bank, Inc. as assignees and
              American Honda Motor Co. shall be included in the calculation as
              if consent to transfer of such agreement is required and as if
              such consent has been obtained.

                   (ii) amendments to the Active Merchant Agreements with Lennox
              and MTD duly executed by all parties thereto to ensure that after
              the Cut-Off Time no Bankruptcy Event or Change of Control Event of
              any Seller or any of its Affiliates may constitute an event of
              default under such Active Merchant Agreements;

                   (iii) one of the following: (x) waivers, in a form and
              substance satisfactory to the Buyer in its reasonable discretion,
              duly executed and delivered by each Subsidiary of the Sellers and
              the Parent (the "Participating Affiliates") that is party to or on
              behalf of which any Seller has entered into any Contract that is a
              Purchased Asset, waiving any right, title or interest that such
              Participating Affiliate, may have in such Contracts and
              authorizing the Buyer or its designees to enter from time to time
              into any amendment or modification, to such Contract after the
              Cut-Off Time; (y) a novation, in form and substance satisfactory
              to the Buyer in its reasonable discretion of such Contracts duly
              executed by all parties to each such Contract (including the
              Participating Affiliates) and naming the Buyer as an assignee of
              all CFC Parties and their Affiliates to such Contract (including,
              without limitation, such Participating Affiliates); or (z) a
              written consent in form and substance satisfactory to the Buyer in
              its reasonable discretion to the transfer and assignment of all
              rights, title and interest of all Sellers and the Participating
              Affiliates in and to such Contracts and the obligations thereunder
              which are Assumed Liabilities, together with an instrument of
              sale, transfer and assignment from the Sellers and each of the
              Participating Affiliates to effect transfer to the Buyer of good,
              valid and marketable title to such Contracts.

         6.5 Instruments of Conveyance and Transfer; Title. The Sellers shall
have delivered to the Buyer such bills of sale, deeds, endorsements, assignments
and other good and sufficient instruments of conveyance and transfer, including
the Intellectual Property Assignment Agreements, in form and substance,
reasonably satisfactory to the Buyer and its counsel, as are necessary to vest
in the Buyer good and marketable title to

                                       99


the Purchased Assets, free and clear of all Liens, other than Permitted Liens,
opinions of counsel and other documents and instruments referred to in Section
2.3(b). With respect to each PL Residual Asset, the Buyer or its designee shall
have been made the registered owner of such PL Residual Asset pursuant to the
terms of the related governing documents. In the case of a Stock Sale, the
Company shall deliver to the Buyer or its designees (a) stock certificates
representing the Shares, duly endorsed in blank for transfer or accompanied by
appropriate stock powers duly executed in blank, with all taxes, direct or
indirect, attributable to the transfer of the Shares paid or provided for; (b)
the minutes and stock records of the Subject Subsidiary; and (c) signature cards
from all banks or financial institutions with which the Subject Subsidiary has
an account designating signatures approved by the Buyer to become effective
immediately following the Funding.

         6.6 Servicing Agreements. On or prior to the Funding Date, the Buyer
and the Sellers and/or the Bankruptcy Acquiror (that purchases the Properties
that are necessary for providing the services described in Annex D attached
hereto), as the case may be, shall have entered into and delivered the Servicing
Agreements (as such term is defined in Section 5.27 hereof), as the case may be.

         6.7 Resignation of Officers and Directors of Subject Subsidiaries. In
the case of a Stock Sale, the directors and officers of the Subject Subsidiary
identified by the Buyer shall have delivered letters of resignation from their
respective positions at the Subject Subsidiary in form and substance
satisfactory to the Buyer.

         6.8 [Intentionally Omitted].

         6.9 No Material Adverse Effect. From December 31, 2002 until the
Cut-Off Time, there shall not have been any change, circumstance or event which
constitutes or has resulted in, or that could reasonably be expected to result
in, a Material Adverse Effect.

         6.10 [Intentionally Omitted].

         6.11 Securitization Rights. The Buyer shall be and shall be recognized
by the relevant trustee as (i) the servicer or successor servicer with respect
to all PL Servicing Rights under each PL Servicing Contract, (ii) the transferee
of the transferor's interest in the Transferor Certificate (as defined in the
Private Label Credit Card Master Trust Documents) and Transferor Amount (as
defined in the Private Label Credit Card Master Trust Documents) and (iii) the
transferee of the PL Residual Assets, and the Sellers shall furnish to the
appropriate party all opinions, consents, approvals, rating agency confirmations
and certificates and other items required in connection with such successions or
transfers, including without limitation evidence that the Rating Agency
Condition (as defined in the Private Label Credit Card Master Trust Documents)
has been satisfied with respect to each such succession or transfer (but only if
the CFC parties have not repaid, redeemed and discharged the obligations
represented by the Trust and terminated the Private Label Credit Card Master
Trust Documents, and the owners of the Receivables and other property that is
subject thereto have not transferred such

                                      100


Receivables and other Property to Mill Creek Bank Inc. prior to the Cut-Off
Time). The Sellers shall furnish to the Buyer a complete set of closing
documents relating to the closing of the Conseco Private Label Credit Card
Master Note Trust 2001-A and the Conseco Private Label Credit Card Master Note
Trust 2001-B transactions.

         6.12 Tax Opinion.

              (a) The Sellers shall furnish to the Buyer an opinion of counsel
to the effect that the Trust will be classified as a grantor trust, a
partnership or a disregarded entity, and not an association taxable as a
corporation, a publicly traded partnership or a taxable mortgage pool, for
federal income tax purposes, and, to the extent that it has issued instruments
designated as notes, bonds, debentures or other evidences of indebtedness, such
instruments will be characterized as indebtedness for federal income tax
purposes.

              (b) The requirement of this Section 6.12 may be satisfied by the
delivery of a letter from the law firm that rendered the opinion as to the U.S.
federal income tax treatment of the Trust, which letter states that the Buyer is
entitled to rely on such opinion to the same extent as the party to whom the
opinion was originally issued. A copy of the relevant opinion shall be attached
to the letter that states that the Buyer is entitled so to rely.

         6.13 Data Service Contracts. Notwithstanding the provisions set forth
in Section 5.13 hereof, the Sellers and the Parent shall have obtained for the
Buyer all of the rights equivalent or substantially similar to those provided to
the Sellers pursuant to, the Acxiom Contracts set forth in Section 6.13 of the
Business Schedules and Attachment A to Section 2.1(a) of the Business Schedules
and the database license with Oracle set forth in Attachment A to Section 2.1(a)
of the Business Schedules and all such rights shall be deemed to be part of the
Purchased Assets.

         6.14 Acceptance of Employment Offers. With respect to each of the
Purchased Businesses, the Buyer shall have received acceptances of offers of
employment from a sufficient number of employees of the Purchased Business so as
to be able to operate such Purchased Business in a manner consistent with its
operating history, as reasonably determined by the Buyer in the exercise of its
good faith discretion.

         6.15 Agreements.

              (a) (i) The Bankruptcy Court (with respect to the bankruptcy
proceeding of the Parent) shall have entered an Order which shall be a Final
Order approving the letter agreement in form and substance satisfactory to the
Buyer, the Parent and the Company pursuant to which the Parent shall guarantee
the Seller's obligations with respect to certain tax matters. The Buyer shall
have received all other documents and instruments to be delivered to the Buyer
pursuant to Section 2.3(b).

                   (ii) The Buyer shall have entered into (A) an agreement or
              agreements with the applicable Sellers and any Bankruptcy Acquiror
              of the applicable Seller's fee simple interest in the properties
              located at 1400

                                      101


              Turbine Dr. Rapid City, S.D. 57703 on the terms and conditions set
              forth on Annex F hereto in accordance with the terms and
              conditions set forth on Annex F hereto and (B) an agreement or
              agreements with the landlord of the applicable Seller's leasehold
              interest in the property located at 7140 S. Roosevelt, Tempe,
              Arizona 85283 shortening the term of the lease by two years.

         6.16 Green Tree Retail Services Bank and Conseco Finance Servicing
Corp. Transfers. CFC shall have caused (i) Green Tree Retail Services Bank to
have transferred and assigned to the Company or any of its Subsidiaries that are
Sellers of the Active Merchant Agreements owned by Green Tree Retail Services
Bank and all Assigned Receivables related thereto and (ii) Conseco Finance
Servicing Corp. to have transferred and assigned to the Company or Mill Creek
Bank Inc. all Purchased Assets owned by Conseco Finance Servicing Corp.

         6.17 Replacement Servicer. The Seller or its Affiliate shall have been
terminated as "Servicer" under each of the Private Label Credit Card Master
Trust Documents and the Buyer or a Person designated by it shall have been duly
appointed as successor servicer and all consents, approvals and rating agency
confirmations required therefor in the Private Label Credit Card Master Trust
Documents shall have been received in all cases, effective as of the Cut-Off
Time.

              Any condition specified in this ARTICLE 6 may be waived by the
Buyer; provided, however, that no such waiver shall be effective unless it is
set forth in a writing executed by the Buyer or unless the Buyer agrees in
writing to consummate the transactions contemplated by this Agreement without
fulfillment of such condition.

                                   ARTICLE 7
                CONDITIONS PRECEDENT TO THE SELLERS' OBLIGATIONS

              The obligation of the Sellers to consummate the transactions
contemplated by this Agreement is subject to the fulfillment, or waiver by the
Sellers in accordance with this ARTICLE 7, of the following conditions as of the
Funding:

         7.1 Representations and Warranties; Covenants; Certificates.

              (a) The representations and warranties of the Buyer contained in
this Agreement, and in any agreement, instrument or document executed and
delivered by it in connection with the Closing (including the other Transaction
Documents to which the Buyer is a party), shall be true and correct on and as of
the Closing Date as if made on and as of such date, except as affected by
transactions permitted by this Agreement and except to the extent that any such
representation or warranty is made as of a specified date, in which case such
representation or warranty shall have been true and correct as of such specified
date, except in each case to the extent that the failures in the aggregate of
such representations and warranties (disregarding any qualifications as to
materiality contained therein) to be true and correct would not reasonably be

                                      102


expected to have, and have not had, a material adverse effect on the Buyer or
its ability to perform its obligations hereunder or to consummate the
transactions contemplated herein.

              (b) The Buyer shall have performed and complied in all material
respects with all agreements, obligations, covenants and conditions required by
this Agreement to be performed or complied with by it on or prior to the
Effective Closing Date and the Funding Date.

              (c) The Sellers shall have received a certificate, dated as of the
Funding Date, signed by authorized officers of the Buyer, in their respective
representative capacities and not individually, to the effect that such
conditions set forth in Sections 7.1(a) and (b) and Section 7.3 hereof have been
satisfied in all respects.

         7.2 Bankruptcy Condition. The Bankruptcy Court shall have entered the
Sale Order, that shall be a Final Order which has not been reversed, modified,
rescinded or stayed as of the Cut-Off Time and as of the Funding Date.

         7.3 Litigation.

              (a) There shall be in effect no pending or threatened injunction,
writ, decree or preliminary restraining order or other order of, or any other
action or proceeding before, any Governmental Authority of competent
jurisdiction that could reasonably be expected to (i) prevent or prohibit the
performance of the material obligations of the parties hereto or to materially
modify the terms or results of the transactions contemplated hereby or (ii)
cause the transactions to be rescinded following the consummation thereof.

              (b) No Governmental Authority shall have notified either party to
this Agreement that the consummation of the transactions contemplated hereby
would constitute a violation of the Laws of the United States or the Laws of any
state thereof or the Laws of the jurisdiction to which such Governmental
Authority is subject and that it intends to commence proceedings to restrain the
consummation of such transactions, to force divestiture if the same are
consummated or to materially modify the terms or results of such transactions
unless such Governmental Authority shall have withdrawn such notice, or has
otherwise indicated in writing that it will not take any action, prior to what
would otherwise have been the Effective Closing Date and the Funding Date.

         7.4 Approvals.

              (a) All authorizations, permits, licenses, certificates of
authority, consents, notices, filings, orders and approvals (other than bulk
sale approvals) from Governmental Authorities necessary to permit the CFC
Parties to perform the transactions contemplated hereby shall have been duly
obtained, made or given, shall be in form and substance reasonably satisfactory
to the Sellers, shall not be subject to

                                      103


the satisfaction of any material condition that has not been satisfied or waived
and shall be in full force and effect.

              (b) All terminations or expirations of waiting periods imposed by
any Governmental Authority necessary for the transactions contemplated under
this Agreement, if any, shall have occurred. This includes, but is not limited
to, the termination or expiration of waiting periods under the HSR Act.

         7.5 [Intentionally Omitted].

         7.6 Other Documents. The Sellers shall have received all other
documents and instruments to be delivered to the Sellers pursuant to Section
2.3(b).

              Any condition specified in this ARTICLE 7 may be waived by the
Sellers; provided, however, that no such waiver shall be effective against the
Sellers unless it is set forth in a writing executed by the Sellers or unless
the Sellers agree in writing to consummate the transactions contemplated by this
Agreement without the fulfillment of such condition.

                                    ARTICLE 8
                                   TERMINATION

         8.1 Termination Prior to Closing. This Agreement may be terminated
prior to the Closing as follows:

              (a) by mutual written agreement of the Buyer and the Company;

              (b) by the Buyer or the Company, if there shall be in effect a
Final Order restraining, enjoining or otherwise prohibiting the consummation of
the transactions contemplated by this Agreement;

              (c) by the Buyer (provided, however, that the Buyer is not then in
material breach of any representation, warranty, covenant or other agreement
contained herein), if there shall have been a breach of any of the
representations or warranties of the Sellers that would have a Material Adverse
Effect or a material breach of any of the covenants set forth in this Agreement
on the part of the Sellers, which breach is not cured within 15 Business Days
following written notice to the Company;

              (d) by the Company (provided, however, that none of the Sellers is
then in material breach of any representation, warranty, covenant or other
agreement contained herein), if there shall have been a breach of any of the
representations or warranties that would have a material adverse effect on the
Buyer's ability to perform its obligations hereunder or to consummate the
transactions contemplated herein or a material breach of any of the covenants
set forth in this Agreement on the part of the Buyer, which breach is not cured
within 15 Business Days following written notice to the Buyer;

                                      104


              (e) [Intentionally Omitted];

              (f) [Intentionally Omitted];

              (g) by the Buyer or the Company, if the Funding Date has not
occurred by the Drop Dead Date; provided, however, that such failure of the
Funding Date to occur is not caused by a breach of this Agreement by the
terminating party;

              (h) [Intentionally Omitted];

              (i) [Intentionally Omitted];

              (j) (i) by the Buyer, in the event either that the Shortfall
Amount is $50 million or more; or

                   (ii) by the Company, in the event the Shortfall Amount is $50
              million or more, unless the Buyer elects to consummate the
              transactions contemplated in this Agreement and other Transaction
              Documents and pay the amount set forth in Section 2.4(b)(i)
              hereof.

         8.2 [Intentionally Omitted].

         8.3 No Consequential Damages. If this Agreement is terminated pursuant
to Section 8.1(d), the sole and exclusive remedy of the CFC Parties and their
Affiliates shall be strictly limited to retention of the Purchased Assets and
the prompt payment by the Buyer to the Company of any Losses on an after Tax
basis actually incurred or suffered by the Sellers as a result of such breach.
If this Agreement is terminated pursuant to Section 8.1(c), the sole and
exclusive remedy of the Buyer and its Affiliates shall be strictly limited to
the prompt payment by the Company of any Losses on an after tax basis actually
incurred or suffered by the Buyer as a result of such breach. In no event shall
(a) the Buyer or its Affiliates have any Liability (including, without
limitation, pursuant to Section 9.2(b) hereof) to the CFC Parties or their
respective Affiliates or any other Person or (b) the Sellers or their respective
Affiliates have any Liability (including, without limitation, pursuant to
Section 9.2(a) hereof) to the Buyer or any other Person, in either case, for any
special, consequential or punitive damages, and any such claim, right or cause
of action for any damages that are special, consequential or punitive is hereby
fully waived, released and forever discharged.

         8.4 Effect of Termination. If the transactions contemplated hereby are
consummated, then this Agreement shall become null and void and of no further
force and effect and there shall be no Liability on the part of any Party to any
other Party or its shareholders, directors or officers, except as contemplated
by ARTICLE 8 and ARTICLE 9 hereof and except for Liabilities for breach by
either party hereto of this Agreement prior to the termination hereof.

                                      105


                                   ARTICLE 9
                  SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION

         9.1 Survival of Representations.

              (a) The respective representations and warranties of the Parties
contained herein and in any Transaction Document or in any other agreement,
certificate, instrument or other document delivered pursuant hereto or thereto
shall survive the Funding until a date 12 months from the Funding Date; and
provided, however, that representations and warranties contained in Section 3.22
hereof shall survive the Funding until 60 days after the lapse of the applicable
statute of limitations. No claim may be asserted nor may any action be commenced
against the Sellers pursuant to Section 9.2(a)(ii) or against the Buyer pursuant
to Section 9.2(b)(i) unless written notice of such claim or action is received
by the Sellers, in the case of Section 9.2(a)(ii), and Buyer, in the case of
Section 9.2(b)(i) on or prior to the date on which the representation or
warranty is based ceases to survive as set forth in the prior sentence (it being
agreed and understood that if a claim for a breach of a representation or
warranty is timely made, the representation or warranty shall, solely for
purposes of such claim, survive until the date on which such claim is finally
liquidated or otherwise resolved).

              (b) Except as otherwise provided herein, the respective covenants
of the Parties contained in this Agreement, the other Transaction Documents or
in any other agreement, certificate, instrument or other document delivered
pursuant hereto or thereto shall survive the Closing indefinitely.
Notwithstanding anything to the contrary set forth herein, the representations
and warranties pertaining to any claim filed prior to the expiration of the
relevant survival period specified in Section 9.1(a) hereof, shall, solely for
purposes of such claim survive until the resolution of such claim.

         9.2 Indemnification.

              (a) From and after the Funding Date and subject to Sections 9.3
and 9.6 hereof), the Sellers on a joint and several basis shall indemnify,
defend and hold the Buyer, its Affiliates and their respective directors,
officers, employees, representatives, agents, successors and assigns
(collectively, the "Buyer Indemnified Parties") harmless, from and against all
Losses on an after-Tax basis that may be incurred or suffered by any Buyer
Indemnified Party resulting or arising from, related to or incurred or suffered
in connection with:

                   (i) any failure of the CFC Parties to pay, perform and
              discharge any Excluded Liabilities;

                   (ii) any breach of any representation or warranty of the CFC
              Parties contained herein or in any other Transaction Document or
              in any other agreement, certificate, instrument or other document
              delivered

                                      106


              pursuant hereto or thereto including any exhibit or schedule
              hereto and thereto;

                   (iii) any breach of any covenant, obligation or agreement of
              the CFC Parties contained herein or in any other Transaction
              Document or in any other agreement, certificate, instrument or
              other document delivered pursuant hereto or thereto;

                   (iv) any failure to comply with any "bulk sales" or similar
              laws promulgated by any Governmental Authority; and

                   (v) any failure of the CFC Parties to pay, perform or
              discharge any of the Assumed Liabilities to the extent that such
              Assumed Liabilities were due and payable or were required to be
              performed by the owner of the Purchased Assets from the Cut-Off
              Time through the Funding Date.

              Notwithstanding the foregoing, Mill Creek Bank shall have no
obligations under this Section 9.2(a).

              (b) From and after the Funding Date, subject to Sections 9.3 and
9.6, the Buyer shall indemnify, defend and hold the Sellers, their Affiliates
and their respective directors, officers, employees, representatives, agents,
successors and assigns (collectively, the "Seller Indemnified Parties", and
together with the Buyer Indemnified Parties, the "Indemnified Parties") harmless
from and against all Losses, that may be incurred or suffered by any Seller
Indemnified Party resulting or arising from, related to or incurred or suffered
in connection with:

                   (i) any breach of any representation or warranty of the Buyer
              contained herein or in any other Transaction Document or in any
              other agreement, certificate, instrument or other document
              delivered pursuant hereto or thereto (including any exhibit or
              schedule hereto and thereto);

                   (ii) any breach of any covenant, obligation or agreement of
              the Buyer contained herein or in any other Transaction Document or
              in any other agreement, certificate, instrument or other document
              delivered pursuant hereto or thereto; or

                   (iii) any failure of the Buyer to assume, pay, perform and
              discharge any Assumed Liability (other than the Assumed
              Liabilities paid, performed or discharged by the CFC Parties
              pursuant to Section 2.2(a)(ii) hereof) as set forth in Section
              2.2(a) hereof.

         9.3 Qualifications on Indemnification. Notwithstanding anything to the
contrary contained in this Agreement,

              (a) Each Buyer Indemnified Party entitled to indemnification for
any Losses suffered or incurred by such Person resulting from, arising out of,
based on or relating to (A) a breach of any representation set forth in Section
3.22 or (B) a

                                       107


failure to perform any covenant, agreement or undertaking of any Seller shall be
entitled to such indemnification for the full amount of such Losses regardless
of the amount of Losses.

              (b) Each Buyer Indemnified Party entitled to indemnification for
any Losses suffered or incurred by such Person resulting from, arising out of,
based on or relating to any breach described in Sections 9.2(a)(ii) and
9.2(a)(iii) shall be entitled to such indemnification for the full amount of
such Losses regardless of the amount of the Losses; provided, however, that the
Sellers shall not be required to indemnify the Buyer Indemnified Parties for any
Losses pursuant to Section 9.2(a)(ii) hereof (other than with respect to
representations under Section 3.22 hereof) until the aggregate amount of such
Losses exceeds $3.5 million (the "Indemnity Deductible"), and then only for the
excess of such Losses over such Indemnity Deductible; provided, further, that
the Sellers shall not be required to indemnify the Buyer Indemnified Parties for
any Losses pursuant to Section 9.2(a)(ii) (other than with respect to the
representations under Section 3.22) for any Losses in the aggregate in excess of
$35 million (the "Cap").

              (c) Each Seller Indemnified Party entitled to indemnification for
any Losses suffered or incurred by such Person resulting from, arising out of,
based on or relating to any breach described on Sections 9.2(b)(ii) and
9.2(b)(iii) shall be entitled to such indemnification for the full amount of
such Losses regardless of the amount of the Losses; provided, however, that the
Buyer shall not be required to indemnify the Seller Indemnified Parties for any
Losses (i) pursuant to Section 9.2(b)(i) until the aggregate amount of such
Losses exceeds the Indemnity Deductible, and then only for the excess of such
Losses over such Indemnity Deductible; and provided, further, that the Buyer
shall not be required to indemnify the Seller Indemnified Parties for any Losses
pursuant to Section 9.2(b)(i) for any Losses in the aggregate in excess of the
Cap.

              (d) For the purposes of determining whether the Indemnity
Deductible has been attained and whether any Indemnified Party is entitled to
indemnification for Losses pursuant to Section 9.2(a)(ii) or Section 9.2(b)(i),
all qualifications as to "material," "materiality," "Material Adverse Effect,"
or similar exception or qualifier contained therein shall be disregarded.

         9.4 Notice and Defense of Claims.

              (a) Notice of Claims. If an Indemnified Party desires to assert a
Direct Claim or receives notice of the assertion of any claim or of the
commencement of any Third Party Claim with respect to which indemnification is
to be sought from an Indemnifying Party, the Indemnified Party will give such
Indemnifying Party reasonable prompt notice thereof, but the failure to give
timely notice will not affect the rights or obligations of the Indemnifying
Party except to the extent that, as a result of such failure, the Indemnifying
Party has been materially prejudiced by the Indemnified Party's failure to give
such notice, in which case the Indemnifying Party shall be relieved from its
obligations hereunder only to the extent of such material

                                      108


prejudice. Such notice shall describe the nature of the Third Party Claim in
reasonable detail and will indicate the estimated amount, if practicable, of the
Loss that has been or may be sustained by the Indemnified Party. Any Notice of a
Direct Claim will state the nature of such claim in reasonable detail and
indicate the estimated amount, if practicable.

              (b) Third Party Claim Defense. Subject to Section 9.4(d), the
Indemnifying Party will have the right to participate in or, by giving notice to
the Indemnified Party, to elect to assume the defense of, any Third Party Claim
at such Indemnifying Party's own expense and by such Indemnifying Party's own
counsel. If an Indemnifying Party assumes the defense, it must pursue such
defense, settlement or negotiation diligently and in good faith. The Indemnified
Party shall have the right, but not the obligation, to participate at its own
expense in the defense thereof by counsel of the Indemnified Party's choice and
shall in any event use its commercially reasonable efforts to cooperate with and
assist the Indemnifying Party; provided, however, that any Indemnified Party
shall be entitled to participate in the defense of any such Third Party Claim
with counsel of its own choice at the expense of the Indemnifying Party if, in
the good faith judgment of the Indemnified Party's counsel, representation by
the Indemnifying Party's counsel presents a material conflict of interest or if
the Indemnified Party has conflicting defenses. Subject to the proviso in the
immediately preceding sentence, if within 10 calendar days after an Indemnified
Party provides notice to the Indemnifying Party of any Third Party Claim, the
Indemnified Party receives notice from the Indemnifying Party that such
Indemnifying Party has elected to assume the defense of such Third Party Claim,
the Indemnifying Party will not be liable for any legal expenses subsequently
incurred by the Indemnified Party in connection with the defense thereof.
Without the prior written consent of the Indemnified Party, the Indemnifying
Party will not enter into any settlement or compromise of any Third Party Claim
unless the sole relief provided is monetary damages that are paid in full by the
Indemnifying Party.

              (c) Direct Claim. The Indemnifying Party will have a period of 45
calendar days from the receipt of notice of a Direct Claim within which to
respond to such Direct Claim. If the Indemnifying Party does not respond within
such 45-day period, the Indemnifying Party will be deemed to have accepted such
Direct Claim. If the Indemnifying Party rejects such Direct Claim, the
Indemnified Party will be free to seek enforcement of its rights to
indemnification under this Agreement.

              (d) Non-Assumable Claims. The Buyer shall have the sole right,
with counsel of its choice, to defend and/or settle any claim that is a
Non-Assumable Claim and Sellers will not be entitled to assume defense thereof;
provided, however, that the Buyer shall consult with the Sellers before settling
any Non-Assumable Claim. With respect to any Non-Assumable Claim, upon the
receipt by the Buyer of an offer of compromise relating to such Non-Assumable
Claim that includes an unconditional release of the Buyer and requires only the
payment of money, the Buyer shall promptly inform the Sellers of such offer
together with a description of the material terms and conditions of such offer.
The Sellers shall have the right to terminate their liability for Losses in
respect of any Non-Assumable Claim that is the subject of such an

                                      109


unconditional offer of compromise upon their irrevocable offer to the Buyer, as
applicable, to pay the amount contained in such offer to compromise; upon
receipt, in the form of immediately available funds by the Buyer, of the amount
contained in such offer to compromise and payment of all other Losses suffered
or incurred by any of them in respect of such Non-Assumable Claim, the Sellers
shall have no further liability to the Buyer in respect of such Non-Assumable
Claim.

         9.5 Tax Treatment. The Parties agree that any indemnification payments
made pursuant to this Agreement shall be treated for Tax purposes as an
adjustment to the Purchase Price, unless otherwise required by applicable Law.
All indemnification payments under this Agreement shall include an amount
sufficient to hold the recipient harmless on a net after-Tax basis from all
Taxes imposed with respect to the receipt or on account of the payment.

         9.6 Remedy. Notwithstanding any other provisions of this Agreement
other than Sections 2.5 and 9.7 hereof and for equitable remedies (including,
without limitation, specific performance), absent fraud, from and after the
Funding Date, the sole remedy of a party in connection with a breach of any
representation, warranty or covenant contained herein or in any other
Transaction Document or in any other agreement, certificate, instrument or other
document delivered pursuant hereto or thereto shall be set forth in this ARTICLE
9.

         9.7 Administrative Expense; Administrative Priority.

              (a) The following shall constitute allowed administrative expenses
of the CFC Debtors under section 364(c)(1) of the Bankruptcy Code with priority
over any and all administrative expenses of the kind specified in section 503(b)
or 507(b) of the Bankruptcy Code: the first $3.5 million of the Sellers'
obligations under Section 5.1(b)(i) and this ARTICLE 9 ("Administrative Tax and
Indemnity Claims"); the balance of Seller's obligations in excess of the first
$3.5 million referenced above shall be allowed as an unsecured prepetition
claim. Notwithstanding anything to the contrary herein, the Parties acknowledge
and agree that the obligations of the CFC Parties pursuant to Section 2.5 hereof
shall be separately enforceable at law or in equity and shall not constitute a
claim under ARTICLE 9 hereof.

              (b) The Buyer shall not be required to file any request for
allowance of administrative claims or proofs of claim with the Bankruptcy Court
or otherwise. Any notices or claims provided by the Buyer hereunder pursuant to
this ARTICLE 9 shall satisfy and perfect any such request for administrative
claims or proof of claim filing requirements otherwise applicable to holders of
claims in the Chapter 11 case. In the event that the Buyer gives notice of a
claim or makes a claim pursuant to ARTICLE 9 hereof that is liquidated as to
amount and the CFC Debtors dispute such claim, the CFC Debtors shall deposit
with the Administrative Claims Escrow Agent, on account of, pending allowance
of, such claim cash in an amount equal to all Administrative Tax and Indemnity
Claims, not to exceed $3.5 million, the disposition of which shall be governed
by the terms and conditions set forth in the Administrative Claims Escrow
Agreement. In addition, the CFC Debtors shall deposit with the

                                      110


Administrative Claims Escrow Agent on account of, and pending allowance of, all
general unsecured claims for Administrative and Tax and Indemnity Claims in
excess of $3.5 million, any property distributable on account of general
unsecured claims pursuant to a confirmed chapter 11 plan of the CFC Debtors.
Notwithstanding the foregoing, any reserve established pursuant to this Section
9.7(b) may be increased upon motion or other request by the Buyer filed with the
Bankruptcy Court up to the Cap. The CFC Debtors shall not seek to disallow,
expunge or estimate any claims of Bayer under section 502 of the Bankruptcy Code
or otherwise, on the grounds that such claims are contingent or unliquidated.

              (c) On or prior to the Funding, the Buyer, the Sellers and the
Administrative Claims Escrow Agent shall enter into the Administrative Claims
Escrow Agreement. Such Administrative Claims Escrow Agreement shall terminate
with respect to any claims made pursuant to Section 9.2(a) on the date an order
of the Bankruptcy Court allowing or disallowing such indemnity claim is entered;
provided, however, that promptly after the entry of such order, the Buyer and
the Company shall instruct the Administrative Claim Escrow Agent to release the
amount allowed or disallowed by such order and the Buyer shall have received
such amounts.

                                   ARTICLE 10
                                  MISCELLANEOUS

         10.1 Expenses. Except as otherwise specifically provided in this
Agreement, the Sellers and the Buyer will each pay all costs and expenses
incurred by each of them, or on their behalf respectively,. in connection with
this Agreement and the transactions contemplated hereby, including fees and
expenses of their own financial consultants, accountants and counsel.

         10.2 Amendment and Waiver. This Agreement may be amended and any
provision of this Agreement may be waived; provided, however, that any such
amendment or waiver shall be binding upon a Party hereto only if such amendment
or waiver is set forth in a writing executed by such Party. No course of dealing
between or among any persons having any interest in this Agreement shall be
deemed effective to modify, amend or discharge any part of this Agreement or any
rights or obligations of any party hereto under or by reason of this Agreement.

         10.3 Notices. All notices, demands and other communications given or
delivered under this Agreement shall be in writing and shall be deemed to have
been given when personally delivered, mailed by first class mail, return receipt
requested, or delivered by express courier service or telecopied (with hard copy
to follow). Notices, demands and communications to the Sellers and the Buyer
shall, unless another address is specified in writing, be sent to the address or
telecopy number indicated below:

                                      111


     Notices to the Sellers:        Conseco Finance Corp.
     ----------------------         1100 Landmark Towers
                                    Saint Paul, Minnesota 55102
                                    Attention: Charles H. Cremens
                                    Telecopy No.: (651) 293-5746

                                    with a copy (which shall not constitute
                                    notice) to:

                                    Kirkland & Ellis
                                    200 East Randolph Drive
                                    Chicago, IL 60601
                                    Attention:  James H.M. Sprayregen, P.C.
                                    Telecopy: (312) 861-2200

     Notices to the Buyer:          General Electric Capital Corporation
     --------------------           General Electric Consumer Finance
                                    1600 Summer Street
                                    Stamford, CT  06905
                                    Attention:  Ron Lemmens
                                    Telecopy:  (203) 602-8626

                                    with copies (which shall not constitute
                                    notice) to:

                                    General Electric Capital Corporation
                                    General Electric Consumer Finance
                                    1600 Summer Street
                                    Stamford, CT  06905
                                    Attention: General Counsel
                                        General Electric Consumer Finance
                                           Americas
                                    Telecopy: (203) 961-5331

                                    with copies (which shall not constitute
                                    notice) to:

                                    Weil, Gotshal & Manges LLP
                                    767 Fifth Avenue
                                    New York, NY 10153
                                    Attention: Jane McDonald
                                    Telecopy: (212) 310-8007


         10.4 Binding Agreement; Assignment. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and

                                      112


their respective successors and permitted assigns; provided that neither this
Agreement nor any of the rights, interests or obligations hereunder may be
assigned by the Sellers without the prior written consent of the Buyer or by the
Buyer without the prior written consent of the Sellers. Notwithstanding the
foregoing, without the prior written consent of the Sellers, each of the Buyer
and its permitted assigns may at any time, in its sole discretion, assign, in
whole or in part, (a) its rights and obligations pursuant to this Agreement and
the other Transaction Documents to one or more of its Affiliates, (b) after the
Funding, its rights under this Agreement and, except as otherwise specifically
set forth therein, the other Transaction Documents, in whole or in part, to any
Person. However, the Buyer and its permitted assigns shall not be released or
novated from any obligations assigned by the Buyer or its permitted assigns
pursuant to this Section 10.4.

         10.5 Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable Law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable Law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provisions or the remaining provisions of this Agreement.

         10.6 Construction. The language used in this Agreement shall be deemed
to be the language chosen by the Parties to express their mutual intent, and no
rule of strict construction shall be applied against any Person. Any reference
to any federal, state, local or foreign statute or law shall be deemed also to
refer to all rules and regulations promulgated thereunder, unless the context
otherwise requires. The word "including" shall mean "including without
limitation".

         10.7 Captions. The captions used in this Agreement are for convenience
of reference only and do not constitute a part of this Agreement and shall not
be deemed to limit, characterize or in any way affect any provision of this
Agreement, and all provisions of this Agreement shall be enforced and construed
as if no caption had been used in this Agreement.

         10.8 Entire Agreement. The annexes, exhibits and schedules identified
in this Agreement are incorporated herein by reference. This Agreement and the
other Transaction Documents (including the Confidentiality Agreement) contain
the entire agreement between the Parties and supersede any prior understandings,
agreements or representations by or between the Parties, written or oral, which
may have related to the subject matter hereof in any way.

         10.9 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original but all of which taken
together shall constitute one and the same instrument.

         10.10 Governing Law. All questions concerning the construction,
validity and interpretation of this Agreement shall be governed by and construed
in accordance with the domestic Laws of the State of New York, without giving
effect to any choice of law or conflict of law provision (whether of the State
of New York or any other jurisdiction)

                                      113


that would cause the application of the Laws of any jurisdiction other than the
State of New York.

         10.11 Parties in Interest. Nothing in this Agreement, express or
implied, is intended to confer on any Person other than the Parties and their
respective successors and assigns any rights or remedies under or by virtue of
this Agreement.

         10.12 Consent to Jurisdiction. THE PARTIES AGREE THAT JURISDICTION AND
VENUE IN ANY ACTION BROUGHT BY ANY PARTY PURSUANT TO THIS AGREEMENT SHALL
PROPERLY (BUT NOT EXCLUSIVELY) LIE IN ANY FEDERAL OR STATE COURT LOCATED IN NEW
YORK, NEW YORK; PROVIDED, HOWEVER, THAT THE PARTIES AGREE THAT JURISDICTION AND
VENUE IN ANY ACTION BROUGHT BY ANY PARTY PURSUANT TO THIS AGREEMENT OVER ANY
DISPUTE RELATING TO THE AUCTION OR THE PURCHASED ASSETS SHALL EXCLUSIVELY LIE
WITH THE BANKRUPTCY COURT SO LONG AS THE BANKRUPTCY COURT SHALL BE WILLING TO
HEAR SUCH DISPUTE. BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PARTY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF SUCH COURTS FOR ITSELF AND IN RESPECT
OF ITS PROPERTY WITH RESPECT TO SUCH ACTION. THE PARTIES IRREVOCABLY AGREE THAT
VENUE WOULD BE PROPER IN SUCH COURT, AND HEREBY WAIVE ANY OBJECTION THAT SUCH
COURT IS AN IMPROPER OR INCONVENIENT FORUM FOR THE RESOLUTION OF SUCH ACTION.
THE PARTIES FURTHER AGREE THAT THE MAILING BY CERTIFIED OR REGISTERED MAIL AT
SUCH LOCATIONS AS INDICATED IN SECTION 10.3, HEREOF RETURN RECEIPT REQUESTED, OF
ANY PROCESS REQUIRED BY ANY SUCH COURT SHALL CONSTITUTE VALID AND LAWFUL SERVICE
OF PROCESS AGAINST THEM, WITHOUT NECESSITY FOR SERVICE BY ANY OTHER MEANS
PROVIDED BY STATUTE OR RULE OF COURT.

         10.13 Delivery by Facsimile. This Agreement and any other Transaction
Document, and any amendments hereto or thereto, to the extent signed and
delivered by means of a facsimile machine, shall be treated in all manner and
respects as an original Contract and shall be considered to have the same
binding legal effects as if it were the original signed version thereof
delivered in person. At the request of any Party hereto or to any such Contract,
each other Party hereto or thereto shall re-execute original forms thereof and
deliver them to all other Parties. No Party hereto or to any such Contract shall
raise the use of a facsimile machine to deliver a signature or the fact that any
signature or Contract was transmitted or communicated through the use of a
facsimile machine as a defense to the formation of a Contract and each such
Party forever waives any such defense.

         10.14 Disclosure Schedules. All schedules attached hereto or referred
to herein are hereby incorporated in and made a part of this Agreement as if set
forth in full herein. The description or listing of a matter, event or thing
within the schedules (whether in response for a description or listing of
material items or otherwise) shall not be deemed an admission or acknowledgment
that such matter, event or thing is "material" for any

                                      114


purpose. In addition, matters reflected in the schedules are not necessarily
limited to matters required by this Agreement to be reflected in such schedules.
Such additional matters are set forth for informational purposes only and do not
necessarily include other matters of a similar nature.

                            [Signature pages follow]

                                      115



              IN WITNESS WHEREOF, the undersigned have executed this Asset
Purchase Agreement as of the date first written above.

                                        CONSECO FINANCE CORP.



                                        By: /s/ Keith Anderson
                                           -------------------------------------
                                        Name: Keith Anderson
                                        Its:



                                        CONSECO FINANCE CANADA HOLDING COMPANY


                                        By: /s/ Keith Anderson
                                           -------------------------------------
                                        Name: Keith Anderson
                                        Its:



                                        CONSECO FINANCE CANADA COMPANY


                                        By: /s/ Keith Anderson
                                           -------------------------------------
                                        Name: Keith Anderson
                                        Its:




                                        RICE PARK PROPERTIES CORPORATION


                                        By: /s/ Keith Anderson
                                           -------------------------------------
                                        Name: Keith Anderson
                                        Its:







                                        GREEN TREE RETAIL SERVICES BANK, INC.


                                        By: /s/ Daniel J. Finn, Jr.
                                           -------------------------------------
                                        Name: Daniel J. Finn, Jr.
                                        Its:  President



                                        MILL CREEK BANK INC.


                                        By: /s/ Shawn R. Gensch
                                           -------------------------------------
                                        Name: Shawn R. Gensch
                                        Its:  President



                                        MILL CREEK SERVICING CORPORATION


                                        By: /s/ Shawn R. Gensch
                                           -------------------------------------
                                        Name: Shawn R. Gensch
                                        Its:  SVP & CFO



                                        CONSECO FINANCE CREDIT CARD
                                        FUNDING CORP.


                                        By: /s/ Keith Anderson
                                           -------------------------------------
                                        Name: Keith Anderson
                                        Its:


                                        GENERAL ELECTRICAL CAPITAL CORPORATION


                                        By: /s/ Renier Lemmens
                                           -------------------------------------
                                        Name: Renier Lemmens
                                        Its:  Authorized Representative







                          PURCHASED BUSINESSES SCHEDULE







                                INDEX OF EXHIBITS



Exhibit A               -        Additional Representations and Warranties with
                                 Respect to the Loans
Exhibit B               -        [Intentionally Omitted].
Exhibit C               -        [Intentionally Omitted].
Exhibit D               -        Form of Lost Document Affidavit

Annex A                 -        November 30 Balance Sheet
Annex B                 -        December 31 Balance Sheet
Annex C                 -        January 31 Balance Sheet
Annex D                 -        Servicing Agreements Terms
Annex E                 -        Form of Sale Order
Annex F                 -        Lease Terms
Annex G                 -        [Intentionally Omitted]
Annex H                 -        Adjustments to Book and Records
Annex I                 -        Pro Forma Schedule as of January 31, 2003


                                      113


                                    EXHIBIT A

1.   Loans. The Sellers make the following representations with respect (a) to
     the Loans that are Purchased Assets and (b) the Securitized Loans relating
     to the PL Business (collectively, the "Covered Loans"):

              (a) Binding Obligation. The Covered Loans are the legal, valid and
binding obligations of the Obligor thereunder and are enforceable by the
applicable Sellers in accordance with their written terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar Laws affecting the enforcement of creditors' rights
generally.

              (b) No Defenses. The Covered Loans are, or as of the Cut-Off Time
and as of the Funding Date will be, in full force and effect free and clear of
all Liens (other than Permitted Liens) and are not subject to any right of
rescission, setoff, counterclaim or defense, including the defense of usury by
any Person, and the operation of any of the terms of such Loans or the exercise
of any right thereunder by any Person will not render such Loans unenforceable,
in whole or in part, or subject to any right of rescission, setoff, counterclaim
or defense, including the defense of usury.

              (c) Insurance. In the case of all applicable Covered Loans,
including, but not limited to Home Improvement Loans, relating to real property,
other than unsecured Loans, as of the date a CFC Party originated or purchased
(as applicable) such Covered Loan, all improvements on the related real property
were covered by a hazard insurance policy.

              (d) Origination. Each Covered Loan constitutes and arose out of a
bona fide business transaction entered into by the Sellers in the ordinary
course of business consistent with past practices of the Sellers, and if not
originated by the Sellers, then purchased by or assigned to a Seller from a home
improvement contractor, dealer or a similarly situated Person in the ordinary
course of business of the Sellers consistent with past practices of the
applicable Sellers. The origination practices with respect to each Covered Loan
(i) have been and are in all material respects legal and proper in the
origination business and consumer finance business and (ii) are in accordance
with the Sellers' underwriting guidelines in all material respects (except that,
with respect to each Covered Loan that was originated by a Person other than a
Seller, the Sellers make such origination practices representation and warranty
only to their Knowledge).

              (e) Lawful Assignment. The Covered Loans were not originated in
and are not subject to the Laws of any jurisdiction whose Laws would make the
transfer or ownership thereof unlawful or unenforceable. The assignment and any
and all documents executed and delivered by the Sellers pursuant to this
Agreement each constitutes the legal, valid and binding obligation of the
Sellers enforceable in accordance with their terms. On the Funding Date,
effective as of the Cut-Off Time, the Sellers will have executed a valid blanket
assignment of the Covered Loans transferred to the Buyer, and will have
transferred all their right, title and interest in such Covered Loans,




including all rights the Sellers may have against the originating Person with
respect to Covered Loans originated by Persons other than a Seller.

              (f) Compliance with Laws. All requirements of any Law, including
without limitation, the Finance Laws, and FHA regulations, if applicable, have
been complied with in all material respects and such compliance is not affected
by the holding or ownership of the Covered Loans.

              (g) Loans In Force. The Covered Loans have not been satisfied,
subordinated or rescinded, in whole or in part, and, in the case of such Loans
or Securitized Loans secured by collateral, such collateral has not been
released, in whole or in part (except as released in the ordinary course of
business consistent with past practices), from the Lien created thereby.

              (h) Liens. With respect to Loans that are Home Improvement Loans,
such Covered Loans have been duly executed and delivered by the Obligors and the
related mortgage are valid and subsisting first, second or third Liens on the
property described therein or the Home Improvement Loans are unsecured
borrowings of the Obligor. On the Funding Date, effective as of the Cut-Off
Time, the Sellers will assign any related mortgage to the Buyer, and the Buyer
will have valid and subsisting Liens on the property therein described. The
Sellers have full right to sell and assign such Loans to the Buyer.

              (i) Originals. The Sellers have in their possession (either
directly or through a custodian) and, as of the Funding Date, will have
delivered to the Buyer, all originals of the mortgage notes, promissory notes,
Contracts, applications and certificates, security agreements, certificates of
title, UCC financing statement that constitute or evidence the Covered Loans,
and to the extent applicable, together with an allonge affixed to each such note
and certificate showing a complete chain of endorsements to Buyer. As to any
missing promissory note, contract or certificate, the Sellers shall deliver or
cause to be delivered, a copy of the lost document and a lost document affidavit
with respect thereto, the form of which is attached hereto at Exhibit D. In the
case of Loans secured by real property, including but not limited to Home
Improvement Loans, the Sellers will deliver, or cause to be delivered, to the
Buyer on the Funding Date, effective as of the Cut-Off Time, the original
mortgage or deed of trust, with evidence of recording thereon, or if the
original mortgage has not yet been returned from the recording office, a true
copy of the mortgage which has been delivered for recording in the appropriate
recording office of the jurisdiction in which the real property has been
delivered, and executed assignments of mortgage showing a complete chain of
assignment of mortgage to the Buyer.

              (j) Notation of Security Interest. With respect to the Covered
Loans where the underlying collateral, such as consumer products, is located in
a state in which notation of a security interest on the title document is
required or permitted to perfect such security interest, the title document
shows (or, if a new or replacement title document with respect to such
collateral is being applied for, then such title document will be issued within
180 days and will show) a Seller as the holder of a first priority

                                      115


security interest in such collateral. If the collateral is located in a state in
which the filing of a financing statement under the UCC is required to perfect a
security interest in goods of the type of such collateral, such filings or
recording have been duly made and show a Seller as a secured party.

              (k) Purchase Money Security Interest. The retail installment
contracts create a "purchase money security interest" (as defined in the UCC) in
favor of the Sellers in the consumer product covered thereby as security for
payment of the outstanding balance of such retail installment contract and all
other obligations of the Obligor under such retail installment contract; such
security interest has been assigned by the Sellers to the Buyer and at the time
of such assignment the Buyer will have a valid purchase money security interest
in such consumer product.

              (l) [Intentionally Omitted].

              (m) Home Ownership and Equity Protection Act. With respect to any
Loan subject to the Home Ownership and Equity Protection Act of 1994, each such
Loan has been originated and serviced in compliance with the provisions thereof.

              (n) Licensing Requirements. All CFC Parties that have had any
interest in any Covered Loan, whether as mortgagee, assignee, pledgee or
otherwise, are (or, during the period in which they held and disposed of such
interest, were) (1) in compliance with any and all applicable licensing
requirements of the Laws of the state where the related mortgaged property is
located, except where the failure to comply with such licensing requirements
will not adversely affect the Buyer's interest in the Covered Loans, all parties
were (2) (a) organized under the Laws of such jurisdiction, or (b) qualified to
do business in such jurisdiction, or (c) federal savings and loan associations,
savings banks, industrial loan corporations or national banks having principal
offices in such jurisdiction, or (d) not doing business in such jurisdiction,
and (2) all parties had capacity to execute the Loans and Securitized Loans.

2.   PL Residual Assets. The Sellers make the following representations with
     respect to the PL Residual Assets:

              (a) All of the PL Residual Assets that are certificated securities
have been validly issued, and are fully paid and non-assessable, and have been
offered, issued and sold in compliance with all applicable laws. There are no
outstanding rights, options, warrants or agreements for the purchase from, or
sale or issuance, in connection with such PL Residual Assets. There are no
agreements on the part of the Sellers to issue, sell or distribute the PL
Residual Assets and the Sellers have no obligation (contingent or otherwise) to
purchase, redeem or otherwise acquire any securities or interest therein or to
pay any dividend or make any distribution in respect of the PL Residual Assets.

              (b) Except as indicated in the PL Residuals Schedule, no servicing
termination or over collateralization triggers or early amortization events have
occurred on any Securitization relating to the PL Business.

                                      116


              (c) The servicing practices used by each of the CFC Parties in
Securitizations relating to the PL Business are in compliance in all material
respects with the requirements of the related agreements and federal, state and
local laws, rules and regulations.


                                      117


                                    EXHIBIT D

                         FORM OF LOST DOCUMENT AFFIDAVIT

              The undersigned being duly sworn, according to law, deposes and
states that he is an officer of [________________] (the "Holder"), that he makes
this Affidavit on its behalf, being authorized to do so, and that the facts
stated herein are true and correct to the best of his knowledge, information and
belief.

              1. On or about [________________], [the Company, ("Company")]
issued [document].

              2. The Holder is the sole legal and beneficial holder of the
[document].

              3. The Holder has reason to believe that the [document] has been
lost, stolen or destroyed because the Holder has caused a diligent search to be
made for the [document], and the [document] is nowhere to be found.

              4. If the [document] is found or comes into the Holder's
possession or control or into the possession or control of the Holder's
representatives or assigns, the [document] shall be delivered to the Company to
be cancelled.

              5. The Holder relinquishes any claim of any nature whatsoever
which it had in connection with the [document].

              6. The undersigned states that the above statements are true and
to the best of the undersigned's knowledge, information and belief.


                                 [COMPANY]



                                 By:___________________________
                                    Name:
                                    Title:



Sworn to and Subscribed before
me this ____ day of _________ __, 2003


- ---------------------------
Notary Public








================================================================================





                            ASSET PURCHASE AGREEMENT



                                  by and among



                             CONSECO FINANCE CORP.,



                        THE SELLING ENTITIES NAMED HEREIN



                                       and



                      GENERAL ELECTRIC CAPITAL CORPORATION



                                   Dated as of



                                 March 14, 2003






================================================================================






                                TABLE OF CONTENTS




                                                                                                      Page
                                                                                           
ARTICLE 1             DEFINITIONS.......................................................................1

         1.1      Definitions...........................................................................1

ARTICLE 2             PURCHASE AND SALE OF ASSETS......................................................32

         2.1      Purchased Assets.....................................................................32

         2.2      Liabilities..........................................................................34

         2.3      Funding Transactions.................................................................38

         2.4      Purchase Price.......................................................................42

         2.5      Post-Effective Time Amounts Received and Paid; Assignment of New Loans;
                  Securitized Receivables..............................................................43

         2.6      Sale of Assets.......................................................................44

         2.7      Assumption of Certain Leases and Contracts...........................................44

         2.8      Consents to Certain Assignments......................................................45

         2.9      Real Estate Taxes....................................................................45

ARTICLE 3             REPRESENTATIONS AND WARRANTIES OF THE SELLERS....................................45

         3.1      Organization and Power...............................................................45

         3.2      Authorization of Transactions........................................................46

         3.3      Absence of Conflicts; Required Consents, Approvals and Filings.......................46

         3.4      Company Subsidiaries.................................................................47

         3.5      Good Title...........................................................................47

         3.6      Compliance with Laws; Permits........................................................48

         3.7      Assets Necessary and Sufficient to Conduct Businesses................................48

         3.8      Facilities; Real Property............................................................49

         3.9      Personal Property....................................................................49

         3.10     Receivables..........................................................................49

         3.11     Material Agreements..................................................................50

         3.12     Intellectual Property................................................................51

         3.13     Brokerage............................................................................53

         3.14     Employees............................................................................53

         3.15     Affiliate Transactions...............................................................53

         3.16     ERISA; Employee Benefits.............................................................54

         3.17     Depository Institutions..............................................................54




                               TABLE OF CONTENTS
                                   (continued)



                                                                                                      Page
                                                                                           
         3.18     Litigation...........................................................................54

         3.19     Financial Statements.................................................................55

         3.20     Indebtedness; Guarantees; Absence of Undisclosed Liabilities.........................55

         3.21     PL Residual Assets...................................................................56

         3.22     Tax Matters..........................................................................56

         3.23     Insurance............................................................................58

         3.24     Environment; Health and Safety.......................................................58

         3.25     Accounting Controls..................................................................59

         3.26     Summary of Securitizations Relating to PL Business...................................59

         3.27     Representations as to Certain Purchased Assets.......................................59

         3.28     Securities Offerings.................................................................59

         3.29     No Powers of Attorney................................................................59

         3.30     Securities Laws Matters; No Registration.............................................59

         3.31     Securitizations Relating to PL Business..............................................59

         3.32     Conduct of Business..................................................................61

         3.33     Absence of Certain Changes...........................................................61

         3.34     Maintenance of Books.................................................................62

ARTICLE 4             REPRESENTATIONS AND WARRANTIES OF THE BUYER......................................62

         4.1      Organization and Corporate Power.....................................................62

         4.2      Authorization of Transaction.........................................................62

         4.3      No Violation.........................................................................63

         4.4      Governmental Authorities and Consents................................................63

         4.5      Litigation...........................................................................63

         4.6      Brokerage............................................................................63

         4.7      Availability of Funds................................................................63

         4.8      Stock Purchase.......................................................................63

         4.9      Approvals............................................................................64

         4.10     Knowledge............................................................................64

                                       ii

                               TABLE OF CONTENTS
                                   (continued)



                                                                                                      Page
                                                                                           
ARTICLE 5             ADDITIONAL AGREEMENTS............................................................64

         5.1      Tax Matters..........................................................................64

         5.2      Access to Information and Facilities.................................................70

         5.3      Confidentiality......................................................................71

         5.4      Conduct of the Businesses Prior to Funding...........................................72

         5.5      Restrictions on Certain Actions......................................................73

         5.6      Press Releases and Announcements.....................................................77

         5.7      Approvals of Third Parties; Satisfaction of Conditions to Closing....................77

         5.8      Bankruptcy Actions...................................................................78

         5.9      [Intentionally Omitted]..............................................................80

         5.10     [Intentionally Omitted]..............................................................80

         5.11     Exclusivity; No Solicitation of Transactions.........................................80

         5.12     Employees............................................................................80

         5.13     Transition...........................................................................85

         5.14     Seller's Trademarks..................................................................85

         5.15     Notices to Obligors..................................................................86

         5.16     Non-Solicitation and Non-Competition.................................................86

         5.17     Further Actions......................................................................87

         5.18     Further Assurances...................................................................87

         5.19     Mail Forwarding......................................................................87

         5.20     [Intentionally Omitted]..............................................................87

         5.21     [Intentionally Omitted]..............................................................87

         5.22     [Intentionally Omitted]..............................................................87

         5.23     Preparation of License Applications..................................................87

         5.24     Provision of Bank Information........................................................88

         5.25     Access to Records After the Funding..................................................88

         5.26     Liens................................................................................89

         5.27     Separation Matters...................................................................89

         5.28     [Intentionally Omitted]..............................................................90


                                      iii

                               TABLE OF CONTENTS
                                   (continued)



                                                                                                      Page
                                                                                          
         5.29     Financial Information................................................................90

         5.30     [Intentionally Omitted]..............................................................90

         5.31     Intellectual Property Licenses; Shared Services; Shared Systems......................90

         5.32     Pending or Threatened Litigation.....................................................91

         5.33     Insurance; Risk of Loss..............................................................91

         5.34     Supplements to Schedules; Post-Signing Information...................................92

         5.35     Payment of Brokers' or Finders' Fees.................................................92

         5.36     Powers of Attorney...................................................................92

         5.37     Non-Competition Waivers..............................................................92

         5.38     Post-Effective Closing Date Deliverables.............................................92

         5.39     Final Schedule of Assets Acquired and Liabilities Assumed............................93

         5.40     Home Equity Loan, Reaffirmed Accounts, CRAs and Charged-Off Accounts Sales...........95

         5.41     Other Notices........................................................................96

         5.42     Limited Power of Attorney............................................................96

         5.43     Wind-Down of PL Securitization.......................................................96

ARTICLE 6             CONDITIONS PRECEDENT TO THE BUYER'S OBLIGATIONS..................................96

         6.1      Representations and Warranties; Covenants; Certificates..............................97

         6.2      Bankruptcy Condition.................................................................97

         6.3      Litigation...........................................................................97

         6.4      Approvals............................................................................98

         6.5      Instruments of Conveyance and Transfer; Title........................................99

         6.6      Servicing Agreements................................................................100

         6.7      Resignation of Officers and Directors of Subject Subsidiaries.......................100

         6.8      [Intentionally Omitted].............................................................100

         6.9      No Material Adverse Effect..........................................................100

         6.10     [Intentionally Omitted].............................................................100

         6.11     Securitization Rights...............................................................100

         6.12     Tax Opinion.........................................................................101


                                       iv

                               TABLE OF CONTENTS
                                   (continued)



                                                                                                      Page
                                                                                          
         6.13     Data Service Contracts..............................................................101

         6.14     Acceptance of Employment Offers.....................................................101

         6.15     Agreements..........................................................................101

         6.16     Green Tree Retail Services Bank and Conseco Finance Servicing Corp. Transfers.......102

         6.17     Replacement Servicer................................................................102

ARTICLE 7             CONDITIONS PRECEDENT TO THE SELLERS' OBLIGATIONS................................102

         7.1      Representations and Warranties; Covenants; Certificates.............................102

         7.2      Bankruptcy Condition................................................................103

         7.3      Litigation..........................................................................103

         7.4      Approvals...........................................................................103

         7.5      [Intentionally Omitted].............................................................104

         7.6      Other Documents.....................................................................104

ARTICLE 8             TERMINATION.....................................................................104

         8.1      Termination Prior to Closing........................................................104

         8.2      [Intentionally Omitted].............................................................105

         8.3      No Consequential Damages............................................................105

         8.4      Effect of Termination...............................................................105

ARTICLE 9             SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION....................................106

         9.1      Survival of Representations.........................................................106

         9.2      Indemnification.....................................................................106

         9.3      Qualifications on Indemnification...................................................107

         9.4      Notice and Defense of Claims........................................................108

         9.5      Tax Treatment.......................................................................110

         9.6      Remedy..............................................................................110

         9.7      Administrative Expense; Administrative Priority.....................................110

ARTICLE 10            MISCELLANEOUS...................................................................111

         10.1     Expenses............................................................................111


                                        v

                               TABLE OF CONTENTS
                                   (continued)



                                                                                                      Page
                                                                                          
         10.2     Amendment and Waiver................................................................111

         10.3     Notices.............................................................................111

         10.4     Binding Agreement; Assignment.......................................................112

         10.5     Severability........................................................................113

         10.6     Construction........................................................................113

         10.7     Captions............................................................................113

         10.8     Entire Agreement....................................................................113

         10.9     Counterparts........................................................................113

         10.10    Governing Law.......................................................................113

         10.11    Parties in Interest.................................................................114

         10.12    Consent to Jurisdiction.............................................................114

         10.13    Delivery by Facsimile...............................................................114

         10.14    Disclosure Schedules................................................................114



                                       vi

EX-10

                                                                 Exhibit 10.1.44

                         SECOND AMENDMENT TO EMPLOYMENT
                         AND RESTRICTED STOCK AGREEMENTS

         This Second Amendment, dated as of the 16th day of December, 2002, is
between Conseco, Inc., an Indiana corporation ("Company"), and William J. Shea
("Executive").

                                    Recitals

         A. The Company and Executive previously entered into an Amended
Employment Agreement dated as of June 1, 2002 (the "Employment Agreement"), a
Restricted Stock Agreement dated as of September 17, 2001 (the "Restricted Stock
Agreement"), and an Amendment to Employment and Restricted Stock Agreements
dated as of September 16, 2002.

         B. The parties now desire to amend again certain provisions of the
Employment Agreement and the Restricted Stock Agreement.

         NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants contained herein, the Company and the Executive agree as follows:

                                    Agreement

         1. The second sentence of Section 5(c) of the Employment Agreement is
deleted and replaced with the following:

                  The restrictions on the Initial Restricted Stock shall lapse
                  as to 20% of the shares on June 30, 2003, and as to 40% of the
                  shares on each of September 17, 2003, and September 17, 2004;
                  provided, however, that the restrictions shall lapse earlier
                  upon a "change in control" of the Company (as defined in
                  Section 10), in the event this Agreement is terminated by the
                  Company and such termination is not for "just cause" (as
                  defined in Section 10), upon the death of Employee, or upon a
                  termination of this Agreement by the Company pursuant to
                  Section 7.

         2. The first sentence of Section 3 of the Restricted Stock Agreement is
deleted and replaced with the following:

                  Subject to paragraph 4, twenty percent (20%) of the Restricted
                  Shares shall become fully vested and nonforfeitable if
                  Employee still is, and since the date of this Agreement has
                  continuously been, employed by the Company on June 30, 2003,
                  and forty percent (40%) of the Restricted Shares shall become
                  fully vested and nonforfeitable if Employee still is, and
                  since the date of this Agreement has continuously been,
                  employed by the Company on each of September 17, 2003 and
                  September 17, 2004; provided,




                  however, that all Restricted Shares shall vest earlier as
                  provided in the Employment Agreement.

         3. Except as expressly altered by this Amendment, the Employment
Agreement and the Restricted Stock Agreement shall remain unchanged and in full
force and effect.


                                  "Company"

                                  CONSECO, INC.

                                  By: /s/ David K. Herzog
                                     ----------------------------------
                                  Printed:  David K. Herzog
                                  Title:  Executive Vice President, General
                                            Counsel and Secretary


                                  "Executive"
                                   /s/ William J. Shea
                                  ---------------------------------
                                  William J. Shea




                                       2

EX-10

                                                                 Exhibit 10.1.45


                              EMPLOYMENT AGREEMENT

            EMPLOYMENT AGREEMENT, dated as of the 1st day of July, 2002, between
CONSECO SERVICES, LLC, an Indiana limited liability company ("Company"), and
Eugene M. Bullis ("Employee").

                                    RECITALS

         A. The services of Employee, and his managerial and professional
experience, are of value to the Company.

         B. The Company and Employee have agreed to enter into this Employment
Agreement ("Agreement").

                                    AGREEMENT

         In consideration of the foregoing and the mutual covenants contained
herein, the parties agree as follows:

         1. Employment. The Company hereby employs Employee and Employee hereby
accepts employment upon the terms and conditions hereinafter set forth.

         2. Term. The effective date of this Agreement shall be July 1, 2002.
Subject to the provisions for termination in Sections 7 and 10, the term of this
Agreement shall be the period beginning July 1, 2002, and ending June 30, 2003
("Initial Term"), and it shall be automatically renewed for one (1) additional
year unless either party elects not to renew this Agreement by serving written
notice of such intention not to renew on the other party at least 90 days prior
to the expiration of the Initial Term.

         3. Duties. Employee is engaged by the Company in the capacity of
Executive Vice President for Finance and Administration. Employee shall report
to the President regarding the performance of his duties.

         4. Extent of Services. Employee, subject to the direction and control
of the President, shall have the power and authority commensurate with his
officer status and necessary to perform his duties hereunder. The Company agrees
to provide to Employee such assistance and work accommodations as are suitable
to the character of his positions with the Company and adequate for the
performance of his duties. Employee shall devote his entire employable time,
attention and best efforts to the business of the Company, and shall not,
without the consent of the Company, during the term of his Agreement be actively
engaged in any other business activity, whether or not such business activity is
pursued for gain, profit or other pecuniary advantage; but this shall not be
construed as preventing Employee from serving on boards of professional,
community, civic, education, charitable and corporate organizations on which he
presently serves or may choose to serve or investing his assets in such form or
manner as will not require any services on the part of Employee in the operation
of the affairs of the companies in which such investments are made, and provided
further that Employee may continue to serve on the board of directors of
ManagedOps.com, Inc., provided that such service does not interfere

                                       1


with the performance of his duties under this Agreement. For purposes of this
Agreement, full-time employment shall be the normal work week for individuals in
comparable officer positions with the Company.

         5. Compensation.

            (a) As compensation for services rendered during the term hereof,
Employee shall receive a base salary ("Base Salary") of Five Hundred Thousand
Dollars ($500,000) per year payable in equal installments in accordance with the
Company's payroll procedure for its salaried employees. Salary payments and
other payments under this Agreement shall be subject to withholding of taxes and
other appropriate and customary amounts.

            (b) In addition to Base Salary, Employee may receive a bonus for the
period ending December 31, 2002, and an additional bonus at the conclusion of
the Initial Term on June 30, 2003, in such amounts as the Compensation Committee
of Conseco, Inc., may approve upon the recommendation of the President, in each
case not to exceed $250,000, based on his performance under this Agreement.

         6. Fringe Benefits.

            (a) Employee shall be entitled to participate in such existing
employee benefit plans and insurance programs offered by the Company, or which
it may adopt from time to time, for its executive management or supervisory
personnel generally, in accordance with the eligibility requirements for
participation therein. Nothing herein shall be construed so as to prevent the
Company from modifying or terminating any employee benefit plans or programs, or
employee fringe benefits, that it may adopt from time to time.

            (b) Employee shall be entitled to four (4) weeks vacation with pay
for each year during the term hereof.

            (c) Employee may incur reasonable expenses for promoting the
Company's business, including expenses for entertainment, travel, and similar
items. The Company shall reimburse Employee for all such reasonable expenses
upon Employee's periodic presentation of an itemized account of such
expenditures.

            (d) During the term of this Agreement, the Company shall at its
expense maintain a term life insurance policy or policies on the life of
Employee in the face amount of $500,000 payable to such beneficiary(ies) as
Employee may designate.

         7. Disability. If Employee shall become physically or mentally disabled
during the term of this Agreement to the extent that his ability to perform his
duties and services hereunder is materially and adversely impaired, his Base
Salary, bonus and other compensation provided herein shall continue while he
remains employed by the Company; provided, that if such disability (as confirmed
by competent medical evidence) continues for at least nine (9) consecutive
months, the Company may terminate Employee's employment hereunder in which case
the Company shall immediately pay Employee a lump sum payment equal to
one-quarter of his annual Base Salary and, provided further, that no such lump
sum payment shall be required if such disability arises primarily from: (a)
chronic use of intoxicants, drugs or narcotics, or (b) intentionally
self-inflicted injury or intentionally self-induced sickness.

                                       2


         8. Disclosure of Information. Employee acknowledges that in and as a
result of his employment with the Company, he has been and will be making use
of, acquiring and/or adding to confidential information of the Company of a
special and unique nature and value. As a material inducement to the Company to
enter into this Agreement and to pay to Employee the compensation stated in
Section 5, as well as any additional benefits stated herein, Employee covenants
and agrees that he shall not, at any time during or following the term of his
employment, directly or indirectly, divulge or disclose for any purpose
whatsoever, any confidential information that has been obtained by or disclosed
to him as a result of his employment with the Company and which the Company has
taken appropriate steps to safeguard, except to the extent that such
confidential information (a) becomes a matter of public record or is published
in a newspaper, magazine or other periodical available to the general public,
other than as a result of any act or omission of Employee, (b) is required to be
disclosed by any law, regulation or order of any court or regulatory commission,
department or agency, in which event Employee shall give prompt notice of such
requirement to the Company to enable the Company to seek an appropriate
protective order or confidential treatment, or (c) must be disclosed to enable
Employee properly to perform his duties under this Agreement, in which event
Employee shall give prompt notice of such requirement to the Company to enable
the Company to seek an appropriate protective order or confidential treatment.
Upon the termination of this Agreement, Employee shall return all materials
obtained from or belonging to the Company which he may have in his possession or
control.

         9. Covenant Against Solicitation. As a material inducement to the
Company to enter into this Agreement and to pay to Employee the compensation
stated in Section 5, as well as any additional benefits stated herein, and other
good and valuable consideration, Employee covenants and agrees that throughout
the period Employee remains employed hereunder and for six (6) months
thereafter, Employee shall not, directly or indirectly, anywhere in the United
States of America (i) solicit or attempt to convert to other insurance carriers,
finance companies or other corporations, persons or other entities providing the
same or similar products or services provided by the Company and/or its
subsidiaries, any customers or policyholders of the Company, or any of its
subsidiaries; or (ii) solicit for employment or employ any employee of the
Company or any of its subsidiaries. Should any covenant or provision of this
Section 9 be held unreasonable or contrary to public policy for any reason,
including, without limitation, the time period, geographical area, or scope of
activity covered by any restrictive covenant or provision, the Company and
Employee acknowledge and agree that such covenant or provision shall
automatically be deemed modified such that the contested covenant or provision
shall have the closest effect permitted by applicable law to the original form
and shall be given effect and enforced as so modified to whatever extent would
be reasonable and enforceable under applicable law.

         10. Termination.

            (a) Either the Company or Employee may terminate this Agreement at
any time for any reason upon written notice to the other. This Agreement shall
also terminate upon (i) the death of Employee, or (ii) termination by the
Company after disability of Employee pursuant to Section 7.

            (b) In the event that this Agreement is terminated by the Company
and such termination is not pursuant to the last sentence of (a) above or for
"just cause" as defined in (d)

                                       3


below, then Employee shall be entitled to continue to receive his Base Salary
and the Company-paid portion of his health and welfare benefits, less applicable
taxes, during the remainder of the Initial Term. Such payments shall be in lieu
of any other severance benefits to which Employee might otherwise be entitled.

            (c) In the event that this Agreement is terminated (i) by the
Company for "just cause" as defined in (d) below, (ii) by Employee, or (iii)
upon the death of Employee, Employee (or his estate) shall be entitled to
receive Employee's Base Salary as provided in Section 5(a) accrued but unpaid as
of the date of termination.

            (d) For purposes of this Agreement, "just cause" shall mean:

                (i) a material breach by Employee of this Agreement or willful
            malfeasance or fraud or dishonesty of a substantial nature in
            performing Employee's services on behalf of the Company, which is in
            any case willful and deliberate on Employee's part and committed in
            bad faith or without reasonable belief that such breach is in the
            best interests of the Company;

                (ii) Employee's use of alcohol or drugs which interferes with
            the performance of his duties hereunder or which compromises the
            integrity and reputation of the Company, its employees, and
            products;

                (iii) Employee's conviction by a court of law, or admission that
            he is guilty, of a felony or other crime involving moral turpitude;
            or

                (iv) Employee's absence from his employment other than as a
            result of Section 7 hereof, for whatever cause, for a period of more
            than one (1) month, without prior consent from the Company.

         11. Arbitration of Disputes; Injunctive Relief.

            (a) Except as provided in paragraph (b) below, any controversy or
claim arising out of or relating to this Agreement or the breach thereof, shall
be settled by binding arbitration in the City of Indianapolis, Indiana, in
accordance with the laws of the State of Indiana by three arbitrators, one of
whom shall be appointed by the Company, one by Employee and the third of whom
shall be appointed by the first two arbitrators. If the first two arbitrators
cannot agree on the appointment of a third arbitrator, then the third arbitrator
shall be appointed by the Chief Judge of the United States District Court for
the Southern District of Indiana. The arbitration shall be conducted in
accordance with the rules of the American Arbitration Association, except with
respect to the selection of arbitrators which shall be as provided in this
Section. Judgment upon the award rendered by the arbitrators may be entered in
any court having jurisdiction thereof. In the event that it shall be necessary
or desirable for Employee to retain legal counsel and/or incur other costs and
expenses in connection with the enforcement of any and all of his rights under
this Agreement, the Company shall pay (or Employee shall be entitled to recover
from the Company, as the case may be) his reasonable attorneys' fees and costs
and expenses in connection with the enforcement of any arbitration award in
court, regardless of the final outcome, unless the arbitrators shall determine
that under the

                                       4


circumstances recovery by Employee of all or a part of any such fees and costs
and expenses would be unjust.

            (b) Employee acknowledges that a breach or threatened breach by
Employee of Sections 8 or 9 of this Agreement would give rise to irreparable
injury to the Company and that money damages would not be adequate relief for
such injury. Notwithstanding paragraph (a) above, the Company and Employee agree
that the Company may seek and obtain injunctive relief, including, without
limitation, temporary restraining orders, preliminary injunctions and/or
permanent injunctions, in a court of proper jurisdiction to restrain or prohibit
a breach or threatened breach of Section 8 or 9 of this Agreement. Nothing
herein shall be construed as prohibiting the Company from pursuing any other
remedies available to the Company for such breach or threatened breach,
including the recovery of damages from Employee.

         12. Notices. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and if sent by registered mail to
his residence, in the case of Employee, or to the business office of its General
Counsel, in the case of the Company.

         13. Waiver of Breach and Severability. The waiver by either party of a
breach of any provision of this Agreement by the other party shall not operate
or be construed as a waiver of any subsequent breach by either party. In the
event any provision of this Agreement is found to be invalid or unenforceable,
it may be severed from the Agreement, and the remaining provisions of the
Agreement shall continue to be binding and effective.

         14. Entire Agreement. This instrument contains the entire agreement of
the parties and supersedes all prior agreements between them. This agreement may
not be changed orally, but only by an instrument in writing signed by the party
against whom enforcement of any waiver, change, modification, extension or
discharge is sought.

         15. Binding Agreement and Governing Law; Assignment Limited. This
Agreement shall be binding upon and shall inure to the benefit of the parties
and their lawful successors in interest (including, without limitation,
Employee's estate, heirs and personal representatives) and shall be construed in
accordance with and governed by the laws of the State of Indiana. This Agreement
is personal to each of the parties hereto, and neither party may assign or
delegate any of its rights or obligations hereunder without the prior written
consent of the other.


         IN WITNESS WHEREOF, the parties have executed this Agreement as of July
1, 2002.

                                         CONSECO SERVICES, LLC


                                         By: /s/ William J. Shea
                                            ---------------------------------
                                            William J. Shea, President
                                            "Company"


                                             /s/ Eugene M. Bullis
                                            ---------------------------------
                                            Eugene M. Bullis
                                            "Employee"




                                       5

EX-10

                                                                 Exhibit 10.46.9


                   SECURED SUPER-PRIORITY DEBTOR IN POSSESSION
                                CREDIT AGREEMENT

                          Dated as of December 19, 2002
                                      among

                             CONSECO FINANCE CORP.,
                       AS DEBTOR AND DEBTOR IN POSSESSION,
                                   as Borrower

                                       and

                 THE SUBSIDIARIES OF THE BORROWER PARTY HERETO,
                      AS DEBTORS AND DEBTORS IN POSSESSION,
                            as Subsidiary Guarantors

                                       and

                               CIHC, INCORPORATED,
                       AS DEBTOR AND DEBTOR IN POSSESSION,
                               as Parent Guarantor

                   THE LENDERS FROM TIME TO TIME PARTY HERETO
                                       and

                                  FPS DIP LLC,
                             as Administrative Agent





                  SECURED SUPER-PRIORITY DEBTOR IN POSSESSION CREDIT AGREEMENT,
dated as of December 19, 2002, by and among CONSECO FINANCE CORP., a Delaware
corporation, as debtor and debtor in possession (the "Borrower"), CIHC,
INCORPORATED, a Delaware corporation and the parent of the Borrower (the "Parent
Guarantor"), the Subsidiaries (as defined below) of the Borrower listed on the
signature pages hereof as guarantors, as debtors and debtors in possession (the
"Subsidiary Guarantors" and together with the Parent Guarantor, the
"Guarantors") the Lenders (as defined below), FPS DIP LLC, a Delaware limited
liability company ("FPS"), as administrative agent for the Lenders (in such
capacity, the "Administrative Agent").

                              W I T N E S S E T H:

                  WHEREAS, on December 17, 2002 (the "Petition Date"), the
Borrower and the Guarantors each filed a voluntary petition for relief
(collectively, the "Cases") under chapter 11 of title 11 of the United State
Code (or any successor legislation thereto), as amended from time to time (the
"Bankruptcy Code"), with the United States Bankruptcy Court for the Northern
District of Illinois Eastern Division (the "Bankruptcy Court").

                  WHEREAS, the Borrower, the Subsidiary Guarantors and certain
other persons have entered into the Asset Purchase Agreement dated as of
December 19, 2002 (as in effect on the Petition Date, the "Asset Purchase
Agreement") providing for the purchase by CFN Investment Holdings LLC ("CFN") of
the Purchased Assets (as defined in the Asset Purchase Agreement, the "Purchased
Assets").

                  WHEREAS, the Borrower owns all the outstanding equity
securities of Mill Creek Bank, Inc., a Utah industrial loan corporation ("Mill
Creek") and Conseco Financing Servicing Corp., a Subsidiary Guarantor and a
wholly owned subsidiary of the Borrower, owns all the outstanding equity
securities of Green Tree Retail Services Bank, Inc. and Rice Park Properties
Corporation.

                  WHEREAS, the Borrower pledged prior to the Petition Date the
capital stock of Mill Creek to U.S. Bank National Association ("U.S. Bank")
pursuant to a Pledge Agreement dated as of December 27, 2000 (the "Mill Creek
U.S. Bank Pledge Agreement") to secure the U.S. Bank Prepetition Indebtedness
(as defined below).

                  WHEREAS, as of the date hereof, the Borrower and the
Guarantors are continuing to operate their respective businesses and manage
their respective properties as debtors in possession under sections 1107 and
1108 of the Bankruptcy Code.

                  WHEREAS, the Borrower has requested that the Lenders provide a
secured super-priority credit facility of up to $125,000,000 consisting of a
$65,000,000 revolving credit facility and a $60,000,000 term loan facility in
order to fund the continued operation of the Borrower's and the Guarantors'
businesses and to repay the U.S. Bank Prepetition Indebtedness.

                  WHEREAS, the Lenders are willing to make available to the
Borrower such post-petition loans upon the terms and subject to the conditions
set forth herein.



                  WHEREAS, the Borrower has also requested that the Lenders
provide a $1,000,000 revolving credit facility to Conseco Finance Credit Corp.,
a New York corporation and a wholly owned subsidiary of the Borrower ("CFCC"),
the proceeds of which will be used solely by CFCC to fund its operations, which
$1,000,000 revolving credit facility will be part of, and under no circumstances
in addition to, the aforementioned revolving credit facility;

                  WHEREAS, the Lenders are willing to make available to the
Borrower such post-petition loans and to CFCC such revolving credit loans, in
each case upon the terms and subject to the conditions set forth herein.

                  WHEREAS, to provide security for the repayments of the Loans
(as defined below) and the payment of the other Obligations (as defined below)
of the Borrower, CFCC and the Guarantors hereunder and under the other Loan
Documents (as defined below),

                  (A) Rice Park Properties Corporation, a Minnesota corporation
          (the "Mortgagor") shall provide the Administrative Agent and the
          Lenders, pursuant to the Mortgage, a perfected, first priority Lien
          (as defined below) on the Mortgaged Property (provided that the
          maximum principal amount of the Loans secured thereby shall be limited
          to $30,000,000), and

                  (B) the Borrower and each Guarantor shall provide to the
          Administrative Agent and the Lenders, pursuant to this Agreement and
          the Orders (as defined below), the following (each as more fully
          described herein):

                  1. with respect to the Obligations of the Borrower hereunder,
                  and the guarantee obligations of the Guarantors hereunder in
                  respect thereof, an allowed administrative expense claim in
                  each of the Cases, as applicable, pursuant to section
                  364(c)(1) of the Bankruptcy Code having priority over all
                  administrative expenses of the kind specified in sections
                  503(b) and 507(b) of the Bankruptcy Code (except the guarantee
                  obligations of the Parent Guarantor shall constitute
                  prepetition general unsecured claims against the Parent
                  Guarantor);

                  2. a perfected, first-priority Lien (as defined below),
                  pursuant to section 364(c)(2) of the Bankruptcy Code, upon all
                  unencumbered property (including (i) real and tangible
                  personal property subject to Liens or security interests which
                  may be avoided pursuant to the Bankruptcy Code, but only to
                  the extent so avoided and (ii) any avoidance actions arising
                  under the Bankruptcy Code) of the Borrower and the Subsidiary
                  Guarantors, all cash and Cash Equivalents (as defined below)
                  in the Cash Collateral Account (as defined below); and

                  3. a perfected, second-priority Lien, pursuant to section
                  364(c)(3) of the Bankruptcy Code, upon all of the property
                  (other than the Primed Collateral) of the Borrower and the
                  Subsidiary Guarantors that is subject to Liens permitted by
                  this Agreement, junior to such permitted Liens (except as
                  otherwise provided herein and in the Orders); and

                  4. a perfected, first priority, priming Lien (the "Priming
                  Liens"), pursuant to section 364(d)(1) of the Bankruptcy Code,
                  upon all of the Primed Collateral

                                       2


                  which Liens in favor of the Administrative Agent and the
                  Lenders shall be senior in all respects to all other Liens
                  thereon granted on or prior to the Petition Date, including
                  Liens granted under the Mill Creek U.S. Bank Pledge Agreement
                  and the CFSC Pledge Agreement securing the Parity Public Debt;

subject and subordinate in each case with respect to subparagraphs (1) through
(4) above, only to (A) the Carve-Out (as defined below) and (B) Liens permitted
by this Agreement pursuant to Section 8.2(d) or (e), provided that the item in
clause (B) does not include any Liens on the Primed Collateral. The items
specified clauses (A) and (B) above being referred to herein as the "Superior
Liens".

                  WHEREAS, each of the Guarantors has agreed to guaranty the
obligations of the Borrower and CFCC hereunder and each of the Borrower, the
Borrower has agreed to guaranty the obligations of CFCC hereunder and each
Guarantor has agreed to secure its obligations to the Lenders hereunder with,
inter alia, security interests in, and Liens on, all of its property and assets,
whether real or personal, tangible or intangible, now existing or hereafter
acquired or arising, all as more fully provided herein.

                  NOW, THEREFORE, in consideration of the premises and the
covenants and agreements contained herein, the parties hereto hereby agree as
follows:

                                   ARTICLE I

                Definitions, Interpretation And Accounting Terms

                  Section 1.1. Defined Terms. As used in this Agreement, the
following terms have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):

                  "Additional Pledged Collateral" means all shares of, limited
and/or general Partnership interests in, and LLC interests in, and all
securities convertible into, and warrants, options and other rights to purchase
or otherwise acquire, stock of, either (a) any Person that, after the date of
this Agreement, as a result of any occurrence, becomes a direct Subsidiary of
any Grantor or (b) any issuer of Pledged Stock, any Partnership or any LLC that
is acquired by any Grantor after the date hereof; all certificates or other
instruments representing any of the foregoing; all Security Entitlements of any
Grantor in respect of any of the foregoing; all additional Indebtedness from
time to time owed to any Grantor by any obligor on the Pledged Notes and the
instruments evidencing such Indebtedness; and all interest, cash, instruments
and other property or Proceeds from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of the
foregoing. Additional Pledged Collateral may be General Intangibles or
Investment Property.

                  "Administrative Agent" has the meaning specified in the
preamble hereof.

                  "Affiliate" means, with respect to any Person, any other
Person which, directly or indirectly, controls, is controlled by or is under
common control with such Person, each officer, director, general partner or
joint-venturer of such Person, and each Person who is the beneficial owner of 5%
or more of any class of Voting Stock of such Person. For the purposes of this

                                       3


definition, "control" means the possession of the power to direct or cause the
direction of management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise. The Administrative
Agent and the Lenders shall not be deemed Affiliates of the Borrower.

                  "Agreement" means this Secured Super-Priority Debtor In
Possession Credit Agreement.

                  "Applicable Lending Office" means, with respect to each
Lender, its Domestic Lending Office, in the case of a Base Rate Loan, and its
Eurodollar Lending Office, in the case of a Eurodollar Rate Loan.

                  "Applicable Margin" means with respect to the Loans maintained
as (a) Base Rate Loans, a rate equal to 5.00% per annum and (b) Eurodollar Rate
Loans, a rate equal to 7.00% per annum.


                  "Applicable Unused Commitment Fee Rate" means a rate equal to
0.50% per annum.


                  "Approved Deposit Account" means a Deposit Account maintained
by any Grantor with a Deposit Account Bank which account is the subject of an
effective Deposit Account Control Agreement or is subject to a Lien in favor of
the Lenders granted pursuant to the Orders, and includes all monies on deposit
therein and all certificates and instruments, if any, representing or evidencing
such Approved Deposit Account.

                  "Approved Fund" means, with respect to any Lender that is a
fund that invests in loans or debt instruments, any other fund or account that
invests in loans or debt instruments and is advised or managed by the same
investment advisor as such Lender or by an Affiliate of such investment advisor.

                  "Approved Securities Intermediary" means a Securities
Intermediary or Commodity Intermediary selected or approved by the
Administrative Agent and with respect to which a Grantor has delivered to the
Administrative Agent an executed Control Account Agreement.

                  "Asset Purchase Agreement" has the meaning specified in the
preamble hereof.

                  "Asset Sale" has the meaning specified in Section 8.4.

                  "Assignment and Acceptance" means an assignment and acceptance
entered into by a Lender and an Eligible Assignee, and accepted by the
Administrative Agent, in substantially the form of Exhibit A.

                  "Available Credit" means, at any time, an amount equal to (a)
the lesser of (i) the aggregate Credit Commitments in effect at such time and
(ii) the Budgeted Amount at such time minus (b) the aggregate Revolving Credit
Outstandings at such time.

                                       4


                  "Bankruptcy Code" has the meaning specified in the recitals to
this Agreement.

                  "Bankruptcy Court" has the meaning specified the recitals to
this Agreement or shall mean any other court having competent jurisdiction over
the Cases.

                  "Base Rate" means, for any period, a fluctuating interest rate
per annum as shall be in effect from time to time, which rate per annum shall be
equal at all times to the higher of: (a) the rate of interest announced publicly
by Bank of America, N.A., in New York, New York, from time to time as its
reference rate or base rate, which may not be the lowest rate charged to prime
commercial customers; (b) the sum of (i) 0.5% per annum plus (ii) the Federal
Funds Rate; and (c) 5.00% per annum. Each change in the Base Rate shall be
effective from and including the date such change is publicly announced as being
effective.

                  "Base Rate Loan" means any Loan during any period in which it
bears interest based on the Base Rate.

                  "Borrower" has the meaning specified in the preamble hereof.

                  "Borrower's Professionals" means all Persons retained or
engaged by any Loan Party as "professional persons" within the meaning of
section 327 of the Bankruptcy Code.

                  "Borrowing" means a borrowing consisting of Loans made on the
same day by the Lenders ratably according to their respective Credit
Commitments.

                  "Budget" has the meaning specified in Section 6.1(e).

                  "Budgeted Amount" means, as of any date, the amount set forth
in the Budget on such date for the amount of Revolving Credit Loans.

                  "Business Day" means a day of the year on which banks are not
required or authorized to close in New York City and, if the applicable Business
Day relates to notices, determinations, fundings and payments in connection with
the Eurodollar Rate or any Eurodollar Rate Loans, a day on which dealings in
Dollar deposits are also carried on in the London interbank market.

                  "Business Day (APA Method)" means any day that is not a
Saturday, Sunday or other day on which commercial banking institutions in the
State of New York are authorized or obligated by law or executive order to be
closed.

                  "Capital Expenditures" means, with respect to any Person for
any period, the aggregate of amounts that would be reflected as additions to
property, plant or equipment on a consolidated balance sheet of such Person and
its Subsidiaries prepared in conformity with GAAP, excluding interest and
operating expenses capitalized during the construction or improvement of
property, plant or equipment.

                  "Capital Lease" means, with respect to any Person, any lease
of property by such Person as lessee which would be accounted for as a capital
lease on a balance sheet of such Person prepared in conformity with GAAP.

                                       5


                  "Capital Lease Obligations" means, with respect to any Person,
the capitalized amount of all obligations of such Person or any of its
Subsidiaries under Capital Leases, as determined on a consolidated basis in
conformity with GAAP.

                  "Carve-Out" means: (i) the unpaid fees of the clerk of the
Bankruptcy Court and of the United States Trustee pursuant to 28 U.S.C. ss.
1930(a) and (b); and (ii) the aggregate allowed unpaid fees and expenses payable
under sections 330 and 331 of the Bankruptcy Code to professional persons
retained pursuant to an order of the Court by the Borrower and/or the Subsidiary
Guarantors, or any statutory committee appointed in the Borrower's chapter 11
case (other than the fees and expenses, if any, of any such professional persons
incurred, directly or indirectly, in respect of, arising from or relating to,
the initiation or prosecution of any action for preferences, fraudulent
conveyances, other avoidance power claims or any other claims or causes of
action against the Administrative Agent or the Lenders or with respect to this
Agreement, the Obligations or the U.S. Bank Pre-Petition Indebtedness; provided,
however, that the Carveout may be used to investigate such claims and causes of
action), not to exceed Five Hundred Thousand Dollars ($500,000.00) in the
aggregate; provided, however, that such dollar limitation on fees and
disbursements shall not be reduced by the amount of any compensation and
reimbursement of expenses paid prior to the occurrence of a Default or an Event
of Default in respect of which the Carve-Out is invoked or any fees, expenses,
indemnities or other amounts paid to the Administrative Agent, the Lenders and
their respective attorneys and agents under this Agreement or otherwise.

                  "Cash Collateral" means "cash collateral" as defined in
section 363(a) of the Bankruptcy Code.

                  "Cash Collateral Account" means any Deposit Account or
Securities Account established by the Administrative Agent with a bank
designated by it from time to time or at such other account designated by the
Administrative Agent in which cash and Cash Equivalents may from time to time be
on deposit or held therein as provided herein.

                  "Cash Equivalents" means (a) securities issued or fully
guaranteed or insured by the United States government or any agency thereof, (b)
certificates of deposit, eurodollar time deposits, overnight bank deposits and
bankers' acceptances of any Lender or any commercial bank organized under the
laws of the United States, any state thereof, the District of Columbia, any
foreign bank, or its branches or agencies (fully protected against currency
fluctuations) which (i) at the time of acquisition, are rated at least "A-1" by
Standard & Poor's Rating Services ("S&P") or "P-1" by Moody's Investors
Services, Inc. ("Moody's") or (ii) have combined capital and surplus of at least
$500,000,000, (c) commercial paper of an issuer rated at least "A-1" by S&P or
"P-1" by Moody's, (d) repurchase agreements entered into by the Borrower with a
Lender or any commercial bank of the type referred to in clause (b) above for
direct obligations issued or fully guaranteed by the United States of America
maturing within 365 days and, except for repurchase agreements having a term of
not more than seven days, in which the Administrative Agent shall have a valid
and perfected first-priority security interest (subject to no other Liens);
provided that each such repurchase agreement shall have a Fair Market Value of
at least 100% of the amount of the repurchase obligations thereunder on the date
of the purchase thereof and (e) shares of any money market fund that (i) has at
least 95% of its assets invested continuously in the types of investments
referred to in clauses (a) through (c)

                                       6


above, (ii) has net assets of not less than $500,000,000 and (iii) is rated at
least "A-1" by S&P or "P-1" by Moody's; provided, however, that the maturities
of all obligations of the type specified in clauses (a) through (c) above shall
not exceed 180 days.

                  "CFCC" means Conseco Finance Credit Corp., a New York
corporation.

                  "CFN" is defined in the recitals.

                  "CFSC Pledge Agreement" means the Pledge Agreement dated as of
December 27, 2000, pursuant to which Conseco Finance Servicing Corp. pledged all
issued and outstanding stock of Green Tree Retail Services Bank, Inc. and Rice
Park Properties Corporation to U.S. Bank as collateral agent, for the benefit of
U.S. Bank and the indenture trustees for the Parity Public Debt.

                  "Claim" has the meaning ascribed to such term in section
101(5) of the Bankruptcy Code.

                  "Closing Date" means the first date on which any Loan is made.
With respect to the Term Loans, the Closing Date shall mean the date on which
all conditions set forth in Section 3.1 are satisfied and the Term Loan Lenders
have exchanged the U.S. Bank Prepetition Indebtedness pursuant to Section 2.1.

                  "Code" means the Internal Revenue Code of 1986 (or any
successor legislation thereto), as amended from time to time.

                  "Collateral" has the meaning specified in Section 11.1.

                  "Committee" means the official statutory committee of
unsecured creditors approved in the Cases pursuant to section 1102 of the
Bankruptcy Code.

                  "Compliance Certificate" has the meaning specified in Section
6.1(d).

                  "Concentration Account" has the meaning specified in Section
7.11(d).

                  "Constituent Documents" means, with respect to any Person, (a)
the articles or certificate of incorporation (or the equivalent organizational
documents) of such Person, (b) the by-laws (or the equivalent governing
documents) of such Person and (c) any document setting forth the manner of
election and duties of the directors or managing members of such Person (if any)
and the designation, amount and/or relative rights, limitations and preferences
of any class or series of such Person's Stock.

                  "Contaminant" means any material, substance or waste that is
classified, regulated or otherwise characterized under any Environmental Law as
hazardous, toxic, a contaminant or a pollutant or by other words of similar
meaning or regulatory effect, including any petroleum or petroleum-derived
substance or waste, asbestos and polychlorinated biphenyls.

                  "Contracts" means, with respect to any Loan Party, any and all
"contracts", as such term is defined in Article 1 of the UCC, of such Loan
Party.

                                       7


                  "Contractual Obligation" of any Person means any obligation,
agreement, undertaking or similar provision of any Security issued by such
Person or of any agreement, undertaking, contract, lease, indenture, mortgage,
deed of trust or other instrument (excluding a Loan Document) to which such
Person is a party or by which it or any of its property is bound or to which any
of its properties is subject.

                  "Control Account" means a Securities Account or Commodity
Account maintained by any Grantor with an Approved Securities Intermediary which
account is the subject of an effective Control Account Agreement or is subject
to a Lien in favor of the Lenders granted pursuant to the Orders, and includes
all Financial Assets held therein and all certificates and instruments, if any,
representing or evidencing the Financial Assets contained therein.

                  "Control Account Agreement" means a letter agreement,
substantially in the form and substance satisfactory to the Administrative Agent
(but in any event sufficient to grant "control" over the applicable Control
Account under Section 8-106 of the UCC), executed by the relevant Grantor, the
Administrative Agent and the relevant Approved Securities Intermediary.

                  "Copyrights" means (a) all copyrights arising under the laws
of the United States, any other country or any political subdivision thereof,
whether registered or unregistered and whether published or unpublished, all
registrations and recordings thereof, and all applications in connection
therewith, including all registrations, recordings and applications in the
United States Copyright Office or in any foreign counterparts thereof and (b)
the right to obtain all renewals thereof.

                  "Copyright Licenses" means any written agreement naming any
Grantor as licensor or licensee granting any right under any Copyright,
including the grant of rights to copy, publicly perform, create derivative
works, manufacture, distribute, exploit and sell materials derived from any
Copyright.

                  "Credit Commitment" means, as applicable, the Revolving Credit
Commitment or the Term Loan Commitment.

                  "Credit Termination Date" shall mean the earliest of (a) the
Scheduled Termination Date, (b) the date of breach of the provisions of Sections
5.8 or 5.9 of the Asset Purchase Agreement, (c) the date of any termination of
the Credit Commitments pursuant to Section 2.4 and (d) the date on which the
Obligations become due and payable pursuant to Section 9.2.

                  "Customary Permitted Liens" means, with respect to any Person,
any of the following Liens:

                  (a) Liens with respect to the payment of taxes, assessments or
governmental charges in all cases which are not yet due or which are being
contested in good faith by appropriate proceedings and with respect to which
adequate reserves or other appropriate provisions are being maintained to the
extent required by GAAP;

                  (b) Liens of landlords arising by statute and Liens of
suppliers, mechanics, carriers, materialmen, warehousemen or workmen and other
Liens imposed by law created in

                                       8


the ordinary course of business for amounts not yet due or which are being
contested in good faith by appropriate proceedings and with respect to which
adequate reserves or other appropriate provisions are being maintained to the
extent required by GAAP;

                  (c) deposits made in the ordinary course of business in
connection with worker's compensation, unemployment insurance or other types of
social security benefits or to secure the performance of bids, tenders, sales,
contracts (other than for the repayment of borrowed money), public or statutory
obligations and surety, stay, appeal, customs or performance bonds or similar
obligations, in each case in the ordinary course of business;

                  (d) encumbrances arising by reason of zoning restrictions,
easements, licenses, reservations, covenants, rights-of-way, utility easements,
building restrictions and other similar encumbrances on the use of Real Property
which do not materially detract from the value of such Real Property or
interfere with the ordinary conduct of the business conducted and proposed to be
conducted at such Real Property;

                  (e) encumbrances arising under leases or subleases of Real
Property which do not in the aggregate materially detract from the value of such
Real Property or interfere with the ordinary conduct of the business conducted
and proposed to be conducted at such Real Property; and

                  (f) financing statements of a lessor's rights in and to
personal property leased to such Person in the ordinary course of such Person's
business.

                  "Default" means any event which with the passing of time or
the giving of notice or both would become an Event of Default.

                  "Deposit Account Bank" means a financial institution selected
or approved by the Administrative Agent where the Borrower maintains an Approved
Deposit Account.

                  "Deposit Account Control Agreement" means a letter agreement,
substantially in form and substance satisfactory to the Administrative Agent
(but in any event sufficient to grant "control" over the applicable deposit
account under Section 9-104 of the UCC) executed by the Grantor, the
Administrative Agent and the relevant Deposit Account Bank.

                  "Dollars" and the sign "$" each mean the lawful money of the
United States of America.

                  "Domestic Lending Office" means, with respect to any Lender,
the office of such Lender specified as its "Domestic Lending Office" opposite
its name on Schedule II or on the Assignment and Acceptance by which it became a
Lender or such other office of such Lender as it may from time to time specify
to the Borrower and the Administrative Agent.

                  "Effective Date" means the date upon which a plan of
reorganization in the Cases becomes effective.

                                       9


                  "Eligible Assignee" means (i) a Lender, (ii) an Affiliate or
Approved Fund of a Lender or (iii) any other Person with a net worth determined
in accordance with GAAP of at least $30,000,000.

                  "Entry Date" means the date of the entry of the Final Order.

                  "Environmental Laws" means all applicable Requirements of Law
now or hereafter in effect, as amended or supplemented from time to time,
relating to pollution or the regulation and protection of human health, safety,
the environment or natural resources, including the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended (42 U.S.C.ss. 9601
et seq.); the Hazardous Material Transportation Act, as amended (49 U.S.C.ss.
180 et seq.); the Federal Insecticide, Fungicide, and Rodenticide Act, as
amended (7 U.S.C.ss. 136 et seq.); the Resource Conservation and Recovery Act,
as amended (42 U.S.C. ss. 6901 et seq.); the Toxic Substance Control Act, as
amended (42 U.S.C.ss. 7401 et seq.); the Clean Air Act, as amended (42 U.S.C.ss.
740 et seq.); the Federal Water Pollution Control Act, as amended (33 U.S.C.ss.
1251 et seq.); the Occupational Safety and Health Act, as amended (29 U.S.C.ss.
651 et seq.); the Safe Drinking Water Act, as amended (42 U.S.C.ss. 300f et
seq.); and their state and local counterparts or equivalents and any transfer of
ownership notification or approval statute, including the Industrial Site
Recovery Act (N.J. Stat. Ann.ss. 13:1K-6 et seq.).

                  "Environmental Liabilities and Costs" means, with respect to
any Person, all liabilities, obligations, responsibilities, Remedial Actions,
losses, damages, punitive damages, consequential damages, treble damages, costs
and expenses (including all fees, disbursements and expenses of counsel, experts
and consultants and costs of investigation and feasibility studies), fines,
penalties, sanctions and interest incurred as a result of any claim or demand by
any other Person, whether based in contract, tort, implied or express warranty,
strict liability, criminal or civil statute, including any thereof arising under
any Environmental Law, Permit, order or agreement with any Governmental
Authority or other Person, which relate to any environmental, health or safety
condition or a Release or threatened Release, and result from the past, present
or future operations of, or ownership of property by, such Person or any of its
Subsidiaries.

                  "Environmental Lien" means any Lien in favor of any
Governmental Authority for Environmental Liabilities and Costs.

                  "ERISA" means the Employee Retirement Income Security Act of
1974 (or any successor legislation thereto), as amended from time to time.

                  "ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control or treated as a single employer with the
Borrower or any of its Subsidiaries within the meaning of Section 414(b), (c),
(m) or (o) of the Code.

                  "ERISA Event" means (a) a reportable event described in
Section 4043(b) or 4043(c)(1), (2), (3), (5), (6), (8) or (9) of ERISA with
respect to a Title IV Plan or a Multiemployer Plan; (b) the withdrawal of the
Borrower, any of its Subsidiaries or any ERISA Affiliate from a Title IV Plan
subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer, as defined in Section 4001(a)(2) of ERISA; (c) the
complete or

                                       10


partial withdrawal of the Borrower, any of its Subsidiaries or any ERISA
Affiliate from any Multiemployer Plan; (d) notice of reorganization or
insolvency of a Multiemployer Plan; (e) the filing of a notice of intent to
terminate a Title IV Plan or the treatment of a plan amendment as a termination
under Section 4041 of ERISA; (f) the institution of proceedings to terminate a
Title IV Plan or Multiemployer Plan by the PBGC; (g) the failure to make any
required contribution to a Title IV Plan or Multiemployer Plan; (h) the
imposition of a lien under Section 412 of the Code or Section 302 of ERISA on
the Borrower or any of its Subsidiaries or any ERISA Affiliate; or (i) any other
event or condition which might reasonably be expected to constitute grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Title IV Plan or Multiemployer Plan or the imposition
of any liability under Title IV of ERISA, other than for PBGC premiums due but
not delinquent under Section 4007 of ERISA.

                  "Eurocurrency Liabilities" has the meaning assigned to that
term in Regulation D of the Federal Reserve Board, as in effect from time to
time.

                  "Eurodollar Base Rate" means, with respect to any Interest
Period for any Eurodollar Rate Loan, the rate determined by the Administrative
Agent to be the offered rate for deposits in Dollars for the applicable Interest
Period which appears on the Dow Jones Markets Telerate Page 3750 as of 11:00
a.m., London time, on the second full Business Day next preceding the first day
of each Interest Period. In the event that such rate does not appear on the Dow
Jones Markets Telerate Page 3750 (or otherwise on the Dow Jones Markets screen),
the Eurodollar Base Rate for the purposes of this definition shall be determined
by reference to such other comparable publicly available service for displaying
eurodollar rates as may be selected by the Administrative Agent. Notwithstanding
the foregoing, the Eurodollar Base Rate shall be deemed at all times to be at
least 3.00%.

                  "Eurodollar Lending Office" means, with respect to any Lender,
the office of such Lender specified as its "Eurodollar Lending Office" opposite
its name on Schedule II or on the Assignment and Acceptance by which it became a
Lender (or, if no such office is specified, its Domestic Lending Office) or such
other office of such Lender as it may from time to time specify to the Borrower
and the Administrative Agent.

                  "Eurodollar Rate" means, with respect to any Interest Period
for any Eurodollar Rate Loan, an interest rate per annum equal to the rate per
annum obtained by dividing (a) the Eurodollar Base Rate by (b) a percentage
equal to 100% minus the reserve percentage applicable two Business Days before
the first day of such Interest Period under regulations issued from time to time
by the Federal Reserve Board for determining the maximum reserve requirement
(including any emergency, supplemental or other marginal reserve requirement)
for a member bank of the Federal Reserve System in New York City with respect to
liabilities or assets consisting of or including Eurocurrency Liabilities (or
with respect to any other category of liabilities which includes deposits by
reference to which the Eurodollar Rate is determined) having a term equal to
such Interest Period. The reserve percentage shall be used whether or not any
Lender is actually subject to Federal Reserve Board regulations.

                  "Eurodollar Rate Loan" means any Loan that, for an Interest
Period, bears interest based on the Eurodollar Rate.

                                       11


                  "Event of Default" has the meaning specified in Section 9.1.

                  "Excess Cash" shall mean, as of any date, the excess, if any,
of (x) all cash of the Borrower and its Subsidiaries (other than Mill Creek and
its Subsidiaries) as of such date over (y) the sum of $1,000,000 plus
obligations under "ACH files" as of such date.

                  "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

                  "Facility" means the Credit Commitments and the provisions
herein related to the Loans.

                  "Fair Market Value" means (a) with respect to any asset or
group of assets (other than a marketable Security) at any date, the value of the
consideration obtainable in a sale of such asset at such date assuming a sale by
a willing seller to a willing purchaser dealing at arm's length and arranged in
an orderly manner over a reasonable period of time having regard to the nature
and characteristics of such asset, as reasonably determined by the Board of
Directors of the Borrower, or, if such asset shall have been the subject of a
relatively contemporaneous appraisal by an independent third-party appraiser,
the basic assumptions underlying which have not materially changed since its
date, the value set forth in such appraisal and (b) with respect to any
marketable Security at any date, the closing sale price of such Security on the
Business Day next preceding such date, as appearing in any published list of any
national securities exchange or the Nasdaq Stock Market or, if there is no such
closing sale price of such Security, the final price for the purchase of such
Security at face value quoted on such Business Day by a financial institution of
recognized standing which regularly deals in securities of such type selected by
the Administrative Agent.

                  "Federal Funds Rate" means, for any period, a fluctuating
interest rate per annum equal for each day during such period to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as published for such
day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations for such day
on such transactions received by the Administrative Agent from three Federal
funds brokers of recognized standing selected by it.

                  "Federal Reserve Board" means the Board of Governors of the
Federal Reserve System, or any successor thereto.

                  "Final Order" means an order of the Bankruptcy Court pursuant
to section 364 of the Bankruptcy Code (a) approving this Agreement and the other
Loan Documents, and (b) authorizing the incurrence by the Loan Parties of
permanent post-petition secured and super-priority Indebtedness in accordance
with this Agreement, and as to which no stay has been entered and which has not
been reversed, modified, vacated or overturned, and which is in form and
substance satisfactory to the Administrative Agent and the Lenders and
substantially similar to the Interim Order.

                  "Financial Statements" means the financial statements of the
Borrower and its Subsidiaries delivered in accordance with Sections 4.4 and 6.1.

                                       12


                  "First Day Orders" means all orders (satisfactory in form and
substance to the Lenders) entered by the Bankruptcy Court on the Petition Date
or within five (5) Business Days of the Petition Date or based upon motions
filed on, or within three (3) Business Days after, the Petition Date.

                  "Fiscal Quarter" means each of the three-month periods ending
on March 31, June 30, September 30 and December 31.

                  "Fiscal Year" means the twelve-month period ending on December
31.

                  "FPS" is defined in the preamble.

                  "GAAP" means generally accepted accounting principles in the
United States of America as in effect from time to time set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and the statements and pronouncements
of the Financial Accounting Standards Board, or in such other statements by such
other entity as may be in general use by significant segments of the accounting
profession, which are applicable to the circumstances as of the date of
determination.

                  "Governmental Authority" means any nation, sovereign or
government, any state or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.

                  "Grantor" means the Borrower and each Guarantor.

                  "Guarantors" means the Subsidiary Guarantors and the Parent
Guarantor.

                  "Guaranty" means the guaranty of the Obligations of the
Borrower made by the Guarantors pursuant to Article X of this Agreement.

                  "Guaranty Obligation" means, as applied to any Person, any
direct or indirect liability, contingent or otherwise, of such Person with
respect to any Indebtedness of another Person, if the purpose or intent of such
Person in incurring the Guaranty Obligation is to provide assurance to the
obligee of such Indebtedness that such Indebtedness will be paid or discharged,
or that any agreement relating thereto will be complied with, or that any holder
of such Indebtedness will be protected (in whole or in part) against loss in
respect thereof, including (a) the direct or indirect guaranty, endorsement
(other than for collection or deposit in the ordinary course of business),
co-making, discounting with recourse or sale with recourse by such Person of
Indebtedness of another Person and (b) any liability of such Person for
Indebtedness of another Person through any agreement (contingent or otherwise)
(i) to purchase, repurchase or otherwise acquire such Indebtedness or any
security therefor, or to provide funds for the payment or discharge of such
Indebtedness (whether in the form of a loan, advance, stock purchase, capital
contribution or otherwise), (ii) to maintain the solvency or any balance sheet
item, level of income or financial condition of another Person, (iii) to make
take-or-pay or similar payments, if required, regardless of non-performance by
any other party or parties to an agreement, (iv) to purchase, sell or lease (as
lessor or lessee) property, or to purchase or sell services, primarily for the
purpose of enabling the debtor to make payment of such Indebtedness or to assure
the holder of such Indebtedness against loss or (v) to supply funds to or in any
other manner invest in such

                                       13


other Person (including to pay for property or services irrespective of whether
such property is received or such services are rendered), if in the case of any
agreement described under subclause (i), (ii), (iii), (iv) or (v) of clause (b)
of this sentence the primary purpose or intent thereof is as described in the
preceding sentence. The amount of any Guaranty Obligation shall be equal to the
amount of the Indebtedness so guaranteed or otherwise supported.

                  "Hedging Contracts" means all Interest Rate Contracts, foreign
exchange contracts, currency swap or option agreements, forward contracts,
commodity swap, purchase or option agreements, other commodity price hedging
arrangements, and all other similar agreements or arrangements designed to alter
the risks of any Person arising from fluctuations in interest rates, currency
values or commodity prices.

                  "Indebtedness" of any Person means (without duplication) (a)
all indebtedness of such Person for borrowed money, (b) all obligations of such
Person evidenced by notes, bonds, debentures or similar instruments, (c) all
reimbursement and other obligations with respect to letters of credit, bankers'
acceptances, surety bonds and performance bonds, whether or not matured, (d) all
indebtedness for the deferred purchase price of property or services, other than
trade payables incurred in the ordinary course of business, (e) all indebtedness
of such Person created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such property), (f)
all Capital Lease Obligations of such Person and the present value of future
rental payments under all synthetic leases, (g) all Guaranty Obligations of such
Person, (h) all obligations of such Person to purchase, redeem, retire, defease
or otherwise acquire for value any Stock or Stock Equivalents of such Person,
valued, in the case of redeemable preferred stock, at the greater of its
voluntary or involuntary liquidation preference plus accrued and unpaid
dividends, (i) all payments that such Person would have to make in the event of
an early termination on the date Indebtedness of such Person is being determined
in respect of Hedging Contracts of such Person and (j) all Indebtedness of the
type referred to above secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien upon
or in property (including Accounts and General Intangibles) owned by such
Person, even though such Person has not assumed or become liable for the payment
of such Indebtedness.

                  "Indemnified Matters" has the meaning specified in Section
13.4.

                  "Indemnitees" has the meaning specified in Section 13.4.

                  "Intellectual Property" means, collectively, all rights,
priorities and privileges of any Grantor relating to intellectual property,
whether arising under United States, multinational or foreign laws or otherwise,
including Copyrights, Copyright Licenses, Patents, Patent Licenses, Trademarks,
Trademark Licenses and trade secrets, and all rights to sue at law or in equity
for any infringement or other impairment thereof, including the right to receive
all proceeds and damages therefrom.

                  "Interest Period" means, in the case of any Eurodollar Rate
Loan, (a) initially, the period commencing on the date such Eurodollar Rate Loan
is made or on the date of conversion of a Base Rate Loan to such Eurodollar Rate
Loan and ending one month thereafter, and

                                       14


(b) thereafter, if such Loan is continued, in whole or in part, as a Eurodollar
Rate Loan pursuant to Section 2.15, a period commencing on the last day of the
immediately preceding Interest Period therefor and ending one month thereafter;
provided, however, that all of the foregoing provisions relating to Interest
Periods in respect of Eurodollar Rate Loans are subject to the following:

                        (i) if any Interest Period would otherwise end on a day
which is not a Business Day, such Interest Period shall be extended to the next
succeeding Business Day, unless the result of such extension would be to extend
such Interest Period into another calendar month, in which event such Interest
Period shall end on the immediately preceding Business Day;

                        (ii) any Interest Period that begins on the last
Business Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall end on the last Business Day of a calendar month;

                        (iii) the Borrower may not select any Interest Period
that ends after the Scheduled Termination Date;

                        (iv) the Borrower may not select any Interest Period in
respect of Loans having an aggregate principal amount of less than $1,000,000;
and

                        (v) there shall be outstanding at any one time no more
than five Interest Periods in the aggregate.

                  "Interest Rate Contracts" means all interest rate swap
agreements, interest rate cap agreements, interest rate collar agreements and
interest rate insurance.

                  "Interim 9019 Order" means an order of the Bankruptcy Court
authorizing and approving, on an interim basis pending a hearing on notice to
interested parties, a settlement pursuant to which the MH Servicing Fees are
increased to 1.25% as of a date no later than the Petition Date and are accorded
the most senior priority under the cash flow waterfall provisions of the MH
Servicing Contracts (except, in the case of securitization trusts for which
principal and interest insurance is in force, in which cases the MH Servicing
Fees will be paid in the highest priority that will not adversely affect the
continuation in force of such insurance), such order to be satisfactory in form
and substance to the Administrative Agent.

                  "Interim Order" means that certain order issued by the
Bankruptcy Court in substantially the form of Exhibit E and otherwise in form
and substance satisfactory to the Lenders.

                  "Investment" means, with respect to any Person, (a) any
purchase or other acquisition by that Person of (i) any Security issued by, (ii)
a beneficial interest in any Security issued by or (iii) any other equity
ownership interest in, any other Person, (b) any purchase by that Person of all
or a significant part of the assets of a business conducted by another Person,
(c) any loan, advance (other than deposits with financial institutions available
for withdrawal on demand, prepaid expenses, accounts receivable and similar
items made or incurred in the ordinary course of business as presently
conducted) or capital contribution by that Person to any other Person, including
all Indebtedness of any other Person to that Person arising from a sale of

                                       15


property by that Person other than in the ordinary course of its business and
(d) any Guaranty Obligation incurred by that Person in respect of Indebtedness
of any other Person.

                  "IRS" means the Internal Revenue Service of the United States
or any successor thereto.

                  "Leases" means, with respect to any Person, all of those
leasehold estates in real property of such Person, as lessee, as such may be
amended, supplemented or otherwise modified from time to time.

                  "Lender" means each financial institution or other entity that
(a) is listed on the signature pages hereof as a "Lender" or (b) from time to
time becomes a party hereto by execution of an Assignment and Acceptance.

                  "Lehman Documents" means the Guaranty Agreements, the Whole
Loan Sale Agreement, and the Subject Agreements, each as defined in the Lehman
Order.

                  "Lehman Order" means that certain order of the Bankruptcy
Court in substantially the form of Exhibit G (provided that the exhibits thereto
must be in form and substance satisfactory to the Lenders) and otherwise in form
and substance satisfactory to the Lenders.

                  "Lien" means any mortgage, deed of trust, pledge,
hypothecation, assignment, charge, deposit arrangement, encumbrance, lien
(statutory or other), security interest or preference, priority or other
security agreement or preferential arrangement of any kind or nature whatsoever
intended to assure payment of any Indebtedness or other obligation, including
any conditional sale or other title retention agreement, the interest of a
lessor under a Capital Lease and any financing lease having substantially the
same economic effect as any of the foregoing.

                  "LLC" means each limited liability company in which a Grantor
has an interest.

                  "LLC Agreement" means each operating agreement with respect to
an LLC, as each agreement has heretofore been and may hereafter be amended,
supplemented or otherwise modified from time to time.

                  "Loan" means any loan made by any Lender pursuant to this
Agreement, including the Term Loans and the Revolving Credit Loans.

                  "Loan Documents" means, collectively, this Agreement, the
Notes (if any), and the Collateral Documents, and each certificate, agreement or
document executed by a Loan Party and delivered to the Administrative Agent or
any Lender in connection with or pursuant to any of the foregoing.

                  "Loan Party" means the Borrower, CFCC, each Guarantor and each
other Subsidiary of the Borrower that executes and delivers a Loan Document.

                  "Material Adverse Change" means a material adverse change in
any of (a) the condition (financial or otherwise), business, performance,
prospects, operations or properties of

                                       16


any Loan Party and its Subsidiaries taken as a whole during the period from and
after the Petition Date, (b) the legality, validity or enforceability of any
Loan Document, (c) the perfection or priority of the Liens granted pursuant to
this Agreement and the Orders, (d) the ability of the Borrower to repay the
Obligations or of the other Loan Parties to perform their respective obligations
under the Loan Documents or (e) the rights and remedies of the Administrative
Agent or the Lenders under the Loan Documents.

                  "Material Adverse Effect" means an effect that results in or
causes, or could reasonably be expected to result in or cause, a Material
Adverse Change.

                  "Material Intellectual Property" means Intellectual Property
owned by or licensed to a Grantor which is material to the business of the
Borrower and the Guarantors taken as a whole.

                  "Maximum Revolving Credit" means, at any time, the lesser of
(a) the Revolving Credit Commitments in effect at such time, (b) the Budgeted
Amount at such time and (c) until such time as the 9019 Order has become final,
$27,000,000

                  "Mill Creek" has the meaning specified in the preamble hereof.

                  "Mill Creek U.S. Bank Pledge Agreement" means the Pledge
Agreement dated as of December 27, 2000, pursuant to which the Borrower pledged
all issued and outstanding stock of Mill Creek to U.S. Bank as collateral agent,
for the benefit of U.S. Bank and the indenture trustees for the Parity Public
Debt.

                  "Mortgage" means the deed of trust, mortgage or similar
document or instrument creating a Lien on the Mortgaged Property in favor of the
Administrative Agent or its designee or assigns.

                  "Mortgaged Property" means the real property, building and
other improvements located at 345 St. Peters Street, St. Paul, Minnesota.

                  "Mortgagor" is defined in the recitals.

                  "Multiemployer Plan" means a multiemployer plan, as defined in
Section 4001(a)(3) of ERISA, to which the Borrower, any of its Subsidiaries or
any ERISA Affiliate has any obligation or liability, contingent or otherwise.

                  "Net Cash Proceeds" means proceeds received by any Loan Party
after the Closing Date in cash or Cash Equivalents from any (a) Asset Sale or
(b) Property Loss Event; provided, that for Asset Sales, in the case of Asset
Sales of actual reasonable expenses of such Asset Sale and, in the case of Asset
Sales permitted under Section 8.4(a), of amounts indebtedness required to be
paid under the Whole Loan Sale Agreement (as defined in the Lehman Order) as
repayment of Indebtedness under the Warehouse Agreement (as defined in the
Lehman Order).

                  "9019 Order" means an order of the Bankruptcy Court
authorizing and approving a settlement pursuant to which the MH Servicing Fees
are increased to 1.25% as of a date no

                                       17


later than the Petition Date, and are accorded the most senior priority under
the cash flow waterfall provisions of the MH Servicing Contracts (except, in the
case of securitization trusts for which principal and interest insurance is in
force, in which cases the MH Servicing Fees will be paid in the highest priority
that will not adversely affect the continuation in force of such insurance),
such order to be satisfactory in form and substance to the Administrative Agent.

                  "Non-Consenting Lender" has the meaning specified in Section
13.1(c).

                  "Non-Funding Lender" has the meaning specified in Section
2.2(d).

                  "Non-Stayed Order" means an order of the Bankruptcy Court
which is in full force and effect, as to which no stay has been entered and
which has not been reversed, modified, vacated or overturned.

                  "Non-U.S. Lender" means any Lender that is not a United States
person as defined in Section 7701(a)(30) of the Code.

                  "Note" means a Revolving Credit Note or Term Note.

                  "Notice of Borrowing" has the meaning specified in Section
2.2(a).

                  "Notice of Conversion or Continuation" has the meaning
specified in Section 2.15.

                  "Obligations" means the Loans and all other amounts,
obligations, covenants and duties owing by the Borrower or CFCC to the
Administrative Agent, any Lender, any Affiliate of any of them or any
Indemnitee, of every type and description (whether by reason of an extension of
credit, loan, guaranty, indemnification, foreign exchange or currency swap
transaction, interest rate hedging transaction or otherwise), present or future,
arising under this Agreement, the U.S. Bank Cash Management Agreements (to the
extent relating to obligations incurred after the Petition Date) any agreement
for cash management services entered into with the written consent of the
Administrative Agent in connection with this Agreement or any other Loan
Document, whether direct or indirect (including those acquired by assignment),
absolute or contingent, due or to become due, now existing or hereafter arising
and however acquired and whether or not evidenced by any note, guaranty or other
instrument or for the payment of money, and includes all letter of credit, cash
management and other fees, interest, charges, expenses, attorneys' fees and
disbursements and other sums chargeable to the Borrower or CFCC under this
Agreement or any agreement for cash management services entered into in
connection with this Agreement.

                  "Orders" means the Interim Order or the Final Order, as
applicable.

                  "Other Taxes" has the meaning specified in Section 2.13(b).

                  "Outstandings" means the Revolving Credit Outstandings or Term
Loan Outstandings, as applicable.

                  "Parent Guarantor" has the meaning specified in the preamble
hereof.

                                       18


                  "Participant Register" has the meaning specified therefor in
Section 13.2(f).

                  "Parity Public Debt" means the Indebtedness of Conseco, Inc.
under (i) the $200,000,000 8-1/8% Senior Notes due 2003 issued under that
certain Indenture dated as of February 18, 1993 between Conseco, Inc., as
Issuer, and Shawmut Bank Connecticut, National Association, as Trustee, and (ii)
the $200,000,000 10 1/2% Senior Notes due 2004 issued under that certain
Indenture, dated as of December 15, 1994, between CCP Insurance, Inc. and LTCB
Trust Company, as supplemented by the First Supplemental Indenture, dated as of
August 31, 1995, between the Conseco, Inc. and LTCB Trust Company.

                  "Partnership" means each partnership in which a Grantor has an
interest.

                  "Partnership Agreement" means each partnership agreement
governing a Partnership, as each such agreement has heretofore been and may
hereafter be amended, supplemented or otherwise modified from time to time.

                  "Patents" means (a) all letters patent of the United States,
any other country or any political subdivision thereof and all reissues and
extensions thereof, (b) all applications for letters patent of the United States
or any other country and all divisions, continuations and continuations-in-part
thereof and (c) all rights to obtain any reissues or extensions of the
foregoing.

                  "Patent License" means all agreements, whether written or
oral, providing for the grant by or to any Grantor of any right to manufacture,
use, import, sell or offer for sale any invention covered in whole or in part by
a Patent.

                  "PBGC" means the Pension Benefit Guaranty Corporation or any
successor thereto.

                  "Permit" means any permit, approval, authorization, license,
variance or permission required from a Governmental Authority under an
applicable Requirement of Law.

                  "Permitted Prepetition Claim Payment" means a payment (as
adequate protection or otherwise) on account of any Claim arising or deemed to
have arisen prior to the Petition Date, which is made pursuant to the First Day
Orders or any subsequent order of the Bankruptcy Court upon prior notice to the
Lenders and a hearing; provided that (a) such First Day Orders and subsequent
orders are acceptable in form and substance (including the amount authorized to
be paid thereunder) to the Administrative Agent and (b) no such payment shall be
made after the occurrence and during the continuance of a Default or an Event of
Default.

                  "Person" means an individual, partnership, corporation
(including a business trust), joint stock company, estate, trust, limited
liability company, unincorporated association, joint venture or other entity, or
a Governmental Authority.

                  "Petition Date" has the meaning specified in the recitals to
this Agreement.

                  "Plan of Reorganization" means a plan of reorganization filed
by the Borrower and the Guarantors in the Cases under chapter 11 of title 11 of
the United State Code.

                                       19


                  "Pledged Collateral" means, collectively, the Pledged Notes,
the Pledged Stock, the Pledged Partnership Interests, the Pledged LLC Interests,
all certificates or other instruments representing any of the foregoing and all
Security Entitlements of any Grantor in respect of any of the foregoing. Pledged
Collateral may be General Intangibles or Investment Property.

                  "Pledged LLC Interests" means all right, title and interest of
any Grantor as a member of any LLC and all right, title and interest of any
Grantor in, to and under any LLC Agreement to which it is a party.

                  "Pledged Mill Creek Securities" means all equity securities
(including common stock, preferred stock and any other form of equity security
or capital stock) of Mill Creek outstanding on or after the Petition Date and
all Primed Collateral relating thereto.

                  "Pledged Notes" means all right, title and interest of any
Grantor in the Instruments evidencing all Indebtedness owed to such Grantor,
including all Indebtedness described on Schedule 4.22, issued by the obligors
named therein.

                  "Pledged Partnership Interests" means all right, title and
interest of any Grantor as a limited and/or general partner in all Partnerships
and all right, title and interest of any Grantor in, to and under any
Partnership Agreements to which it is a party.

                  "Pledged Stock" means the shares of capital stock owned by
each Grantor, including the Primed Collateral.

                  "Primed Pledged Shares" means the common and other capital
stock of any kind of the Primed Pledged Share Issuers.

                  "Primed Pledged Share Issuers" means each of Mill Creek Bank,
Green Tree Retail Services Bank, Inc. and Rice Park Properties Corporation, and
their successors and assigns.

                  "Primed Collateral" means (i) Primed Pledged Shares, the
certificates representing the Primed Pledge Shares, and all dividends , cash,
instruments and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of the Primed
Pledged Shares, (ii) all additional shares of stock of the Primed Pledged Share
Issuers, now owned or from time acquired by the Borrower or any Guarantor in any
manner, and the certificates representing such additional shares, and all
dividends, cash, instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of such shares and (iii) all proceeds of the foregoing (including proceeds that
constitute property of types described above).

                  "Priming Liens" is defined in the recitals.

                  "Projections" has the meaning specified in Section 6.1(f).

                  "Property Loss Event" means any loss of or damage to property
of the Borrower or any of its Subsidiaries that results in the receipt by such
Person of proceeds of insurance in excess of $1,000,000 or any taking of
property of the Borrower or any of its Subsidiaries that

                                       20


results in the receipt by such Person of a compensation payment in respect
thereof in excess of $1,000,000.

                  "Proposed Change" has the meaning specified in Section
13.1(c).

                  "Protective Advances" means all expenses, disbursements and
advances incurred by the Administrative Agent pursuant to the Loan Documents
after the occurrence and during the continuance of an Event of Default which the
Administrative Agent, in its sole discretion, deems necessary or desirable to
preserve or protect the Collateral or any portion thereof or to enhance the
likelihood or maximize the amount of repayment of the Obligations.

                  "Purchasing Lender" has the meaning specified in Section 13.7.

                  "Ratable Portion" or "ratably" means, with respect to
Revolving Credit Loans or Term Loans with respect to any Lender, the percentage
obtained by dividing (a) the applicable Credit Commitment of such Lender by (b)
the aggregate applicable Credit Commitments of all Lenders (or, at any time
after the Credit Termination Date, the percentage obtained by dividing the
aggregate outstanding principal balance of the applicable Outstandings owing to
such Lender by the aggregate outstanding principal balance of the applicable
Outstandings owing to all Lenders).

                  "Real Property" means all of those plots, pieces or parcels of
land now owned, leased or hereafter acquired or leased by the Borrower or any of
its Subsidiaries (the "Land"), together with the right, title and interest of
the Borrower or any of its Subsidiaries, if any, in and to the streets, the land
lying in the bed of any streets, roads or avenues, opened or proposed, in front
of, the air space and development rights pertaining to the Land and the right to
use such air space and development rights, all rights of way, privileges,
liberties, tenements, hereditaments and appurtenances belonging or in any way
appertaining thereto, all fixtures, all easements now or hereafter benefiting
the Land and all royalties and rights appertaining to the use and enjoyment of
the Land, including all alley, vault, drainage, mineral, water, oil and gas
rights, together with all of the buildings and other improvements now or
hereafter erected on the Land, and any fixtures appurtenant thereto.

                  "Register" has the meaning specified in Section 13.2(c).

                  "Registered Loan" has the meaning specified therefor in
Section 13.2(c).

                  "Registered Note" has the meaning specified therefor in
Section 2.6(d)

                  "Reinvestment Event" means any Property Loss Event in respect
of which the Borrower has delivered a Reinvestment Notice.

                  "Reinvestment Notice" means a written notice executed by a
Responsible Officer of the Borrower stating that no Default or Event of Default
has occurred and is continuing and that the Borrower (directly or indirectly
through one of its Subsidiaries) intends and expects to use all or a specified
portion of the Net Cash Proceeds of a Property Loss Event to effect repairs and
or to acquire replacement assets.

                                       21


                  "Related Document" means the Asset Purchase Agreement and any
document or agreement executed in connection with the Asset Purchase Agreement.

                  "Release" means, with respect to any Person, any release,
spill, emission, leaking, pumping, injection, deposit, disposal, discharge,
dispersal, leaching or migration, in each case, of any Contaminant into the
indoor or outdoor environment or into or out of any property owned by such
Person, including the movement of Contaminants through or in the air, soil,
surface water, ground water or property.

                  "Remedial Action" means all actions required to (a) clean up,
remove, treat or in any other way address any Contaminant in the indoor or
outdoor environment, (b) prevent the Release or threat of Release or minimize
the further Release so that a Contaminant does not migrate or endanger or
threaten to endanger public health or welfare or the indoor or outdoor
environment or (c) perform pre-remedial studies and investigations and
post-remedial monitoring and care.

                  "Requirement of Law" means, with respect to any Person, the
common law and all federal, state, local and foreign laws, rules and
regulations, orders, judgments, decrees and other legal requirements or
determinations of any Governmental Authority or arbitrator, applicable to or
binding upon such Person or any of its property or to which such Person or any
of its property is subject.

                  "Requisite Lenders" means, until the Revolving Credit
Commitments have been terminated and Revolving Credit Loans, and all Obligations
relating thereto, repaid in full, (x) FPS and (y) Revolving Credit Loan Lenders
having more than 51% of the aggregate outstanding amount of the Revolving Credit
Commitments or, after the Credit Termination Date, 51% of the aggregate
Revolving Credit Outstandings, and thereafter Term Loan Lenders having more than
51% of the aggregate outstanding amount of the Term Loans. A Non-Funding Lender
shall not be included in the calculation of "Requisite Lenders."

                  "Responsible Officer" means, with respect to any Person, any
of the principal executive officers, managing members or general partners of
such Person, but in any event, with respect to financial matters, the chief
financial officer, treasurer or controller of such Person.

                  "Restricted Payment" means (a) any dividend or other
distribution, direct or indirect, on account of any Stock or Stock Equivalents
of the Borrower or any of the Guarantors now or hereafter outstanding, except a
dividend or distribution payable solely to the Borrower and/or one or more
Guarantors, (b) any redemption, retirement, sinking fund or similar payment,
purchase or other acquisition for value, direct or indirect, of any Stock or
Stock Equivalents of the Borrower or any of the Guarantors now or hereafter
outstanding other than one payable solely to the Borrower and/or one or more
Guarantors, and (c) any payment or prepayment of principal, premium (if any),
interest, fees (including fees to obtain any waiver or consent in connection
with any Security) or other charges on, or redemption, purchase, retirement,
defeasance, sinking fund or similar payment with respect to, any Indebtedness of
the Borrower or any other Loan Party, other than any required redemptions,
retirement, purchases or other payments, in each case to the extent permitted to
be made by the terms of such Indebtedness after giving effect to any applicable
subordination provisions.

                                       22


                  "Revolving Credit Commitment" means, with respect to each
Lender, the commitment of such Lender to make Revolving Credit Loans and acquire
interests in other Outstandings in the aggregate principal amount outstanding
not to exceed the amount set forth opposite such Lender's name on Schedule I
under the caption "Revolving Credit Commitment," as amended to reflect each
Assignment and Acceptance executed by such Lender and as such amount may be
reduced pursuant to this Agreement.

                  "Revolving Credit Loan Lender" means, in such capacity, a
Lender with a Revolving Credit Loan outstanding or a Revolving Credit
Commitment.

                  "Revolving Credit Loan" is defined in Section 2.1.

                  "Revolving Credit Note" means a promissory note of the
Borrower payable to the order of any Lender in a principal amount equal to the
amount of such Lender's Revolving Credit Commitment evidencing the aggregate
Indebtedness of the Borrower to such Lender resulting from the Revolving Credit
Loans owing to such Lender.

                  "Revolving Credit Outstandings" means, at any particular time,
the principal amount of the Revolving Credit Loans outstanding at such time.

                  "Scheduled Termination Date" means the earlier of (x) the
termination for any reason of the Asset Purchase Agreement, (y) the Closing Date
(as defined in the Asset Purchase Agreement) and (z) 90 days after the Petition
Date (or, if the 9019 Order has been entered within 30 Business Days (APA
Method) after the Petition Date, 120 days after the Petition Date).

                  "SEC" means the U.S. Securities and Exchange Commission or any
successor thereto.

                  "Secured Obligations" means, in the case of the Borrower, the
Obligations, and, in the case of any other Loan Party, the obligations of such
Loan Party under the Guaranty and the other Loan Documents to which it is a
party.

                  "Secured Parties" means the Lenders, the Administrative Agent,
each of their respective successors and assigns, and any other holder of any of
the Obligations or of any other obligations under the Loan Documents, including
the beneficiaries of each indemnification obligation undertaken by the Loan
Parties and the Administrative Agent.

                  "Securities Act" means the Securities Act of 1933, as amended.

                  "Selling Lender" has the meaning specified in Section 13.7.

                  "Stock" means shares of capital stock (whether denominated as
common stock or preferred stock), beneficial, partnership or membership
interests, participations or other equivalents (regardless of how designated) of
or in a corporation, partnership, limited liability company or equivalent
entity, whether voting or non-voting.

                                       23


                  "Stock Equivalents" means all securities convertible into or
exchangeable for Stock and all warrants, options or other rights to purchase or
subscribe for any Stock, whether or not presently convertible, exchangeable or
exercisable.

                  "Sub-Agent" is defined in Section 12.7.

                  "Subsidiary" means, with respect to any Person, any
corporation, partnership, limited liability company or other business entity of
which an aggregate of 50% or more of the outstanding Voting Stock is, at the
time, directly or indirectly, owned or controlled by such Person and/or one or
more Subsidiaries of such Person.

                  "Subsidiary Guarantor" means each Subsidiary of the Borrower
party to this Agreement.

                  "Superior Liens" has the meaning specified in the recitals
hereto.

                  "Super-Priority Claim" means a claim, pursuant to section
364(c)(1) of the Bankruptcy Code, against any Loan Party in the Cases that is an
administrative expense claim having priority over any or all administrative
expenses of the kind specified in sections 503(b) or 507(b) of the Bankruptcy
Code.

                  "Tax Affiliate" means, with respect to any Person, (a) any
Subsidiary of such Person and (b) any Affiliate of such Person with which such
Person files or is eligible to file consolidated, combined or unitary tax
returns.

                  "Tax Return" has the meaning specified in Section 4.7(a).

                  "Taxes" has the meaning specified in Section 2.13(a).

                  "Term Loan Lender" means, in such capacity, a Lender with a
Term Loan outstanding or a Term Loan Commitment.

                  "Term Loan" is defined in Section 2.1.

                  "Term Loan Commitment" means, with respect to each Lender, the
commitment of such Lender to make Term Loans in the aggregate principal amount
outstanding not to exceed the amount set forth opposite such Lender's name on
Schedule I under the caption "Term Loan Commitment," as amended to reflect each
Assignment and Acceptance executed by such Lender and as such amount may be
reduced pursuant to this Agreement.

                  "Term Loan Obligations" means the Term Loans and to the extent
related thereto, all other Obligations.

                  "Term Loan Outstandings" means, at any particular time, the
principal amount of the Term Loans outstanding at such time.

                  "Term Note" means a promissory note of the Borrower payable to
the order of any Lender in a principal amount equal to the amount of such
Lender's Term Loan Commitment

                                       24


evidencing the aggregate Indebtedness of the Borrower to such Lender resulting
from the Term Loans owing to such Lender.

                  "Title IV Plan" means a pension plan, other than a
Multiemployer Plan, which is covered by Title IV of ERISA to which the Borrower
or any of its Subsidiaries or any ERISA Affiliate has any obligation or
liability (contingent or otherwise).

                  "Trademarks" means (a) all trademarks, trade names, corporate
names, company names, business names, fictitious business names, trade styles,
service marks, logos and other source or business identifiers, and all goodwill
associated therewith, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark Office or in any
similar office or agency of the United States, any State thereof or any other
country or any political subdivision thereof, or otherwise, and all common-law
rights related thereto and (b) the right to obtain all renewals thereof.

                  "Trademark License" means any agreement, whether written or
oral, providing for the grant by or to any Grantor of any right to use any
Trademark.

                  "Type" shall refer, in the case of Term Loans, to Term Loans
and, in the case of Revolving Credit Loans, to Revolving Credit Loans.

                  "UCC" means the Uniform Commercial Code as from time to time
in effect in the State of New York; provided, however, that in the event that,
by reason of mandatory provisions of law, any or all of the attachment,
perfection or priority of the Administrative Agent's and the other Secured
Parties' security interest in any Collateral is governed by the Uniform
Commercial Code as in effect in a jurisdiction other than the State of New York,
the term "UCC" shall mean the Uniform Commercial Code as in effect in such other
jurisdiction for purposes of the provisions hereof relating to such attachment,
perfection or priority and for purposes of definitions related to such
provisions.

                  "Unused Commitment Fee" has the meaning specified in Section
2.10(a).

                  "U.S. Bank" has the meaning given to it in the preamble.

                  "U.S. Bank Cash Management Agreements" means, collectively,
that certain "Consolidated U.S. Bank Treasury Management Service Agreement"
dated January 31, 2000 from the Borrower and certain affiliates to U.S. Bank,
the "U.S. Bank Treasury Management Services - Terms and Conditions" and "Product
Specification Sheets" referred to in such Service Agreement and any other
documents entered into or delivered by the Borrower or any affiliate pursuant to
or with respect to any of the foregoing or with respect to any of the services
provided by U.S. Bank pursuant to any of the foregoing, all as the same may
hereinafter be amended, supplemented, extended, restated or otherwise modified
from time to time.

                  "U.S. Bank Prepetition Credit Agreement" means the Credit
Agreement between the Borrower and U.S. Bank dated as of December 27, 2000, as
amended by the First Amendment to Credit Agreement dated as of January 9, 2002,
as further amended by the Second Amendment to Credit Agreement dated as of July
9, 2002, and as further amended by the Third

                                       25


Amendment to Credit Agreement dated as of August 23, 2002, and as further
amended by the Fourth Amendment to Credit Agreement and Waiver dated as of
September 6, 2002, and as further amended by the Fifth Amendment to Credit
Agreement, Forbearance Agreement and Limited Waiver dated as of November 27,
2002.

                  "U.S. Bank Prepetition Indebtedness" means all obligations
outstanding under the U.S. Bank Prepetition Credit Agreement.

                  "U.S. Bank Mortgage" means the Mortgage, Security Agreement,
Assignment of Leases and Rents and Fixture Financing Statement from Rice Park
Properties Corporation to U.S. Bank, pursuant to which Rice Park Properties
Corporation granted U.S. Bank a Lien on certain real property located in St.
Paul, Minnesota to secure the Borrower's obligations under the Credit Agreement
and the Cash Management Agreements.

                  "U.S. Trustee" means the United States Trustee for the
Northern District of Illinois Eastern Division.

                  "Vehicles" means all vehicles covered by a certificate of
title law of any state.

                  "Voting Stock" means Stock of any Person having ordinary power
to vote in the election of members of the board of directors, managers, trustees
or other controlling Persons of such Person (irrespective of whether, at the
time, Stock of any other class or classes of such entity shall have or might
have voting power by reason of the happening of any contingency).

                  "Withdrawal Liability" means, with respect to the Borrower at
any time, the aggregate liability incurred (whether or not assessed) with
respect to all Multiemployer Plans pursuant to Section 4201 of ERISA or for
increases in contributions required to be made pursuant to Section 4243 of
ERISA.

                  Section 1.2. Computation of Time Periods. In this Agreement,
in the computation of periods of time from a specified date to a later specified
date, the word "from" means "from and including" and the words "to" and "until"
each mean "to but excluding" and the word "through" means "to and including."

                  Section 1.3. Accounting Terms and Principles.

                  (a) Except as set forth below, all accounting terms not
specifically defined herein shall be construed in conformity with GAAP and all
accounting determinations required to be made pursuant hereto shall, unless
expressly otherwise provided herein, be made in conformity with GAAP.

                  Section 1.4. Certain Terms.

                  (a) The words "herein," "hereof," "hereto" and "hereunder" and
similar words refer to this Agreement as a whole, and not to any particular
Section, subsection or clause in this Agreement.

                                       26


                  (b) References in this Agreement to an Exhibit, Schedule,
Section, subsection or clause refer to the appropriate Exhibit or Schedule to,
or Section, subsection or clause of, this Agreement.

                  (c) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.

                  (d) Where the context requires, provisions relating to the
Collateral or any part thereof, when used in relation to a Grantor, shall refer
to such Grantor's Collateral or the relevant part thereof.

                  (e) Each agreement defined in this Article I shall include all
appendices, exhibits and schedules thereto. If the prior written consent of the
Requisite Lenders is required hereunder for an amendment, restatement,
supplement or other modification to any such agreement and such consent is
obtained, references in this Agreement to such agreement shall be to such
agreement as so amended, restated, supplemented or modified.

                  (f) References in this Agreement to any statute shall be to
such statute as amended or modified and in effect at the time any such reference
is operative.

                  (g) The term "including" when used in any Loan Document means
"including without limitation", except when used in the computation of time
periods.

                  (h) The terms "Lender", "Administrative Agent" and "Secured
Party" include their respective successors.

                  (i) Terms not otherwise defined herein and defined in the UCC
are used herein with the meanings specified in the UCC, including the following
which are capitalized herein:

                  "Account Debtor"
                  "Accounts"
                  "Chattel Paper"
                  "Commercial Tort Claim (if any)"
                  "Commodity Account"
                  "Commodity Intermediary"
                  "Deposit Account"
                  "Documents"
                  "Entitlement Holder"
                  "Entitlement Order"
                  "Equipment"
                  "Financial Asset"
                  "General Intangibles"
                  "Instruments"
                  "Inventory"
                  "Investment Property"
                  "Letter of Credit Right"
                  "Payment Intangible"

                                       27


                  "Proceeds"
                  "Security"
                  "Securities Account"
                  "Securities Intermediary"
                  "Security Entitlement"

                  (j) References to approvals by (or to events, etc. being
satisfactory to or similar concepts) by any Lender or the Administrative Agent
shall refer to the approval of such person in its and absolute sole discretion.

                  (k) Terms not otherwise defined herein and defined in the
Asset Purchase Agreement are used herein with the meanings specified in the
Asset Purchase Agreement, including the following which are capitalized herein:

                  "Amortization Event"
                  "Bidding Procedures"
                  "Bidding Procedures Order"
                  "Buyer"
                  "MH Servicing Business"
                  "MH Servicing Contracts"
                  "MH Servicing Fees"
                  "Non-MH Servicing Business"
                  "Private Label Credit Cared Master Trust Documents"
                  "Purchased Assets"
                  "Purchased Business"
                  "Sale Order"
                  "Securitization"
                  "Servicing Contract"


                                   ARTICLE II

                                  The Facility

                  Section 2.1. The Credit Commitments; Limitations on
Obligations of U.S. Bank National Association. On the terms and subject to the
conditions contained in this Agreement, each Lender with a Revolving Credit
Commitment severally agrees to make loans ("Revolving Credit Loans") to the
Borrower (and, solely to the extent provided herein, CFCC) from time to time on
any Business Day during the period from the date hereof until the Credit
Termination Date in an aggregate amount not to exceed at any time outstanding
for all such Loans made by such Lender such Lender's Revolving Credit
Commitment; provided, however, that (a) the aggregate Revolving Credit
Outstandings to CFCC, after giving effect to such Revolving Credit Loan, shall
not exceed $1,000,000 and (b) at no time shall any Lender be obligated to make a
Loan (i) to the extent that such Lender's Ratable Portion of the Revolving
Credit Outstandings, after giving effect to such Revolving Credit Loan, would
exceed such Lender's Ratable Portion of the Budgeted Amount and (ii) to the
extent that the aggregate Revolving Credit Outstandings, after giving effect to
such Revolving Credit Loan, would exceed

                                       28


the Maximum Revolving Credit in effect at such time. Subject to the terms and
conditions contained in this Agreement, Revolving Credit Loans to the Borrower
prepaid out of Excess Cash pursuant to Section 2.8(b) may be reborrowed but all
other amounts prepaid may not be reborrowed. Subject to the terms and conditions
contained in this Agreement, Revolving Credit Loans to CFCC prepaid may be
reborrowed.

          On the terms and subject to the conditions contained in this
Agreement, each Lender with a Term Loan Commitment severally agrees to make a
term loan ("Term Loan") to the Borrower on the Closing Date equal to the amount
of its Term Loan Commitment. Notwithstanding any provision in this Agreement to
the contrary, (a) each Term Lender shall only be obligated to make a Term Loan
on the Closing Date, subject to the satisfaction of the conditions set forth in
Section 3.1, in the amount equal to its pro rata share of the amount of the U.S.
Bank Prepetition Indebtedness, (b) each Term Lender shall make its Term Loan
through the exchange of its U.S. Bank Prepetition Indebtedness for Term Loan
Indebtedness hereunder and not by the transfer of funds to the Borrower pursuant
to Section 2.2, and (c) U.S. Bank shall not have any obligation to make any Loan
other than a Term Loan equal to its Term Loan Commitment. No Term Loan that is
prepaid may be reborrowed. Upon such exchange, each Term Loan Lender will be
deemed to have fully funded its Term Loan Commitment.

          FPS agrees to purchase Term Loans from U.S. Bank in a principal amount
of $10,000,000 as follows:

                  (a) The effective date of the purchase shall be the first date
          on which any Revolving Credit Loan (regardless of amount) is made. The
          conditions set forth in Section 3.1(a) (including approval of the
          Bankruptcy Court of the Priming Liens) to the making of such Revolving
          Credit Loan shall have been satisfied.

                  (b) The purchase price shall be $10,000,000 plus accrued and
          unpaid interest on such principal amount.

                  (c) The purchase shall be effected through the execution and
          delivery of an Assignment and Acceptance by U.S. Bank and FPS.
          Pursuant thereto, U.S. Bank shall represent and warrant to FPS that
          U.S. Bank is the legal and beneficial owner of the interest being
          assigned by it thereunder and that such interest is free and clear of
          any adverse claim of ownership and free and clear of any defenses to
          payment based on the conduct of U.S. Bank.

                  (d) The purchase shall be effective upon payment of the
          purchase price therefor by FPS, and, notwithstanding any other
          provision in this Agreement to the contrary, until the purchase price
          is paid, all proceeds from the sale of the Primed Collateral and the
          Mortgaged Property which would otherwise be applied to Revolving
          Credit Loans held by FPS shall be applied to, and be applied to the
          payment of the purchase price for, the Term Loans held by U.S. Bank.

                  Section 2.2. Borrowing Procedures.

                  (a) Each Borrowing of Loans (including to CFCC) shall be made
on notice given by the Borrower to the Administrative Agent not later than 4:00
P.M. (New York City

                                       29


time) (i) one Business Day, in the case of a Borrowing of Base Rate Loans, and
(ii) three Business Days, in the case of a Borrowing of Eurodollar Rate Loans,
prior to the date of the proposed Borrowing. Each such notice shall be in
substantially the form of Exhibit C (a "Notice of Borrowing") specifying (i) the
date of such proposed Borrowing, (ii) the aggregate amount of such proposed
Borrowing, (iii) whether any portion of the proposed Borrowing will be of Base
Rate Loans or Eurodollar Rate Loans, (iv) the Available Credit (after giving
effect to the proposed Borrowing), (v) the Budgeted Amount (after giving effect
to the proposed Borrowing) and (vi) any amount to be netted pursuant to Section
2.8(b). The Loans shall be made as Base Rate Loans unless (subject to Section
2.16) the Notice of Borrowing specifies that all or a portion thereof shall be
Eurodollar Rate Loans. Each Borrowing shall be in an aggregate amount of not
less than $100,000 or an integral multiple of $100,000 in excess thereof. The
Borrower may not request more than one Borrowing per week (or more frequently as
the Administrative Agent may permit).

                  (b) The Administrative Agent shall give to each Lender prompt
notice of the Administrative Agent's receipt of a Notice of Borrowing and, if
Eurodollar Rate Loans are properly requested in such Notice of Borrowing, the
applicable interest rate determined pursuant to Section 2.16(a). Each Lender
shall, before 11:00 A.M. (New York City time) on the date of the proposed
Borrowing, make available to the Administrative Agent at its address referred to
in Section 13.8, in immediately available funds, such Lender's Ratable Portion
of such proposed Borrowing. After the Administrative Agent's receipt of such
funds and upon fulfillment of the applicable conditions set forth in Sections
3.1 and 3.2, the Administrative Agent will make such funds available to the
Borrower (or if the Revolving Credit Loans are to be made to CFCC, to CFCC).

                  (c) Unless the Administrative Agent shall have received notice
from a Lender prior to the date of any proposed Borrowing that such Lender will
not make available to the Administrative Agent such Lender's Ratable Portion of
such Borrowing, the Administrative Agent may assume that such Lender has made
such Ratable Portion available to the Administrative Agent on the date of such
Borrowing in accordance with this Section 2.2 and the Administrative Agent may,
in reliance upon such assumption, make available to the Borrower on such date a
corresponding amount. If and to the extent that such Lender shall not have so
made such Ratable Portion available to the Administrative Agent, such Lender and
the Borrower severally agree to repay to the Administrative Agent forthwith on
demand such corresponding amount together with interest thereon, for each day
from the date such amount is made available to the Borrower until the date such
amount is repaid to the Administrative Agent, at (i) in the case of the
Borrower, the interest rate applicable at the time to the Loans comprising such
Borrowing and (ii) in the case of such Lender, the Federal Funds Rate for the
first Business Day and thereafter at the interest rate applicable at the time to
the Loans comprising such Borrowing. If such Lender shall repay to the
Administrative Agent such corresponding amount, such amount so repaid shall
constitute such Lender's Loan as part of such Borrowing for purposes of this
Agreement. If the Borrower shall repay to the Administrative Agent such
corresponding amount, such payment shall not relieve such Lender of any
obligation it may have hereunder to the Borrower.

                  (d) The failure of any Lender to make the Loan or any payment
required by it on the date specified (a "Non-Funding Lender") shall not relieve
any other Lender of its

                                       30


obligations to make such Loan or payment on such date, but no such other Lender
shall be responsible for the failure of any Non-Funding Lender to make a Loan or
payment required under this Agreement.

                  Section 2.3. Intentionally Omitted.

                  Section 2.4. Reduction and Termination of the Credit
Commitments.

                  (a) The Borrower may, upon at least three Business Days' prior
notice to the Administrative Agent, terminate in whole or reduce in part ratably
the unused portions of the respective Revolving Credit Commitments of the
Lenders; provided, however, that each partial reduction shall be in the
aggregate amount of not less than $1,000,000 or an integral multiple of
$1,000,000 in excess thereof. The Borrower may not at any time reduce the Term
Loan Commitment.

                  (b) Except as otherwise provided in Section 2.8, the then
current Revolving Credit Commitments shall be reduced on each date on which a
prepayment of Revolving Credit Loans is made pursuant to Section 2.7(a) or
required to be made pursuant to Section 2.8(a) or would be required to be made
had the outstanding Revolving Credit Loans equaled the Revolving Credit
Commitments then in effect, in each case in the amount of such prepayment (or
deemed prepayment) (and the Revolving Credit Commitment of each Lender shall be
reduced by its Ratable Portion of such amount).

                  Section 2.5. Repayment of Loans. The Borrower promises to
repay the entire unpaid principal amount of the Loans and all accrued but unpaid
interest thereon on the Scheduled Termination Date. CFCC promises to repay the
entire unpaid principal amount of the Loans to it and all accrued but unpaid
interest thereon on the Scheduled Termination Date.

                  Section 2.6. Evidence of Debt.

                  (a) Each Lender shall maintain in accordance with its usual
practice (or that of its Affiliates) an account or accounts evidencing
Indebtedness of the Borrower and CFCC to such Lender resulting from each Loan of
such Lender from time to time, including the amounts of principal and interest
payable and paid to such Lender from time to time under this Agreement.

                  (b) The Administrative Agent shall maintain accounts in
accordance with its usual practice (or that of its Affiliates) in which it will
record (i) the amount of each Loan made and, if a Eurodollar Rate Loan, the
Interest Period applicable thereto, (ii) the amount of any principal or interest
due and payable by the Borrower and CFCC to each Lender hereunder and (iii) the
amount of any sum received by the Administrative Agent hereunder from the
Borrower and each Lender's share thereof, if applicable.

                  (c) The entries made in the accounts maintained pursuant to
clauses (a) and (b) of this Section 2.6 shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
obligations recorded therein; provided, however, that the failure of any Lender
or the Administrative Agent to maintain such accounts or any error therein shall
not in any manner affect the obligations of the Borrower and CFCC to repay the
Loans in

                                       31


accordance with the terms hereof and the other Loan Documents. Notwithstanding
any other provision of this Agreement, in the event that any Lender requests
that the Borrower and CFCC execute and deliver a promissory note or notes
payable to such Lender in order to evidence the Indebtedness owing to such
Lender by the Borrower or CFCC hereunder, the Borrower or CFCC, as applicable,
will promptly execute and deliver a Note or Notes to such Lender evidencing any
Loans of such Lender, substantially in the form of Exhibit B-1 or B-2, as
applicable. Thereafter, the Loans evidenced by such Note and interest thereon
shall at all times (including after assignment pursuant Section 13.2) be
represented by one or more Notes in such form payable to the order of the payee
named therein (or, if such Note is a Registered Note as hereafter set forth, to
such payee and its registered assigns). Any Lender may request that its Notes be
treated as registered promissory notes ("Registered Notes"), in which case such
Notes shall contain the following statement:

                  "This Note is a Registered Note and, as provided in and
                  subject to the terms of the Credit Agreement, this Note and
                  the Loans evidenced hereby may be transferred in whole or in
                  part only upon surrender of this Note to the Administrative
                  Agent for registration of transfer or exchange (and in the
                  case of a surrender for registration of transfer, duly
                  endorsed or accompanied by a written instrument of transfer,
                  duly executed by the registered holder of this Note or its
                  attorney duly authorized in writing), at which time a new Note
                  for a like principal amount will be issued to, and registered
                  in the name of, the permitted transferee as provided in
                  Section 13.2 of the Credit Agreement. Reference in this Note
                  to a "holder" shall mean the person or entity in whose name
                  this Note is at the time registered in the register maintained
                  by the Administrative Agent as provided in Section 13.2(c) of
                  the Credit Agreement and, prior to due presentment for
                  registration of transfer, the Borrower, CFCC, the
                  Administrative Agent and the Lenders may treat such person or
                  entity as the owner of this Note for the purpose of receiving
                  payment and all other purposes, notwithstanding notice to the
                  contrary. The Loans evidenced by this Note may be participated
                  in whole or in part only by registration of such participation
                  on the Participant Register maintained by the holder of this
                  Note pursuant to Section 13.2(f) of the Credit Agreement. Any
                  participation of the Loans may be effected only by the
                  registration of the participation on the Participant
                  Register."

                  Section 2.7. Optional Prepayments.

                  (a) The Borrower may, upon at least three Business Days' prior
notice to the Administrative Agent stating the proposed date and aggregate
principal amount of the prepayment, prepay the outstanding principal amount of
the Loans in whole or in part; provided, however, that (i) if any prepayment of
any Eurodollar Rate Loan is made by the Borrower other than on the last day of
an Interest Period for such Loan, the Borrower shall also pay any amounts owing
pursuant to Section 2.16(e), (ii) each partial prepayment of Loans shall be in
an aggregate

                                       32


principal amount not less than $1,000,000 or integral multiples of $1,000,000 in
excess thereof and (iii) if the aggregate outstanding balance of Loans is less
than $1,000,000, the Borrower may prepay the entire aggregate outstanding
balance of Loans. Upon the giving of such notice of prepayment, the principal
amount of Loans specified to be prepaid shall become due and payable on the date
specified for such prepayment. All repayments of Loans made pursuant to this
Section 2.7(a) shall result in a permanent reduction of the Commitments to the
extent and in the manner provided in Section 2.4(b).

                  (b) The Borrower shall have no right to prepay the principal
amount of any Loan other than as provided in this Section 2.7. CFCC shall not
have the right to prepay the principal amount of any Loan without the consent of
the Administrative Agent.

                  (c) The Borrower may not, without the consent of the Revolving
Credit Lenders, voluntarily prepay all or any portion of the Term Loans unless
the Revolving Credit Loans have been repaid in full and the Revolving Credit
Commitments have been terminated.

                  Section 2.8. Mandatory Prepayments.

                  (a) Without limiting the provisions of Article IX, the
Borrower shall prepay Loans in connection with Asset Sales as follows:

                        (1) With respect to Asset Sales permitted by Section
                  8.4(a), the Borrower shall immediately prepay the Revolving
                  Credit Loans in an amount equal to 100% of the Net Cash
                  Proceeds received by the Borrower or any of its Subsidiaries
                  from such sale. Such prepayment shall not result in a
                  reduction of the Revolving Credit Commitment and the amount
                  prepaid may, subject to the terms and conditions of this
                  Agreement, be reborrowed.

                        (2) With respect to Asset Sales permitted by Section
                  8.4(c)(other than the sale referred to in Item 4 of Schedule
                  8.4 (Menards)), the Borrower shall immediately prepay the
                  Revolving Credit Loans in an amount equal to 50% of the Net
                  Cash Proceeds received by the Borrower or any of its
                  Subsidiaries from such sale. The Revolving Credit Commitment
                  shall be permanently reduced by an amount equal to 50% of such
                  Net Cash Proceeds. In addition to such prepayment, the
                  Borrower shall within 30 days of the consummation of such
                  Asset Sale prepay the Revolving Credit Loans in an amount
                  equal to 50% of the Net Cash Proceeds received by the Borrower
                  or any of its Subsidiaries from such sale. In addition to the
                  reduction stated above, the Revolving Credit Commitment shall
                  be permanently reduced on such date by an amount equal to 50%
                  of such Net Cash Proceeds.

                        (3) With respect to Asset Sales permitted by Section
                  8.4(b) comprised of Purchased Assets (other than Pledged Mill
                  Creek Securities) to CFN or its Affiliates, the Borrower shall
                  immediately prepay the Revolving Credit Loans in an amount
                  equal to the lesser of $30,000,000 and the aggregate principal
                  amount of Revolving Credit Loans. Such prepayment shall result
                  in a permanent reduction of the Revolving Credit Commitment by
                  $30,000,000.

                                       33


                        (4) With respect to Asset Sales permitted by Section
                  8.4(b) comprised of the Pledged Mill Creek Securities to CFN
                  or its Affiliates, the Borrower shall immediately prepay the
                  Revolving Credit Loans to the extent the aggregate principal
                  amount of Revolving Credit Loans exceeds the lesser of (x)
                  $30,000,000 and (y) if payments or prepayments of Revolving
                  Credit Loans have been made out of Purchased Assets (other
                  than the Mill Creek Securities), the difference between
                  $30,000,000 less the amount of such payments or prepayments).
                  Such prepayment shall result in a permanent reduction of the
                  Revolving Credit Commitment by the amount of the prepayment.
                  The Borrower shall immediately prepay the Term Loans in an
                  amount equal to any remaining Net Cash Proceeds.

                        (5) With respect to Asset Sales comprised of the Pledged
                  Mill Creek Securities to Persons other than CFN and its
                  Affiliates, the Borrower shall immediately prepay the
                  Revolving Credit Loans in an amount equal to the Net Cash
                  Proceeds received by the Borrower or any of its Subsidiaries
                  from such sale. The Revolving Credit Commitment shall be
                  permanently reduced by the amount of the Net Cash Proceeds.
                  The Borrower shall immediately prepay the Term Loans in an
                  amount equal to any remaining Net Cash Proceeds.

                        (6) With respect to Asset Sales to Persons other than
                  CFN and its Affiliates comprised of the Purchased Assets
                  (other than the Pledged Mill Creek Securities), the Borrower
                  shall immediately prepay the Revolving Credit Loans in an
                  amount equal to the Net Cash Proceeds received by the Borrower
                  from such sale. The Revolving Credit Commitment shall
                  terminate upon consummation of such sale. The Borrower shall
                  immediately prepay the Term Loans in any amount equal to any
                  remaining Net Cash Proceeds.

                  (b) The Borrower shall prepay the Revolving Credit Loans on
each Business Day in an amount equal to the Excess Cash as of the prior Business
Day. No Lender has an obligation to monitor the amount of Excess Cash. In the
event there is a Borrowing of Revolving Credit Loans occurring on the date of
such prepayment in excess of the amount of the prepayment, for the convenience
of the parties, so long as the conditions set forth in Section 3.2 have been
satisfied, the Borrowing on such date and the required prepayment may be netted
and accordingly the proceeds of the Revolving Credit Loans shall be made or
deemed made available to the Borrower by the Borrower retaining the amounts that
would otherwise have been paid to the Revolving Credit Loan Lenders as such
prepayment and by the Revolving Credit Loan Lenders making available to the
Borrower as otherwise provided in this Article II the excess of the amount of
the Borrowing over the amount of the prepayment.

                  (c) All repayments of Loans required to be made pursuant to
Section 2.8(a) shall, except as otherwise provided therein, result in a
permanent reduction of the Revolving Credit Commitments to the extent and in the
manner provided in Section 2.4(b) or as provided in Section 2.8(a). All
prepayments made by the Borrower of Revolving Credit Loans shall be applied to
Revolving Credit Loans made to the Borrower and, second, to Revolving Credit
Loans made to CFCC.

                                       34


                  (d) If at any time, the aggregate principal amount of
Revolving Credit Outstandings exceeds the Maximum Revolving Credit at such time,
the Borrower shall forthwith prepay the Loans then outstanding in an amount
equal to such excess.

                  Section 2.9. Interest.

                  (a) Rate of Interest. All Loans and the outstanding amount of
all other Obligations shall bear interest, in the case of Loans, on the unpaid
principal amount thereof from the date such Loans are made and, in the case of
such other Obligations, from the date such other Obligations are due and payable
until, in all cases, paid in full, except as otherwise provided in Section
2.10(c), as follows:

                      (i) if a Base Rate Loan or such other Obligation, at the
greater of (A) 10.00% per annum or (B) a rate per annum equal to the sum of (x)
the Base Rate as in effect from time to time, plus (y) the Applicable Margin;
and

                      (ii) if a Eurodollar Rate Loan, at the greater of (A)
10.00% per annum or (B) a rate per annum equal to the sum of (x) the Eurodollar
Rate determined for the applicable Interest Period, plus (y) the Applicable
Margin in effect from time to time during such Interest Period.

                  (b) Interest Payments. (i) Interest accrued on each Base Rate
Loan shall be payable in arrears (A) on the first day of each calendar month,
commencing on the first such day following the making of such Base Rate Loan and
(B) if not previously paid in full, at maturity (whether by acceleration or
otherwise) of such Base Rate Loan; (ii) interest accrued on each Eurodollar Rate
Loan shall be payable in arrears (A) on the first day of each month during an
Interest Period applicable to such Loan, (B) upon the payment or prepayment
thereof in full or in part and (C) if not previously paid in full, at maturity
(whether by acceleration or otherwise) of such Eurodollar Rate Loan; and (iii)
interest accrued on the amount of all other Obligations shall be payable on
demand from and after the time such Obligation becomes due and payable (whether
by acceleration or otherwise).

                  (c) Default Interest. Notwithstanding the rates of interest
specified in Section 2.9(a) or elsewhere herein, effective immediately upon the
occurrence of an Event of Default, and for as long thereafter as such Event of
Default shall be continuing, the principal balance of all Loans and the amount
of all other Obligations shall bear interest at a rate which is 2.00% per annum
in excess of the rate of interest applicable to such Loans or such other
Obligations from time to time.

                  Section 2.10. Fees.

                  (a) Unused Commitment Fee. The Borrower agrees to pay to the
Administrative Agent for the account of each Lender a commitment fee on the
average amount by which the Revolving Credit Commitment of such Lender exceeds
such Lender's Ratable Portion of the Revolving Credit Outstandings (the "Unused
Commitment Fee") from the date hereof until the Credit Termination Date at the
Applicable Unused Commitment Fee Rate, payable in arrears (i) on the first day
of each calendar month, commencing on the first such day following the Closing
Date, and (ii) on the Credit Termination Date.

                                       35


                  (b) Commitment Fees. The Borrower agrees to pay to each
Revolving Credit Lender a commitment fee equal to 3.00% of such Lender's
Revolving Credit Commitment on the date the Interim Order is entered. The
Borrower agrees to pay to each Term Loan Lender (including FPS or any of its
Affiliates to the extent it becomes a Term Loan Lender) a commitment fee equal
to 3.00% of such Lender's Term Loan Commitment (computed as of the date the
Interim Order is entered, or, if applicable, the date of the assignment to FPS
or such affiliate) on the date when the following conditions have been
satisfied: (a) the right of CFN (or permitted assignees) to purchase assets
under the Asset Purchase Agreement has expired and CFN and its affiliates did
not purchase all the Purchased Assets under the Asset Purchase Agreement and the
Pledged Mill Creek Securities were purchased by a Person other than CFN and its
affiliates, (b) all Loans and other Obligations have been paid in full and all
Commitments terminated and (c) all amounts payable to the Buyer under the Asset
Purchase Agreement have been paid in full.

                  (c) Servicing Fee. The Borrower agrees to pay to the
Administrative Agent, a servicing fee of $50,000 per month, payable on the date
the Interim Order is entered and each 30 days thereafter.

                  Section 2.11. Payments and Computations.

                  (a) The Borrower and CFCC shall make each payment hereunder
(including fees and expenses) not later than 11:00 A.M. (New York City time) on
the day when due, in Dollars, to the Administrative Agent at such account or
location as the Administrative Agent may specify from time to time in
immediately available funds without set-off or counterclaim, including any
claims against any Lender or its Affiliate in connection with the Asset Purchase
Agreement. The Administrative Agent will promptly thereafter cause to be
distributed immediately available funds relating to the payment of principal or
interest or fees to the Lenders, in accordance with the application of payments
set forth in clauses (e) and (f) of this Section 2.11, as applicable, for the
account of their respective Applicable Lending Offices; provided, however, that
amounts payable pursuant to Section 2.12, 2.13 or 2.16(c) or (e) shall be paid
only to the affected Lender or Lenders. Payments received by the Administrative
Agent after 11:00 A.M. (New York City time) shall be deemed to be received on
the next succeeding Business Day.

                  (b) All computations of interest and of fees shall be made by
the Administrative Agent on the basis of a year of 360 days, in each case for
the actual number of days (including the first day but excluding the last day)
occurring in the period for which such interest and fees are payable. Each
determination by the Administrative Agent of an interest rate hereunder shall be
conclusive and binding for all purposes, absent manifest error.

                  (c) If and to the extent any payment owed to the
Administrative Agent or any Lender is not made when due, each Loan Party hereby
authorizes the Administrative Agent and such Lender, subject to any notice
period provided in the Orders, to setoff and charge any amount so due against
any deposit account maintained by such Loan Party with the Administrative Agent
or such Lender, whether or not the deposit therein is then due, subject to the
limitations of clause (g).

                                       36


                  (d) Whenever any payment hereunder shall be stated to be due
on a day other than a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest or fees, as the case may be;
provided, however, that, if such extension would cause payment of interest on or
principal of any Eurodollar Rate Loan to be made in the next calendar month,
such payment shall be made on the immediately preceding Business Day. All
repayments of any Loans shall be applied first to repay such Loans of such Type
outstanding as Base Rate Loans and then to repay such Loans outstanding as
Eurodollar Rate Loans with those Eurodollar Rate Loans which have earlier
expiring Eurodollar Interest Periods being repaid prior to those which have
later expiring Eurodollar Interest Periods.

                  (e) Unless the Administrative Agent shall have received notice
from the Borrower to the Lenders prior to the date on which any payment is due
hereunder that the Borrower will not make such payment in full, the
Administrative Agent may assume that the Borrower has made such payment in full
to the Administrative Agent on such date and the Administrative Agent may, in
reliance upon such assumption, cause to be distributed to each Lender on such
due date an amount equal to the amount then due such Lender. If and to the
extent the Borrower shall not have made such payment in full to the
Administrative Agent, each Lender shall repay to the Administrative Agent
forthwith on demand such amount distributed to such Lender together with
interest thereon at the Federal Funds Rate, for the first Business Day, and,
thereafter, at the rate applicable to Base Rate Loans, for each day from the
date such amount is distributed to such Lender until the date such Lender repays
such amount to the Administrative Agent.

                  (f) Subject to Section 2.7(c) and the provisions of clause (g)
of this Section 2.11 (and except as otherwise provided in Section 2.8), all
payments and any other amounts received by the Administrative Agent from or for
the benefit of the Borrower or any other Loan Party shall be applied first, to
pay principal of and interest on any portion of the Loans which the
Administrative Agent may have advanced pursuant to the express provisions of
this Agreement on behalf of any Lender, for which the Administrative Agent has
not then been reimbursed by such Lender or the Borrower; and second, to pay all
other Obligations then due and payable. Payments in respect of Loans received by
the Administrative Agent shall be distributed to each Lender in accordance with
such Lender's Ratable Portion and all payments of fees and all other payments in
respect of any other Obligation shall be allocated among such of the Lenders as
are entitled thereto, and, if to the Lenders, in proportion to their respective
Ratable Portions.

                  (g) Subject to the Carve-Out, after the occurrence and during
the continuance of an Event of Default, the Borrower hereby irrevocably waives
the right to direct the application of any and all payments in respect of the
Obligations and any proceeds of Collateral, and agrees that the Administrative
Agent may, and shall upon either (A) the written direction of the Requisite
Lenders or (B) the acceleration of the Obligations pursuant to Section 9.2,
apply all payments in respect of any Obligations and all funds on deposit in any
Cash Collateral Account (including all proceeds arising from a Reinvestment
Event that are held in the Cash Collateral Account pending application of such
proceeds as specified in a Reinvestment Notice) and all other proceeds of
Collateral in the following order (it being agreed that funds (other than from
the sale of Collateral) on deposit with U.S. Bank under the U.S. Bank Cash
Management Agreements may be setoff by U.S. Bank against obligations to U.S.
Bank incurred after the

                                       37


Petition Date up to $2,000,000 and against obligations to U.S. Bank in respect
of "ACH files" relating solely to payroll obligations):

                      (i) first, to pay interest on and then principal of any
portion of the Loans which the Administrative Agent may have advanced on behalf
of any Lender for which the Administrative Agent has not then been reimbursed by
such Lender or the Borrower or CFCC;

                      (ii) second, to pay Obligations in respect of any expense
reimbursements including fees and expenses in respect of indemnities then due
the Administrative Agent;

                      (iii) third, to pay Obligations in respect of any expense
reimbursements or indemnities then due to the Lenders;

                      (iv) fourth, to pay Obligations in respect of any fees
(other than fees payable to the Term Loan Lenders under Section 2.10(b)) then
due to the Administrative Agent and the Lenders;

                      (v) fifth, to the extent Section 2.8(a) would otherwise
apply, to the payment of the principal of and interest on the Loans as set forth
in the applicable provision or provisions of Section 2.8(a);

                      (vi) sixth, to the extent Section 2.8(a) would not
otherwise apply, and subject to Section 2.7(c), to pay the principal of and
interest on the Revolving Credit Loans;

                      (vii) seventh, to the extent Section 2.8(a) would not
otherwise apply, to pay the principal of and interest on the Term Loans;

                      (viii) eighth, to the ratable payment of all other
Obligations (other than the fee payable in respect of the Term Loan Commitments
under Section 2.10(b); and

                      (ix) ninth, to the ratable payment of the fee payable in
respect of the Term Loan Commitments under Section 2.10(b);

provided, however, that if sufficient funds are not available to fund all
payments to be made in respect of any of the Obligations described in any of the
foregoing clauses first through ninth, the available funds being applied with
respect to any such Obligation (unless otherwise specified in such clause) shall
be allocated to the payment of such Obligations ratably, based on the proportion
of the Administrative Agent's and each Lender's interest in the aggregate
outstanding Obligations described in each such clause, except in the case of
clause fifth, in the aggregate outstanding Obligations described in the
applicable provision of Section 2.8(a). The order of priority set forth in
clauses first through seventh of this Section 2.11(g) may at any time and from
time to time be changed by the agreement of the Lenders without necessity of
notice to or consent of or approval by the Borrower, any Secured Party that is
not a Lender or any other Person.

                                       38


                  (h) At the option of the Administrative Agent, interest, fees,
expenses and other sums due and payable in respect of the Loans and Protective
Advances may be paid from the proceeds of Revolving Credit Loans. The Borrower
(and, with respect to Revolving Credit Loans made to CFCC, CFCC) hereby
authorizes the Lenders to make Revolving Credit Loans pursuant to Section
2.2(a), from time to time in such Lender's discretion, with the consent of the
Revolving Credit Lenders, which are in the amounts of any and all interest,
fees, expenses and other sums payable in respect of the Loans, and further
authorizes the Administrative Agent to give the Lenders notice of any Borrowing
with respect to such Loans and to distribute the proceeds of such Loans to pay
such amounts. The Borrower and CFCC agree that all Revolving Credit Loans so
made shall be deemed to have been requested by it (irrespective of the
satisfaction of the conditions in Section 3.2, which conditions the Lenders
irrevocably waive) and directs that all proceeds thereof shall be used to pay
such amounts.

                  Section 2.12. Capital Adequacy. If at any time any Lender
determines that (a) the adoption of or any change in or in the interpretation of
any law, treaty or governmental rule, regulation or order after the date of this
Agreement regarding capital adequacy, (b) compliance with any such law, treaty
or governmental rule, regulation or order or (c) compliance with any guideline
or request or directive from any central bank or other Governmental Authority
(whether or not having the force of law) shall have the effect of reducing the
rate of return on such Lender's, or any corporation controlling such Lender's,
capital as a consequence of its obligations hereunder to a level below that
which such Lender or such corporation could have achieved but for such adoption,
change, compliance or interpretation, then, upon demand from time to time by
such Lender (with a copy of such demand to be sent to the Administrative Agent),
the Borrower shall pay to the Administrative Agent for the account of such
Lender, from time to time as specified by such Lender, additional amounts
sufficient to compensate such Lender for such reduction. A certificate as to
such amounts submitted to the Borrower and the Administrative Agent by such
Lender shall be conclusive and binding for all purposes, absent manifest error.
Each Lender may compute amounts due under this Section 2.12 on the basis of
amounts charged to it by any funding source.

                  Section 2.13. Taxes.

                  (a) Any and all payments by the Borrower, CFCC or any
Guarantor under any Loan Document shall be made free and clear of and without
deduction for any and all present or future taxes, levies, imposts, deductions,
charges or withholdings, and all liabilities with respect thereto, excluding (i)
in the case of each Lender and the Administrative Agent (A) taxes measured by
its net income, and franchise taxes imposed on it, by the jurisdiction (or any
political subdivision thereof) under the laws of which such Lender or the
Administrative Agent, as the case may be, is organized and (B) any United States
withholding taxes payable with respect to payments under the Loan Documents
under laws (including any statute, treaty or regulation) in effect on the
Closing Date (or, in the case of an Eligible Assignee, the date of the
applicable Assignment and Acceptance) applicable to such Lender or the
Administrative Agent, as the case may be, but not excluding any United States
withholding taxes payable as a result of any change in such laws occurring after
the Closing Date (or the date of such Assignment and Acceptance) and (ii) in the
case of each Lender, taxes measured by its net income, and franchise taxes
imposed on it, by the jurisdiction in which such Lender's Applicable Lending
Office is located (all such non-excluded taxes, levies, imposts, deductions,
charges, withholdings and

                                       39


liabilities being hereinafter referred to as "Taxes"). If any Taxes shall be
required by law to be deducted from or in respect of any sum payable under any
Loan Document to any Lender or the Administrative Agent (w) the sum payable
shall be increased as may be necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 2.13) such Lender or the Administrative Agent, as the case may be,
receives an amount equal to the sum it would have received had no such
deductions been made, (x) the Borrower or such Guarantor, as the case may be,
shall make such deductions, (y) the Borrower, CFCC or such Guarantor, as the
case may be, shall pay the full amount deducted to the relevant taxing authority
or other authority in accordance with applicable law and (z) the Borrower, CFCC
or such Guarantor, as the case may be, shall deliver to the Administrative Agent
evidence of such payment.

                  (b) In addition, the Borrower (and with respect to Loans made
to it, CFCC) agrees to pay any present or future stamp or documentary taxes or
any other excise or property taxes, charges or similar levies of the United
States or any political subdivision thereof or any applicable foreign
jurisdiction, and all liabilities with respect thereto, which arise from any
payment made under any Loan Document or from the execution, delivery or
registration of, or otherwise with respect to, any Loan Document (collectively,
"Other Taxes").

                  (c) The Borrower (and, with respect to Loans made to it, CFCC)
will indemnify each Lender and the Administrative Agent for the full amount of
Taxes and Other Taxes (including any Taxes or Other Taxes imposed by any
jurisdiction on amounts payable under this Section 2.13) paid by such Lender or
the Administrative Agent, as the case may be, and any liability (including for
penalties, interest and expenses) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally asserted.
This indemnification shall be made within 30 days from the date such Lender or
the Administrative Agent, as the case may be, makes written demand therefor.

                  (d) Within 30 days after the date of any payment of Taxes or
Other Taxes, the Borrower or CFCC, as applicable, will furnish to the
Administrative Agent, at its address referred to in Section 13.8, the original
or a certified copy of a receipt evidencing payment thereof.

                  (e) Without prejudice to the survival of any other agreement
of the Borrower, CFCC or any of the Guarantors hereunder, the agreements and
obligations of the Borrower, CFCC or any such Guarantor contained in this
Section 2.13 shall survive the payment in full of the Obligations.

                  (f) Prior to the Closing Date, in the case of each Non-U.S.
Lender that is a signatory hereto, and on the date of the Assignment and
Acceptance pursuant to which it becomes a Lender, in the case of each other
Non-U.S. Lender, and from time to time thereafter if requested by the Borrower
or the Administrative Agent, each Non-U.S. Lender that is entitled at such time
to an exemption from United States withholding tax, or that is subject to such
withholding tax at a reduced rate under an applicable tax treaty, shall provide
the Administrative Agent and the Borrower with two completed copies of: (i) Form
W-8ECI (claiming exemption from withholding because the income is effectively
connected with a U.S. trade or business) or any successor form; (ii) Form W-8BEN
(claiming exemption from, or a reduction of,

                                       40


withholding tax under an income tax treaty) or any successor form; (iii) in the
case of a Non-U.S. Lender claiming exemption under Section 871(h) or 881(c) of
the Code, a Form W-8BEN (claiming exemption from withholding under the portfolio
interest exemption) or any successor form; or (iv) any other applicable form,
certificate or document prescribed by the IRS certifying as to such Non-U.S.
Lender's entitlement to such exemption from United States withholding tax or
reduced rate with respect to all payments to be made to such Non-U.S. Lender
under the Loan Documents. Unless the Borrower and the Administrative Agent shall
have received forms or other documents satisfactory to them indicating that
payments under any Loan Document to or for a Non-U.S. Lender are not subject to
United States withholding tax or are subject to such tax at a rate reduced by an
applicable tax treaty, the Borrower or the Administrative Agent, as the case may
be, shall withhold taxes from such payments at the applicable statutory rate and
such Non-U.S. Lender shall not be entitled to the benefits of Section 2.13(a).

                  (g) Any Lender claiming any additional amounts payable
pursuant to this Section 2.13 shall use its reasonable efforts (consistent with
its internal policy and legal and regulatory restrictions) to change the
jurisdiction of its Applicable Lending Office if the making of such a change
would avoid the need for, or reduce the amount of, any such additional amounts
which would be payable or may thereafter accrue and would not, in the sole
determination of such Lender, be otherwise disadvantageous to such Lender.

                  Section 2.14. Substitution of Lenders. In the event that
(a)(i) any Lender makes a claim under Section 2.12 or Section 2.16(c), (ii) it
becomes illegal for any Lender to continue to fund or make any Eurodollar Rate
Loan and such Lender notifies the Borrower pursuant to Section 2.16(d), (iii)
the Borrower is required to make any payment pursuant to Section 2.13 that is
attributable to any Lender or (iv) any Lender is a Non-Funding Lender, (b) in
the case of clause (a)(i) above, as a consequence of increased costs in respect
of which such claim is made, the effective rate of interest payable to such
Lender under this Agreement with respect to its Loans materially exceeds the
effective average annual rate of interest payable to the Requisite Lenders under
this Agreement and (c) Lenders holding at least 75% of the Credit Commitments
are not subject to such increased costs or illegality, payment or proceedings
(any such Lender, an "Affected Lender"), the Administrative Agent may substitute
another financial institution for such Affected Lender hereunder, upon
reasonable prior written notice (which written notice must be given within 90
days following the occurrence of any of the events described in clause (a)(i),
(ii), (iii) or (iv)) by the Borrower to the Administrative Agent and the
Affected Lender that the Borrower intends to make such substitution, which
substitute financial institution must be an Eligible Assignee and, if not a
Lender, reasonably acceptable to the Administrative Agent; provided, however,
that if more than one Lender claims increased costs, illegality or right to
payment arising from the same act or condition and such claims are received by
the Borrower within 30 days of each other then the Borrower may substitute all,
but not less than all (except to the extent the Borrower has already substituted
one of such Affected Lenders before the Borrower's receipt of the other Affected
Lenders' claims), Lenders making such claims. In the event that the proposed
substitute financial institution or other entity is reasonably acceptable to the
Administrative Agent and the written notice was properly issued under this
Section 2.14, the Affected Lender shall sell and the substitute financial
institution or other entity shall purchase, pursuant to an Assignment and
Acceptance, all rights and claims of such Affected Lender under the Loan
Documents and the substitute financial institution or other entity shall assume
and the Affected Lender shall be relieved of its Credit Commitments and all
other prior

                                       41


unperformed obligations of the Affected Lender under the Loan Documents (other
than in respect of any damages (other than exemplary or punitive damages, to the
extent permitted by applicable law) in respect of any such unperformed
obligations). Upon the effectiveness of such sale, purchase, assignment and
assumption (which, in any event shall be conditioned upon the payment in full by
the Borrower to the Affected Lender in cash of all fees, unreimbursed costs and
expenses and indemnities accrued and unpaid through the effective date of the
aforementioned Assignment and Acceptance), the substitute financial institution
or other entity shall become a "Lender" hereunder for all purposes of this
Agreement having a Credit Commitment in the amount of such Affected Lender's
Credit Commitment assumed by it and such Credit Commitment of the Affected
Lender shall be terminated; provided that all indemnities under the Loan
Documents shall continue in favor of such Affected Lender.

                  Section 2.15. Conversion/Continuation Option.

                  (a) The Borrower or CFCC, as applicable may elect (i) at any
time, to convert Base Rate Loans or any portion thereof to Eurodollar Rate Loans
or (ii) at the end of any applicable Interest Period, to convert Eurodollar Rate
Loans or any portion thereof into Base Rate Loans or to continue such Eurodollar
Rate Loans or any portion thereof for an additional Interest Period; provided,
however, that the aggregate amount of the Eurodollar Loans for each Interest
Period must be in the amount of at least $1,000,000 or an integral multiple of
$1,000,000 in excess thereof. Each conversion or continuation shall be allocated
among the Loans of each Lender in accordance with such Lender's Ratable Portion.
Each such election shall be in substantially the form of Exhibit D hereto (a
"Notice of Conversion or Continuation") and shall be made by the Borrower giving
the Administrative Agent at least three Business Days' prior written notice
specifying (A) the amount and type of Loan being converted or continued, and (B)
in the case of a conversion, the date of conversion (which date shall be a
Business Day and, if a conversion from Eurodollar Rate Loans, shall also be the
last day of the applicable Interest Period).

                  (b) The Administrative Agent shall promptly notify each Lender
of its receipt of a Notice of Conversion or Continuation and of the options
selected therein. Notwithstanding the foregoing, no conversion in whole or in
part of Base Rate Loans to Eurodollar Rate Loans, and no continuation in whole
or in part of Eurodollar Rate Loans upon the expiration of any applicable
Interest Period, shall be permitted at any time at which (i) a Default or an
Event of Default shall have occurred and be continuing or (ii) the continuation
of, or conversion into, would violate any of the provisions of Section 2.16. If,
within the time period required under the terms of this Section 2.15, the
Administrative Agent does not receive a Notice of Conversion or Continuation
from the Borrower containing a permitted election to continue any Eurodollar
Rate Loans for an additional Interest Period or to convert any such Loans, then,
upon the expiration of the applicable Interest Period, such Loans will be
automatically continued as Eurodollar Rate Loans with an Interest Period of one
month. Each Notice of Conversion or Continuation shall be irrevocable.

                  Section 2.16. Special Provisions Governing Eurodollar Rate
Loans.

                  (a) Determination of Interest Rate. The Eurodollar Rate for
each Interest Period for Eurodollar Rate Loans shall be determined by the
Administrative Agent pursuant to

                                       42


the procedures set forth in the definition of "Eurodollar Rate." The
Administrative Agent's determination shall be presumed to be correct, absent
manifest error, and shall be binding on the Borrower.

                  (b) Interest Rate Unascertainable, Inadequate or Unfair. In
the event that (i) the Administrative Agent determines that adequate and fair
means do not exist for ascertaining the applicable interest rates by reference
to which the Eurodollar Rate then being determined is to be fixed or (ii) the
Requisite Lenders notify the Administrative Agent that the Eurodollar Rate for
any Interest Period will not adequately reflect the cost to the Lenders (or the
Affiliates of the Lenders providing funds to the Lenders) of making or
maintaining such Loans for such Interest Period, the Administrative Agent shall
forthwith so notify the Borrower and the Lenders, whereupon each Eurodollar Loan
will automatically, on the last day of the current Interest Period for such
Loan, convert into a Base Rate Loan and the obligations of the Lenders to make
Eurodollar Rate Loans or to convert Base Rate Loans into Eurodollar Rate Loans
shall be suspended until the Administrative Agent shall notify the Borrower that
the Requisite Lenders have determined that the circumstances causing such
suspension no longer exist.

                  (c) Increased Costs. If at any time any Lender shall determine
that the introduction of or any change in or in the interpretation of any law,
treaty or governmental rule, regulation or order (other than any change by way
of imposition or increase of reserve requirements included in determining the
Eurodollar Rate) or the compliance by such Lender with any guideline, request or
directive from any central bank or other Governmental Authority (whether or not
having the force of law), there shall be any increase in the cost to such Lender
of agreeing to make or making, funding or maintaining any Eurodollar Rate Loans,
then the Borrower shall from time to time, upon demand by such Lender (with a
copy of such demand to the Administrative Agent), pay to the Administrative
Agent for the account of such Lender additional amounts sufficient to compensate
such Lender for such increased cost. A certificate as to the amount of such
increased cost, submitted to the Borrower and the Administrative Agent by such
Lender, shall be conclusive and binding for all purposes, absent manifest error.
Each Lender may determine the amount of increased costs under this clause by
reference to amounts payable by any Affiliate of the Lender providing funds to
the Lender.

                  (d) Illegality. Notwithstanding any other provision of this
Agreement, if any Lender determines that the introduction of or any change in or
in the interpretation of any law, treaty or governmental rule, regulation or
order after the date of this Agreement shall make it unlawful, or any central
bank or other Governmental Authority shall assert that it is unlawful, for any
Lender or its Eurodollar Lending Office to make Eurodollar Rate Loans or to
continue to fund or maintain Eurodollar Rate Loans, then, on notice thereof and
demand therefor by such Lender to the Borrower through the Administrative Agent,
(i) the obligation of such Lender to make or to continue Eurodollar Rate Loans
and to convert Base Rate Loans into Eurodollar Rate Loans shall be suspended,
and each such Lender shall make a Base Rate Loan as part of any requested
Borrowing of Eurodollar Rate Loans and (ii) if the affected Eurodollar Rate
Loans are then outstanding, the Borrower shall immediately convert each such
Loan into a Base Rate Loan. If at any time after a Lender gives notice under
this Section 2.16(d) such Lender determines that it may lawfully make Eurodollar
Rate Loans, such Lender shall promptly give notice of that determination to the
Borrower and the Administrative Agent, and the Administrative Agent shall
promptly transmit the notice to each other Lender. The Borrower's right to
request, and such

                                       43


Lender's obligation, if any, to make, Eurodollar Rate Loans shall thereupon be
restored. Any Lender may invoke the protections of this clause if any Affiliate
of such Lender providing funds to the Lender is subject to similar provisions.

                  (e) Breakage Costs. In addition to all amounts required to be
paid by the Borrower pursuant to Section 2.10, the Borrower (or, in the case of
Revolving Credit Loans to CFCC, CFCC) shall compensate each Lender, upon demand,
for all losses, expenses and liabilities (including any loss or expense incurred
by reason of the liquidation or reemployment of deposits or other funds acquired
by such Lender to fund or maintain such Lender's Eurodollar Rate Loans to the
Borrower or CFCC but excluding any loss of the Applicable Margin on the relevant
Loans) which that Lender may sustain (i) if for any reason a proposed Borrowing,
conversion into or continuation of Eurodollar Rate Loans does not occur on a
date specified therefor in a Notice of Borrowing or a Notice of Conversion or
Continuation given by a Borrower or in a telephonic request by it for a
Borrowing, a conversion or continuation or a successive Interest Period does not
commence after notice therefor is given pursuant to Section 2.2 or Section 2.15,
as applicable, (ii) if for any reason any Eurodollar Rate Loan is prepaid
(including any mandatory prepayment made pursuant to Section 2.8) on a date
which is not the last day of the applicable Interest Period, (iii) as a
consequence of a required conversion of a Eurodollar Rate Loan to a Base Rate
Loan as a result of any of the events indicated in Section 2.16(d) or (iv) as a
consequence of any failure by the Borrower to repay Eurodollar Rate Loans when
required by the terms hereof. The Lender making demand for such compensation
shall deliver to the Borrower concurrently with such demand a written statement
as to such losses, expenses and liabilities, and this statement shall be
conclusive as to the amount of compensation due to that Lender, absent manifest
error. Each Lender may determine the amount of increased costs under this clause
by reference to amounts payable by any Affiliate of the Lender providing funds
to the Lender.



                                  ARTICLE III

                               Conditions To Loans

                  Section 3.1. Conditions Precedent to Initial Loans. The
obligation of each Lender to make the Loans requested by the Borrower or CFCC to
be made by it on the Closing Date is subject to the satisfaction of all of the
following conditions precedent:

                  (a) Interim Order. The Bankruptcy Court shall have entered the
Interim Order, which (i) shall have been entered upon an application of the
Borrower satisfactory in form and substance to the Lenders, (ii) shall contain
the approval of this Agreement and the other Loan Documents to which any Loan
Party is a party to and the transactions contemplated hereby and thereby and
granting the Super-Priority Claim status and the Liens described in Section 11.1
(including the Priming Liens) and finding that the Lenders are extending credit
to the Borrower in good faith within the meaning of section 364(e) of the
Bankruptcy Code, (iii) shall be certified by the Clerk of the Bankruptcy Court
as having been duly entered, (iv) shall be in full force and effect and (v)
shall not have been vacated, reversed, modified, amended or stayed without the
prior written consent of the Administrative Agent and the Lenders.

                                       44


                  (b) First Day Orders and Interim 9019 Order. All First Day
Orders shall be in form and substance satisfactory to the Administrative Agent
and the Lenders. The Interim 9019 Order and the Order (a) authorizing the "CFC
Debtors" to (i) Maintain Existing Bank Accounts, (ii) Continue Use of Existing
Checks and Business Forms, (iii) Continue Use of Existing Cash Management System
and (iv) Continue Use of Existing Investment Practices; and (B) Granting
Superpriority Status to Intercompany Claims shall have been entered by the
Bankruptcy Court in a form and scope acceptable to the Lenders.

                  (c) Certain Documents. The Administrative Agent (or the
Sub-Agent in the case of clause (iii) below) shall have received on the Closing
Date each of the following, each dated the Closing Date unless otherwise
indicated or agreed to by the Administrative Agent, in form and substance
satisfactory to the Administrative Agent and each Lender and each of their
respective counsel, and in sufficient copies for each Lender:

                      (i) this Agreement, duly executed and delivered by each of
the Loan Parties and, for the account of each Lender requesting the same, a Note
or Notes of the Borrower conforming to the requirements set forth herein;

                      (ii) upon the reasonable request of the Administrative
Agent, copies of UCC search reports as of a recent date listing all effective
financing statements that name any Loan Party as debtor, together with copies of
such financing statements, none of which shall cover the Collateral (except for
those securing the Public Parity Debt or with respect to any Liens permitted by
this Agreement);

                      (iii) (A) share certificates representing all certificated
Stock (including the Primed Pledged Shares) being pledged pursuant to this
Agreement and stock powers for such share certificates executed in blank, as the
Administrative Agent may require;

                            (B) instruments representing such of the Notes
pledged pursuant to this Agreement as shall be requested by the Administrative
Agent, in each case duly endorsed in favor of the Administrative Agent or in
blank;

                      (iv) upon the reasonable request of the Administrative
Agent, Control Account Agreements from (A) all Securities Intermediaries with
respect to all Securities Accounts and Securities Entitlements of each Loan
Party and (B) all futures commission agents and clearing houses with respect to
all commodities contracts and Commodities Accounts held by each Loan Party;

                      (v) upon the reasonable request of the Administrative
Agent, Deposit Account Control Agreements, duly executed by the appropriate Loan
Party and Deposit Account Bank, with respect to such Deposit Accounts of the
Borrower and the Guarantors;

                      (vi) a copy of the articles or certificate of
incorporation (or equivalent Constituent Document) of each Loan Party, certified
as of a recent date by the Secretary of State of the state of incorporation of
such Loan Party, together with certificates of such official attesting to the
good standing of each such Loan Party;

                                       45


                      (vii) a certificate of the Secretary or an Assistant
Secretary of each Loan Party certifying (A) the names and true signatures of
each officer of such Loan Party who has been authorized to execute and deliver
any Loan Document or other document required hereunder to be executed and
delivered by or on behalf of such Loan Party, (B) the by-laws (or equivalent
Constituent Document) of such Loan Party as in effect on the date of such
certification, (C) the resolutions of such Loan Party's Board of Directors (or
equivalent governing body) approving and authorizing the execution, delivery and
performance of this Agreement and the other Loan Documents to which it is a
party and (D) that there have been no changes in the certificate of
incorporation (or equivalent Constituent Document) of such Loan Party from the
certificate of incorporation (or equivalent Constituent Document) delivered
pursuant to the immediately preceding clause;

                      (viii) a certificate of a Responsible Officer of the
Borrower to the effect that the condition set forth in Section 3.2(b) has been
satisfied;

                      (ix) evidence satisfactory to the Administrative Agent of
the receipt of the consents, authorizations and approvals, and the making of the
filings, listed on Schedule 4.2;

                      (x) the Budget;

                      (xi) the Projections for the 13-week period beginning on
the Monday immediately prior to the Closing Date;

                      (xii) the Mortgage duly executed and delivered by the
Mortgagor; and

                      (xiii) the Lehman Documents;

                      (xiv) the Lehman Order;

                      (xv) such other certificates, documents, agreements and
information respecting any Loan Party as any Lender through the Administrative
Agent may reasonably request.

                  (d) Fees and Expenses Paid. There shall have been paid to the
Administrative Agent, for the account of the Administrative Agent and the
Lenders, as applicable, all fees and expenses (including reasonable fees and
expenses of counsel).

                  (e) Repayment of U.S. Bank Prepetition Indebtedness. The
principal of and interest on, and all fees and expenses relating to, the U.S.
Bank Prepetition Indebtedness shall have been paid in full through the exchange
contemplated by Section 2.1 and the Priming Lien shall be in full force and
effect.

                  (f) Mill Creek Memorandum of Understanding. The Lenders shall
have received copies of all supervisory or remedial agreements of any kind
relating to Mill Creek, including, but not limited to, memoranda of
understanding, agreements, cease-and-desist orders, consent orders and
enforcement orders outstanding at any time since January 1, 2000, and the terms
thereof shall not adversely affect the business, operations or financial
condition of Mill

                                       46


Creek in the sole discretion of the Administrative Agent and shall otherwise be
satisfactory in form, scope and substance to the Administrative Agent in its
sole discretion.

                  Section 3.2. Conditions Precedent to Each Loan. The obligation
of each Lender on any date (including the Closing Date) to make any Loan is
subject to the satisfaction of all of the following conditions precedent:

                  (a) Request for Borrowing. The Administrative Agent shall have
received a duly executed Notice of Borrowing.

                  (b) Representations and Warranties; No Defaults; Asset
Purchase Agreement in Full Force and Effect. The following statements shall be
true on the date of such Borrowing, both before and after giving effect thereto
and, in the case of any Borrowing, to the application of the proceeds therefrom:

                      (i) The representations and warranties set forth in
Article IV and in the other Loan Documents shall be true and correct on and as
of the Closing Date and shall be true and correct as of any such date after the
Closing Date with the same effect as though made on and as of such date, except
to the extent such representations and warranties expressly relate to an earlier
date;

                      (ii) no Default or Event of Default shall have occurred
and be continuing; and

                      (iii) the Asset Purchase Agreement shall have been duly
executed and delivered by the parties thereto and shall remain in full force and
effect and shall not have been terminated for any reason and neither the
Borrower nor any of its Subsidiaries shall be in breach thereof or in default
thereunder.

                  (c) Maximum Revolving Credit. After giving effect to the Loan
requested to be made or issued on any such date and the use of proceeds thereof,
the Revolving Credit Outstandings shall not exceed the Maximum Revolving Credit
at such time.

                  (d) No Legal Impediments. The making of the Loans on such date
does not violate any Requirement of Law on the date of or immediately following
the making of such Loan and is not temporarily, preliminarily or permanently
enjoined.

                  (e) Bankruptcy Court Approval. (i) The Interim Order shall be
in full force and effect and shall not have been stayed, reversed, vacated,
rescinded, modified or amended in any respect without the prior written consent
of the Lenders or (ii)(A) if the date of such Loan is more than 30 days after
the Petition Date or (B) the amount of such Loan when added to the aggregate
amount of Loans outstanding on such date, would exceed the maximum amount
authorized under the Interim Order, the Final Order shall (x) be certified by
the Clerk of the Bankruptcy Court as having been duly entered, (y) be in full
force and effect and (z) shall not have been vacated, reversed, modified,
amended or stayed without the prior written consent of the Lenders;
Administrative Agent. The Lehman Order shall be in full force and effect and
shall not have been stayed, reversed, vacated, rescinded, modified or amended in
any respect without the prior written consent of the Administrative Agent.

                                       47


                      (i) Additional Matters. The Administrative Agent shall
have received such additional documents, information and materials as any
Lender, through the Administrative Agent, may reasonably request. With respect
to any Loan made on or after 15 Business Days after the Petition Date, the
Administrative Agent shall have received (i) a favorable opinion of counsel to
the Mortgagor, to the effect that the Mortgage is a legal, valid and binding
obligation, enforceable in accordance with its terms, addressed to the
Administrative Agent and the Lenders and addressing such other matters as any
Lender through the Administrative Agent may reasonably request and (ii)
mortgagee's title insurance policies (ALTA form) in favor of the Administrative
Agent and the Lenders in amounts and in form and substance and issued by
insurers, reasonably satisfactory to the Administrative Agent, with respect to
the Mortgaged Property to be covered by such Mortgage, insuring that title to
such property is marketable and that the interests created by the Mortgage
constitute valid first Liens thereon free and clear of all defects and
encumbrances, except as permitted by the Mortgage, and such policies shall also
include such endorsements as the Administrative Agent shall reasonably request
and shall be accompanied by evidence of the payment in full of all premiums
thereon.

                  (f) Additional Bankruptcy Court Orders; 9019 Order. With
respect to any Loan made on or after 10 Business Days (APA Method) after the
Petition Date, the Bidding Procedures Order shall (x) be certified by the Clerk
of the Bankruptcy Court as having been duly entered, (y) be in full force and
effect and (z) shall not have been vacated, reversed, modified, amended or
stayed without the prior written consent of the Administrative Agent. With
respect to any Loan made on or after 30 Business Days (APA Method) after the
Petition Date, the 9019 Order shall (x) be certified by the Clerk of the
Bankruptcy Court as having been duly entered, (y) be in full force and effect
and (z) shall not have been vacated, reversed, modified, amended or stayed
without the prior written consent of the Administrative Agent.

                  (g) Budget Variance Report; Extended Budget. The Borrower
shall have delivered a budget variance report pursuant to Section 6.1(f) if due
prior to the date of such Borrowing and there shall not be any Event of Default
under Section 9.1(o) or any other Default or Event of Default, and the Borrower
have certified to the Lenders that the foregoing is correct. With respect to any
Borrowing 30 days after the Petition Date, the Borrower shall have delivered to
the Administrative Agent the extended Budget required by Section 6.1(e) and such
extension shall be acceptable in form and substance to the Administrative Agent
in its sole discretion. The Borrower shall have certified to the Lenders that on
the date of each Borrowing the Borrower

                  (h) No Rapid Amortization Event. No Amortization Event under
the Private Label Credit Card Master Trust Documents shall have occurred which
could reasonably be expected to have a material adverse effect on the business,
financial condition or operations of Mill Creek Bank.

                  (i) Loans to CFCC. No Loans shall be made to CFCC unless the
Administrative Agent shall have received such documents, instruments,
certificates, legal opinions as it may request (including any of the foregoing
comparable to those contained in Section 3.1) relating to CFCC and, if deemed
necessary or desirable by any Lender, any amendments to this Agreement to
provide additional representations, warranties, affirmative and negative
covenants and events of default and other agreements from CFCC shall have been
executed and delivered by the parties hereto to effect the same.

                                       48


                  Each submission by the Borrower or CFCC to the Administrative
Agent of a Notice of Borrowing and the acceptance by the Borrower or CFCC of the
proceeds of each Loan requested therein shall be deemed to constitute a
representation and warranty by the Borrower or CFCC, as applicable, as to the
matters specified in Section 3.2(b) on the date of the making of such Loan.

                                   ARTICLE IV

                         Representations and Warranties

                  To induce the Lenders and the Administrative Agent to enter
into this Agreement, the Borrower (and, as to itself, CFCC) represents and
warrants as to itself and as to each other Loan Party, and each other Loan Party
represents and warrants as to itself, to the Lenders and the Administrative
Agent that, on and as of the Closing Date, after giving effect to the making of
the Loans and other financial accommodations on the Closing Date and on and as
of each date as required by Section 3.2(b)(i):

                  Section 4.1. Valid Existence; Compliance with Law. Each of the
Loan Parties (a) is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization, (b) is duly qualified as a
foreign entity and in good standing under the laws of each jurisdiction where
such qualification is necessary, except where the failure to be so qualified or
in good standing would not reasonably be likely to have a Material Adverse
Effect, (c) has all requisite power and authority and the legal right to own,
pledge, mortgage and operate its properties, to lease the property it operates
under lease and to conduct its business as now or currently proposed to be
conducted, (d) is in compliance with its Constituent Documents, (e) is in
compliance with all applicable Requirements of Law, except where the failure to
be in compliance in the aggregate would not reasonably be likely to have a
Material Adverse Effect and (f) has all necessary licenses, permits, consents or
approvals from or by, has made all necessary filings with, and has given all
necessary notices to, each Governmental Authority having jurisdiction, to the
extent required for such ownership, operation and conduct, except for licenses,
permits, consents, approvals or filings which can be obtained or made by the
taking of ministerial action to secure the grant or transfer thereof or the
failure to obtain or make in the aggregate would not reasonably be likely to
have a Material Adverse Effect.

                  Section 4.2. Power; Authorization; Enforceable Obligations.

                  (a) The execution, delivery and performance by each Loan Party
of the Loan Documents to which it is a party and the consummation of the
transactions contemplated thereby, including the obtaining of the Loans and the
creation and perfection of the Liens on the Collateral as security therefor:

                      (i) are, subject to the entry of the Orders, within such
Loan Party's corporate, limited liability company, partnership or other powers;

                                       49


                      (ii) have been or, at the time of delivery thereof
pursuant to Article III will have been, duly authorized by all necessary
corporate, partnership, limited liability company or other action, including the
consent of shareholders, partners or members where required;

                      (iii) subject to the entry of the Orders, do not and will
not (A) contravene such Loan Party's or any of its Subsidiaries' respective
Constituent Documents, (B) violate any other Requirement of Law applicable to
such Loan Party (including Regulations T, U and X of the Federal Reserve Board)
or any order or decree of any Governmental Authority or arbitrator applicable to
such Loan Party, (C) conflict with or result in the breach of, or constitute a
default under, or result in or permit the termination or acceleration of, any
Contractual Obligation of such Loan Party or any of its Subsidiaries, or (D)
result in the creation or imposition of any Lien upon any of the property of
such Loan Party or any of its Subsidiaries, other than those in favor of the
Secured Parties pursuant to this Agreement and the Orders; and

                      (iv) do not require the consent of, authorization by,
approval of, notice to or filing or registration with any Governmental Authority
or any other Person, other than (A) those required to be given or made to the
Bankruptcy Court and (B) those listed on Schedule 4.2 and which have been or
will be obtained or made prior to the Closing Date, copies of which have been or
will be delivered to the Administrative Agent pursuant to Section 3.1, and each
of which on the Closing Date will be in full force and effect.

                  (b) This Agreement has been, and each of the other Loan
Documents will have been upon delivery thereof pursuant to the terms of this
Agreement, duly executed and delivered by each Loan Party party thereto. Subject
to the entry of the Orders, this Agreement is, and each of the other Loan
Documents will be, when delivered hereunder, the legal, valid and binding
obligation of each Loan Party party thereto, enforceable against such Loan Party
in accordance with its terms.

                  Section 4.3. Ownership of Mill Creek and the Guarantors.

                  (a) All of the outstanding Stock of Mill Creek has been
validly issued and is fully paid and non-assessable and is owned beneficially
and of record by the Borrower, free and clear of all Liens (other than any Liens
in favor of the Secured Parties created by this Agreement). All of the
outstanding Stock of subsidiaries of Mill Creek has been validly issued and is
fully paid and non-assessable and is owned beneficially and of record by Mill
Creek or one of its wholly owned subsidiaries, in each case free and clear of
all Liens. None of such Stock is subject to any option, warrant, right of
conversion or purchase or any similar right. There are no agreements or
understandings to which the Borrower or any of its Subsidiaries is a party with
respect to the voting, sale or transfer of any shares of Stock of Mill Creek or
any of its Subsidiaries, as the case may be, or any agreement restricting the
transfer or hypothecation of any such shares of Stock other than restrictions in
effect on the Petition Date contained in the Mill Creek U.S. Bank Pledge
Agreement.

                  (b) Set forth on Schedule 4.3 hereto is a complete and
accurate list showing, as of the Closing Date, all Subsidiaries of the Borrower
and, as to each such Subsidiary, the jurisdiction of its organization, the
number of shares of each class of Stock authorized (if applicable), the number
of shares of each such class of Stock outstanding on the Closing Date

                                       50


and the number and percentage of the outstanding shares of each such class of
Stock owned (directly or indirectly) by the Borrower. The Borrower does not own
or hold, directly or indirectly, any Stock of any Person other than such
Subsidiaries and Investments permitted by Section 8.3.

                  Section 4.4. Financial Statements.

                  (a) The consolidated balance sheet of the Borrower and its
Subsidiaries as at December 31, 2001, and the related consolidated statements of
income, retained earnings and cash flows of the Borrower and its Subsidiaries
for the fiscal year then ended, all certified by the Borrower's nationally
recognized independent public accountants and the consolidated balance sheets of
the Borrower and its Subsidiaries as at September 30, 2002, and the related
consolidated statements of income, retained earnings and cash flows of the
Borrower and its Subsidiaries for the nine months then ended, copies of which
have been furnished to each Lender, fairly present, subject, in the case of said
balance sheet as at September 30, 2002, and said statements of income, retained
earnings and cash flows for the nine months then ended, to the absence of
footnote disclosure and normal recurring year-end audit adjustments, the
consolidated financial condition of the Borrower and its Subsidiaries as at such
dates and the consolidated results of the operations of the Borrower and its
Subsidiaries for the period ended on such dates, all in conformity with GAAP.

                  (b) Neither the Borrower nor any of its Subsidiaries has any
material obligation, contingent liability or liability for taxes, long-term
leases or unusual forward or long-term commitment which is not reflected in the
Financial Statements referred to in clause (a) above or in the notes thereto or
is permitted by this Agreement.

                  (c) The Budget, as the case may be, have been prepared by the
Borrower in light of the past operations of its business, and reflect
projections of the sources and uses of cash for the period covered thereby. The
Budget is based upon estimates and assumptions stated therein, all of which the
Borrower believes to be reasonable and fair in light of current conditions and
current facts known to the Borrower and, as of the Closing Date, reflect the
Borrower's good faith and reasonable estimates of the future financial
performance of the Borrower and its Subsidiaries and of the other information
projected therein for the periods set forth therein.

                  Section 4.5. Material Adverse Change. Other than the events
previously disclosed to the Lenders that required the Borrower and the
Guarantors to file the Cases and the filing of the Cases themselves, since
September 30, 2002, there has been no Material Adverse Change and there have
been no events or developments that in the aggregate have had a Material Adverse
Effect.

                  Section 4.6. Litigation. Other than the Cases, there are no
pending or, to the knowledge of the Borrower, threatened actions, investigations
or proceedings affecting the Borrower or any of its Subsidiaries before any
court, Governmental Authority or arbitrator other than those that in the
aggregate would not reasonably be likely to have a Material Adverse Effect. The
performance of any action by any Loan Party required or contemplated by any of
the Loan Documents is not restrained or enjoined (either temporarily,
preliminarily or permanently).

                                       51


                  Section 4.7. Taxes.

                  (a) Except as set forth on Schedule 4.7, all federal, state,
local and foreign income and franchise and other material tax returns, reports
and statements (collectively, the "Tax Returns") required to be filed by the
Borrower or any of its Tax Affiliates have been timely filed with the
appropriate Governmental Authorities in all jurisdictions in which such Tax
Returns are required to be filed, all such Tax Returns are true and correct in
all material respects, and all taxes, charges and other impositions reflected
therein or otherwise due and payable have been paid prior to the date on which
any fine, penalty, interest, late charge or loss may be added thereto for
non-payment thereof except where contested in good faith and by appropriate
proceedings if adequate reserves therefor have been established on the books of
the Borrower or such Tax Affiliate, as the case may be, in conformity with GAAP.
Except as set forth on Schedule 4.7, no Tax Return is under audit or examination
by any Governmental Authority and no notice of such an audit or examination or
any assertion of any claim for Taxes has been given or made by any Governmental
Authority. Proper and accurate amounts have been withheld by the Borrower and
each of its Tax Affiliates for their respective employees for all periods in
full and complete compliance with the tax, social security and unemployment
withholding provisions of applicable Requirements of Law and such withholdings
have been timely paid to the respective Governmental Authorities.

                  (b) Except as set forth on Schedule 4.7, none of the Borrower
or any of its Tax Affiliates has (i) executed or filed with the IRS or any other
Governmental Authority any agreement or other document extending, or having the
effect of extending, the period for the filing of any Tax Return or the
assessment or collection of any charges, (ii) any obligation under any tax
sharing agreement or arrangement other than that to which the Administrative
Agent has a copy prior to the date hereof or (iii) been a member of an
affiliated, combined or unitary group other than the group of which the Borrower
(or its Tax Affiliate) is the common.

                  Section 4.8. Full Disclosure.

                  (a) The information prepared or furnished by or on behalf of
any Loan Party in connection with this Agreement or the consummation of the
financing taken as a whole, including the information contained in the
Disclosure Documents, does not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements contained
therein or herein not misleading. All facts known to the Borrower which are
material to an understanding of the financial condition, business, properties or
prospects of the Borrower and its Subsidiaries taken as one enterprise and the
Parent Guarantor have been disclosed to the Lenders. The terms contained in the
materials referred to in Section 3.1(f) do not adversely affect the business,
operations or financial condition of Mill Creek Bank.

                  (b) The Disclosure Documents comply as to form in all material
respects with all applicable requirements of all applicable state and Federal
securities laws.

                  Section 4.9. Margin Regulations. The Borrower is not engaged
in the business of extending credit for the purpose of purchasing or carrying
"margin stock" (within the meaning of Regulation U of the Federal Reserve Board)
and no proceeds of any Borrowing will be used to purchase or carry any margin
stock or to extend credit to others for the purpose of

                                       52


purchasing or carrying any margin stock in contravention of Regulation T, U or X
of the Federal Reserve Board.

                  Section 4.10. No Burdensome Restrictions; No Defaults.

                  (a) Neither the Borrower nor any of its Subsidiaries (i) is a
party to any Contractual Obligation the compliance with which would have a
Material Adverse Effect or the performance of which by any thereof, either
unconditionally or upon the happening of an event, would result in the creation
of a Lien (other than a Lien permitted under Section 8.2) on the property or
assets of any thereof or (ii) is subject to any charter or corporate restriction
which would have a Material Adverse Effect.

                  (b) Other than defaults resulting solely from the filing of
the Cases, neither the Borrower nor any of its Subsidiaries is in default under
or with respect to any Contractual Obligation owed by it and, to the knowledge
of the Borrower, no other party is in default under or with respect to any
Contractual Obligation owed to any Loan Party or to any Subsidiary of a Loan
Party, other than, in either case, those defaults which in the aggregate would
not reasonably be likely to have a Material Adverse Effect.

                  (c) No Default or Event of Default has occurred and is
continuing.

                  (d) To the best knowledge of the Borrower, there is no
Requirement of Law applicable to the any Loan Party or any Subsidiary of a Loan
Party the compliance with which by such Loan Party or Subsidiary would have a
Material Adverse Effect.

                  Section 4.11. Investment Company Act; Public Utility Holding
Company Act. No Loan Party or any Subsidiary of a Loan Party is (a) an
"investment company" or an "affiliated person" of, or "promoter" or "principal
underwriter" for, an "investment company," as such terms are defined in the
Investment Company Act of 1940, as amended or (b) a "holding company," or an
"affiliate" or a "holding company" or a "subsidiary company" of a "holding
company," as each such term is defined and used in the Public Utility Holding
Act of 1935, as amended.

                  Section 4.12. Use of Proceeds. The proceeds of the Loans are
being used by the Borrower solely as follows: (a) to fund post-petition
operating expenses of the Loan Parties incurred in the ordinary course of
business and consistent with the Budget, (b) to pay certain other costs and
expenses of administration of the Cases to be specified in writing to the
Administrative Agent (including by notice of application for Orders), (c) to pay
the U.S. Bank Prepetition Indebtedness in an amount equal to $60,000,000 (except
only the Term Loan may be used for such purpose), (d) for Working Capital,
Capital Expenditures and other general corporate purposes of the Loan Parties
not in contravention of any Requirement of Law or the Loan Documents or the
Budget and (e) as long as no Default or Event of Default has occurred and is
continuing, to pay certain Permitted Prepetition Claim Payments consistent with
the Budget. Notwithstanding the foregoing, the Borrower shall not use any
proceeds in a manner or in any amount not shown in the Budget. The Borrower
shall use the entire amount of the proceeds of each Loan in accordance with this
Section 4.12; provided, however, that nothing herein shall in any way prejudice
or prevent the Administrative Agent or the Lenders from

                                       53


objecting, for any reason, to any requests, motions or applications made in the
Bankruptcy Court, including any applications for interim or final allowances of
compensation for services rendered or reimbursement of expenses incurred under
sections 105(a), 330 or 331 of the Bankruptcy Code, by any party in interest,
and provided further, however, that the Borrower shall not use the proceeds from
any Loans for any purpose that is prohibited under the Bankruptcy Code. The
proceeds of Revolving Credit Loans made to CFCC may be used by CFCC for general
corporate purposes.

                  Section 4.13. Insurance. All policies of insurance of any kind
or nature of the Loan Parties and all Subsidiaries thereof, including policies
of life, fire, theft, product liability, public liability, property damage,
other casualty, employee fidelity, workers' compensation and employee health and
welfare insurance, are in full force and effect and are of a nature and provide
such coverage as is sufficient and as is customarily carried by businesses of
the size and character of such Person. None of the Loan Parties or any
Subsidiary thereof has been refused insurance for any material coverage which it
had applied or had any policy of insurance terminated (other than at its
request).

                  Section 4.14. Labor Matters.

                  (a) There are no strikes, work stoppages, slowdowns or
lockouts pending or threatened against or involving any of the Loan Parties,
other than those which in the aggregate would not reasonably be likely to have a
Material Adverse Effect.

                  (b) There are no unfair labor practices, grievances or
complaints pending, or, to the Borrower's knowledge, threatened against or
involving any of the Loan Parties or any Subsidiaries thereof, nor are there any
arbitrations or grievances threatened involving any such Loan Party or
Subsidiary, other than those which, in the aggregate, if resolved adversely to
such Loan Party or such Subsidiary, would not reasonably be likely to have a
Material Adverse Effect.

                  (c) Except as set forth on Schedule 4.14, as of the Closing
Date, there is no collective bargaining agreement covering any of the employees
of the Loan Parties or any Subsidiaries thereof.

                  (d) Schedule 4.14 sets forth as of the date hereof, all
material consulting agreements, executive employment agreements, executive
compensation plans, deferred compensation agreements, employee stock purchase
and stock option plans and severance plans of the Loan Parties and their
respective Subsidiaries.

                  Section 4.15. ERISA.

                  (a) Schedule 4.15 separately identifies as of the date hereof
all Title IV Plans, all Multiemployer Plans and all of the employee benefit
plans within the meaning of Section 3(3) of ERISA to which any of the Loan
Parties or any of their respective Subsidiaries has any obligation or liability,
contingent or otherwise.

                  (b) Each employee benefit plan of any of the Loan Parties or
any of their respective Subsidiaries which is intended to qualify under Section
401 of the Code does so qualify, and any trust created thereunder is exempt from
tax under the provisions of Section 501

                                       54


of the Code, except where such failures in the aggregate would not reasonably be
likely to have a Material Adverse Effect.

                  (c) Each Title IV Plan of any of the Loan Parties or any
Subsidiary thereof is in compliance in all material respects with applicable
provisions of ERISA, the Code and other Requirements of Law except for
non-compliances that in the aggregate would not reasonably be likely to have a
Material Adverse Effect.

                  (d) Other than the Cases, there has been no, nor is there
reasonably expected to occur, any ERISA Event which would have a Material
Adverse Effect.

                  (e) Except to the extent set forth on Schedule 4.15, none of
the Loan Parties, any of their respective Subsidiaries or any ERISA Affiliate
would have any Withdrawal Liability as a result of a complete withdrawal as of
the date hereof from any Multiemployer Plan.

                  Section 4.16. Environmental Matters.

                  (a) The operations of each of the Loan Parties and each of
their respective Subsidiaries have been and are in compliance with all
Environmental Laws, including obtaining and complying with all required
environmental, health and safety Permits, other than non-compliances that in the
aggregate would not reasonably be likely to have a Material Adverse Effect.

                  (b) None of the Loan Parties or any of their respective
Subsidiaries or any Real Property currently or, to the knowledge of the Loan
Parties, previously owned, operated or leased by any such Loan Party or
Subsidiary is subject to any pending or, to the knowledge of the Borrower,
threatened, claim, order, agreement, notice of violation, notice of potential
liability or is the subject of any pending or threatened proceeding or
governmental investigation under or pursuant to Environmental Laws other than
those that in the aggregate would not reasonably be likely to have a Material
Adverse Effect.

                  (c) Except as disclosed on Schedule 4.16, none of the Loan
Parties or any of their respective Subsidiaries is a treatment, storage or
disposal facility requiring a Permit under the Resource Conservation and
Recovery Act, 42 U.S.C. ss. 6901 et seq., the regulations thereunder or any
state analog.

                  (d) There are no facts, circumstances or conditions arising
out of or relating to the operations or ownership of real property owned,
operated or leased by any of the Loan Parties or any of their respective
Subsidiaries which are not specifically included in the financial information
furnished to the Lenders other than those that in the aggregate would not
reasonably be likely to have a Material Adverse Effect.

                  (e) As of the date hereof, no Environmental Lien has attached
to any property of any of the Loan Parties or any of their respective
Subsidiaries and, to the knowledge of the Borrower, no facts, circumstances or
conditions exist that could reasonably be expected to result in any such Lien
attaching to any such property.

                                       55


                  (f) Each Loan Party and each Subsidiary thereof has provided
the Lenders with copies of all environmental, health or safety audits, studies,
assessments, inspections, investigations or other environmental health and
safety reports relating to the operations of the Loan Parties and their
respective Subsidiaries or any of their respective Real Property that are in the
possession, custody or control of the Loan Parties or any of their respective
Subsidiaries.

                  Section 4.17. Intellectual Property. The Loan Parties and
their respective Subsidiaries own or license or otherwise have the right to use
all Intellectual Property and other intellectual property rights that are
necessary for the operations of their respective businesses, without, to the
best of the Borrower's knowledge, infringing upon or conflicting with the rights
of any other Person with respect thereto, including all trade names associated
with any private label brands of any of the Loan Parties or any of their
respective Subsidiaries, except to the extent such infringement or conflict
would not reasonably be likely to have a Material Adverse Effect. To the
Borrower's knowledge, no slogan or other advertising device, product, process,
method, substance, part or component, or other material now employed, or now
contemplated to be employed, by any of the Loan Parties or any of their
respective Subsidiaries infringes upon or conflicts with any rights owned by any
other Person, and no claim or litigation regarding any of the foregoing is
pending or threatened, except to the extent that the same would not reasonably
be likely to have a Material Adverse Effect.

                  Section 4.18. Title; Real Property.

                  (a) Subject to the provisions of the Bankruptcy Code, each
Loan Party and each of their respective Subsidiaries has good and marketable
title to, or valid leasehold interests in, all Real Property and good title to
all personal property purported to be owned by it, including those reflected on
the most recent Financial Statements delivered by the Borrower, and none of such
properties and assets is subject to any Lien, except Liens permitted under
Section 8.2. Subject to the provisions of the Bankruptcy Code, the Loan Parties
and their respective Subsidiaries have received all deeds, assignments, waivers,
consents, non-disturbance and recognition or similar agreements, bills of sale
and other documents, and have duly effected all recordings, filings and other
actions necessary to establish, protect and perfect the Loan Parties' and their
respective Subsidiaries' right, title and interest in and to all such property.

                  (b) Set forth on Schedule 4.18 hereto is a complete and
accurate list of all material Real Property owned by the each Loan Party or any
Subsidiary thereof showing as of the Closing Date the street address, county or
other relevant jurisdiction, state, and record owner.

                  (c) As of the Closing Date, no portion of any material Real
Property owned or leased by any Loan Party or any Subsidiary thereof has
suffered any material damage by fire or other casualty loss which has not
heretofore been completely repaired and restored to its original condition. No
portion of any Real Property owned or leased by any Loan Party or any Subsidiary
thereof is located in a special flood hazard area as designated by any federal
Governmental Authority.

                  (d) All Permits required to have been issued or appropriate to
enable all real property owned or leased by any of the Loan Parties or any of
their respective Subsidiaries to be lawfully occupied and used for all of the
purposes for which they are currently occupied and

                                       56


used have been lawfully issued and are in full force and effect, other than
those which, in the aggregate, would not reasonably be likely to have a Material
Adverse Effect.

                  (e) None of the Loan Parties or any of their respective
Subsidiaries has received any notice, or has any knowledge, of any pending,
threatened or contemplated condemnation proceeding affecting any Real Property
owned or leased by any of the Loan Parties or any of their respective
Subsidiaries or any part thereof, except those which, in the aggregate, would
not reasonably be likely to have a Material Adverse Effect.

                  Section 4.19. Secured, Super Priority Obligations.

                  (a) Subject to Section 11.1, on and after the Closing Date,
the provisions of the Loan Documents and the Orders are effective to create in
favor of the Administrative Agent, for the benefit of the Secured Parties,
legal, valid and perfected Liens on and security interests (having the priority
provided for herein and in the Orders) in all right, title and interest in the
Collateral, enforceable against each Loan Party that owns an interest in such
Collateral.

                  (b) Subject to Section 11.1, pursuant to section 364(c)(2) and
(3) and section 364(d)(1) of the Bankruptcy Code and the Orders, all amounts
owing by the Borrower hereunder and by the Subsidiary Guarantors in respect
thereof (including, without limitation, any exposure of a Lender or any of its
Affiliates in respect of cash management or hedging transactions incurred on
behalf of any Loan Party) will be secured by a first priority perfected Lien on
the Collateral, subject and subordinate only to the Superior Liens.

                  (c) (i) Subject to Section 11.1, pursuant to section 364(c)(1)
of the Bankruptcy Code and the Orders, all obligations of the Borrower and the
obligations of the Subsidiary Guarantors under the Guaranty in respect thereof
(including any exposure of a Lender in respect of cash management or hedging
transactions incurred on behalf of any Loan Party) at all times will constitute
allowed super-priority administrative expense claims in each of the Cases having
priority over all administrative expenses of the kind specified in sections
503(b) or 507(b) of the Bankruptcy Code, subject and subordinate only to the
Carve-Out, and (ii) the obligations of the Parent Guarantor under the Guaranty
shall constitute pre-petition general unsecured claims.

                  (d) The Interim Order, once entered, and the Final Order, once
entered, are in full force and effect and have not been vacated, reversed,
modified, amended or stayed without the prior written consent of the Lenders.

                  Section 4.20. Deposit Accounts; Control Accounts. The only
Deposit Accounts, Securities Accounts or Commodity Accounts maintained by any
Grantor on the date hereof are those listed on Schedule 4.20, which sets forth
such information separately for each Grantor.

                  Section 4.21. Title; No Other Liens. Except for the Liens
granted to any of the Secured Parties pursuant to this Agreement and the Liens
permitted under this Agreement on the Primed Pledged Shares securing the Parity
Public Debt which Lien is subject to the Priming Lien, each Grantor is the
record and beneficial owner of the Pledged Collateral pledged by it hereunder
constituting Instruments or certificated securities and is the entitlement
holder of all such Pledged Collateral constituting Investment Property held in a
Securities Account and has

                                       57


rights in or the power to transfer each other item of Collateral in which a Lien
is granted by it hereunder free and clear of any and all Liens (other than the
Liens permitted by this Agreement). Without limiting the foregoing, there are no
Liens on the capital stock of Conseco Agency of Nevada, Inc., Conseco Agency of
New York, Inc., Conseco Agency, Inc., Conseco Agency of Alabama, Inc., Conseco
Agency of Kentucky, Inc., Crum-Reed General Agency, Inc., Conseco Agency
Reinsurance Limited or Convergent Lending Service, LLC.

                  Section 4.22. Pledged Collateral.

                  (a) The Pledged Stock, Pledged Partnership Interests and
Pledged LLC Interests pledged hereunder by each Grantor constitute that
percentage of the issued and outstanding equity of all classes of each issuer
thereof as set forth on Schedule 4.22.

                  (b) All of the Pledged Stock, Pledged Partnership Interests
and Pledged LLC Interests have been duly and validly issued and are fully paid
and nonassessable.

                  (c) Each of the Pledged Notes constitutes the legal, valid and
binding obligation of the obligor with respect thereto, enforceable in
accordance with its terms, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, and general equitable
principles (whether considered in a proceeding in equity or at law).

                  (d) All Pledged Collateral and, if applicable, any Additional
Pledged Collateral, consisting of certificated securities or Instruments has
been delivered to the Administrative Agent to the extent requested by the
Administrative Agent. The certificates evidencing the Prime Pledged Shares have
been delivered to the Sub-Agent.

                  (e) All Pledged Collateral held by a Securities Intermediary
in a Securities Account is in a Control Account.

                  (f) Other than the Pledged Partnership Interests and the
Pledged LLC Interests that constitute General Intangibles, there is no Pledged
Collateral other than that represented by certificated securities or Instruments
in the possession of the Administrative Agent or that consisting of Financial
Assets held in a Control Account.

                  (g) The LLC Agreement governing any Pledged LLC Interests and
the Partnership Agreement governing any Pledged Partnership Interests provide
that, upon the occurrence and during the continuance of an Event of Default, the
Administrative Agent shall be entitled to exercise all of the rights of the
Grantor granting the security interest therein, and that a transferee or
assignee of a membership interest or partnership interest, as the case may be,
of such LLC or Partnership, as the case may be, shall become a member or
partner, as the case may be, of such LLC or Partnership, as the case may be,
entitled to participate in the management thereof and, upon the transfer of the
entire interest of such Grantor, such Grantor ceases to be a member or partner,
as the case may be.

                  (h) There are no Governmental approvals (other than the
Orders) necessary for the pledge of the Pledged Securities, the voting of the
Pledged Securities pursuant to the terms of the pledge or the sale thereof
pursuant to the terms of this Agreement.

                                       58


                  Section 4.23. Representations in Asset Purchase Agreement. The
representations and warranties in the Asset Purchase Agreement are true and
correct. Neither the Borrower nor any of its Subsidiaries is in breach of its
obligations under the Asset Purchase Agreement.

                  Section 4.24. Intellectual Property.

                  (a) Schedule 4.24 lists all Material Intellectual Property of
any Grantor on the Closing Date, separately identifying that owned by such
Grantor and that licensed to such Grantor. The Material Intellectual Property
set forth on Schedule 4.24 for such Grantor constitutes all of the intellectual
property rights necessary to conduct its business.

                  (b) On the date hereof, all Material Intellectual Property
owned by any Grantor is valid, subsisting, unexpired and enforceable, has not
been adjudged invalid and has not been abandoned and the use thereof in the
business of such Grantor does not infringe the intellectual property rights of
any other Person.

                  (c) Except as set forth in Schedule 4.23, on the date hereof,
none of the Material Intellectual Property owned by any Grantor is the subject
of any licensing or franchise agreement pursuant to which such Grantor is the
licensor or franchisor.

                  (d) No holding, decision or judgment has been rendered by any
Governmental Authority which would limit, cancel or question the validity of, or
any Grantor's rights in, any Material Intellectual Property.

                  (e) No action or proceeding seeking to limit, cancel or
question the validity of any Material Intellectual Property owned by any Grantor
or such Grantor's ownership interest therein is on the date hereof pending or,
to the knowledge of such Grantor, threatened. There are no claims, judgments or
settlements to be paid by any Grantor relating to the Material Intellectual
Property.



                                   ARTICLE V

              Matters Relating to the Sale of the Purchased Assets

                  Section 5.1. Sale of Purchased Assets. The Borrower will take
all actions required to be taken by it or its Subsidiaries under the Asset
Purchase Agreement, including (a) obtaining a Bidding Procedures Order
reflecting the Bidding Procedures by the date specified in the Asset Purchase
Agreement, (b) obtaining a Sale Order by the date specified in the Asset
Purchase Agreement and (c) otherwise complying with the provisions of Sections
5.8 and 5.9 of the Asset Purchase Agreement.

                                       59



                                   ARTICLE VI

                               Reporting Covenants

                  As long as any of the Obligations or Commitments remain
outstanding, unless the Requisite Lenders otherwise consent in writing, the
Borrower, CFCC and the Guarantors agree with the Lenders and the Administrative
Agent that:

                  Section 6.1. Financial Statements. The Borrower shall furnish
to the Administrative Agent (with sufficient copies for each of the Lenders) the
following:

                  (a) Monthly Reports. Within 30 days after the end of each
fiscal month in each Fiscal Year, financial information regarding the Borrower
and its Subsidiaries consisting of a consolidated unaudited balance sheet as of
the close of such month and the related statements of income and cash flow for
such month and that portion of the current Fiscal Year ending as of the close of
such month, setting forth in comparative form the figures for the corresponding
period in the prior year and the figures contained in the Budget, as the case
may be, for the current fiscal month, in each case certified by a Responsible
Officer of the Borrower as fairly presenting the consolidated financial position
of the Borrower and its Subsidiaries as at the dates indicated and the results
of their operations and cash flow for the periods indicated in accordance with
GAAP (subject to the absence of footnote disclosure and normal year-end audit
adjustments).

                  (b) Quarterly Reports. [Intentionally Omitted.]

                  (c) Annual Reports. Within 90 days after the Fiscal Year
ending on December 31, 2002, financial information regarding the Borrower and
its Subsidiaries consisting of consolidated balance sheets of the Borrower and
its Subsidiaries as of the end of such Fiscal Year and related statements of
income and cash flows of the Borrower and its Subsidiaries for such Fiscal Year,
all prepared in conformity with GAAP and certified, in the case of such
consolidated financial statements, without qualification as to the scope of the
audit by independent public accountants of recognized national standing
acceptable to the Requisite Lenders, together with the report of such accounting
firm stating that (i) such financial statements fairly present the consolidated
financial position of the Borrower and its Subsidiaries as of the dates
indicated and the results of their operations and cash flow for the periods
indicated in conformity with GAAP applied on a basis consistent with prior years
(except for changes with which such independent certified public accountants
shall concur and which shall have been disclosed in the notes to the financial
statements) and (ii) the examination by such accountants in connection with such
consolidated financial statements has been made in accordance with generally
accepted auditing standards, and accompanied by a certificate stating that in
the course of the regular audit of the business of the Borrower and its
Subsidiaries such accounting firm has obtained no knowledge that a Default or
Event of Default has occurred and is continuing, or, if in the opinion of such
accounting firm, a Default or Event of Default has occurred and is continuing, a
statement as to the nature thereof.

                  (d) Compliance Certificate. Together with each delivery of any
financial statements pursuant to Section 6.1(a), a certificate of a Responsible
Officer of the Borrower

                                       60


(each, a "Compliance Certificate") stating that no Default or Event of Default
has occurred and is continuing or, if a Default or an Event of Default has
occurred and is continuing, stating the nature thereof and the action which the
Borrower proposes to take with respect thereto.

                  (e) Budgets. Prior to the Closing Date, the Borrower shall
provide to the Administrative Agent its weekly financial projections (as
modified by the extension required by this clause (e), the "Budget") for each
fiscal week during the period from the Petition Date through 90 days after the
Petition Date. Within 30 days after the Petition Date, the Borrower shall
provide to the Administrative Agent a weekly extension of such budget to cover
the period from the Petition Date through 120 days after the Petition Date. The
initial and extended Budget shall each be in form and substance satisfactory to
the Administrative Agent.

                  (f) Budget Variance Report; Cash Flow Projections. The
Borrower shall provide to the Administrative Agent at least once each week on a
date acceptable to the Administrative Agent for the period from the Closing Date
through the Scheduled Termination Date (a) a variance report comparing the
actual weekly receipts and disbursements with the budgeted weekly receipts and
disbursements for the prior week and (b) rolling 13-week projections of cash
receipts and disbursements (the "Projections") and (c) stating whether or not an
Event of Default has occurred or, if a Borrowing occurs on such date, would
occur after giving effect to such Borrowing, under Section 9.1(o). Each of the
foregoing shall be in form and scope satisfactory to the Administrative Agent.

                  (g) Management Letters, Etc. Within five Business Days after
receipt thereof by any Loan Party, copies of each management letter, exception
report or similar letter or report received by such Loan Party from its
independent certified public accountants.

                  (h) Asset Purchase Agreement. At the same time provided to the
Buyers under the Asset Purchase Agreement, a copy of each document, report,
notice or certificate or financial statement or report delivered under the Asset
Purchase Agreement.

CFCC shall supply to each Revolving Credit Loan Lender at such times as may be
specified by any Revolving Credit Loan Lender such documents, certificates,
reports, notices and financial information as may be requested from time to time
by any Revolving Credit Loan Lender.

                  Section 6.2. Default Notices. As soon as practicable, and in
any event within five Business Days after a Responsible Officer of any Loan
Party has actual knowledge of the existence of any Default, Event of Default or
other event which has had a Material Adverse Effect or which has any reasonable
likelihood of causing or resulting in a Material Adverse Change, the Borrower
(and, as to CFCC, CFCC) shall give the Administrative Agent notice specifying
the nature of such Default or Event of Default or other event, including the
anticipated effect thereof, which notice, if given by telephone, shall be
promptly confirmed in writing on the next Business Day.

                  Section 6.3. Litigation. Unless the Administrative Agent is
otherwise promptly notified pursuant to documents received by them pursuant to
Section 6.12 or periodic delivery of the Bankruptcy Courts official claims
register, promptly after the commencement thereof, the Borrower shall give the
Administrative Agent written notice of the commencement

                                       61


of all actions, suits and proceedings before any domestic or foreign
Governmental Authority or arbitrator, affecting the any of the Loan Parties or
any of their respective Subsidiaries, which in the reasonable judgment of the
Borrower, expose such Loan Party or such Subsidiary to liability in an amount
aggregating $250,000 or more or which, if adversely determined, would have a
Material Adverse Effect.

                  Section 6.4. Asset Sales. Prior to any Asset Sale permitted
under Section 8.4 anticipated to generate in excess of $250,000 (or such other
amount as may be specified by the Administrative Agent) in Net Cash Proceeds,
the Borrower shall send the Administrative Agent a notice (a) describing such
Asset Sale or the nature and material terms and conditions of such transaction
and (b) stating the estimated Net Cash Proceeds anticipated to be received by
any Loan Party or any Subsidiary thereof and specifying the clause of Section
2.8 applicable to such Asset Sale.

                  Section 6.5. Notices under Related Documents. Promptly after
the sending or filing thereof, the Borrower shall send the Administrative Agent
copies of all material notices, certificates or reports delivered pursuant to
any Related Document.

                  Section 6.6. SEC Filings; Press Releases. Promptly after the
sending or filing thereof, the Borrower shall send the Administrative Agent
copies of (a) all reports which the Parent Guarantor or the Borrower sends to
their respective security holders generally, (b) all reports and registration
statements which the Parent Guarantor or any of its Subsidiaries files with the
SEC or any national securities exchange or the National Association of
Securities Dealers, Inc., (c) all press releases and (d) all other statements
concerning material changes or developments in the business of any Loan Party or
any Subsidiary thereof made available by such Loan Party or Subsidiary to the
public.

                  Section 6.7. Labor Relations. Promptly after becoming aware of
the same, the Borrower shall give the Administrative Agent written notice of (a)
any labor dispute to which any of the Loan Parties or any of their respective
Subsidiaries is or may become a party, including any strikes, lockouts or other
disputes relating to any of such Loan Parties' or Subsidiaries' plants and other
facilities the result of which would reasonably be likely to have a Material
Adverse Effect and (b) any Worker Adjustment and Retraining Notification Act or
related liability incurred with respect to the closing of any plant or other
facility of any of such Loan Party or Subsidiary which would reasonably be
likely to have a Material Adverse Effect.

                  Section 6.8. Tax Returns. Upon the request of the
Administrative Agent, the Borrower will provide copies of all federal, state and
local tax returns and reports filed by any Loan Party or any Subsidiary thereof
in respect of taxes measured by income (excluding sales, use and like taxes).

                  Section 6.9. Insurance. No later than five Business Days after
the Closing Date, the Administrative Agent shall have received evidence
satisfactory to it that the insurance policies required by Section 7.5 are in
full force and effect, provided that, if requested by the Borrower, the
Administrative Agent may extend such five-Business Day period in its sole
discretion. As soon as is practicable and in any event within 45 days after the
end of each Fiscal Quarter, the Borrower will furnish the Administrative Agent
(in sufficient copies for each of the

                                       62


Lenders) with (a) a report in form and substance satisfactory to the
Administrative Agent and the Lenders outlining all material insurance coverage
maintained as of the date of such report by the Loan Parties and their
respective Subsidiaries and the duration of such coverage and (b) a certificate
of a Responsible Officer certifying that all premiums then due and payable (and
not otherwise stayed) with respect to such coverage have been paid.

                  Section 6.10. ERISA Matters. The Borrower shall furnish the
Administrative Agent (with sufficient copies for each of the Lenders):

                  (a) promptly and in any event within 30 days after any of the
Loan Parties, any of their respective Subsidiaries or any ERISA Affiliate knows
or has reason to know that any material ERISA Event has occurred;

                  (b) promptly and in any event within 10 days after any of the
Loan Parties, any of their respective Subsidiaries or any ERISA Affiliate knows
or has reason to know that a request for a minimum funding waiver under Section
412 of the Code has been filed with respect to any Title IV Plan or
Multiemployer Plan, a written statement of a Responsible Officer of the Borrower
describing such ERISA Event or waiver request and the action, if any, which the
Loan Parties, such Subsidiaries and such ERISA Affiliates propose to take with
respect thereto and a copy of any notice filed with the PBGC or the IRS
pertaining thereto;

                  (c) simultaneously with the date that the any of the Loan
Parties, any of their respective Subsidiaries or any ERISA Affiliate files a
notice of intent to terminate any Title IV Plan, if such termination would
require material additional contributions in order to be considered a standard
termination within the meaning of Section 4041(b) of ERISA, a copy of each
notice.

                  Section 6.11. Environmental Matters. The Borrower shall
provide the Administrative Agent promptly and in any event within 10 days of any
of the Loan Parties or any of their respective Subsidiaries learning of any of
the following, written notice of any of the following:

                  (a) that any Loan Party or any subsidiary thereof is or may be
liable to any Person as a result of a Release or threatened Release which could
reasonably be expected to subject such Loan Party to Environmental Liabilities
and Costs of $250,000 or more;

                  (b) the receipt by any Loan Party or any Subsidiary thereof of
notification that any Real Property or personal property of such Loan Party or
Subsidiary is or is reasonably likely to be subject to any Environmental Lien;

                  (c) the receipt by any Loan Party or any subsidiary thereof of
any notice of violation of or potential liability under, or knowledge by such
Loan Party or Subsidiary that there exists a condition which could reasonably be
expected to result in a violation of or liability under any Environmental Law,
except for violations and liabilities the consequence of which in the aggregate
would have no reasonable likelihood of subjecting the Loan Parties and their
respective Subsidiaries collectively to Environmental Liabilities and Costs of
$250,000 or more;

                                       63


                  (d) the commencement of any judicial or administrative
proceeding or investigation alleging a violation of or liability under any
Environmental Law, which in the aggregate, if adversely determined, would have a
reasonable likelihood of subjecting the Loan Parties and their respective
Subsidiaries collectively to Environmental Liabilities and Costs of $250,000 or
more;

                  (e) any proposed acquisition of Stock, assets or Real
Property, or any proposed leasing of property, or any other action by any Loan
Party or any Subsidiary thereof other than those the consequences of which in
the aggregate have reasonable likelihood of subjecting the Loan Parties and
their respective Subsidiaries collectively to Environmental Liabilities and
Costs of $250,000 or more;

                  (f) any proposed action by any Loan Party or any Subsidiary
thereof or any proposed change in Environmental Laws which in the aggregate have
a reasonable likelihood of requiring such Loan Parties or Subsidiary thereof to
obtain additional environmental, health or safety Permits or make additional
capital improvements to obtain compliance with Environmental Laws that in the
aggregate would cost $250,000 or more or subject the Loan Parties and their
respective Subsidiaries to additional Environmental Liabilities and Costs of
$250,000 or more; and

                  (g) upon written request by any Lender through the
Administrative Agent, a report providing an update of the status of any
environmental, health or safety compliance, hazard or liability issue identified
in any notice or report delivered pursuant to this Agreement.

                  Section 6.12. Bankruptcy Court.

                  (a) The Borrower will use its best efforts to obtain the
approval of the Bankruptcy Court of this Agreement and the other Loan Documents
and, upon the request of the Administrative Agent, deliver to the Administrative
Agent and its counsel all material pleadings, motions and other documents filed
on behalf of all of the Loan Parties with the Bankruptcy Court; provided that
the Borrower shall have no such obligation if the Administrative Agent and its
counsel receive such documents as a result of being on the service list in
connection with the Cases.

                  (b) The Administrative Agent shall have received all motions
and other documents to be filed by any of the Loan Parties with the Bankruptcy
Court prior to filing and such documents shall be in form and substance
satisfactory to the Requisite Lenders.

                  Section 6.13. Other Information. The Borrower will provide the
Administrative Agent or any Lender with such other information respecting the
business, properties, condition, financial or otherwise, or operations of any
Loan Party as any Lender, through the Administrative Agent, may from time to
time reasonably request.

                                       64


                                  ARTICLE VII

                              Affirmative Covenants

                  As long as the Obligations or the Credit Commitments remain
outstanding, unless the Requisite Lenders otherwise consent in writing, each
Loan Party agrees with the Lenders and the Administrative Agent that:

                  Section 7.1. Preservation of Valid Existence, Etc. Such Loan
Party shall, and shall cause each of its Subsidiaries to, preserve and maintain
its corporate, partnership, limited liability company or other existence, rights
(charter and statutory) and franchises, except as permitted by Sections 8.3 and
8.4.

                  Section 7.2. Compliance with Laws, Etc. Such Loan Party shall,
and shall cause each of its Subsidiaries to, comply with all applicable
Requirements of Law, Contractual Obligations and Permits, except where the
failure so to comply in the aggregate would not reasonably be likely to have a
Material Adverse Effect.

                  Section 7.3. Conduct of Business. Such Loan Party shall, and
shall cause each of its Subsidiaries to, (a) conduct its business in the
ordinary course (except as otherwise permitted by the Bankruptcy Code or
approved by the Bankruptcy Court) and (b) use its reasonable efforts, in the
ordinary course and consistent with past practice, to preserve its business and
the goodwill and business of the customers, advertisers, suppliers and others
having business relations with such Loan Party or any of its Subsidiaries,
except in each case where the failure to comply with the covenants in each of
clauses (a) and (b) above in the aggregate would not reasonably be likely to
have a Material Adverse Effect.

                  Section 7.4. Payment of Taxes, Etc. Such Loan Party shall, and
shall cause each of its Subsidiaries to, pay and discharge before the same shall
become delinquent, all material lawful governmental claims, taxes, assessments,
charges and levies arising after the Petition Date, except where contested in
good faith, by proper proceedings and adequate reserves therefor have been
established on the books of such Loan Party or the appropriate Subsidiary in
conformity with GAAP.

                  Section 7.5. Maintenance of Insurance. Such Loan Party shall
(a) maintain, and cause to be maintained for each of its Subsidiaries, insurance
with responsible and reputable insurance companies or associations in such
amounts and covering such risks as is usually carried by companies engaged in
similar businesses and owning similar properties in the same general areas in
which such Loan Party or such Subsidiary operates, and such other insurance as
may be reasonably requested by the Requisite Lenders, through the Administrative
Agent, and, in any event, all insurance required by any Loan Document and (b)
cause all such insurance to provide that no cancellation, material addition in
amount or material change in coverage shall be effective until after 30 days'
written notice thereof to the Administrative Agent.

                  Section 7.6. Access. Such Loan Party shall from time to time
permit the Administrative Agent and any of the Lenders, or any agents or
representatives thereof, within two Business Days after written notification of
the same (except that upon the occurrence and

                                       65


during the continuance of an Event of Default, no such notice shall be required)
to (a) examine and make copies of and abstracts from the records and books of
account of such Loan Party and each of its Subsidiaries, (b) visit the
properties of such Loan Party and each of its Subsidiaries, (c) discuss the
affairs, finances and accounts of such Loan Party and each of its Subsidiaries
with any of their respective officers and (d) communicate directly with such
Loan Party's or Subsidiary's independent certified public accountants; provided,
however, that the Borrower shall have the right to have a representative present
at any such oral communications and to receive a copy of any such written
communications; provided further, however, that the failure of a representative
of the Loan Party to be party to any such oral communications after receiving
two Business Days' notice thereof shall not prevent the Administrative Agent or
any Lender, or any agents or representatives thereof, from engaging in any such
communications. Such Loan Party shall authorize its independent certified public
accountants to disclose to the Administrative Agent or any Lender any and all
financial statements and other information of any kind, as the Administrative
Agent or such Lender reasonably requests from such Loan Party and which such
accountants may have with respect to the business, financial condition, results
of operations or other affairs of such Loan Party or any Subsidiary thereof.

                  Section 7.7. Keeping of Books. Such Loan Party shall, and
shall cause each of its Subsidiaries to, keep proper books of record and
account, in which full and correct entries shall be made in conformity with GAAP
of all financial transactions and the assets and business of such Loan Party and
each such Subsidiary.

                  Section 7.8. Maintenance of Properties, Etc. Except as
otherwise required by the Bankruptcy Code, such Loan Party shall, and shall
cause each of its Subsidiaries to, maintain and preserve (a) all of its
properties which are necessary in the conduct of its business in good working
order and condition, (b) all rights, permits, licenses, approvals and privileges
(including all Permits) which are used or useful or necessary in the conduct of
its business and (c) all Intellectual Property with respect to its business;
except where the failure to so maintain and preserve in the aggregate would not
reasonably be likely to have a Material Adverse Effect.

                  Section 7.9. Application of Proceeds. The Borrower shall use
the entire amount of the proceeds of the Loans as provided in Section 4.12.

                  Section 7.10. Environmental. Except as otherwise required by
the Bankruptcy Code or by a Non-Stayed Order, such Loan Party shall, and shall
cause any Subsidiary to, comply in all material respects with Environmental Laws
and, without limiting the foregoing, such Loan Party shall, at its sole cost and
expense, upon receipt of any notification or otherwise obtaining knowledge of
any Release or other event that has any reasonable likelihood of such Loan Party
or Subsidiary incurring Environmental Liabilities and Costs in excess of
$500,000, (a) conduct, or pay for consultants to conduct, tests or assessments
of environmental conditions at such operations or properties, including the
investigation and testing of subsurface conditions and (b) take such Remedial
Action, investigational or other action as required by Environmental Laws or as
any Governmental Authority requires or as is appropriate and consistent with
good business practice to address the Release or event.

                  Section 7.11. Control Accounts; Approved Deposit Accounts.

                                       66


                  (a) Each Loan Party will (i) deposit in an Approved Deposit
Account all cash and all Proceeds received by such Loan Party except that cash
to make Investments permitted by this Agreement may be deposited in a Control
Account, (ii) not establish or maintain any Securities Account that is not a
Control Account and (iii) not establish or maintain any Deposit Account other
than with a Deposit Account Bank, a Lender or an Affiliate of a Lender;
provided, however, that the Loan Parties and their respective Subsidiaries may
maintain payroll, withholding tax and other fiduciary deposit accounts.

                  (b) Each Loan Party shall instruct each Account Debtor or
other Person obligated to make a payment to such Loan Party under a General
Intangible to make payment, or to continue to make payment, as the case may be,
to an Approved Deposit Account and will deposit in an Approved Deposit Account
all Proceeds of such Approved Deposit Accounts and General Intangibles received
by such Loan Party from any other Person immediately upon receipt.

                  (c) In the event the Administrative Agent determines in its
sole discretion that the financial condition of an Approved Securities
Intermediary or Deposit Account Bank, as the case may be, has materially
deteriorated, the affected Loan Parties agree to notify all of their respective
obligors that were making payments to such terminated Control Account or
Approved Deposit Account, as the case may be, to make all future payments to
another Control Account or Approved Deposit Account, as the case may be.

                  Section 7.12. Compliance with Asset Purchase Agreement. The
Borrower will, and will cause its Subsidiaries, to comply with all the covenants
and obligations and agreements applicable to it and its Subsidiaries contained
in the Relevant Documents.



                                  ARTICLE VIII

                               Negative Covenants

                  As long as any of the Obligations or the Credit Commitments
remain outstanding, without the written consent of the Requisite Lenders, each
Loan Party agrees with the Lenders and the Administrative Agent that (it being
agreed that, notwithstanding the definition of the term "Loan Party", the Parent
Guarantor shall not constitute a Loan Party for purposes of this Article VIII,
except it shall constitute a Loan Party for purposes of Section 8.18):

                  Section 8.1. Indebtedness. Such Loan Party will not, and will
not permit any of its Subsidiaries to, directly or indirectly create, incur,
assume or otherwise become or remain directly or indirectly liable with respect
to any Indebtedness, except:

                  (a) the Obligations;

                  (b) unsecured Indebtedness existing on the Petition Date and
secured Indebtedness existing on the Petition Date and disclosed on Schedule
8.1;

                                       67



                  (c) Capital Lease Obligations and purchase money Indebtedness
incurred by such Loan Party or a Subsidiary thereof after the Petition Date to
finance the acquisition of fixed assets in an aggregate outstanding principal
amount not to exceed $1,000,000 at any time; provided, however, that the Capital
Expenditure related thereto is otherwise included in the Budget;

                  (d) Renewals, extensions, refinancings and refundings of
Indebtedness permitted by clause (c) of this Section 8.1; provided, however,
that any such renewal, extension, refinancing or refunding is in an aggregate
principal amount not greater than the principal amount of the Indebtedness being
renewed, extended, refinanced or refunded;

                  (e) Indebtedness arising from intercompany loans among the
Borrower and the Subsidiary Guarantors; and

                  (f) Indebtedness of the Borrower to Green Tree Finance Corp. -
Five and Green Tree Residual Finance Corp. I to the extent and under the
circumstances set forth in the Lehman Order; provided that such Indebtedness may
only be repaid at such times as is set forth in the Lehman Order.

                  Section 8.2. Liens, Etc. Such Loan Party will not, and will
not permit any of its Subsidiaries to, create or suffer to exist, any Lien upon
or with respect to any of its properties or assets, whether now owned or
hereafter acquired, or assign, or permit any of its Subsidiaries to assign, any
right to receive income, except for:

                  (a) Liens created pursuant to the Loan Documents and the
Orders (including the Adequate Protection Liens, as defined therein);

                  (b) Superior Liens;

                  (c) Customary Permitted Liens of the Loan Parties and their
respective Subsidiaries;

                  (d) purchase money Liens granted by such Loan Party or any
Subsidiary thereof (including the interest of a lessor under a Capital Lease and
Liens to which any property is subject at the time of such Loan Party's or
Subsidiary's acquisition thereof) securing Indebtedness permitted under Section
8.1(d) and limited in each case to the property purchased with the proceeds of
such purchase money Indebtedness or subject to such Capital Lease; and

                  (e) any Lien securing the renewal, extension, refinancing or
refunding of any Indebtedness secured by any Lien permitted by clause (d) of
this Section 8.2 without any change in the assets subject to such Lien.

                  Section 8.3. Investments. Such Loan Party will not, and will
not permit any of its Subsidiaries to, directly or indirectly make or maintain
any Investment except:

                  (a) Investments existing on the date of this Agreement and
disclosed on Schedule 8.3;

                                       68


                  (b) Cash Equivalents held in a Cash Collateral Account or a
Control Account with respect to which the Administrative Agent, for the benefit
of the Secured Parties, has a first priority perfected Lien;

                  (c) Accounts, Contract Rights, Chattel Paper, notes receivable
and similar items arising or acquired in the ordinary course of business
consistent with the past practice of such Loan Party or any Subsidiary thereof;

                  (d) Investments received in settlement of amounts due to such
Loan Party or any Subsidiary thereof effected in the ordinary course of
business;

                  (e) Investments by (i) the Borrower in any Subsidiary
Guarantor consistent with the Budget, (ii) a Subsidiary Guarantor in the
Borrower and (iii) a Subsidiary of the Borrower that is not a Loan Party in the
Borrower or a Subsidiary Guarantor or any other Subsidiary of the Borrower;

                  (f) loans or advances to employees of such Loan Party or any
Subsidiary thereof in the ordinary course of business, which loans and advances
shall not exceed the aggregate outstanding principal amount of $1,000,000 at any
time;

                  (g) Investments in Approved Deposit Accounts with respect to
which the Administrative Agent, for the benefit of the Secured Parties, has a
first priority perfected Lien;

                  (h) Investments by the Borrower in Green Tree Finance Corp. -
Five consisting of the transfer of Whole Loans (as defined in the Lehman Order)
under the circumstances, in such amounts and under the conditions set forth in
the Lehman Order.

                  Section 8.4. Sale of Assets. Such Loan Party will not, and
will not permit any of its Subsidiaries to, sell, convey, transfer, lease or
otherwise dispose of, any of its assets or any interest therein (including the
sale or factoring at maturity or collection of any accounts) to any Person, or
permit or suffer any other Person to acquire any interest in any of its assets
or, in the case of any such Subsidiary, issue or sell any shares of such
Subsidiary's Stock or Stock Equivalent (any such disposition being an "Asset
Sale"), except the following sales (provided that any prepayments required under
Section 2.8 are made in connection therewith):

                  (a) the sale to Lehman Brothers Holdings Inc. or its
Affiliates of up to $318,000,000 outstanding principal balance of Loans (as
defined in the Asset Purchase Agreement) subject to the Lehman Warehouse
Facility (as defined in the Asset Purchase Agreement) and up to $150,000,000 per
calendar month in outstanding principal balance of Loans (as defined in the
Asset Purchase Agreement) originated with the proceeds of the Additional Lehman
Debt Amount (as defined in the Asset Purchase Agreement) and at a price at not
less than such outstanding principal balance;

                  (b) a sale of assets pursuant to the Asset Purchase Agreement
provided the Obligations are repaid to the extent required pursuant to Section
2.8 on the date of consummation of such sale; and

                  (c) the sale of assets listed on Schedule 8.4.

                                       69


                  Section 8.5. Restricted Payments. Such Loan Party will not,
and will not permit any of its Subsidiaries to, directly or indirectly, declare,
order, pay, make or set apart any sum for any Restricted Payment except (a)
Restricted Payments by any Loan Party to another Loan Party and (b) Restricted
Payments in respect of Permitted Prepetition Claim Payments.

                  Section 8.6. Restriction on Fundamental Changes. Such Loan
Party will not, and will not permit any of its Subsidiaries, to (a) merge with
any Person, (b) consolidate with any Person, (c) acquire all or substantially
all of the Stock or Stock Equivalents of any Person, (d) acquire all or
substantially all of the assets of any Person or all or substantially all of the
assets constituting the business of a division, branch or other unit operation
of any Person, (e) enter into any joint venture or partnership with any Person
or (f) acquire or create any Subsidiary.

                  Section 8.7. Change in Nature of Business. Such Loan Party
will not, and will not permit any of its Subsidiaries to, make any material
change in the nature or conduct of its business as carried on at the date
hereof.

                  Section 8.8. Transactions with Affiliates. Such Loan Party
will not, and will not permit any of its Subsidiaries to, except as otherwise
expressly permitted herein, (a) make any Investment in an Affiliate of the
Borrower other than a Loan Party or, in the case of Subsidiaries (other than
Mill Creek and its Subsidiaries) that are not Loan Parties, investments in other
Subsidiaries except Mill Creek may only invest in Subsidiaries of Mill Creek,
(b) transfer, sell, lease, assign or otherwise dispose of any asset to any
Affiliate of the Borrower other than a Loan Party or, in the case of
Subsidiaries (other than Mill Creek and its Subsidiaries) that are not Loan
Parties, to other Subsidiaries or, in the case of Mill Creek and its
Subsidiaries, to Subsidiaries of Mill Creek, (c) merge into or consolidate with
or purchase or acquire assets from any Affiliate of the Borrower other than
merger or consolidation in which a Loan Party is the surviving entity, (d) repay
any Indebtedness to any Affiliate of the Borrower which is not a Loan Party or
(e) enter into any other transaction directly or indirectly with or for the
benefit of any Affiliate of the Borrower which is not a Loan Party (including
guaranties and assumptions of obligations of any such Affiliate), except for (i)
transactions in the ordinary course of business on a basis no less favorable to
such Loan Party as would be obtained in a comparable arm's-length transaction
with a Person not an Affiliate and (ii) salaries and other employee compensation
to officers or directors of the Loan Parties commensurate with current
compensation levels.

                  Section 8.9. Restrictions on Subsidiary Distributions; No New
Negative Pledge. Other than pursuant to the Loan Documents and any agreements
governing any purchase money Indebtedness or Capital Lease Obligations permitted
by Section 8.1 (d) or (e) (in which latter case, any prohibition or limitation
shall only be effective against the assets financed thereby), such Loan Party
will not, and will not permit any of its Subsidiaries to, (a) agree to enter
into or suffer to exist or become effective any consensual encumbrance or
restriction of any kind on the ability of such Loan Party or Subsidiary to pay
dividends or make any other distribution or transfer of funds or assets or make
loans or advances to or other Investments in, or pay any Indebtedness owed to,
any Loan Party or Subsidiary or (b) enter into or suffer to exist or become
effective any agreement which prohibits or limits the ability of any Loan Party
or any Subsidiary thereof to create, incur, assume or suffer to exist any Lien
upon any of its property, assets or revenues, whether now owned or hereafter
acquired, to secure the Obligations,

                                       70


including any agreement which requires other Indebtedness or Contractual
Obligation to be equally and ratably secured with the Obligations.

                  Section 8.10. Modification of Constituent Documents. Such Loan
Party will not, and will not permit any of its Subsidiaries to, change its
capital structure (including in the terms of its outstanding Stock) or otherwise
amend its Constituent Documents, except for changes and amendments which do not
materially affect the rights and privileges of such Loan Party or Subsidiary, or
the interests of the Administrative Agent and the Lenders under the Loan
Documents or in the Collateral.

                  Section 8.11. Accounting Changes; Fiscal Year. Such Loan Party
will not, and will not permit any of its Subsidiaries to, change its (a)
accounting treatment and reporting practices or tax reporting treatment, except
as required by GAAP or any Requirement of Law and disclosed to the Lenders and
the Administrative Agent or (b) Fiscal Year.

                  Section 8.12. Margin Regulations. The Borrower will not use
all or any portion of the proceeds of any credit extended hereunder to purchase
or carry Margin Stock.

                  Section 8.13. Sale/Leasebacks. Such Loan Party will not, and
will not permit any of its Subsidiaries to, enter into any sale and leaseback
transaction.

                  Section 8.14. No Speculative Transactions. Such Loan Party
will not, and will not permit any of its Subsidiaries to, engage in any
speculative transaction or in any transaction involving Hedging Contracts except
for the sole purpose of hedging in the normal course of business and consistent
with industry practices.

                  Section 8.15. Compliance with ERISA. Such Loan Party will not,
and will not permit any of its Subsidiaries to, or cause or permit any ERISA
Affiliate to, cause or permit to occur (a) an event which could result in the
imposition of a Lien under Section 412 of the Code or Section 302 or 4068 of
ERISA or (b) an ERISA Event (other than the Cases) that would have a Material
Adverse Effect.

                  Section 8.16. Environmental. Such Loan Party will not, and
will not permit any of its Subsidiaries to, allow a Release of any Contaminant
in violation of any Environmental Law; provided, however, that such Loan Party
or Subsidiary shall not be deemed in violation of this Section 8.16 if, as the
consequence of all such Releases, such Loan Party or Subsidiary would not incur
Environmental Liabilities and Costs in excess of $500,000 in the aggregate.

                  Section 8.17. Chapter 11 Claims; Payment of Prepetition
Claims. (a) Such Loan Party will not, and will not permit any of its
Subsidiaries to, (i) incur, create, assume, suffer to exist or permit any
administrative expense, unsecured claim or other Super-Priority Claim or lien
which is pari passu with or senior to the claims of the Secured Parties against
the Loan Parties hereunder or (ii) apply to the Bankruptcy Court for authority
to do so, except with respect to the Carve-Out.

                  (b) Such Loan Party will not, and will not permit any of its
Subsidiaries to, make any payments with respect to Indebtedness relating to
pre-Petition Date obligations, other than (i) as permitted under the Orders,
(ii) as permitted by the Bankruptcy Court pursuant to the

                                       71


First Day Orders, including pre-Petition Date wages and benefits and other
employee-related claims, in amounts not to exceed the amounts contemplated by
the Budget, and (iii) as otherwise permitted under this Agreement as Permitted
Prepetition Claim Payments.

                  Section 8.18. No Modification to Bankruptcy Court Orders. Such
Loan Party will not, and will not permit any of its Subsidiaries to, make or
permit to be made any change, amendment or modification, or any application or
motion for any change, amendment or modification, to either Order without the
prior written consent of the Lenders or to the Interim 9019 Order, the 9019
Order, the Bidding Procedures Order or the Sale Order without the prior written
consent of the Requisite Lenders. The Borrower will not amend the Purchase Price
(as defined in the Asset Purchase Agreement) payable in the event of a purchase
of the Purchased Assets (including the Pledged Mill Creek Securities) below an
amount sufficient to repay the Obligations in full.

                  Section 8.19. Operations of CFCC. CFCC will not engage in any
transaction outside of the ordinary course of business.

                                   ARTICLE IX

                                Events Of Default

                  Section 9.1. Events of Default. Each of the following events
shall be an Event of Default:

                  (a) The Borrower or CFCC shall fail to pay any principal of
any Loan when the same becomes due and payable;

                  (b) The Borrower or CFCC shall fail to pay any interest on any
Loan, any fee under any of the Loan Documents or any other Obligation (other
than the Obligations referred to in clause (a) above) and such non-payment
continues for a period of three Business Days after the due date therefor;

                  (c) Any representation or warranty made or deemed made by any
Loan Party in any Loan Document or by any Loan Party (or any of its officers) in
connection with any Loan Document shall prove to have been incorrect in any
material respect when made or deemed made;

                  (d) Any Loan Party shall fail to perform or observe (i) any
term, covenant or agreement contained in Article V, Section 6.1, 6.2, 7.1, 7.6,
7.9, 7.11 or 7.12 or Article VIII, or (ii) any other term, covenant or agreement
contained in this Agreement or in any other Loan Document if such failure under
this clause (ii) shall remain unremedied for 30 days after the earlier of the
date on which (A) a Responsible Officer of any Loan Party or any Subsidiary
thereof becomes aware of such failure or (B) written notice thereof shall have
been given to the Borrower by the Administrative Agent or any Lender;

                  (e) (i) Any Loan Party or any Subsidiary thereof shall fail to
make any payment on any Indebtedness (other than the Obligations) of such Loan
Party or Subsidiary (or any Guaranty Obligation in respect of Indebtedness of
any other Person) having a principal

                                       72


amount of $500,000 or more, other than Indebtedness existing prior to the
Petition Date, when the same becomes due and payable (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise), (ii) any
other event shall occur or condition shall exist under any agreement or
instrument relating to any such Indebtedness, if the effect of such event or
condition is to accelerate, or to permit the acceleration of, the maturity of
such Indebtedness, or (iii) any such Indebtedness shall become or be declared to
be due and payable, or required to be prepaid or repurchased (other than by a
regularly scheduled required prepayment), prior to the stated maturity thereof;

                  (f) The Loan Documents and the Orders shall, for any reason,
cease to create a valid Lien on any of the Collateral purported to be covered
thereby or such Lien shall cease to be a perfected Lien having the priority
provided for herein pursuant to section 364 of the Bankruptcy Code against each
Loan Party, or any Loan Party shall so allege in any pleading filed in any court
or any material provision of any Loan Document shall, for any reason, cease to
be valid and binding on each Loan Party party thereto or any Loan Party shall so
state in writing;

                  (g) One or more judgments or orders (or other similar process)
involving, in any single case or in the aggregate, an amount in excess of
$500,000 in the case of a money judgment, to the extent not covered by
insurance, shall be rendered against one or more Loan Party or any of their
respective Subsidiaries and shall remain unpaid and either (i) enforcement
proceedings shall have been commenced by any creditor upon such judgment or
order or (ii) there shall be any period of 20 consecutive days during which a
stay of enforcement of such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect;

                  (h) An ERISA Event (other than the Cases) shall occur and the
amount of all liabilities and deficiencies resulting therefrom, whether or not
assessed, would reasonably be likely to have a Material Adverse Effect.

                  (i) Any of the Cases shall be dismissed (or the Bankruptcy
Court shall make a ruling requiring the dismissal of the Cases, which ruling has
not been stayed) or converted to a case under chapter 7 of the Bankruptcy Code,
or any Loan Party shall file any pleading requesting any such relief; or an
application shall be filed by any Loan Party for the approval of, or there shall
arise, (i) any other Claim having priority senior to or pari passu with the
claims of the Administrative Agent and the Lenders under the Loan Documents and
the Orders or any other claim having priority over any or all administrative
expenses of the kind specified in sections 503(b) or 507(b) of the Bankruptcy
Code (other than the Carve-Out) or (ii) any Lien on the Collateral having a
priority senior to or pari passu with the Liens and security interests granted
herein and in the Orders, except as expressly provided herein or therein;

                  (j) The Bankruptcy Court shall enter (i) an order approving
payment of any prepetition Claim other than a Permitted Prepetition Claim
Payment, provided that the Borrower shall be in compliance with the Budget when
such order is entered and when such payment is made, (ii) an order approving a
First Day Order not approved by the Administrative Agent and the Requisite
Lenders, (iii) a Non-Stayed Order granting relief from the automatic stay
applicable under section 362 of the Bankruptcy Code to any holder of any
security interest to permit foreclosure on any assets (other than certain assets
identified by the Borrower and agreed to by the Administrative Agent and the
Requisite Lenders) having a book value in excess of

                                       73


$500,000 in the aggregate or (iv) an order, except to the extent the same would
not constitute a Default under any of the previous clauses, approving any
settlement or other stipulation requiring payment prior to the Effective Date on
account of any claim of any creditor of any Loan Party, or otherwise providing
for payments as adequate protection or otherwise to such creditor individually
or in the aggregate in excess of $500,000 for any and all such creditors payable
prior to the date of consummation of a Plan of Reorganization of the Loan
Parties;

                  (k) (i) The Interim Order shall cease to be in full force and
effect and the Final Order shall not have been entered prior to such cessation,
(ii) the Final Order shall not have been entered by the Bankruptcy Court on or
before the 30th day following the Closing Date, (iii) from and after the date of
entry thereof, the Final Order shall cease to be in full force and effect, (iv)
any Loan Party shall fail to comply with the terms of the Orders in any material
respect or (v) either Order shall be amended, supplemented, stayed, reversed,
vacated or otherwise modified (or any of the Loan Parties shall apply for
authority to do so) without the written consent of the Lenders;

                  (l) The Bankruptcy Court shall enter an order appointing a
responsible officer or an examiner with powers beyond the duty to investigate
and report, as set forth in sections 1106(a)(3) and (4) of the Bankruptcy Code,
in any of the Cases;

                  (m) There shall occur a Material Adverse Change or any event
or circumstances which would have a Material Adverse Effect (including, without
limitation, in the case of CFCC, the commencement of voluntary or involuntary
bankruptcy, insolvency or similar proceedings);

                  (n) One or more of the Loan Parties or any Subsidiaries of any
such loan Parties shall have entered into one or more consent or settlement
decrees or agreements or similar arrangements with a Governmental Authority or
one or more judgments, orders, decrees or similar actions shall have been
entered against one or more of the Loan Parties or any Subsidiaries of such Loan
Parties based on or arising from the violation of or pursuant to any
Environmental Law, or the generation, storage, transportation, treatment,
disposal or Release of any Contaminant and, in connection with all the
foregoing, the Loan Parties and any Subsidiaries such Loan Parties are likely to
incur Environmental Liabilities and Costs in excess of $500,000 in the
aggregate;

                  (o) The financial results of the Borrower during any one week
period shall be more than a 10% adverse variation from any line item in the
Budget (but not in excess of $5,000,000 for the first week included in the
Budget and $1,000,000 for each subsequent week) it being understood that
expenditures not made in any specific week may be made in a subsequent week for
the same purpose; or

                  (p) (i) The 9019 Order shall not have been entered on or
before 30 Business Days (APA Method) after the Petition Date, (ii) from and
after the date of entry thereof, the 9019 Order or the Interim 9019 Order shall
cease to be in full force and effect, (iii) any Loan Party shall fail to comply
with the terms of the 9019 Order or the Interim 9019 Orders in any material
respect or (iv) either the 9019 Order or the Interim 9019 Order shall be
amended, supplemented,

                                       74


stayed, reversed, vacated or otherwise modified (or any of the Loan Parties
shall apply for authority to do so) without the written consent of the
Administrative Agent; or

                  (q) The Lehman Order shall be amended, supplemented, stayed,
reversed, vacated or otherwise modified (or any of the Loan Parties shall apply
for authority to do so) without the written consent of the Administrative Agent
or the Lehman Documents shall be amended, modified or supplemented without the
consent of the Administrative Agent or Green Tree Finance Corp. - Five or Lehman
(as defined in the Lehman Order) shall fail to perform their obligations under
the Lehman Order, including the obligation of Green Tree Finance Corp. - Five to
make loans to the Borrower in such amounts and at such times as are required
under the Order.

                  Section 9.2. Remedies. Upon the occurrence and during the
continuance of any Event of Default, without further order of, application to or
action by the Bankruptcy Court, the Administrative Agent (a) may, and at the
request of the Requisite Lenders shall, by notice to the Borrower declare that
all or any portion of the Credit Commitments be terminated, whereupon the
obligation of each Lender to make any Loan shall immediately terminate and/or
(b) may, and at the request of the Requisite Lenders shall, by notice to the
Borrower or CFCC, declare the Loans, all interest thereon and all other amounts
and Obligations payable under this Agreement or any of the other Loan Documents
to be forthwith due and payable, whereupon the Loans, all such interest and all
such amounts and Obligations shall become and be forthwith due and payable,
without presentment, demand, protest or further notice of any kind, all of which
are hereby expressly waived by the Borrower and CFCC. In addition, subject
solely to any requirement of the giving of notice by the terms of either Order,
the automatic stay provided in section 362 of the Bankruptcy Code shall be
deemed automatically vacated without further action or order of the Bankruptcy
Court or the Administrative Agent and, upon two Business Days' notice thereof to
the U.S. Trustee and the Committee, the Administrative Agent and the Lenders
shall be entitled to exercise all of their respective rights and remedies under
the Loan Documents, including all rights and remedies with respect to the
Collateral and the Guarantors.

                  Section 9.3. Intentionally Omitted.

                  Section 9.4. Rescission. If at any time after termination of
the Credit Commitments and/or acceleration of the maturity of the Loans, the
Borrower and CFCC shall pay all arrears of interest and all payments on account
of principal of the Loans which shall have become due otherwise than by
acceleration (with interest on principal and, to the extent permitted by law, on
overdue interest, at the rates specified herein) and all Events of Default and
Defaults (other than non-payment of principal of and accrued interest on the
Loans due and payable solely by virtue of acceleration) shall be remedied or
waived pursuant to Section 13.1, then upon the written consent of the Requisite
Lenders and written notice to the Borrower, the termination of the Credit
Commitments and/or the acceleration and their consequences may be rescinded and
annulled; provided, however, that such action shall not affect any subsequent
Event of Default or Default or impair any right or remedy consequent thereon.
The provisions of the preceding sentence are intended merely to bind the Lenders
to a decision which may be made at the election of the Requisite Lenders and
they are not intended to benefit the Borrower and do not give the Borrower the
right to require the Lenders to rescind or annul any acceleration hereunder,
even if the conditions set forth herein are met.

                                       75


                                   ARTICLE X

                                    Guaranty

                  Section 10.1. The Guaranty. In order to induce the Lenders to
enter into this Agreement and to extend credit hereunder and in recognition of
the direct benefits to be received by each Guarantor from the proceeds of the
Loans, each Guarantor hereby agrees with the Administrative Agent and the
Lenders that such Guarantor hereby unconditionally and irrevocably, jointly and
severally, guarantees as primary obligor and not merely as surety the full and
prompt payment when due, whether upon maturity, by acceleration or otherwise, of
any and all of the Obligations of the Borrower to the Lenders. If any or all of
the Obligations of the Borrower to the Lenders become due and payable hereunder,
each Guarantor, jointly and severally, unconditionally promises to pay such
Obligations to the Lenders, or order, on demand, together with any and all
reasonable expenses which may be incurred by the Administrative Agent or the
Lenders in collecting any of the Obligations. Notwithstanding any provision to
the contrary contained in this Agreement, the guarantee by CIHC under this
Article X shall constitute a pre-Petition unsecured claim and the Obligations
guaranteed by such guarantee shall include only the Term Loan Obligations. In
order to induce the Lenders to enter into this Agreement and to extend credit
hereunder and in recognition of the direct benefits to be received by each
Guarantor from the proceeds of the Loans, the Borrower hereby agrees with the
Administrative Agent and the Lenders that the Borrower hereby unconditionally
and irrevocably, jointly and severally, guarantees as primary obligor and not
merely as surety the full and prompt payment when due, whether upon maturity, by
acceleration or otherwise, of any and all of the Obligations of CFCC to the
Lenders. For purposes of such guaranty, the Borrower shall be treated as a
Guarantor under this Article X.

                  Section 10.2. Nature of Liability. The liability of each
Guarantor hereunder is exclusive and independent of any security for or other
guaranty of the Obligations of the Borrower whether executed by such Guarantor,
any other Guarantor, any other guarantor or by any other party, and the
liability of each Guarantor hereunder shall not be affected or impaired by (a)
any direction as to application of payment by the Borrower, CFCC or by any other
party, (b) any other continuing or other guaranty, undertaking or maximum
liability of a guarantor or of any other party as to the Obligations of the
Borrower or CFCC or any payment on or in reduction of any such other guaranty or
undertaking, (d) any dissolution, termination or increase, decrease or change in
personnel by the Borrower or CFCC or (e) any payment made to the Administrative
Agent or the Lenders on the Indebtedness which the Administrative Agent or such
Lenders repay to the Borrower or CFCC pursuant to court order in any bankruptcy,
reorganization, arrangement, moratorium or other debtor relief proceeding, and
each Guarantor waives any right to the deferral or modification of its
obligations hereunder by reason of any such proceeding.

                  Section 10.3. Independent Obligation. The obligations of each
Guarantor hereunder are independent of the obligations of any other Guarantor,
any other guarantor or the Borrower, and a separate action or actions may be
brought and prosecuted against each Guarantor whether or not action is brought
against any other Guarantor, any other guarantor or the Borrower and whether or
not any other Guarantor, any other guarantor or the Borrower is joined in any
such action or actions. Each Guarantor waives, to the fullest extent permitted
by law, the benefit of any statute of limitations affecting its liability
hereunder or the enforcement

                                       76


thereof. Any payment by the Borrower or other circumstance which operates to
toll any statute of limitations as to the Borrower shall operate to toll the
statute of limitations as to the Guarantor.

                  Section 10.4. Authorization. Each Guarantor authorizes the
Administrative Agent and the Lenders without notice or demand (except as shall
be required by applicable statute and cannot be waived), and without affecting
or impairing its liability hereunder, from time to time to:

                  (a) change the manner, place or terms of payment of, and/or
change or extend the time of payment of, renew, increase, accelerate or alter,
any of the Obligations (including any increase or decrease in the rate of
interest thereon), any security therefor, or any liability incurred directly or
indirectly in respect thereof, and the Guaranty herein made shall apply to the
Obligations as so changed, extended, renewed or altered;

                  (b) take and hold security for the payment of the Obligations
and sell, exchange, release, surrender, realize upon or otherwise deal with in
any manner and in any order any property by whomsoever at any time pledged or
mortgaged to secure, or howsoever securing, the Obligations or any liabilities
(including any of those hereunder) incurred directly or indirectly in respect
thereof or hereof, and/or any offset there against;

                  (c) exercise or refrain from exercising any rights against the
Borrower, CFCC or others or otherwise act or refrain from acting;

                  (d) release or substitute any one or more endorsers,
guarantors, the Borrower, CFCC or other obligors;

                  (e) settle or compromise any of the Obligations, any security
therefor or any liability (including any of those hereunder) incurred directly
or indirectly in respect thereof or hereof, or subordinate the payment of all or
any part thereof to the payment of any liability (whether due or not) of the
Borrower or CFCC to its creditors;

                  (f) apply any sums by whomsoever paid or howsoever realized to
any liability or liabilities of the Borrower or CFCC to the Lenders regardless
of what liability or liabilities of such Guarantor or the Borrower remain
unpaid; and/or

                  (g) consent to or waive any breach of, or any act, omission or
default under, this Agreement or any of the instruments or agreements referred
to herein, or otherwise amend, modify or supplement this Agreement or any of
such other instruments or agreements.

                  Section 10.5. Reliance. It is not necessary for the
Administrative Agent or the Lenders to inquire into the capacity or powers of
the Borrower or its Subsidiaries or the officers, directors, partners or agents
acting or purporting to act on its behalf, and any Obligations made or created
in reliance upon the professed exercise of such powers shall be guaranteed
hereunder.

                  Section 10.6. Subordination. Any of the Indebtedness of the
Borrower or CFCC now or hereafter owing to any Guarantor is hereby subordinated
to the Obligations of the Borrower and CFCC; provided, however, that payment may
be made by the Borrower or CFCC

                                       77


on any such Indebtedness owing to such Guarantor so long as the same is not
prohibited by this Agreement; and provided further that if the Administrative
Agent so requests at a time when an Event of Default exists, all such
Indebtedness of the Borrower or CFCC to such Guarantor shall be collected,
enforced and received by such Guarantor as trustee for the Lenders and be paid
over to the Administrative Agent on behalf of the Lenders on account of the
Obligations of the Borrower to Lenders, but without affecting or impairing in
any manner the liability of such Guarantor under the other provisions of this
Guaranty. Prior to the transfer by any Guarantor of any note or negotiable
instrument evidencing any of the Indebtedness of the Borrower or CFCC to such
Guarantor, such Guarantor shall mark such note or negotiable instrument with a
legend that the same is subject to this subordination.

                  Section 10.7. Waiver.

                  (a) Each Guarantor waives any right (except as shall be
required by applicable statute and cannot be waived) to require the
Administrative Agent or the Lenders to (i) proceed against the Borrower or CFCC,
any other Guarantor, any other guarantor or any other party, (ii) proceed
against or exhaust any security held from the Borrower, CFCC, any other
Guarantor, any other guarantor or any other party or (iii) pursue any other
remedy in the Administrative Agent's or the Lenders' power whatsoever. Each
Guarantor waives (except as shall be required by applicable statute and cannot
be waived) any defense based on or arising out of any defense of the Borrower or
CFCC, any other Guarantor, any other guarantor or any other party other than
payment in full of the Obligations, including any defense based on or arising
out of the disability of the Borrower or CFCC, any other Guarantor, any other
guarantor or any other party, or the unenforceability of the Obligations or any
part thereof from any cause, or the cessation from any cause of the liability of
the Borrower other than payment in full of the Obligations. Subject to the
giving of three Business Days' prior written notice in accordance with the
Orders, the Administrative Agent and the Lenders may, at their election,
foreclose on any security held by the Administrative Agent or the Lenders by one
or more judicial or nonjudicial sales, whether or not every aspect of any such
sale is commercially reasonable (to the extent such sale is permitted by
applicable law), or exercise any other right or remedy the Administrative Agent
and the Lenders may have against the Borrower, CFCC or any other party, or any
security, without affecting or impairing in any way the liability of any
Guarantor hereunder except to the extent the Obligations have been paid. Each
Guarantor waives any defense arising out of any such election by the
Administrative Agent and the Lenders, even though such election operates to
impair or extinguish any right of reimbursement or subrogation or other right or
remedy of such Guarantor against the Borrower or any other party or any
security.

                  (b) Each Guarantor waives all presentments, demands for
performance, protests and notices, including without limitation notices of
nonperformance, notices of protest, notices of dishonor, notices of acceptance
of this Guaranty, and notices of the existence, creation or incurring of new or
additional Obligations. Each Guarantor assumes all responsibility for being and
keeping itself informed of the Borrower's financial condition and assets, and of
all other circumstances bearing upon the risk of nonpayment of the Obligations
and the nature, scope and extent of the risks which such Guarantor assumes and
incurs hereunder, and agrees that the Administrative Agent and the Lenders shall
have no duty to advise such Guarantor of information known to them regarding
such circumstances or risks.

                                       78


                  Section 10.8. Limitation on Enforcement. The Lenders agree
that this Guaranty as to the Subsidiary Guarantors may be enforced only by the
action of the Administrative Agent, in each case acting upon the instructions of
the Requisite Lenders and as to the Parent Guarantor only by action of an agent
of the holders of the majority of the outstanding principal amount of Term
Loans. The Lenders agree that no Lender shall have any right individually to
seek to enforce or to enforce this Guaranty it being understood and agreed that
such rights and remedies may be exercised by the Administrative Agent or such
agent for the benefit of the Lenders (or, in the case of the enforcement against
the Parent Guarantor, the Term Loan Lenders) upon the terms of this Agreement.

                                   ARTICLE XI

                                    Security

                  Section 11.1. Security.

                  (a) To induce the Lenders to make the Loans, each Grantor
hereby grants to the Administrative Agent, for itself and for the ratable
benefit of the Secured Parties, as security for the full, prompt and complete
payment when due (whether at stated maturity, by acceleration or otherwise) of
the Obligations hereunder, a continuing first priority Lien and security
interest in the Collateral (subject and subordinate only to the Superior Liens
on the Collateral). For purposes of this Agreement, all of the following
property now owned or at any time hereafter acquired by a Grantor or in which a
Grantor now has or at any time in the future may acquire any right, title or
interests is collectively referred to as the "Collateral":

                      (i)    all Accounts;

                      (ii)   all Chattel Paper;

                      (iii)  all Deposit Accounts;

                      (iv)   all Documents;

                      (v)    all Equipment;

                      (vi)   all General Intangibles;

                      (vii)  all Instruments;

                      (viii) all Inventory;

                      (ix)   all Investment Property;

                      (x)    all Letter of Credit Rights;

                      (xi)   all Real Property;

                      (xii)  all Vehicles;

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                      (xiii) the Commercial Tort Claims described on Schedule
11.1;

                      (xiv)  all books and records pertaining to the property
described in this Section 11.1;

                      (xv)   all other goods and personal property of such
Grantor, whether tangible or intangible, wherever located;

                      (xvi)  all property of any Grantor held by the
Administrative Agent or any Secured Party, including all property of every
description, in the possession or custody of or in transit to the Administrative
Agent or such Secured Party for any purpose, including safekeeping, collection
or pledge, for the account of such Grantor, or as to which such Grantor may have
any right or power;

                      (xvii) to the extent not otherwise included, all monies
and other property of any kind which is, after the Petition Date, received by
such Grantor in connection with refunds with respect to taxes, assessments and
governmental charges imposed on such Grantor or any of its property or income;

                      (xviii) to the extent not otherwise included, all causes
of action (including claims of the Grantors under sections 544, 545, 547 and 548
of the Bankruptcy Code) and all monies and other property of any kind received
therefrom, and all monies and other property of any kind recovered by any
Grantor; and

                      (xix)  to the extent not otherwise included, all Proceeds.

                  (b) Not in limitation of anything else to the contrary set
forth in this Section 11, upon entry of the Interim Order or Final Order, to
provide security for the repayments of the Loans and the payment of the other
Obligations of the Borrower and the Guarantors hereunder and under the other
Loan Documents, the Borrower and each Guarantor hereby grant to the
Administrative Agent and the Lenders the following:

                      (i) with respect to the Obligations of the Borrower
hereunder, and the guarantee obligations of the Guarantors hereunder in respect
thereof, an allowed administrative expense claim in each of the Cases, as
applicable, pursuant to section 364(c)(1) of the Bankruptcy Code having priority
over all administrative expenses of the kind specified in sections 503(b) and
507(b) of the Bankruptcy Code (except the guarantee obligations of the Parent
Guarantor shall constitute prepetition general unsecured claims against the
Parent Guarantor);

                      (ii) a perfected, first-priority Lien (as defined below),
pursuant to section 364(c)(2) of the Bankruptcy Code, upon all unencumbered
property (including (i) real and tangible personal property subject to Liens or
security interests which may be avoided pursuant to the Bankruptcy Code, but
only to the extent so avoided and (ii) any avoidance actions arising under the
Bankruptcy Code) of the Borrower and the Subsidiary Guarantors, all cash and
Cash Equivalents in the Cash Collateral Account;

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                      (iii) a perfected, second-priority Lien, pursuant to
section 364(c)(3) of the Bankruptcy Code, upon all of the property (other than
the Primed Collateral) of the Borrower and the Guarantors that is subject to
Liens permitted by this Agreement, junior to such permitted Liens (except as
otherwise provided herein and in the Orders); and

                      (iv) a perfected, first priority, priming Lien, pursuant
to section 364(d)(1) of the Bankruptcy Code, upon all of the Primed Collateral
which Liens in favor of the Administrative Agent and the Lenders shall be senior
in all respects to all other Liens thereon granted on or prior to the Petition
Date, including Liens granted under the Mill Creek U.S. Bank Pledge Agreement
and the CFSC Pledge Agreement securing the Parity Public Debt;

subject and subordinate in each case with respect to subparagraphs (i) through
(iv) above only to the Superior Liens.

                  Section 11.2. Perfection of Security Interests.

                  (a) Each Grantor shall, at its expense, perform any and all
reasonable steps requested by the Administrative Agent at any time to perfect,
maintain, protect, and enforce the Lenders' security interest in the Collateral
of such Grantor, including (i) executing and filing financing, in lieu or
continuation statements, and amendments thereof, in form and substance
satisfactory to the Administrative Agent, (ii) maintaining complete and accurate
stock records, (iii) using its best efforts in delivering to the Administrative
Agent negotiable warehouse receipts, if any, and, upon the Administrative
Agent's request therefor, non-negotiable warehouse receipts covering any portion
of the Collateral located in warehouses and for which warehouse receipts are
issued, (iv) placing notations on such Grantor's books of account to disclose
the Administrative Agent's security interest therein, (v) delivering to the
Administrative Agent all documents, certificates and Instruments necessary or
desirable to perfect the Administrative Agent's Lien in letters of credit on
which such Grantor is named as beneficiary and all acceptances issued in
connection therewith, (vi) after the occurrence and during the continuation of
an Event of Default, transferring Inventory maintained in warehouses to other
warehouses designated by the Administrative Agent and (vii) taking such other
steps as are deemed necessary or desirable to maintain the Administrative
Agent's security interest in the Collateral.

                  (b) Each Grantor hereby authorizes the Administrative Agent to
execute and file financing, in lieu or continuation statements on such Grantor's
behalf covering the Collateral. The Administrative Agent may file one or more
financing statements disclosing the Administrative Agent's security interest
under this Agreement without the signature of such Grantor appearing thereon.
Each Grantor shall pay the costs of, or incidental to, any recording or filing
of any financing statements concerning the Collateral. Each Grantor agrees that
a carbon, photographic, photostatic, or other reproduction of this Agreement or
of a financing statement is sufficient as a financing statement. If any
Collateral is at any time in the possession or control of any warehouseman,
bailee or such Grantor's agents or processors, such Grantor shall notify such
warehouseman, bailee, agents or processors of the Administrative Agent's
security interest, which notification shall specify that such Person shall, upon
the occurrence and during the continuance of an Event of Default, hold all such
Collateral for the Administrative Agent's

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account subject to the Administrative Agent's instructions. From time to time,
each Grantor shall, upon the Administrative Agent's request, execute and deliver
written instruments pledging to the Administrative Agent the Collateral
described in any such instruments or otherwise, but the failure of such Grantor
to execute and deliver such confirmatory instruments shall not affect or limit
the Administrative Agent's security interest or other rights in and to the
Collateral. Until all Obligations have been fully satisfied and the Credit
Commitments shall have been terminated, the Administrative Agent's security
interest in the Collateral, and all Proceeds and products thereof, shall
continue in full force and effect.

                  (c) Notwithstanding subsections (a) and (b) of this Section
11.2, or any failure on the part of any Grantor or the Administrative Agent to
take any of the actions set forth in such subsections, the Liens and security
interests granted herein shall be deemed valid, enforceable and perfected by
entry of the Interim Order and the Final Order, as applicable. No financing
statement, notice of lien, mortgage, deed of trust or similar instrument in any
jurisdiction or filing office need be filed or any other action taken in order
to validate and perfect the Liens and security interests granted by or pursuant
to this Agreement, the Interim Order or the Final Order.

                  Section 11.3. Rights of Lenders; Limitations on Lenders'
Obligations.

                  (a) Subject to each Grantor's rights and duties under the
Bankruptcy Code (including section 365 of the Bankruptcy Code), it is expressly
agreed by each Grantor that, anything herein to the contrary notwithstanding,
such Grantor shall remain liable under its Contracts to observe and perform all
the conditions and obligations to be observed and performed by it thereunder.
Neither the Administrative Agent nor any Secured Party shall have any obligation
or liability under any Contract by reason of or arising out of this Agreement,
the Loan Documents, or the granting to the Administrative Agent of a security
interest therein or the receipt by the Administrative Agent or any Lender of any
payment relating to any Contract pursuant hereto, nor shall the Administrative
Agent be required or obligated in any manner to perform or fulfill any of the
obligations of any Grantor under or pursuant to any Contract, or to make any
payment, or to make any inquiry as to the nature or the sufficiency of any
payment received by it or the sufficiency of any performance by any party under
any Contract, or to present or file any claim, or to take any action to collect
or enforce any performance or the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or times.

                  (b) Subject to Section 11.5 hereof, the Administrative Agent
authorizes each Grantor to collect its Accounts; provided that such collection
is performed in accordance with such Grantor's customary procedures, and the
Administrative Agent may, upon the occurrence and during the continuation of any
Event of Default and without notice, other than any requirement of notice
provided in the Orders, limit or terminate said authority at any time.

                  (c) Subject to any requirement of notice provided in the
Orders, the Administrative Agent may at any time, upon the occurrence and during
the continuation of any Event of Default, after first notifying the Borrower of
its intention to do so, notify Account Debtors, notify the other parties to the
Contracts of the Borrower or any other Grantor, notify obligors of Instruments
and Investment Property of the Borrower or any other Grantor and notify obligors
in respect of Chattel Paper of the Borrower or any other Grantor that the right,
title and

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interest of the Borrower or such Grantor in and under such Accounts, such
Contracts, such Instruments, such Investment Property and such Chattel Paper
have been assigned to the Administrative Agent and that payments shall be made
directly to the Administrative Agent. Subject to any requirement of notice
provided in the Orders, upon the request of the Administrative Agent, the
Borrower or such other Grantor will so notify such Account Debtors, such parties
to Contracts, obligors of such Instruments and Investment Property and obligors
in respect of such Chattel Paper. Subject to any requirement of notice provided
in the Orders, upon the occurrence and during the continuation of an Event of
Default, the Administrative Agent may in its own name, or in the name of others,
communicate with such parties to such Accounts, Contracts, Instruments,
Investment Property and Chattel Paper to verify with such Persons to the
Administrative Agent's reasonable satisfaction the existence, amount and terms
of any such Accounts, Contracts, Instruments, Investment Property or Chattel
Paper.

                  (d) The Administrative Agent shall have the right to make test
verification of the Accounts in any manner and through any medium that it
considers advisable, and each Grantor agrees to furnish all such assistance and
information as the Administrative Agent may require in connection therewith.
Each Grantor, at its expense, will cause certified independent public
accountants satisfactory to the Requisite Lenders to prepare and deliver to the
Administrative Agent at any time and from time to time, promptly upon the
Administrative Agent's request, the following reports: (i) a reconciliation of
all Accounts of such Grantor, (ii) an aging of all Accounts of such Grantor,
(iii) trial balances and (iv) a test verification of such Accounts as the
Administrative Agent may request. The Administrative Agent shall have the right
at any time to conduct periodic audits of the Accounts of any Grantor at the
expense of the Borrower.

                  Section 11.4. Covenants of the Loan Parties with Respect to
Collateral. Each Grantor hereby covenants and agrees with the Administrative
Agent that from and after the date of this Agreement and until the Obligations
are fully satisfied:

                  (a) Maintenance of Records. Such Grantor will keep and
maintain, at its own cost and expense, satisfactory and complete records of the
Collateral, in all material respects, including a record of all payments
received and all credits granted with respect to the Collateral and all other
dealings concerning the Collateral. For the Administrative Agent's further
security, each Grantor agrees that the Administrative Agent shall have a
property interest in all of such Grantor's books and records pertaining to the
Collateral and, upon the occurrence and during the continuation of an Event of
Default, such Grantor shall deliver and turn over any such books and records to
the Administrative Agent or to its representatives at any time on demand of the
Administrative Agent.

                  (b) Indemnification With Respect to Collateral. In any suit,
proceeding or action brought by the Administrative Agent relating to any
Account, Chattel Paper, Contract, General Intangible, Investment Property,
Instrument, Intellectual Property or other Collateral for any sum owing
thereunder or to enforce any provision of any Account, Chattel Paper, Contract,
General Intangible, Investment Property, Instrument, Intellectual Property or
other Collateral, such Grantor will save, indemnify and keep the Secured Parties
harmless from and against all expense, loss or damage suffered by the Secured
Parties by reason of any defense, setoff, counterclaim, recoupment or reduction
of liability whatsoever of the obligor thereunder, arising

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out of a breach by such Grantor of any obligation thereunder or arising out of
any other agreement, indebtedness or liability at any time owing to, or in favor
of, such obligor or its successors from such Grantor, and all such obligations
of such Grantor shall be and remain enforceable against and only against such
Grantor and shall not be enforceable against the Administrative Agent.

                  (c) Limitation on Liens on Collateral. Such Grantor will not
create, permit or suffer to exist, and will defend the Collateral against and
take such other action as is necessary to remove, any Lien on the Collateral
except Liens permitted under Section 8.2 and will defend the right, title and
interest of the Administrative Agent in and to all of such Grantor's rights
under the Accounts, Chattel Paper, Deposit Accounts, Leases, Real Estate,
Contracts, Documents, General Intangibles, Instruments, Investment Property,
Letter of Credit Rights, Vehicles and Commercial Tort Claims and to the
Intellectual Property, Equipment and Inventory and in and to the Proceeds
thereof against the claims and demands of all Persons whomsoever other than
claims or demands arising out of Liens permitted under Section 8.2.

                  (d) Limitations on Modifications of Accounts. Such Grantor
will not, without the Administrative Agent's prior written consent, grant any
extension of the time of payment of any of the Accounts, Chattel Paper or
Instruments, compromise, compound or settle the same for less than the full
amount thereof, release, wholly or partly, any Person liable for the payment
thereof, or allow any credit or discount whatsoever thereon other than any of
the foregoing which are done in the ordinary course of business, consistent with
past practices and trade discounts granted in the ordinary course of business of
such Grantor.

                  (e) Notices. Such Grantor will advise the Lenders promptly, in
reasonable detail, (i) of any Lien asserted against any of the Collateral other
than Liens permitted under Section 8.2 and (ii) of the occurrence of any other
event which would result in a Material Adverse Change with respect to the
aggregate value of the Collateral or on the security interests created
hereunder.

                  (f) Maintenance of Equipment. Such Grantor will keep and
maintain the Equipment in good operating condition sufficient for the
continuation of the business conducted by such Grantor on a basis consistent
with past practices, ordinary wear and tear excepted.

                  (g) Pledged Collateral.

                      (i) Upon request of the Administrative Agent, such Grantor
will (x) deliver to the Administrative Agent (or with respect to the Primed
Pledged Shares, the Sub-Agent), all certificates and Instruments representing or
evidencing any Pledged Collateral, whether now existing or hereafter acquired,
in suitable form for transfer by delivery or, as applicable, accompanied by such
Grantor's endorsement, where necessary, or duly executed instruments of transfer
or assignment in blank, all in form and substance satisfactory to the
Administrative Agent, together with a Pledge Amendment, duly executed by the
Grantor, in substantially the form of Exhibit F (a "Pledge Amendment"), in
respect of such Additional Pledged Collateral and authorizes the Administrative
Agent to attach each Pledge Amendment to this Agreement and (y) maintain all
other Pledged Collateral constituting Investment Property in a Control Account.
The Administrative Agent shall have the right, at any time in its discretion

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and without notice to the Grantor, to transfer to or to register in its name or
in the name of its nominees any or all of the Pledged Collateral. The
Administrative Agent shall have the right at any time to exchange certificates
or instruments representing or evidencing any of the Pledged Collateral for
certificates or instruments of smaller or larger denominations.

                      (ii) Except as provided in Section 11.7, such Grantor
shall be entitled to receive all cash dividends paid in respect of the Pledged
Collateral (other than liquidating or distributing dividends) with respect to
the Pledged Collateral. Any sums paid upon or in respect of any of the Pledged
Collateral upon the liquidation or dissolution of any issuer of any of the
Pledged Collateral, any distribution of capital made on or in respect of any of
the Pledged Collateral or any property distributed upon or with respect to any
of the Pledged Collateral pursuant to the recapitalization or reclassification
of the capital of any issuer of Pledged Collateral or pursuant to the
reorganization thereof shall, unless otherwise subject to a perfected security
interest in favor of the Administrative Agent, be delivered to the
Administrative Agent to be held by it hereunder as additional collateral
security for the Secured Obligations. If any sums of money or property so paid
or distributed in respect of any of the Pledged Collateral shall be received by
such Grantor, such Grantor shall, until such money or property is paid or
delivered to the Administrative Agent, hold such money or property in trust for
the Administrative Agent, segregated from other funds of such Grantor, as
additional security for the Secured Obligations.

                      (iii) Except as provided in Section 11.7, such Grantor
will be entitled to exercise all voting, consent and corporate rights with
respect to the Pledged Collateral; provided, however, that no vote shall be
cast, consent given or right exercised or other action taken by such Grantor
which would impair the Collateral or which would be inconsistent with or result
in any violation of any provision of this Agreement or any other Loan Document
or, without prior notice to the Administrative Agent, to enable or take any
other action to permit any issuer of Pledged Collateral to issue any stock or
other equity securities of any nature or to issue any other securities
convertible into or granting the right to purchase or exchange for any stock or
other equity securities of any nature of any issuer of Pledged Collateral.

                      (iv) Such Grantor shall not grant Control over any
Investment Property to any Person other than the Administrative Agent.

                      (v) In the case of each Grantor which is an issuer of
Pledged Collateral, such Grantor agrees to be bound by the terms of this
Agreement relating to the Pledged Collateral issued by it and will comply with
such terms insofar as such terms are applicable to it. In the case of each
Grantor which is a partner in a Partnership, such Grantor hereby consents to the
extent required by the applicable Partnership Agreement to the pledge by each
other Grantor, pursuant to the terms hereof, of the Pledged Partnership
Interests in such Partnership and to the transfer of such Pledged Partnership
Interests to the Administrative Agent or its nominee and to the substitution of
the Administrative Agent or its nominee as a substituted partner in such
Partnership with all the rights, powers and duties of a general partner or a
limited partner, as the case may be. In the case of each Grantor which is a
member of an LLC, such Grantor hereby consents to the extent required by the
applicable LLC Agreement to the pledge by each other Grantor, pursuant to the
terms hereof, of the Pledged LLC Interests in such LLC and to the transfer of
such Pledged LLC Interests to the Administrative Agent or its nominee and

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to the substitution of the Administrative Agent or its nominee as a substituted
member of the LLC with all the rights, powers and duties of a member of the LLC
in question.

                      (vi) Such Grantor will not agree to any amendment of an
LLC Agreement or Partnership Agreement that in any way adversely affects the
perfection of the security interest of the Administrative Agent in the Pledged
Partnership Interests or Pledged LLC Interests pledged by such Grantor
hereunder, including any amendment electing to treat the membership interest or
partnership interest of such Grantor as a Security.

                  (h) Intellectual Property. Such Grantor will comply with the
following except where the failure to so comply would reasonably be likely to
have a Material Adverse Effect:

                      (i) Such Grantor (either itself or through licensees) will
(i) continue to use each Trademark that is Material Intellectual Property in
order to maintain such Trademark in full force and effect with respect to each
class of goods for which such Trademark is currently used, free from any claim
of abandonment for non-use, (ii) maintain as in the past the quality of products
and services offered under such Trademark, (iii) use such Trademark with the
appropriate notice of registration and all other notices and legends required by
applicable Requirements of Law, (iv) not adopt or use any mark which is
confusingly similar or a colorable imitation of such Trademark unless the
Administrative Agent shall obtain a perfected security interest in such mark
pursuant to this Agreement and (v) not (and not permit any licensee or
sublicensee thereof to) do any act or knowingly omit to do any act whereby such
Trademark may become invalidated or impaired in any way.

                      (ii) Such Grantor (either itself or through licensees)
will not do any act, or omit to do any act, whereby any Patent which is Material
Intellectual Property may become forfeited, abandoned or dedicated to the
public.

                      (iii) Such Grantor (either itself or through licensees)
(i) will not (and will not permit any licensee or sublicensee thereof to) do any
act or omit to do any act whereby any portion of the Copyrights which is
Material Intellectual Property may become invalidated or otherwise impaired and
(ii) will not (either itself or through licensees) do any act whereby any
portion of the Copyrights which is Material Intellectual Property may fall into
the public domain.

                      (iv) Such Grantor (either itself or through licensees)
will not do any act, or omit to do any act, whereby any trade secret which is
Material Intellectual Property may become publicly available or otherwise
unprotectable.

                      (v) Such Grantor (either itself or through licensees) will
not do any act that knowingly uses any Material Intellectual Property to
infringe the intellectual property rights of any other Person.

                      (vi) Such Grantor will notify the Administrative Agent
immediately if it knows, or has reason to know, that any application or
registration relating to any Material Intellectual Property may become
forfeited, abandoned or dedicated to the public, or of any adverse determination
or development (including the institution of, or any such determination or
development in, any proceeding in the United States Patent and Trademark Office,
the United

                                       86


States Copyright Office or any court or tribunal in any country) regarding such
Grantor's ownership of, right to use, interest in, or the validity of, any
Material Intellectual Property or such Grantor's right to register the same or
to own and maintain the same.

                      (vii) Whenever such Grantor, either by itself or through
any agent, licensee or designee, shall file an application for the registration
of any Intellectual Property with the United States Patent and Trademark Office,
the United States Copyright Office or any similar office or agency within or
outside the United States, such Grantor shall report such filing to the
Administrative Agent within five Business Days after the last day of the fiscal
quarter in which such filing occurs. Upon request of the Administrative Agent,
such Grantor shall execute and deliver, and have recorded, any and all
agreements, instruments, documents, and papers as the Administrative Agent may
request to evidence the Administrative Agent's security interest in any
Copyright, Patent or Trademark and the goodwill and general intangibles of such
Grantor relating thereto or represented thereby.

                      (viii) Such Grantor will take all reasonable actions
necessary or requested by the Administrative Agent, including in any proceeding
before the United States Patent and Trademark Office, the United States
Copyright Office or any similar office or agency, to maintain and pursue each
application (and to obtain the relevant registration) and to maintain each
registration of any Copyright, Trademark or Patent that is Material Intellectual
Property, including filing of applications for renewal, affidavits of use,
affidavits of incontestability and opposition and interference and cancellation
proceedings.

                      (ix) In the event that any Material Intellectual Property
is infringed upon or misappropriated or diluted by a third party, such Grantor
shall notify the Administrative Agent promptly after such Grantor learns
thereof. Such Grantor shall take appropriate action in response to such
infringement, misappropriation or dilution, including promptly bringing suit for
infringement, misappropriation or dilution and to recover any and all damages
for such infringement, misappropriation or dilution, and shall take such other
actions as may be appropriate in its reasonable judgment under the circumstances
to protect such Material Intellectual Property.

                  Section 11.5. Performance by Agent of the Loan Parties'
Obligations. If any Grantor fails to perform or comply with any of its
agreements contained herein and the Administrative Agent, as provided for by the
terms of this Agreement, shall itself perform or comply, or otherwise cause
performance or compliance, with such agreement, the expenses of the
Administrative Agent incurred in connection with such performance or compliance,
together with interest thereon at the rate then in effect in respect of the
Loans, shall be payable by such Grantor to the Administrative Agent on demand
and shall constitute Obligations secured by the Collateral. Performance of such
Grantor's obligations as permitted under this Section 11.5 shall in no way
constitute a violation of the automatic stay provided by section 362 of the
Bankruptcy Code and each Grantor hereby waives applicability thereof. Moreover,
the Administrative Agent shall in no way be responsible for the payment of any
costs incurred in connection with preserving or disposing of Collateral pursuant
to section 506(c) of the Bankruptcy Code and the Collateral may not be charged
for the incurrence of any such cost.

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                  Section 11.6. Limitation on Administrative Agent's Duty in
Respect of Collateral. Neither the Administrative Agent nor any Lender shall
have any duty as to any Collateral in its possession or control or in the
possession or control of any agent or nominee of it or any income thereon or as
to the preservation of rights against prior parties or any other rights
pertaining thereto, except that the Administrative Agent shall, with respect to
the Collateral in its possession or under its control, deal with such Collateral
in the same manner as the Administrative Agent deals with similar property for
its own account. Upon request of the Borrower, the Administrative Agent shall
account for any moneys received by it in respect of any foreclosure on or
disposition of the Collateral of any Grantor.

                  Section 11.7. Remedies; Rights Upon Default.

                  (a) If any Event of Default shall occur and be continuing, the
Administrative Agent may exercise in addition to all other rights and remedies
granted to it in this Agreement and in any other Loan Document, all rights and
remedies of a secured party under the UCC. Without limiting the generality of
the foregoing, each Grantor expressly agrees that in any such event the
Administrative Agent, without demand of performance or other demand,
advertisement or notice of any kind (except the notice required by the Interim
Order or Final Order or the notice specified below of time and place of public
or private sale) to or upon such Grantor or any other Person (all and each of
which demands, advertisements and/or notices are hereby expressly waived to the
maximum extent permitted by the UCC and other applicable law), may forthwith
collect, receive, appropriate and realize upon the Collateral, or any part
thereof, and/or may forthwith sell, lease, assign, give an option or options to
purchase, or sell or otherwise dispose of and deliver said Collateral (or
contract to do so), or any part thereof, in one or more parcels at public or
private sale or sales, at any exchange or broker's board or at any of the
Administrative Agent's offices or elsewhere at such prices as it may deem best,
for cash or on credit or for future delivery without assumption of any credit
risk. The Administrative Agent shall have the right upon any such public sale or
sales to purchase the whole or any part of said Collateral so sold, free of any
right or equity of redemption, which equity of redemption each Grantor hereby
releases. Each Grantor further agrees, at the Administrative Agent's request, to
assemble the Collateral make it available to the Administrative Agent at places
which the Administrative Agent shall reasonably select, whether at such
Grantor's premises or elsewhere. The Administrative Agent shall apply the
proceeds of any such collection, recovery, receipt, appropriation, realization
or sale (net of all expenses incurred by the Administrative Agent in connection
therewith, including attorney's fees and expenses), to the Obligations in the
order set forth in this Agreement, such Grantor remaining liable for any
deficiency remaining unpaid after such application, and only after so paying
over such net proceeds and after the payment by the Administrative Agent of any
other amount required by any provision of law need the Administrative Agent
account for the surplus, if any, to such Grantor. To the maximum extent
permitted by applicable law, each Grantor waives all claims, damages and demands
against the Administrative Agent and the Lenders arising out of the
repossession, retention or sale of the Collateral except such as arise out of
the gross negligence or willful misconduct of the Administrative Agent. Each
Grantor agrees that the Administrative Agent need not give more than seven days'
notice to the Borrower (which notification shall be deemed given when mailed or
delivered on an overnight basis, postage prepaid, addressed to the Borrower at
its address referred to in Section 13.8) of the time and place of any public
sale or of the time after which a private sale may take place and that such
notice is reasonable notification of such matters. The

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Grantors shall remain liable for any deficiency if the proceeds of any sale or
disposition of the Collateral are insufficient to pay all amounts to which the
Administrative Agent is entitled, the Grantors also being liable for the fees
and expenses of any attorneys employed by the Administrative Agent to collect
such deficiency.

                  (b) Each Grantor hereby waives presentment, demand, protest or
any notice (to the maximum extent permitted by applicable law) of any kind in
connection with this Agreement or any Collateral.

                  (c) Pledged Collateral.

                      (i) Upon the occurrence and during the continuance of an
Event of Default, if the Administrative Agent shall give notice of its intent to
exercise such rights to the relevant Grantor or Grantors, (i) the Administrative
Agent shall have the right to receive any and all cash dividends, payments or
other Proceeds paid in respect of the Pledged Collateral and make application
thereof to the Obligations in the order set forth herein and (ii) the
Administrative Agent or its nominee may exercise (A) all voting, consent,
corporate and other rights pertaining to the Pledged Collateral at any meeting
of shareholders, partners or members, as the case may be, of the relevant issuer
or issuers of Pledged Collateral or otherwise and (B) any and all rights of
conversion, exchange and subscription and any other rights, privileges or
options pertaining to the Pledged Collateral as if it were the absolute owner
thereof (including the right to exchange at its discretion any and all of the
Pledged Collateral upon the merger, consolidation, reorganization,
recapitalization or other fundamental change in the corporate structure of any
issuer of Pledged Securities, the right to deposit and deliver any and all of
the Pledged Collateral with any committee, depositary, transfer agent, registrar
or other designated agency upon such terms and conditions as the Administrative
Agent may determine), all without liability except to account for property
actually received by it, but the Administrative Agent shall have no duty to any
Grantor to exercise any such right, privilege or option and shall not be
responsible for any failure to do so or delay in so doing.

                      (ii) In order to permit the Administrative Agent to
exercise the voting and other consensual rights which it may be entitled to
exercise pursuant hereto and to receive all dividends and other distributions
which it may be entitled to receive hereunder, (i) each Grantor shall promptly
execute and deliver (or cause to be executed and delivered) to the
Administrative Agent all such proxies, dividend payment orders and other
instruments as the Administrative Agent may from time to time reasonably request
and (ii) without limiting the effect of clause (i) above, such Grantor hereby
grants to the Administrative Agent an irrevocable proxy to vote all or any part
of the Pledged Collateral and to exercise all other rights, powers, privileges
and remedies to which a holder of the Pledged Collateral would be entitled
(including giving or withholding written consents of shareholders, partners or
members, as the case may be, calling special meetings of shareholders, partners
or members, as the case may be, and voting at such meetings), which proxy shall
be effective, automatically and without the necessity of any action (including
any transfer of any Pledged Collateral on the record books of the issuer
thereof) by any other person (including the issuer of such Pledged Collateral or
any officer or agent thereof) during the continuance of an Event of Default and
which proxy shall only terminate upon the payment in full of the Secured
Obligations.

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                      (iii) Each Grantor hereby expressly authorizes and
instructs each issuer of any Pledged Collateral pledged hereunder by such
Grantor to (x) comply with any instruction received by it from the
Administrative Agent in writing that (A) states that an Event of Default has
occurred and is continuing and (B) is otherwise in accordance with the terms of
this Agreement, without any other or further instructions from such Grantor, and
each Grantor agrees that such issuer shall be fully protected in so complying
and (y) unless otherwise expressly permitted hereby, pay any dividends or other
payments with respect to the Pledged Collateral directly to the Administrative
Agent.

                  Section 11.8. The Administrative Agent's Appointment as
Attorney-in-Fact.

                  (a) Each Grantor hereby irrevocably constitutes and appoints
the Administrative Agent and any officer or agent (including the Sub-Agent
solely with respect to the Primed Pledged Shares so long as they are held by the
Sub-Agent) thereof, with full power of substitution, as its and its Subsidiaries
true and lawful attorney-in-fact with full irrevocable power and authority in
the place and stead of such Grantor and in the name of such Grantor, or in its
own name, from time to time in the Administrative Agent's discretion, for the
purpose of carrying out the terms of this Agreement, to take any and all
appropriate action and to execute and deliver any and all documents and
instruments which may be necessary and desirable to accomplish the purposes of
this Agreement and the transactions contemplated hereby, and, without limiting
the generality of the foregoing, hereby give the Administrative Agent the power
and right, on behalf of such Grantor, without notice to or assent by such
Grantor to do the following:

                      (i) to ask, demand, collect, receive and give acquittances
and receipts for any and all moneys due and to become due under any Collateral
and, in the name of such Grantor, its own name or otherwise, to take possession
of and endorse and collect any checks, drafts, notes, acceptances or other
Instruments for the payment of moneys due under any Collateral and to file any
claim or to take any other action or proceeding in any court of law or equity or
otherwise deemed appropriate by the Administrative Agent for the purpose of
collecting any and all such moneys due under any Collateral whenever payable and
to file any claim or to take any other action or proceeding in any court of law
or equity or otherwise deemed appropriate by the Administrative Agent for the
purpose of collecting any and all such moneys due under any Collateral whenever
payable;

                      (ii) to pay or discharge taxes, liens, security interests
or other encumbrances levied or placed on or threatened against the Collateral,
to effect any repairs or any insurance called for by the terms of this Agreement
and to pay all or any part of the premiums therefor and the costs thereof; and

                      (iii) (A) to direct any party liable for any payment under
any of the Collateral to make payment of any and all moneys due, and to become
due thereunder, directly to the Administrative Agent or as the Administrative
Agent shall direct; (B) to receive payment of and receipt for any and all
moneys, claims and other amounts due, and to become due at any time, in respect
of or arising out of any Collateral; (C) to sign and indorse any invoices,
freight or express bills, bills of lading, storage or warehouse receipts, drafts
against debtors, assignments, verifications and notices in connection with
accounts and other documents constituting or

                                       90


relating to the Collateral; (D) to commence and prosecute any suits, actions or
proceedings at law or equity in any court of competent jurisdiction to collect
the Collateral or any part thereof and to enforce any other right in respect of
any Collateral; (E) to defend any suit, action or proceeding brought against any
Grantor with respect to any Collateral of such Grantor; (F) to settle,
compromise or adjust any suit, action or proceeding described above and, in
connection therewith, to give such discharges or releases as the Administrative
Agent may deem appropriate; (G) to license or, to the extent permitted by an
applicable license, sublicense, whether general, special or otherwise, and
whether on an exclusive or non-exclusive basis, any trademarks, throughout the
world for such term or terms, on such conditions, and in such manner, as the
Administrative Agent shall in its sole discretion determine; and (H) generally
to sell, transfer, pledge, make any agreement with respect to or otherwise deal
with any of the Collateral as fully and completely as though the Administrative
Agent were the absolute owner thereof for all purposes, and to do, at the
Administrative Agent's option and such Grantor's expense, at any time, or from
time to time, all acts and things which the Administrative Agent reasonably
deems necessary to protect, preserve or realize upon the Collateral and the
Administrative Agent's Lien therein, in order to effect the intent of this
Agreement, all as fully and effectively as such Grantor might do.

                  (b) The Administrative Agent agrees that it will forbear from
exercising the power of attorney or any rights granted to the Administrative
Agent pursuant to this Section 11.8, except upon the occurrence or during the
continuation of an Event of Default. The Grantors hereby ratify, to the extent
permitted by law, all that said attorneys shall lawfully do or cause to be done
by virtue hereof. Exercise by the Administrative Agent of the powers granted
hereunder is not a violation of the automatic stay provided by section 362 of
the Bankruptcy Code and each Grantor waives applicability thereof. The power of
attorney granted pursuant to this Section 11.8 is a power coupled with an
interest and shall be irrevocable until the Obligations are indefeasibly paid in
full.

                  (c) The powers conferred on the Administrative Agent hereunder
are solely to protect the Administrative Agent's and the Lenders' interests in
the Collateral and shall not impose any duty upon it to exercise any such
powers. The Administrative Agent shall be accountable only for amounts that it
actually receives as a result of the exercise of such powers and neither it nor
any of its officers, directors, employees or agents shall be responsible to any
Grantor for any act or failure to act, except for its own gross negligence or
willful misconduct.

                  (d) Each Grantor also authorizes the Administrative Agent, at
any time and from time to time upon the occurrence and during the continuation
of any Event of Default or as otherwise expressly permitted by this Agreement,
(i) to communicate in its own name or the name of its Subsidiaries with any
party to any Contract with regard to the assignment of the right, title and
interest of such Grantor in and under the Contracts hereunder and other matters
relating thereto and (ii) to execute any endorsements, assignments or other
instruments of conveyance or transfer with respect to the Collateral.

                  (e) All Obligations shall constitute, in accordance with
section 364(c)(1) of the Bankruptcy Code, claims against each Grantor in its
Case which are administrative expense claims having priority over any all
administrative expenses of the kind specified in sections 503(b) or 507(b) of
the Bankruptcy Code, subject only to the Carve Out.

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                  Section 11.9. Modifications.

                  (a) The Liens, Lien priority, administrative priorities and
other rights and remedies granted to the Administrative Agent for the benefit of
the Lenders pursuant to this Agreement, the Interim Order and/or the Final Order
(specifically, including the existence, perfection and priority of the Liens
provided herein and therein and the administrative priority provided herein and
therein) shall not be modified, altered or impaired in any manner by any other
financing or extension of credit or incurrence of Indebtedness by any of the
Grantors (pursuant to section 364 of the Bankruptcy Code or otherwise), or by
any dismissal or conversion of any of the Cases, or by any other act or omission
whatsoever. Without limitation, notwithstanding any such order, financing,
extension, incurrence, dismissal, conversion, act or omission:

                      (i) except for the Carve-Out having priority over the
Obligations, no costs or expenses of administration which have been or may be
incurred in any of the Cases or any conversion of the same or in any other
proceedings related thereto, and no priority claims, are or will be prior to or
on a parity with any claim of the Administrative Agent or the Lenders against
the Grantors in respect of any Obligation; (ii) the Liens and security interests
granted herein shall constitute valid and perfected first priority Liens and
security interests (subject and subordinate only to the Superior Liens) and
shall be prior to all other liens and security interests, now existing or
hereafter arising, in favor of any other creditor or any other Person
whatsoever; and

                      (iii) the Liens and security interests granted hereunder
shall continue valid and perfected without the necessity that financing
statements be filed or that any other action be taken under applicable
non-bankruptcy law.

                  (b) Notwithstanding any failure on the part of any Grantor or
the Administrative Agent or the Lenders to perfect, maintain, protect or enforce
the Liens and security interests in the Collateral granted hereunder, the
Interim Order and the Final Order (when entered) shall automatically, and
without further action by any Person, perfect such Liens and security interests
against the Collateral.

                  Section 11.10. Control of Actions to Enforce Liens ; Release
of Collateral Sold under Asset Purchase Agreement. All action with respect to
the disposition of Collateral shall be taken by the Administrative Agent or the
Sub-Agent at the direction of the Revolving Credit Lenders so long as any
Revolving Credit Loans are outstanding and thereafter at the direction of the
Term Loan Lenders. In the event of a sale of Collateral under the Asset Purchase
Agreement, the Lenders consent to the release of the Collateral sold pursuant
thereto, it being understood the proceeds from such sale shall be applied as set
forth in Section 2.8.

                                  ARTICLE XII

                            The Administrative Agent

                  Section 12.1. Authorization and Action.

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                  (a) Each Lender hereby appoints FPS as the Administrative
Agent hereunder and each Lender authorizes the Administrative Agent to take such
action as agent on its behalf and to exercise such powers under this Agreement
and the other Loan Documents as are delegated to the Administrative Agent under
such Loan Documents and to exercise such powers as are reasonably incidental
thereto. Without limiting the foregoing, each Lender hereby authorizes the
Administrative Agent to execute and deliver, and to perform its obligations
under, each of the Loan Documents to which the Administrative Agent is a party
and to exercise all rights, powers and remedies that the Administrative Agent
may have under such Loan Documents and that under such Loan Documents the
Administrative Agent is acting as agent for the other Secured Parties.

                  (b) As to any matters not expressly provided for by this
Agreement and the other Loan Documents (including enforcement or collection),
the Administrative Agent shall not be required to exercise any discretion or
take any action, but shall be required to act or to refrain from acting (and
shall be fully protected in so acting or refraining from acting) upon the
instructions of the Requisite Lenders, and such instructions shall be binding
upon all Lenders; provided, however, that the Administrative Agent shall not be
required to take any action which (i) the Administrative Agent in good faith
believes exposes it to personal liability unless the Administrative Agent
receives an indemnification satisfactory to it from the Lenders with respect to
such action or (ii) is contrary to this Agreement or applicable law. The
Administrative Agent agrees to give to each Lender prompt notice of each notice
given to it by any Loan Party pursuant to the terms of this Agreement or the
other Loan Documents.

                  (c) In performing its functions and duties hereunder and under
the other Loan Documents, the Administrative Agent is acting solely on behalf of
the Lenders and its duties are entirely administrative in nature. The
Administrative Agent does not assume and shall not be deemed to have assumed any
obligation other than as expressly set forth herein and in the other Loan
Documents or any other relationship as the Administrative Agent, fiduciary or
trustee of or for any Lender or any other holder of Obligations. The
Administrative Agent may perform any of its duties under any of the Loan
Documents by or through its agents or employees.

                  Section 12.2. Administrative Agent's Reliance, Etc. Neither
the Administrative Agent nor any of its Affiliates or any of the respective
directors, officers, agents or employees of the Administrative Agent or any such
Affiliate shall be liable for any action taken or omitted to be taken by it,
him, her or them under or in connection with this Agreement or the other Loan
Documents, except for its, his, her or their own gross negligence or willful
misconduct. Without limiting the foregoing, the Administrative Agent (a) may
treat the payee of any Note as its holder until such Note has been assigned in
accordance with Section 13.2; (b) may rely on the Register to the extent set
forth in Section 13.2(c); (c) may consult with legal counsel (including counsel
to the Borrower or any other Loan Party), independent public accountants and
other experts selected by it and shall not be liable for any action taken or
omitted to be taken in good faith by it in accordance with the advice of such
counsel, accountants or experts; (d) makes no warranty or representation to any
Lender and shall not be responsible to any Lender for any statements, warranties
or representations made by or on behalf of the Parent Guarantor, the Borrower or
any of its Subsidiaries in or in connection with this Agreement or any of the
other Loan Documents; (e) shall not have any duty to ascertain or to inquire
either as to the performance or observance of any of the terms, covenants or
conditions of this Agreement

                                       93


or any of the other Loan Documents or the financial condition of any Loan Party,
or the existence or possible existence of any Default or Event of Default; (f)
shall not be responsible to any Lender for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement or
any of the other Loan Documents or any other instrument or document furnished
pursuant hereto or thereto; and (g) shall incur no liability under or in respect
of this Agreement or any of the other Loan Documents by acting upon any notice,
consent, certificate or other instrument or writing (which may be by telecopy)
or any telephone message believed by it to be genuine and signed or sent by the
proper party or parties.

                  Section 12.3. The Administrative Agent Individually. With
respect to its Ratable Portion, the FPS as Administrative Agent shall have and
may exercise the same rights and powers hereunder and is subject to the same
obligations and liabilities as and to the extent set forth herein for any other
Lender. The terms "Lenders" or "Requisite Lenders" or any similar terms shall,
unless the context clearly otherwise indicates, include the Administrative Agent
in its individual capacity as a Lender and as one of the Requisite Lenders. FPS
and its Affiliates may accept deposits from, lend money to, and generally engage
in any kind of banking, trust or other business with any Loan Party as if it
were not acting as the Administrative Agent.

                  Section 12.4. Lender Credit Decision. Each Lender acknowledges
that it shall, independently and without reliance upon the Administrative Agent
or any Lender conduct its own independent investigation of the financial
condition and affairs of the Borrower and each other Loan Party in connection
with the making and continuance of the Loans. Each Lender acknowledges that it
will, independently and without reliance upon the Administrative Agent or any
Lender and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under this Agreement or any of the other Loan Documents.

                  Section 12.5. Indemnification. Each Lender agrees to indemnify
the Administrative Agent, each of its Affiliates and each of their respective
directors, officers, employees, agents and advisors (to the extent not
reimbursed by the Borrower), from and against such Lender's aggregate Ratable
Portion of any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses and disbursements (including fees and
disbursements of legal counsel) of any kind or nature whatsoever which may be
imposed on, incurred by, or asserted against, the Administrative Agent, or any
of its Affiliates, directors, officers, employees, agents and advisors in any
way relating to or arising out of this Agreement or the other Loan Documents or
any action taken or omitted by the Administrative Agent under this Agreement or
the other Loan Documents; provided, however, that no Lender shall be liable for
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from the
Administrative Agent's or such Affiliate's director's, officer's, employee's,
agent's or advisor's gross negligence or willful misconduct. Without limiting
the foregoing, each Lender agrees to reimburse the Administrative Agent promptly
upon demand for its ratable share of any out-of-pocket expenses (including fees
and disbursements of legal counsel) incurred by the Administrative Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of its rights or
responsibilities under, this Agreement or the other Loan Documents, to the
extent that

                                       94


the Administrative Agent is not reimbursed for such expenses by the Borrower or
another Loan Party.

                  Section 12.6. Successor Administrative Agent. The
Administrative Agent may resign at any time by giving written notice thereof to
the Lenders and the Borrower. Upon any such resignation, the Requisite Lenders
shall have the right to appoint a successor administrative agent. If no
successor administrative agent shall have been so appointed by the Requisite
Lenders, and shall have accepted such appointment, within 30 days after the
retiring administrative agent's giving of notice of resignation, then the
retiring administrative agent may, on behalf of the Lenders, appoint a successor
administrative agent, selected from among the Lenders. Upon the acceptance of
any appointment as administrative agent by a successor administrative agent,
such successor administrative agent shall succeed to and become vested with all
the rights, powers, privileges and duties of the retiring administrative agent,
and the retiring administrative agent shall be discharged from its duties and
obligations under this Agreement and the other Loan Documents. Prior to any
retiring administrative agent's resignation hereunder as administrative agent,
the retiring administrative agent shall take such action as may be reasonably
necessary to assign to the successor administrative agent its rights as
administrative agent under the Loan Documents. After such resignation, the
retiring administrative agent shall continue to have the benefit of this Article
XII as to any actions taken or omitted to be taken by it while it was
administrative agent under this Agreement and the other Loan Documents.

                  Section 12.7. U.S. Bank as Sub-Agent. The Lenders hereby
appoint U.S. Bank as Sub-Agent (the "Sub-Agent") for the purpose of holding the
certificates evidencing the shares of the Primed Pledged Shares as Collateral
for the Obligations. The Sub-Agent shall take such action with respect to the
Primed Pledged Shares as may be requested from time to time by the
Administrative Agent. The Sub-Agent shall be entitled to the protections of this
Article XII, mutatis mutandis.

                                  ARTICLE XIII

                                  Miscellaneous

                  Section 13.1. Amendments, Waivers, Etc.

                  (a) No amendment or waiver of any provision of this Agreement
or any other Loan Document nor consent to any departure by any Loan Party
therefrom shall in any event be effective unless the same shall be in writing
and signed by the Requisite Lenders, and then any such waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which given; provided, however, that no amendment, waiver or consent shall,
unless in writing and signed by each Lender, in addition to the Requisite
Lenders, do any of the following:

                      (i) increase the Commitments of the Lenders or subject the
Lenders to any additional obligations;

                                       95


                      (ii) extend the scheduled final maturity of any Loan, or
waive, reduce or postpone any scheduled date fixed for the payment or reduction
of principal or of the Commitments;

                      (iii) reduce the principal amount of any Loan (other than
by the payment or prepayment thereof);

                      (iv) reduce the rate of interest on any Loan;

                      (v) postpone any scheduled date fixed for payment of such
interest or fees;

                      (vi) change the aggregate Ratable Portions of the Lenders
which shall be required for the Lenders or any of them to take any action
hereunder;

                      (vii) release any of the Pledged Mill Creek Securities or
substantially all of the Collateral except as provided in Section 8.4(b) or
release any Guarantor from its obligations under the Guaranty except in
connection with sale or other disposition permitted by this Agreement (or
permitted pursuant to a waiver or consent of a transaction otherwise prohibited
by this Agreement); or

                      (viii) amend this Section 13.1 or the definition of the
terms "Requisite Lenders" or "Ratable Portion";

                      (ix) amend or waive Section 2.8(a), Section 3.1(a),
Section 3.1(b), Section 3.1(c) or Section 9.1(f)

and provided further, (A) that any modification of the application of payments
to the Loans pursuant to Section 2.8 or the reduction of the Credit Commitments
pursuant to Section 2.4(b) shall require the consent of the Requisite Lenders
and (B) that no amendment, waiver or consent shall, unless in writing and signed
by the Administrative Agent and the Sub-Agent in addition to the Lenders
required above to take such action, affect the rights or duties of the
Administrative Agent or the Sub-Agent under this Agreement or the other Loan
Documents or the provisions of Article XII, Section 13.3 or Section 13.4.

                  (b) The Administrative Agent may, but shall have no obligation
to, with the written concurrence of any Lender, execute amendments,
modifications, waivers or consents on behalf of that Lender. Any waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which it was given. No notice to or demand on the Borrower in any
case shall entitle the Borrower to any other or further notice or demand in
similar or other circumstances.

                  (c) In connection with any proposed amendment, modification,
waiver or termination (a "Proposed Change") requiring the consent of all
affected Lenders, the consent of Requisite Lenders is obtained, but the consent
of other Lenders whose consent is required is not obtained (any such Lender
whose consent is not obtained as described in this Section 13.1 being referred
to as a "Non-Consenting Lender"), then, so long as the Lender that is acting as
the Administrative Agent is not a Non-Consenting Lender, at the Borrower's
request, the

                                       96


Administrative Agent or an Eligible Assignee that is acceptable to the
Administrative Agent shall have the right with the consent of the Requisite
Lenders and in the Requisite Lenders' sole discretion (but shall have no
obligation) to purchase from such Non-Consenting Lender, and such Non-Consenting
Lender hereby agrees that it shall, upon the Administrative Agent's request,
sell and assign to the Lender that is acting as the Administrative Agent or such
Eligible Assignee, all of the Commitments and Outstandings of such
Non-Consenting Lender for an amount equal to the principal balance of all Loans
held by the Non-Consenting Lender and all accrued interest and fees with respect
thereto through the date of sale, such purchase and sale to be consummated
pursuant to an executed Assignment and Acceptance.

                  (d) The Borrower and Guarantors shall enter into such
amendments to this Agreement as may be reasonably requested by the
Administrative Agent with respect to funding mechanics, loan administration
provisions and other provisions (including defnitions of "Base Rate",
"Eurodollar Base Rate" and other terms included in determining the interest
rates under this Agreement) included in Article II to this Agreement with
respect to Revolving Credit Loans to reflect the internal procedures and
policies of the Administrative Agent and its members.

                  Section 13.2. Assignments and Participations.

                  (a) Each Lender may sell, transfer, negotiate or assign to one
or more Eligible Assignees all or a portion of its rights and obligations
hereunder (including all of its rights and obligations with respect to the
Loans); provided, however, that (i) if any such assignment shall be of the
assigning Lender's Outstandings and Credit Commitment, such assignment shall
cover the same percentage of such Lender's Outstandings and Credit Commitment,
and (ii) the aggregate amount being assigned pursuant to each such assignment
(determined as of the date of the Assignment and Acceptance with respect to such
assignment) shall in no event (if less than the Assignor's entire interest) be
less than $1,000,000 or an integral multiple of $1,000,000 in excess thereof,
except, in either case, (A) with the consent of the Administrative Agent or (B)
if such assignment is being made to a Lender or an Affiliate or Approved Fund of
such Lender.

                  (b) The parties to each assignment shall execute and deliver
to the Administrative Agent, for its acceptance and recording, an Assignment and
Acceptance, together with any Note (if the assigning Lender's Loans are
evidenced by a Note) subject to such assignment. Upon such execution, delivery,
acceptance and recording from and after the effective date specified in such
Assignment and Acceptance, (i) the assignee thereunder shall become a party
hereto and, to the extent that rights and obligations under the Loan Documents
have been assigned to such assignee pursuant to such Assignment and Acceptance,
have the rights and obligations of a Lender hereunder and thereunder and (ii)
the assignor thereunder shall, to the extent that rights and obligations under
this Agreement have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights (except those which survive the payment in
full of the Obligations) and be released from its obligations under the Loan
Documents, other than those relating to events or circumstances occurring prior
to such assignment (and, in the case of an Assignment and Acceptance covering
all or the remaining portion of an assigning Lender's rights and obligations
under the Loan Documents, such Lender shall cease to be a party hereto).

                                       97


                  (c) The Borrower authorizes the Administrative Agent, and the
Administrative Agent agrees, to maintain at its address referred to in Section
13.8 a copy of each Assignment and Acceptance delivered to and accepted by it
and a register for the recording of the names and addresses of the Lenders and
the Commitments of and principal amount of the Loans (the "Registered Loans")
owing to each Lender from time to time (the "Register"). The entries in the
Register shall be conclusive and binding for all purposes, absent manifest
error, and the Loan Parties, the Administrative Agent and the Lenders may treat
each Person whose name is recorded in the Register as a Lender for all purposes
of this Agreement. The Register shall be available for inspection by the
Borrower, the Administrative Agent or any Lender at any reasonable time and from
time to time upon reasonable prior notice.

                  (d) Upon its receipt of an Assignment and Acceptance executed
by an assigning Lender and an assignee, the Administrative Agent shall, if such
Assignment and Acceptance has been completed, (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in the Register and
(iii) give prompt notice thereof to the Borrower. Within five Business Days
after its receipt of such notice, the Borrower, at its own expense, shall, if
requested by such assignee, execute and deliver to the Administrative Agent, new
Notes to the order of such assignee in an amount equal to the Commitments
assumed by it pursuant to such Assignment and Acceptance and, if the assigning
Lender has surrendered any Note for exchange in connection with the assignment
and has retained Commitments hereunder, new Notes to the order of the assigning
Lender in an amount equal to the Commitments retained by it hereunder. Such new
Notes shall be dated the same date as the surrendered Notes and be in
substantially the form of Exhibit B-1 or B-2 hereto, as applicable.

                  (e) A Registered Loan (and the Registered Note, if any,
evidencing the same) may be assigned or sold in whole or in part only by
registration of such assignment or sale on the Register (and each Registered
Note shall expressly so provide). Any assignment or sale of all or part of such
Registered Loan (and the Registered Note, if any, evidencing the same) may be
effected only by registration of such assignment or sale on the Register,
together with the surrender of the Registered Note, if any, evidencing the same
duly endorsed by (or accompanied by a written instrument of assignment or sale
duly executed by) the holder of such Registered Note, whereupon, at the request
of the designated assignee(s) or transferee(s), one or more new Registered Notes
in the same aggregate principal amount shall be issued to the designated
assignee(s) or transferee(s). Prior to the registration of assignment or sale of
any Registered Loan (and the Registered Note, if any, evidencing the same), the
Agents shall treat the Person in whose name such Registered Loan (and the
Registered note, if any, evidencing the same) is Registered as the owner thereof
for the purpose of receiving all payments thereon and for all other purposes,
notwithstanding notice to the contrary.

                  (f) In the event that any Lender sells participations in a
Registered Loan, such Lender shall maintain a register on which it enters the
name of all participants in the Registered Loans held by it (the "Participant
Register"). A Registered Loan (and the Registered Note, if any, evidencing the
same) may be participated in whole or in part only by registration of such
participation on the Participant Register (and each Registered Note shall
expressly so provide). Any participation of such Registered Loan (and the
Registered Note, if any, evidencing the same) may be effected only by the
registration of such participation on the Participant Register.

                                       98


                  (g) Any foreign Person who purchases or is assigned or
participates in any portion of such Registered Loan shall provide the
Administrative Agent and the Lender with a completed Internal Revenue Service
Form W-8BEN (Certificate of Foreign Status) or a substantially similar form for
such purchaser, participant or any other Affiliate who is a holder of beneficial
interests in the Registered Loan.

                  (h) In addition to the other assignment rights provided in
this Section 13.2, each Lender may assign, as collateral or otherwise, any of
its rights under this Agreement (including rights to payments of principal or
interest on the Loans) to (i) any Federal Reserve Bank pursuant to Regulation A
of the Federal Reserve Board without notice to or consent of the Borrower or the
Administrative Agent and (ii) any trustee or agent for the benefit of the
holders of such Lender's Stock or other securities; provided, however, that no
such assignment shall release the assigning Lender from any of its obligations
hereunder.

                  (i) Each Lender may sell participations to one or more Persons
in or to all or a portion of its rights and obligations under the Loan Documents
(including all its rights and obligations with respect to the Loans). The terms
of such participation shall not, in any event, require the participant's consent
to any amendments, waivers or other modifications of any provision of any Loan
Documents, the consent to any departure by any Loan Party therefrom, or to the
exercising or refraining from exercising any powers or rights which such Lender
may have under or in respect of the Loan Documents (including the right to
enforce the obligations of the Loan Parties), except if any such amendment,
waiver or other modification or consent would (i) reduce the amount, or postpone
any date fixed for, any amount (whether of principal, interest or fees) payable
to such participant under the Loan Documents, to which such participant would
otherwise be entitled under such participation or (ii) result in the release of
all or substantially all of the Collateral other than in accordance with Section
8.4(b). In the event of the sale of any participation by any Lender, (A) such
Lender's obligations under the Loan Documents shall remain unchanged, (B) such
Lender shall remain solely responsible to the other parties for the performance
of its obligations, (C) such Lender shall remain the holder of its Obligations
for all purposes of this Agreement and (D) the Borrower, the Administrative
Agent and the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement. Each participant shall be entitled to the benefits of Sections 2.12,
2.13 and 2.16(d) as if it were a Lender; provided, however, that anything herein
to the contrary notwithstanding, the Borrower shall not, at any time, be
obligated to pay to any participant of any interest of any Lender, under Section
2.11, 2.12 or 2.16(d), any sum in excess of the sum which the Borrower would
have been obligated to pay to such Lender in respect of such interest had such
participation not been sold.

                  Section 13.3. Costs and Expenses.

                  (a) The Borrower agrees upon demand to pay or reimburse the
Administrative Agent and each Lender for all of the their respective reasonable
internal and external audit, legal, appraisal, valuation, filing, document
duplication and reproduction and investigation expenses and for all other
reasonable out-of-pocket costs and expenses of every type and nature (including
the reasonable fees, expenses and disbursements of the Administrative Agent's
counsel, Willkie Farr & Gallagher, local and other legal counsel, auditors,
accountants, appraisers, printers, insurance and environmental advisers, and
other consultants and agents) incurred by the

                                       99


Administrative Agent in connection with (i) the Administrative Agent's audit and
investigation of the Parent Guarantor and the Borrower and its Subsidiaries in
connection with the preparation, negotiation and execution of the Loan Documents
and the Administrative Agent's periodic audits of the Parent Guarantor, the
Borrower and its Subsidiaries, as the case may be; (ii) the preparation,
negotiation, execution and interpretation of this Agreement (including the
satisfaction or attempted satisfaction of any of the conditions set forth in
Article III), the Loan Documents and any proposal letter or commitment letter
issued in connection therewith and the making of the Loans hereunder; (iii) the
creation, perfection or protection of the Liens under the Loan Documents
(including any reasonable fees and expenses for local counsel in various
jurisdictions); (iv) the ongoing administration of this Agreement, the other
Loan Documents and the Loans, including consultation with attorneys in
connection therewith and with respect to the Administrative Agent's rights and
responsibilities hereunder and under the other Loan Documents; (v) the
protection, collection or enforcement of any of the Obligations or the
enforcement of any of the Loan Documents; (vi) the commencement, defense or
intervention in any court proceeding relating in any way to the Obligations, any
Loan Party, any Subsidiary of any Loan Party, this Agreement or any of the other
Loan Documents; (vii) the response to, and preparation for, any subpoena or
request for document production with which the Administrative Agent is served or
deposition or other proceeding in which the Administrative Agent is called to
testify, in each case, relating in any way to the Obligations, any Loan Party,
any Subsidiary of any Loan Party, this Agreement or any of the other Loan
Documents; and (viii) any amendments, consents, waivers, assignments,
restatements, or supplements to any of the Loan Documents and the preparation,
negotiation, and execution thereof.

                  (b) The Borrower further agrees to pay or reimburse the
Administrative Agent and each Lender upon demand for all out-of-pocket costs and
expenses, including reasonable attorneys' fees (including allocated costs of
internal counsel and costs of settlement), incurred by the Administrative Agent
or such Lender (i) in enforcing any Loan Document or Obligation or any security
therefor or exercising or enforcing any other right or remedy available by
reason of an Event of Default; (ii) in connection with any refinancing or
restructuring of the credit arrangements provided hereunder in the nature of a
"work-out" or in any insolvency or bankruptcy proceeding; (iii) in commencing,
defending or intervening in any litigation or in filing a petition, complaint,
answer, motion or other pleadings in any legal proceeding relating to the
Obligations, any Loan Party or any Subsidiary of any Loan Party and related to
or arising out of the transactions contemplated hereby or by any of the other
Loan Documents; and (iv) in taking any other action in or with respect to any
suit or proceeding (bankruptcy or otherwise) described in clauses (i) through
(iii) above.

                  (c) CFCC agrees to pay or reimburse the Administrative Agent
upon demand for all expenses and indemnification payments of the costs and
expenses and Indemnified Matters referred to in Section 13.3 and Section 13.4 to
the extent incurred by or relating to CFCC.

                  Section 13.4. Indemnities.

                  (a) The Borrower agrees to indemnify and hold harmless the
Administrative Agent, each Lender and each of their respective Affiliates, and
each of the directors, officers, employees, agents, representative, attorneys,
consultants and advisors of or to any of the

                                      100


foregoing (including those retained in connection with the satisfaction or
attempted satisfaction of any of the conditions set forth in Article III) (each
such Person being an "Indemnitee") from and against any and all claims, damages,
liabilities, obligations, losses, penalties, actions, judgments, suits, costs,
disbursements and expenses of any kind or nature (including fees and
disbursements of counsel to any such Indemnitee) which may be imposed on,
incurred by or asserted against any such Indemnitee in connection with or
arising out of any investigation, litigation or proceeding, whether or not any
such Indemnitee is a party thereto, whether direct, indirect, or consequential
and whether based on any federal, state or local law or other statutory
regulation, securities or commercial law or regulation, or under common law or
in equity, or on contract, tort or otherwise, in any manner relating to or
arising out of this Agreement, any other Loan Document, any Obligation, any
Disclosure Document or any act, event or transaction related or attendant to any
thereof, or the use or intended use of the proceeds of the Loans or in
connection with any investigation of any potential matter covered hereby
(collectively, the "Indemnified Matters"); provided, however, that the Borrower
shall not have any obligation under this Section 13.4 to an Indemnitee with
respect to any Indemnified Matter caused by or resulting primarily from the
gross negligence or willful misconduct of that Indemnitee, as determined by a
court of competent jurisdiction in a final non-appealable judgment or order.
Without limiting the foregoing, Indemnified Matters include (i) all
Environmental Liabilities and Costs arising from or connected with the past,
present or future operations of the Parent Guarantor, the Borrower or any of its
Subsidiaries involving any property subject to a Loan Document, or damage to
real or personal property or natural resources or harm or injury alleged to have
resulted from any Release of Contaminants on, upon or into such property or any
contiguous real estate; (ii) any costs or liabilities incurred in connection
with any Remedial Action concerning the Parent Guarantor, the Borrower or any of
its Subsidiaries; (iii) any costs or liabilities incurred in connection with any
Environmental Lien; (iv) any costs or liabilities incurred in connection with
any other matter under any Environmental Law, including CERCLA and applicable
state property transfer laws, whether, with respect to any of such matters, such
Indemnitee is a mortgagee pursuant to any leasehold mortgage, a mortgagee in
possession, the successor in interest to the Parent Guarantor, the Borrower or
any of its Subsidiaries, or the owner, lessee or operator of any property of the
Parent Guarantor, the Borrower or any of its Subsidiaries by virtue of
foreclosure, except, with respect to those matters referred to in clauses (i),
(ii), (iii) and (iv) above, to the extent incurred following (A) foreclosure by
the Administrative Agent or any Lender, or the Administrative Agent, any Lender
having become the successor in interest to the Parent Guarantor, the Borrower or
any of its Subsidiaries, and (B) attributable solely to acts of the
Administrative Agent or such Lender or any agent on behalf of the Administrative
Agent or such Lender.

                  (b) The Borrower shall indemnify the Administrative Agent and
the Lenders for, and hold the Administrative Agent and the Lenders harmless from
and against, any and all claims for brokerage commissions, fees and other
compensation made against the Administrative Agent and the Lenders for any
broker, finder or consultant with respect to any agreement, arrangement or
understanding made by or on behalf of any Loan Party or any Subsidiary thereof
in connection with the transactions contemplated by this Agreement or any of the
other Loan Documents.

                  (c) The Administrative Agent and each Lender agree that in the
event that any such investigation, litigation or proceeding set forth in
paragraph (b) above is asserted or

                                      101


threatened in writing or instituted against it or any other Indemnitee, or any
Remedial Action, is requested of it or any of its officers, directors, agents
and employees, for which any Indemnitee may desire indemnity or defense
hereunder, such Indemnitee shall promptly notify the Borrower in writing.

                  (d) The Borrower, at the request of any Indemnitee, shall have
the obligation to defend against such investigation, litigation or proceeding or
requested Remedial Action and the Borrower, in any event, may participate in the
defense thereof with legal counsel of the Borrower's choice. In the event that
such Indemnitee requests the Borrower to defend against such investigation,
litigation or proceeding or requested Remedial Action, the Borrower shall
promptly do so and such Indemnitee shall have the right to have legal counsel of
its choice participate in such defense. No action taken by legal counsel chosen
by such Indemnitee in defending against any such investigation, litigation or
proceeding or requested Remedial Action, shall vitiate or in any way impair the
Borrower's obligation and duty hereunder to indemnify and hold harmless such
Indemnitee.

                  (e) The Borrower agrees that any indemnification or other
protection provided to any Indemnitee pursuant to this Agreement (including
pursuant to this Section 13.4) or any other Loan Document shall (i) survive
payment in full of the Obligations and (ii) inure to the benefit of any Person
who was at any time an Indemnitee under this Agreement or any other Loan
Document.

                  Section 13.5. Limitation of Liability. The Borrower and each
Loan Party agrees that no Indemnitee shall have any liability (whether direct or
indirect, in contract, tort or otherwise) to any Loan Party or any Subsidiary
thereof or any of their respective equity holders or creditors for or in
connection with the transactions contemplated hereby and in the other Loan
Documents, except to the extent such liability is found in a final judgment by a
court of competent jurisdiction to have resulted primarily from such
Indemnitee's gross negligence or willful misconduct. In no event, however, shall
any Indemnitee be liable on any theory of liability for any special, indirect,
consequential or punitive damages and each of the Loan Parties hereby waives,
releases and agrees (for itself and on behalf of its Subsidiaries) not to sue
upon any such claim for any such damages, whether or not accrued and whether or
not known or suspected to exist in its favor.

                  Section 13.6. Right of Set-off. Upon the occurrence and during
the continuance of any Event of Default, upon providing such notice such Persons
as may be required by the Orders (if any), each Lender and each Affiliate of a
Lender is hereby authorized at any time and from time to time, to the fullest
extent permitted by law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
Indebtedness at any time owing by such Lender or any of its Affiliates to or for
the credit or the account of the Loan Parties against any and all of the
Obligations now or hereafter existing whether or not such Lender shall have made
any demand under this Agreement or any other Loan Document and although such
Obligations may be unmatured. Each Lender agrees promptly to notify the Borrower
after any such set-off and application made by such Lender or any of its
Affiliates; provided, however, that the failure to give such notice shall not
affect the validity of such set-off and application. The rights of each Lender
under this Section 13.6 are in addition to the other

                                      102


rights and remedies (including other rights of set-off) which such Lender may
have. Nothing in this Section 13.6 shall alter the payment priorities contained
in Section 2.11.

                  Section 13.7. Sharing of Payments, Etc.

                  (a) If any Lender receives any payment (whether voluntary,
involuntary, through the exercise of any right of set-off or otherwise) of the
Loans owing to it, any interest thereon, any fees in respect thereof or any
amounts due pursuant to Section 13.3 or 13.4 (other than payments pursuant to
Section 2.12, 2.13 or 2.16 and taking into account the application of proceeds
provisions of Section 2.08 and Section 2.11) in excess of its Ratable Portion of
all payments of such Obligations obtained by all the Lenders, such Lender (a
"Purchasing Lender") shall forthwith purchase from the other Lenders (each, a
"Selling Lender") such participations in their Loans or other Obligations as
shall be necessary to cause such Purchasing Lender to share the excess payment
ratably with each of them.

                  (b) If all or any portion of any payment received by a
Purchasing Lender is thereafter recovered from such Purchasing Lender, such
purchase from each Selling Lender shall be rescinded and such Selling Lender
shall repay to the Purchasing Lender the purchase price to the extent of such
recovery together with an amount equal to such Selling Lender's ratable share
(according to the proportion of (i) the amount of such Selling Lender's required
repayment to (ii) the total amount so recovered from the Purchasing Lender) of
any interest or other amount paid or payable by the Purchasing Lender in respect
of the total amount so recovered.

                  (c) The Borrower agrees that any Purchasing Lender so
purchasing a participation from a Selling Lender pursuant to this Section 13.7
may, to the fullest extent permitted by law, exercise all its rights of payment
(including the right of set-off) with respect to such participation as fully as
if such Lender were the direct creditor of the Borrower in the amount of such
participation.

                  Section 13.8. Notices, Etc. All notices, demands, requests and
other communications provided for in this Agreement shall be given in writing,
or by any telecommunication device capable of creating a written record, and
addressed to the party to be notified as follows:

                  (a)      if to the Borrower:

                           Conseco Finance Corp.
                           345 St. Peter Street, Suite 100
                           Landmark Towers
                           St. Paul, MN  55102
                           Attention: Chief Financial Officer
                           Telecopy no:  651 293-5746

                           with a copy to:
                           Kirkland & Ellis
                           200 East Randolph Drive
                           Chicago, IL 60601

                                      103


                           Attention:       James H.M. Sprayregen, P.C.
:                          Telecopy:        (312) 861-2200

                  (b) if to any Lender, at its notice address specified opposite
its name on Schedule II or on the signature page of any applicable Assignment
and Acceptance;

                  (e)      if to the Administrative Agent:

                           As to matters relating to funding of Loans:

                           Madeleine L.L.C.
                           450 Park Avenue
                           28th Floor
                           New York, NY 10022
                           Attention:  The person specified from time to time by
                                 the Administrative Agent.
                           Telecopy: The number specified from time to time by
                                 the Administative Agent.

                           As to all other matters:

                           FPS DIP LLC
                           c/o Fortress Investment Group
                           1251 Avenue of the Americas
                           New York, New York  10020
                           Attention:  Bill Doniger, Managing Director
                           Telecopy no:  (212) 798-6070

                           with a copy to:

                           Willkie Farr & Gallagher
                           787 Seventh Avenue
                           New York, New York  10019
                           Attention:  Thomas M. Cerabino, Esq.
                           Telecopy no.  (212) 728-8111

or at such other address as shall be notified in writing (i) in the case of the
Borrower and the Administrative Agent, to the other parties and (ii) in the case
of all other parties, to the Borrower, and the Administrative Agent. All notices
given to the Borrower shall be deemed to have been given to all Guarantors. All
such notices and communications shall be effective upon personal delivery (if
delivered by hand, including any overnight courier service), when deposited in
the mails (if sent by mail), or when properly transmitted (if sent by a
telecommunications device); provided, however, that notices and communications
to the Administrative Agent pursuant to Article II or X shall not be effective
until received by the Administrative Agent.

                  Section 13.9. No Waiver; Remedies. No failure on the part of
any Lender or the Administrative Agent to exercise, and no delay in exercising,
any right hereunder shall

                                      104


operate as a waiver thereof; nor shall any single or partial exercise of any
such right preclude any other or further exercise thereof or the exercise of any
other right. The remedies herein provided are cumulative and not exclusive of
any remedies provided by law.

                  Section 13.10. Binding Effect. This Agreement shall become
effective when it shall have been executed by the Borrower and the
Administrative Agent and when the Administrative Agent shall have been notified
by each Lender that such Lender has executed it and thereafter shall be binding
upon and inure to the benefit of the Borrower, the Administrative Agent and each
Lender and their respective successors and assigns, except that the Borrower
shall not have the right to assign its rights hereunder or any interest herein
without the prior written consent of the Lenders.

                  Section 13.11. Governing Law. This Agreement and the rights
and obligations of the parties hereto shall be governed by, and construed and
interpreted in accordance with, the law of the State of New York.

                  Section 13.12. Submission to Jurisdiction; Service of Process.

                  (a) Any legal action or proceeding with respect to this
Agreement or any other Loan Document may be brought in the courts of the State
of New York or of the United States of America for the Southern District of New
York, and, by execution and delivery of this Agreement, the Borrower hereby
accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. The parties hereto
hereby irrevocably waive any objection, including any objection to the laying of
venue or based on the grounds of forum non conveniens, which any of them may now
or hereafter have to the bringing of any such action or proceeding in such
respective jurisdictions.

                  (b) The Borrower and each other Loan Party hereby irrevocably
consents to the service of any and all legal process, summons, notices and
documents in any suit, action or proceeding brought in the United States of
America arising out of or in connection with this Agreement or any of the other
Loan Documents by the mailing (by registered or certified mail, postage prepaid)
or delivering of a copy of such process to the Borrower at its address specified
in Section 13.8. The Borrower agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law.

                  (c) Nothing contained in this Section 13.12 shall affect the
right of the Administrative Agent or any Lender to serve process in any other
manner permitted by law or commence legal proceedings or otherwise proceed
against the Borrower or any other Loan Party in any other jurisdiction.

                  (d) If for the purposes of obtaining judgment in any court it
is necessary to convert a sum due hereunder in Dollars into another currency,
the parties hereto agree, to the fullest extent that they may effectively do so,
that the rate of exchange used shall be that at which in accordance with normal
banking procedures the Administrative Agent could purchase Dollars with such
other currency at the spot rate of exchange quoted by the Administrative Agent
at

                                      105


11:00 A.M. (New York City time) on the Business Day preceding that on which
final judgment is given, for the purchase of Dollars, for delivery two Business
Days thereafter.

                  Section 13.13. Waiver of Jury Trial. Each of the
Administrative Agent, the Lenders, the Secured Parties, the Borrower, CFCC, the
Guarantors and the Grantors irrevocably waives trial by jury in any action or
proceeding with respect to this Agreement or any other Loan Document.

                  Section 13.14. Marshaling; Payments Set Aside. None of the
Administrative Agent or any Lender shall be under any obligation to marshal any
assets in favor of the Borrower or any other party or against or in payment of
any or all of the Obligations. To the extent that the Borrower or CFCC makes a
payment or payments to the Administrative Agent or the Lenders or any of such
Persons receives payment from the proceeds of the Collateral or exercise their
rights of setoff, and such payment or payments or the proceeds of such
enforcement or setoff or any part thereof are subsequently invalidated, declared
to be fraudulent or preferential, set aside or required to be repaid to a
trustee, receiver or any other party, then to the extent of such recovery, the
obligation or part thereof originally intended to be satisfied, and all Liens,
right and remedies therefor, shall be revived and continued in full force and
effect as if such payment had not been made or such enforcement or setoff had
not occurred.

                  Section 13.15. Section Titles. The Article and Section titles
contained in this Agreement are and shall be without substantive meaning or
content of any kind whatsoever and are not a part of the agreement between the
parties hereto.

                  Section 13.16. Execution in Counterparts. This Agreement may
be executed in any number of counterparts and by different parties in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
Signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are attached to the same
document.

                  Section 13.17. Entire Agreement. This Agreement, together with
all of the other Loan Documents and all certificates and documents delivered
hereunder or thereunder, embodies the entire agreement of the parties and
supersedes all prior agreements and understandings relating to the subject
matter hereof. Delivery of an executed signature page of this Agreement by
facsimile transmission shall be as effective as delivery of a manually executed
counterpart hereof. A set of the copies of this Agreement signed by all parties
shall be lodged with the Borrower and the Administrative Agent.

                  Section 13.18. Treatment of Certain Information;
Confidentiality.

                  (a) The Borrower, CFCC and the other Loan Parties acknowledge
that from time to time financial advisory, investment banking and other services
may be offered or provided to the Borrower or one or more of its Subsidiaries
(in connection with this Agreement or otherwise) by any Lender, or by one or
more Subsidiaries or Affiliates of such Lender and the Borrower and each Loan
Party hereby authorizes each Lender to share any information delivered to such
Lender by the Borrower and its Subsidiaries pursuant to this Agreement, or in
connection

                                      106


with the decision of such Lender to enter into this Agreement, to any such
Subsidiary or Affiliate, it being understood that any such Subsidiary or
Affiliate receiving such information shall be bound by the provisions of clause
(b) below as if it were a Lender hereunder. Such authorization shall survive the
repayment of the Loans and the termination of the Credit Commitments.

                  (b) Each Lender and the Administrative Agent agrees (on behalf
of itself and each of its Affiliates, directors, officers, employees and
representatives) to use reasonable precautions to keep confidential, in
accordance with their customary procedures for handling confidential information
of the same nature and in accordance with safe and sound banking practices, any
non-public information supplied to it by the Borrower or any other Loan Party
pursuant to this Agreement or any of the other Loan Documents that is identified
by the Borrower or CFCC as being confidential at the time the same is delivered
to the Lenders or the Administrative Agent, provided that nothing herein shall
limit the disclosure of any such information (i) to the extent required by
statute, rule, regulation or judicial process, (ii) to counsel for any of the
Lenders or the Administrative Agent, (iii) to bank examiners or other regulatory
authorities, auditors or accountants, (iv) to the Administrative Agent or any
other Lender, (v) in connection with any litigation to which any one or more of
the Lenders or the Administrative Agent is a party, (vi) to a subsidiary or
Affiliate of such Lender as provided in clause (a) above or (vii) to any
assignee or participant (or prospective assignee or participant), and provided
further that in no event shall any Lender or the Administrative Agent be
obligated or required to return any materials furnished by the Borrower or any
other Loan Party.

                  Section 13.19. No Recourse. No past, present or future
director, officer, member, partner (including any general partner) employee,
incorporator or stockholder, as such, of the Lender or the Administrative Agent
shall have any liability for any obligations of any Lender or the Administrative
Agent under this Agreement or any other Loan Document or for any claim based on,
in respect of or by reason of such obligations or their creation. The Borrower,
CFCC and each Loan Party hereby waive and release all such liability.

                                      107







                  IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first above written.

                                         CONSECO FINANCE CORP., as Borrower


                                         By: /s/ Charles H. Cremens
                                            ------------------------------------
                                            Name:  Charles H. Cremens
                                            Title: President and CEO


                                         CIHC, INCORPORATED, as Parent Guarantor


                                         By: /s/ David K. Herzog
                                            ------------------------------------
                                            Name:  David K. Herzog
                                            Title: Secretary


                                         CONSECO FINANCE SERVICING CORP.,
                                          a Subsidiary Guarantor


                                         By: /s/ Charles H. Cremens
                                            ------------------------------------
                                            Name:  Charles H. Cremens
                                            Title: President



                                         FPS DIP LLC, as
                                          Administrative Agent and as a Lender


                                         By: /s/ William B. Doniger
                                            ------------------------------------
                                            Name:  William B. Doniger
                                            Title: Vice President



                                         U.S. BANK NATIONAL ASSOCIATION,
                                          as Lender and Sub-Agent


                                         By: /s/ Daniel J. Falstad
                                            ------------------------------------
                                            Name:  Daniel J. Falstad
                                            Title: Vice President





                                         CONSECO FINANCE CREDIT CORP.,


                                         By: /s/ Brian F. Corey
                                            ------------------------------------
                                            Name:  Brian F. Corey
                                            Title: SVP, General Counsel
                                                    and Secretary











                                TABLE OF CONTENTS
                                                                                                           
ARTICLE I Definitions, Interpretation And Accounting Terms........................................................3

         Section 1.1. Defined Terms...............................................................................3

         Section 1.2. Computation of Time Periods................................................................26

         Section 1.3. Accounting Terms and Principles............................................................26

         Section 1.4. Certain Terms..............................................................................26

ARTICLE II The Facility..........................................................................................28

         Section 2.1. The Credit Commitments; Limitations on Obligations of U.S. Bank National
                           Association...........................................................................28

         Section 2.2. Borrowing Procedures.......................................................................29

         Section 2.3. Intentionally Omitted......................................................................31

         Section 2.4. Reduction and Termination of the Credit Commitments........................................31

         Section 2.5. Repayment of Loans.........................................................................31

         Section 2.6. Evidence of Debt...........................................................................31

         Section 2.7. Optional Prepayments.......................................................................32

         Section 2.8. Mandatory Prepayments......................................................................33

         Section 2.9. Interest...................................................................................35

         Section 2.10. Fees......................................................................................35

         Section 2.11. Payments and Computations.................................................................36

         Section 2.12. Capital Adequacy..........................................................................39

         Section 2.13. Taxes.....................................................................................39

         Section 2.14. Substitution of Lenders...................................................................41

         Section 2.15. Conversion/Continuation Option............................................................42

         Section 2.16. Special Provisions Governing Eurodollar Rate Loans........................................42

ARTICLE III Conditions To Loans..................................................................................44

         Section 3.1. Conditions Precedent to Initial Loans......................................................44

         Section 3.2. Conditions Precedent to Each Loan..........................................................47

ARTICLE IV Representations and Warranties........................................................................49

         Section 4.1. Valid Existence; Compliance with Law.......................................................49

         Section 4.2. Power; Authorization; Enforceable Obligations..............................................49

         Section 4.3. Ownership of Mill Creek and the Guarantors.................................................50

         Section 4.4. Financial Statements.......................................................................51

         Section 4.5. Material Adverse Change....................................................................51





                                TABLE OF CONTENTS

                                   (continued)
                                                                                                           
         Section 4.6. Litigation.................................................................................51

         Section 4.7. Taxes......................................................................................52

         Section 4.8. Full Disclosure............................................................................52

         Section 4.9. Margin Regulations.........................................................................52

         Section 4.10. No Burdensome Restrictions; No Defaults...................................................53

         Section 4.11. Investment Company Act; Public Utility Holding Company Act................................53

         Section 4.12. Use of Proceeds...........................................................................53

         Section 4.13. Insurance.................................................................................54

         Section 4.14. Labor Matters.............................................................................54

         Section 4.15. ERISA.....................................................................................54

         Section 4.16. Environmental Matters.....................................................................55

         Section 4.17. Intellectual Property.....................................................................56

         Section 4.18. Title; Real Property......................................................................56

         Section 4.19. Secured, Super Priority Obligations.......................................................57

         Section 4.20. Deposit Accounts; Control Accounts........................................................57

         Section 4.21. Title; No Other Liens.....................................................................57

         Section 4.22. Pledged Collateral........................................................................58

         Section 4.23. Representations in Asset Purchase Agreement...............................................59

         Section 4.24. Intellectual Property.....................................................................59

ARTICLE V Matters Relating to the Sale of the Purchased Assets...................................................59

         Section 5.1. Sale of Purchased Assets...................................................................59

ARTICLE VI Reporting Covenants...................................................................................60

         Section 6.1. Financial Statements.......................................................................60

         Section 6.2. Default Notices............................................................................61

         Section 6.3. Litigation.................................................................................61

         Section 6.4. Asset Sales................................................................................62

         Section 6.5. Notices under Related Documents............................................................62

         Section 6.6. SEC Filings; Press Releases................................................................62

         Section 6.7. Labor Relations............................................................................62

         Section 6.8. Tax Returns................................................................................62

         Section 6.9. Insurance..................................................................................62



                                       ii


                                TABLE OF CONTENTS

                                   (continued)
                                                                                                           
         Section 6.10. ERISA Matters.............................................................................63

         Section 6.11. Environmental Matters.....................................................................63

         Section 6.12. Bankruptcy Court..........................................................................64

         Section 6.13. Other Information.........................................................................64

ARTICLE VII Affirmative Covenants................................................................................65

         Section 7.1. Preservation of Valid Existence, Etc.......................................................65

         Section 7.2. Compliance with Laws, Etc..................................................................65

         Section 7.3. Conduct of Business........................................................................65

         Section 7.4. Payment of Taxes, Etc......................................................................65

         Section 7.5. Maintenance of Insurance...................................................................65

         Section 7.6. Access.....................................................................................65

         Section 7.7. Keeping of Books...........................................................................66

         Section 7.8. Maintenance of Properties, Etc.............................................................66

         Section 7.9. Application of Proceeds....................................................................66

         Section 7.10. Environmental.............................................................................66

         Section 7.11. Control Accounts; Approved Deposit Accounts...............................................66

         Section 7.12. Compliance with Asset Purchase Agreement..................................................67

ARTICLE VIII Negative Covenants..................................................................................67

         Section 8.1. Indebtedness...............................................................................67

         Section 8.2. Liens, Etc.................................................................................68

         Section 8.3. Investments................................................................................68

         Section 8.4. Sale of Assets.............................................................................69

         Section 8.5. Restricted Payments........................................................................70

         Section 8.6. Restriction on Fundamental Changes.........................................................70

         Section 8.7. Change in Nature of Business...............................................................70

         Section 8.8. Transactions with Affiliates...............................................................70

         Section 8.9. Restrictions on Subsidiary Distributions; No New Negative Pledge...........................70

         Section 8.10. Modification of Constituent Documents.....................................................71

         Section 8.11. Accounting Changes; Fiscal Year...........................................................71

         Section 8.12. Margin Regulations........................................................................71

         Section 8.13. Sale/Leasebacks...........................................................................71



                                      iii


                                TABLE OF CONTENTS

                                   (continued)
                                                                                                           
         Section 8.14. No Speculative Transactions...............................................................71

         Section 8.15. Compliance with ERISA.....................................................................71

         Section 8.16. Environmental.............................................................................71

         Section 8.17. Chapter 11 Claims; Payment of Prepetition Claims..........................................71

         Section 8.18. No Modification to Bankruptcy Court Orders................................................72

         Section 8.19. Operations of CFCC........................................................................72

ARTICLE IX Events Of Default.....................................................................................72

         Section 9.1. Events of Default..........................................................................72

         Section 9.2. Remedies...................................................................................75

         Section 9.3. Intentionally Omitted......................................................................75

         Section 9.4. Rescission.................................................................................75

ARTICLE X Guaranty...............................................................................................76

         Section 10.1. The Guaranty..............................................................................76

         Section 10.2. Nature of Liability.......................................................................76

         Section 10.3. Independent Obligation....................................................................76

         Section 10.4. Authorization.............................................................................77

         Section 10.5. Reliance..................................................................................77

         Section 10.6. Subordination.............................................................................77

         Section 10.7. Waiver....................................................................................78

         Section 10.8. Limitation on Enforcement.................................................................79

ARTICLE XI Security..............................................................................................79

         Section 11.1. Security..................................................................................79

         Section 11.2. Perfection of Security Interests..........................................................81

         Section 11.3. Rights of Lenders; Limitations on Lenders' Obligations....................................82

         Section 11.4. Covenants of the Loan Parties with Respect to Collateral..................................83

         Section 11.5. Performance by Agent of the Loan Parties' Obligations.....................................87

         Section 11.6. Limitation on Administrative Agent's Duty in Respect of Collateral........................88

         Section 11.7. Remedies; Rights Upon Default.............................................................88

         Section 11.8. The Administrative Agent's Appointment as Attorney-in-Fact................................90

         Section 11.9. Modifications.............................................................................92


                                       iv


                                TABLE OF CONTENTS

                                   (continued)
                                                                                                          

         Section 11.10. Control of Actions to Enforce Liens ; Release of Collateral Sold under Asset
                           Purchase Agreement....................................................................92

ARTICLE XII The Administrative Agent.............................................................................92

         Section 12.1. Authorization and Action..................................................................92

         Section 12.2. Administrative Agent's Reliance, Etc......................................................93

         Section 12.3. The Administrative Agent Individually.....................................................94

         Section 12.4. Lender Credit Decision....................................................................94

         Section 12.5. Indemnification...........................................................................94

         Section 12.6. Successor Administrative Agent............................................................95

         Section 12.7. U.S. Bank as Sub-Agent....................................................................95

ARTICLE XIII Miscellaneous.......................................................................................95

         Section 13.1. Amendments, Waivers, Etc..................................................................95

         Section 13.2. Assignments and Participations............................................................97

         Section 13.3. Costs and Expenses........................................................................99

         Section 13.4. Indemnities..............................................................................100

         Section 13.5. Limitation of Liability..................................................................102

         Section 13.6. Right of Set-off.........................................................................102

         Section 13.7. Sharing of Payments, Etc.................................................................103

         Section 13.8. Notices, Etc.............................................................................103

         Section 13.9. No Waiver; Remedies......................................................................104

         Section 13.10. Binding Effect..........................................................................105

         Section 13.11. Governing Law...........................................................................105

         Section 13.12. Submission to Jurisdiction; Service of Process..........................................105

         Section 13.13. Waiver of Jury Trial....................................................................106

         Section 13.14. Marshaling; Payments Set Aside..........................................................106

         Section 13.15. Section Titles..........................................................................106

         Section 13.16. Execution in Counterparts...............................................................106

         Section 13.17. Entire Agreement........................................................................106

         Section 13.18. Treatment of Certain Information; Confidentiality.......................................106

         Section 13.19. No Recourse.............................................................................107



                                       v







                                TABLE OF CONTENTS

                                   (continued)

EXHIBITS


Exhibit A            -      Form of Assignment and Acceptance
Exhibit B-1          -      Form of Term Note
Exhibit B-2          -      Form of Revolving Credit Note
Exhibit C            -      Form of Notice of Borrowing
Exhibit D            -      Form of Notice of Conversion or Continuation
Exhibit E            -      Form of Interim Order
Exhibit F            -      Form of Pledge Amendment
Exhibit G            -      Form of Lehman Order

SCHEDULES

Schedule 4.2         -      Consents
Schedule 4.3         -      Ownership of Subsidiaries
Schedule 4.7         -      Taxes
Schedule 4.14        -      Labor Matters
Schedule 4.15        -      List of Plans
Schedule 4.16        -      Environmental Matters
Schedule 4.18        -      Real Property
Schedule 4.20        -      Approved Deposit Accounts and Control Accounts
Schedule 4.22        -      Pledged Collateral
Schedule 4.24        -      Material Intellectual Property
Schedule 8.1         -      Existing Indebtedness
Schedule 8.3         -      Existing Investments
Schedule 8.4         -      Permitted Asset Sales
Schedule 11.1        -      Commercial Tort Claims



                                       vi




                                   Schedule I


- --------------------------------------------------------------- --------------------- ---------------------
Lender                                                          Revolving Credit
                                                                Commitment            Term Loan Commitment

- --------------------------------------------------------------- --------------------- ---------------------
- --------------------------------------------------------------- --------------------- ---------------------
                                                                                
FPS DIP LLC                                                     $65,000,000           --------------
- --------------------------------------------------------------- --------------------- ---------------------
- --------------------------------------------------------------- --------------------- ---------------------
U.S. Bank National Association                                  --------------        $60,000,000
- --------------------------------------------------------------- --------------------- ---------------------
- --------------------------------------------------------------- --------------------- ---------------------
Total                                                           $65,000,000           $60,000,000
- --------------------------------------------------------------- --------------------- ---------------------






                                   Schedule II


- ---------------------------------------------------- ------------------------------------------------------
Lender                                               Address

- ---------------------------------------------------- ------------------------------------------------------
- ---------------------------------------------------- ------------------------------------------------------
                                                  
FPS DIP LLC                                          FPS DIP LLC
                                                     c/o Fortress Investment Group
                                                     1251 Avenue of the Americas
                                                     New York, New York  10020
                                                     Attention:  Bill Doniger, Managing Director
                                                     Telecopy:  (212) 798-6070

- ---------------------------------------------------- ------------------------------------------------------
- ---------------------------------------------------- ------------------------------------------------------
U.S. Bank National Association                       U.S. Bank National Association
                                                     U.S. Bancorp Center  BC-MN-H22A
                                                     800 Nicollet Mall
                                                     Minneapolis, Minnesota 55402
                                                     Attn:  Mr. Daniel Falstad
                                                     Telecopy:   (612) 303-4662

                                                     with a copy to:

                                                     Michael R. Stewart, Esq.
                                                     Faegre & Benson LLP
                                                     2200 Wells Fargo Center
                                                     90 South Seventh Street
                                                     Minneapolis, Minnesota  55402
                                                     Telecopy:   (612)  336-3026
- ---------------------------------------------------- ------------------------------------------------------








                                  SCHEDULE 8.4

                                 PERMITTED SALES

1.                The sale of remaining floorplan assets.

2.                The sale of remaining MH community loans.

3.                The sale of the charter (but not other assets) of Green Tree
                  Services Bank.

4.                The sale of Menards.

5.                The Borrower intends to sell certain manufactured housing,
                  recreational vehicle and trailer accounts being serviced by
                  Textron Financial Corporation pursuant to an Indicative Bid
                  Letter by and between Textron Financial Corporation and the
                  Borrower, dated December 13, 2002.

6.                The Borrower intends to exercise an option to repurchase the
                  Westwind Enterprises Ltd. Loan from Textron Financial
                  Corporation pursuant to an Addendum to Asset Purchase
                  Agreement between Textron Financial Corporation and Conseco
                  Finance Servicing Corp., dated November 22, 2002. As part of
                  the repurchase, the Borrower expects to sell the Westwind
                  Enterprises Ltd. Loan to TMAC pursuant to an Offer to Purchase
                  Westwind Loan by and between The Mortgage Acquisition
                  Corporation and the Borrower, dated December 5, 2002.

7.                The Borrower intends to sell certain of its outstanding
                  manufactured community loans representing 11 properties. The
                  Borrower has received indicative bid letters from three
                  potential buyers:

                  a.      A Champion Homes subsidiary has found a buyer for the
                          Foley Grove property in Foley, AL. Related thereto,
                          the Borrower has agreed to the settlement of its
                          outstanding note with Foley Grove, LLC and to release
                          the Deed of Trust at the time of such sale.

                  b.      Onyx Capital Corporation has offered to purchase
                          certain manufactured housing community real estate
                          loans associated with the Colonial Coach Estates and
                          Valley Meadows properties pursuant to an Agreement
                          Relative to the Purchase of Certain Manufactured
                          Housing Community Real Estate Loans by and between
                          Onyx Capital Corporation and Conseco Finance Servicing
                          Corp., dated October 9, 2002.

                  c.      The Borrower intends to sell eight mobile home
                          community construction loans to The Mortgage
                          Acquisition Corporation ("TMAC") pursuant to an Offer
                          to Purchase Mobile Home Community Construction Loans
                          by and between TMAC Investors XI and the Borrower,
                          dated November 20, 2002.




8.                The Borrower intends to sell certain of its repo refi
                  inventory loans to Normandy Corporation pursuant to a Letter
                  of Intent by Lac Blue Corp., dated December 4, 2002.










                                 AMENDMENT NO. 1


                  AMENDMENT NO. 1, dated as of December 23, 2002 (this
"Amendment No. 1"), to the SECURED SUPER-PRIORITY DEBTOR IN POSSESSION CREDIT
AGREEMENT, dated as of December 19, 2002 (as amended, supplemented or otherwise
modified prior to the date hereof, the "Credit Agreement"), by and among CONSECO
FINANCE CORP., a Delaware corporation, as debtor and debtor in possession (the
"Borrower"), CIHC, INCORPORATED, a Delaware corporation and the parent of the
Borrower (the "Parent Guarantor"), the Subsidiaries (as defined below) of the
Borrower listed on the signature pages thereof as guarantors, as debtors and
debtors in possession (the "Subsidiary Guarantors" and together with the Parent
Guarantor, the "Guarantors"), the Lenders (as defined below), and FPS DIP LLC, a
Delaware limited liability company ("FPS"), as administrative agent for the
Lenders (in such capacity, the "Administrative Agent").

                                    RECITALS:

                  A. The Borrower, the Parent Guarantor, CFCC, the Lenders and
the Administrative Agent have entered into the Credit Agreement. Unless
otherwise defined herein, capitalized terms used herein shall have the meanings
ascribed thereto in the Credit Agreement.

                  B. The Borrower, the Parent Guarantor and CFCC have requested
certain amendments to the Credit Agreement and the Lenders, subject to the terms
and conditions set forth herein, have agreed to such changes.

                  SECTION 1. Amendment. Effective as of December 23, 2002,
subject to the satisfaction of the conditions precedent set forth in Section 4
hereof, the Lenders, the Administrative Agent, the Borrower, the Parent
Guarantor and CFCC hereby agree the Credit Agreement shall be amended as
follows:

                  (a) The penultimate recital of the Credit Agreement is hereby
amended by amending and restating clause 2 of clause (B) thereof to read as
follows:

                  "2. a perfected, first-priority Lien (as defined below),
                  pursuant to section 364(c)(2) of the Bankruptcy Code, upon all
                  unencumbered property ((i) including real and tangible
                  personal property subject to Liens or security interests which
                  may be avoided pursuant to the Bankruptcy Code, but only to
                  the extent so avoided and (ii) including, upon entry of the
                  Final Order, any avoidance actions arising under the
                  Bankruptcy Code) of the Borrower and the Subsidiary
                  Guarantors, all cash and Cash Equivalents (as defined below)
                  of the Borrower and the Subsidiary Guarantors in the Cash
                  Collateral Account (as defined below); and"

                  (b) Section 1 of the Credit Agreement is amended by:




                        (i) adding the following definition after the definition
                  of "Collateral": "`Collateral Document' means any document,
                  instrument or agreement entered into by a Loan Party providing
                  or purporting to provide Collateral."; and

                        (ii) amending and restating the definition of "Net Cash
                  Proceeds" to read as follows: "`Net Cash Proceeds' means
                  proceeds received by any Loan Party after the Closing Date in
                  cash or Cash Equivalents from any (a) Asset Sale or (b)
                  Property Loss Event; provided, that, for Asset Sales, such
                  amounts shall be net of, in the case of all Asset Sales, the
                  actual reasonable expenses of such Asset Sale and, in the case
                  of Asset Sales permitted under Section 8.4(a), shall be net of
                  amounts of indebtedness required to be paid under the Whole
                  Loan Sale Agreement (as defined in the Lehman Order) as
                  repayment of Indebtedness under the Warehouse Loan Agreement
                  (as defined in the Lehman Order)."

                  (c) Section 2.10(b) of the Credit Agreement is hereby amended
by replacing the first sentence therein with the following sentence: "The
Borrower agrees to pay each Revolving Credit Lender a commitment fee equal to
3.00% of such Lender's Revolving Credit Commitment on the date that is the
earlier of December 27, 2002 and the date of the first Borrowing of a Revolving
Credit Loan."

                  (d) Section 2.11(g) of the Credit Agreement is amended by
amending and restating clauses "sixth" and "seventh" thereof in their entirety
to read as follows:

                        "sixth, to the extent Section 2.8(a) would not otherwise
                  apply, to pay the principal of and interest on the Revolving
                  Credit Loans;

                        seventh, to the extent Section 2.8(a) would not
                  otherwise apply, and subject to Section 2.7(c), to pay the
                  principal of and interest on the Term Loans;."

                  (e) Section 3.1(c)(iii)(A) of the Credit Agreement is hereby
amended and restated by inserting the following at the end thereof: "provided,
that, such certificates (other than those evidencing the Primed Pledged Shares)
shall be delivered on or prior to January 10, 2003; and".

                  (f) Section 3.1 is hereby amended by deleting clause (f)
thereof.

                  (g) Section 3.2(f) of the Credit Agreement is hereby amended
and restated in its entirety to read as follows:

                        "(f) Additional Bankruptcy Court Orders; 9019 Order.
                  With respect to any Loan made on or after January 6, 2003, the
                  Bidding Procedures Order shall (x) be certified by the Clerk
                  of the Bankruptcy Court as having been duly entered, (y) be in
                  full force and effect and (z) shall not have been vacated,
                  reversed, modified, amended or stayed without the prior
                  written consent of the Administrative Agent. With respect

                                       2


                  to any Loan made on or after the date hereof, an order of the
                  Bankruptcy Court shall have been entered approving the
                  Break-up Fee (as defined in the Asset Purchase Agreement) and
                  such order shall be in full force and effect and shall not
                  have been vacated, reversed, modified, amended or stayed
                  without the prior written consent of the Administrative Agent.
                  With respect to any Loan made on or after 30 Business Days
                  (APA Method) after the Petition Date, the 9019 Order shall (x)
                  be certified by the Clerk of the Bankruptcy Court as having
                  been duly entered, (y) be in full force and effect and (z)
                  shall not have been vacated, reversed, modified, amended or
                  stayed without the prior written consent of the Administrative
                  Agent."

                  (h) Section 3.2 of the Credit Agreement is hereby amended by
inserting the following clause after clause (i) thereof:

                        "(j) Mill Creek Memorandum of Understanding. With
                  respect to any Loan made on or after January 14, 2003, the
                  Lenders shall have received copies of all supervisory or
                  remedial agreements of any kind relating to Mill Creek,
                  including, but not limited to, memoranda of understanding,
                  agreements, cease-and-desist orders, consent orders and
                  enforcement orders outstanding at any time since January 1,
                  2000, and the terms thereof shall not adversely affect the
                  business, operations or financial condition of Mill Creek in
                  the sole discretion of the Administrative Agent and shall
                  otherwise be satisfactory in form, scope and substance to the
                  Administrative Agent in its sole discretion."


                  (i) Section 4.8(a) of the Credit Agreement is hereby amended
by changing, in the last sentence thereof, "Section 3.1(f)" to "Section 3.2(j)".

                  (j) Section 7.12 of the Credit Agreement is hereby amended by
adding the following sentence to the end thereof: "The Borrower shall cause each
Subsidiary that becomes a debtor under the Bankruptcy Code to become a Guarantor
and Grantor under this Agreement within 3 Business Days of becoming a debtor."

                  (k) Section 8.2 of the Credit Agreement is hereby amended by
deleting the period at the end thereof and inserting the following:

                        "; and

                        (f) the Lien created under the Interim 9019 Order but
                  only to the extent expressly permitted in the Interim Order;
                  and

                        (g) a Lien consisting of the "Securitization Trustee's
                  MH Platform Lien (as defined in the Interim Order).""

                  (l) Section 11.1(a) of the Credit Agreement is hereby amended
by amending and restating clause (xviii) thereof in its entirety to read as
follows: "(xviii) to the extent not otherwise included, all causes of action
(including, upon entry of the Final Order, claims of the Grantors under sections
544, 545, 547 and 548 of the Bankruptcy Code) and all monies and other property
of any kind received therefrom, and all monies and other property of any kind
recovered by any Grantor; and".

                  (m) Section 13.8(c) of the Credit Agreement is hereby amended
and restated to read as follows:

                                       3


                           FPS DIP LLC
                           c/o Fortress Investment Group
                           1251 Avenue of the Americas
                           New York, New York  10020
                           Attention:  Bill Doniger, Managing Director
                           Telecopy no:  (212) 798-6070

                           with a copy to:

                           Willkie Farr & Gallagher
                           787 Seventh Avenue
                           New York, New York  10019
                           Attention:  Thomas M. Cerabino, Esq.
                           Telecopy no.  (212) 728-8111"

                  (n) Exhibit E to the Credit Agreement is hereby amended and
restated in its entirety to read as set forth on Exhibit A hereto.

                  (o) Schedules 4.2, 4.14 and 8.3 to the Credit Agreement are
hereby amended and restated in their entirety to read as set forth on Exhibit B
hereto.

                  (p) The Lenders agree that the fees and expenses of counsel
that are a closing condition (as provided in Section 3.1(d) of the Credit
Agreement) may be paid one Business Day after the invoice therefor has been sent
to the Borrower.

                  (q) The Lenders agree that accrued interest on the $60,000,000
aggregate principal amount of U.S. Bank Prepetition Indebtedness may be paid on
December 27, 2002 rather than the Closing Date, such payment to be included in
the Budget and paid with the proceeds of Revolving Loans.


                  SECTION 2. Representations and Warranties of the Borrower. The
Borrower, and, as to itself, each of the Parent Guarantor and CFCC, represents
and warrants as follows:

                  (a) Power and Authority. The Borrower and each Guarantor each
has all requisite power and authority under applicable law and under its
Constituent Documents to execute, deliver and perform its respective obligations
under this Amendment and the Loan Documents to which it is a party. All actions,
waivers and consents (corporate, regulatory and otherwise) necessary or
appropriate for the Borrower and each Guarantor to execute, deliver and perform
this Amendment have been taken and/or received.

                  (b) Validity and Legal Effect. This Amendment have been duly
executed and delivered by the Borrower and each Guarantor. This Amendment and
the Credit Agreement, as modified hereby, constitutes, and the other Loan
Documents to which the Borrower or any Guarantor is a party constitute (or will
constitute when executed and delivered), the legal, valid

                                       4


and binding obligations of the Borrower or such Guarantor, as applicable,
enforceable against it in accordance with the terms thereof.

                  (c) No Default or Event of Default. Both before and after
giving effect to this Amendment, no Default or Event of Default has occurred and
is continuing.

                  SECTION 3. Conditions of Effectiveness. This Amendment No. 1
shall become effective (the "Effective Date") as of the date first above written
when, and only when, the parties hereto shall have executed a counterpart of
this Amendment and delivered the same to the Administrative Agent.

                  SECTION 4. Reference to and Effect on the Loan Documents. (a)
On and after the effectiveness of this Amendment No. 1, each reference in the
Credit Agreement to "this Agreement", "hereunder", "hereof" or words of like
import referring to the Credit Agreement, and each reference in the Notes and
each of the other Loan Documents to "the Credit Agreement", "thereunder",
"thereof" or words of like import referring to the Credit Agreement shall mean
and be a reference to the Credit Agreement, as modified by this Amendment No. 1.

                  (b) The execution, delivery and effectiveness of this
Amendment No. 1 shall not, except as expressly provided herein, operate as a
waiver of any right, power or remedy of any Lender or the Agent under any of the
Loan Documents, nor constitute a waiver of any provision of any of the Loan
Documents except as expressly modified by this Amendment.

                  SECTION 5. Execution in Counterparts. This Amendment No. 1 may
be executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute but one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Amendment No. 1 by telecopier shall be effective as delivery of a manually
executed counterpart of this Amendment No. 1.

                  SECTION 6. Governing Law. This Amendment No. 1 shall be
governed by, and construed in accordance with, the laws of the State of New
York.

                                       5




                  IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by their respective officers thereunto duly authorized,
as of the date first above written.



                                         CONSECO FINANCE CORP., as Borrower


                                         By: /s/ Brian F. Corey
                                            ------------------------------------
                                            Name:  Brian F. Corey
                                            Title: Senior Vice President
                                                     and Secretary


                                         CIHC, INCORPORATED, as Parent Guarantor


                                         By: /s/ David K. Herzog
                                            ------------------------------------
                                            Name:  David K. Kerzog
                                            Title: Secretary


                                         CONSECO FINANCE SERVICING CORP.,
                                          a Subsidiary Guarantor


                                         By: /s/ Brian F. Corey
                                            ------------------------------------
                                            Name:  Brian F. Corey
                                            Title: Senior Vice President
                                                     and Secretary


                                         FPS DIP LLC, as
                                          Administrative Agent and as a Lender


                                         By: /s/ William B. Doniger
                                            ------------------------------------
                                            Name:  William B. Doniger
                                            Title: Vice President




                                         U.S. BANK NATIONAL ASSOCIATION,
                                          as Lender and Sub-Agent


                                         By:  /s/
                                            ------------------------------------
                                            Name:
                                            Title:





                                         CONSECO FINANCE CREDIT CORP.,


                                         By: /s/ Brian F. Corey
                                            ------------------------------------
                                            Name:  Brian F. Corey
                                            Title: Senior Vice President









                                                    Exhibit A to Amendment No. 1



                                                   Exhibit E to Credit Agreement

                              Form of Interim Order










                                                    Exhibit B to Amendment No. 1


                                 Schedules 4.2, 4.14 and 8.3 to Credit Agreement





                                 AMENDMENT NO. 2


                  AMENDMENT NO. 2, dated as of December 24, 2002 (this
"Amendment"), to the SECURED SUPER-PRIORITY DEBTOR IN POSSESSION CREDIT
AGREEMENT, dated as of December 19, 2002 (as amended, supplemented or otherwise
modified prior to the date hereof, including by Amendment No. 1 dated as of
December 23, 2002, the "Credit Agreement"), by and among CONSECO FINANCE CORP.,
a Delaware corporation, as debtor and debtor in possession (the "Borrower"),
CIHC, INCORPORATED, a Delaware corporation and the parent of the Borrower (the
"Parent Guarantor"), the Subsidiaries (as defined below) of the Borrower listed
on the signature pages thereof as guarantors, as debtors and debtors in
possession (the "Subsidiary Guarantors" and together with the Parent Guarantor,
the "Guarantors"), the Lenders (as defined below), and FPS DIP LLC, a Delaware
limited liability company ("FPS"), as administrative agent for the Lenders (in
such capacity, the "Administrative Agent").

                                    RECITALS:

                  A. The Borrower, the Parent Guarantor, CFCC, the Lenders and
the Administrative Agent have entered into the Credit Agreement. Unless
otherwise defined herein, capitalized terms used herein shall have the meanings
ascribed thereto in the Credit Agreement.

                  B. The Borrower, the Parent Guarantor and CFCC have requested
certain amendments to the Credit Agreement and the Lenders, subject to the terms
and conditions set forth herein, have agreed to such changes.

                  SECTION 1. Amendment. Effective as of December 24, 2002,
subject to the satisfaction of the conditions precedent set forth in Section 4
hereof, the Lenders, the Administrative Agent, the Borrower, the Parent
Guarantor and CFCC hereby agree the Credit Agreement shall be amended as
follows:

                  (a) Section 1 of the Credit Agreement is amended by amending
and restating the following definitions in their entirety to read as follows:

                  (1) "`Budgeted Amount' means, as of any date of Borrowing, the
maximum amount set forth in the Budget for outstanding Revolving Credit Loans
during such week, provided, that, the Budgeted Amount shall, for the Borrowing
on December 27, 2002, be $22,000,000 (it being understood that the change of the
Budgeted Amount on such date from the amount otherwise shown in the Budget for
such date does not constitute an agreement by any Lender to any change,
including any corresponding change, in the Budget for any other date) and
provided, further, that if the Administrative Agent agrees under Section 2.2(a)
to permit more frequent Borrowings, the Budgeted Amount for any date shall be
the amount of Borrowings shown for such date in the Budget."



                  (2) "`Excess Cash' shall mean, as of any date, the amount, as
reasonably estimated in good faith by the Borrower as the excess, if any, of (x)
all cash of the Borrower and its Subsidiaries (other than Mill Creek and its
Subsidiaries) as of such date over (y) the sum of $1,000,000 plus obligations
under "ACH files" as of such date."

                  (b) Section 2.2(a) of the Credit Agreement is amended by
amending and restating the last sentence in its entirety to read as follows:
"The Borrower may request Borrowings be made on December 27, 2002, January 6,
2003 and thereafter only on the first Business Day of each week (unless more
frequent Borrowings are agreed to by the Administrative Agent, which agreement
may be conditioned upon increasing the frequency of mandatory prepayments under
Section 2.8(b))."

                  (c) Section 2.8(b) of the Credit Agreement is amended by
amending and restating the first sentence in its entirety to read as follows:
"The Borrower shall prepay the Revolving Credit Loans on the last Business Day
of each week, commencing Friday, January 3, 2003, equal to the Excess Cash as of
the end of such Business Day (and if the actual amount of Excess Cash as of such
date exceeds the amount estimated by the Borrower pursuant to the definition
thereof, the Borrower shall prepay (an "Additional Excess Cash Prepayment") the
Revolving Credit Loans on the first Business Day of the following week by the
amount of such excess; provided, that, all such prepayments shall be on such
additional dates, if any, as may be specified by the Administrative Agent in
connection with any agreement given by the Administrative Agent under the last
sentence of Section 2.2(a). The Revolving Credit Lenders may net the amount of
any Borrowing of Revolving Credit Loans against the amount of Additional Excess
Cash Prepayment.)"

                  SECTION 2. Representations and Warranties of the Borrower. The
Borrower, and, as to itself, each of the Parent Guarantor and CFCC, represents
and warrants as follows:

                  (a) Power and Authority. The Borrower and each Guarantor each
has all requisite power and authority under applicable law and under its
Constituent Documents to execute, deliver and perform its respective obligations
under this Amendment and the Loan Documents to which it is a party. All actions,
waivers and consents (corporate, regulatory and otherwise) necessary or
appropriate for the Borrower and each Guarantor to execute, deliver and perform
this Amendment have been taken and/or received.

                  (b) Validity and Legal Effect. This Amendment has been duly
executed and delivered by the Borrower and each Guarantor. This Amendment and
the Credit Agreement, as modified hereby, constitutes, and the other Loan
Documents to which the Borrower or any Guarantor is a party constitute (or will
constitute when executed and delivered), the legal, valid and binding
obligations of the Borrower or such Guarantor, as applicable, enforceable
against it in accordance with the terms thereof.

                  (c) No Default or Event of Default. Both before and after
giving effect to this Amendment, no Default or Event of Default has occurred and
is continuing.

                  SECTION 3. Conditions of Effectiveness. This Amendment shall
become effective (the "Effective Date") as of the date first above written when,
and only when, the

                                       2


parties hereto shall have executed a counterpart of this Amendment and delivered
the same to the Administrative Agent.

                  SECTION 4. Reference to and Effect on the Loan Documents. (a)
On and after the effectiveness of this Amendment, each reference in the Credit
Agreement to "this Agreement", "hereunder", "hereof" or words of like import
referring to the Credit Agreement, and each reference in the Notes and each of
the other Loan Documents to "the Credit Agreement", "thereunder", "thereof" or
words of like import referring to the Credit Agreement shall mean and be a
reference to the Credit Agreement, as modified by this Amendment.

                  (b) The execution, delivery and effectiveness of this
Amendment shall not, except as expressly provided herein, operate as a waiver of
any right, power or remedy of any Lender or the Agent under any of the Loan
Documents, nor constitute a waiver of any provision of any of the Loan Documents
except as expressly modified by this Amendment.

                  SECTION 5. Execution in Counterparts. This Amendment may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute but one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Amendment by telecopier shall be effective as delivery of a manually executed
counterpart of this Amendment.

                  SECTION 6. Governing Law. This Amendment shall be governed by,
and construed in accordance with, the laws of the State of New York.


                                       3




                  IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by their respective officers thereunto duly authorized,
as of the date first above written.



                                         CONSECO FINANCE CORP., as Borrower


                                         By: /s/ Brian F. Corey
                                            ------------------------------------
                                            Name:  Brian F. Corey
                                            Title: Senior Vice President


                                         CIHC, INCORPORATED, as Parent Guarantor


                                         By: /s/ David K. Herzog
                                            ------------------------------------
                                            Name:  David K. Herzog
                                            Title: Secretary


                                         CONSECO FINANCE SERVICING CORP.,
                                          a Subsidiary Guarantor


                                         By: /s/ Brian F. Corey
                                            ------------------------------------
                                            Name:  Brian F. Corey
                                            Title: Senior Vice President



                                         FPS DIP LLC, as
                                          Administrative Agent and as a Lender


                                         By: /s/ William B. Doniger
                                            ------------------------------------
                                            Name:  William B. Doniger
                                            Title: Vice President






                                         CONSECO FINANCE CREDIT CORP.,


                                         By: /s/ Brian F. Corey
                                            ------------------------------------
                                            Name:  Brian F. Corey
                                            Title: Senior Vice President









                                 AMENDMENT NO. 3


                  AMENDMENT NO. 3, dated as of January 17, 2003 (this
"Amendment"), to the SECURED SUPER-PRIORITY DEBTOR IN POSSESSION CREDIT
AGREEMENT, dated as of December 19, 2002 (as amended, supplemented or otherwise
modified prior to the date hereof, including by Amendment No. 1 dated as of
December 23, 2002 and Amendment No. 2 dated as of December 24, 2002 and Waiver
No. 1 dated as of January 7, 2003, the "Credit Agreement"), by and among CONSECO
FINANCE CORP., a Delaware corporation, as debtor and debtor in possession (the
"Borrower"), CIHC, INCORPORATED, a Delaware corporation and the parent of the
Borrower (the "Parent Guarantor"), the Subsidiaries (as defined below) of the
Borrower listed on the signature pages thereof as guarantors, as debtors and
debtors in possession (the "Subsidiary Guarantors" and together with the Parent
Guarantor, the "Guarantors"), the Lenders (as defined below), and FPS DIP LLC, a
Delaware limited liability company ("FPS"), as administrative agent for the
Lenders (in such capacity, the "Administrative Agent").

                                    RECITALS:

                  A. The Borrower, the Parent Guarantor, CFCC, the Lenders and
the Administrative Agent have entered into the Credit Agreement. Unless
otherwise defined herein, capitalized terms used herein shall have the meanings
ascribed thereto in the Credit Agreement.

                  B. The Borrower, the Parent Guarantor and CFCC have requested
certain amendments to the Credit Agreement and the Lenders, subject to the terms
and conditions set forth herein, have agreed to such changes.

                  SECTION 1. Amendment. Effective as of January 17, 2003,
subject to the satisfaction of the conditions precedent set forth in Section 3
hereof, the Lenders, the Administrative Agent, the Borrower, the Parent
Guarantor and CFCC hereby agree the Credit Agreement shall be amended as
follows:

                  (a) The second recital of the Credit Agreement is amended and
restated in its entirety to read as follows:

                  "WHEREAS, the Borrower, the Subsidiary Guarantors and certain
other persons have entered into the Asset Purchase Agreement dated as of
December 19, 2002 (as in effect on January 17, 2003, the "Asset Purchase
Agreement") providing for the purchase by CFN Investment Holdings LLC ("CFN") of
the Purchased Assets (as defined in the Asset Purchase Agreement, the "Purchased
Assets")."

                  (b) Section 1 of the Credit Agreement is amended by adding the
following definitions in appropriate alphabetical order:




                  "`Borrowing Period' means a Daily Borrowing Period or Weekly
Borrowing Period.

                  `Daily Borrowing Period' means any calendar week during which
the Borrower may request Borrowings be made on each Business Day.

                  `Daily Mode Notice' has the meaning specified in Section
2.2(a) hereof."

                  `Weekly Borrowing Period' means any calendar week during which
the Borrower may request Borrowings be made only on the first Business Day of
such week.

                  (c) Section 1 of the Credit Agreement is amended by amending
and restating the following definitions in their entirety to read as follows:

                  "`Budgeted Amount' means, as of any date of Borrowing during
(i) any Daily Borrowing Period, the maximum amount set forth in the Budget for
outstanding Revolving Credit Loans on such date and (ii) any Weekly Borrowing
Period, the maximum amount set forth in the Budget for outstanding Revolving
Credit Loans during such week; provided, that, the Budgeted Amount shall, for
the Borrowing on December 27, 2002, be $22,000,000 (it being understood that the
change of the Budgeted Amount on such date from the amount otherwise shown in
the Budget for such date does not constitute an agreement by any Lender to any
change, including any corresponding change, in the Budget for any other date)."

                  `Carve-Out' means: (i) the unpaid fees of the clerk of the
Bankruptcy Court and of the United States Trustee pursuant to 28 U.S.C. ss.
1930(a) and (b); and (ii) the aggregate allowed unpaid fees and expenses payable
under sections 330 and 331 of the Bankruptcy Code to professional persons
retained pursuant to an order of the Court by the Borrower and/or the Subsidiary
Guarantors, or any statutory committee appointed in the Borrower's chapter 11
case (other than the fees and expenses, if any, of any such professional persons
incurred, directly or indirectly, in respect of, arising from or relating to,
the initiation or prosecution of any action for preferences, fraudulent
conveyances, other avoidance power claims or any other claims or causes of
action against the Administrative Agent or the Lenders or with respect to this
Agreement, the Obligations or the U.S. Bank Pre-Petition Indebtedness; provided,
however, that the Carveout may be used to investigate such claims and causes of
action), not to exceed One Million Two Hundred and Fifty Thousand Dollars
($1,250,000.00) in the aggregate; provided, however, that such dollar limitation
on fees and disbursements shall not be reduced by the amount of any compensation
and reimbursement of expenses paid prior to the occurrence of a Default or an
Event of Default in respect of which the Carve-Out is invoked or any fees,
expenses, indemnities or other amounts paid to the Administrative Agent, the
Lenders and their respective attorneys and agents under this Agreement or
otherwise.

                  "Final Order" means an order of the Bankruptcy Court pursuant
to section 364 of the Bankruptcy Code in the form attached hereto as Exhibit H.

                  (d) Section 2.2(a) of the Credit Agreement is amended and
restated in its entirety to read as follows:

                                       2


                  "(a) The Borrower may request Borrowings be made on December
        27, 2002, January 6, 2003 and thereafter (i) only on the first Business
        Day of any Weekly Borrowing Period or (ii) on each Business Day of any
        Daily Borrowing Period. The Borrowing Period that shall be in effect for
        each calendar week shall be a Weekly Borrowing Period, unless the
        Administrative Agent notifies by facsimile, telephone or otherwise (a
        "Daily Mode Notice") the Borrower before 11:00 A.M. (New York City Time)
        on the first Business Day of such week that such week shall be a Daily
        Borrowing Period. If such notice is given by telephone, it shall be
        effective immediately upon such telephone call being made by the
        Administrative Agent to the Borrower. Notwithstanding how such notice is
        given, it shall only be effective during the week in which it is given.
        The Administrative Agent shall be entitled to give or not give such
        notice in its sole discretion. Each Borrowing of Loans (including to
        CFCC) shall be made on notice given by the Borrower to the
        Administrative Agent not later than 4:00 P.M. (New York City time) (i)
        one Business Day, in the case of a Borrowing of Base Rate Loans, and
        (ii) three Business Days, in the case of a Borrowing of Eurodollar Rate
        Loans, prior to the date of the proposed Borrowing. Each such notice
        shall be in substantially the form of Exhibit C (a "Notice of
        Borrowing") specifying (i) the date of such proposed Borrowing, (ii) the
        aggregate amount of such proposed Borrowing, (iii) whether any portion
        of the proposed Borrowing will be of Base Rate Loans or Eurodollar Rate
        Loans, (iv) the Available Credit (after giving effect to the proposed
        Borrowing), (v) the Budgeted Amount (after giving effect to the proposed
        Borrowing) and (vi) any amount to be netted pursuant to Section 2.8(b);
        provided that with respect to any Borrowing to be made on the first
        Business Day of any week, the amount of such proposed Borrowing,
        Available Credit and Budgeted Amount will be specified (i) for the first
        Business Day of such week only (assuming such week will be a Daily
        Borrowing Period), and (ii) for such week (assuming such week will be a
        Weekly Borrowing Period). In all events, the Borrower must comply with
        the requirements for Borrowing each time a Borrowing is made during any
        Borrowing Period. If a Daily Borrowing Period is in effect, the Borrower
        must comply with the requirements for Borrowing with respect to each
        Borrowing made during the Daily Borrowing Period. If a Weekly Borrowing
        Period is in effect, the Borrower must comply with the requirements for
        Borrowing with respect to the one Borrowing permitted to be made during
        the Weekly Borrowing Period. If the Administrative Agent provides the
        Daily Mode Notice, the Lenders shall only be obligated, subject to the
        satisfaction of the requirements of this Agreement, to make the Loans
        requested for the first day in the Notice of Borrowing; provided, that
        the Borrower may request additional Borrowings during such calendar week
        in accordance with this Section 2.2(a). If the Administrative Agent does
        not provide the Daily Mode Notice, the Lenders shall be obligated,
        subject to the satisfaction of the requirements of this Agreement, only
        to make the Loans requested for such week in the Notice of Borrowing.
        The Loans shall be made as Base Rate Loans unless (subject to Section
        2.16) the Notice of Borrowing specifies that all or a portion thereof
        shall be Eurodollar Rate Loans. Each Borrowing shall be in an aggregate
        amount of not less than $100,000 or an integral multiple of $100,000 in
        excess thereof.

                  (e) Section 2.2(b) of the Credit Agreement is amended and
restated by amending and restating its first sentence in its entirety to read as
follows: "The Administrative Agent shall give to each Lender prompt notice of
(i) the Administrative Agent's receipt of a Notice of

                                       3


Borrowing, (ii) if relevant pursuant to the terms of Section 2.2(a), whether the
Administrative Agent will be funding Borrowings for such week on a weekly or
daily basis and (iii) if Eurodollar Rate Loans are properly requested in such
Notice of Borrowing, the applicable interest rate determined pursuant to Section
2.16(a)."

                  (f) Section 2.8(b) of the Credit Agreement is amended by
amending and restating the first sentence in its entirety to read as follows:
"The Borrower shall prepay the Revolving Credit Loans (i) if a Weekly Borrowing
Period is in effect, on the last Business Day of each week, commencing Friday,
January 3, 2003, in an amount equal to the Excess Cash as of the end of such
Business Day, and (ii) if a Daily Borrowing Period is in effect, on each
Business Day in an amount equal to the Excess Cash as of the end of such
Business Day (and, in each case, if the actual amount of Excess Cash as of such
date exceeds the amount estimated by the Borrower pursuant to the definition
thereof, the Borrower shall prepay (an "Additional Excess Cash Prepayment") the
Revolving Credit Loans on the next Business Day by the amount of such excess)."

                  (g) Section 3.2(f) of the Credit Agreement is amended by
amending and restating its first sentence to read as follows: "With respect to
any Loan made on or after January 8, 2003, the Bidding Procedures Order shall
(x) be certified by the Clerk of the Bankruptcy Court as having been duly
entered, (y) be in full force and effect and (z) shall not have been vacated,
reversed, modified, amended or stayed without the prior written consent of the
Administrative Agent."

                  (h) Section 9.1(l) of the Credit Agreement is amended and
restated in its entirety to read as follows: "The Bankruptcy Court shall (upon
motion of any party other than the Administrative Agent or any of the Lenders)
enter an order appointing a responsible officer or an examiner with powers
beyond the duty to investigate and report, as set forth in sections 1106(a)(3)
and (4) of the Bankruptcy Code, in any of the Cases;"

                  (i) Section 9.1(o) of the Credit Agreement is amended by
amending and restating the first sentence in its entirety to read as follows:
"The financial results of the Borrower during any one calendar week period shall
be more than a 10% adverse variation from any line item in the Budget (but not
in excess of $5,000,000 for the first calendar week included in the Budget and
$1,000,000 for each subsequent calendar week) or such other greater percentage
adverse variation as may be agreed to in writing by the Administrative Agent; it
being understood that expenditures not made in any specific week may be made in
a subsequent calendar week for the same purpose;"

                                       4


                  (j) Section 13.8 of the Credit Agreement is amended by
amending and restating the lead-in to such section in its entirety to read as
follows: "Except as otherwise set forth in Section 2.2(a), all notices, demands,
requests and other communications provided for in this Agreement shall be given
in writing, or by any telecommunication device capable of creating a written
record, and addressed to the party to be notified as follows:"

                  (k) Exhibit A hereto is hereby added to the Credit Agreement
as Exhibit H.

                  SECTION 2. Representations and Warranties of the Borrower. The
Borrower, and, as to itself, each of the Parent Guarantor and CFCC, represents
and warrants as follows:

                  (a) Power and Authority. The Borrower and each Guarantor each
has all requisite power and authority under applicable law and under its
Constituent Documents to execute, deliver and perform its respective obligations
under this Amendment and the Loan Documents to which it is a party. All actions,
waivers and consents (corporate, regulatory and otherwise) necessary or
appropriate for the Borrower and each Guarantor to execute, deliver and perform
this Amendment have been taken and/or received.

                  (b) Validity and Legal Effect. This Amendment has been duly
executed and delivered by the Borrower and each Guarantor. This Amendment and
the Credit Agreement, as modified hereby, constitutes, and the other Loan
Documents to which the Borrower or any Guarantor is a party constitute (or will
constitute when executed and delivered), the legal, valid and binding
obligations of the Borrower or such Guarantor, as applicable, enforceable
against it in accordance with the terms thereof.

                  (c) No Default or Event of Default. Both before and after
giving effect to this Amendment, no Default or Event of Default has occurred and
is continuing.

                  SECTION 3. Conditions of Effectiveness. This Amendment shall
become effective (the "Effective Date") as of the date first above written when,
and only when, the parties hereto shall have executed a counterpart of this
Amendment and delivered the same to the Administrative Agent.

                  SECTION 4. Reference to and Effect on the Loan Documents. (a)
On and after the effectiveness of this Amendment, each reference in the Credit
Agreement to "this Agreement", "hereunder", "hereof" or words of like import
referring to the Credit Agreement, and each reference in the Notes and each of
the other Loan Documents to "the Credit Agreement", "thereunder", "thereof" or
words of like import referring to the Credit Agreement shall mean and be a
reference to the Credit Agreement, as modified by this Amendment.

                  (b) The execution, delivery and effectiveness of this
Amendment shall not, except as expressly provided herein, operate as a waiver of
any right, power or remedy of any Lender or the Agent under any of the Loan
Documents, nor constitute a waiver of any provision of any of the Loan Documents
except as expressly modified by this Amendment.

                  SECTION 5. Execution in Counterparts. This Amendment may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall

                                       5


constitute but one and the same agreement. Delivery of an executed counterpart
of a signature page to this Amendment by telecopier shall be effective as
delivery of a manually executed counterpart of this Amendment.

                  SECTION 6. Governing Law. This Amendment shall be governed by,
and construed in accordance with, the laws of the State of New York.








                                       6





                  IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by their respective officers thereunto duly authorized,
as of the date first above written.



                                         CONSECO FINANCE CORP., as Borrower


                                         By: /s/ Keith Anderson
                                            ------------------------------------
                                            Name:  Keith Anderson
                                            Title:


                                         CIHC, INCORPORATED, as Parent Guarantor


                                         By: /s/ David K. Herzog
                                            ------------------------------------
                                            Name:  David K. Herzog
                                            Title: Secretary


                                         CONSECO FINANCE SERVICING CORP.,
                                          a Subsidiary Guarantor


                                         By: /s/ Keith Anderson
                                            ------------------------------------
                                            Name:  Keith Anderson
                                            Title:



                                         FPS DIP LLC, as
                                          Administrative Agent and as a Lender


                                         By: /s/ Randal A. Nardone
                                            ------------------------------------
                                            Name:  Randal A. Nardone
                                            Title: COO & Secretary







                                         CONSECO FINANCE CREDIT CORP.,


                                         By: /s/ Keith Anderson
                                            ------------------------------------
                                            Name:  Keith Anderson
                                            Title:







                                    EXHIBIT A

                                   FINAL ORDER









                                 AMENDMENT NO. 4


                  AMENDMENT NO. 4, dated as of February 7, 2003 (this
"Amendment"), to the SECURED SUPER-PRIORITY DEBTOR IN POSSESSION CREDIT
AGREEMENT, dated as of December 19, 2002 (as amended, supplemented or otherwise
modified prior to the date hereof, including by Amendment No. 1 dated as of
December 23, 2002, Amendment No. 2 dated as of December 24, 2002, Waiver No. 1
dated as of January 7, 2003 and Amendment No. 3 dated as of January 17, 2003,
the "Credit Agreement"), by and among CONSECO FINANCE CORP., a Delaware
corporation, as debtor and debtor in possession (the "Borrower"), CIHC,
INCORPORATED, a Delaware corporation, debtor and debtor in possession and the
parent of the Borrower, as guarantor (the "Parent Guarantor"), CONSECO FINANCE
SERVICING CORP., a Delaware corporation, and CONSECO FINANCE CREDIT CORP., a New
York corporation, as guarantors (the "Subsidiary Guarantors" and together with
the Parent Guarantor, the "Guarantors"), the Lenders, and FPS DIP LLC, a
Delaware limited liability company ("FPS"), as administrative agent for the
Lenders (in such capacity, the "Administrative Agent").

                                    RECITALS:

                  A. The Borrower, the Parent Guarantor, the Subsidiary
Guarantors, the Lenders and the Administrative Agent have entered into the
Credit Agreement. Unless otherwise defined herein, capitalized terms used herein
shall have the meanings ascribed thereto in the Credit Agreement.

                  B. The Borrower, the Parent Guarantor and the Subsidiary
Guarantors have requested certain amendments to the Credit Agreement and the
Lenders and the Administrative Agent, subject to the terms and conditions set
forth herein, have agreed to such amendments.

                  SECTION 1. Amendment. Effective as of January 31, 2003,
subject to the satisfaction of the conditions precedent set forth in Section 3
hereof, the parties hereto hereby agree the Credit Agreement shall be amended as
follows:

                  (a) The second recital of the Credit Agreement is amended and
restated in its entirety to read as follows:

                  "WHEREAS, the Borrower, the Subsidiary Guarantors and certain
other persons have entered into the Asset Purchase Agreement dated as of
December 19, 2002 (as in effect February 7, 2003, the "Asset Purchase
Agreement") providing for the purchase by CFN Investment Holdings LLC ("CFN") of
the Purchased Assets (as defined in the Asset Purchase Agreement, the "Purchased
Assets")."

                  (b) Section 1 of the Credit Agreement is amended by amending
and restating the following definitions in their entirety to read as follows:




                  ""Final Order" means the orders of the Bankruptcy Court in the
form attached hereto as Exhibit H, or such other form as may be acceptable to
the Administrative Agent."

                  (c) Section 3.2(f) of the Credit Agreement is amended by
amending and restating its third sentence to read as follows: "With respect to
any Loan made on or after February 12, 2003, the 9019 Order shall (x) be
certified by the Clerk of the Bankruptcy Court as having been duly entered, (y)
be in full force and effect and (z) shall not have been vacated, reversed,
modified, amended or stayed without the prior written consent of the
Administrative Agent."

                  (d) Section 9.1(p) of the Credit Agreement is amended and
restated in its entirety to read as follows: "(i) The 9019 Order shall not have
been entered on or before February 12, 2003, (ii) from and after the date of
entry thereof, the 9019 Order or the Interim 9019 Order shall cease to be in
full force and effect, (iii) any Loan Party shall fail to comply with the terms
of the 9019 Order or the Interim 9019 Orders in any material respect or (iv)
either the 9019 Order or the Interim 9019 Order shall be amended, supplemented,
stayed, reversed, vacated or otherwise modified (or any of the Loan Parties
shall apply for authority to do so) without the written consent of the
Administrative Agent; or"

                  (e) Exhibit H to the Credit Agreement is hereby amended and
restated in its entirety to read as set forth on Exhibit A hereto.

                  SECTION 2. Representations and Warranties of the Borrower. The
Borrower, and, as to itself, each of the Parent Guarantor and CFCC, represents
and warrants as follows:

                  (a) Power and Authority. The Borrower and each Guarantor each
has all requisite power and authority under applicable law and under its
Constituent Documents to execute, deliver and perform its respective obligations
under this Amendment and the Loan Documents to which it is a party. All actions,
waivers and consents (corporate, regulatory and otherwise) necessary or
appropriate for the Borrower and each Guarantor to execute, deliver and perform
this Amendment have been taken and/or received.

                  (b) Validity and Legal Effect. This Amendment has been duly
executed and delivered by the Borrower and each Guarantor. This Amendment and
the Credit Agreement, as modified hereby, constitutes, and the other Loan
Documents to which the Borrower or any Guarantor is a party constitute (or will
constitute when executed and delivered), the legal, valid and binding
obligations of the Borrower or such Guarantor, as applicable, enforceable
against it in accordance with the terms thereof.

                  (c) No Default or Event of Default. After giving effect to
this Amendment, no Default or Event of Default has occurred and is continuing.

                  SECTION 3. Conditions of Effectiveness. This Amendment shall
become effective (the "Effective Date") as of the date first above written when,
and only when, the parties hereto shall have executed a counterpart of this
Amendment and delivered the same to the Administrative Agent.

                  SECTION 4. Reference to and Effect on the Loan Documents. (a)
On and after the effectiveness of this Amendment, each reference in the Credit
Agreement to "this

                                       2


Agreement", "hereunder", "hereof" or words of like import referring to the
Credit Agreement, and each reference in the Notes and each of the other Loan
Documents to "the Credit Agreement", "thereunder", "thereof" or words of like
import referring to the Credit Agreement shall mean and be a reference to the
Credit Agreement, as modified by this Amendment.

                  (b) The execution, delivery and effectiveness of this
Amendment shall not, except as expressly provided herein, operate as a waiver of
any right, power or remedy of any Lender or the Agent under any of the Loan
Documents, nor constitute a waiver of any provision of any of the Loan Documents
except as expressly modified by this Amendment.

                  SECTION 5. Execution in Counterparts. This Amendment may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute but one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Amendment by telecopier shall be effective as delivery of a manually executed
counterpart of this Amendment.

                  SECTION 6. Governing Law. This Amendment shall be governed by,
and construed in accordance with, the laws of the State of New York.




                                       3




                  IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by their respective officers thereunto duly authorized,
as of the date first above written.



                                         CONSECO FINANCE CORP., as Borrower


                                         By: /s/ Keith Anderson
                                            ------------------------------------
                                            Name:  Keith Anderson
                                            Title:


                                         CIHC, INCORPORATED, as Parent Guarantor


                                         By: /s/ David K. Herzog
                                            ------------------------------------
                                            Name:  David K. Herzog
                                            Title: Secretary


                                         CONSECO FINANCE SERVICING CORP.,
                                          a Subsidiary Guarantor


                                         By: /s/ Keith Anderson
                                            ------------------------------------
                                            Name:  Keith Anderson
                                            Title:



                                         FPS DIP LLC, as
                                          Administrative Agent and as a Lender


                                         By: /s/ Randal A. Nardone
                                            ------------------------------------
                                            Name:  Randal A. Nardone
                                            Title: COO & Secretary







                                         CONSECO FINANCE CREDIT CORP.,
                                          a Subsidiary Guarantor


                                         By: /s/ Keith Anderson
                                            ------------------------------------
                                            Name:  Keith Anderson
                                            Title:







                                    EXHIBIT A

                                   FINAL ORDER








                                 AMENDMENT NO. 5


                  AMENDMENT NO. 5, dated as of March 14, 2003 (this
"Amendment"), to the SECURED SUPER-PRIORITY DEBTOR IN POSSESSION CREDIT
AGREEMENT, dated as of December 19, 2002 (as amended, supplemented or otherwise
modified prior to the date hereof, including by Amendment No. 1 dated as of
December 23, 2002, Amendment No. 2 dated as of December 24, 2002, Waiver No. 1
dated as of January 7, 2003, Amendment No. 3 dated as of January 17, 2003, and
Amendment No. 4 dated as of February 7, 2003, the "Credit Agreement"), by and
among CONSECO FINANCE CORP., a Delaware corporation, as debtor and debtor in
possession (the "Borrower"), CIHC, INCORPORATED, a Delaware corporation, debtor
and debtor in possession and the parent of the Borrower, as guarantor (the
"Parent Guarantor"), CONSECO FINANCE SERVICING CORP., a Delaware corporation,
and CONSECO FINANCE CEDIT CORP., a New York corporation and the other persons
party hereto as subsidiary guarantors (the "Subsidiary Guarantors" and together
with the Parent Guarantor, the "Guarantors"), the Lenders, and FPS DIP LLC, a
Delaware limited liability company ("FPS"), as administrative agent for the
Lenders (in such capacity, the "Administrative Agent").

                                    RECITALS:

                  A. The Borrower, the Parent Guarantor, the Subsidiary
Guarantors, the Lenders and the Administrative Agent have entered into the
Credit Agreement. Unless otherwise defined herein, capitalized terms used herein
shall have the meanings ascribed thereto in the Credit Agreement.

                  B. The Borrower, the Parent Guarantor and the Subsidiary
Guarantors have requested certain amendments to the Credit Agreement and the
Lenders and the Administrative Agent, subject to the terms and conditions set
forth herein, have agreed to such amendments.

                  SECTION 1. Amendment. Effective as of March 14, 2003, subject
to the satisfaction of the conditions precedent set forth in Section 3 hereof,
the parties hereto hereby agree the Credit Agreement shall be amended as
follows:

                  (a) The second recital of the Credit Agreement is amended and
restated in its entirety to read as follows:

                  "WHEREAS, the Borrower, the Subsidiary Guarantors and certain
other Persons have entered into the Asset Purchase Agreement dated as of
December 19, 2002 (as in effect on March 14, 2003, the "Asset Purchase
Agreement") providing for the purchase by CFN Investment Holdings LLC ("CFN") of
the Purchased Assets (as defined in the Asset Purchase Agreement, the "Purchased
Assets"); and on March 14, 2003, the Bankruptcy Court entered the Sale Order
contemplated by the Bidding Procedures Order which, among other things, permits
the sale of the Pledged Mill Creek Securities or assets of Mill Creek to General
Electric Consumer Finance for a price at least sufficient to pay the Obligations
in full and which would result in a credit of $270,000,000 to the purchase price
to be paid by the Buyer under the Asset Purchase Agreement (the "GE Mill Creek
Sale"); "



                  (b) The sixth recital of the Credit Agreement is amended and
restated in its entirety to read as follows:

                  "WHEREAS, the Borrower has requested that the Lenders provide
a secured super-priority credit facility of up to $150,000,000 consisting of a
$90,000,000 revolving credit facility and a $60,000,000 term loan facility in
order to fund the continued operation of the Borrower's and the Guarantors'
businesses and to repay the U.S. Bank Prepetition Indebtedness."

                  (c) Section 1 of the Credit Agreement is amended by amending
and restating the following definitions in their entirety to read as follows:

                  ""Final Order" means the orders of the Bankruptcy Court in the
form attached hereto as Exhibit H, or such other form as may be acceptable to
the Administrative Agent, modified by the order referred to in Section 3(c) of
Amendment No. 5 to this Agreement."

                  "Scheduled Termination Date" means the earlier of (x) the
termination for any reason of the Asset Purchase Agreement, (y) the later of the
Closing Date (as defined in the Asset Purchase Agreement) and the closing of the
GE Mill Creek Sale and (z) April 16, 2003 (which date shall become May 31, 2003
upon the approval of the Bankruptcy Court referred to in Section 3(c) of
Amendment No. 5 to this Agreement)."

                  (d) Section 2.8(a) of the Credit Agreement is amended by
amending and restating clauses (3) through (6) thereof in their entirety to read
as follows:

                        (3) With respect to Asset Sales permitted by Section
                  8.4(b) comprised of Purchased Assets (other than the assets
                  sold pursuant to the GE Mill Creek Sale or Pledged Mill Creek
                  Securities), the Borrower shall immediately prepay the
                  Revolving Credit Loans in an amount equal to the Net Cash
                  Proceeds thereof (including net of the Lehman Debt Amount as
                  such term is defined in the Asset Purchase Agreement). Such
                  prepayment shall result in a termination of the Revolving
                  Credit Commitment. The Borrower shall then immediately prepay
                  the Term Loans in any amount equal to any remaining Net Cash
                  Proceeds. Nothing herein shall affect the existence and effect
                  of the Scheduled Termination Date in such event.

                        (4) With respect to Asset Sales permitted by Section
                  8.4(b) comprised of the assets sold pursuant to the GE Mill
                  Creek Sale or the Pledged Mill Creek Securities, the Borrower
                  shall immediately prepay the Revolving Credit Loans in full.
                  Such prepayment shall result in a termination of the Revolving
                  Credit Commitment. The Borrower shall also immediately prepay
                  the Term Loans in full.

                        (5) Intentionally Omitted.

                        (6) Intentionally Omitted."

                                       2


                  (e) Section 2.10(b) of the Credit Agreement is amended and
restated by amending and restating its clause (a) to read as follows: "(a) the
Pledged Mill Creek Securities were purchased by a Person other than CFN and its
affiliates or the GE Mill Creek Sale has occurred".

                  (f) Section 3.2(f) of the Credit Agreement is amended by
amending and restating its third sentence to read as follows: "With respect to
any Loan made on or after March 14, 2003, the 9019 Order shall (x) be certified
by the Clerk of the Bankruptcy Court as having been duly entered, (y) be in full
force and effect and (z) shall not have been vacated, reversed, modified,
amended or stayed without the prior written consent of the Administrative
Agent."

                  (g) Section 3.2 of the Credit Agreement is amended by adding
the following new clause (k) after existing clause (j): "(k) No Lender shall be
obligated to make any Revolving Credit Loan on or prior to March 21, 2003. No
Lender shall be obligated to make any Revolving Credit Loan on or after March
21, 2003 unless the Borrower submits to the Administrative Agent a revised
Budget through June 30, 2003 and the Administrative Agent approves the substance
of such revised budget, which revised budget, upon such approval, shall
constitute the Budget under this Agreement."

                  (h) Section 8.4(b) of the Credit Agreement is amended and
restated in its entirety to read as follows: "(b) a sale of assets pursuant to
the Asset Purchase Agreement provided the Obligations are repaid to the extent
required pursuant to Section 2.8 on the date of consummation of such sale, and
the GE Mill Creek Sale provided the purchase price paid with respect thereto is
sufficient to repay the Obligations and in full and, on the date of such sale,
the Obligations are paid in full; and".

                  (i) Section 9.1(p) of the Credit Agreement is amended and
restated in its entirety to read as follows: "(i) The 9019 Order shall not have
been entered on or before March 14, 2003, (ii) from and after the date of entry
thereof, the 9019 Order or the Interim 9019 Order shall cease to be in full
force and effect, (iii) any Loan Party shall fail to comply with the terms of
the 9019 Order or the Interim 9019 Orders in any material respect or (iv) either
the 9019 Order or the Interim 9019 Order shall be amended, supplemented, stayed,
reversed, vacated or otherwise modified (or any of the Loan Parties shall apply
for authority to do so) without the written consent of the Administrative Agent;
or"

                  (j) Schedule 1 to the Credit Agreement is hereby amended and
restated in its entirety to read as set forth on Exhibit A hereto.

                  SECTION 2. Representations and Warranties of the Borrower. The
Borrower, and, as to itself, each of the Parent Guarantor and each Subsidiary
Guarantor, represents and warrants as follows:

                  (a) Power and Authority. The Borrower and each Guarantor each
has all requisite power and authority under applicable law and under its
Constituent Documents to execute, deliver and perform its respective obligations
under this Amendment and the Loan Documents to which it is a party. All actions,
waivers and consents (corporate, regulatory and otherwise) necessary or
appropriate for the Borrower and each Guarantor to execute, deliver and perform
this Amendment have been taken and/or received.

                                       3


                  (b) Validity and Legal Effect. This Amendment has been duly
executed and delivered by the Borrower and each Guarantor. This Amendment and
the Credit Agreement, as modified hereby, constitutes, and the other Loan
Documents to which the Borrower or any Guarantor is a party constitute (or will
constitute when executed and delivered), the legal, valid and binding
obligations of the Borrower or such Guarantor, as applicable, enforceable
against it in accordance with the terms thereof.

                  SECTION 3. Conditions of Effectiveness. This Amendment shall
become effective (the "Effective Date") as of the date first above written when,
and only when: (a) the parties hereto shall have executed a counterpart of this
Amendment and delivered the same to the Administrative Agent and (b) the
Administrative Agent shall have received such documents as it may reasonably
request from the Borrower, the Parent Guarantor and the Subsidiary Guarantors,
and (c) solely as to the amendment (i) of the definition of Scheduled
Termination Date to the extent it extends such date to May 31, 2002 and (ii) in
Section 1(j) of this Amendment, the Administrative Agent shall have received
certified copies of orders of the Bankruptcy Court approving the terms of this
Amendment, such orders to be in form acceptable to the Administrative Agent in
its sole discretion.

                  SECTION 4. Reference to and Effect on the Loan Documents. (a)
On and after the effectiveness of this Amendment, each reference in the Credit
Agreement to "this Agreement", "hereunder", "hereof" or words of like import
referring to the Credit Agreement, and each reference in the Notes and each of
the other Loan Documents to "the Credit Agreement", "thereunder", "thereof" or
words of like import referring to the Credit Agreement shall mean and be a
reference to the Credit Agreement, as modified by this Amendment.

                  (b) The execution, delivery and effectiveness of this
Amendment shall not, except as expressly provided herein, operate as a waiver of
any right, power or remedy of any Lender or the Agent under any of the Loan
Documents, nor constitute a waiver of any provision of any of the Loan Documents
except as expressly modified by this Amendment.

                  SECTION 5. Execution in Counterparts. This Amendment may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute but one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Amendment by telecopier shall be effective as delivery of a manually executed
counterpart of this Amendment.

                  SECTION 6. Governing Law. This Amendment shall be governed by,
and construed in accordance with, the laws of the State of New York.

                                       4





                  IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by their respective officers thereunto duly authorized,
as of the date first above written.



                                         CONSECO FINANCE CORP., as Borrower


                                         By: /s/ Charles H. Cremens
                                            ------------------------------------
                                            Name:  Charles H. Cremens
                                            Title:


                                         CIHC, INCORPORATED, as Parent Guarantor


                                         By: /s/ Eugene Bullis
                                            ------------------------------------
                                            Name:  Eugene Bullis
                                            Title:


                                         CONSECO FINANCE SERVICING CORP.,
                                          a Subsidiary Guarantor


                                         By: /s/ Charles H. Cremens
                                            ------------------------------------
                                            Name:  Charles H. Cremens
                                            Title:



                                         FPS DIP LLC, as
                                          Administrative Agent and as a Lender


                                         By: /s/ Wes Edens
                                            ------------------------------------
                                            Name:  Wes Edens
                                            Title: President & CEO




                                         U.S. BANK NATIONAL ASSOCIATION, as
                                          Lender and Sub-Agent


                                         By: /s/ Daniel J. Falstad
                                            ------------------------------------
                                            Name:  Daniel J. Falstad
                                            Title: Vice President


                                         LEHMAN COMMERCIAL PAPER, INC. as
                                          a Lender


                                         By: /s/ Frank Preziose
                                            ------------------------------------
                                            Name:  Frank Preziose
                                            Title: Authorized Signatory









                                         CONSECO FINANCE CREDIT CORP.,
                                          a Subsidiary Guarantor


                                         By: /s/ Charles H. Cremens
                                            ------------------------------------
                                            Name:  Charles H. Cremens
                                            Title:


                                         CONSECO FINANCE CORP. - ALABAMA - ,
                                          a Subsidiary Guarantor


                                         By: /s/ Charles H. Cremens
                                            ------------------------------------
                                            Name:  Charles H. Cremens
                                            Title:


                                         CONSECO FINANCE CONSUMER DISCOUNT
                                          COMPANY, a Subsidiary Guarantor


                                         By: /s/ Charles H. Cremens
                                            ------------------------------------
                                            Name:  Charles H. Cremens
                                            Title:


                                         CONSECO FINANCE CANADA COMPANY,
                                          a Subsidiary Guarantor


                                         By: /s/ Charles H. Cremens
                                            ------------------------------------
                                            Name:  Charles H. Cremens
                                            Title:



                                         CONSECO FINANCE LOAN COMPANY,
                                          a Subsidiary Guarantor


                                         By: /s/ Charles H. Cremens
                                            ------------------------------------
                                            Name:  Charles H. Cremens
                                            Title:




                                         RICE PARK PROPERTIES CORPORATION,
                                          a Subsidiary Guarantor


                                         By: /s/ Charles H. Cremens
                                            ------------------------------------
                                            Name:  Charles H. Cremens
                                            Title:



                                         LANDMARK MANUFACTURED HOUSING, INC.,
                                          a Subsidiary Guarantor


                                         By: /s/ Charles H. Cremens
                                            ------------------------------------
                                            Name:  Charles H. Cremens
                                            Title:


                                         CONSECO AGENCY OF NEVADA, INC.,
                                          a Subsidiary Guarantor


                                         By: /s/ Charles H. Cremens
                                            ------------------------------------
                                            Name:  Charles H. Cremens
                                            Title:



                                         CONSECO AGENCY OF NEW YORK, INC.,
                                          a Subsidiary Guarantor


                                         By:  /s/ Charles H. Cremens
                                            ------------------------------------
                                            Name:  Charles H. Cremens
                                            Title:



                                         CONSECO AGENCY, INC.,
                                          a Subsidiary Guarantor


                                         By:  /s/ Charles H. Cremens
                                            ------------------------------------
                                            Name:  Charles H. Cremens
                                            Title:





                                         CONSECO AGENCY OF ALABAMA, INC.,
                                          a Subsidiary Guarantor


                                         By: /s/ Charles H. Cremens
                                            ------------------------------------
                                            Name:  Charles H. Cremens
                                            Title:



                                         CONSECO AGENCY OF KENTUCKY, INC.,
                                          a Subsidiary Guarantor


                                         By: /s/ Charles H. Cremens
                                            ------------------------------------
                                            Name:  Charles H. Cremens
                                            Title:



                                         CRUM-REED GENERAL AGENCY, INC.,
                                          a Subsidiary Guarantor


                                         By: /s/ Charles H. Cremens
                                            ------------------------------------
                                            Name:  Charles H. Cremens
                                            Title:









                                    EXHIBIT A

                                   Schedule I*



- --------------------------------------------------------------- --------------------- ---------------------
Lender                                                          Revolving Credit
                                                                Commitment            Term Loan Commitment

- --------------------------------------------------------------- --------------------- ---------------------
- --------------------------------------------------------------- --------------------- ---------------------
                                                                                
FPS DIP LLC                                                     $ 76,500,000          $ 8,500,000
- --------------------------------------------------------------- --------------------- ---------------------
- --------------------------------------------------------------- --------------------- ---------------------
Lehman Commercial Paper, Inc.                                   $ 13,500,000          $ 1,500,000
- --------------------------------------------------------------- --------------------- ---------------------
- --------------------------------------------------------------- --------------------- ---------------------
U.S. Bank National Association                                  --------------        $50,000,000
- --------------------------------------------------------------- --------------------- ---------------------
- --------------------------------------------------------------- --------------------- ---------------------
Total                                                           $ 90,000,000          $60,000,000
- --------------------------------------------------------------- --------------------- ---------------------
- --------------------------------------------------------------- --------------------- ---------------------


*After giving effect to Amendment No. 5 to the Credit
Agreement and assignments made on or prior to the effective
date of Amendment No. 5
- --------------------------------------------------------------- --------------------- ---------------------

EX-12

                         CONSECO, INC. AND SUBSIDIARIES
                                                                   Exhibit 12.1
               Computation of Ratio of Earnings to Fixed Charges,
     Preferred Dividends and Distributions on Company-Obligated Mandatorily
              Redeemable Preferred Securities of Subsidiary Trusts
                    - Consolidated Basis for the years ended
                        December 31, 2002, 2001 and 2000
                              (Dollars in millions)




                                                                                        2002          2001         2000
                                                                                        ----          ----         ----
                                                                                                       
Pretax loss from operations:
    Net loss .....................................................................   $(7,835.7)    $ (405.9)    $(1,191.2)
    Add income tax expense (benefit)..............................................       864.3        (63.5)       (166.2)
    Add discontinued operations...................................................     2,223.1        106.7         381.9
    Add extraordinary (gain) loss on extinguishment of debt.......................        (8.1)       (17.2)          5.0
    Add minority interest.........................................................       173.2        119.5         145.3
    Add cumulative effect of accounting change....................................     2,949.2          -            55.3
                                                                                     ---------     --------     ---------

       Pretax loss from operations................................................    (1,634.0)      (260.4)       (769.9)
                                                                                     ----------    --------     ---------

Add fixed charges:
    Interest expense on corporate debt, including amortization....................       346.7        369.5         438.5
    Interest expense on investment borrowings.....................................        16.4         30.5          15.8
    Interest added to policyholder account balances...............................       501.7        530.0         560.7
    Portion of rental (a).........................................................        13.8         15.1          14.1
                                                                                     ---------     --------     ---------

       Fixed charges..............................................................       878.6        945.1       1,029.1
                                                                                     ---------     --------     ---------

       Adjusted earnings (loss)...................................................   $  (755.4)    $  684.7     $   259.2
                                                                                     =========     ========     =========

          Ratio of earnings to fixed charges......................................          (b)          (d)          (f)
                                                                                             =            =            =

          Ratio of earnings to fixed charges, excluding interest added to
              policyholder account balances.......................................          (b)          (d)          (f)
                                                                                             =            =            =

          Ratio of earnings to fixed charges, excluding interest added to
              policyholder account balances and interest expense on
              investment borrowings...............................................          (b)          (d)          (f)
                                                                                             =            =            =

Fixed charges   ..................................................................   $   878.6     $  945.1     $ 1,029.1
Add dividends on preferred stock, including dividends on preferred
    stock of subsidiaries (divided by the ratio of income before minority
    interest and extraordinary charge to pretax income)...........................         3.2         19.8          17.0
Add distributions on Company-obligated mandatorily redeemable
    preferred securities of subsidiary trusts.....................................       173.2        183.9         223.5
                                                                                     ---------     --------     ---------

       Fixed charges plus preferred dividends and distributions on
              Company-obligated mandatorily redeemable preferred
              securities of subsidiary trusts.....................................   $ 1,055.0     $1,148.8     $ 1,269.6
                                                                                     =========     ========     =========

       Adjusted earnings (loss)...................................................   $  (755.4)    $  684.7     $   259.2
                                                                                     =========     ========     =========

          Ratio of earnings to fixed charges, preferred dividends and
              distributions on Company-obligated mandatorily redeemable
              preferred securities of subsidiary trusts...........................          (c)          (e)          (g)
                                                                                             =            =            =




                                                                                                   

          Ratio of earnings to fixed charges, preferred dividends and
              distributions on Company-obligated mandatorily redeemable
              preferred securities of subsidiary trusts, excluding
              interest added to policyholder account balances.....................          (c)          (e)          (g)
                                                                                             =            =            =

          Ratio of earnings to fixed charges, preferred dividends and
              distributions on Company-obligated mandatorily redeemable
              preferred securities of subsidiary trusts, excluding interest
              added to policyholder account balances and interest expense on
              investment borrowings...............................................          (c)          (e)          (g)
                                                                                             =            =            =


- --------------------

     (a)  Interest portion of rental is estimated to be 33 percent.
     (b)  For such ratios, adjusted earnings were $1,634.0 million less than
          fixed charges. Adjusted earnings for the year ended December 31, 2002,
          included: (i) special and reorganization charges of $110.9 million;
          (ii) goodwill impairment charges of $500 million; and (iii) provision
          for losses related to loan guarantees of $240.0 million, as described
          in greater detail in the notes to the accompanying consolidated
          financial statements.
     (c)  For such ratios, adjusted earnings were $1,810.4 million less than
          fixed charges. Adjusted earnings for the year ended December 31, 2002,
          included: (i) special and reorganization charges of $110.9 million;
          (ii) goodwill impairment charges of $500 million; and (iii) provision
          for losses related to loan guarantees of $240.0 million, as described
          in greater detail in the notes to the accompanying consolidated
          financial statements.
     (d)  For such ratios, adjusted earnings were $260.4 million less than fixed
          charges. Adjusted earnings for the year ended December 31, 2001,
          included: (i) special charges of $80.4 million; and (ii) provision for
          losses related to loan guarantees of $169.6 million, as described in
          greater detail in the notes to the accompanying consolidated financial
          statements.
     (e)  For such ratios, adjusted earnings were $464.1 million less than fixed
          charges. Adjusted earnings for the year ended December 31, 2001,
          included: (i) special charges of $80.4 million; and (ii) provision for
          losses related to loan guarantees of $169.6 million, as described in
          greater detail in the notes to the accompanying consolidated financial
          statements.
     (f)  For such ratios, adjusted earnings were $769.9 million less than fixed
          charges. Adjusted earnings for the year ended December 31, 2000,
          included: (i) special charges of $305.0 million; and (ii) provision
          for losses related to loan guarantees of $231.5 million, as described
          in greater detail in the notes to the accompanying consolidated
          financial statements.
     (g)  For such ratios, adjusted earnings were $1,010.4 million less than
          fixed charges. Adjusted earnings for the year ended December 31, 2000,
          included: (i) special charges of $305.0 million; and (ii) provision
          for losses related to loan guarantees of $231.5 million, as described
          in greater detail in the notes to the accompanying consolidated
          financial statements.



          

EX-21

                                                                      Exhibit 21





                              LIST OF SUBSIDIARIES


        NAME (1)                                                       JURISDICTION
- -----------------------                                                ------------
                                                                   
CDOC, Inc.                                                             Delaware
Conseco Entertainment, Inc.                                            Indiana
     Conseco Entertainment, LLC                                        Indiana
Conseco Equity Sales, Inc.                                             Texas
Conseco Risk Management, Inc.                                          Indiana
Conseco Capital Management, Inc.                                       Pennsylvania
CIHC, Incorporated                                                     Indiana
     Conseco Securities, Inc.                                          Delaware
     Conseco Life Insurance (Bermuda) Limited                          Bermuda
     Conseco Life Insurance Company of Texas                           Texas
         Colonial Penn Life Insurance Company                          Pennsylvania
         Conseco Annuity Assurance Company                             Illinois
         Conseco Senior Health Insurance Company                       Pennsylvania
              Conseco Life Insurance Company of New York               New York
         Washington National Insurance Company                         Illinois
              Conseco Life Insurance Company                           Indiana
         Pioneer Life Insurance Company                                Illinois
              Conseco Medical Insurance Company                        Illinois
         Conseco Health Insurance Company                              Arizona
         Bankers Life Insurance Company of Illinois                    Illinois
              Bankers Life and Casualty Company                        Illinois
                  BLC Financial Services, Inc.                         Illinois
                  Carmel Fifth LLC (2)                                 Delaware
     Bankers National Life Insurance Company                           Texas
     Conseco Management Services Company                               Texas
     Conseco Services, LLC (3)                                         Indiana
     CFIHC, Inc.                                                       Delaware
         Conseco Private Capital Group, Inc.                           Indiana
         Performance Matters Associates, Inc.                          Delaware





                                                                   
         Performance Matters Associates of Texas, Inc.                 Texas
         Performance Matters Associates of Kansas, Inc.                Kansas
         Performance Matters Associates of Ohio, Inc.                  Ohio
     Conseco Finance Corp.                                             Delaware
         Conseco Financing Servicing Corp.                             Delaware
              P Financial Services, Inc.                               Minnesota
              Green Tree Retail Services Bank, Inc.                    South Dakota
              Landmark Manufactured Housing, Inc.                      Minnesota
              Convergent Lending Services, LLC                         Pennsylvania
              Rice Park Properties Corporation                         Minnesota
              Conseco Finance Loan Company                             Minnesota
              Green Tree Titling Holding Company I                     Delaware
                  G.T. Titling, LLC I                                  Delaware
                  G.T. Titling, LLC II                                 Delaware
                  Green Tree Titling Limited Partnership I             Delaware
                  Green Tree Titling Limited Partnership II            Delaware
                       Conseco Finance Leasing Trust                   Delaware
         Conseco Finance Vendor Services Corporation                   Delaware
         Conseco Agency, Inc.                                          Minnesota
              Conseco Agency of Alabama, Inc.                          Alabama
              Conseco Agency of Kentucky, Inc.                         Kentucky
              Crum-Reed General Agency, Inc.                           Texas
              Conseco Agency Reinsurance Limited                       Turks and Caicos
         Conseco Finance Canada Holding Company                        Delaware
              Conseco Finance Canada Company                           Nova Scotia
         Conseco Finance Corp. - Alabama                               Delaware
         Conseco Agency of Nevada, Inc.                                Nevada
         Conseco Agency of New York, Inc.                              New York
         Green Tree Floorplan Funding Corp.                            Delaware
         Mill Creek Bank, Inc.                                         Utah
              Mill Creek Servicing Corporation                         Utah
         Green Tree Financial Corp. - Texas                            Delaware
         Green Tree Residual Finance Corp. I                           Minnesota
         Conseco Finance Securitizations Corp.                         Minnesota
         Conseco Finance Net Interest Margin Finance Corp. I           Delaware
         Conseco Finance Net Interest Margin Finance Corp. II          Delaware
         Green Tree Finance Corp. - Two                                Minnesota
         Green Tree Finance Corp. - Five                               Minnesota






                                                                   

         Green Tree RECS II Guaranty Corporation                       Minnesota
         Conseco Finance Credit Corp.                                  New York
         Conseco Finance Consumer Discount Company                     Pennsylvania
         Green Tree First GP Inc.                                      Minnesota
         Green Tree Second GP Inc.                                     Minnesota
         BizGuild, Inc.                                                Minnesota
         Conseco Finance Credit Card Funding Corp.                     Minnesota
         Conseco HE/HI 2001-B-2, Inc.                                  Minnesota
         Conseco Finance Advance Receivables Corp.                     Minnesota
         Conseco Finance Liquidation Expense Advance Receivables
          2002-2 Corp.                                                 Minnesota

- ------------------


(1)   Except otherwise indicated, each company is a direct or indirect wholly
      owned subsidiary of the indicated parent.

(2)   50 percent owned by Bankers Life and Casualty Company, 25 percent owned by
      Conseco Senior Health Insurance Company, 16.75 percent owned by Washington
      National Insurance Company and 8.25 percent owned by Conseco Annuity
      Assurance Company.

(3)   89.1 percent owned by CIHC, Incorporated, 9.9 percent owned by Conseco,
      Inc. and 1 percent owned by Conseco Management Services Company.

EX-23

                                                                    Exhibit 23.1



                       CONSENT OF INDEPENDENT ACCOUNTANTS



          We hereby consent to the incorporation by reference in the
Registration Statements of Conseco, Inc. (File Nos. 33-57079, 33-56901,
33-57931, 33-40556, 33-58710, 33-58712, 333-10297, 333-18037, 333-18581,
333-19783, 333-23251, 333-28305, 333-32615, 333-32617, 333-32621, 333-41114,
333-83607, 333-51123, 333-83465, 333-85825, 333-68264, 333-68466, 333-68742,
333-89864 and 333-90032) of our report dated April 11, 2003, on our audits of
the consolidated financial statements and financial statement schedules of
Conseco, Inc. as of December 31, 2002 and 2001, and for the years ended December
31, 2002, 2001 and 2000, which report is included in this Annual Report on Form
10-K.



                                        /s/ PRICEWATERHOUSECOOPERS LLP
                                        ------------------------------
                                        PricewaterhouseCoopers LLP



Indianapolis, Indiana
April 11, 2003

EX-99

                                                                    Exhibit 99.1

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In connection with the Annual Report of Conseco, Inc. (the "Company") on
Form 10-K for the year ending December 31, 2002 as filed with the Securities and
Exchange Commission on the date hereof (the "Report"), I, William J. Shea,
President and Chief Executive Officer of the Company, certify, pursuant to 18
U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of
2002, that to my knowledge:

         (1) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and

         (2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.


/s/ William J. Shea
- -----------------------------
William J. Shea
President and Chief Executive Officer
April 14, 2003


     A signed original of this written statement required by Section 906 has
been provided to Conseco, Inc. and will be retained by Conseco, Inc. and
furnished to the Securities and Exchange Commission upon request.

EX-99

                                                                    Exhibit 99.2

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In connection with the Annual Report of Conseco, Inc. (the "Company") on
Form 10-K for the year ending December 31, 2002 as filed with the Securities and
Exchange Commission on the date hereof (the "Report"), I, Eugene M. Bullis,
Executive Vice President and Chief Financial Officer of the Company, certify,
pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the
Sarbanes-Oxley Act of 2002, that to my knowledge:

         (1) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and

         (2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.


/s/ Eugene M. Bullis
- ----------------------------
Eugene M. Bullis
Executive Vice President and Chief Financial Officer
April 14, 2003

     A signed original of this written statement required by Section 906 has
been provided to Conseco, Inc. and will be retained by Conseco, Inc. and
furnished to the Securities and Exchange Commission upon request.